Dos Republicas Coal Partnership v. David Saucedo, as Floodplain Administrator and County Judge of the Maverick County Commissioners Court, and the Maverick County Commissioners Court

ACCEPTED
13-14-00725-cv
THIRTEENTH COURT OF APPEALS
CORPUS CHRISTI, TEXAS
4/2/2015 10:45:17 AM
DORIAN RAMIREZ
CLERK

No. 13-14-00725-CV
______________________________________________________
FILED IN
13th COURT OF APPEALS
Court of Appeals CORPUS CHRISTI/EDINBURG, TEXAS

for the Thirteenth Judicial District
4/2/2015 10:45:17 AM
DORIAN E. RAMIREZ
Corpus Christi – Edinburg, Texas Clerk
______________________________________________________

Dos Republicas Coal Partnership,
Appellant,
v.
David Saucedo as Floodplain Administrator and
County Judge of the Maverick County Commissioners Court
and the Maverick County Commissioners Court,
Appellees.
______________________________________________________

BRIEF OF APPELLANT
______________________________________________________

On appeal from the 293rd Judicial District Court
Maverick County, Texas
Cause Number 14-03-29340-MCV
______________________________________________________

Leonard Dougal Bill Cobb
State Bar No. 06031400 State Bar No. 00796372
Mallory Beck Matthew Ploeger
State Bar No. 24073899 State Bar No. 24032838
JACKSON WALKER L.L.P. Jenny Lee Smith
100 Congress State Bar No. 24079357
Suite 1100 COBB & COUNSEL
Austin, Texas 78701 401 Congress Avenue
ldougal@jw.com Suite 1540
T: (512) 236-2233 Austin, Texas 78701
F: (512) 391-2112 bill@cobbxcounsel.com
(512) 693-7570
(512) 687-3432 – Facsimile

Attorneys for Appellant Dos Republicas Coal Partnership

April 2, 2015 Oral Argument Requested
 IDENTITY OF PARTIES AND COUNSEL

Party Counsel

Dos Republicas Coal Partnership, Bill Cobb
Appellant bill@cobbxcounsel.com
Matthew Ploeger
matt@cobbxcounsel.com
Jenny L. Smith
jenny@cobbxcounsel.com
COBB & COUNSEL
401 Congress Avenue
Suite 1540
Austin, Texas 78701
(512) 693-7570
(512) 687-3432 – Facsimile

Leonard Dougal
Mallory Beck
JACKSON WALKER L.L.P.
100 Congress, Suite 1100
Austin, Texas 78701
E: ldougal@jw.com
T: (512) 236-2233
F: (512) 391-2112

Rolando Jasso
Claudio Heredia
Knickerbocker, Heredia, Jasso, &
Stewart P.C.
468 East Main Street
Eagle Pass, Texas 78852-4598
rmjasso@khjslaw.com
chlaw750@yahoo.com

ii
David Saucedo, as Floodplain Alfonso Nevarez C.
Administrator and County Judge of Mariliza V. Williams
the Maverick County Nevarez Law Group, PC
Commissioners Court, 590 East Main Street, Suite A
Appellee Eagle Pass, Texas 78852
Phone: (830) 776-7003
Fax: (830) 776-7004
anc@nevarezlawgroup.com
mvw@nevarezlawgroup.com

Maverick County Commissioners Alfonso Nevarez C.
Court, Appellee Mariliza V. Williams
Nevarez Law Group, PC
590 East Main Street, Suite A
Eagle Pass, Texas 78852
Phone: (830) 776-7003
Fax: (830) 776-7004
anc@nevarezlawgroup.com
mvw@nevarezlawgroup.com

iii
 TABLE OF CONTENTS

Identity of Parties and Counsel............................................................................ ii
Table of Contents .................................................................................................. iv
Index of Authorities .............................................................................................. ix
Statement of the Case ......................................................................................... xiv
Statement Regarding Oral Argument ............................................................... xv
Issues Presented .................................................................................................. xvi
1. Ministerial Duty. Pursuant to the Maverick County Flood
Damage Prevention Ordinance (the “Ordinance”), “[a]pproval or
denial of a Development Permit by the Floodplain Administrator
shall be based on all of the provisions of this ordinance and the
following relevant factors.” Here, DRCP submitted a permit
application, which complied with the Ordinance and all relevant
factors. Was it error for the trial court to find that the
Floodplain Administrator was not required to approve
DRCP’s permit application? ............................................................ xvi
2. Abuse of Discretion. The Floodplain Administer abuses his
discretion if he fails to consider a factor the Legislature directs him
to consider, or considers an irrelevant factor. Here, the Floodplain
Administrator failed to consider any of the ten mandatory factors
addressed in the Ordinance, and indeed, purports to have
considered several irrelevant factors not addressed in the
Ordinance. ............................................................................................. xvi
a. Was it error for the trial court to find that the
Floodplain Administrator did not abuse his
discretion by failing to consider the Ordinance’s
mandatory factors?.............................................................. xvi
b. Was it error for the trial court to find that the
Floodplain Administrator did not abuse his
discretion by failing to provide any reason or
explanation for the denial of DRCP’s permit
application? .......................................................................... xvi

iv
 c. Was it error for the trial court to find that the
Floodplain Administrator did not abuse his
discretion by considering irrelevant factors outside
of the Ordinance’s exclusive list? ...................................... xvi
3. Due Process. A person may not be deprived of a property right
without due process of law, which requires, at a minimum, notice
and an opportunity to be heard. Here, the Floodplain
Administrator denied DRCP’s permit application without first
providing DRCP with notice and an opportunity to be heard. Was
it error for the trial court to conclude that the Floodplain
Administrator did not violate DRCP’s due process rights?........ xvi
Record References .............................................................................................. xvii
Introduction .............................................................................................................1
Statement of Facts ...................................................................................................2
A. Dos Republicas Coal Partnership Obtains All State-Required
Permits to Operate a Surface Coal Mining Project in Maverick
County. ...........................................................................................................2
B. The Maverick County Commissioners Court Adopted the
Maverick County Flood Damage Prevention Ordinance to
Prevent Property Loss in the Floodplain. .................................................3
C. DRCP Complies with the Ordinance, but Its Permit Application
Is Ignored. ......................................................................................................5
D. Two Years of “Deliberation” Begets a Two Sentence “Order”: “I
Am in Receipt of Dos Republicas Request for Floodplain
Permit. After Reviewing the Request, I Am Hereby Denying
It.” ....................................................................................................................7
E. The Floodplain Administrator Uses the Ordinance to
Undermine State-Issued Permits, Testifying that He Would
Never Allow Mining in the Floodplain Regardless of Whether
the Permit Application Met the Requirements of the Ordinance. ........9
F. In a Forgone Conclusion, the Trial Court Denies DRCP’s
Petition for Writ of Mandamus.................................................................10
Summary of the Argument ..................................................................................12

v
Standard of Review...............................................................................................15
Argument ...............................................................................................................18
I. The Trial Court Erred By Failing to Compel the Floodplain
Administrator to Perform the Purely Ministerial Act of
Approving DRCP’s Permit Application. .................................................19
A. The Floodplain Administrator’s duty to approve an
application is purely ministerial and non-discretionary
when all of the criteria are met. ......................................................20
B. DRCP’s Permit Application satisfies the Ordinance’s
requirements as a matter of law. ....................................................24
C. DRCP’s Permit Application satisfies the Ordinance’s ten
factors as a matter of law.................................................................24
1. DRCP’s application and trial testimony presented
unrebutted expert opinion that DRCP’s mining plan
satisfies each of the ten factors, including (a)-(c). .............26
a. The danger to life and property due to
flooding or erosion damage. ......................................26
b. The susceptibility of the proposed facility and
its contents to flood damage and the effect of
such damage on the individual owner. ....................27
c. The danger that materials may be swept onto
other lands to the injury of others. ............................28
d. The evidence conclusively establishes that
DRCP’s Permit Application meets the
remaining factors of the Ordinance. .........................29
2. The trial court’s erroneous findings that the
Floodplain Administrator properly denied the
permit based on factors (a)-(c) are unsupported by
any evidence. ..........................................................................30
a. There is no legally or factually sufficient
evidence the Floodplain Administrator even
considered factors (a)-(c), much less that he

vi
 found that DRCP’s Permit Application failed
to satisfy them. .............................................................31
b. No legally or factually sufficient evidence
supports the trial court’s finding that the
Floodplain Administrator raised concerns
about factors (a)-(c) and gave DRCP an
opportunity to respond. ..............................................34
c. No legally or factually sufficient evidence
supports the trial court’s finding that DRCP
failed to address factors (a)-(c)...................................34
II. The Floodplain Administrator Abused Any Discretion by
Failing to Base his Decision on the Factors Mandated by the
Ordinance. ....................................................................................................39
A. The failure to consider mandatory factors constitutes an
abuse of discretion............................................................................40
B. The Floodplain Administrator was required to provide an
explanatory order with reasons for his denial. ............................42
1. Meaningful judicial review necessitates that
the Floodplain Administrator’s order provide
the reasons for his denial. ...........................................42
2. Post hoc rationalization cannot cure the
absence of reasons in the Floodplain
Administrator’s two-sentence denial letter. ............44
3. An explanatory order with reasoning is even
more important when conflicting permit
decisions are reached. .................................................46
C. The Floodplain Administrator’s post hoc justifications
demonstrate that he abused his discretion by considering
four irrelevant factors. .....................................................................49
1. Floodwater quality is an irrelevant factor. .........................55
a. The purpose of the Ordinance is to prevent
property losses rather than protecting
floodwater quality. ......................................................56
vii
 b. The TCEQ has the “sole and exclusive
authority to set water quality standards for all
water in the state.” .......................................................57
2. The “best interest of the county” is an irrelevant
factor.........................................................................................58
3. Surface Coal Mining Regulations are irrelevant
factors. ......................................................................................60
4. Personal experience is an irrelevant factor.........................63
III. The Floodplain Administrator Acted Arbitrarily and
Capriciously When He Denied DRCP Notice or an Opportunity
to be Heard. .................................................................................................64
Prayer ......................................................................................................................66
Certificate of Compliance ....................................................................................68
Certificate of Service .............................................................................................68
Appendix ................................................................................................................69
Authorities............................................................................................................111

viii
 INDEX OF AUTHORITIES

Cases

Amtel Commc’ns, Inc. v. Public Util. Comm’n, 687 S.W.2d 95 (Tex. App.—
Austin 1985, no writ) ................................................................................. 43, 44

Anderson v. City of Seven Points, 806 S.W.2d 791 (Tex. 1991) .................... 16, 20

Austin v. Deats, 32 S.W.2d 685 (Tex. Civ. App.—Austin 1930, no writ) ........46

Austin v. Nelson, 45 S.W.2d 692 (Tex. Civ. App.—Austin 1931, no writ) ......47

Bauer v. City of Wheat Ridge, 513 P.2d 203 (Colo. 1973) (en banc) ............ 14, 53

Brack v. Island Park Estates, LLC, No. 13-06-698-CV, 2007 WL 4225576 (Tex.
App.—Corpus Christi Nov. 29, 2007, no pet.) ....................................... 17, 38

Cavazos v. Bd. of Governors of Council of Co-Owners of Summit Condominiums,
No. 13-12-00524-CV, 2013 WL 5305237 (Tex. App.—Corpus Christi Sept.
19, 2013, no pet.) ................................................................................................18

City of Arlington v. Centerfolds, Inc., 232 S.W.3d 238 (Tex. App.—Fort Worth
2007, pet. denied) ..............................................................................................64

City of Corpus Christi v. Unitarian Church of Corpus Christi, 436 S.W.2d 923
(Tex. Civ. App.—Corpus Christi 1968, writ ref’d n.r.e.) ...................... 13, 21

City of Dallas v. Saucedo-Falls, 268 S.W.3d 653 (Tex. App.—Dallas 2008, pet.
denied) ................................................................................................................65

City of El Paso v. El Paso Elec. Co., 851 S.W.2d 896 (Tex. App.—Austin 1993,
writ denied) ........................................................................................................43

City of El Paso v. Public Util. Comm’n, 883 S.W.2d 179 (Tex. 1994) .......... 16, 39

City of San Antonio v. City of Boerne, 111 S.W.3d 22 (Tex. 2003) ......................50

ix
Comm’rs Court of Titus Cnty. v. Agan, 940 S.W.2d 77 (Tex. 1997) ...................42

Consumers Water, Inc. v. Public Util. Comm’n, 774 S.W.2d 719 (Tex. App.—
Austin 1989, no writ) ........................................................................................48

Ector County v. Stringer, 843 S.W.2d 477 (Tex. 1992) ........................................43

Gary Safe Co. v. A. C. Andrews Co., Inc., 568 S.W.2d 166 (Tex. Civ. App.—
Dallas 1978, writ ref’d n.r.e.) ...........................................................................54

Griggs v. United States, 253 F. App’x 405 (5th Cir. 2007) ..................................45

Hartford Cas. Ins. Co. v. State, 159 S.W.3d 212 (Tex. App.—Austin 2005, pet.
denied) ................................................................................................................65

Hooper v. Generations Cmty. Fed. Credit Union, No. 04-12-00080-CV, 2013 WL
2645111 (Tex. App.—San Antonio June 12, 2013, no pet.) ..........................18

In re Bailey, 975 S.W.2d 430 (Tex. App.—Waco 1998, no pet.) ........................20

Integrity Group, Inc. v. Medina County Comm’rs Court, No. 04-03-00413-CV,
2004 WL 2346620 (Tex. App.—San Antonio Oct. 20, 2004, pet. denied)...21

Lewis v. Metropolitan Savings & Loan Ass’n, 550 S.W.2d 11 (Tex. 1977)..........64

Luminant Generation Co., LLC v. United States EPA, 675 F.3d 917 (5th Cir.
2012) ............................................................................................................. 45, 49

Madden v. Tex. Bd. of Chiropractic Examiners, 663 S.W.2d 622 (Tex. App.—
Austin 1983, writ ref’d n.r.e.)...........................................................................44

Mass Mktg., Inc. v. Gaines, 70 S.W.3d 261 (Tex. App.—San Antonio 2001,
pet. denied).........................................................................................................32

Mitchell Energy Corp. v. Fed. Energy Regulatory Comm’n, 651 F.2d 414 (5th
Cir. 1981) .............................................................................................................45

x
Mobile County v. City of Saraland, 501 So. 2d 438 (Ala. 1986) .................... 32, 41

Moffitt v. Town of S. Padre Island, No. 13-00-453-CV, 2001 WL 34615363 (Tex.
App.—Corpus Christi Nov. 1, 2001, no pet.) ......................................... 16, 17

Morgan Drive Away, Inc. v. R.R. Comm’n of Texas, 498 S.W.2d 147 (Tex. 1973)
..............................................................................................................................43

Nucor Steel – Tex. v. PUC, 363 S.W.3d 871 (Tex. App.—Austin 2012, no pet.)
..............................................................................................................................45

O’Connor v. First Court of Appeals, 837 S.W.2d 94 (Tex. 1992) .........................20

Pritchett v. Nathan Rodgers Const. & Realty Corp., 379 So. 2d 545
(Ala. 1979) .................................................................................................... 14, 40

Public Util. Comm’n v. S. Plains Elec. Coop., Inc., 635 S.W.2d 954 (Tex. App.—
Austin 1982, writ ref’d n.r.e.)...........................................................................52

R.R. Comm’n v. Coppock, 215 S.W.3d 559 (Tex. App.—Austin 2007, pet.
denied) ................................................................................................................62

S. Plains Lamesa R.R. v. High Plains Underground Water Conservation Dist. No.
1, 52 S.W.3d 770 (Tex. App.—Amarillo 2001, no pet.) .......................... 51, 52

Santoya v. Pereda, 75 S.W.3d 487 (Tex. App.—San Antonio 2002,
pet. denied) .........................................................................................................17

SEC v. Chenery Corp., 332 U.S. 194 (1946)...........................................................43

Slavin v. City of San Antonio, 330 S.W.3d 670 (Tex. App.—San Antonio 2010,
no pet.) ......................................................................................................... 64, 65

Starr Cnty. v. Starr Indus. Servs., Inc., 584 S.W.2d 352 (Tex. App.—Austin
1979, writ ref’d n.r.e.) ........................................................................................60

xi
Stolte v. County of Guadalupe, No. 04-04-00083-CV, 2004 WL 2597443 (Tex.
App.—San Antonio Nov. 17, 2004, no pet.) ............................... 13, 21, 39, 52

Texas Alcoholic Beverage Comm’n v. Good Spirits, Inc., 616 S.W.2d 411 (Tex.
App.—Waco 1981, no writ) ...................................................................... 47, 48

Texas Dep’t of Ins. v. State Farm Lloyds, 260 S.W.3d 233 (Tex. App.—Austin
2008, no pet.) ............................................................................................... 51, 52

Thomas v. Casale, 924 S.W.2d 433 (Tex. App.—Fort Worth 1996,
writ denied) ........................................................................................... 36, 37, 38

Van Brunt v. BancTexas Quorum, N.A., 804 S.W.2d 117 (Tex. App.—Dallas
1989, no writ) .....................................................................................................54

Vondy v. Comm’r Court of Uvalde Cnty., 620 S.W.2d 104 (Tex. 1981) . 15, 16, 17

Vondy v. Comm’rs Ct. of Uvalde Cnty., 714 S.W.2d 417 (Tex. App.—San
Antonio 1986, writ ref’d n.r.e.) ........................................................................49

Withers v. Commissioners’ Court of Bandera County, 75 S.W.3d 528 (Tex.
App.—San Antonio 2002, no pet.) ..................................................................15

Statutes
33 U.S.C. § 1342......................................................................................................57

33 U.S.C. § 1251......................................................................................................57

TEX. GOV’T CODE § 24.020 .............................................................................. 20, 42

TEX. LOCAL GOV’T CODE § 245.002 .......................................................................50

TEX. LOCAL GOV’T CODE § 81.001 .........................................................................20

TEX. NAT. RES. CODE § 134.012 .............................................................................61

TEX. WATER CODE § 16.312 .......................................................................... 3, 4, 56
xii
TEX. WATER CODE § 26.023 ...................................................................................57

TEX. WATER CODE § 26.011 ...................................................................................57

TEX. WATER CODE § 26.027 ...................................................................................57

TEX. WATER CODE § 16.318 ....................................................................................23

Rules

TEX. R. APP. P. 43.2 .................................................................................................66

Constitutional Provisions

TEX. CONST. art. V, § 18 .........................................................................................50

xiii
 STATEMENT OF THE CASE

Nature of the Case: Appellant/Plaintiff Dos Republicas Coal

Partnership (“DRCP”) seeks a writ of mandamus compelling the Maverick

County Floodplain Administrator to grant DRCP’s application for a

floodplain development permit. 1 CR 41-73.

Course of Proceedings and Trial Court Disposition: On October 9,

2014, the trial court conducted a full trial on the merits. While Appellant

DRCP introduced evidence and called an expert witness to present

testimony in support of its request, Appellees submitted no evidence and

offered no witnesses at trial. Upon conclusion, the trial court orally ruled

that DRCP’s request for mandamus relief should be denied, and issued a

ruling to that effect the following day, October 10, 2014. 5 CR 2940 [Tab 1].

DRCP files this appeal because the trial court erred when it refused to issue

DRCP a writ of mandamus, compelling the Floodplain Administrator to

grant DRCP’s floodplain development permit application.

Trial Court: 293rd Judicial District Court, Maverick County, Texas,

Honorable Cynthia Muniz, presiding.

xiv
 STATEMENT REGARDING ORAL ARGUMENT

This case presents an issue of recurring and increasing importance in

the State of Texas: Whether local political subdivisions may thwart

statewide permitting regimes governing energy extraction.

Notwithstanding that DRCP has obtained the requisite mining and

wastewater discharge permits to extract energy in Maverick County from

the Railroad Commission of Texas (“RRC”) and the Texas Commission on

Environmental Quality (“TCEQ”), respectively, the Floodplain

Administrator defied the state permitting regime, stating: I need to

“protect[] this community from the Railroad Commission” (2 CR 879-80),

and denied DRCP’s permit application. According to the Floodplain

Administrator, DRCP allegedly failed to satisfy TCEQ and RRC regulations.

Allowing the trial court’s order to stand in this case thus has the potential of

rendering state agency permitting meaningless, and for this reason,

Appellant respectfully requests oral argument to address this issue.

xv
 ISSUES PRESENTED

1. Ministerial Duty. Pursuant to the Maverick County Flood Damage
Prevention Ordinance (the “Ordinance”), “[a]pproval or denial of a
Development Permit by the Floodplain Administrator shall be based
on all of the provisions of this ordinance and the following relevant
factors.” Here, DRCP submitted a permit application, which complied
with the Ordinance and all relevant factors. Was it error for the trial
court to find that the Floodplain Administrator was not required to
approve DRCP’s permit application?

2. Abuse of Discretion. The Floodplain Administer abuses his discretion
if he fails to consider a factor the Legislature directs him to consider,
or considers an irrelevant factor. Here, the Floodplain Administrator
failed to consider any of the ten mandatory factors addressed in the
Ordinance, and indeed, purports to have considered several irrelevant
factors not addressed in the Ordinance.

a. Was it error for the trial court to find that the Floodplain
Administrator did not abuse his discretion by failing to
consider the Ordinance’s mandatory factors?

b. Was it error for the trial court to find that the Floodplain
Administrator did not abuse his discretion by failing to
provide any reason or explanation for the denial of DRCP’s
permit application?

c. Was it error for the trial court to find that the Floodplain
Administrator did not abuse his discretion by considering
irrelevant factors outside of the Ordinance’s exclusive list?

3. Due Process. A person may not be deprived of a property right
without due process of law, which requires, at a minimum, notice and
an opportunity to be heard. Here, the Floodplain Administrator
denied DRCP’s permit application without first providing DRCP with
notice and an opportunity to be heard. Was it error for the trial court
to conclude that the Floodplain Administrator did not violate
DRCP’s due process rights?
xvi
 RECORD REFERENCES

In this brief, the following record citation conventions will be used:

• The Clerk’s Record will be cited as “[volume] CR [page].”

• The Reporter’s Record will be cited as “[volume] RR [page].”

• The Appendix items are as follows:

Tab 1 Order Denying Dos Republicas Coal Partnership’s
Amended Petition for Writ of Mandamus (5 CR 2940)
Tab 2 Findings of Fact and Conclusions of Law (5 CR 3207-12)
Tab 3 Maverick County Flood Damage Prevention Ordinance
(1 RR, Exhibit 5)
Tab 4 April 3, 2014 Letter Denying DRCP’s Floodplain
Development Permit Application (1 RR, Exhibit 4)
Tab 5 Supplemental Floodplain Analysis, Executive Summary
(1 RR, Exhibit 3, at 2-6)

xvii
TO THE HONORABLE COURT OF APPEALS:

Appellant Dos Republicas Coal Partnership (“DRCP”) respectfully

submits this Brief.

INTRODUCTION

It is no secret that a number of Maverick County residents are opposed

to DRCP’s proposed 2,700-acre coal mining project near the City of Eagle

Pass. Perhaps because of this opposition, Appellees refused to perform their

duty to review and approve DRCP’s application for a floodplain

development permit for two-and-a-half years. And when they finally did

act, they summarily denied DRCP’s permit application in a two-sentence

denial letter, which contained no reason or explanation for the denial.

Indeed, the Floodplain Administrator admitted that he would not approve

any permit involving mining coal in the floodplain regardless of whether the

application satisfied the Ordinance’s provisions.

By denying DRCP’s permit application, the Floodplain Administrator

acted arbitrarily and capriciously and without regard to the requirements of

the Ordinance (or the state law authorizing the County to pass it) to deny

DRCP the lawful exercise of its property rights. This Court should compel

1
Appellees to comply with the Ordinance and issue DRCP its floodplain

development permit.

STATEMENT OF FACTS

A. Dos Republicas Coal Partnership Obtains All State-Required
Permits to Operate a Surface Coal Mining Project in Maverick
County.

Dos Republicas Coal Partnership (“DRCP”) seeks to operate a surface

coal mine near the City of Eagle Pass, Texas. To accomplish its goal, DRCP

obtained all state-required permits to operate its proposed mine.

Specifically, DRCP owns the surface mining permit for a 2,700-acre

coal mining project near Eagle Pass, Texas. 1 RR, Exhibit 8. The permit was

originally obtained by Dos Republicas Resources Co., Inc. (“DRRC”) in 1994.

1 RR, Exhibit 8, at Finding of Fact No. 1. In January 2009, DRRC transferred

the original mining permit, Permit 42, to DRCP, re-numbering it to Permit

42A. Id. Beginning in April 2008, DRCP filed an application with the

Railroad Commission of Texas (“RRC”) to renew, revise, and expand Permit

42A. 1 RR, Exhibit 8, at Finding of Fact No. 2. In January 2013, the Railroad

Commission granted DRCP’s request to renew, revise, and expand permit

42A, issuing Permit 42B. 1 RR, Exhibit 8.

2
 Likewise, DRCP also obtained a wastewater discharge permit, Permit

No. WQ0003511000, from the Texas Commission on Environmental Quality

(“TCEQ”). 1 RR, Exhibit 7. Under this permit, DRCP is “authorized to treat

and discharge wastes from the Eagle Pass Mine” according to the “effluent

limitations” established by its permit. Id.

B. The Maverick County Commissioners Court Adopted the Maverick
County Flood Damage Prevention Ordinance to Prevent Property
Loss in the Floodplain.

In addition to these state-required permits, DRCP was required to seek

a floodplain development permit under the Maverick County Flood Damage

Prevention Ordinance (the “Ordinance”). The Ordinance was approved and

adopted by the Maverick County Commissioners Court on August 15, 1996,

under the authority granted by the Texas Legislature in the Flood Control

Insurance Act (“FCIA”), now embodied in the Texas Water Code. 1 RR,

Exhibit 5, Article 1, Article 4 [Tab 3]. The Legislature enacted the FCIA for

the express purpose of allowing Texans to “secur[e] flood insurance

coverage” and to “minimiz[e] exposure of property to flood losses.” TEX.

WATER CODE § 16.312. The FCIA provides:

The purpose of this subchapter is to evidence a positive interest
in securing flood insurance coverage under this federal
program and to so procure for those citizens of Texas desiring to
3
 participate and in promoting the public interest by providing
appropriate protection against the perils of flood losses and in
encouraging sound land use by minimizing exposure of
property to flood losses.

TEX. WATER CODE § 16.312.

The Ordinance—a fill-in-the-blank Federal Emergency Management

Agency (“FEMA”) template—is in accord. 1 RR, Exhibit 5, Article 1, Section

A [Tab 3]; TEXAS WATER DEVELOPMENT BOARD, SAMPLE FEMA ORDINANCES,

available at http://www.twdb.texas.gov/flood/insurance/participation.asp

(last visited April 1, 2015).

Under the heading “Statutory Authorization,” the Ordinance

expressly provides “The Legislature of the State of Texas has in (statutes)

VTS-Water Code 16.318 delegated the responsibility of local governmental

units to adopt regulations designed to minimize flood losses.” 1 RR, Exhibit

5, Article 1, Section A [Tab 3] (emphasis added). And the Floodplain

Administrator agrees the Ordinance addresses the “methods of reducing

flood losses.” 2 CR 855; 1 RR, Exhibit 5, Article 1 [Tab 3].

The Ordinance provides that each permit application shall include

particular information, including five specific information requirements in

Article 4, Section C(1)(a)-(e) for each permit application. 1 RR, Exhibit 5,

4
Article 4, Section C(1) [Tab 3]. The Ordinance further provides: “Approval

or denial of a Development Permit by the Floodplain Administrator shall be

based on all of the provisions of this ordinance and the following [ten]

relevant factors.” 1 RR, Exhibit 5, Article 4, Section C(2) [Tab 3].

The Maverick County Commissioners Court approved and adopted

the Ordinance on August 12, 1996, 1 RR, Exhibit 5 [Tab 3], appointing the

County Judge as the Floodplain Administrator. 1 RR, Exhibit 5, Article 4 [Tab

3]. In 1998, two years later, DRCP first sought, and received, a floodplain

development permit from Maverick County. 1 RR, Exhibit 6. Two decades

later, under the same Ordinance and substantially the same plan to conduct

surface mining operations in Maverick County, Maverick County has denied

DRCP’s application for a floodplain development permit.

C. DRCP Complies with the Ordinance, but Its Permit Application Is
Ignored.

Because a portion of DRCP’s planned mining operations would be in

a FEMA-designated floodplain, pursuant to the Ordinance, DRCP filed an

application for a floodplain development permit with the Maverick County

Floodplain Administrator on November 3, 2011. 1 RR, Exhibit 2.

5
 The Floodplain Administrator failed to acknowledge, respond, or

otherwise act on DRCP’s Permit Application for nine months. While DRCP

awaited action, however, FEMA revised its floodplain designations, and

issued a new floodplain map. 1 RR, Exhibit 3; 1 RR, Exhibit 1 at ¶ 3. To

address these revisions and FEMA’s new floodplain map, DRCP filed a

Supplemental Application for Floodplain Permit on September 4, 2013

(DRCP’s 2011 Permit Application and 2013 Supplemental Application will

be referred to collectively herein as DRCP’s “Permit Application”). 1 RR,

Exhibit 3.

The Permit Application contains a study by Multatech Engineering,

Inc. that is based on the 2011 FEMA DFIRM. 1 RR, Exhibit 3, at 2 [Tab 5].

Multatech was contracted by DRCP to evaluate the hydrologic and

hydraulic effects resulting from the construction of the Eagle Pass Mine, and

its associated ponds, access road, haul roads, collection ditches, railroad

loop, loading facility, and mining activity, where it encroaches the three

existing floodplains delineated on the 2011 FEMA DFIRM. 1 RR, Exhibit 3,

at 2 [Tab 5]. Paul Padilla, a licensed engineer and hydrology expert,

addressed (in detail) each requirement and factor set forth in the Ordinance.

1 RR, Exhibit 1 at ¶ 21; 1 RR, Exhibit 3, Executive Summary (2013
6
Supplemental Floodplain Analysis) [Tab 5]. In Mr. Padilla’s expert opinion,

DRCP’s Permit Application satisfies each requirement and factor outlined in

the Ordinance. 1 RR, Exhibit 1, at ¶ 21.

Yet again, however, the Floodplain Administrator failed to

acknowledge, respond, or otherwise act on DRCP’s Permit Application.

D. Two Years of “Deliberation” Begets a Two Sentence “Order”: “I Am
in Receipt of Dos Republicas Request for Floodplain Permit. After
Reviewing the Request, I Am Hereby Denying It.”

Finally, after more than two years of waiting for the Floodplain

Administrator to act on its Permit Application, on March 25, 2014, DRCP

filed a Petition for Writ of Mandamus seeking to compel the Floodplain

Administrator to do so. 1 CR 4-33. On April 3, 2014, the Floodplain

Administrator denied the Permit Application without stating any reason or

explanation for the denial. 1 RR, Exhibit 4 [Tab 4]. Indeed, the Floodplain

Administrator’s “Order” consists of only two sentences: “I am in receipt of

Dos Republicas request for floodplain permit. After reviewing the request,

I am hereby denying it.” 1 RR, Exhibit 4 [Tab 4].

Notwithstanding the Ordinance’s clear directive that “[a]pproval or

denial of a Development Permit by the Floodplain Administrator shall be

based on all of the provisions of this ordinance and the following [ten]
7
factors,” the Floodplain Administrator denied the Permit Application

without seeking the opinion of an engineer, or indeed, even considering

DRCP’s Permit Application and whether it meets the criteria stated in the

Ordinance. 1 RR, Exhibit 4 [Tab 4]; 1 RR, Exhibit 9 at 10:12-14 (“Q. Did any

engineers review DRCP’s floodplain permit application? A. No.”); 1 RR,

Exhibit 9 at 54:3-20 (“So that [Wilson & Company 2011 hydrology report]

wasn’t a basis for your decision? A. Right.”); 1 RR 56:23-57:2 (“Q. And was

this supplemental floodplain analysis a basis upon which you denied the

floodplain permit, or did you consider it when denying the floodplain

permit? A. No.”). Further, he denied the Permit Application without giving

DRCP notice or an opportunity to be heard.

Believing that the Floodplain Administrator’s actions are illegal and

arbitrary, DRCP amended its petition for writ of mandamus, and sought to

compel the Floodplain Administrator to issue the floodplain development

permit to DRCP. 1 CR 41-73.

8
E. The Floodplain Administrator Uses the Ordinance to Undermine
State-Issued Permits, Testifying that He Would Never Allow Mining
in the Floodplain Regardless of Whether the Permit Application Met
the Requirements of the Ordinance.

On October 2, 2014—six months after the denial—the Floodplain

Administrator freely admitted that the dispositive factor for his decision was

that DRCP planned to mine in the floodplain:

Q: There’s nothing DRCP could have put in that
application that was going to get it granted because
they were mining in the floodplain, is that right?

A: Yes, sir.

1 RR, Exhibit 9 at 29:21-25.

Q: And is there any way that DRCP can mine
within the floodplain and still get a permit?

A: Not that I would be comfortable with.

1 RR, Exhibit 9 at 28:12-14.

Q: . . . So again, it kind of boils down to DRCP
wants to mine in the floodplain, and there’s just no
way to get a floodplain permit application if you
want to mine in the floodplain, right?

A: Yes, sir.

1 RR, Exhibit 9 at 39:10-14. In fact, Appellees have confirmed that the

Floodplain Administrator was simply overriding the Railroad Commission

9
to prevent mining completely: “the County Judge was doing his job in

protecting this community from the Railroad Commission.” 2 CR 879-80.

Further, in his briefs and testimony, the Floodplain Administrator

insists, after issuing his denial letter, that he considered several factors not

found in the Ordinance when denying DRCP’s Permit Application,

including: “the best interest of the county,” his personal experiences, Texas

Coal Mining Regulations, and floodwater quality. 5 CR 3209-10 (Findings of

Fact Nos. 14, 15, 16, and 17).

F. In a Forgone Conclusion, the Trial Court Denies DRCP’s Petition for
Writ of Mandamus.

On October 9, 2014, the trial court conducted a full trial on the merits.

1 RR 1. While Appellant DRCP introduced evidence and called an expert

witness to present testimony in support of its request, the Floodplain

Administrator submitted no evidence and offered no witnesses at trial. 1 RR

31:12-13 (DRCP calling Paul Padilla to testify); 1 RR 4 (noting DRCP’s

exhibits 1-9, and showing Appellees submitted no exhibits); 1 RR 91-97

(Appellees’ presentation of argument only to trial court, presenting no

witnesses or evidence). In what seemed to be a forgone conclusion, the trial

court orally ruled that DRCP’s request for mandamus relief would be

10
denied, and issued a ruling to that effect the following day, October 10, 2014.

1 RR 105:18-21 (“I'm ready to rule. I find that the floodplain administrator

did not abuse his discretion in denying the application and therefore I deny

the writ of mandamus. That concludes this hearing); 5 CR 2940 [Tab 1].

On December 5, 2014, the trial court entered Findings of Fact and

Conclusions of Law. 5 CR 3207-12 [Tab 2]. In particular, despite the

Floodplain Administrator’s testimony that he did not consider the Permit

Application or the attached expert report, the trial court nevertheless found

that the Floodplain Administrator reviewed the Permit Application and

considered all of the provisions of the Ordinance. 5 CR 3208-10 [Tab 2]

(Finding of Fact Nos. 6, 8, 10, & 19). Moreover, the trial court found that the

Floodplain Administrator concluded that DRCP failed to satisfy three of the

factors contained in the Ordinance. Id.

Further, despite the Floodplain Administrator’s admission that he

considered factors outside of the ten exclusive factors contained in the

Ordinance, the trial court found that these outside factors—including

floodwater quality, “best interests of [Maverick] County,” state mining

regulations, and the Floodplain Administrator’s personal experiences—

were not “standing alone” bases for the Floodplain Administrator’s decision,
11
but, rather, were “mere reference[s]” to factors contained in the Ordinance.

5 CR 3209-10 [Tab 2] (Finding of Fact Nos. 14-17). DRCP timely filed this

appeal. 5 CR 3179-80 (DRCP’s Notice of Appeal, filed November 7, 2014).

SUMMARY OF THE ARGUMENT

It is no secret that a number of Maverick County residents are opposed

to DRCP’s mine. Perhaps because of this opposition, Appellees refused to

perform their duty to review DRCP’s Permit Application for two-and-a-half

years. And, in April 2014, when the Floodplain Administrator finally acted,

he denied the Permit Application in a two-sentence letter that provides no

basis or rationale for the denial. Indeed, he later testified that he did not

even consider the Permit Application or the expert study that accompanied

it. Nor did he consult any other expert opinion or other evidence. Rather,

his decision was based on the fact that DRCP wants to operate a mine.

Mandamus will lie to compel a county commissioners court and its

officials to act when they:

(1) fail to perform a purely ministerial act;

(2) fail to consider a factor the law directs them to consider; or

(3) consider an irrelevant factor.

12
Here, the Maverick County Commissioners Court and its Floodplain

Administrator did all three. Thus, the trial court erred by refusing to compel

the Floodplain Administrator to comply with the law.

The Floodplain Administrator failed to perform the purely ministerial

act of issuing a permit. DRCP submitted a Permit Application that satisfied

all the requirements of Article 4, Section C(1)-(2) of the Ordinance. As this

Court has recognized, “[w]here the [applicant] has done all that the statutes

and law demands, the authorized granting of a [] permit becomes a mere

ministerial duty.” City of Corpus Christi v. Unitarian Church of Corpus Christi,

436 S.W.2d 923, 927 (Tex. Civ. App.—Corpus Christi 1968, writ ref’d n.r.e.).

Thus, the trial court erred in refusing to issue a writ of mandamus to compel

the Floodplain Administrator to approve the Permit Application. Stolte v.

County of Guadalupe, No. 04-04-00083-CV, 2004 WL 2597443, at *4 (Tex.

App.—San Antonio Nov. 17, 2004, no pet.) (“[A] county’s authority to grant

or deny a plat application is limited by statute or other properly adopted

rules . . . . Therefore the County’s duty to grant the plat application was

ministerial in nature and the trial court erred in denying [the developer’s]

motion for summary judgment and his request for mandamus relief.”).

13
 The Floodplain Administrator failed to consider any factors the

Ordinance directed him to consider. The Floodplain Administrator’s two-

sentence denial of DRCP’s Permit Application fails to address any of the ten

factors contained in Article 4, Section C(2), conclusively establishing that the

Floodplain Administrator failed to consider any of the mandatory factors in

the Ordinance. See Pritchett v. Nathan Rodgers Const. & Realty Corp., 379 So.

2d 545, 547 (Ala. 1979) (it is an abuse of discretion to deny a permit

application, “without any statement of the reasons for denying the building

permit”).

The Floodplain Administrator considered irrelevant factors, not found

in the Ordinance. The Floodplain Administrator’s improper, post hoc

rationalizations demonstrate, at best, that he considered the best interest of

Maverick County, his personal experiences, floodwater quality, and mining

regulations, none of which are factors in the Ordinance. Bauer v. City of

Wheat Ridge, 513 P.2d 203, 204 (Colo. 1973) (en banc) (“The flood plain

ordinance establishes the criteria upon which the ‘special exception’ will be

granted. If the council believes that other reasons should be used in denying

an application, then the appropriate procedure is to amend the floodplain

14
ordinance. Once an applicant applies under the ordinance, only those

factors which apply generally to all applicants may be considered.”).

The Floodplain Administrator violated DRCP’s due process rights by

failing to give DRCP proper notice and afford it an opportunity to be heard.

Additionally, the Floodplain Administrator acted arbitrarily and

capriciously by failing to give DRCP proper notice and an opportunity to be

heard before denying the Permit Application. This failure denied DRCP its

due process rights and constitutes an abuse of discretion.

For these reasons, this Court should reverse the trial court’s judgment

and issue a writ of mandamus ordering Appellees to approve DRCP’s

Permit Application and issue the development permit to DRCP.

STANDARD OF REVIEW

A district court is vested with the power to exercise supervisory

control over decisions of a commissioners court. Vondy v. Comm’r Court of

Uvalde Cnty., 620 S.W.2d 104, 109 (Tex. 1981). A district court may issue a

writ of mandamus, requiring a public official—including a county judge or

a commissioners court—to do a certain act when the act is “ministerial and

nondiscretionary.” Id.; Withers v. Commissioners’ Court of Bandera County, 75

S.W.3d 528, 529 (Tex. App.—San Antonio 2002, no pet.) (“A writ of

15
mandamus will issue to compel a public official to perform a ministerial

act.”).

Moreover, “[e]ven in matters involving some degree of discretion, the

commissioners court may not act arbitrarily.” Vondy, 620 S.W.2d at 109;

Moffitt v. Town of S. Padre Island, No. 13-00-453-CV, 2001 WL 34615363, at *2

(Tex. App.—Corpus Christi Nov. 1, 2001, no pet.) (“However, mandamus

may issue in a proper case to correct a clear abuse of discretion by a public

official.”). Specifically, “[a] Commissioners Court abuses its discretion—

necessitating mandamus relief—when it either: (A) fails to perform a purely

ministerial act or (B) fails to consider a factor the Legislature directs it to

consider; or considers an irrelevant factor.” 5 CR 3211 [Tab 2]; City of El Paso

v. Public Util. Comm’n, 883 S.W.2d 179, 184 (Tex. 1994).

Although this action was a mandamus initiated at the trial court, it is

“a civil action subject to trial and appeal on substantive law issues and the

rules of procedure as any other civil suit.” Anderson v. City of Seven Points,

806 S.W.2d 791, 792 n.1 (Tex. 1991). Thus, the district court’s findings of fact

and conclusions of law shall be reviewed “in accordance with standards

generally applicable to a trial court’s findings and conclusions.” Moffitt, 2001

WL 34615363, at *2. Therefore, this Court must review the trial court’s legal
16
conclusions de novo and factual findings for legal and factual sufficiency. Id.

at *3.

As an initial matter, a mandamus petition, compelling a county official

to do a certain act, may be granted as a matter of law. Vondy, 620 S.W.2d at

108-09 (where Constitution required payment of salaries to constable and

commissioners court denied payment of salaries to constable, mandamus

could issue without assessment of facts); Santoya v. Pereda, 75 S.W.3d 487, 491

(Tex. App.—San Antonio 2002, pet. denied) (party demonstrated it was

entitled to mandamus relief as a matter of law). Here, because the

Floodplain Administrator failed to consider any factors (and at a minimum,

considered irrelevant factors), this case can be decided as a question of law.

Nevertheless, even if this Court must review the factual findings here,

an appellate court may disregard a trial court’s findings of fact as factually

insufficient where the trial court’s finding is “so contrary to the

overwhelming weight of the evidence as to be clearly wrong or unjust.”

Brack v. Island Park Estates, LLC, No. 13-06-698-CV, 2007 WL 4225576, at *3

(Tex. App.—Corpus Christi Nov. 29, 2007, no pet.).

Similarly, an appellate court may disregard a trial court’s findings

where they are legally insufficient—there is no evidence in the record to
17
support the trial court’s findings. Cavazos v. Bd. of Governors of Council of Co-

Owners of Summit Condominiums, No. 13-12-00524-CV, 2013 WL 5305237, at

*2 (Tex. App.—Corpus Christi Sept. 19, 2013, no pet.). An appellate court

should

sustain a legal sufficiency or no evidence challenge
when: (1) the record discloses a complete absence of
evidence of a vital fact; (2) the court is barred by rules
of law or of evidence from giving weight to the only
evidence offered to prove a vital fact; (3) the evidence
offered to prove a vital fact is no more than a mere
scintilla; or (4) the evidence establishes conclusively
the opposite of the vital fact.

Hooper v. Generations Cmty. Fed. Credit Union, No. 04-12-00080-CV, 2013 WL

2645111, at *2 (Tex. App.—San Antonio June 12, 2013, no pet.). Moreover,

“[e]vidence does not exceed a scintilla if it is so weak as to do no more than

create a mere surmise or suspicion that the fact exists.” Id. As described

below, many of the factual findings here are both legally and factually

insufficient and must be disregarded by this Court.

ARGUMENT

This Court should reverse the trial court’s refusal to issue a writ of

mandamus to compel the Floodplain Administrator to approve DRCP’s

Permit Application for each of the following independent reasons:

18
 ♦ The Floodplain Administrator failed to perform the purely
ministerial act of issuing a permit (Part I, infra);

♦ The Floodplain Administrator abused any discretion by failing
to consider any factors the Ordinance directed him to consider
(Part II.A, infra);

♦ The Floodplain Administrator abused any discretion by failing
to give any reason or explanation for his denial (Part II.B, infra);

♦ The Floodplain Administrator abused any discretion by
considering four irrelevant factors not found in the Ordinance
(Part II.C, infra);

♦ The Floodplain Administrator acted arbitrarily and capriciously
by denying DRCP due process (Part III, infra).

I. The Trial Court Erred By Failing to Compel the Floodplain
Administrator to Perform the Purely Ministerial Act of Approving
DRCP’s Permit Application.

Where, as here, a permit applicant has satisfied the statutory

requirements to obtain the permit, all that remains is the ministerial act of

issuing the permit. As discussed below, DRCP’s Permit Application

satisfied all the requirements and factors contained in the Ordinance. As a

result, the Floodplain Administrator had the ministerial duty to grant the

floodplain development permit. The trial court erred when it concluded

otherwise. 5 CR 3210-12 (Finding of Fact No. 20; Conclusion of Law Nos. 9,

10) [Tab 2].

19
 A. The Floodplain Administrator’s duty to approve an
application is purely ministerial and non-discretionary when
all of the criteria are met.

“The district court has appellate jurisdiction and general supervisory

control over the commissioners court, with the exceptions and regulations

prescribed by law.” TEX. GOV’T CODE § 24.020. A county judge—such as

Appellee Judge Saucedo here—is a member of the commissioners court

pursuant to Texas law. TEX. LOCAL GOV’T CODE § 81.001. Thus, the district

court may issue a writ of mandamus to compel the commissioners court or

other public official to perform a duty that there is a clear duty to perform.

In re Bailey, 975 S.W.2d 430, 432 (Tex. App.—Waco 1998, no pet.) (citing

O’Connor v. First Court of Appeals, 837 S.W.2d 94, 97 (Tex. 1992)). “Mandamus

will issue when there is a legal duty to perform a nondiscretionary,

ministerial act, a demand for performance of that act, and a refusal.” Id.

(citing Anderson v. City of Seven Points, 806 S.W.2d 791, 793 (Tex. 1991)).

An act is “ministerial” when “the law clearly spells out the duty to be

performed by the official with sufficient certainty that nothing is left to the

exercise of discretion.” Id. And, while county commissioners have broad

responsibilities to conduct county business, the “legal basis for any action

taken must be grounded ultimately in the Texas Constitution or statutes.”
20
Integrity Group, Inc. v. Medina County Comm’rs Court, No. 04-03-00413-CV,

2004 WL 2346620, at *1 (Tex. App.—San Antonio Oct. 20, 2004, pet. denied).

Where a permit applicant has satisfied the requirements to obtain the permit,

all that remains is the ministerial act of issuing the permit. Stolte v. County

of Guadalupe, No. 04-04-00083-CV, 2004 WL 2597443, at *4 (Tex. App.—San

Antonio Nov. 17, 2004, no pet.). As this Court has recognized, a “permit

must be granted . . . where the applicant has fulfilled all the requirements

required by law. Mandamus will issue to compel the issuing of building

permit that has been withheld without lawful reason.” City of Corpus Christi

v. Unitarian Church of Corpus Christi, 436 S.W.2d 923, 927 (Tex. Civ. App.—

Corpus Christi 1968, writ ref’d n.r.e.). This Court further noted that “[w]here

the [applicant] has done all that the statutes and law demands, the

authorized granting of a building permit becomes a mere ministerial duty.”

Id.

The Ordinance outlines “permit procedures” for granting or denying

a permit application. 1 RR, Exhibit 5 [Tab 3]. Article 4, Sections C(1)-(2) are

the only provisions of the Ordinance that are applicable to determine

whether a floodplain permit applicant has satisfied the Ordinance. 1 RR,

Exhibit 9 at 71:11-13 (“Q. And were there any other provisions in the
21
Ordinance that affected that decision? A. None that I could see.”). The

Ordinance provides five specific requirements in Article 4, Section C(1)(a)-(e)

that every permit application must contain. 1 RR, Exhibit 5 [Tab 3].

The Ordinance also includes a list of ten factors the Floodplain

Administrator must consider in evaluating a permit application. 1 RR,

Exhibit 5, Article 4, Section C(2) (“[a]pproval or denial of a Development

Permit by the Floodplain Administrator shall be based on all of the

provisions of this ordinance and the following relevant factors”). Thus, the

Ordinance requires the Floodplain Administrator to consider the following

ten factors when approving or denying the application:

a. The danger to life and property due to flooding or erosion
damage;
b. The susceptibility of the proposed facility and its contents
to flood damage and the effect of such damage on the
individual owner;
c. The danger that materials may be swept onto other lands
to the injury of others;
d. The compatibility of the proposed use with existing and
anticipated development;
e. The safety of access to the property in times of flood for
ordinary and emergency vehicles;
f. The costs of providing governmental services during and
after flood conditions including maintenance and repair of
streets and bridges, and public utilities such as sewer, gas,
electrical and water systems;
22
 g. The expected heights, velocity, duration, rate of rise, and
sediment transport of the flood waters and the effects of
wave action, if applicable, expected at the site;
h. The necessity to the facility of a waterfront location, where
applicable;
i. The availability of alternative locations, not subject to
flooding or erosion damage, for the proposed use;
j. The relationship of the proposed use to the comprehensive
plan for that area.

1 RR, Exhibit 5, Article 4, Section C(2) [Tab 3]. The Maverick County

Commissioners Court promulgated the Ordinance pursuant to legislative

authority under the TEXAS WATER CODE § 16.318. Under the Ordinance, the

Floodplain Administrator “shall” consider the ten factors outlined in Article

4, Section C(2). 1 RR, Exhibit 5, Article 4. And when those factors—the rules

established by the Maverick County Commissioners Court—are met, only

the ministerial duty of issuing the permit remains.

DRCP satisfied each of these ten factors as a matter of law. Indeed, the

only evidence introduced mandates the conclusion that the permit should

have been approved. Nevertheless, the trial court erroneously found that

the Floodplain Administrator properly determined that DRCP failed to

satisfy three of the ten factors.

23
 B. DRCP’s Permit Application satisfies the Ordinance’s
requirements as a matter of law.

There is no dispute that DRCP’s Permit Application satisfies the five

requirements found in Section C(1) of the Ordinance. Indeed, the Floodplain

Administrator testified that DRCP satisfied the five requirements. 1 RR,

Exhibit 9 at 46:7-9 (“Q. DRCP met the requirements in C(1)(a) through (e),

correct? A. Yes, sir.”); 63:7-11 (“Q. And with respect to Dos Republicas, is

there any quarrel with Dos Republicas regarding the requirements part of

the ordinance and their satisfaction of it? A. No.”).

C. DRCP’s Permit Application satisfies the Ordinance’s ten
factors as a matter of law.

The only dispute appears to be whether DRCP’s Permit Application

satisfies the first three of the ten factors in the Ordinance. As discussed

below, the evidence demonstrates that—as a matter of law—DRCP’s Permit

Application satisfies each of the ten factors, including the first three. DRCP’s

Permit Application was prepared and submitted by Paul Padilla, a licensed

engineer in the State of Texas and Vice President of Multatech Engineering,

Inc. 1 RR, Exhibit 1 at ¶ 2; 1 RR, Exhibit 3 [Tab 5]. Mr. Padilla has been an

engineer for approximately thirty-one years and is a member of the Texas

Society for Professional Engineers, American Public Works Association, and

24
the Society of American Military Engineers. 1 RR 32:18-23; 33:4-6. Mr.

Padilla addressed each the factors in the Ordinance in detail and assessed

whether DRCP’s Permit Application complied with these factors. 1 RR,

Exhibit 1 at ¶ 21; 1 RR, Exhibit 3 (2013 Supplemental Floodplain Analysis)

[Tab 5]. Further, Mr. Padilla testified at trial about his opinions contained in

the Permit Application. 1 RR 40-49; 1 RR, Exhibit 3 (2013 Supplemental

Floodplain Analysis) [Tab 5]. In Mr. Padilla’s unchallenged, expert opinion,

DRCP’s Permit Application satisfies each of the Ordinance’s factors. 1 RR,

Exhibit 1 at ¶ 21; 1 RR, Exhibit 3 (2013 Supplemental Floodplain Analysis)

[Tab 5].

The Floodplain Administrator, on the other hand, testified that he did

not consult any other expert or obtain any other evidence with respect to any

of the ten mandatory factors, including factors (a)-(c). 1 RR, Exhibit 9 at

10:12-14 (“Q. Did any engineers review DRCP’s floodplain permit

application? A. No.”); 1 RR, Exhibit 9, at 49:18-23 (Q. “[W]as there any other

evidence that you considered when denying the permit? A. . . . one of the

major factors to me is – is what I’ve actually seen in that community, what

I’ve seen happen in the past with prior flooding.”); 1 RR, Exhibit 9 at 46:14-

22 (when asked what evidence he had to support his denial, the Floodplain
25
Administrator merely responded with “what’ I’ve seen in the past”). Nor

did the Floodplain Administrator introduce any evidence at trial. 1 RR 4.

As discussed below, DRCP’s unrebutted evidence establishes as a

matter of law that the Permit Application satisfies the Ordinance’s ten

mandatory factors (Part 1). Further, the trial court’s finding to the contrary

is not supported by factually or legally sufficient evidence (Part 2).

1. DRCP’s application and trial testimony presented
unrebutted expert opinion that DRCP’s mining plan
satisfies each of the ten factors, including (a)-(c).

Mr. Padilla addressed in detail each of the Ordinance’s ten factors and

demonstrated that DRCP’s Permit Application satisfied each factor. 1 RR,

Exhibit 1 at ¶ 21; 1 RR, Exhibit 3 (2013 Supplemental Floodplain Analysis)

[Tab 5]. As only the first three factors appear to be contested, only those

factors are addressed in detail below.

a. The danger to life and property due to
flooding or erosion damage.

The first factor requires the Floodplain Administrator to consider any

danger to life and property due to flooding or erosion damage. DRCP’s

Permit Application and Mr. Padilla’s unrebutted expert testimony establish

that under DRCP’s mining plan, there is a decreased risk of damage caused

26
by flooding or erosion due to the proposed sedimentation ponds. 1 RR,

Exhibit 3, at 5 [Tab 5]; 1 RR, Exhibit 1 at ¶ 13; 1 RR 40:14-41:21. Specifically,

DRCP’s Permit Application and Mr. Padilla’s unrebutted expert testimony

establish that DRCP’s proposed mining plan will have a zero net effect on

flooding in the Elm Creek watershed outside of the mining project area. 1

RR 53:21-23. The Floodplain Administrator did not consider any evidence

or introduce any evidence at trial to the contrary. Accordingly, the evidence

conclusively establishes that the consideration of the first factor favors

granting DRCP’s Permit Application. 1 RR 41:19-21.

b. The susceptibility of the proposed facility
and its contents to flood damage and the
effect of such damage on the individual
owner.

The second factor evaluates the risk of flood damage to the proposed

facility itself. DRCP’s Permit Application, as well as Mr. Padilla’s

unrebutted expert testimony, establish as a matter of law that there is very

minimal risk of property damage or any other damage to the property

owner. 1 RR, Exhibit 5, Article 4, Section C(2)(b) [Tab 3]; 1 RR, Exhibit 3, at

5 [Tab 5]; 1 RR, Exhibit 1 at ¶ 14. Again, the Floodplain Administrator cannot

point to any evidence that there is any substantial risk to DRCP’s facility

27
from flood damage. Accordingly, the evidence conclusively establishes that

the second factor favors granting DRCP’s Permit Application. 1 RR 42:19-

20.

c. The danger that materials may be swept onto
other lands to the injury of others.

The evidence also conclusively establishes that the third factor—the

danger that materials may be swept onto other lands to the injury of others—

strongly favors approving DRCP’s Permit Application. The Permit

Application and Mr. Padilla’s unrebutted expert testimony establish that

foreign debris is less likely to be swept downstream with DRCP’s mining

plan because the use of sedimentation ponds contains the flow within the

channel. 1 RR, Exhibit 3, at 5 [Tab 5]; 1 RR, Exhibit 1 at ¶ 15. Furthermore,

DRCP’s Permit Application and Mr. Padilla’s unrebutted expert testimony

establish that the sediment load leaving the mine area will be lower if DRCP

conducts its proposed mining operation with sedimentation ponds than if

DRCP does nothing at all in the floodplain. 1 RR 54:1-2. Again, the

Floodplain Administrator has not pointed to any evidence that DRCP’s

proposal would increase any danger that materials will be swept onto other

lands or injure others. Thus, because the evidence conclusively establishes

28
that DRCP’s proposal will actually decrease rather than increase this risk,

consideration of the third factor favors granting DRCP’s Permit Application.

1 RR 43:2-9.

d. The evidence conclusively establishes that
DRCP’s Permit Application meets the
remaining factors of the Ordinance.

Appellees do not appear to dispute the fact that DRCP’s Permit

Application meets the Ordinance’s remaining seven factors. And the trial

court did not find that the Permit Application failed to meet them. 5 CR

3208-09 (Findings of Fact Nos. 6, 8, and 10 addressing factors (a)-(c) only).

Indeed, the undisputed evidence demonstrates that DRCP meets these

factors as a matter of law. DRCP’s Permit Application and Mr. Padilla’s

unrebutted expert testimony addresses each of these factors and establishes

that each favors approval of the Permit Application:

 The compatibility of the proposed use with existing and
anticipated development. 1 RR, Exhibit 5, Article 4, Section
C(2)(d) [Tab 3]; 1 RR, Exhibit 3, at 5 [Tab 5]; 1 RR, Exhibit 1 at ¶
16; 1 RR 43:16-44:19.

 The safety of access to the property in times of flood for ordinary
and emergency vehicles. 1 RR, Exhibit 5, Article 4, Section
C(2)(e) [Tab 3]; 1 RR, Exhibit 3, at 5 [Tab 5]; 1 RR, Exhibit 1 at ¶
17; 1 RR 44:20-45:11.

29
  The costs of providing governmental services during and after
flood conditions including maintenance and repair of streets and
bridges, and public utilities and facilities such as sewer, gas,
electrical and water systems. 1 RR, Exhibit 5, Article 4, Section
C(2)(f) [Tab 3]; 1 RR, Exhibit 3, at 5-6 [Tab 5]; 1 RR, Exhibit 1 at ¶
18; 1 RR 45:12-46:8.

 The expected heights, velocity, duration, rate of rise, and
sediment transport of the flood waters and the effects of wave
action, if applicable, expected at the site. 1 RR, Exhibit 5, Article
4, Section C(2)(g) [Tab 3]; 1 RR, Exhibit 3, at 6 [Tab 5]; 1 RR,
Exhibit 1 at ¶ 19; 1 RR 46:9-47:10.

 The necessity to the facility of a waterfront location, where
applicable. 1 RR, Exhibit 5, Article 4, Section C(2)(h) [Tab 3]; 1
RR, Exhibit 3, at 6 [Tab 5]; 1 RR, Exhibit 1 at ¶ 19; 1 RR 47:17-48:2.

 The availability of alternative locations, not subject to flooding
or erosion damage, for the proposed use. 1 RR, Exhibit 5, Article
4, Section C(2)(i) [Tab 3]; 1 RR, Exhibit 3, at 6 [Tab 5]; 1 RR,
Exhibit 1 at ¶ 19; 1 RR 48:3-19.

 The relationship of the proposed use to the comprehensive plan
for that area. 1 RR, Exhibit 5, Article 4, Section C(2)(j) [Tab 3]; 1
RR 48:20-49:13; 1 RR, Exhibit 3, at 6 [Tab 5]; 1 RR, Exhibit 1 at
¶ 20.

2. The trial court’s erroneous findings that the Floodplain
Administrator properly denied the permit based on
factors (a)-(c) are unsupported by any evidence.

Despite this evidence, the trial court erroneously found that (1) the

Floodplain Administrator considered factors (a)-(c), and (2) the Floodplain

Administrator properly concluded that DRCP failed to satisfy those factors.

These findings are wholly unsupported by the evidence in this case.
30
 a. There is no legally or factually sufficient
evidence the Floodplain Administrator even
considered factors (a)-(c), much less that he
found that DRCP’s Permit Application failed
to satisfy them.

In Findings of Fact 6 and 19, the trial court erroneously found that the

Floodplain Administrator considered all provisions of the Ordinance and

denied the Permit Application based on concerns with factors (a)-(c). 1 5 CR

3208, 3210 [Tab 2]. But these findings are not supported by legally or

factually sufficient evidence; there is less than a scintilla of evidence that the

Floodplain Administrator considered factors (a)-(c), the provisions of the

Ordinance, or any other relevant factors, when making his decision to deny

DRCP’s Permit Application.

Indeed, the only indication that the Floodplain Administrator

purportedly considered the factors in Article 4, Section C(2), is a conclusory,

self-serving statement by the Floodplain Administrator himself that is belied

by his own testimony. 1 RR, Exhibit 9 at 46:10-12. When asked what

evidence the Floodplain Administrator relied upon, supporting the denial

1 Conclusion of Law Number 3 also includes these legally insufficient factual
findings. 5 CR 3211 (Conclusion of Law No. 3) [Tab 2]. To the extent that Conclusion of
Law Number 3 contains these same factual findings, it is likewise legally and factually
insufficient.

31
based on these three factors, he could point to no relevant evidence—no

opinions from engineers or other professionals, no other hydrological

studies, and could not name a single contaminant that he was purportedly

concerned about. 1 RR, Exhibit 9 at 46:13-48:25; 1 RR, Exhibit 9 at 10:12-14

(“Q. Did any engineers review DRCP’s floodplain permit application? A.

No.”); 1 RR, Exhibit 9 at 34:17-23 (“Q. . . . And what would be those

contaminants that would be in the floodwater? A. I wouldn’t be familiar

with the technical term to say what they are, sir. Q. Okay. Is there a

nontechnical term that you can throw out or just anything – A. No.”).

The failure to consult an engineer or any other expert certainly

suggests arbitrary and capricious action. Mobile County v. City of Saraland,

501 So. 2d 438, 440 (Ala. 1986) (finding permit denial was arbitrary and

capricious where, among other issues, “the city did not consult an expert

until after the petition for mandamus was filed by the county” and the

“decision appear[ed] not to have been based on any expert opinion”).

Moreover, this testimony—without any evidence or other support—does no

more than “create a mere surmise or suspicion” that the Floodplain

Administrator considered these factors. Mass Mktg., Inc. v. Gaines, 70 S.W.3d

261, 264 (Tex. App.—San Antonio 2001, pet. denied). As such, it was error
32
for the court to find that the Floodplain Administrator considered factors (a)-

(c) without any evidence.

In fact, the opposite is true—the Floodplain Administrator considered

none of the factors outlined in the Ordinance. The entirety of the Floodplain

Administrator’s denial of DRCP’s Permit Application is comprised of two

sentences that offered no reasoning for his determination, whether based on

the mandatory factors identified in the Ordinance, or otherwise. 1 RR,

Exhibit 4 [Tab 4]. Indeed, it would have been impossible for the Floodplain

Administrator to consider whether DRCP’s Permit Application satisfied the

mandatory factors identified in the Ordinance, because the Floodplain

Administrator admits he never considered DRCP’s pending Permit

Application prior to denying it. 1 RR, Exhibit 9 at 54:3-20, 56:23-57:2 (“Q.

And was this supplemental floodplain analysis a basis upon which you

denied the floodplain permit, or did you consider it when denying the

floodplain permit? A. No.”).

Because these findings are unsupported by legally or factually

sufficient evidence, this Court should disregard them. As discussed above,

the undisputed evidence demonstrates that the Permit Application satisfies

each of the Ordinance’s provisions.
33
 b. No legally or factually sufficient evidence
supports the trial court’s finding that the
Floodplain Administrator raised concerns
about factors (a)-(c) and gave DRCP an
opportunity to respond.

In Finding of Fact 8, the trial court apparently concluded that, after the

Floodplain Administrator purportedly considered factors (a)-(c), he raised

his concerns regarding those factors with DRCP, which failed to address

those concerns. 5 CR 3208-09 [Tab 2]. This finding is wrong in every way

possible. Not only did the Floodplain Administrator not consider factors (a)-

(c), he did not raise any concerns with DRCP or give DRCP a chance to

respond to those concerns. See Part III, infra. Rather, after more than two

years of delay, and at the prompting of a mandamus action, the Floodplain

Administrator summarily denied the Permit Application in a two-sentence

letter that gives no indication of any concerns with any provision of the

Ordinance. 1 RR, Exhibit 4 [Tab 4]. The trial court’s finding is not supported

by factually or legally sufficient evidence and should be disregarded.

c. No legally or factually sufficient evidence
supports the trial court’s finding that DRCP
failed to address factors (a)-(c).

In Finding of Fact 10, the trial court erroneously found that DRCP

failed to address factors (a)-(c). 5 CR 3209 [Tab 2]. Specifically, the trial court

34
found that Mr. Padilla failed to demonstrate that his analysis “considered

the specific rainfall events Maverick County is and has been susceptible to

which have caused significant flooding and damage in Maverick County.”

5 CR 3209 (Finding of Fact No. 11) [Tab 2]. The trial court also found that

Mr. Padilla failed to demonstrate that “he considered the contaminants

and/or sediment contained in the sedimentation ponds that will overflow in

the event of a flood event in Maverick County.” 5 CR 3209 (Finding of Fact

No. 12) [Tab 2]. Compounding this factual error, the trial court erroneously

concluded that the “Floodplain Administrator denied DRCP’s permit based

on the concern that if the permit was approved, the occurrence of a flooding

event (such as the flooding events experienced by Maverick County in the

past) will carry sediment and/or contaminants downstream into the homes

of Maverick County citizens and into Elm Creek.” 5 CR 3210 (Finding of

Fact No. 18) [Tab 2].

None of these findings is supported by legally or factually sufficient

evidence. An appellate court should sustain a no evidence, or legal

insufficiency point, when the record discloses one of the following

circumstances: “a complete absence of evidence of a vital fact . . . [or] the

35
evidence establishes conclusively the opposite of a vital fact.” Thomas v.

Casale, 924 S.W.2d 433, 435 (Tex. App.—Fort Worth 1996, writ denied).

First, each of these findings of fact are inherently built on two faulty,

underlying premises. Findings of Fact Numbers 11 and 18 necessarily imply

that there are “specific rainfall events Maverick County is and has been

susceptible to which have caused significant flooding and damage in

Maverick County.” 5 CR 3209-10 [Tab 2]. There is no evidence in the record

of any specific flood events that Mr. Padilla allegedly should have

considered. At trial, Appellees merely posed hypothetical questions to Mr.

Padilla without providing proof of underlying rain events (which was

appropriately objected to for lack of foundation at the hearing). E.g., 1 RR

66:7-10; 1 RR 66:13-17. Because there is a complete absence of a vital fact—

proof of specific rain events Mr. Padilla allegedly should have addressed—

the evidence is legally insufficient to support these findings. Thomas, 924

S.W.2d at 435.

Further, the trial court’s Findings 12 and 18 seemingly equate sediment

and contaminants, asserting that Paul Padilla did not consider either. 5 CR

3209-10 [Tab 2]. But the evidence conclusively establishes the opposite—

Paul Padilla did consider sediment in his analysis of DRCP’s development
36
plan. 1 RR 38:10-12 (“Q. So your analysis includes consideration of certain

sedimentation ponds as capturing water and sediment; correct? A. That’s

correct.”); 1 RR 46:25-47:1 (In Mr. Padilla’s opinion, DRCP’s plan will result

in a “[d]ecrease in sediment transport.”); 1 RR 60:25-61:1 (explaining that

DRCP’s plan “would reduce sediment” coming out of the mine). Because

the evidence conclusively establishes that Mr. Padilla considered

sediment—and concluded that the sediment leaving the mine would

decrease under DRCP’s development plan—the trial court erred in

concluding that Mr. Padilla did not consider sediment in his analysis.

Thomas, 924 S.W.2d at 435.

Similarly, Findings of Fact 12 and 18 imply that there are contaminants

“contained in the sedimentation ponds that will overflow in the event of a

flood event in Maverick County.” 5 CR 3209-10 [Tab 2]. First and foremost,

the Floodplain Administrator could not consider any alleged contaminants

in the floodwater because TCEQ has exclusive authority over floodwater

quality. Infra, Part II.C.3. Second, Appellees wholly failed to establish that

contaminants will be contained in the sedimentation ponds. Likewise,

Appellees failed to establish that the sedimentation ponds will overflow “in

the event of a flood.” At most, Appellees established that coal “ha[s] sulfur
37
in it” and sulfur “could be a contaminant.” 1 RR 67:15-22. But there was no

proof that DRCP’s sedimentation ponds would contain contaminants. And,

there was no proof that contaminants would be carried “downstream into

the homes of Maverick County citizens and into Elm Creek.” 1 RR, Exhibit

9 at 10:12-14 (Q. . . . Did any engineers review DRCP’s floodplain permit

application? A. No.”). To the contrary, the Floodplain Administrator merely

raised a concern of the “possibility of any contamination,” but could not

identify any particular contaminants or contamination that might occur

under DRCP’s mining plan. 1 RR, Exhibit 9 at 34:10-23. Again, because there

is a complete absence of a vital fact underlying Findings of Fact 12 and 18,

the evidence is legally insufficient to support these findings. Thomas, 924

S.W.2d at 435.

Moreover, Findings of Fact Numbers 10, 11, 12, and 18 are likewise

factually insufficient because, as outlined above, these findings are “so

contrary to the overwhelming weight of the evidence as to be clearly wrong

or unjust.” Brack v. Island Park Estates, LLC, No. 13-06-698-CV, 2007 WL

4225576, at *3 (Tex. App.—Corpus Christi Nov. 29, 2007, no pet.).

* * * * *

38
 Because DRCP’s Permit Application satisfies the Ordinance’s

requirements and factors as a matter of law, the trial court erred when it

found that the Floodplain Administrator did not have the ministerial duty

to approve DRCP’s Permit Application.

II. The Floodplain Administrator Abused Any Discretion by Failing to
Base his Decision on the Factors Mandated by the Ordinance.

To the extent the Ordinance affords the Floodplain Administrator any

discretion, the Floodplain Administrator clearly abused that discretion. A

commissioners court abuses its discretion—necessitating mandamus relief—

when it fails to consider a factor the Legislature directs it to consider. City of

El Paso v. Public Util. Comm’n, 883 S.W.2d 179, 184 (Tex. 1994); Stolte v. County

of Guadalupe, No. 04-04-00083-CV, 2004 WL 2597443, at *1 (Tex. App.—San

Antonio Nov. 17, 2004, no pet.). As discussed below, the Floodplain

Administrator failed to consider any of the ten factors that the Ordinance

mandates that he must consider in evaluating a permit application. Indeed,

his two-sentence order denying DRCP’s Permit Application failed to give

any reason or explanation for the denial, much less any consideration of the

mandatory factors. 1 RR, Exhibit 4 [Tab 4]. In its entirety, the order provides:

“I am in receipt of Dos Republicas Request for Floodplain Permit. After

39
reviewing the Request, I am hereby denying it.” Id. As the Alabama

Supreme Court has stated, it is an abuse of discretion to deny a permit

application, “without any statement of the reasons for denying the building

permit.” Pritchett v. Nathan Rodgers Const. & Realty Corp., 379 So. 2d 545, 547

(Ala. 1979). Moreover, the Floodplain Administrator readily admitted that

he did not even review DRCP’s Permit Application.

A. The failure to consider mandatory factors constitutes an abuse
of discretion.

The Ordinance provides: “Approval or denial of a Development

Permit by the Floodplain Administrator shall be based on all of the

provisions of this ordinance and the following [ten] relevant factors.” 1 RR,

Exhibit 5, at Article 4, Section C(2) [Tab 3]. Contrary to the express terms of

the Ordinance, however, the Floodplain Administrator failed to consider any

of the ten factors. Indeed, it would have been impossible for the Floodplain

Administrator to consider the ten factors; the Floodplain Administrator

willingly admitted he did not even review DRCP’s Permit Application,

violating Article 4, Section B(2) of the Ordinance, which provides: “the

Floodplain Administrator shall . . . [r]eview permit applications.” 1 RR,

Exhibit 5, Article 4, Section B(2) [Tab 3]; 1 RR 56:23-57:2 (“Q. And was this

40
supplemental floodplain analysis a basis upon which you denied the

floodplain permit, or did you consider it when denying the floodplain

permit? A. No.”); 1 RR 54:3-10, 19-20 (Floodplain Administrator admitting

that he did not consider DRCP’s 2011 permit application prior to denying it,

and it was not a basis for his decision).

Moreover, the Floodplain Administrator’s two-sentence denial letter

demonstrates that his decision was not based upon the consideration of any

factors in the Ordinance. 1 RR, Exhibit 4 [Tab 4]. The absence of any

additional commentary is telling—none of the ten mandatory factors located

in Article 4, Section C(2) are cited, referenced, or otherwise identified in this

denial. Id. Why? The answer is simple. These mandatory factors were not

considered. In addition, the Floodplain Administrator did not consult an

engineer or any other expert before denying DRCP’s Permit Application,

further indicating that his denial was without regard to the ten mandatory

factors and, thus, was arbitrary and capricious. Mobile County v. City of

Saraland, 501 So. 2d 438, 440 (Ala. 1986) (finding permit denial was arbitrary

and capricious where, among other issues, “the city did not consult an expert

until after the petition for mandamus was filed by the county” and the

“decision appear[ed] not to have been based on any expert opinion”).
41
 B. The Floodplain Administrator was required to provide an
explanatory order with reasons for his denial.

The Floodplain Administrator has repeatedly asserted that he was not

required to explain the reasons for his denial. E.g., 2 CR 873 (“There is no

provision in the County Floodplain Damage Prevention Ordinance to

provide a detailed explanation of any permit denial.”); 2 CR 879 (“The fact

that Defendants’ denial was brief and not to the liking to the Plaintiff is not

reason [sic] for a mandamus nor is it abuse of discretion.”). But the law is

clear that the Floodplain Administrator must explain his reasons for denying

a permit and that the statutory sufficiency of the denial may be reviewed

solely on the reasons stated in the order.

1. Meaningful judicial review necessitates that the
Floodplain Administrator’s order provide the
reasons for his denial.

It is beyond dispute that a district court may exercise judicial review

of commissioners court decisions. Comm’rs Court of Titus Cnty. v. Agan, 940

S.W.2d 77, 80 (Tex. 1997); TEX. GOV’T CODE § 24.020 (“The district court has

appellate jurisdiction and general supervisory control over the

commissioners court, with the exceptions and regulations prescribed by

law.”). As the Texas Supreme Court explained, “[o]nce the commissioners

42
court acts, the district court may review the commissioners’ orders to

determine if they are arbitrary, or otherwise constitute an abuse of

discretion.” Ector County v. Stringer, 843 S.W.2d 477, 479 (Tex. 1992). This

judicial review necessarily “implies a power to require the [Floodplain

Administrator] to supply any reasons or explanations necessary for the

reviewing court to understand the [Floodplain Administrator’s] final order”

so that there may be “meaningful judicial review” rather than a “charade of

the real thing.” City of El Paso v. El Paso Elec. Co., 851 S.W.2d 896, 900 (Tex.

App.—Austin 1993, writ denied). Without a written order, judicial review

is impossible, whether a court is reviewing the decision of a state agency, a

political subdivision, or a commissioners court.

As the Texas Supreme Court has plainly stated, an explanatory order

is essential for judicial review: “We may consider only what was written by

the Commission in its order, and we must measure its statutory sufficiency

by what it says.” Morgan Drive Away, Inc. v. R.R. Comm’n of Texas, 498 S.W.2d

147, 152 (Tex. 1973); see also Amtel Commc’ns, Inc. v. Public Util. Comm’n, 687

S.W.2d 95, 106 (Tex. App.—Austin 1985, no writ) (quoting SEC v. Chenery

Corp., 332 U.S. 194, 196-97 (1946) (the “order must clearly and explicitly set

forth the ground upon which its determination is based so that a reviewing
43
court may know and understand that basis”). Indeed, it would be contrary

to public policy to allow any permitting body—a political subdivision,

commissioners court, Floodplain Administrator, or otherwise—to evade

judicial review by condoning and affirming the issuance of permit denials

devoid of any explanation whatsoever.

2. Post hoc rationalization cannot cure the absence of
reasons in the Floodplain Administrator’s two-
sentence denial letter.

This Court may review the Floodplain Administrator’s determination

only upon the bases provided in his decision. See Madden v. Tex. Bd. of

Chiropractic Examiners, 663 S.W.2d 622, 626 n.3 (Tex. App.—Austin 1983, writ

ref’d n.r.e.) (“We may in this instance evaluate the Board’s final order solely

upon the bases stated therein.”). As the Austin Court of Appeals explained

in Amtel Commc’ns, Inc. v. Public Util. Comm’n, 687 S.W.2d 95, 106 (Tex.

App.—Austin 1985, no writ): “A reviewing court must judge the propriety

of [agency] action solely by the grounds invoked by the agency. If those

grounds are improper, the reviewing court may not uphold the agency order

on a theory that the agency’s determination may be sustained on valid

grounds not invoked by the agency in its order.”

44
 Justifications for government action provided “after the fact,”

constitute improper, “post hoc rationalizations” of that action, which courts

may not consider. Nucor Steel – Tex. v. PUC, 363 S.W.3d 871, 878 n.2 (Tex.

App.—Austin 2012, no pet.) (although Commission did not engage in it,

court recognized that it should “disregard” post hoc rationalizations). As the

Fifth Circuit informs us in Luminant Generation Co., LLC v. United States EPA,

675 F.3d 917, 925 (5th Cir. 2012): “We must disregard any post hoc

rationalizations of the [agency’s] action and evaluate it solely on the basis of

the agency’s stated rationale at the time of its decision.” See also Griggs v.

United States, 253 F. App’x 405, 412 n.7 (5th Cir. 2007) (“Reference to other

reasons for the decision . . . offered for the first time on appeal is a ‘post hoc

rationalization’ advanced by an agency seeking to defend past agency

decision against attack.” For an “agency’s discretionary order [to] be

upheld, if at all,” it must be “on the same basis articulated in the order by

the agency itself.”); Mitchell Energy Corp. v. Fed. Energy Regulatory Comm’n,

651 F.2d 414, 419 (5th Cir. 1981) (same).

Ignoring this authority, the trial court concluded that “Defendants

were not required to provide the reasons for denying DRCP’s Development

Permit Application and Supplemental Application at the time of issuing the
45
denial, and the failure to do so, did not constitute an abuse of discretion.” 5

CR 3211 (Conclusion of Law No. 4) [Tab 2]. In light of this authority, the trial

court erred in rendering this conclusion of law and refusing to issue

mandamus on this basis.

3. An explanatory order with reasoning is even more
important when conflicting permit decisions are
reached.

Notwithstanding this recent ordeal, the Floodplain Administrator

approved DRCP’s application for a floodplain development permit in 1998.

1 RR, Exhibit 6. Despite few differences between then and now, however,

the Floodplain Administrator denied DRCP’s Permit Application in 2014. 1

RR, Exhibit 4 [Tab 4]. The conflicting grant and denial of DRCP’s Permit

Applications in 1998 and 2014, respectively, demonstrate both the need for

an explanatory order in this matter, and that the Floodplain Administrator’s

denial in 2014 was arbitrary and capricious.

Long-standing Texas case law reflects that a governmental entity

exercising its permit powers acts arbitrarily and capriciously where that

entity has both granted permits and denied permits for substantially similar

applications. Austin v. Deats, 32 S.W.2d 685, 687 (Tex. Civ. App.—Austin

1930, no writ) (finding city council’s denial of permit application was
46
arbitrary and capricious where council granted similar permit applications,

noting that “[t]he city council dilly-dallied with appellee’s applications for

the permit, and then refused them without giving any reason for the

action”); see also Austin v. Nelson, 45 S.W.2d 692, 695 (Tex. Civ. App.—Austin

1931, no writ) (“While it is true that a city council has the right to enact and

enforce in a lawful manner proper regulatory ordinances for public health,

safety, and comfort, still it is equally true that courts may review

unwarranted and arbitrary interference with lawful property rights or

business by a city council” and a decision to treat businesses that apply for

permits differently “must rest upon some reasonable and just

difference . . . and can never be made arbitrarily and without any such basis.”

(internal citations omitted)).

And the same principle applies to a business that has requested

multiple permits, where previous permits were granted. For example, in

Texas Alcoholic Beverage Comm’n v. Good Spirits, Inc., 616 S.W.2d 411 (Tex.

App.—Waco 1981, no writ), Good Spirits had already obtained seven

permits with the Texas Alcoholic Beverage Commission (“TABC”), yet upon

similar application for the eighth permit, the TABC denied the application.

Id. at 414-15. The court asked, “[s]ince the [TABC] has approved Appellee’s
47
applications seven times previously, what is the reasoning behind the

[TABC’s] refusing the permits the eighth time?” Id. The TABC argued

reasons that were not supported by substantial evidence and the court thus

held that TABC’s denial of that eighth permit was arbitrary. Id. at 415.

All the purported concerns raised by the Floodplain Administrator in

2014 to deny the permit application existed in 1998, but did not provoke the

Floodplain Administrator to deny DRCP’s permit application then, making

consideration of these concerns (which purportedly formed the basis for the

denial) in 2014 arbitrary and capricious, and demonstrating the need for an

explanatory order, here.

* * * * *

Consequently, in this case the Floodplain Administrator’s failure to

cite or consider any of the ten Ordinance factors in his two-sentence denial

letter was an abuse of discretion, arbitrary, and capricious. See Consumers

Water, Inc. v. Public Util. Comm’n, 774 S.W.2d 719, 722 (Tex. App.—Austin

1989, no writ) (“The Commission did not recite in its final order any findings

on the statutorily required criteria of AVIC or its elements as set out in PURA

§ 41(a). We conclude the omission was arbitrary and capricious.”); Vondy v.

Comm’rs Ct. of Uvalde Cnty., 714 S.W.2d 417, 422 (Tex. App.—San Antonio
48
1986, writ ref’d n.r.e.) (Commissioners Court action was arbitrary and

capricious where it made decision “without any reason or basis” other than

reasons previously rejected by the Texas Supreme Court); see also Luminant

Generation Co., LLC v. United States EPA, 675 F.3d 917, 925 (5th Cir. 2012)

(EPA conceded it “acted arbitrarily and capriciously by failing to supply any

reason for its disapproval.”). As a result, the trial court erred when it

determined that the Floodplain Administrator was not required to

“specifically address the requirements and/or factors which he considered

as the basis for his decision” in his written denial and failure to do so “did

not constitute an abuse of discretion.” 5 CR 3209 (Finding of Fact No. 13); 5

CR 3211 (Conclusion of Law No. 4) [Tab 2]. This Court should reverse the

trial court’s decision to correct this error.

C. The Floodplain Administrator’s post hoc justifications
demonstrate that he abused his discretion by considering four
irrelevant factors.

Rather than consider any of the required factors outlined in the

Ordinance, the Floodplain Administrator—by his own admission—

purportedly considered irrelevant issues outside of the ten exclusive factors

found in the Ordinance. For this reason, too, it is clear that the Floodplain

Administrator’s denial was illegal, arbitrary, and an abuse of discretion.
49
Thus, the trial court erred by concluding that “the Floodplain

Administrator’s denial of the permit was not illegal, arbitrary, or capricious

or an abuse of discretion.” 5 CR 3212 (Conclusion of Law No. 10) [Tab 2].

Because a commissioners court has only the powers and jurisdiction as

conferred by the Constitution and the laws of the State, TEX. CONST. art. V,

§ 18(b); City of San Antonio v. City of Boerne, 111 S.W.3d 22, 28 (Tex. 2003), the

Floodplain Administrator may only consider those factors identified in the

Ordinance when approving or denying DRCP’s Permit Application and no

others. See TEX. LOCAL GOV’T CODE § 245.002 (“Each regulatory agency shall

consider the approval, disapproval, or conditional approval of an

application for a permit solely on the basis of any orders, regulations,

ordinances, rules, expiration dates, or other properly adopted requirements

in effect at the time”). In fact, consideration of only those factors outlined in

the Ordinance is consistent with the language of the Ordinance, itself. 1 RR,

Exhibit 5, at Article 4, Sections C(2) [Tab 3] (“Approval or denial of a

Development Permit by the Floodplain Administrator shall be based on all

of the provisions of this ordinance and the following [ten] factors.”)

(emphasis added). To be clear, considering even one irrelevant factor

renders government action arbitrary and capricious. Texas Dep’t of Ins. v.
50
State Farm Lloyds, 260 S.W.3d 233, 256 (Tex. App.—Austin 2008, no pet.). As

the Austin Court of Appeals unequivocally held:

Thus, even if some of the factors on which the order
was based were relevant, at least one of the factors
was irrelevant. In other words, even if the
commissioner also considered other legally relevant
factors, the order was based in part on at least one
legally irrelevant factor. . . . Because the
commissioner considered at least one legally
irrelevant factor in issuing his order, we agree that
the order is arbitrary and capricious.”

Id. (emphasis added).

Similarly, the Amarillo Court of Appeals has analyzed whether a

water district abused its discretion when it denied a water well permit “to

prevent the disproportionate taking of water,” even though the water

district’s rules provided no authority for the district to consider that factor.

S. Plains Lamesa R.R. v. High Plains Underground Water Conservation Dist. No.

1, 52 S.W.3d 770, 774, 778 (Tex. App.—Amarillo 2001, no pet.). Noting the

Legislature granted the district authority to regulate the spacing of wells, the

production of wells, or both, and permitted the water district to implement

rules for such regulation, the appellate court found the district’s denial of the

permit to prevent the disproportionate taking of water was improper

because such “authority was not clearly authorized by the Legislature.” Id.

51
at 776-79; see also Texas Dep’t of Ins. v. State Farm Lloyds, 260 S.W.3d 233, 256

(Tex. App.—Austin 2008, no pet.) (holding order of Commissioner of

Insurance was arbitrary and capricious where Commissioner considered at

least one legally irrelevant factor); Public Util. Comm’n v. S. Plains Elec. Coop.,

Inc., 635 S.W.2d 954, 957 (Tex. App.—Austin 1982, writ ref’d n.r.e.) (trial

court “correctly set [] aside” agency decision because agency’s consideration

of “non-statutory standard amounts to arbitrary and capricious action”).

In Stolte, the San Antonio Court of Appeals held that the Guadalupe

County Commissioner’s Court abused its discretion when it considered two

factors—lot frontages and driveways—that it was not directed to consider

when reviewing a subdivision plat application:

a county’s authority to grant or deny a plat
application is limited by statute or other properly
adopted rules, and in this case, there is no statute or
other rule governing lot frontages or driveways.
Therefore the County’s duty to grant the plat
application was ministerial in nature and the trial
court erred in denying [the developer’s] motion for
summary judgment and his request for mandamus
relief.

Id. at *4 (emphasis added).

In a strikingly similar situation to that here, the Colorado Supreme

Court held that the Wheat Ridge City Council abused its discretion when it
52
considered one factor—building type—that it was not directed to consider

when reviewing a floodplain permit application (referred to as a ‘special

exception’ under Colorado law). Bauer v. City of Wheat Ridge, 513 P.2d 203,

204 (Colo. 1973). The Bauer Court explained:

[t]he floodplain ordinance establishes the criteria
upon which the ‘special exception’ will be granted.
If the council believes that other reasons should be
used in denying an application, then the appropriate
procedure is to amend the floodplain ordinance.
Once an applicant applies under the ordinance, only
those factors which apply generally to all applicants
may be considered.

Id. at 204.

Here, the evidence and the trial court’s findings reflect that the

Floodplain Administrator considered four irrelevant factors when denying

DRCP’s Permit Application, and accordingly, the trial court erred when it

concluded the Floodplain Administrator did not abuse his discretion.

Specifically, the trial court determined that the Floodplain

Administrator considered (1) floodwater quality, (2) the “best interest of

[Maverick] County,” (3) Texas Coal Mining Regulations, and (4) the

53
Floodplain Administrator’s own “personal experiences.”2 5 CR 3209-10

(Findings of Fact Nos. 14, 15, 16, and 17) [Tab 2].3 Nevertheless, the trial court

attempted to rationalize that unlawful consideration as “mere reference[s]”

to legitimate factors. Id. As discussed below, each of these considerations is

not among the list of exclusive factors contained in Article 4, Section C(2) of

the Ordinance, and as a result, each is an irrelevant factor.

And the trial court’s attempt to justify the Floodplain Administrator’s

unlawful consideration of irrelevant factors—by attempting to relate them

to relevant ones—is unavailing. Factors (a) through (c) include the danger

to life and property due to flooding or erosion damage, the susceptibility of

2 Oddly enough, despite these findings, the trial court also concluded that
“Defendants did not consider any irrelevant factors when denying DRCP’s Development
Permit Application.” 5 CR 3211 (Conclusion of Law No. 5) [Tab 2]. But, this is a
contradictory position—the trial court specifically found that the Floodplain
Administrator considered certain factors that are not outlined in the Ordinance, and thus,
are irrelevant. 5 CR 3209-10 (Findings of Fact Nos. 14-17) [Tab 2]. To the extent this Court
agrees with DRCP and the trial court’s Findings of Fact 14-17, this Court may disregard
the inconsistent finding made in Conclusion of Law Number 5. Van Brunt v. BancTexas
Quorum, N.A., 804 S.W.2d 117, 123 (Tex. App.—Dallas 1989, no writ). And, the trial
court’s findings of fact control over inconsistent conclusions of law at any rate. Gary Safe
Co. v. A. C. Andrews Co., Inc., 568 S.W.2d 166, 168 (Tex. Civ. App.—Dallas 1978, writ ref’d
n.r.e.) (“Since the trial court’s finding conflicts with the conclusions of law, the findings
of fact must control.”).
3 The trial court issued Conclusion of Law Number 6, which contains some
of the same factual allegations as Findings of Fact Numbers 14-17. 5 CR 3211 (Conclusion
of Law No. 6) [Tab 2].

54
the proposed facility and its contents to flood damage, and the danger that

materials may be swept onto other lands to the injury of others. 1 RR, Exhibit

5, Article 4, Section C(2) [Tab 3]. They do not include—and cannot include—

the best interest of the county, personal experiences, floodwater quality, and

Surface Coal Mining Regulations. The trial court’s blatant attempt to fit a

square peg in a round hole is belied by both the evidence in this case and the

relevant legal authority.

1. Floodwater quality is an irrelevant factor.

The Floodplain Administrator contends, and the trial court found, that

he considered floodwater quality as a factor when denying DRCP’s Permit

Application. E.g., 1 RR, Exhibit 9 at 34:10-12 (“I’m just looking at the

possibility of any contamination that can fall into that creek and that would

go into people’s homes.”)); 2 CR 858 (citing water pollution and surface

water quality regulations); 2 CR 864 (citing surface water quality

regulations); 2 CR 864 (“it is reasonable to assume that [the sedimentation

ponds] would all suffer from the same defects of backfilling, overtopping,

and sediment release”). Floodwater quality, however, is not among the ten

listed factors in the Ordinance. 1 RR, Exhibit 5, Article 4, Section C(2) [Tab

3]. Accordingly, floodwater quality is an irrelevant factor. Further, the
55
TCEQ has the exclusive authority to regulate water quality, and,

consequently, the Floodplain Administrator has no authority to consider

water quality in its evaluation of DRCP’s Permit Application.

a. The purpose of the Ordinance is to prevent
property losses rather than protecting
floodwater quality.

The Maverick County Commissioners Court adopted the Ordinance

under the authority granted to it by the Legislature in the Flood Control

Insurance Act (“FCIA”), which was enacted to allow Texans to “secur[e]

flood insurance coverage” and to “minimiz[e] exposure of property to flood

losses.” TEX. WATER CODE § 16.312. In other words, the Legislature was

concerned with securing flood insurance coverage and minimizing exposure

and risk of property to flood loss, not floodwater quality. And the

Ordinance itself provides that the Legislature conferred authority on the

county commissioners to “adopt regulations designed to minimize flood

losses.” 1 RR, Exhibit 5, Article 1, Section A [Tab 3]. Even the Floodplain

Administrator admits the Ordinance addresses the “methods of reducing

flood losses.” 2 CR 855; 1 RR, Exhibit 5, Article 4, Section C(2) [Tab 3]. In

contrast, the words “water quality” are not found anywhere in the

Ordinance, much less in the list of factors the Floodplain Administrator was
56
required to consider in reviewing DRCP’s Permit Application. 1 RR, Exhibit

5 [Tab 3].

b. The TCEQ has the “sole and exclusive
authority to set water quality standards for all
water in the state.”

Water quality standards are the exclusive province of the Texas

Commission on Environmental Quality, TEX. WATER CODE § 26.023, and not

within the province of local Floodplain Administrators. TCEQ’s control over

water quality also derives from the Federal Clean Water Act, which

establishes requirements for protecting water quality, including the

requirement to have a permit for the discharge of storm water that comes

into contact with an industrial activity, see 33 U.S.C. §§ 1251, et seq. A major

portion of the Clean Water Act is the national pollutant discharge

elimination system (“NPDES”), a federal regulatory program to control

discharges of pollutants into surface waters of the United States. The State

of Texas assumed authority to administer the NPDES program in Texas

(“TPDES”) and TCEQ has federal regulatory authority over these permits.

See 33 U.S.C. § 1342 (b); TEX. WATER CODE §§ 26.011, 26.027.

Here, the TCEQ issued DRCP a TPDES permit that authorizes DRCP

to discharge storm water and mine seepage from the “active mining area”
57
subject to specified effluent limitations. 1 RR, Exhibit 7 (DRCP TPDES

Permit). In addition, TCEQ has set certain effluent limitations for discharges

from the “active mining area” ponds caused by a precipitation event within

any 24-hour period less than or equal to the 10-year, 24-hour precipitation

event and for all discharges from all retention ponds. See id. Finally, DRCP’s

TPDES permit requires monitoring water at the point of discharge from the

sedimentation ponds and retention ponds located in the proposed mine

area. See id. Because the quality of the water leaving the mine site and

entering state waters is within TCEQ’s authority, delegated to it and only it

through the NPDES and TPDES statutory scheme, the Floodplain

Administrator lacks the authority to further regulate the quality of the

floodwaters. Accordingly, floodwater quality is an irrelevant factor under

the Ordinance.

2. The “best interest of the county” is an irrelevant factor.

The Floodplain Administrator also purports to have considered (and

the trial court found that he did consider) “the best interest of the County”

as a factor when denying DRCP’s Permit Application. 1 RR, Exhibit 9 at

39:21-40:2 (“Q. Amongst the factors to consider in the ordinance in granting

or denying a permit, is one of those factors the best interest of the county?
58
A. The factors I based to make my decision you mean? Q. Correct. A. Yes.”);

1 RR, Exhibit 9 at 42:12-43:4 (affirming interrogatory response that the

Floodplain Administrator made his decision “in the best interest of the

county”); 1 RR, Exhibit 9, at 67:7-13 (referring to discovery response where

the Floodplain Administrator stated that he was acting in the best interest of

the county); 2 CR 873 (“The County Judge, acting as Floodplain

Administrator, must use his best judgment to protect the lives and property

of the people of Maverick County. Their safety and wellbeing take

precedence over all other considerations.”); 2 CR 879-80 (“The County Judge

was doing his job in protecting this community from the Railroad

Commission and from this Plaintiff.”).

“The best interest of the County,” however, is not among the

Ordinance’s exclusive list of ten factors. 1 RR, Exhibit 5, Article 4, Section

C(2) [Tab 3]; 1 RR, Exhibit 9 at 43:20-44:3 (“Q: . . . There’s just no factor there

in the ordinance that says the Floodplain Administrator considers the best

interest of the county? . . . A. Okay. Q. And you agree with that? A. In the

ordinance itself? Q. Yes. I agree with that.”); 1 RR 49:14-17 (“Q. Now we’ve

gone through 10 factors A through J. Among these factors you considered

59
is there one that discusses the best interest of the county? A. No.”).

Accordingly, “the best interest of the County” is an irrelevant factor.

This issue was squarely addressed in a similar matter decided by the

Austin Court of Appeals. See Starr Cnty. v. Starr Indus. Servs., Inc., 584 S.W.2d

352, 356 (Tex. App.—Austin 1979, writ ref’d n.r.e.). In Starr County, the Court

held that the Texas Water Quality Board’s denial of a permit was arbitrary

and capricious based on the Board’s finding that “[t]he adamant local

opposition to the application for a proposed industrial solid waste

management site evidences that the granting of a permit would be contrary

to the welfare of the people in the area.” Id. The Court explained: “Nowhere

in the Act is local opposition mentioned for consideration as a standard to

govern the Board’s decision and such opposition, standing alone, should

have no part in the Board’s decision-making process. Yet obviously it did.”

Id. As in Starr County, the Floodplain Administrator’s consideration of the

non-statutory, “best interests of the County” was arbitrary and capricious,

and constitutes an abuse of discretion.

3. Surface Coal Mining Regulations are irrelevant factors.

The trial court also found that the Floodplain Administrator

considered Surface Coal Mining Regulations as a factor when denying
60
DRCP’s Permit Application. 5 CR 3210 (Finding of Fact No. 16) [Tab 2]; 2 CR

857-66 (reviewing various sections of the Texas Surface Coal Mining and

Reclamation Act and Texas Coal Mining Regulations, alleging that DRCP

failed to comply with certain requirements already addressed by the RRC);

1 RR, Exhibit 9 at 23:8-15 (describing issues with sedimentation ponds, an

area addressed by the Texas Coal Mining Regulations). Surface Coal Mining

Regulations, however, are not among the ten exclusive factors listed in the

Ordinance. 1 RR, Exhibit 5, Article 4, Section C(2) [Tab 3]; 1 RR, Exhibit 9 at

50:3-7 (“Q. Does the floodplain ordinance give you as the Floodplain

Administrator the authority to deny a permit if the permit doesn’t comply

with Texas Railroad Commission Rules? A. I don’t see that.”). Accordingly,

Surface Coal Mining Regulations are an irrelevant factor.

Further, as with water quality, Texas law invests a state agency—the

Texas Natural Resources Code invests the Railroad Commission of Texas—

with the exclusive authority to enforce surface coal mining regulations. See

TEX. NAT. RES. CODE § 134.012(a)(1) (“Jurisdiction of Commission Over

Surface Coal, Iron Ore, and Iron Ore Gravel Mining and Reclamation

Operations” . . . “The commission has exclusive jurisdiction over . . . surface

coal mining and reclamation operations in this state.”). As the Austin Court
61
of Appeals has noted, “[t]he natural resources code specifies that the

[Railroad] Commission has been granted exclusive jurisdiction over surface

coal mining and reclamation activities, has been charged with enforcing the

relevant portions of the [Natural Resources Code], and has been given the

authority to issue rules pertaining to mining and reclamation activities that

are consistent with the code.” R.R. Comm’n v. Coppock, 215 S.W.3d 559, 570

(Tex. App.—Austin 2007, pet. denied). By contrast, the Floodplain

Administrator has no jurisdiction over surface coal mining and reclamation

activities and is not charged with enforcing the relevant portions of the

Natural Resources Code. Indeed, the Floodplain Administrator admits he

was not permitted to consider coal mining regulations when determining

whether to grant or deny DRCP’s Permit Application. 1 RR, Exhibit 9 at 50:3-

7 (“Q. Does the floodplain ordinance give you as the Floodplain

Administrator the authority to deny a permit if the permit doesn’t comply

with Texas Railroad Commission Rules? A. I don’t see that.”). Accordingly,

Surface Coal Mining Regulations are an irrelevant factor under the

Ordinance, and the Floodplain Administrator acted arbitrarily and

capriciously by considering them in denying DRCP’s Permit Application.

62
 4. Personal experience is an irrelevant factor.

Last, the Floodplain Administrator testified, and the trial court found,

that he considered his own personal experience as a factor when denying

DRCP’s Permit Application. 5 CR 3210 (Finding of Fact No. 15) [Tab 2]; 1

RR, Exhibit 9 at 46:14-47:25 (Floodplain Administrator describing denial of

permit based on “what I’ve seen in the past”); 1 RR 49:21-23 (“one of the

major factors to me is – is what I’ve actually seen in that community, what

I’ve seen happen in the past with prior flooding. . . . I’m not saying that Dos

Republicas is responsible for the flooding, but I think I have a

responsibility to either accept or deny based on what I could see can

happen in the future.” (emphasis added)). Personal experience, however,

is not among the ten exclusive factors listed in the Ordinance. 1 RR, Exhibit

5, Article 4, Section C(2) [Tab 3]. Accordingly, personal experience is an

irrelevant factor, and is an improper basis for denying DRCP’s Permit

Application.4

4 Even if personal experiences could be considered by the Floodplain
Administrator, Appellees failed to even introduce any evidence supporting these alleged
personal experiences. The Floodplain Administrator, in his testimony, was never able to
provide concrete evidence of flooding or any other purported concerns. 1 RR, Exhibit 9,
at 49:18-23 (Q. “[W]as there any other evidence that you considered when denying the
permit? A. . . . one of the major factors to me is – is what I’ve actually seen in that
community, what I’ve seen happen in the past with prior flooding.”); 1 RR, Exhibit 9 at
63
 * * * * *

The Floodplain Administrator’s consideration of any one of these

irrelevant factors renders his denial of DRCP’s Permit Application arbitrary

and capricious. Accordingly, the trial court erred when it concluded the

Floodplain Administrator did not abuse his discretion.

III. The Floodplain Administrator Acted Arbitrarily and Capriciously
When He Denied DRCP Notice or an Opportunity to be Heard.

Administrative action is “invalid for arbitrariness when the contesting

parties are denied due process of law.” Lewis v. Metropolitan Savings & Loan

Ass’n, 550 S.W.2d 11, 12 (Tex. 1977); see also Slavin v. City of San Antonio, 330

S.W.3d 670, 672 (Tex. App.—San Antonio 2010, no pet.) (A governmental

entity “acts in an arbitrary manner when the treatment accorded to parties

in the administrative process denies them due process of law.”). Specifically,

where a local ordinance deprives a property owner of the use of his property,

that property owner is entitled to procedural due process prior to any such

deprivation. City of Arlington v. Centerfolds, Inc., 232 S.W.3d 238, 248-54 (Tex.

App.—Fort Worth 2007, pet. denied) (affirming trial court’s decision that

46:14-22 (when asked what evidence he had to support his denial, the Floodplain
Administrator merely responded with “what’ I’ve seen in the past”).

64
property owner’s procedural due process rights were violated and board

action was arbitrary and capricious where License and Amortization Appeal

Board of the City of Arlington improperly restricted property owner’s

opportunity to be heard). Prior to depriving DRCP of its property interests,

the Floodplain Administrator provided DRCP with no hearing or

opportunity to be heard. Accordingly, the Floodplain Administrator denied

DRCP all rights of procedural due process. See Hartford Cas. Ins. Co. v. State,

159 S.W.3d 212, 216 (Tex. App.—Austin 2005, pet. denied) (“The procedural

due process guarantee protects against arbitrary takings” and requires “[a]t

a minimum . . . notice and an opportunity to be heard at a meaningful time

and in a meaningful manner.”); City of Dallas v. Saucedo-Falls, 268 S.W.3d 653,

660 (Tex. App.—Dallas 2008, pet. denied) (“Procedural due process requires

an opportunity for a hearing appropriate to the nature of the case.”). Because

the Floodplain Administrator denied DRCP any due process of law prior to

denying the Permit Application, his action was necessarily arbitrary and

capricious. See Slavin, 330 S.W.3d at 672. As a result, the trial court erred

when it determined that due process was not an issue in this matter. 5 CR

3211 (Conclusion of Law No. 7) [Tab 2].

65
 PRAYER

Pursuant to TEX. R. APP. P. 43.2, Dos Republicas Coal Partnership

respectfully requests that this Court reverse the trial court’s final judgment

and render judgment in its favor and issue a writ of mandamus ordering the

Floodplain Administrator and the Maverick County Commissioners Court

to issue a floodplain development permit to DRCP. In the alternative, Dos

Republicas Coal Partnership requests that the final judgment be reversed

and the case remanded for the trial court to determine any remaining issues

of fact, or for resolution of any other issues identified by the Court. Finally,

DRCP requests any and all other relief to which it is may be entitled.

66
Respectfully Submitted,

/s/ Bill Cobb
Bill Cobb
State Bar No. 00796372
Matthew Ploeger
State Bar No. 24032838
Jenny Lee Smith
State Bar No. 24079357
COBB & COUNSEL
401 Congress Avenue, Suite 1540
Austin, Texas 78701
bill@cobbxcounsel.com
(512) 693-7570
(512) 687-3432 – Facsimile

Leonard Dougal
State Bar No. 06031400
Mallory Beck
State Bar No. 24073899
JACKSON WALKER L.L.P.
100 Congress, Suite 1100
Austin, Texas 78701
E: ldougal@jw.com
T: (512) 236-2233
F: (512) 391-2112

67
 CERTIFICATE OF COMPLIANCE

In compliance with Texas Rule of Appellate Procedure 9.4(i)(3), and
relying on the word count function in the word processing software used to
produce this document, I hereby certify that the total word count in this
document is 13,801.

/s/ Bill Cobb
Bill Cobb

CERTIFICATE OF SERVICE

I hereby certify that on this 2nd day of April, 2015, a true and correct
copy of the foregoing document has been served upon the following
attorneys by electronic service and email.

Alfonso Nevarez C. Rolando Jasso
Nevarez Law Group, PC State Bar No. 10491500
780 Rio Grande Street Claudio Heredia
Eagle Pass, Texas 78852 State Bar No. 09505300
anc@nevarezlawgroup.com Knickerbocker, Heredia, Jasso, &
mvw@nevarezlawgroup.com Stewart P.C.
468 East Main Street
Eagle Pass, Texas 78852-4598
rmjasso@khjslaw.com
chlaw750@yahoo.com

/s/ Bill Cobb
Bill Cobb

68
 APPENDIX

Tab 1 Order Denying Dos Republicas Coal Partnership’s Amended
Petition for Writ of Mandamus (5 CR 2940)

Tab 2 Findings of Fact and Conclusions of Law (5 CR 3207-12)

Tab 3 Maverick County Flood Damage Prevention Ordinance (1 RR,
Exhibit 5)

Tab 4 April 3, 2014 Letter Denying DRCP’s Floodplain Development
Permit Application (1 RR, Exhibit 4)

Tab 5 Supplemental Floodplain Analysis, Executive Summary (1 RR,
Exhibit 3, at 2-6)
TAB 1
'•

NO.l4-03.-29340=MCVI

DOS REPUBLICA$ COAL PARTNERSHIP, § IN THE DIS1RICT COURT
Plaintiff §
§
vs. §
§
DAVID SAUCEDO as FLOODPLAIN § MAVERICK COUNTY TEXAS
ADMINISTRATOR and COUNTY JUDGE §
OF THE MAVERICK COUNTY §
CO:MMISIONERS COURT and THE §
MAVERICK COUNTY COMMISIONERS §
COURT §
Defendant § 293td JUDICIAL DIS1RICT

ORDER DENYING PLAINTIFF
DOS REPUBLICAS COAL PARTNERSHIP'S AMENDED PETITION FOR
WRIT OF MANDAMUS

On October 9, 2014, came to be heard Plaintiff Dos Republicas Coal

Pamership (DCCP) Amended Petition for Writ of Mandamus. The Court, having

reviewed the Plaintiff's Writ, and the responses, pleadings, briefs, evidence and

testimony from both Plaintiff and Defendants therein, and having considered

A~E18dt( ~JRiibn fob Writ of
same, is of the opinion that Plaintiff DCCP's
1
J,\J_,.O,;.~__JYCLOCKa_M
Mandamus should be DENIED.
Del 'l 0 2014

for Writ of Mandamus is hereby DENIED.

Signed this \ G¥r'aay of October, 2014.

- 935
--~~~~~--~
PRE
2940
TAB 2
.'
CAUSE NO. 14-03-29340-MCV

DOS REPUBLICA$ COAL PARTNERSIDP, § IN THE DISTRICT COURT
--
§
Plaintiff, §
§
v. §
§
DAVID SAUCEDO as FLOODPLAIN § MAVERICK COUNTY, TEXAS
ADMINISTRATOR and COUNTY JUDGE §
OFTHEMAVlliUCKCOUNTY §
COMWSIONERS COURT and THE §
MAVERICK COUNTY COMMISIONERS §
COURT, §
§
Defendants. § 293rd JUDICIAL DISTRICT

FINDINGS OF FACT AND CONCLUSIONS OF LAW

The Plaintiff's Amended Motion for Writ of Mandamus in the above-

captioned cause came on for hearing before the Court on October 9, 2014. All
\
parties were present through their attorneys. After considering the pleadings, the

evidence, and the arguments of counsel, the Court entered it's Order Denying
tl
~
I
Plaintiff's Amended ~otion for Writ of Mandamus on October 10, 2014. On

October 27, 2014, Plair\~iff requested that this Court enter findings of fact and

conclusions of law, which are hereby submitted as follows:

FINDINGS OF FACT

1. On August 15, 1996, the Maverick County Commissioners Court approved
and adopted the Maverick County Flood Damage Prevention Ordinance
("Ordinance"). The Ordinance was adopted pursuant to the National Flood
Insurance Program and was established to minimize flood losses in Maverick
County, Texas. 1

1 Plaintiff Exhibit 5. Maverick County Flood Damage Prevention Ordinance, pg. 1

1 3201
3207
2. Through the Ordinance, the Maverick County Commissioners Court
appointed the County Judge as the Floodplain Administrator with the
authority to review, and either approve or deny all applications for
development permits required by adoption of the Ordinance. 2

3. As per Article 4, Section C(1), an Application for a Development Permit must
be presented to the Floodplain Administrator and must include the
information contained in Subsections (a)-(e).3

4. As per Article 4, Section C(2), approval or denial of a Development Permit by
the Floodplain Administrator shall be based on all of the provisions of the
Ordinance and the relevant factors contained in Subsections (a)-G) (the
"factors").4

5. On November 3, 2011, Dos Republicas Coal Partnership ("DRCP") filed an
Application for Floodplain Permit with Maverick County, as required by the
Ordinance. DRCP filed a Supplemental Application on September 4, 2013,
after a new FEMA floodplain map was adopted.

6. After reviewing DRCP' s Application and taking into consideration all of the
provisions of the Ordinance, the Floodplain Administrator decided that
DRCP satisfied the requirements contained in Article 4, Section C(1)
contained in the Ordinance, but had concerns with factors (a)-(c) contained in
Article 4, Section C(2). 5

7. Factors (a)-(c) cited by Floodplain Administrator are:

(a) The danger to life and property due to flooding or erosion damage;
(b) The susceptibility of the proposed facility and its contents to flood
damage and the effect of such damage on the individual owner;
and
(c) The danger that materials may be swept onto other lands to the
injury of others.6

8. As a result of DRCP's failure to address the concerns the Floodplain

2 Id. at pg. 12

3 Id. at pg. 13
4 Id. at pgs. 13-14

5 Plaintiff Exhibit 9, Excerpts from Transcript dated October 2, 3014, Oral and Video Deposition of the Corporate
Represet~tative of tl1e Mwerick County Commissioners Court (David Raul Saucedo), pg. 69lines 7-22

6 Id. at pgs. 70-71lines 24-10
2
3202
3208
 Administrator had with factors (a)-(c), the Floodplain Administrator denied
DRCP's Development Permit 7 . DRCP was notified of the Floodplain
Administrators decision in a letter dated April 3, 2014.8 Thereafter, DRCP
filed this cause on March 25, 2014.

9. At the October 9, 2014 hearing, DRCP called its expert, civil engineer Paul
Padilla. He had prepared the Supplemental Floodplain Analysis to the
original 2011 Floodplain Application, which was submitted to the Floodplain
Administrator as a Supplemental Application. Paul Padilla testified
regarding the requirements for a floodplain permit, and whether DRCP met
all the requirements9 .

10. The Court finds that DRCP's expert Paul Padilla failed to demonstrate
through his testimony that all ten factors contained in Article 4, Section C (2)
(a)-G) of the Ordinance were satisfied, so as to support the granting of the
Permit. Specifically, Mr. Padilla failed to address factors (a)-(c) which the
Floodplain Administrator referenced as his reason for denying DRCP's
Development Permit. 10

11. The Court finds that DRCP's expert, Paul Padilla, failed to demonstrate
through his testimony that in his analysis he considered the specific rainfall
events Maverick County is and has been susceptible to which have caused
significant flooding and damage in Maverick County.'~ 1

12. The Court finds that DRCP' s expert, Paul Padilla, failed to demonstrate
through his testimony that in his analysis he considered the contaminants
and/or sediment contained in the sedimentation ponds that will overflow in
the event of a flood event in Maverick County.12

13. The Permit Procedures are outlined in Article 4, Section C of the Ordinance.
There is no requirement in the Ordinance that the Floodplain Administrator's
written denial of the Permit specifically address the requirements and/or
factors which he considered as the basis for his decision. 13

14. The Court finds that the "best interest of [Maverick] county" was not a basis

7 Deposition of David Raul Saucedo, pg. 69 lines 7-14
8 Plaintiff Exhibit 4, Defendant's letter of denial, April3, 2014
9 Exce.r pts from Transcript dated October 9, 2014, Hearing on Abatement and Writ of Mandamus, p.31
10 Id. pg. 69 lines 9-21
11 Id. at lines 18-21
12 Id. at lines 9-17

13 Floodplain Prevention Ordinance, pgs.13-14
3 320 3
3209
 for Defendants' decision standing alone, but was merely referenced when
considering the Ordinance was designed to minimize flood losses in flood
hazard areas of Maverick County, Texas.

15. The Court finds that the Floodplain Administrator's personal experiences
were not a basis for Defendants' decision standing alone, but knowledge of
the specific rainfall events in Maverick County which have caused significant
flood damage in Maverick County was a mere reference when considering
factors (a)-(c) contained in the Ordinance.

16. The Court finds that the Texas Coal Mining Regulations was not a basis for
Defendants' decision standing alone, but was a mere reference when
considering factors (a)-(c) contained in the Ordinance.

17. The Court finds that the floodwater quality was not a basis for Defendants'
decision standing alone, but was a mere reference when considering the
factors contained in the Ordinance; specifically, the danger to life and
property due to flooding or erosion damage, and the danger that materials
may be swept onto other lands to the injury of others.

18. The Court finds that the Floodplain Administrator denied DRCP's permit
based on the concern that if the permit was approved, the occurrence of a
flooding event (such as the flooding events experienced by Maverick County
in the past) will carry sediment and/or contaminants downstream into the
homes of Maverick County citizens and into Elm Creek.

19. The Court finds that the Floodplain Administrator based his decision to deny
DRCP's Development Permit on all of the provisions of the Ordinance and
the relevant factors, as he was authorized to do by Article 4 of the
Ordinance. 14

20. The Court finds that the Floodplain Administrator did not abuse his
discretion when rendering his decision to deny DRCP' s Development Permit.

CONCLUSIONS OF LAW
1. A district court may issue a writ of mandamus to rectify an abuse of
discretion, when a Commissioners Court acts illegally, unreasonably, or
arbitrarily.

14 Deposition of David .Raul Saucedo, pg. 69 lines 7-14
4 320 4
3210
 2. A Commissioners Court abuses its discretion-necessitating mandamus
relief-when it either: (A) fails to perform a purely ministerial act, or
(B) fails to consider a factor the Legislature directs it to consider, or
considers an irrelevant factor.

3. Defendants considered all of the provisions of the Ordinance as well as
the relevant factors as per Article 4, Section C(2) of the Ordinance, and
denial of DRCP' s Development Permit did not constitute an abuse of
discretion.

4. Defendants were not required to provide the reasons for denying DRCP' s
Development Permit Application and Supplemental Application at the
time of issuing the denial, and the failure to do so, did not constitute an
abuse of discretion.

5. Defendants did not consider any irrelevant factors when denying DRCP' s
Development Permit Application and Supplemental Application and the
denial of same did not constitute an abuse of discretion.

6. Defendants' reference to the best interest of the county, floodwater
quality, surface coal mining regulations, and personal experience was not
a basis for Defendants' decision standing alone and that reference did not
render Defendants' denial of DRCP' s Development Permit Application
and Supplemental Application arbitrary and capricious.

7. The Ordinance does not deprive DRCP of the use of its property because
Defendants' denial of DRCP's Development Permit Application does not
deprive it of all economically viable uses of its property, therefore due
process is not an issue, and the denial was not arbitrary or capricious or an
abuse of discretion.

8. The Floodplain Administrator was required, under Article 4, Section C(2)
to approve or deny DRCP's Development Permit Application and
Supplemental Application based on all of the provisions of the Ordinance,
and the relevant factors listed in (a)-G).

9. The Floodplain Administrator was not required, and did not have a
ministerial duty to grant DRCP' s Development Permit Application and
Supplemental Application if the Floodplain Administrator found that the
application did not meet the provisions of the Ordinance and relevant
factors.

5

3211 3205
 10. DRCP's Development Permit Application and Supplemental Application
did not satisfy the requirements of the Ordinance and the act of approving
or denying it was not a ministerial act therefore, the Floodplain
Administrator's denial of the permit was not illegal, arbitrary or
capricious or an abuse of discretion.

F\LED
A+±03o'CLOCK£_M
DEC 5 2014

6 3206
3212
TAB 3
 RECEIVED IN
13th COURT OF APPEALS
CORPUS CHRISTI/EDINBURG, TEXAS
12/22/2014 3:27:24 PM
DORIAN E. RAMIREZ
Clerk
TAB 4
 RECEIVED IN
13th COURT OF APPEALS
CORPUS CHRISTI/EDINBURG, TEXAS
12/22/2014 3:27:24 PM
DORIAN E. RAMIREZ
Clerk
TAB 5
Authorities
Amtel Communications, Inc. v. Public Utility Com'n of Texas, 66 P.U.R.4th 140 (1985)
687 S.W.2d 95, 1985-2 Trade Cases P 66,725

Robert J. Hearon, Graves, Dougherty, Hearon & Moody,
66 P.U.R.4th 140 Austin, for Southwestern Bell Telephone Co.
Court of Appeals of Texas,
Austin. Before PHILLIPS, C.J., and POWERS and GAMMAGE, JJ.

AMTEL COMMUNICATIONS, Opinion
INC., et al., Appellants,
POWERS, Justice.
v.
PUBLIC UTILITY COMMISSION Amtel Communications, a supplier of telephone-related
OF TEXAS, Appellee. equipment, filed in the Public Utility Commission a
complaint against Southwestern Bell Telephone Company, a
Nos. 350,669, 14215. | Feb. 20, 1985. public utility that supplies telecommunications services. In
Amtel's complaint, it charged that the combined effects of
Supplier of telephone-related equipment filed complaint
Bell's tariff charges and certain of its business policies were
against telephone company alleging that its tariff charges
discriminatory and anticompetitive, and therefore in violation
and certain of its business policies were discriminatory and
of §§ 38, 45 and 47 of Tex.Rev.Civ.Stat.Ann. art. 1446c
anticompetitive. The Public Utility Commission denied relief,
(Supp.1985), Public Utility Regulatory Act (“PURA”). Amtel
and supplier sought judicial review. The 250th Judicial
requested *98 that the Commission amend Bell's tariffs
District Court, Travis County, Harley Clark, J., affirmed, and
and business policies, as necessary, to prevent the violations
supplier appealed. The Court of Appeals, Powers, J., held
alleged. After a contested-case hearing, the Commission
that: (1) Commission's findings demonstrated that it assessed
denied Amtel relief. Amtel sued for judicial review under
implicit statutory criteria in arriving at decision that telephone
PURA § 69. The district court affirmed the Commission's
company's exclusionary policy and tariff rates did not violate
final order and this appeal ensued. We will affirm the
discrimination and anticompetitive provisions of the Public
judgment of the district court.
Utility Regulatory Act; (2) Commission's determination that
telephone company's exclusionary policy and tariff system
of equal rates based upon distance of concentrator from
telephone company's main offices should not be altered THE CONTROVERSY
was within zone of reasonableness; and (3) Commission's
determination that supplier would suffer discrimination and Amtel manufactures and sells equipment that is purchased
anticompetitive disadvantage by reason of Commission's primarily by businesses engaged in providing a telephone-
decision not to implement suggested remedies, but that effects answering service for telephone subscribers. Among such
were justified by contrary considerations was not outside zone equipment is a “concentrator.” This article, when connected
of reasonableness. to link the telephones of a subscriber and his answering
service, through Bell's telephone system, causes the
Affirmed. telephones of the answering service and subscriber to ring
simultaneously. After three rings, the absent subscriber's
Gammage, J., filed concurring opinion. telephone may therefore be answered by his answering
service. While Amtel successfully sells its concentrator in
other States, it has been unsuccessful in selling them for use
Attorneys and Law Firms in Texas, owing, it is said, to the discriminatory and anti-
competitive practices now to be described.
*97 Brook Bennett Brown, McGinnis, Lochridge & Kilgore,
Austin, for appellants. Bell owns and rents to answering services a make of
concentrator it purchases from “Western Electric.” Bell and
Jim Mattox, Atty. Gen., Stephen J. Davis, Asst. Atty. Gen.,
Amtel thus compete in supplying concentrators to businesses
Austin, for PUC.
that provide an answering service. Under Bell's business
Mike Willatt, Austin, for Texas Ass'n of Telephone policies, it installs its concentrators adjacent to the “main
Answering Services. frames” located in its central offices. Because of this

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Amtel Communications, Inc. v. Public Utility Com'n of Texas, 66 P.U.R.4th 140 (1985)
687 S.W.2d 95, 1985-2 Trade Cases P 66,725

proximity, only very short connecting lines (“bridges”) are
required to connect the telephones of the subscriber and
*99 THE ADMINISTRATIVE PROCEEDINGS
answering service through Bell's telephone system. On the
other hand, another of Bell's business policies will not permit After Amtel filed its complaint against Bell, the latter filed
to be installed inside Bell's central offices any concentrator in the Commission a request that its tariffs be revised in
that Bell does not itself own and service. Consequently, certain particulars, including a request by Bell that the
if a telephone-answering service chooses to buy and use Commission establish a “parity” of pricing for the installation
a concentrator supplied by Amtel, in lieu of renting one and use of the lines associated with concentrators, whatever
supplied by Bell, various and lengthy lines must be put in their make. This independent proceeding was consolidated
place outside the central office housing Bell's “main frame.” with that initiated by Amtel's complaint. After hearing, the
The cost of doing so must be borne by the answering service Commission sustained Bell's request for tariff revisions, save
electing to use an Amtel concentrator; but the cost does not for the “parity” pricing request, and denied Amtel relief
arise at all if the answering service elects to rent a concentrator under its complaint. Finding no violations of PURA §§
supplied by Bell, for no external lines need be installed in that 38, 45 and 47, the agency refused to alter the “distance-
case. sensitive” charges associated with the installation and use
of concentrators; and, it refused to order a change in that
Whether the shorter internal lines are utilized for installation aspect of Bell's business policies which permits only its own
of a Bell concentrator, or the longer external lines required concentrators to be installed in its central offices adjacent to
for an Amtel concentrator, the lines are put in place by the “main frame.”
Bell. Under Bell's tariff, on file with the Commission, the
company is entitled to recover for the installation a sum The Commission's decision was based upon findings of
determined by the length of line installed. Similarly, under fact and conclusions of law set forth and adopted in the
the tariff Bell is entitled to recover for use of the lines a Commission's final order. These may be summarized broadly
sum determined by their length. In the words of the parties, as follows: (1) Bell's exclusionary policy rests upon valid
the charges for installation and use of the lines are therefore business grounds and decisions with which the Commission
“distance sensitive” and work to increase considerably the should not interfere; (2) the cost-based system of “distance-
cost of installing and using an Amtel concentrator, owing to sensitive” charges should not be revised in favor of “parity”
the much longer external lines required for that make. owing to certain practical difficulties that make “parity”
pricing unreasonable; and (3) under “parity” Bell would be
In summary, Amtel's concentrator may be used by an permitted either an excessive recovery or an insufficient
answering-service enterprise only if it is willing to bear the recovery. The latter theory—that Bell would recover too
much higher cost associated with the installation and use of a much or too little under “parity”—is apparently based upon
concentrator supplied by Amtel. The result, of which Amtel a rationale that Bell's actual costs are unequal for the two
complains, is a distinct competitive advantage enjoyed by classes of concentrator; therefore, the actual sums recoverable
Bell in supplying its make of concentrator to the answering- by Bell under a system of artificially equal charges (“parity”)
service market. would allow Bell a sum far in excess of its lawful rate in
the case of its own concentrators, and far below its lawful
It is argued by Amtel that Bell's competitive advantage rate in the case of other makes of concentrators. The agency's
may be terminated in either of the following ways: (a) findings, here summarized, will be discussed below at greater
revising Bell's tariff charges to delete therefrom the “distance length.
sensitive” charges, permitting instead a system of artificially
equal charges for all makes of concentrators, a remedy the
parties refer to as “parity”; or (b) requiring a change in Bell's
business policies to permit concentrators not owned by Bell to THE COMPETING PUBLIC POLICIES OF PURA
be installed in its central offices adjacent to the “main frame”, To properly understand Amtel's contentions on appeal, and
or perhaps requiring Bell to install its concentrators outside our resolution of those contentions, it is essential to observe
its central offices. These were urged as alternative remedies that PURA embodies distinctly contrary public policies which
in the administrative proceedings we now review. the Commission is charged to effectuate in its administration
of that statute.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Amtel Communications, Inc. v. Public Utility Com'n of Texas, 66 P.U.R.4th 140 (1985)
687 S.W.2d 95, 1985-2 Trade Cases P 66,725

the public interest lies (§ 63); and the power to cause the
First, PURA requires that the Commission implement a attorney general to enforce, by civil penalties or injunctions,
public policy that the monopoly power of a public utility any violation by a public utility of the prohibitions contained
shall be held only under State license and exercised under in PURA, or in any rule, regulation, or order promulgated by
State regulatory control. The statute requires, concurrently, the agency (§§ 72–77).
that the agency implement a contrary public policy in favor
of competition. Second, the Commission must under PURA The central assumption that utility services shall be provided
implement a public policy against discrimination in utility under a publicly controlled monopoly is justified in PURA §
services while, in some instances and in some degree, the 2, where it is stated that a public utility is, “by definition”,
agency may implement a policy of discrimination based upon a monopoly in respect of which “the normal forces of
the public interest. competition” do not operate to regulate the utility's prices
and practices, necessitating that regulatory control “substitute
These competing public policies are, in the present case, for such competition.” Consequently, the rates charged by
interwoven to a substantial degree. Their accommodation a public utility are fixed not by it but by the Commission,
or adjustment is, of course, a matter charged initially and and it is unlawful for the utility to charge, collect, or receive
primarily to the special knowledge, experience, discretion, any sum except that allowed by the legal or official rate set
and well-considered policies of the Commission as it pursues by the Commission (§ 27). Similarly, the utility's services,
all the legislative purposes implicit in PURA. See generally instrumentalities, and facilities must be “safe, adequate, and
Patillo & Fields, Antitrust and PURA: Look Before You Leap!, reasonable” according to what the Commission fixes as
28 Baylor L.Rev. 1029 (1976); Zimmerman, Overview: “just and reasonable” (§ 35(a)). The central theme logically
Competitive Principles in Regulated Industries, 39 Antitrust requires that competitive forces not be permitted to derange
L.J. 427 (1970); Hale & Hale, Competition or Control the official regulatory system of control. It is accordingly
V: Production and Distribution of Electric Energy, 110 provided that the Commission may not issue a certificate of
U.Pa.L.Rev. 57 (1961). Although the various public policies convenience and necessity to another public utility without
are interwoven in the present case, we shall separate them for first considering and assessing the effect such issuance might
purposes of discussion. have “on any public utility of the same kind already serving
the proximate area....” (§ 54(c)).

On the other hand, PURA contains other provisions that are
Monopoly Power vs. Competition
distinctly “antitrust” in nature and reflect a definite public
The regulatory powers granted the Commission under PURA policy in favor of competition as a regulating or controlling
are quite extensive and are based upon the political decision force applicable to public utilities. In these particular
that various utility services shall be supplied *100 the instances, it is plain that PURA does not insulate a public
public under a government-regulated monopoly system (§ 2). utility from the forces of competition and, indeed, prohibits
The Commission's power extends to the fixing of just and anticompetitive practices by the utility. For example, in
reasonable rates for such services (§§ 38, 39), which itself the case of telecommunications utilities, PURA provides as
necessitates that the Commission “fix proper and adequate ... follows in § 18:
methods of depreciation, amortization, or depletion of the
(a) It is the policy of this state to protect
several classes of property of each public utility” (§ 27(b)).
the public interest in having adequate
The agency's power extends further to such matters as the
and efficient telecommunications
fixing of standards, classifications, regulations, and practices
service available to all citizens
dealing with the supplying of utility services (§ 35(b)); the
of the state at just, fair and
general power “to ensure compliance with the obligations”
reasonable rates. The legislature finds
of public utilities as set out in PURA (§ 37); the issuance
that the telecommunications industry
of certificates of convenience and necessity, authorizing the
through technical advancements,
rendition of utility service after considering certain factors
federal, judicial and administrative
(§ 54); the power to disallow a public utility's sale of its
actions, and the formulation of
property or its contemplated merger with another public
new communications enterprises has
utility, depending upon where the Commission determines
become and will continue to be in

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Amtel Communications, Inc. v. Public Utility Com'n of Texas, 66 P.U.R.4th 140 (1985)
687 S.W.2d 95, 1985-2 Trade Cases P 66,725

many and growing areas a competitive
industry which does not lend itself
Discrimination vs. Equal Treatment
to traditional public utility regulatory
rules, policies, and principles; and [2] In a similar way, PURA demonstrates a central purpose
that therefore, the public interest that the Commission shall generally effectuate a public policy
requires that new rules, policies, against discrimination, particularly in basic utility services.
and principles be formulated and Other provisions imply, on the other hand, that in some
applied to protect the public interest circumstances discrimination may be in the public interest
and to provide equal opportunity to and there is, in such circumstances, actually a public policy in
all telecommunications utilities in a favor of discriminatory practices by a public utility regulated
competitive market place. It is the under the statute, even with regard to basic utility services.
purpose of this section to grant to
the commission the authority and the There can be no doubt that PURA embraces the time-honored
power under this Act to carry out the public policy against discrimination by a public utility in
public policy herein stated (emphasis the services it provides. This is clearly seen in § 38 which
supplied). provides as follows:

And in reference to all public utilities coming within the terms It shall be the duty of the
of the statute, § 47 of PURA specifically provides as follows: [Commission] to insure that every
rate made, demanded, or received
No public utility may discriminate
by any public utility, or by any
against any person or corporation that
two or more public utilities jointly,
*101 sells or leases equipment or
shall be just and reasonable. Rates
performs services in competition with
shall not be unreasonably preferential,
the public utility, nor may any public
prejudicial, or discriminatory, but
utility engage in any other practice
shall be sufficient, equitable, and
that tends to restrict or impair such
consistent in application to each class
competition (emphasis supplied).
of consumers (emphasis supplied).

[1] Given these rather definite and clear pronouncements In § 42, it is provided that the Commission, if it finds
of competing policies, it cannot reasonably be doubted that that a utility's rates are discriminatory and therefore “in
the Legislature intended the Commission to make, where violation of [a] provision of law,” shall determine a just
necessary and desirable in the particular case, whatever and reasonable rate, to be thereafter the legal rate the utility
adjustments and accommodations it considers necessary to may charge. Under § 45, a public utility is prohibited
effectuate the public interests underlying both competition from making or granting “any unreasonable preference or
and monopoly power. They may conflict in the process of advantage to any corporation within any classification, or
considering the issuance of a certificate of convenience and subject any corporation or person within any classification to
necessity under § 54; in the process of regulating “operations” any unreasonable prejudice or disadvantage”; and, moreover,
and “services” under § 18(b); in enforcing the prohibition a public utility subject to PURA may not maintain or establish
of § 47 through an action by the attorney general under §§ “any unreasonable differences as to rates or service either as
71 and 72; or they may arise, as in the present case, in between localities or as between classes of service.” Finally, §
the complaint process authorized by § 83 of PURA, where 47 provides that a public utility may not “discriminate against
they are interwoven with Bell's request for a revision of its any person or corporation that sells or leases equipment or
tariffs. In whatever context they arise, it is the Commission's performs services in competition with the public utility....”
task to assess the competing policies and decide where
the public interest lies, for nothing in PURA suggests a [3] On the other hand, it is implicit in the Commission's
legislative intention to protect any utility's private interest power of reasonable classification granted in section 37,
against competition. among other provisions, that some degree of discrimination
may be in the public interest in some circumstances; and
in such instances unequal treatment is neither a violation

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
Amtel Communications, Inc. v. Public Utility Com'n of Texas, 66 P.U.R.4th 140 (1985)
687 S.W.2d 95, 1985-2 Trade Cases P 66,725

of PURA nor a basis for invalidating agency actions and Within the range of possible distinguishing factors, there is
decisions. For example, in the matter of public utilities included to some extent the achievement of social policies
providing telecommunication services, the Commission must through utility regulation. In Ford v. Rio Grande Valley Gas
under § 18 decide when “traditional public utility regulatory Co., supra, the regulatory authority (a city) was permitted to
rules, policies, and principles” do not lend themselves to make a valid distinction when it included canneries among its
regulating a competitive aspect of the operations, services, class of low-rate customers for the purpose of attracting new
or practices of those particular utilities. Under §§ 37, 38, industry to the city. Notwithstanding a statutory prohibition
40 and 45, the Commission must decide when different against rate discrimination between consumers similarly
rates, preferences, or advantages become unreasonable situated or receiving the same kind of service, it has been held
*102 as between classes or within a class, and therefore or recognized that a public utility may validly discriminate in
unlawful. Under § 44, the Commission must decide when and favor of low-income or elderly persons. Rosenhouse, Public
under what conditions it will approve a difference between Utilities: Validity of Preferential Rates for Elderly or Low-
municipal and rural rates in excess of the 115% differential Income Persons, Annot., 29 A.L.R.4th 616–18 (1984).
set by that section.
In addition to the rates charged by a utility for its services,
[4] [5] The antidiscriminatory principle is not only discrimination may possibly be found in certain other
statutory, it is a common law principle as well. City of practices of the utility wherein it may depart from the standard
Texarkana v. Wiggins, 151 Tex. 100, 246 S.W.2d 622 of impartial treatment. These practices include the utility's
(1952). But the principle includes a permissible range of granting exclusive rights and privileges within the scope
unequal treatment which, while literally discriminatory, is of its public duties; its requiring security deposits of some
not unlawfully so. The dividing line is generally that drawn customers, but not all; and its affording different treatment in
by the rule of reasonableness, for mere inequality is not extending credit. See generally 64 Am.Jur.2d Public Utilities
itself unlawful discrimination. That is to say, the different §§ 38–41 (1972). The various practices may or may not
treatment practiced by the public utility must be founded upon constitute unlawful discrimination according to the facts of
a substantial and reasonable ground of distinction between the case. Id.
the favored and disfavored classes or individuals. United Gas
Corporation v. Shepherd Laundries Co., 144 Tex. 164, 189 [6] In any case, the validating or invalidating criterion is
S.W.2d 485 (1945). The ground of distinction may rest upon generally that of reasonableness applied to the distinguishing
such factors as: feature relied upon as a justification for departing from equal
treatment. Under PURA, the Commission is entitled to make
the cost of service, the purpose the first evaluation, subject to judicial review, in an exercise
for which the service or product of its judgment, special knowledge, and experience. Texas
is received, the quantity or amount Alarm & Signal Ass'n v. Public Utility Comm'n, supra, at 772–
received, the different character of the 73.
service furnished, the time of its use
or any other matter which presents a [7] [8] Implicit in all of the foregoing is this: the
substantial difference as a ground of principles of monopoly, competition, equal treatment, and
distinction. discrimination are not absolute, but only relative and abstract
principles evidencing competing public policies which PURA
Caldwell v. City of Abilene, 260 S.W.2d 712, 714
implicates in varying ways in the several functions of
(Tex.Civ.App.1953, writ ref'd), quoted with approval in
the Commission, such as ratemaking, the issuance *103
Texas Alarm & Signal Ass'n v. Public Utility Comm'n, 603
of certificates of convenience and necessity, and the
S.W.2d 766, 772 (Tex.1980). “There is no rule of thumb
enforcement of the mandates or prohibitions contained in
by which to determine whether the conditions of utility
PURA or in the rules or orders of the Commission. Such
service are similar or dissimilar. It is a question of fact to be
principles acquire meaning only in a particular factual
determined from the testimony in each case, and the burden
context. It is not enough simply to show that a given utility
of proof is on the complaining party.” Ford v. Rio Grande
practice results in unequal treatment. Bearing in mind these
Valley Gas Co., 141 Tex. 525, 174 S.W.2d 479, 480 (1943).
propositions, we turn to the specific points of error assigned
by Amtel in the present appeal.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
Amtel Communications, Inc. v. Public Utility Com'n of Texas, 66 P.U.R.4th 140 (1985)
687 S.W.2d 95, 1985-2 Trade Cases P 66,725

constituted unreasonable discrimination (§ 45); (b) whether
they constituted an unlawful restriction or impairment of
competition (§ 47); and (c) whether the “distance-sensitive”
AMTEL'S POINTS OF ERROR
charges permitted Bell resulted in rates that were unjust,
1. The findings of fact upon which the Commission's final unreasonable, and unreasonably discriminatory (§ 38).
order rests are insufficient in that they do not include findings
on the statutory criteria dispositive of the issues raised in the The Commission's final order includes the following under
agency proceedings. Amtel argues that the set of fact findings the heading “conclusions of law”:
made by the Commission do not include findings responsive
to the criteria implicit in PURA §§ 38, 45 and 47. We shall (a) There was under the evidence adduced a reasonable basis
first state the criteria as we understand them. for the difference in “rates” associated with the respective
makes of concentrator. (Presumably the word “rates” refers
Section 45 prohibits unreasonable discrimination by a utility to the charges permitted by Bell based upon length of line
as to rates or services and forbids a public utility to subject installed and used, derived from the rate applied thereto.)
any corporation or person “to unreasonable prejudice or
disadvantage.” It is, in our view, primarily a prohibition (b) “The evidence ... shows that [Bell] has legitimate reasons
against discriminatory practices by a public utility in the for refusing open access to its central offices.”
matter of rates or services.
(c) The disparity in charges occasioned by Bell's exclusion
[9] Section 47 forbids discrimination by a public utility policy and the “distance-sensitive” charges permitted by its
against competing suppliers of equipment or services and tariffs do not “indicate” a violation of PURA §§ 38, 45 or 47,
prohibits “any other practice that tends to restrict or impair or any other provision of PURA.
such competition.” In our view, this section is rather plainly
a prohibition against discrimination or any other practice that (d) The “rates” charged the answering service for either
tends to restrict or impair competition between a public utility make of concentrator, *104 and those charged “the ultimate
and the supplier of competing equipment or services. It is, customer,” are “cost-based.”
therefore, primarily an antitrust provision applicable in the
area of competing equipment and services, which may lie (e) “Setting rates at parity in this case would result in
outside the area of basic utility services. unreasonable rates which would discriminate against a class
of customers by charging the class more than a service is
Section 38 imposes upon the Commission a duty to worth.”
insure that its rates are just and reasonable and not
unreasonably discriminatory. It is, therefore, primarily a (f) “To the extent parity pricing is allowed, it is inevitable that
standard applicable to the Commission in its setting of the [Bell] will either under or overrecover its costs, and certain
rates permitted to be charged by a public utility. customers will pay more than their fair share, or will be
subsidized by other customers....”
Amtel complained to the Commission that Bell had, by the
combined effect of its tariff rates and its business policies (g) If parity pricing is allowed, Bell “will also under or
relative to concentrators, violated §§ 45 and 47; and if the overrecover its authorized rate of return, which is prohibited
Commission allowed Bell to maintain the discrimination or by Sections 39 and 40(a) of” PURA.
competitive disadvantage suffered by Amtel, in the tariff
amendments requested by Bell, the Commission would (h) The portion of Bell's proposed tariff amendment
violate its duty under § 38 to insure that Bell's rates were just requesting that “rates be set at parity for recurring charges
and reasonable and not unreasonably discriminatory. is unreasonable, causes discrimination between classes, is
not based on costs, and should be rejected ...”; and, it
From PURA §§ 38, 45 and 47, we therefore infer the “is unnecessary and improper because of the previous
following “criteria” to which Amtel refers in its contention conclusions of law that rates need not be set at parity in this
that they should have been the subject of agency findings of docket.”
fact: (a) whether Bell's exclusionary policy and its tariff rates

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 6
Amtel Communications, Inc. v. Public Utility Com'n of Texas, 66 P.U.R.4th 140 (1985)
687 S.W.2d 95, 1985-2 Trade Cases P 66,725

The foregoing are obviously findings of ultimate fact quite the finding that “parity” rates would either prevent Bell from
properly classified by the Commission as “conclusions of recovering its costs or enable it to recover more than its
law.” costs. As we understand the theory of “parity” as advanced
by the parties, it would allow Bell to recover the aggregate
Under the heading “findings of fact”, the Commission's final of its actual costs, notwithstanding that any artificially equal
order sets forth the following, among others: charges assigned both makes of concentrator might be high
or low as compared to Bell's actual cost for installation
(a) Bell's exclusionary policy is justified by reasons of and use of a particular make. The same may be said of
“security, control over persons not employed by [Bell] who the Commission's finding that “parity” charges would be
may not be properly trained, damage to equipment caused “unreasonable.” It can be so only in relation to some assumed
by these employees, work rules dealing with safety, and fire premise or standard that is not stated explicitly as the basis
codes”; and the cost of overcoming these should be borne by for that conclusion. And when *105 we look at the findings
the customer providing a concentrator to be installed in a Bell of basic fact made by the agency and set forth in its final
building. order, we find very little indeed to support the Commission's
judgmental inference that an artificially equal charge is bad
(b) The “Commission should neither require nor prohibit administrative policy in the circumstances and why it would
[Bell] from permitting the location of customer-owned result in unreasonably discriminatory rates “by charging [a]
concentrators or other equipment in [Bell's] buildings in order class more than a service is worth,” as opposed to what the
to leave the matter open for negotiation during the period of service costs. The word “worth” implies a value judgment,
divestiture.” of course, in comparison to a standard that is not stated. We
particularly do not find in the order any findings of basic fact
(c) “If parity pricing were to be required in this case, it would suggesting a fair and reasonable support for the intriguing
be necessary to establish a ‘phantom’ rental rate so as to treat conclusion that the “Commission should neither require nor
all equipment as if it were the same.” prohibit [Bell] from permitting the location of customer-
owned concentrators or other equipment in [Bell's] buildings
These conclusory inferences, while denominated “findings in order to leave the matter open for negotiation during
of fact,” appear rather plainly to be findings of ultimate fact the period of divestiture” (emphasis added). This conclusion
because they too clearly imply the Commission's exercise of suggests that the agency's deference to Bell's policy is in
“discretion or judgment ... based on a multitude of factors.” the nature of a temporary expediency not described in the
Lewis v. Gonzales County Savings and Loan Ass'n, 474 agency's findings of basic fact.
S.W.2d 453, 457 (Tex.1971). That is to say, they imply
judgments reached by the agency as to the validity of In light of such defects, we would prefer at this point to
Bell's exclusionary policy, whether the Commission should remand the case to the agency in order that it might exercise its
interfere with that policy, and why “parity” should not be discretion, experience, special knowledge and administrative
ordered as a remedy to the complaint made by Amtel. judgment in resolving these apparent defects in the set of
ultimate facts which it found and upon which it apparently
From the totality of these findings of ultimate fact, whatever based its decision in the case. We are not reasonably satisfied
the heading employed, it is evident that the Commission that the Commission would have made the same decision
assessed and acted upon the statutory “criteria” we have based upon its remaining findings of ultimate fact.
extracted from PURA §§ 38, 45 and 47. In other words,
it is manifest that the Commission did assess the criteria We do not, however, write on a clean slate. We must explicitly
of (1) unreasonable discrimination, (2) anticompetitive and in good faith attempt to follow the precedent set by the
practices, and (3) unjust, unreasonable, and unreasonably Supreme Court of Texas in Texas Health Fac. v. Charter
discriminatory rates, to conclude ultimately that no violation Medical-Dallas, 665 S.W.2d 446 (Tex.1984), even though we
of PURA §§ 38, 45 and 47 was “indicated.” do not approve the reasoning and result of that opinion. An
explanation is required.
Nevertheless, we agree that these findings by the Commission
do suggest, in our inexpert view of the matter, some defects in The transcending aspects of the controversy in Charter
reasoning by the agency. For example, we do not understand Medical were that three applicants sought the agency's

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Amtel Communications, Inc. v. Public Utility Com'n of Texas, 66 P.U.R.4th 140 (1985)
687 S.W.2d 95, 1985-2 Trade Cases P 66,725

authorization to erect and operate a health-care facility; each
facility was proposed to be erected in the same vicinity north The Supreme Court obviously considered the agency order to
of Dallas; and all three proposed to provide substantially have serious logical deficiencies. Nothing in the agency order
the same health-care services. Under applicable law, the explained the apparently contradictory findings of ultimate
agency was required to evaluate the competing applications fact that a “public need” existed for the two favored facilities
by reference to five criteria: (1) whether the area population but not for the third, when all three were proposed to offer the
and health-care requirements demonstrated a “public need” same services in the same vicinity. 665 S.W.2d at 452, 453.
for the proposed facility; (2) the economic feasibility of the The Court's examination of the agency's findings of ultimate
proposed facility; (3) its relationship to existing services and fact relative to the other four governing criteria resulted in
facilities; (4) whether it would affect adversely any existing grave doubt that these could support the agency's decision.
facility; and (5) whether there existed less expensive, more 665 S.W.2d at 453. Only three of the 213 findings of basic fact
effective, or more appropriate alternatives to the proposed which bore upon “public need” were considered valid by the
facility. See Charter Medical-Dallas v. Texas Health Fac., Court, along with four others which the Court felt could relate
656 S.W.2d 928, 931–34 (Tex.App.1983), rev'd 665 S.W.2d to “public need” even though the agency felt they bore upon
446 (Tex.1984). other criteria. The Court chose, nevertheless, not to remand
the case but to affirm the agency order on a basis that the Court
The agency determined that the facilities proposed by two of itself could construct a saving rationale from the seven valid
the applicants satisfied every criterion, but that the facility findings of basic fact alone. Id. This necessarily overruled the
proposed by Charter Medical satisfied none of them. In its holding of the Court of Appeals that a reviewing court could
review of the grounds for such determinations, as expressed not affirm the order on such a basis; and it abrogates several
in the findings of fact made by the agency, the Supreme generally accepted rules that apply to the judicial review of
Court expressed doubt that the findings were sufficient to an administrative order which embodies a decision that the
sustain the agency's conclusions on four of the five criteria agency alone is authorized to make under applicable law—
as they related to its decision refusing to authorize the for example, a determination to issue a license, to set a utility
Charter Medical facility. 665 S.W.2d at 453. Nevertheless, rate, or to act on a complaint about utility services.
the Supreme Court sustained the agency's decision because
it felt that seven of the agency's 213 findings of fact relating The first such rule is that a reviewing court “must judge the
to the criterion of “public need” justified by themselves the propriety of [agency] action solely by the grounds invoked
agency's determination that no such need existed for the by the agency.” Securities and Exchange Com. v. Chenery
facility proposed by Charter Medical. Only three of the Corp., 332 U.S. 194, 196, 67 S.Ct. 1575, 1577, 91 L.Ed. 1995
seven findings of fact referred to by the Supreme Court (1946). If those grounds are improper, the reviewing court
were thought by the agency to relate to the “public-need” may not uphold the agency order on a theory that the agency's
criterion: that the Charter Medical facility would not be near determination may be sustained on valid grounds not invoked
a general hospital; that it would be accessible only by private by the agency in its order—for example a fragment of its
automobile and ambulance, but not public transportation; and findings of fact or a theory not expressed in the order. For the
that the “recreational facilities” which would form a part of court to affirm the agency order on grounds or a theory not
the facility might not be built. Cf., 665 S.W.2d at 453 and expressly invoked by the agency constitutes an intrusion by
656 S.W.2d at 939–44. The remaining four findings were: the the court into the exclusive domain of the agency, that is, its
Charter Medical *106 facility would not be near a general right and duty to make the relevant determinations on grounds
hospital; the evidence did not show a physician interest in and a rationale considered sufficient by the agency. Id.
the Charter Medical facility “similar to the interest expressed
in the other two facilities ...”; the Charter Medical facility [10] [11] The second rule is a corollary of the first. The
would duplicate the services of the other two facilities if agency's order must clearly and explicitly set forth the ground
they were authorized; and the projected occupancy rates for upon which its determinations is based so that a reviewing
Charter Medical were not supported by competent evidence. court may know and understand that basis.
665 S.W.2d at 453. These four findings, in the opinion of the
agency, bore not upon “public need” but upon the criteria of If the administrative action is to be tested by the basis upon
economic feasibility and the relation of the proposed facility which it purports to rest, that basis must be set forth with
to existing facilities and services. 656 S.W.2d at 945, 948. such clarity as to be understandable. It will not do for a
court to be compelled to guess at the theory underlying

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Amtel Communications, Inc. v. Public Utility Com'n of Texas, 66 P.U.R.4th 140 (1985)
687 S.W.2d 95, 1985-2 Trade Cases P 66,725

the agency's action; nor can a court be expected to chisel
that which must be precise from what the agency has left Implicit in what we have said above is the proposition that
vague and indecisive. In other words, “We must know the antidiscrimination and antitrust provisions of PURA are
what a decision means before the duty becomes ours to say not absolute; nor, of course, are their opposites. Here, the
whether it is right or wrong.” United States v. Chicago, M. Commission's findings of ultimate fact apparently reflect an
St. P. & P.R. Co., 294 U.S. 499, 511 [55 S.Ct. 462, 467, agency theory, policy, or conclusion that the discrimination
79 L.Ed. 1023] ... and competitive disadvantage suffered by Amtel are not
unreasonable or unlawful in light of other factors clearly
Securities and Exchange Com. v. Chenery Corp., supra, implicit in the findings made by the Commission:
at 196–97, 67 S.Ct. at 1577–78. See generally Davis,
Administrative Law Text §§ 16.05–16.07 (1972). 1 (a) “Parity” is not an acceptable remedy for the discrimination
and competitive disadvantage suffered by Amtel because it
*107 [12] The agency order being silent as to the grounds would, in the Commission's judgment, result in rates that are
upon which the agency acted in finding a “public need” unreasonable, discriminatory, excessive, or insufficient with
for two of the facilities, but not the third, when all were respect to one or the other class of concentrator users;
proposed to provide substantially the same services in the
same vicinity, the Supreme Court was not, under the general (b) The Commission should not interfere in regard to Bell's
rule, free to supply the missing rationale. But it necessarily did exclusionary policy in order to leave the matter “open for
so—and without revealing what the rationale was. Moreover, negotiation during the period of divestiture”;
the Court's essential method of review in Charter Medical
is unquestionably to the effect that the agency order must *108 (c) Bell's exclusionary policy is justified by reasons
be upheld if the reviewing court is able to construct from of safety, training, work rules and fire codes, which the
any of the agency's individual findings of fact any ground Commission impliedly found to outweigh the contrary
or set of grounds which the court believes sufficient to considerations of competition and discrimination;
“support” in a general way the determinations reached by the
agency, even though the agency's order does not clearly and (d) The difference in charges associated with the two makes
explicitly state those grounds or rationale in a way that is of concentrator is based upon length of line installed and
sufficient for the reviewing court to understand them, even used, which is a reasonable ground of distinction in the
though those “supporting” grounds be only a fragment of Commission's judgment; and
the whole set of grounds upon which the agency acted in
the case, and even though other of the correlative grounds (e) “Parity” would be an unreasonable remedy for the
upon which the agency acted are of doubtful validity. We anticompetitive and discriminatory effects of which Amtel
shall, therefore, attempt to apply in our evaluation of the complains. (This finding apparently has reference to an
present appeal the rather generalized style of judicial review exposition included by the agency in its final order, setting
laid down by the Supreme Court in its Charter Medical forth at length the agency's rationale. A part of that rationale
opinion. We nevertheless respectfully request the Supreme includes the judgments that setting rates at “parity” would
Court to reassess its views in these matters for they are of be a difficult administrative process given all the possible
supervening importance to judicial review of the orders of variables involved; “parity” can in any event be only a
Texas administrative agencies. rough approximation and one of questionable value given the
administrative effort and cost involved; and “parity” raises
[13] Turning to the particulars of Amtel's first point of the spectre of “an unending cycle of proceedings to adjust
error, we observe that it is incorrect of Amtel to say that the [the applicable] rates to achieve parity where parity is not
Commission's final order does not include findings on the required” as an administrative policy under PURA.)
statutory criteria implicit in PURA §§ 38, 45 and 47. The
Commission indeed expressly found that the prohibitions and In summary, these findings are to the effect that sufficient
requirements of those statutory provisions were not violated. grounds exist in the Commission's judgment for Bell's
Moreover, the general tenor of the remaining findings of exclusionary policy and for not departing from the
ultimate fact is to explain in greater detail the validity of that administrative policy of “distance-sensitive” rates. Even
conclusion. though there are logical defects in several of these findings,

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Amtel Communications, Inc. v. Public Utility Com'n of Texas, 66 P.U.R.4th 140 (1985)
687 S.W.2d 95, 1985-2 Trade Cases P 66,725

they reflect that the Commission did assess the criteria in Sections” 38, 45 and 47; (b) “cost is not a controlling
implicit in PURA §§ 38, 45 and 47, to arrive ultimately criteria [sic] in setting rates”, but the agency assigned
at a decision that Bell's exclusionary policy and its tariff controlling effect to that criterion in the present case; and
rates did not combine to constitute a violation of the (c) “[t]he Commission does not have discretion to ignore
prohibitions and directives contained in those sections of the statutory guidelines” established in PURA §§ 38, 45
PURA. Notwithstanding the logical defects, no more was and 47. One must agree, of course, with the last named
required of the Commission under the opinion of the Supreme proposition—the Commission was not free to “ignore” the
Court in Charter Medical. We must therefore overrule criteria of PURA §§ 38, 45 and 47. One may agree as
Amtel's first point of error. well with the second proposition that “cost” is not the
sole criterion applicable to the case, for the exaggeration
[14] 2. The Commission's final order rests upon policy of a single criterion of several applicable to the case
considerations as opposed to the statutory criteria stated in would constitute reversible error. Federal Communications
PURA §§ 38, 45 and 47. Before turning to the particulars Commission v. RCA Communications, 346 U.S. 86, 73 S.Ct.
of Amtel's arguments under its second point of error, we 998, 97 L.Ed. 1470 (1953) (cause remanded to agency
should observe generally that “administration” is ordinarily for further consideration where its decision rested solely
defined by the very fact that an agency is effectuating on erroneous theory that competition was the controlling
policy, primarily the policies settled upon and declared by factor in determining “public interest”, when competition is
a legislative body. These legislative policies are commonly feasible).
expressed, of necessity, in the broadest possible terms, as in
PURA § 38 where the Commission is enjoined to “insure We are then left with determining whether the Commission
that every rate made ... shall be just and reasonable.” This considered the factors implicit in PURA §§ 38, 45 and 47;
is an expression typical of many where the legislature whether it erred in favoring a policy of “distance-sensitive”
cannot itself make a choice between all possible lines of rates; and whether it exaggerated the cost factor by giving it
policy in all possible circumstances that may arise, and it controlling effect when other factors were made applicable
therefore delegates to the agency, by necessary implication, by PURA §§ 38, 45 and 47. We hold the Commission's final
a power to make the final detailed choices by administrative order demonstrates that the agency did assess the factors made
policies made within any general policy limits set by the relevant by those sections of PURA; it did not exaggerate the
legislature and the purposes behind the statute. Allowing cost factor; and it acted on a demonstrably reasonable basis
administrative agencies to make and apply policies in in not altering the system of “distance-sensitive” charges for
its determination of contested cases has both advantages installation and use.
and disadvantages, but it is not forbidden so long as the
agency acts within constitutional and statutory limits. See As mentioned previously, the antidiscrimination and antitrust
generally Landis, The Administrative Process, Ch. II, “The criteria of PURA §§ 38, 45 and 47 are not absolute. The
Framing of Policies: the Relationship of the Administrative Commission is allowed discretion and judgment in such
and Legislative” (Greenwood Press 1974); Blachly and matters for it is also required under the statute to implement
Oatman, Administrative Legislation and Adjudication, Ch. the contraries of those public policies, as discussed at length
X, “Advantages of Administrative Adjudication” (Brookings in the first part of this opinion. Implicit in the Commission's
Institution 1934); Jaffe, Judicial Control of Administrative findings of ultimate fact is the proposition that the agency's
Action, at 20–25 (Little, Brown & Co. 1965). Therefore, we decision rests upon its considered judgment in adjusting the
must view Amtel's contentions as raising the issue of whether competing policies in the circumstances of the case.
the Commission's final order is within the limits allowed by
PURA §§ 38, 45 and 47. (It is not contended that the policies [16] [17] As correctly pointed out by Amtel, the
are unconstitutional.) Commission may make classifications, in a rate proceeding
at least, based upon such factors as “the cost of service,
[15] Amtel argues the following: (a) the Commission's the purpose for which the service or product is received,
findings of fact demonstrate that its decision was based the quantity or amount received, the different character of
on a Commission policy favoring “distance-sensitive” rates the service furnished, the time of its use or any other
over average rates (“parity”) and not upon an analysis of matter which presents a substantial difference as a ground
“the evidence *109 ... according to the criteria set out of distinction.” Caldwell v. City of Abilene, supra, (emphasis

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Amtel Communications, Inc. v. Public Utility Com'n of Texas, 66 P.U.R.4th 140 (1985)
687 S.W.2d 95, 1985-2 Trade Cases P 66,725

are unreasonable, discriminatory, excessive, or insufficient.
added); Texas Alarm & Signal Ass'n v. Public Utility Comm'n,
While Amtel states that this determination is not supported
supra. We may assume that the same principle of reasonable
by “substantial evidence,” its argument is not “evidentiary” at
classification implies that substantial differences may furnish
all. Rather, Amtel argues that the suggested remedies would
a basis for other agency action which applies different
not, as a matter of law, have the unlawful effect attributed to
treatment to different classes or individuals—here Bell and
them by the Commission; and, in any event, no findings of
Amtel as competing suppliers of concentrators to telephone-
basic fact demonstrate such unlawful effect.
answering services. We will further assume that where
substantial differences do exist, as grounds of distinction, it
Again, we find ourselves controlled by the rather generalized
is possible that an unreasonable application of the same rates
method of judicial review expressed and implied by the
may be discriminatory. See State ex rel. Utilities Commission
decision in Charter Medical, supra. We find that the
v. Edmisten, 291 N.C. 424, 230 S.E.2d 647 (1976). That is, in
Commission's final order contains findings of ultimate
our view, the issue made by Amtel's contentions in the present
fact implying that Amtel will suffer discrimination and
case. But within the zone of reasonableness, the application
competitive disadvantage by reason of the agency's decision
of the same rates to those in different circumstances would
not to implement the remedies suggested by Amtel. But, in
not be prohibited by any provision of PURA suggested to us.
the agency's view, these ill effects are justified by contrary
considerations established by other findings of ultimate fact.
[18] Here, the agency's findings of ultimate fact include
Again, we may not say that the agency's determination in
those to the effect that: (a) “parity” would be an unreasonable
that regard is outside the zone of reasonableness. We have
remedy for reasons pointed out in another part of the
discussed the same matters above and need not repeat them
agency's final order; and (b) Bell's exclusionary policy
here. We overrule Amtel's point of error.
is founded upon valid business grounds. Together these
suggest in the Commission's judgment that neither Bell's
Finding no error as assigned, we affirm the judgment of the
exclusionary policy nor the tariff system of equal rates based
district court.
upon distance should be altered by the Commission. Such
judgments are, of course, committed to agency discretion
in the first instance and we are unable to say that the
Commission's judgment in such matters lies outside the zone PHILLIPS, C.J., not participating.
of reasonableness. It presumably *110 considered that the
anticompetitive and discriminatory effects were offset by the GAMMAGE, Justice, concurring.
deleterious administrative effects of “parity” rates and an I agree that sufficient grounds exist in the Public Utility
administrative requirement that Bell immediately discontinue Commission's findings to sustain its final order; that the
its exclusionary policy. We overrule Amtel's second point of Public Utility Commission assessed the relevant criteria
error. established in PURA in arriving at its determination; that
the Commission acted reasonably within its discretion based
[19] 3. The Commission's final order is not supported by upon its findings regarding these criteria; and that the record
substantial evidence, and is contrary to law, insofar as it of the Commission proceeding contains substantial evidence
rests upon a determination that the remedies proposed by to support the Commission's finding that Bell's exclusionary
Amtel would be unlawful. The “remedies” referred to in this policy and tariff rates did not discriminate unlawfully against
point of error are three alternative suggestions made by Amtel AMTEL. This is all that is necessary to our review. Charter
as a means of removing the discrimination and competitive Medical-Dallas v. Texas Health Facilities Commission, 665
disadvantage suffered by Amtel: (a) “parity” of installation S.W.2d 446 (Tex.1984). I therefore concur only in the
and use charges for the two makes of concentrators; (b) affirmance of the judgment.
revision of Bell's exclusionary policy to permit the installation
of other makes of concentrator in Bell's central offices; or (c)
Parallel Citations
requiring Bell to place its concentrator's outside its central
offices. The determination referred to is the Commission's 687 S.W.2d 95, 1985-2 Trade Cases P 66,725
conclusion of law that such remedies would result in rates that

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Amtel Communications, Inc. v. Public Utility Com'n of Texas, 66 P.U.R.4th 140 (1985)
687 S.W.2d 95, 1985-2 Trade Cases P 66,725

Footnotes
1 It is, for several reasons, an obvious truism that a reviewing court “has neither the right nor the authority to lay out a precise form of
findings to be made by” an administrative agency in a contested case. Texas Health Fac. v. Charter Medical-Dallas, supra, at 452
(emphasis added). But this truism cannot mean that a reviewing court is entirely powerless with regard to the content of an agency's
final order when it is made the subject of a suit for judicial review. The reviewing court must have at minimum the power to require
that an agency's findings of fact and conclusions of law be set out in a manner that is understandable to the court, which is probably
not technically trained in the area of the agency's expertise and experience, and sufficient to enable the court to perform its statutory
duty of judicial review. The latter most often includes, of course, the court's task of deciding: (1) whether the agency could have
inferred its findings of basic fact from the evidence adduced in the agency and included in the record as a whole; and (2) whether the
agency's findings of basic fact fairly and reasonably support its conclusions of law. Unless the reviewing court has this limited power
over the form and content of an agency's final order, the court as a practical matter lacks the power of judicial review altogether. But
the limited power is necessarily implied in the very grant of the power of judicial review, for the reviewing court “must know what
a decision means before the duty [arises] to say whether it is right or wrong.” United States v. Chicago, M. St. P. & P.R. Co., supra.
Conversely, it is a ludicrous exercise for a court to attempt to judge the validity of the order when it is not understandable.

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 12
Anderson v. City of Seven Points, 806 S.W.2d 791 (1991)

the judgment of the trial court and rendered judgment denying
the petition for writ of mandamus. 805 S.W.2d 791. We
806 S.W.2d 791
reverse and remand this cause to the court of appeals.
Supreme Court of Texas.

M.D. ANDERSON, Jr., et al., Petitioners, In March 1988, a group of citizens (citizens) submitted
v. a petition requesting that the mayor order an election on
CITY OF SEVEN POINTS, Tx. & Walter the question of abolishing the corporate existence of the
city of Seven Points to the mayor. The petition contained
Talliaferro, Mayor Pro Tem., Respondents.
the signatures of 207 persons. The mayor appointed a
No. C–9682. | Feb. 20, 1991. | committee of three persons to study and evaluate the petition.
Rehearing Overruled April 17, 1991. Approximately six days later, the committee filed a report
with the mayor and the city council. The report concluded
Citizens filed petition for writ of mandamus, seeking to that the petition contained the signatures of 176 qualified
require mayor to hold election on question of abolishing voters and that there were 358 qualified voters in the city
city's corporate existence. The District Court Number 173, of Seven Points “as close as can be determined.” Based
Henderson County, Tommy Wallace, J., granted petition. upon the report, the mayor *793 refused to order the
On review, the Tyler Court of Appeals, Twelfth Supreme election. Subsequently the citizens filed a petition for writ of
Judicial District, ––– S.W.2d ––––, reversed and rendered mandamus and requested that the trial court order the mayor
judgment denying petition. On appeal, the Supreme Court, to order the abolition election.
Hightower, J., held that: (1) citizens were not required to
prove that mayor's refusal to grant their petition and order At trial, the court, without a jury, heard conflicting testimony
election was arbitrary and unreasonable, and (2) evidence was concerning the number of qualified voters in the city of
Seven Points. Several witnesses testified that the number of
legally sufficient to support trial court's finding that petition
requesting mayor to order election was signed by at least two qualified voters was between 240 and 260. The chairman of
thirds of qualified voters. the committee appointed by the mayor to study and evaluate
the citizens' petition testified that the total number of qualified
Reversed and remanded. voters was 358. In its findings of fact, the trial court found
that the number of qualified voters of the city of Seven Points
was less than 400 and that a petition signed by at least two-
Attorneys and Law Firms thirds of the qualified voters was submitted to the mayor.
The trial court granted the petition for writ of mandamus
*792 Ronald D. Hinds, Reyna, Hinds & Crandall, Dallas,
and ordered the mayor (and anyone performing his duties
for petitioners.
and responsibilities) and the city of Seven Points “to perform
Ronald R. Waldie, Seven Points, for respondents. all legal requirements for the holding of a valid election
on the question of the abolition of the municipal corporate
existence of the City of Seven Points and such election is to
be held on the 6th day of May, 1989.” The court of appeals,
OPINION
stating that the citizens failed to discharge their burden to
HIGHTOWER, Justice. present evidence that demonstrated that the mayor's refusal
to grant the petition and order the election was arbitrary and
[1] [2] This is an appeal in an action for a writ of unreasonable, reversed the trial court and rendered judgment
mandamus initiated in the trial court. 1 In 1988, a petition denying the petition for writ of mandamus. 805 S.W.2d 791.
requesting that the mayor order an election on the question of
abolishing the corporate existence of the city of Seven Points The citizens argue that they were not required to prove that the
was submitted to the mayor. After the mayor refused to order mayor's refusal to grant their petition and order the election
the election, a group of citizens filed a petition for writ of was arbitrary and unreasonable. We agree.
mandamus. The trial court granted the petition for writ of
mandamus and ordered the mayor of the city of Seven Points [3] [4] A writ of mandamus will issue to compel a public
to order the abolition election. The court of appeals reversed official to perform a ministerial act. Womack v. Berry, 156

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Anderson v. City of Seven Points, 806 S.W.2d 791 (1991)

Tex. 44, 291 S.W.2d 677, 682 (1956); Turner v. Pruitt, 161 prove that the mayor's refusal to grant their petition and order
Tex. 532, 342 S.W.2d 422, 423 (1961). An act is ministerial the election was arbitrary and unreasonable.
when the law clearly spells out the duty to be performed by
the official with sufficient certainty that nothing is left to The remaining issue before this court is whether the evidence
the exercise of discretion. Depoyster v. Baker, 89 Tex. 155, is legally insufficient to support the trial court's finding that
34 S.W. 106, 107 (1896); Parrish v. Wright, 293 S.W. 659, the petition was signed by at least two-thirds of the qualified
663 (Tex.Civ.App.—Amarillo 1927, writ ref'd); Lampson voters. Before we consider this issue, however, we must
v. South Park Ind. School Dist., 698 S.W.2d 407, 423– determine whether the trial court's finding that the petition
24 (Tex.App.—Beaumont 1985, writ dism'd). Furthermore, was signed by at least two-thirds of the qualified voters is
a writ of mandamus will not issue to compel a public reviewable for legal sufficiency of the evidence.
official to perform an act which involves an exercise of
discretion. However, this rule is not without exception—a [6] [7] In its findings of fact, the trial court found, among
writ of mandamus may issue in a proper case to correct a clear other things, that the number of qualified voters of the city
abuse of discretion by a public official. Womack v. Berry, of Seven Points was less than 400 and that a petition signed
291 S.W.2d at 682; Dykes v. City of Houston, 406 S.W.2d by at least two-thirds of the qualified voters was submitted
176, 183 (Tex.1966). This case, however, does not involve to the mayor. In the court of appeals, the city of Seven
an abuse of discretion by a public official but involves the Points asserted a point of error complaining that the evidence
performance of a ministerial act by a public official. is legally insufficient to support the trial court's finding
that the petition was signed by at least two-thirds of the
[5] The petition requesting that the mayor order an election qualified voters. Findings of fact in a case tried to the court
on the question of abolishing the corporate existence of the have the same force and dignity as a jury's verdict upon
city of Seven Points was filed pursuant to section 62.002 of questions. L.R. French v. Diamond Hill Jarvis Civic League,
the Texas Local Government Code which states: 724 S.W.2d 921, 922 (Tex.App.—Fort Worth 1987, writ
ref'd n.r.e.); Reyes–Retana v. PTX Food Corp., 709 S.W.2d
(a) The mayor of the municipality shall order an election 695 (Tex.App.—San Antonio 1986, writ ref'd n.r.e.). The
on the question of abolishing the municipality's corporate trial court's findings of fact are reviewable for legal (and
existence if a petition requesting that the election be held factual) sufficiency of the evidence by the same standards
is submitted to the mayor and is signed by at least 400 as applied in reviewing the legal (and factual) sufficiency of
qualified voters of the municipality. However, if a majority the evidence supporting a jury's finding. Creative Mfg., Inc.
of the qualified voters of the municipality is less than 400, v. Unik, Inc., 726 S.W.2d 207, 210 (Tex.App.—Fort Worth
the petition must be signed by at least two-thirds of the 1987, writ ref'd n.r.e.); Okon v. Levy, 612 S.W.2d 938, 941
qualified voters of the municipality. (Tex.Civ.App.—Dallas 1981, writ ref'd n.r.e.). Under these
circumstances, we are unable to ascertain why a trial court's
(b) The mayor shall order the election to be held on the
finding of fact in a petition for writ of mandamus should be
same date as the next general election at which the office
subject to a different standard of review than any other finding
of mayor is to be filled.
of fact by a trial court. Therefore, we hold that the trial court's
TEX. LOCAL GOV'T CODE ANN. § 62.002 (Vernon 1988) finding that the petition was signed by at least two-thirds of
(emphasis added). Section 62.002 spells out the act to be the qualified voters is reviewable for legal sufficiency of the
performed by the mayor with sufficient certainty so that evidence. 2
nothing is left to the exercise of discretion. Once the trial
court determined that a majority of the qualified voters was [8] We now consider whether the evidence is legally
less than 400 and the petition was signed by at least two- insufficient to support the trial court's finding that the petition
thirds of the qualified voters, the mayor had no discretion; was *795 signed by at least two-thirds of the qualified
therefore the act became ministerial and the trial court was voters. In making this determination, we consider only the
required to grant the *794 petition for writ of mandamus evidence and inferences tending to support the trial court's
and order an election on the question of abolishing the city's finding and disregard all evidence to the contrary. Garza
corporate existence. Thus, under the facts and circumstances v. Alviar, 395 S.W.2d 821, 823 (Tex.1965). If there is any
of this case, we hold that the citizens were not required to evidence of probative value to support the trial court's finding
that the petition was signed by at least two-thirds of the

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Anderson v. City of Seven Points, 806 S.W.2d 791 (1991)

petition contained the valid signatures of 176 qualified voters
qualified voters, we must find that the evidence is legally
and the court of appeals concluded that the petition contained
sufficient. In re King's Estate, 150 Tex. 662, 664–65, 244
the valid signatures of 198 qualified voters. Under these facts
S.W.2d 660, 661–62 (1951). 3
and circumstances, we hold that there is some evidence that
the petition was signed by at least two-thirds of the qualified
[9] At trial, the court heard conflicting testimony concerning
voters.
the number of qualified voters in the city of Seven Points.
Several witnesses for the citizens testified that the number
The City of Seven Points also asserted a factual insufficiency
of qualified voters was between 240 and 260. Mr. M.D.
point of error in the court of appeals; however, the court
Anderson, Jr., a former city councilman and a resident of the
of appeals sustained the point based upon its erroneous
city since 1975, has actively campaigned for a local option
conclusion that the citizens failed to discharge their burden
election and for several city council elections. Mr. Anderson
to present evidence that demonstrated that the mayor's
has gone door-to-door during these elections and has looked
refusal to grant the petition and order the election was
at every piece of property in the city. He testified that the total
arbitrary and unreasonable. Since we hold that the citizens
number of qualified voters when the petition was submitted to
were not required to prove that the mayor's refusal to
the mayor was between 240 and 260. Ms. Virginia Springer
grant their petition and order the election was arbitrary and
has been a resident of the city since 1973. Based upon her
unreasonable, we remand the cause to the court of appeals for
comparison of voter registration lists from former municipal
reconsideration of the factual insufficiency point of error.
elections and current voter registration information from
certain precincts in the city, she testified that the total number
For the reasons explained herein, we reverse and remand this
of qualified voters in the city was between 247 and 250. The
cause to the court of appeals.
petition submitted to the mayor contained the signatures of
207 persons. However, the mayor's report concluded that the

Footnotes
1 This is an appeal from an original proceeding for a writ of mandamus initiated in the trial court which is different from an original
proceeding for a writ of mandamus filed in an appellate court. An original proceeding for a writ of mandamus initiated in the trial
court is a civil action subject to trial and appeal on substantive law issues and the rules of procedure as any other civil suit:
The relief sought to be effected through its aid is asked, as in any other case, by a petition alleging the facts by virtue of which it
is claimed, with a prayer for such judgment as the facts warrant. The defendant is served and required to answer as in any other
suit, and the case proceeds to trial and judgment as any other action, and there is no distinguishable difference in principle in
the course of proceeding and result attained in it and any other suit in the District Court. When the judgment is rendered by the
court, unless superseded or suspended by writ of error or appeal, it is carried into effect by the appropriate writ....
******
And as this court has appellate jurisdiction in all manner of pleas, plaints, motions, causes and controversies, which may be
brought before it from the District Court, we think it clear that the right of this court to review the judgment of the District Court
cannot be denied. It must follow, as no distinction is made by the law authorizing an appeal in this and other cases, that the
judgment of the District Court may be superseded by an appropriate bond for this purpose, pending the appeal in this court.
Griffin v. Wakelee, 42 Tex. 513, 516 (1875). See Hughes v. McDonald, 122 S.W.2d 366, 370 (Tex.Civ.App.—Austin 1938), rev'd
on other grounds, 137 Tex. 21, 152 S.W.2d 327 (1941). An original proceeding for a writ of mandamus filed in an appellate court
is governed by the unique requirements of Rule 121 of the Texas Rules of Appellate Procedure. TEX.R.APP.P. 121. See Jannise v.
Cain, 759 S.W.2d 958, 960 (Tex.App.—Beaumont 1988, no writ). Furthermore, the granting of a writ of mandamus by a court of
appeals may not be appealed to this court but is reviewable by writ of mandamus filed in this court. See Johnson v. Fourth Court
of Appeals, 700 S.W.2d 916, 917–18 (Tex.1985).
2 Relying upon Deal v. Bonner, 700 S.W.2d 721 (Tex.App.—Beaumont 1985, no writ), the citizens argue that the standard of review
on appeal in this case is whether the trial court abused its discretion in granting the petition for writ of mandamus. We disagree. Once
the trial court determined that a majority of the qualified voters was less than 400 and the petition was signed by at least two-thirds
of the qualified voters, the mayor had no discretion and the act became ministerial. Furthermore, under these circumstances, the trial
court had no discretion and was required to grant the petition for writ of mandamus. If the trial court had not granted the petition for
writ of mandamus, it would have committed reversible error. Similarly, if the trial court determined that a majority of the qualified
voters was less than 400 and the petition was not signed by at least two-thirds of the qualified voters, the trial court would have no

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Anderson v. City of Seven Points, 806 S.W.2d 791 (1991)

discretion and would be required to deny the petition for writ of mandamus. Under those circumstances, if the trial court had not
denied the petition for writ of mandamus, it would have committed reversible error.
In Deal v. Bonner, a petition requesting an election on the question of abolishing the corporate existence of the city of Hudson was
submitted to the mayor. After the mayor refused to order the election, a group of citizens filed a petition for writ of mandamus.
After finding that the citizens' petition requesting an election was signed by more than 400 qualified voters, the trial court granted
the petition for writ of mandamus and ordered the mayor to order the abolition election. 700 S.W.2d at 722. Among other things,
the court of appeals, in dicta, stated “that appellate courts were reluctant to overturn district judges, either in the granting or refusing
of a writ of mandamus, unless a clear abuse of the trial judge's discretion was lucidly demonstrated.” Id. at 724. Since we are unable
to ascertain why a trial court's finding of fact in a petition for writ of mandamus should be subject to a different standard of review
than any other finding of fact by a trial court and we hold that the trial court's finding that the petition was signed by at least two-
thirds of the qualified voters of the city of Seven Points is reviewable for legal sufficiency of the evidence, we disapprove Deal
v. Bonner to the extent that it conflicts with this opinion.
3 Legal insufficiency challenges may only be sustained when the record discloses (1) a complete absence of evidence of a vital fact,
(2) the court is barred by rules of law or of evidence from giving weight to the only evidence offered to prove a vital fact, (3) the
evidence offered to prove a vital fact is no more than a mere scintilla, and (4) the evidence established conclusively the opposite of
the vital fact. See Calvert, “No Evidence” and “Insufficient Evidence” Points of Error, 38 TEX.L.REV. 361, 362–63 (1960).

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
City of Austin v. Deats, 32 S.W.2d 685 (1930)

oils to be used or sold at such filling station, the location
of public buildings, schools and places of public resort with
32 S.W.2d 685
reference to the location of such filling station, the character
Court of Civil Appeals of Texas, Austin.
and condition of public traffic on the streets immediately
CITY OF AUSTIN ET AL. contiguous and in the neighborhood of such proposed station,
v. the hazards presented by the use of the sidewalks as a means
of ingress and egress to such filling station, the liability of
DEATS. a1
such filling station to become a nuisance or offensive to the
inhabitants or occupants of buildings or residences adjacent
No. 7500. | Oct. 29, 1930. |
thereto or in the neighborhood thereof, the length of time that
Rehearing Denied Nov. 19, 1930.
existing filling stations have been in operation and the consent
Appeal from District Court, Travis County; George Calhoun, to or acquiescence in and location by the occupants or owners
Judge. of the adjacent buildings or residences.

“Section 4. That any person who may violate any provisions
Suit by Paul M. Deats against the City of Austin and others.
of this ordinance shall be deemed guilty of a misdemeanor
From a decree for plaintiff, defendants appeal.
and upon conviction thereof shall be fined any sum not less
than $10.00 nor more than $200.00 and each day's violation
Affirmed.
of any of the terms of this ordinance is hereby declared to be
a distinct and separate offense and punishable as such.”
Attorneys and Law Firms
Appellee made various applications for a permit to construct
*686 J. Bouldin Rector, A. L. Love, and Geo. E. Shelley, all a gasoline filling station on his property at the intersection
of Austin, for appellants. of Rio Grande and Nineteenth streets, which were refused;
and he instituted this proceeding for a mandamus to compel
Jno. W. Hornsby and Stanley C. Hornsby, both of Austin, for the issuance of the permit and to enjoin the city and its
appellee. officials from interfering with him in the construction and
operation of the gasoline filling station, alleging: (a) That,
Opinion assuming the ordinance to be valid, the refusal of his permit
under the facts was arbitrary and constituted an unfair and
BLAIR, J.
unjust discrimination against him; and (b) that the ordinance
An ordinance passed by the city of Austin reads, in part, as deprived him of his property without compensation and took
follows: it without due process of law, and denied him equal protection
of law, in violation of both federal and state Constitutions.
“Sec. 1. That it shall be unlawful for any person to erect,
construct, build, operate or maintain any gasoline filling The case was tried without a jury and the trial court found: (a)
station within the corporate limits of the City of Austin That appellants acted arbitrarily in refusing appellee's permit,
without having first obtained a permit for such purpose from and were “guilty of an unfair and unjust discrimination”
the City Council. against him under the facts; and (b) that the ordinance
was invalid on its face, “for the reason that said ordinance
“Section 2. That the term ‘gasoline filling station’ as used in attempts to authorize and empower said city council to
Sec. 1 of this ordinance is hereby defined to be a place or prejudge and declare a legitimate business a nuisance per se,
building where gasoline or other explosive oils are sold to the without regard to whether it was in fact, and before such
public or supplied to owners or drivers of automobiles from business has come into existence; and because such ordinance
such place or filling station. would deprive the plaintiff of the lawful use of his property,
which is a deprivation of the property itself, without due
“Section 3. That in granting or refusing the permit provided
process of law guaranteed under both the federal and state
for in Sec. 1 of this ordinance, the City Council shall take
constitutions.” Appellee was awarded a permanent injunction
into consideration the place where such filling station is
against appellants as prayed; hence this appeal.
proposed to be established, its contiguity to other buildings
and residences, the explosive character of the gasoline and

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
City of Austin v. Deats, 32 S.W.2d 685 (1930)

refusal was a reasonable exercise of the discretionary powers
The evidence shows that appellee first made application for vested in the city council, as regards such matters; and that
the permit April 27, 1927, about three months prior to the this is especially true, in view of the rule that the exercise of
enactment of the ordinance; and since its enactment he has such discretionary powers by the city council is not subject
made several applications for the permit; all of which have to judicial review, in absence of clear evidence that such
been refused by the city council without any reason being discretion has been abused. We have reached the conclusion
given for such refusal; and in some instances the city council that the evidence supports the findings of the trial court that
delayed passing upon the applications without any excuse for the action of the city council in refusing the permit was
such delay. The city council did not give to appellee a hearing arbitrary and constituted an unfair and unjust discrimination
on any of his applications. The evidence is also undisputed against appellee; and that these findings are binding upon
that the city council had both before and after the passage this an appellate court. Cain v. City of San Antonio (Tex.
of the ordinance granted several permits to other persons Civ. App.) 28 S.W.(2d) 190. The city council dilly-dallied
to locate gasoline filling stations of a type similar to that with appellee's applications for the permit, and then refused
appellee desired to construct on the same street and at points them without giving any reason for the action. It granted
which came more nearly within the inhibitions specifically permits to other persons to locate gasoline filling stations on
enumerated in the ordinance. The same was also shown to the same street and at points which come more nearly within
be true with respect to permits granted to other persons on the inhibitions specifically enumerated in the ordinance, and
other streets in the city, both before and after the passage of at no time gave appellee a hearing on his applications. The
the ordinance. The city council was not shown to have at any evidence detailed supports the trial court's findings, and was
time heard any evidence concerning the question of whether sufficiently clear to show an abuse of the council's discretion
the operation of appellee's filling station might be reasonably in the matter.
expected to constitute a nuisance; nor was it shown that
any person owning a residence or business in the immediate [3] Nor do we sustain appellants' contention in this
vicinity of appellee's property ever *687 protested or made connection that the acts of the city council are immaterial
any complaint with regard to the construction of the filling in granting permits to other persons at points on the same
station; and the only evidence appellants offered on the trial street and on other streets, on the question of whether the
of the case in the district court was that of its city engineer, city council acted arbitrarily in the matter. Appellants cite, in
who testified that the construction of the filling station at the support of this contention, the case of Zucht v. King (Tex.
point in question would tend to increase traffic hazards; but Civ. App.) 225 S. W. 267; Riggs v. City of Hot Springs, 181
admitted that the city council had granted permits to others Ark. 377, 26 S.W.(2d) 70; Chimene v. Baker, 32 Tex. Civ.
on the same street, which, as regards traffic hazards, were App. 520, 75 S. W. 330. But these cases are not in point;
“in a more aggravated form.” Appellee's witness controverted they simply hold that the acts of the city council in granting
the city engineer's testimony on the issue of increased traffic or refusing such permits are not to be considered in arriving
hazards. The evidence also shows that appellee offered to at the validity or invalidity of a particular city ordinance.
set his property line or curb back ten feet in order to offset The question here is the authority of the courts to review the
traffic hazards. The evidence showed that appellee's property action of a municipal corporation exercising its police power
was of greater value for a filling station than for a residence, to determine whether it has acted reasonably or arbitrarily in
for which purpose it had been theretofore used. The agreed the premises.
facts showed that on Nineteenth street, beginning on the block
where appellee's property was situated and extending east
six contiguous blocks, there were thirteen various business Appellants' second contention is that the various acts of the
institutions, including several filling stations of the kind city council in refusing appellee's application for a permit and
appellee proposed to construct and operate. A real estate agent in granting the permits to others similarly situated to appellee
of long standing and familiar with the conditions in Austin, were immaterial, and afforded no reason for the granting of
testified that Nineteenth street was now practically a business the injunction, if in fact the council's action was a reasonable
street within the distance of the six blocks, and that it would exercise of its discretionary powers. This proposition merely
eventually become so entirely. states the question above discussed in another way. However,
[1] [2] Appellant's first contention is that the evidence it is based upon appellants' special answer that, because of the
above detailed fails to show that the refusal of the permit was construction and operation of the particular filling station at
arbitrary or discriminatory; but to the contrary shows that its the point in question, it would tend to increase traffic hazards;

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
City of Austin v. Deats, 32 S.W.2d 685 (1930)

cases follow the well-settled rule announced in 7 R. C.
to interfere with lighting of the streets; to obscure the view of
L. (permanent supplement) 4714, § 112, as follows: “The
persons traveling on the streets; create additional violations
judicial department of the government has authority to review
of the traffic laws; interfere with citizens in the use of their
the action of a municipal corporation exercising the police
nearby residences; increase the fire hazard by storage of oil
power, and restrict it to what is reasonable. Pearson v. Twohy
and gasoline and other inflammables on the premises, thereby
Bros. Co., 113 Oregon, 230, 231 P. 129, 36 A. L. R. 1113.”
creating a nuisance, which the city under its police power had
See also Ex parte Adlof, 86 Tex. Cr. R. 13, 215 S. W. 222;
the right to regulate and control, in aid of and as promoting
Invader Oil Co. v. Ft. Worth (Tex. Civ. App.) 229 S. W. 616;
the public health, safety, or welfare of its inhabitants.
Bowie v. Painter (Tex. Civ. App.) 255 S. W. 498.
The trial court specifically found on all these issues contrary
A complete answer of this contention of appellant will also be
to appellants' contention, and that the construction and
found in the fact that the city council did not base their refusal
operation of the gasoline filling station under the evidence
of the permit upon any hearing or evidence which tended
adduced did not create a nuisance, nor interfere with the
to show that the filling station would reasonably become a
public health, safety, nor welfare of the citizens of Austin, as
nuisance by operation.
alleged by appellants. In this connection, appellants further
contend that, since there was a conflict in the evidence as to Our above holding that the city council acted arbitrarily
whether the construction and operation of the filling station and unreasonably in refusing appellee's permit to construct
would constitute a nuisance, the action of the city council in the filling station disposes of the entire case, and it is not
the matter was conclusive upon the courts, unless the acts necessary that we pass upon the constitutionality of the
of the city council were clearly arbitrary. We have already ordinance in question. However, in passing, we find that
disposed of the question that the council acted arbitrarily. similar ordinances have been upheld in numerous cases by
As supporting this contention, appellants cite the cases of the Courts of Civil Appeals in this state and by courts in
Heckman v. City of Independence, 127 Kan. 658, 274 P. other states. The following cases are now pending in the
732; Huddleston v. Burnett, 172 Ark. 216, 287 S. W. 1013; Supreme Court on writ of error involving the constitutionality
*688 Wood v. City of Chickasha, 125 Okl. 212, 257 of ordinances similar to the one in question: City of San
P. 286. A careful examination of these cases shows they Antonio v. Thompson (Tex. Civ. App.) 23 S.W.(2d) 796; City
merely hold that, while a city may not declare by ordinance of Wichita Falls v. Continental Oil Co. (Tex. Civ. App.) 5
a lawful business to be a nuisance per se, it may do so S.W.(2d) 561.
upon proof that it may reasonably become a nuisance by
operation; and that neither a trial court nor an appellate court, We find no error in the trial court's judgment, and it is
reviewing the action of a municipal corporation exercising affirmed.
police power upon sufficient evidence that a business may
reasonably become a nuisance by operation, will disturb the Affirmed.
action of the municipal corporation. In other words, these

Footnotes
a1 For opinion denying second motion for rehearing, see 34 S.W. (2d) 917.

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
City of Austin v. Nelson, 45 S.W.2d 692 (1931)

the neighborhood thereof, the length of time that existing
filling stations have been in operation and the consent to or
45 S.W.2d 692
acquiescence in and location by the occupants or owners of
Court of Civil Appeals of Texas, Austin.
the adjacent buildings or residences.”
CITY OF AUSTIN
Section 4 prescribed the penalties for violation of the
v.
ordinance.
NELSON.
Appellee applied to the city council for a permit to erect,
No. 7628. | Nov. 4, 1931. maintain, and operate a gasoline filling station on his property
at the intersection of Rio Grande and Nineteenth streets, the
Appeal from District Court, Travis County; George Calhoun,
station to be erected under the usual, ordinary, proper, and
Judge.
reasonable regulations and directions of the city council with
respect to plans and specifications, and the kind and character
Suit by J. H. Nelson against the City of Austin. Judgment for
of material; and to be constructed in accordance with the usual
plaintiff, and defendant appeals.
and customary regulations for protection against hazards of
the filling station business; and in all respects and details
Affirmed.
complying with *693 the rules and regulations of the city
of Austin for the erection and maintenance of a gasoline
Attorneys and Law Firms filling station. At a regular meeting of the city council, the
application was “read and referred to the Safety Committee
*692 J. Bouldin Rector, A. L. Love, and Geo. E. Shelley, all for their recommendations.” This committee was composed
of Austin, for appellant. of the captain of traffic police, the fire chief, the fire marshal,
and the city engineer. The captain of traffic police made a
Hart & Patterson, of Austin, for appellee.
written report of his investigation to the city engineer, and
Opinion recommended that the permit be not granted because the
intersection of the two streets in question was irregular and
BLAIR, J. “on a sloping hill” and “detrimental to traffic, and creates a
hazard to a certain degree * * * due to the street car line being
This litigation arose out of the following facts: Section 1 of on Rio Grande, and the narrow width of Rio Grande north of
an ordinance of the city of Austin makes it unlawful for any 19th and the destruction to the view of traffic which is going
person to erect, maintain, and operate any gasoline filling east on 19th, turning north on Rio Grande, * * * the hazard
station within its corporate limits without first obtaining a would be created in cars entering and leaving the station.” The
permit from the city council. Section 2 defines the term fire chief and fire marshal made the following report of their
“gasoline filling station” as used in the ordinance. Section investigation to Adam R. Johnson, city manager: “We cannot
3 reads as follows: “That in granting or refusing the permit recommend the granting of this permit, as the location is in a
provided for in Section 1 of this ordinance, the City Council strictly residential district, and that it is a recognized fact that
shall take into consideration the place where such filling where gasoline is handled or stored, that there always exists
station is proposed to be established, its contiguity to other a fire hazard as well as the chance of an explosion, even with
buildings and residences, the explosive character of the the best of approved appliances. We do not think that this type
gasoline and oils to be used or sold at such filling station, of business should be carried on in a district that is strictly
the location of public buildings, schools and places of residential.”
public resort with reference to the location of such filling
station, the character and condition of public traffic on the The city engineer made the following report to Adam
streets immediately contiguous and in the neighborhood R. Johnson, city manager: “As a member of the Safety
of such proposed station, the hazards presented by the Committee I do not recommend the granting of a permit for
use of the sidewalks as a means of ingress and egress a filling station at the northeast corner of Nineteenth and Rio
to such filling station, the liability of such filling station Grande Streets on account of the increased hazard which will
to become a nuisance or offensive to the inhabitants or be caused by the proposed use of the property.”
occupants of buildings or residences adjacent thereto or in

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
City of Austin v. Nelson, 45 S.W.2d 692 (1931)

of law; and appellee was awarded a permanent injunction
On May 22, 1930, the chief clerk of the city of Austin wrote against the city of Austin and its officers, servants and
appellee as follows: “This is to advise that your application to agents, from interfering in any manner with appellee or his
erect gasoline filling station on Lot 6, Outlot 23, Division ‘D’, agents, servants and employees, in the erection, maintenance,
was read at the Council meeting this morning, and, as is the and operation of the proposed gasoline filling station in
rule in such matters, same will lie over for one week before compliance with all the legal and valid building ordinances of
being acted upon.” the city of Austin; hence this appeal.

On May 29, 1930, the city council passed the following order: On the issues of whether in refusing appellee's permit
“The Mayor laid before the Council reports of the Safety the city council acted arbitrarily and unfairly and unjustly
Committee upon the application of J. H. Nelson to erect a discriminated against him, the trial court made the following
gasoline filling station at the northeast corner of Nineteenth findings of fact:
and Rio Grande Streets, and Councilman Pannell moved that
in view of the adverse report of said Committee, permit for “The Court finds as a fact that the defendants, acting as
said gasoline filling station be denied. Motion was seconded City Councilmen of the City of Austin arbitrarily refused the
by Councilman Steck, and same prevailed by the following application of the plaintiff, J. H. Nelson, for a permit to erect
vote: Ayes, Mayor McFadden, Councilmen Pannell, and and operate a filling station on his property at the Northeast
Steck, 3; nays, none; Councilmen Mueller and Reed absent.” corner of West 19th and Rio Grande Streets in the City of
Austin, Texas, * * * said property and premises being known
On May 29, 1930, the chief clerk wrote appellee as follows: as No. 606 West 19th Street, Austin, Texas.
“The City Council, at its meeting today, voted to deny your
application for a filling station at 19th and Rio Grande Streets *694 “The Court further finds that said 19th Street between
on account of same being in a residential district, and also the Congress Avenue and Rio Grande Street is a business street
hazard to traffic that would be created at this point.” in that there are a number of filling stations and other business
houses on said 19th Street between the points stated, and that
Upon receipt of this notice, appellee instituted this suit for the particular location on which the plaintiff seeks to erect
a mandatory injunction to require the city council to issue a filling station is not more hazardous, but that the traffic
him a permit to erect, maintain, and operate a gasoline filling hazards at said point are less than the traffic hazards at other
station on his lot of land at the corner of Rio Grande and places for which filling station permits have been granted.
Nineteenth streets, and to perpetually restrain and enjoin
the city of Austin, its officers, agents and employees, from “The Court further finds that the erection of a filling station
interfering in any manner with appellee or his agents and on plaintiff's property at the intersection of said 19th and Rio
employees in the construction, maintenance, and operation of Grande Streets according to the plans and specifications of
the proposed gasoline filling station, alleging: (a) That the said filling station submitted by plaintiff to the defendants will
refusal of his permit under the facts pleaded was arbitrary, lessen the traffic hazards at the intersection of said streets.
and constituted an unfair and unjust discrimination against
him; and (b) that the ordinance in question deprived him of “The Court further finds that the traffic at the corner of 19th
his property without compensation, and took it without due Street and Rio Grande Street is not as heavy as the traffic at the
process of law, and denied him equal protection of law, in corner of 19th and Congress Avenue, 19th and Lavaca Streets,
violation of both federal and state Constitutions. and 19th and Guadalupe Streets, and that the City Council
has granted permits for filling stations and other businesses
The trial was to the court without a jury, and the court found at said street intersections.
and concluded: (a) That the city council acted arbitrarily in
refusing appellee's permit, and was guilty of an unfair and “The Court further finds that the location at the corner of 19th
unjust discrimination against him under the facts pleaded and Street and Rio Grande Street is not as near to residences and
proved; and (b) that the ordinance was invalid on its face, in is not as near to public buildings, schools, or places of public
that it authorized and empowered the city council to prejudge resort, and that the traffic conditions contiguous to and in the
and declare a legitimate business a nuisance per se without neighborhood of the said lcation are not greater but less than
regard to whether it was so in fact, and before the business had at some other filling stations for which said City Council has
come into existence; and because such ordinance deprived granted permits.
appellee of the lawful use of his property without due process

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
City of Austin v. Nelson, 45 S.W.2d 692 (1931)

based, and the rule that the exercise of such discretionary
“The Court further finds that the offset in Rio Grande Street power by the city council is not subject to judicial review, in
does not seriously interfere or prevent persons using said absence of clear evidence that such power has been abused.
street from observing other persons coming from opposite The question, however, is, not whether the city council is
direction, and that the trees at said intersection, the grades vested with discretionary power to enact and enforce a proper
of said streets nor the sidewalks seriously obstruct the view and legal ordinance regulating the issuance of permits to erect
of traffic at said place, and that the traffic which now uses and operate gasoline filling stations, but is, assuming the
said streets, with such traffic as might be added thereto by ordinance to be valid, whether the city council in enforcing
the erection of a filling station thereon, would not constitute it and in refusing appellee's permit acted arbitrarily and
a public nuisance. discriminatorily, and that such action is reviewable by the
courts is well settled. Such was the holding of the Supreme
“The Court further finds that the motor vehicle using said
Court of the United States in Holden v. Hardy, 169 U. S. 366,
filling station and entering at an angle as is generally done
18 S. Ct. 383, 42 L. Ed. 780, where it is held: “But the exercise
at other filling stations for which permits have been granted
of the police power is subject to judicial review, and property
by the said City Council and the manner said filling station is
rights cannot be wrongfully destroyed by arbitrary enactment.
to be construced, does not render this particular location any
It was averred that the works would be so constructed as not to
more hazardous than other filling stations similarly located,
interfere with the health or safety of the people. No reasonable
and that the erection and construction of said filling station
explanation for the arbitrary exercise of power in the case is
in the manner proposed will lessen the traffic hazard at said
suggested.”
location.

“The Court further finds that the erection of a filling station
This case was cited and the principle followed by the Supreme
upon the location specified will not increase the fire hazards
Court of Texas in Houston & T. C. Ry. Co. v. City of Dallas,
any more than does other filling stations generally located
98 Tex. 396, 84 S. W. 648, 653, 70 L. R. A. 850, where
throughout the City of Austin and would not constitute
it is held as follows: “The power is not an arbitrary one,
this particular filling station a public nuisance, and that the
but has its limitations. *695 It is commensurate with, but
erection and operation of a filling station at said location
does not exceed, the duty to provide for the real needs of
would not increase the violations of the traffic laws any more
the people in their health, safety, comfort, and convenience
than other filling stations similarly located in the City of
as consistently as may be with private property rights. As
Austin, and that by reason of these facts the City Council of
those needs are extensive, various, and indefinite the power to
the City of Austin has been guilty of an unfair and unjust
deal with them is likewise broad, indefinite, and impracticable
discrimination against the plaintiff.”
of precise definition or limitation. But as the citizen cannot
“The Court further finds that Rio Grande Street is paved, be deprived of his property without due process of law,
has upon it a street railway and the property abutting thereon and as a privation by force of the police power fulfills
from 6th to 19th Street is occupied by residences, business this requirement only when the power is exercised for the
and boarding houses; that the property abutting on 19th Street purpose of accomplishing, and in a manner appropriate to the
from Congress Avenue to Rio Grande Street is occupied accomplishment of, the purposes for which it exists, it may
by filling stations, other business houses, residences and often become necessary for courts, having proper regard to
boarding houses; and that plaintiff's property by reason of the constitutional safeguard referred to in favor of the citizen,
its location and close proximity to other filling stations and to inquire as to the existence of the facts upon which a given
business houses on 19th street has a special business value exercise of the power rests, and into the manner of its exercise,
and is of much greater value for business purposes than for and if there has been an invasion of property rights under
residence purposes.” the guise of this power, without justifying occasion, or in an
[1] The city of Austin contends that the evidence shows unreasonable, arbitrary, and oppressive way, to give to the
that it did not act arbitrarily or discriminatorily in refusing injured party that protection which the Constitution secures. It
appellee a permit; but to the contrary shows that the city is therefore not true, as urged by plaintiff, that the judgment of
council fairly and reasonably exercised its discretionary the legislative body concludes all inquiry as to the existence
power to enforce the valid ordinance in question, in view of facts essential to support the assertion of such a power
of the facts and investigation upon which the action was as that now in question. If this were true, it would always
be within legislative power to disregard the constitutional

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
City of Austin v. Nelson, 45 S.W.2d 692 (1931)

provisions giving protection to the individual. The authorities
are practically in accord upon the subject. * * * We followed this principle of law in the recent case of City
of Austin v. Deats (Tex. Civ. App.) 32 S.W.(2d) 686 (writ of
“The reasonableness or unreasonableness of many ordinances error refused), and in which we held that the city council acted
will appear on their faces, and the court may, upon mere arbitrarily and unfairly, and unjustly discriminated against
inspection, pronounce them to be valid or invalid. In others Deats in refusing to grant him a permit to erect a gasoline
the question may depend upon their operation upon particular filling station on his lot at the intersection of Rio Grande
persons or conditions of fact which cannot be known to the and Nineteenth streets, directly across the street from where
court until made to appear by evidence. Their effect may appellee's lot here involved is located; and the evidence on
be just and reasonable in general, but in particular instances the issues of whether the city council acted arbitrarily and
may be arbitrary and oppressive to the extent of invading discriminatorily in this case is more fully developed and is
fundamental rights.” much stronger than in the Deats Case.

Again, in the cases of Stockwell v. State, 110 Tex. 550, 221 S. In substance, the numerous cases cited in appellee's brief hold
W. 932, 12 A. L. R. 1116; City of Texarkana v. Reagan, 112 that, while it is true that a city council has the right to enact
Tex. 317, 247 S. W. 816; and Crossman v. City of Galveston, and enforce in a lawful manner proper regulatory ordinances
112 Tex. 303, 247 S. W. 810, 813, the Supreme Court held for public health, safety, and comfort, still it is equally true
in substance that, before the state or a municipality in the that courts may review unwarranted and arbitrary interference
exercise of police power could find or declare a building with lawful property rights or business by a city council under
or business a nuisance per se, or that by use or operation the guise of enforcing police regulations for the public health,
it became a nuisance so as to prohibit its maintenance or safety, and comfort; and that the city council, in the exercise
operation, it must be so in fact; that whether a business or its of its police power with respect to declaring a business a
operation was a nuisance per se, or a nuisance depending on nuisance, must perform the duty in a reasonable manner
its operation, is a justiciable question, determinable only by and in conformity to constitutional safeguards relating to
courts of competent jurisdiction; and that the burden of proof private property rights, and so as to give the injured party that
as to whether a building or business was a nuisance per se, protection which the Constitution secures.
or by operation, was on the city in an action to enjoin it from *696 [2] The city council adjudged appellee's proposed
declaring and treating such building or business as a nuisance; gasoline filling station to be a nuisance per se before it
the court holding in the last case cited as follows: “It can only came into existence, and refused a permit for its erection.
become a nuisance by the use to which it is put or the state No zoning ordinance prohibited its erection at the location
of repair in which it is maintained; but as to whether or not it in question. The plans and specifications and material to be
is, even in those events, a nuisance is a justiciable question, used were admitted to be in compliance with all building
determina ble only by a court of competent jurisdiction. The rules and regulations required for gasoline filling stations.
mere declaration of the city commissioners that the building The city council had issued permits for similar stations in
or its use constitutes a nuisance does not make it so. * * * numerous similar locations throughout the city. In allowing
The right of abatement is made to rest alone upon the findings or disallowing permits for filling stations, Mayor McFadden
of the city commissioners. They are made court, jury, and testified, as follows: “In passing on these applications, there
executive authority, all in one. * * * Such arbitrary authority has been no official action by the council, separating the city
cannot, under our form of government, be conferred upon into residential districts in which they will not grant permits,
the city commissioners. The citizen's property, not a nuisance and others that they have termed ‘quasi business locations,’
within itself or under the common law, cannot be destroyed as you say, and grant permits there, and that that is the rule or
without the judgment of a court finding that it is in fact test in the council's mind. There has been no official action.
a nuisance. The opinion of the city commissioners that the That is a matter of discretion with us, or we claim it to be. We
property of plaintiffs in error is a nuisance is not due process. have designated actually in the minds of the council, certain
It is not process at all. It has no more vitality than the opinion streets that we call business streets, and other certain streets,
of other citizens are against the consent of plaintiffs in error. or locations that we call residence sections. That is true. And,
* * * In this proceeding the burden is of the city to allege and that is the underlying principle upon which we either permit
establish the contention that the building involved is in fact or decline a permit for a filling station.”
a nuisance.”

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
City of Austin v. Nelson, 45 S.W.2d 692 (1931)

the business of appellee. In fact, there was much positive
This “unofficial action” on the part of the city council, testimony that the erection and maintenance of appellee's
regardless of their good intentions, cannot be upheld, and station in the manner proposed would relieve traffic hazards
similar action on the part of the city council of San Francisco at that point instead of increasing them; and the trial court's
was condemned by the Supreme Court of the United States finding that traffic hazards would be decreased is fully
in the case of Yick Wo v. Hopkins, 118 U. S. 356, 6 S. Ct. supported by the evidence. At most, the city's testimony only
1064, 1071, 30 L. Ed. 220, as follows: “For the very idea showed that traffic hazards would be increased “to a degree,”
that one man may be compelled to hold his life, or the means or slightly increased, and that “where gasoline is handled
of living, or any material right essential to the enjoyment of or stored, there always exists a fire hazard as well as the
life, at the mere will of another, seems to be intolerable in chance of an explosion.” These same conditions even to a
any country where freedom prevails, as being the essence of greater degree were shown to exist as to other points on
slavery itself.” the same street near appellee's location and at other similar
locations where the city council had issued permits; and that
The following and numerous other authorities hold that
this character of testimony was admissible and material as
gasoline filling stations erected according to modern
showing discrimination was settled in the Deats Case, supra.
approved methods, like the one in question was proposed
to be erected, are not nuisances per se, that their erection
in a residence district does not constitute a nuisance per se, In the recent case of Continental Oil Co. v. City of Wichita
and that under the Constitution arbitrary power cannot be Falls, by the Commission of Appeals, 42 S.W.(2d) 236, it was
conferred upon a city council to declare a filling station a held that the finding of the trial court that the “extra hazard to
nuisance, unless it is so in fact. They further hold that a school children or pedestrians was not material” was binding
city council may by reasonable ordinance establish zoning upon the appellate courts; and the fact that a filling station
districts or define how gasoline filling stations may be in a purely residential district would depreciate the values
constructed and operated, “but arbitrary power to allow a of the residential property or create a fire hazard “no more
gas filling station on one man's property and disallow it to than would necessarily” follow in similar locations where
another, without any definite rule by which the city council is no zoning ordinance existed would not authorize a denial of
to be governed, cannot be conferred, for this would be to give a permit for the filling station any more than for any other
it power to deny equal rights to all the citizens.” Slaughter v. lawful business.
Post, 214 Ky. 175, 282 S. W. 1091, 1092; City of Electra v. *697 [5] [6] Nor is there any basis for the contention that,
Cross (Tex. Civ. App.) 225 S. W. 795; Marshall v. City of because the streets at the point in question approached each
Dallas (Tex. Civ. App.) 253 S. W. 887; Gulf Refining Co. v. other irregularly, and because of a slight slope in the ground,
Dishroon (Tex. Civ. App.) 13 S.W.(2d) 230. there was a basis for distinction or classification between the
[3] [4] The city engineer admitted that appellee's station location of appellee's station and other stations. The evidence
was to have been erected subject to the usual, ordinary, was undisputed that, with the exception of the streets being
proper, and reasonable regulations and directions of the city slightly narrower at appellee's location, other locations were
council with respect to plans and specifications, and the kind similar, and that violation of traffic rules in egress and ingress
and character of material; and to be constructed in accordance to the station would be the same at all locations. So there
with the usual regulations for protection against fire and could be no basis for a different classification of appellee's
traffic hazards, and in all respects and details complying with property in these regards, even if the ordinance permitted it.
the rules and regulations of the city of Austin for the erection Or, as was held by the Supreme Court of the United States,
and maintenance of a gasoline filling station. The evidence is in Frost v. Corporation Commission, 278 U. S. 515, 49 S.
undisputed that the city council has heretofore issued permits Ct. 235, 238, 73 L. Ed. 483, there must be some substantial
for the erection and where there are now being operated filling difference to justify treating one person's property differently
stations of similar character at points on Nineteenth street from another's property of the kind, and mere difference is not
near appellee's location, and at points throughout the city of enough, but the classification must rest upon some reasonable
Austin, which create greater traffic hazards than appellee's and just difference and related to the act or thing with respect
station would create; and that appellee's station would create to which the discrimination is made, and “can never be made
no greater fire hazard than the other stations have created arbitrarily and without any such basis.”
with respect to their locality. Clearly this evidence shows that
the city council unfairly and unjustly discriminated against

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
City of Austin v. Nelson, 45 S.W.2d 692 (1931)

In view of our above holding, the constitutionality of the Affirmed.
ordinance need not be passed upon, and the trial court's
judgment will be affirmed.

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 6
Bauer v. City of Wheat Ridge, 182 Colo. 324 (1973)
513 P.2d 203

‘special exception’ permit and entered a judgment ordering
the council to issue the permit. From that judgment, the city
182 Colo. 324
council appealed to this court. We affirm the district court's
Supreme Court of Colorado, En Banc.
judgment.
Mervin L. BAUER and Shirley
As provided in C.R.S.1963, 139-60-1, Wheat Ridge, a
J. Bauer, Plaintiffs-Appellees.
statutory city, enacted a flood plain ordinance. The city
v.
council performed a legislative function when it adopted this
CITY OF WHEAT RIDGE, a municipal ordinance. In deciding whether or not to grant a ‘special
corporation, et al., Defendants-Appellants. exception’ permit under the ordinance, the city council acted
in an adjudicative capacity.
No. 25980. | Aug. 20, 1973.
[1] The flood plain ordinance establishes the criteria upon
The District Court, Jefferson County, George J. Priest, J., which the ‘special exception’ will be granted. If the council
found that city council had acted arbitrarily in denying believes that other reasons should be used in denying an
‘special exception’ for construction of apartment house on application, then the appropriate procedure is to amend the
floodplain, and the council appealed. The Supreme Court, flood plain ordinance. Once an applicant applies under the
Hodges, J., held that denial of ‘special exception’ even though ordinance, only those factors which apply generally to all
proposed apartment house met all qualifications under the applicants may be considered. Western Paving Construction
floodplain ordinance and the general zoning ordinances of the Co. v. Board of County Commissioners, Colo., 506 P.2d 1230
city was arbitrary and capricious; and that city council should (1973).
have made specific findings of fact as to what factors were or
were not established. *327 [2] After reviewing the record and exhibits in this
case, we believe the district court correctly characterized the
Affirmed. city council's action when it ruled:
‘In this case it appears that the council
Pringle, C.J., and Groves, J., did not participate. denied this permit solely because of
the type of building that was to be
placed on the ground even though it
Attorneys and Law Firms met all qualifications under the flood
plain ordinance and the general zoning
*326 **204 Holley, Boatright & Villano, David C.
ordinances of the City of Wheat Ridge.
Deuben, George Alan Holley, Wheat Ridge, for plaintiffs-
This the court believes to be an arbitrary
appellees.
and capricious act.’
Maurice F. Fox, Wheat Ridge, for defendants-appellants.

Opinion [3] Under C.R.C.P. 106(a)(4), the role of review of the
district court ‘. . . shall not be extended further than to
HODGES, Justice.
determine whether the inferior tribunal has exceeded its
The Plaintiffs Mr. and Mrs. Bauer own real property in the jurisdiction or abused its discretion.’ The proper function
City of Wheat Ridge. The property is located in an area of the district court is to affirm the council where there is
designated by ordinance as a flood plain. As zoned, the Bauers ‘any competent evidence’ to support the council's decision.
could build an apartment house on this property, provided **205 Civil Service Commission v. Doyle, 174 Colo. 149,
they met the criteria in the flood plain ordinance for a ‘special 483 P.2d 380 (1971).
exception.’ Bauers' application for the ‘special exception’
was denied by the city council.
The findings which the city council made when it denied the
Bauers appealed the city council's denial to the district permit were very brief, and were extremely vague as to any
court pursuant to C.R.C.P. 106(a)(4). The district court substantial reason for its action. The flood plain ordinance
found that the council had acted arbitrarily in denying the clearly lists certain mandatory factors which must be met

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Bauer v. City of Wheat Ridge, 182 Colo. 324 (1973)
513 P.2d 203

by the permit applicant under Section 4.52 of the ordinance. The evidence before the city council is uncontradicted
Certain permissive factors are found in Section 1.11 through
that *328 the applicant complied with the mandatory
Section 1.14, and references thereto are made in Section 5.43. requirements of Section 4.52 of the flood plain ordinance.
[4] Where the city council is acting in an adjudicative [5] We find no merit in the council's argument that the
capacity, the following would be required to sustain a denial district court action should have been dismissed for failure
of this permit: If there is a lack of evidence to show that to name the Mayor as a party. Since the district court's
certain of the required factors existed, or if the evidence is decision ordering the issuance of the special exception is
in dispute as to one or more of these factors, and the city affirmed, it is unnecessary to decide or discuss whether this
council determines the permit should be denied, then it would denial by the city council of Bauers' application constitutes
have to make specific findings of fact as to what factors an unconstitutional taking of property.
were or were not established. Where a record supports the
findings, a reviewing court must uphold the city council's
action. Civil Service Commission v. Doyle, supra; Marker v. Judgment affirmed.
Colorado Springs, 138 Colo. 485, 336 P.2d 305; Civil Service
Commission v. Hazlett, 119 Colo. 173, 201 P.2d 616; and
PRINGLE, C.J., and GROVES, J., do not participate.
Civil Service Commission v. Hoag, 88 Colo. 169, 293 P. 338.
Parallel Citations

513 P.2d 203

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Brack v. Island Park Estates, LLC, Not Reported in S.W.3d (2007)
2007 WL 4225576

the purchase. After the sale, Brack and Dean went to the
Island Moorings property and served a “forcible entry and
2007 WL 4225576
detainer” petition on the former owner. Brack and Dean then
Only the Westlaw citation is currently available.
went to a local restaurant to specifically recruit the owner
SEE TX R RAP RULE 47.2 FOR to build a restaurant on the Island Moorings property. After
DESIGNATION AND SIGNING OF OPINIONS. the restaurant was built, Brack took charge of running the
Island Moorings restaurant, including naming the restaurant,
MEMORANDUM OPINION creating a logo, hiring and firing employees, developing a
Court of Appeals of Texas, menu, and installing a computer system and inventory.
Corpus Christi-Edinburg.
On September 2, 2005, Dean formed a Texas limited liability
Reginald BRACK, Appellant,
company known as Island Park Estates, LLC (“Island Park”),
v. in which he was the sole member/manager. On September 21,
ISLAND PARK ESTATES, LLC., Blue Water Marina, 2005, Island Park entered into a loan agreement with Frost
LLC., Kevin B. Dean, and Emile L. Clavet, Appellees. National Bank for the purpose of acquiring property known
as Island Park Estates, also in Port Aransas, to create a single
No. 13-06-698-CV. | Nov. 29, 2007. family subdivision. Brack and Dean negotiated a loan from
Frost National Bank for the purchase of Island Park Estates.
On appeal from County Court at Law No. 3 of Nueces County,
Brack, Dean and Clavet guaranteed a $4,080,211 .75 note for
Texas, Marisela Saldana, Judge.
the purchase of Island Park Estates.
Attorneys and Law Firms
On December 9, 2005, Brack sold his membership interests
Arnold Gonzales, Jr., Audrey Mullert Vicknair, Corpus in Blue Water to Dean and Clavet. On December 22, 2005,
Christi, for appellant. Blue Water (consisting of the remaining members Dean
and Clavet) entered into a commercial note, executed by
Charles W. Zahn, Port Aransas, Rene Luna, Corpus Christi,
Dean, payable to Brack in the amount of $3,500,000-the
for appellees.
total purchase price of Brack's membership interests in
Before Chief Justice VALDEZ and Justices GARZA and Blue Water. Blue Water and Brack entered into a pledge
VELA. agreement, effective that same day, to secure Blue Water's
payment and performance of the commercial note. The
agreement also provided that Blue Water would obtain the
release of Brack's personal guarantee of the $14,080,211.75
MEMORANDUM OPINION
loan with Frost National Bank. On December 22, 2005,
Memorandum Opinion by Justice VELA. Blue Water entered into a commercial note in the amount
of $3,500,000 payable to Brack. Blue Water subsequently
*1 In this interlocutory appeal, Reginald Brack (“Brack”) paid Brack $1,750,000 pursuant to the parties' agreement. The
complains that the trial court erred in denying his special pledge agreement, dated December 22, 2005, was amended
appearance on the basis of both general and specific and a second commercial note was created to reflect that Blue
jurisdiction. We affirm. Water owed Brack $1,750,000.

Brack is a resident of New York. On October 4, 2004, he, Later, Blue Water defaulted on the note. Brack demanded
along with Texas resident Kevin Dean (“Dean”), and Maine payment and performance on August 8, 2006. On August
resident Emile Clavet (“Clavet”), formed a Maine limited 22, 2006, Brack filed a “Memorandum of Rights Relating
liability company known as Blue Water Marina, LLC (“Blue to Assets” in the official public records of real property
Water”). The company was formed to purchase a tract of land in Nueces County to provide notice of his rights as a
known as Island Moorings Marina located in Port Aransas, secured party under the pledge agreement. Brack, through his
Texas. On the date of Blue Water's formation, it purchased attorney, also sent letters to all purchasers of lots in the Island
Island Moorings, which was subject to foreclosure. Brack Park subdivision, attaching a copy of the memorandum of
was personally present at the Nueces County courthouse for interest, informing the purchaser:

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Brack v. Island Park Estates, LLC, Not Reported in S.W.3d (2007)
2007 WL 4225576

title, tortuous interference with contracts, and fraud in the
*2 I represent Reginald Brack. The Memorandum of inducement.
Rights (a copy of which is enclosed with this letter)
gives notice to the public that Mr. Brack's consent must Brack filed a special appearance, alleging that he did not
be obtained for Island Park Estates, L.L.C. (“Seller”) to have sufficient minimum contacts in Texas to justify being
transfer any of its assets. sued in this state. A hearing on Brack's special appearance
was held on December 20, 2006. The trial court found that
The Memorandum of Rights was filed for public record on
it had both general and specific jurisdiction over Brack and
August 22, 2006. Your deed (a copy of which is enclosed
entered findings of fact and conclusions of law supporting its
with this letter) was filed on September 6, 2006,.... No
decision.
request has been made for Mr. Brack to consent to the
transfer of the Property to you. Mr. Brack has not consented
to the transfer of the referenced property. Therefore, the
transfer to you was an unauthorized transaction, and as I.
such is subject to being voided and rescinded.

Unless the seller makes a written and signed consent Standard of Review
agreement with Mr. Brack, within twenty days from the
Whether a trial court has personal jurisdiction over a
letter of this date, I will recommend to Mr. Brack that a
nonresident defendant is a question of law. BMC Software
suit be filed against the Seller and you seeking to void and
Belgium, N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex.2002).
rescind the transfer of the Property, and seeking to recover
However, the trial court must frequently resolve fact
any other appropriate relief to which the plaintiff may be
questions before deciding the jurisdictional question. Id.
lawfully entitled.
The plaintiff has the initial burden of pleading sufficient
Mr. Brack regrets the inconvenience, expense and potential allegations to bring a nonresident defendant within the
loss to you because of this situation; however, because the provisions of the Texas long-arm statute. Moki Mac River
Seller has failed to honor Mr. Brack's legal contractual Expeditions v. Drugg, 221 S.W.3d 569, 574 (Tex.2007). A
rights, Mr. Brack has no choice but to enforce those rights defendant must then negate all bases for personal jurisdiction
in this manner. alleged by the plaintiff.Id.

(emphasis added). *3 If a trial court issues findings of fact and conclusions of
law in ruling on the special appearance, the appellant may
One month later, Brack, through another attorney, wrote the challenge the legal and factual sufficiency of the evidence to
purchasers another letter, essentially stating the same, but support the findings and the appellate courts may review the
further notifying the purchaser that the sale of the property legal and factual sufficiency challenge to support the findings.
was “void or voidable” and that Brack had See BMC Software, 83 S.W.3d at 794. A legal sufficiency
challenge to the findings of fact will not be sustained if there
no choice but to seek court intervention to rescind the is more than a scintilla of evidence to support the findings. Id.
unauthorized and improper transfer of the Property from at 795.In conducting a factual sufficiency review, appellate
the seller to you. You will certainly be made a party to courts may set aside a trial court's finding only if it is so
the action to rescind the transfer.Therefore, I suggest that contrary to the overwhelming weight of the evidence as to
you immediately contact your title insurance company be clearly wrong or unjust. See Hoffmann v. Dandurand, 180
regarding the Memorandum. I also strongly suggest that S.W.3d 340, 345 (Tex.App.-Dallas 2005, no pet.).
you seek legal counsel regarding your rights.
We review the trial court's legal conclusions de novo. BMC
(emphasis added).
Software, 83 S.W.3d at 794. Specifically, we review the trial
court's legal conclusions drawn from the facts to determine
On August 28, 2006, Brack filed a lawsuit against Blue Water
their correctness. Id. If the appellate court determines a
and Dean in Maine. Blue Water and Dean answered the
conclusion of law is erroneous, but the trial court rendered
lawsuit on September 16, 2006. Blue Water, Dean and Clavet
a proper judgment, the erroneous conclusion of law will not
filed this suit in Texas on October 16, 2006, for slander of
require reversal.Id.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Brack v. Island Park Estates, LLC, Not Reported in S.W.3d (2007)
2007 WL 4225576

court reiterated the purposeful availment requirement for the
exercise of jurisdiction, by stating:

II. *4 For half a century, the touchstone of jurisdictional due
process has been ‘purposeful availment.’ Since Hanson v.
Specific Jurisdiction Denckla,‘it is essential in each case that there be some act
by which the defendant purposefully avails itself of the
By his second issue, Brack argues that the trial court privilege of conducting activities within the forum State,
erroneously denied his special appearance on the basis of thus invoking the benefits and protections of its laws.’
specific jurisdiction because the evidence is not sufficient
to support the trial court's findings of fact and conclusions Michiana Easy Livin' Country, Inc. v. Holten, 168 S.W.3d at
of law. Brack claims that he could not reasonably anticipate 777, 784 (Tex.2005).
being haled into a Texas court and did not purposefully avail
himself of the benefits of Texas law. We disagree. The supreme court also recently explained, in Michiana, that
there are three parts to a “purposeful availment” inquiry. Id.
Texas courts may assert in personam jurisdiction over a at 785.First, only the defendant's contacts with the forum
non resident if (1) the Texas long-arm statute authorizes the are relevant, not the unilateral activity of another party or
exercise of jurisdiction, and (2) the exercise of jurisdiction third person. Id. at 785.Second, the contacts relied upon must
is consistent with federal and state due-process guarantees. be purposeful rather than random, isolated or fortuitous. Id.;
Moki Mac, 221 S.W.3d at 574;see also Schlobohm v. see also Burger King Corp. v. Rudzewicz, 471 U.S. 462,
Schapiro, 784 S.W.2d 355, 356 (Tex.1990). Our long-arm 475, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1980). Thus, “[s]ellers
statute describes what “[i]n addition to other acts,” may who ‘reach out beyond one state and create continuing
constitute doing business in this state. Moki Mac, 221 S.W.3d relations and obligations with citizens of another state’ are
at 574. subject to the jurisdiction of the latter in suits based on
their activities.”Michiana, 168 S.W.3d at 785. Finally, the
The long-arm statute's broad doing-business language allows defendant must seek some benefit, advantage or profit by
the statute to reach as far as the federal constitutional availing itself of the jurisdiction. Michiana, 168 S.W.3d at
requirements of due process will allow. Moki Mac, 221 785.
S.W.3d at 575; Guardian Royal Exch. Assurance, Ltd.
v. English China Clays, P.L.C ., 815 S.W.2d 223, 226 When specific jurisdiction is alleged, courts focus the
(Tex.1991). Thus, the requirements of the Texas long-arm minimum contacts analysis on the relationship among the
statute are satisfied if an assertion of jurisdiction accords with defendant, the forum, and the litigation. Guardian Royal, 815
federal due-process limitations. Moki Mac, 221 S.W.3d at S.W.2d at 228 (citing Helicopteros Nacionales de Colombia
575. v. Hall, 466 U.S. 408, 414, 104 S.Ct. 1868, 80 L.Ed.2d 404
(1984); Schlobohm, 784 S.W.2d at 357). Specific jurisdiction
Federal due-process requirements limit a state's power to is established if the defendant's alleged liability “aris[es] out
assert personal jurisdiction over a nonresident defendant. of or [is] related to” an activity conducted within the forum.
Id; see also Guardian Royal, 815 S.W.2d at 226. Personal Helicopteros, 466 U.S. at 414 n. 8.
jurisdiction is proper when the nonresident defendant has
established minimum contacts with the forum state, and the In Moki Mac, our supreme court noted that the United States
exercise of jurisdiction comports with “traditional notions of Supreme Court has provided relatively little guidance on the
fair play and substantial justice.”Int'l Shoe Co. v. Washington, “arise from or relate to” requirement, and noted that it had not
326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945). had occasion to examine the strength of the nexus required
Minimum contacts are sufficient for personal jurisdiction to establish specific jurisdiction. Moki Mac, 221 S.W.3d at
when the nonresident defendant purposefully avails itself of 579. The court held that Moki Mac had sufficient purposeful
the privilege of conducting activities within the forum State, contacts with Texas to satisfy the first prong of jurisdictional
thus invoking the benefits and protections of its laws. Hanson due process, but determined that purposeful availment alone
v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 2 L.Ed.2d 1283 will not support an exercise of specific jurisdiction:
(1958). In Michiana Easy Livin' Country, Inc., v. Holten, the

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Brack v. Island Park Estates, LLC, Not Reported in S.W.3d (2007)
2007 WL 4225576

and was intricately involved in developing, designing, and
Specific jurisdiction analysis has two managing a restaurant for the property. His conduct included
co-equal components. For specific- hiring and firing of employees, developing a logo and menu,
jurisdiction purposes, purposeful and organizing the operating procedures of the restaurant. He
availment has no jurisdictional planned and made all arrangements for the opening of the
relevance unless the defendant's Island Moorings Marina. Moreover, and crucial to the specific
liability arises from or relates to the jurisdiction requirement underlying this particular action, he
forum contacts. personally guaranteed a note for over four million dollars
for a Texas company, for the purpose of acquiring Texas
Id. Our supreme court concluded that for a nonresident
property. Despite the fact that he ultimately sold his shares, he
defendant's forum contacts to support an exercise of specific
maintained an interest in the Texas company. He also sent two
jurisdiction, there must be a substantial connection between
letters to purchasers of the Island Park lots, maintaining that
those contacts and the operative facts of the litigation. Id. at
he had an interest in the Texas properties, and, he threatened
585.
these Texas property purchasers with litigation if his demands
were not met. Certainly, Brack reached out beyond one state
and created continuing relationships and obligations with
III. citizens from another state, acts which were purposeful and
not merely fortuitous. By taking these actions, Brack could
reasonably anticipate being haled into court and purposefully
Jurisdictional Analysis
availed himself of Texas law.
We turn now to the issue of whether there is specific
jurisdiction in this case. For a Texas forum to properly
exercise specific jurisdiction in this case: (1) Brack must have B. Relatedness Requirement
The “arise from or relate to” requirement lies at the heart of a
had minimum contacts with Texas by purposefully availing
specific jurisdiction by defining the required nexus between
himself of the privilege of conducting activities here; and (2)
the nonresident defendant, the litigation, and the forum. Moki
Brack's liability must have arisen from or be related to those
Mac, 221 S.W.3d at 579. In Moki Mac, the supreme court held
contacts. See Moki Mac, 221 S.W.3d at 576.
that for a nonresident defendant's forum contacts to support
an exercise of specific jurisdiction, there must be a substantial
A. Purposeful Availment connection between those contacts and the operative facts
*5 As stated in Michiana, the contacts of persons who “reach of the litigation.Id. at 585.In Moki Mac, the relationship
out beyond one state and create continuing relationships and between Moki Mac's contacts with Texas and the operative
obligations with citizens of another state” are purposeful facts of the litigation-the guides' conduct on the rafting trip
rather than fortuitous. Michiana, 168 S.W.3d at 785. and whether they exercised reasonable care in supervising the
Purposeful availment requires that “a defendant must seek child-were too attenuated to satisfy specific jurisdiction. Id.
some benefit, advantage, or profit by ‘availing’ itself of the at 585, 588.The operative facts, in Moki Mac, concerned the
jurisdiction.”Id. at 785.The notion necessarily implies that guides' conduct on the hiking trip and whether they exercised
the nonresident submit to suit in the forum, and that the reasonable care in supervising the decedent. Id. at 585.The
nonresident may avoid being haled into court in a particular alleged misrepresentation in the brochures was not the subject
forum by purposefully conducting business so as not to derive of the case. Id.
benefit or profit from a forum's laws. Id.
*6 Here, in contrast, Brack purposefully came to Texas to
Here, Brack created a corporation, albeit in Maine, for the do business and did business in Texas. SeeTEX. CIV. PRAC.
specific purpose of purchasing a property in Port Aransas, & REM.CODE ANN. § 17.042 (Vernon 1997). He purchased
Texas. He personally guaranteed a note with a Texas bank for property in Texas and entered into business relationships for
the purchase of Island Moorings, and was physically present the purpose of buying property in Texas. Brack suggests in his
on the Texas county courthouse steps when the purchase was correspondence to the potential buyers that he had an interest
made. He personally delivered a “forcible entry and detainer” in the Texas property they were attempting to purchase and
document to the previous owner of the foreclosed property, that he would be forced to file suit against them to void the
sale or transfer of any property. Brack's conduct suggests

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Brack v. Island Park Estates, LLC, Not Reported in S.W.3d (2007)
2007 WL 4225576

that he availed himself of the privileges of doing business in
Appellant urges that because Brack filed suit in Maine and
Texas and that he would utilize the court system, if necessary.
thereafter the appellees filed a similar suit against him in
The evidence supports the trial court's determination that
Texas, traditional notions of fair play and substantial justice
Brack's actions invoked the benefits and protections of Texas
are affected. The case law is clear that if we determine that
law. Likewise, his liability, if any, relates to his contacts
the nonresident has established minimum contacts only in rare
with Texas. We believe that the minimum contacts prong of
cases will the exercise of jurisdiction fail to comport with fair
personal jurisdiction has been satisfied.
play and substantial justice. We do not see how maintaining
jurisdiction offends traditional notions of fair play and
C. Fair Play and Substantial Justice substantial justice when Brack clearly availed himself of
Having found that Brack purposefully established minimum Texas business opportunities, property and its laws. Because
contacts with Texas, we must consider whether the exercise we find that the trial court had specific jurisdiction over
of personal jurisdiction over him comports with traditional Brack, his second issue is overruled. We do not address
notions of fair play and substantial justice.Guardian Royal appellant's general jurisdiction argument. TEX.R.APP. P.
Exch., 815 S.W.2d at 231. The following factors are 47.1.
considered: (1) the burden on the defendant; (2) the interests
of the forum state in adjudicating the dispute; (3) the plaintiff's
interest in obtaining convenient and effective relief; (4) the
IV.
interstate judicial system's interest in obtaining the most
efficient resolution of controversies; and (5) the shared
interest of the several states in furthering substantive social Conclusion
policies.Id. Only in rare cases will the exercise of jurisdiction
The judgment of the trial court is affirmed.
not comport with fair play and substantial justice when the
nonresident has established minimum contacts with the forum
state. Id.

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Cavazos v. Board of Governors of Council of Co-Owners..., Not Reported in...
2013 WL 5305237

2013 WL 5305237
Only the Westlaw citation is currently available. I. BACKGROUND

SEE TX R RAP RULE 47.2 FOR Appellants were owners of condominium units at The Summit
DESIGNATION AND SIGNING OF OPINIONS. Condominiums located on South Padre Island, Texas. The
Summit is a 64–unit building built in 1982. The Summit has
MEMORANDUM OPINION a Condominium Declaration (the “Declaration”) and Bylaws,
Court of Appeals of Texas, both of which are recorded in the Cameron County Clerk's
Corpus Christi–Edinburg. office.
Juan Luis CAVAZOS, Aliza Marie Cavazos,
Prior to 2011, the Declaration had the following provision,
Nirav Desai and Janki Desai, Appellants,
Article 6.2, regarding the leasing and renting of condominium
v.
units:
BOARD OF GOVERNORS OF THE
COUNCIL OF CO–OWNERS OF THE The owners of the respective
SUMMIT CONDOMINIUMS, Appellee. apartment units shall have the absolute
right to lease or rent same or
No. 13–12–00524–CV. | Sept. 19, 2013. part thereof, not to exceed two
(2) years, furnished or unfurnished,
On appeal from the 107th District Court of Cameron County, provided that said lease or tenancy
Texas. Benjamin Euresti Jr., Judge. is made subject to the covenants
and restrictions contained in this
Attorneys and Law Firms
Declaration and further subject to the
Michael M. Fulton, Law Offices of Michael M. Fulton, San Bylaws of this Condominium.
Antonio, TX, Frank Costilla, Attorney At Law, Brownsville,
TX, for Appellants. In 2011, owners voted on the following amendment (the
“Amendment”) to Article 6.2 of the Declaration:
Mike Mills, Lisa Powell, Atlas, Hall & Rodriguez, McAllen,
TX, for Appellees. The owners of the respective
apartment units shall have the right to
Before Justices GARZA, BENAVIDES, and PERKES. lease or rent same or part thereof, for
no less than thirty (30) days, furnished
or unfurnished, provided that said
MEMORANDUM OPINION lease or tenancy is made subject to the
covenants and restrictions contained in
Memorandum Opinion by Justice BENAVIDES.
this Declaration and further subject to
*1 By two issues, appellants Juan Luis Cavazos, Aliza Marie the Bylaws of this Condominium.
Cavazos, Nirav Desai, and Janki Desai argue that the trial
court erred in denying appellants' request for declaratory A similar change regarding the leasing and rental policy
judgment because: (1) appellee's, the Board of Governors of was adopted to the Bylaws. 1 In order for these amendments
the Council of Co–Owners of the Summit Condominiums to pass, they had to be agreed upon by two-thirds of the
(“Board of Governor's”), amendment to prohibit leasing owners. 2 The owners of 53 of the 64 units, or approximately
or renting for less than thirty days is beyond the power 83% of the owners, consented to the adoption of the
and authority of the Board of Governors; and (2) Texas Amendment in writing. The only non-consenting unit owners
Property Code section 81.102(a)(8) prohibits the adoption of were appellants.
an amendment to a Condominium Declaration that alters or
destroys the ownership rights of a unit owner affected by an Appellants sued, challenging the adoption of the
amendment without the unit owner's consent. We affirm. Amendments to the Declaration and Bylaws. During the

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2013 WL 5305237

bench trial, appellants argued that the Amendments violated (Tex.1994). An appellant may not challenge a trial court's
section 81.102(a)(8) of the Texas Property Code, which conclusions of law for factual sufficiency. BMC Software, 83
provides that “an amendment of the declaration may not S.W.3d at 794. However, we determine the correctness of the
alter or destroy a unit or a limited common element without trial court's legal conclusions drawn from the facts. Id. If we
the consent of the owners affected and the owners' first determine that a conclusion of law is not correct, but the trial
lien mortgagees.”TEX. PROP.CODE ANN. § 81.102(a)(8) court rendered the proper judgment, the incorrect conclusion
(West 2007). Appellants contended that the Amendment of law does not require reversal. Id.
“altered or destroyed” their absolute ownership right to lease
their personal property. The Board of Governors countered
by arguing that section 81.102 referred to alteration or B. Applicable Law
destruction of physical aspects of a unit, such as the removal Chapter 81 of the Texas Property Code is entitled the
of a wall. “Texas Condominium Act.” SeeTEX. PROP.CODE ANN.
§ 81.001–.210 (West 2007). It applies to “condominium
*2 At the conclusion of the bench trial, the trial court ruled regime[s] created before January 1, 1994,” like The Summit.
in favor of the Board of Governors and denied appellants' Chapter 82 of the Texas Property Code is called the “Texas
request for declaratory judgment to declare the Amendment Uniform Condominium Act,” id. § 82.001 (West 2007), and
invalid and unenforceable. On appellants' request, the trial it applies to “all commercial, industrial, residential, and other
court also issued formal findings of fact and conclusions of types of condominiums in this state for which the declaration
law. This appeal ensued. is recorded on or after January 1, 1994.”Id. § 82.002(a) (West
2007). Chapter 82 does, however, have some applicability to
condominiums built prior to 1994 in certain instances:

II. STANDARD OF REVIEW This section and the following
AND APPLICABLE LAW sections apply to a condominium in
this state for which the declaration
A. Standard of Review was recorded before January 1,
Findings of fact in a bench trial have the same force and 1994: Section 82.005, 92.006, 82.007,
dignity as a jury verdict and are reviewable for legal and 82.053, 82.054, 82.102(a)(1)-(7) and
factual sufficiency of the evidence by the same standards (12)-(22), 82,108, 82.111, 82.113,
as applied in reviewing a jury's findings. Anderson v. 82.114, 82.116, 82.157, and 82.161.
City of Seven Points, 806 S.W.2d 791, 794 (Tex.1991). The definitions prescribed by Section
In reviewing for legal sufficiency, we consider only the 82.003 apply to a condominium in
evidence and inferences supporting the finding. Minnesota this state for which the declaration
Mining and Mfg. Co. v. Nishika Ltd., 953 S.W.2d 733, 738 was recorded before January 1, 2004,
(Tex.1997). If more than a scintilla of probative evidence to the extent the definitions do not
supports the finding, the no evidence challenge fails. Id. conflict with the declaration. The
More than a scintilla of evidence exists when the evidence sections listed in this subsection
supporting the finding, as a whole, rises to a level that apply only with respect to events
would enable reasonable and fair-minded people to differ and circumstances occurring on or
in their conclusions. Merrell Dow Pharms., Inc. v. Havner, after January 1, 1994, and do
953 S.W.2d 706, 711 (Tex.1997). In reviewing for factual not invalidate existing provisions of
sufficiency, we weigh all of the evidence in the record and the declaration, bylaws, or plats or
overturn the finding only if it is so against the great weight plans of a condominium for which
and preponderance of the evidence as to be clearly wrong and the declaration was recorded before
unjust.Ortiz v. Jones, 917 S.W.2d 770, 772 (Tex.1996). January 1, 1994.

We review a trial court's challenged conclusions of law *3 Id. § 82.002(c) (West 2007).
as legal questions.BMC Software Belg., N.V. v. Marchand,
83 S.W.3d 789, 794 (Tex.2002). Accordingly, we apply a “Courts have recognized the unique nature of condominium
de novo standard. In re Humphreys, 880 S.W.2d 402, 404 ownership and its problems.”Gulf Shores Council of Co–

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Cavazos v. Board of Governors of Council of Co-Owners..., Not Reported in...
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Owners, Inc. v. Raul Cantu No. 3 Family Ltd. P' ship., if it prohibits something” completely. See generally Murphy
985 S.W.2d 667, 670 (Tex.App.-Corpus Christi 1999, pet. v. Wright, 115 S.W.2d 448 (Tex.Civ.App.-Fort Worth 1938,
denied). “The owners make up a democratic subsociety no writ) (concluding that where a city ordinance was not
more restrictive in the use of condominium property than merely a regulation, but an absolute prohibition, it exceeded
property owners might accept in traditional forms of property the authority of a city council's rulemaking powers).
ownership.” Id.“Each owner must give up some historic
rights of property ownership and the freedom of use of the We disagree with appellants that the Amendment completely
property and subordinate those traditional ownership rights prohibited the owners' ability to rent. By adopting the
when electing to own a condominium unit.”Id.; see Sea Amendment, the Board placed a minimum-stay provision,
Council of Co–Owners, Inc. v. Sondock, 644 S.W.2d 774, 780 limiting the minimum amount of time a unit owner can
(Tex.App.-Corpus Christi 1982, writ ref'd n.r.e.). rent its condominium unit, similar to the previous two-year
maximum limit already set forth in the Declaration. This limit
was agreed to by more than eighty percent of the owners. In
Gulf Shores Council of Co–Owners, Inc., we held that the
III. ANALYSIS
right to lease or rent “does not give an owner an absolute right
A. The Scope of Authority of The Summit's Board of to lease his unit without any restrictions; but rather the right
Governors is subject to all provisions and restrictions applicable.”985
By their first issue, appellants argue that the Board of S.W.2d at 670 (internal emphasis and quotations omitted).
Governors acted outside its scope of authority when it Based on The Summit's Bylaws and our precedent, we hold
prohibited the rental of condominiums for less than thirty that the Board of Governors acted within its authority to pass
days. Article 3 of the Bylaws, which addresses the Board's the Amendment and set a reasonable rental restriction. We
powers, provides that, “The Board shall manage and overrule appellants' first issue.
administer the affairs of the Council and shall have all
such duties, rights, powers, and authority given to it by the
B. Section 81.102(a)(8) of the Texas Property Code
Act, the Declaration or Bylaws.”Article 3 outlines specific
*4 By their second issue, appellants assert that the
tasks for the Board of Governors, such as keeping sufficient
Amendments to the Declaration and Bylaws, which prohibit
books, engaging the services of a manager, and formulating
the leasing or renting of units at The Summit for no less
and enforcing appropriate policies to maintain the common
than thirty days, violate section 81 .102(a)(8) of the Texas
elements of The Summit, such as the parking garage, pool,
Condominium Act. This statute provides that “an amendment
lobby, and elevator. Subparagraph (k) elaborates as follows:
of the declaration may not alter or destroy a unit or a limited
In general, the Board shall have common element without the consent of the owners affected
all such duties, rights, and authority and the owners' first lien mortgagees.”TEX. PROP.CODE
to do all such acts and things as ANN. § 81.102(a)(8).
are not by the Act, Declaration
or these Bylaws directed to be Appellants testified by affidavit that ninety percent of the
done or exercised exclusively by rentals for their condominium units are for periods of
the unit owners or council which less than thirty days. Appellants rent their units “to help
shall be necessary or reasonably cover the property taxes, association fees, assessments and
required for the successful and their mortgage payments.”Thus, according to appellants,
orderly administration, management, this restriction on their ability to rent “alters or destroys”
and operation of the Condominium an ownership interest without their consent. To buttress
Regime established by the Declaration this argument, appellants cite the Declaration's definition of
to which these Bylaws pertain. “unit”:

2.5 Condominium Unit.A Condominium Unit shall include
Appellants contend that the Board of Governors completely the ownership of an apartment and certain interests which
prohibited appellants' ability to rent, which was outside the are appurtenant to the apartment, including, but not limited
scope of the Board's authority. Appellants argue that “a to the following items:
regulation or restriction is not reasonable as a matter of law

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2013 WL 5305237

The Declaration, as noted earlier, defines “unit” as ownership
(a) General Common Elements.The ownership of an
of an apartment and “certain interests which are appurtenant
undivided interest in the general common elements, the
to the apartment,” such as the general common elements
same being shown on Exhibit “E” attached hereto and
like the pool, elevators, parking spaces, a membership in
made a part hereof for all purposes;
the Council, and an undivided interest in the funds in the
(b) A membership in the Council and an undivided interest Council's budget. Appellants do not cite to anything in the
in the funds and assets held by the Council, proportionate record, and we find nothing, showing that the Declaration's
to the interest owned in the general common elements; definition of “interests appurtenant” refers to an ownership
interest such as leasing or renting.
(c) Exclusive use of one (1) covered parking space,
patio, balcony, porch or deck attached to the individual *5 The trial court apparently agreed with appellees'
condominium apartment. interpretation when it made the following conclusions:

The unfettered ability to rent their condominiums, appellants 37. The Amendment does not alter or destroy a unit as
argue, is a “certain interest appurtenant” to their units. reference[d] in § 81.102(a)(8).

The Summit's Board of Governors, on the other hand, 38. Under the Declaration and Chapters 81 and 82,
contends that section 81.102(a)(8) refers to the “alteration” “apartment” and “unit” mean and refer to only the
or “destruction” of a physical aspect of the unit, such as physical characteristics of a unit or apartment, not the
removing a wall. The few cases we found that cite this right to rent or lease or any aspect of such right. The
statute only refer to physical changes, too. See Dickerson Amendment, therefore does not alter or destroy a unit.
v. Debarbieris, 964 S.W.2d 680, 686 (Tex.App.-Houston
[14th Dist.] 1998, no pet.) (citing the statute to contest the Our standard of review requires us to determine the
installation of a gate system as a common element to the correctness of the trial court's legal conclusions drawn from
condominium complex); W. Campus Ramsey Props., Ltd. v. the facts. BMC Software, 83 S.W.3d at 794. Here, the facts
Encinal Condo. Owners' Ass'n, No. 03–09–00146–CV, 2009 and supporting case law support the conclusion that section
Tex.App. LEXIS 9863, at ––––11–15, 2009 WL 5149935 81.102(a)(8) refers to the “alteration” or “destruction” of a
(Tex.App.-Austin Dec. 30, 2009, pet. filed) (mem.op.) (citing physical aspect of a condominium unit, not the “alteration
section 81.102(a)(8) for authority to remove a wall that split or destruction” of ownership rights like leasing or renting.
a common terrace between two units). SeeTEX. PROP.CODE ANN. § 81.102(a)(8).

We note that chapter 82 of the Texas Property Code defines a In light of the foregoing, we overrule appellants' second issue.
condominium unit as “a physical portion of the condominium
designated for separate ownership or occupancy.”TEX.
PROP.CODE ANN. § 82.003(23) (West 2007) (emphasis
IV. CONCLUSION
added). Although chapter 81 applies to The Summit because
it was built prior to 1994, the definitions contained in section Having overruled both of appellants' issues, we affirm the trial
82.003 apply “to the extent the definitions do not conflict court's judgment.
with the declaration.”TEX. PROP.CODE ANN. § 82.002(c).

Footnotes
1 The proposed change to the Bylaws stated as follows:
(9) No apartment of part thereof may be leased or rented for less than thirty days. The owner and/or rental agent must inform the
Summit manager of his or her intent to lease or rent the specific unit. Further, prior to the lease or rental of any apartment unit
or part thereof, the owner and/or rental agent must contact the Summit manager and provide them with the unit number and the
name, number of occupants, phone number, arrival date and departure date of the lessor [lessee] or renter.
2 Article 8.1 of the Declaration provided that, “This Declaration shall not be changed or amended except with the written consent of two-
thirds (2/3) of the total ownership of the condominium units and the written consent of all mortgagees of such condominiums units.”

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End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
City of Arlington v. Centerfolds, Inc., 232 S.W.3d 238 (2007)

232 S.W.3d 238
Court of Appeals of Texas, OPINION
Fort Worth.
TERRIE LIVINGSTON, Justice.
CITY OF ARLINGTON, Texas and the
This is an appeal from the trial court's summary judgment in
License and Amortization Appeal Board
favor of appellees Centerfolds, Inc. and Steven William Craft
of the City of Arlington, Appellants, on procedural due process grounds with regard to the denial of
v. appellees' application for a location exemption for a sexually
CENTERFOLDS, INC. and oriented business (SOB) in Arlington, Texas. In four issues,
Steven William Craft, Appellees. appellants the City of Arlington, Texas and the License and
Amortization Appeal Board of the City of Arlington contend
No. 2–06–080–CV. | June 14, 2007. that (1) this case should be dismissed because appellees do not
| Rehearing Overruled July 12, 2007. have standing, (2) appellees waived their due process claims
by failing to raise them at the hearing before the Board, (3)
Synopsis
appellees failed to establish their due process claims, and,
Background: Operator of a sexually oriented business sought
alternatively, (4) a genuine issue of material fact precludes
review of decision of city's license and amortization appeal
summary judgment. We affirm.
board denying application for a location exemption. The
District Court, Tarrant County, Bonnie Sudderth, J., granted
operator summary judgment. City and board appealed.
Background Facts

Appellee Craft is Vice President of appellee Centerfolds,
Holdings: The Court of Appeals, Terrie Livingston, J., held which leases property *242 on West Division Street in
that: Arlington. Since 1988, Centerfolds has operated several
SOBs at that location. In July 2003, Centerfolds was operating
[1] operator had standing to challenge decision by city's an SOB named La Bare at the location, which featured
license and amortization appeal board denying application; male dancers and catered to female patrons. In July and
August 2003, appellees closed La Bare and began renovating
[2] operator was denied due process in administrative hearing the premises to start a new SOB, Chicas Locas, which
on application; and featured female dancers and catered to mostly Hispanic
male customers. Centerfolds did not open Chicas Locas to
[3] board's decision was arbitrary and capricious. customers until late August 2003.

In 1992, the City passed an ordinance prohibiting the
Affirmed.
operation of an SOB within 1,000 feet of a residence,
thus making Centerfolds' operation a nonconforming use
Attorneys and Law Firms under the new ordinance. ARLINGTON, TEX., CODE,
SEXUALLY ORIENTED BUSINESS ORDINANCES art.
*241 Fanning, Harper & Martinson, Thomas P. Brandt, III, §§ 3.01–.02(A) (2004). SOBs that were already in
Joshua A. Skinner, and John F. Roehm III, Dallas, for operation when the ordinance was passed and that are
Appellants. considered nonconforming uses under the ordinance are
allowed to apply for an exemption to the location restrictions
Quaid & Quaid, L.C., Charles Joseph Quaid, Dallas, for each year. Id. § 3.02(A). The building in which Chicas Locas
Appellees. is located is within 1,000 feet of two residential areas.

Panel B: LIVINGSTON, DAUPHINOT, and HOLMAN, JJ.
To obtain a location exemption, an SOB must prove its
entitlement to the exemption by a preponderance of the

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City of Arlington v. Centerfolds, Inc., 232 S.W.3d 238 (2007)

evidence at a hearing before the Board. Id. art. IV, § 4.11. failed to file required findings of fact and conclusions of law
Section 4.11(E) of the ordinance provides that the Board may in support of its decision.
grant the exemption if it makes the following findings:
The trial court denied appellants' motion for summary
1. That the location of the [SOB] will not have a detrimental judgment because of the procedural due process concerns;
effect on nearby properties or be contrary to the public however, because appellees had failed to file their own
safety or welfare; motion for summary judgment, the trial court could not grant
them the relief they had asked for in their response: for
2. That the location of the [SOB] will not downgrade the
the case to be remanded to the Board for a new hearing.
property values or quality of life in the adjacent areas or
Appellees then filed a motion for summary judgment raising
encourage the development of urban blight;
the same procedural due process grounds. 2 The trial court
3. That the location of the [SOB] in the area will not be granted the summary judgment motion without specifying
contrary to any program of neighborhood conservation, any particular grounds, vacated the Board's order denying
nor will it interfere with any efforts of urban renewal or appellants' application for a location exemption for 2004,
restoration; and and remanded the case to the Board for a trial de novo on
appellees' application for a location exemption.
4. That all other applicable provisions of [the SOB
ordinance] will be observed.

Id. § 4.11(E). Beginning “a couple of years” after the passage Standard of Review
of the new SOB ordinance, Centerfolds applied for, and the
Board granted, such an exemption each year. A plaintiff is entitled to summary judgment on a cause of
action if it conclusively proves all essential elements of
On September 22, 2003, after Centerfolds had converted its the claim. See TEX.R. CIV. P. 166a(a), (c); MMP, Ltd. v.
business to Chicas Locas from La Bare, appellees applied to Jones, 710 S.W.2d 59, 60 (Tex.1986). When reviewing a
renew their location exemption for 2004. The chief of police summary judgment, we take as true all evidence favorable to
denied the application because of the club's proximity to a the nonmovant, and we indulge every reasonable inference
residential area. After a hearing at which appellees and the and resolve any doubts in the nonmovant's favor. IHS Cedars
City both presented evidence, the Board denied the exemption Treatment Ctr. of DeSoto, Tex., Inc. v. Mason, 143 S.W.3d
application on January 20, 2004. Appellees appealed the 794, 798 (Tex.2004). Questions of law are appropriate
Board's decision to the district court. Id. § 4.09. matters for summary judgment. Rhone–Poulenc, Inc. v. Steel,
997 S.W.2d 217, 223 (Tex.1999); Westchester Fire Ins. Co.
Appellants filed a motion for partial summary judgment v. Admiral Ins. Co., 152 S.W.3d 172, 178 (Tex.App.-Fort
contending that the Board's decision must be affirmed based Worth 2004, pet. filed) (op. on reh'g). Summary judgment is
proper in an appeal to the trial court pursuant to the substantial
on the substantial evidence standard of review. 1 In their
evidence review because the only issue before the trial court
response, appellees contended that the Board's decision could
is a question of law. In re Edwards Aquifer Auth., 217 S.W.3d
not be upheld on substantial evidence grounds *243 because
581, 587 (Tex.App.-San Antonio 2006, orig. proceeding);
they were denied procedural due process during the hearing
Parks v. Harris County Civil Serv. Comm'n, 225 S.W.3d
before the Board. Specifically, appellees contended, among
246, 250 (Tex.App.-El Paso, 2006, no pet.); Arrellano v. Tex.
other things, that they were not allowed to cross-examine
Employment Comm'n, 810 S.W.2d 767, 770–71 (Tex.App.-
members of the public who made remarks to the Board
San Antonio 1991, writ denied).
in a public comment session held before the hearing, that
Board members impermissibly considered the unexamined
public comment in deciding to deny appellee's request
for a location exemption, that appellees were denied full Standing
and effective cross-examination of witnesses at the hearing
because they were not allowed to re-examine witnesses after In their first issue, appellants contend that appellees lack
Board members asked questions of them, and that the Board standing to challenge the Board's decision because they
did not fulfill the requirements to apply for an exemption.
According to appellants, under section 3.02 of the City's SOB

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City of Arlington v. Centerfolds, Inc., 232 S.W.3d 238 (2007)

ordinance, only an SOB that has “continuously operated” of whether it has a justiciable interest in the controversy.”
has standing to apply for an exemption under section 4.11. Nootsie, Ltd. v. Williamson County Appraisal Dist., 925
Although the City did not plead the matter at trial, it contends S.W.2d 659, 661 (Tex.1996). In contrast to a challenge to
that it may raise the matter for the first time on appeal standing, a challenge to a party's capacity must be raised by
because standing implicates the trial court's subject matter a verified pleading in the trial court. TEX.R. CIV. P. 93(1)-
jurisdiction. (2); Lovato, 171 S.W.3d at 849.

*244 Applicable Law Analysis
[1] [2] [3] A plaintiff must have both standing and Section 3.02(A) of the City's SOB ordinance provides that
capacity to bring a lawsuit. Austin Nursing Ctr., Inc. v.
Lovato, 171 S.W.3d 845, 848 (Tex.2005); Coastal Liquids [a]ny [SOB] lawfully operating prior
Transp., L.P. v. Harris County Appraisal Dist., 46 S.W.3d to the effective date of Ordinance
880, 884 (Tex.2001). The issue of standing focuses on No. 92–117 [the SOB ordinance],
whether a party has a sufficient relationship with the lawsuit that is in violation of Section
so as to have a justiciable interest in its outcome. Lovato, 171 3.01 [setting forth the zoning and
S.W.3d at 848. Standing, therefore, focuses on who may bring location restrictions for SOBs] and has
an action, M.D. Anderson Cancer Ctr. v. Novak, 52 S.W.3d continuously operated and maintained
704, 708 (Tex.2001); In re Guardianship of Archer, 203 a valid and effective [SOB] license
S.W.3d 16, 23 (Tex.App.-San Antonio 2006, pet. denied), and at such location, shall be deemed
is concerned with whether the claimant has a particularized a nonconforming [SOB].... Any
injury distinct from that suffered by the general public. Bland nonconforming status shall terminate
ISD v. Blue, 34 S.W.3d 547, 555–56 (Tex.2000); All Seasons if the [SOB] voluntarily discontinues
Window & Door Mfg., Inc. v. Red Dot Corp., 181 S.W.3d 490, operating as a[n][SOB] or abandons
497 (Tex.App.-Texarkana 2005, no pet.). such use at such location for thirty (30)
days or more, or if there has been a
[4] [5] [6] Standing requires that there be a real final administrative determination ...
controversy between the parties that will actually be denying an application for such
determined by the judicial declaration sought. Lovato, business at such location without
171 S.W.3d at 849. This means that litigants must be further appeal, or a judicial
“properly situated to be entitled to [a] judicial determination.” determination upholding such denial.
Id. (quoting 13 CHARLES ALAN WRIGHT, ARTHUR
ARLINGTON, TEX., CODE, SEXUALLY ORIENTED
R. MILLER, & EDWARD H. COOPER, FEDERAL
BUSINESS ORDINANCES art. III, § 3.02(A) (emphasis
PRACTICE AND PROCEDURE: JURISDICTION 2D §
added). According to appellants, an SOB that has failed to
3531, at 338–39 (2d ed.1984)). Without standing, a court
continuously operate is not entitled to request an exemption
lacks subject matter jurisdiction to hear the case. Id.; Tex.
from the location restrictions.
Ass'n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 443
(Tex.1993). Thus, the issue of standing may be raised for the
*245 The evidence at the Board hearing showed that
first time on appeal. Lovato, 171 S.W.3d at 849.
appellees had shut down La Bare for at least part of July and
August 2003 for the purpose of renovating the building and
The issue of capacity, however, “is conceived of as a
hiring new staff in preparation for opening Chicas Locas. It
procedural issue dealing with the personal qualifications
is undisputed that the club was not open for business during
of a party to litigate.” Id. at 848 (quoting 6A CHARLES
that time. Appellants contend that this means the club was not
ALAN WRIGHT, ARTHUR R. MILLER, & MARY KAY
continuously operated and therefore lost its nonconforming
KANE, FEDERAL PRACTICE AND PROCEDURE: CIVIL
use status, thereby losing standing to pursue an exemption
2D § 1559, at 441 (2d ed.1990)). Our supreme court has
and maintain this subsequent appeal. Appellees, however,
distinguished between standing and capacity, stating that
contend that although the club was not open for business
“[a] plaintiff has standing when it is personally aggrieved,
during parts of July and August, they were nevertheless
regardless of whether it is acting with legal authority; a party
continuing to operate an SOB at that location by renovating
has capacity when it has the legal authority to act, regardless

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City of Arlington v. Centerfolds, Inc., 232 S.W.3d 238 (2007)

the club, hiring new employees, and otherwise preparing for As grounds for their summary judgment motion in the trial
the changed format. They also contend that whether or not court, appellees alleged that they were denied due process of
they were in continuous operation under the statute is not a law in the proceedings before the Board because
matter of standing but of capacity.
*246 (A) [they were] denied
[7] We agree with appellees' latter contention. We need not cross[-]examination of witnesses and
interpret whether the club here was “continuous[ly] operated” evidence in two (2) particulars: (1)
individual citizens were allowed to
under the facts as applied to this ordinance. 3 It is clear
give opening statements which were
that here appellees are personally aggrieved by the Board's
reportedly not to be part of the
decision; regardless of whether they were qualified to apply
underlying administrative record or
for the exemption under the ordinance, they did file an
evidence being considered by the
application, which was rejected on the ground that the SOB
Board (and therefore not subject
violated the ordinance's location restrictions, not because the
to cross[-]examination) but such
club was no longer considered a nonconforming use by virtue
testimony and comments by such
of its failure to continuously operate. Section 3.02 refers
citizens were specifically referenced
to the nonconforming use designation as a “status,” which
by Board members as part of the basis
speaks more to appellees' authority or capacity to challenge
for their denial of the exemption; and
the Board's decision rather than whether appellees have a
(2) the refusal of the [administrative
justiciable interest in the controversy. If the City had alleged
law judge (ALJ) ] to allow further
that the exemption should be denied on the ground that
examination or cross[-]examination
appellees had not continuously operated as required under
of witnesses after the completion
section 3.02, and if the Board had rejected the application on
of questioning of such witnesses by
that basis, appellees would have had standing to appeal that
the very Board members who were
decision because they would have been personally aggrieved
sitting in judgment; and (b) [sic] the
by it, i.e., they would not have been able to continue to
[Board] fail[ed] to make findings of
operate their business. Here, the result is the same: the
fact and conclusions of law. [Citations
Board's decision bars appellees from operating their business.
omitted.]
Therefore, we conclude and hold that whether the club was
continuously operated does not affect appellees' standing to
challenge the Board's decision here; rather it is an issue of The hearing took place before the Board, with an ALJ, who
capacity that appellants should have raised as an affirmative was not a member of the Board, presiding. The first part of
defense in their pleadings below. See TEX.R. CIV. P. 93(1)- the hearing consisted of commentary from members of the
(2); Lovato, 171 S.W.3d at 849; Coastal Liquids, 46 S.W.3d general public who attended the hearing. According to section
at 884 (holding that whether foreign corporation's failure to 5.02(A) of the Board's rules of procedure, this commentary
properly register with Secretary of State barred corporation's was not to be considered as evidence for purposes of
claim was issue of capacity rather than standing). We overrule the hearing. License & Amortization Appeal Bd. Rules of
appellants' first issue. Procedure § 5.02(A) (Dec. 16, 2002). Six citizens voluntarily
spoke during the public comment portion of the hearing, and
the City later called three of these as witnesses during the
evidentiary portion of the hearing. All six were opposed to
Preservation of Error appellees' being granted an exemption. The record shows that
some of the public comment was met with audible applause.
In their second issue, appellants contend that appellees
waived their procedural due process claims by failing to assert
After the first person spoke during the public comment part
them before the Board. Appellees argue that they were not
of the hearing, the following exchange occurred:
required to preserve their claims before the Board, but even
if they were, they did so. [APPELLEES' COUNSEL]: It's my understanding I'm not
allowed to cross [-]examine people that—

Applicable Facts [ALJ]: No. This is not evidence.

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City of Arlington v. Centerfolds, Inc., 232 S.W.3d 238 (2007)

At the conclusion of testimony from another witness,
[APPELLEES' COUNSEL]: I just wanted to make sure. appellees' counsel stated,

After the public comment section of the hearing concluded, [APPELLEES' COUNSEL]: Just a clarification. I assume
the evidentiary part of the hearing began. Appellees, who all witnesses, once the Board asks questions, we're not
had the burden to prove entitlement to the exemption by a asking further questions.
preponderance of the evidence, presented their witnesses first.
ARLINGTON, TEX., CODE, SEXUALLY ORIENTED [ALJ]: Right.
BUSINESS ORDINANCES art. III, § 4.11(G); License and
[APPELLEES' COUNSEL]: Thank you.
Amortization Appeal Bd. Rules of Procedure § 5.01. The
ALJ, in keeping with the Board's written procedures, allowed
the City, through its counsel, to cross-examine each witness; Analysis
he also allowed the parties to redirect and recross. See Ordinarily, to preserve a complaint for our review, a party
License and Amortization Appeal Bd. Rules of Procedure must have presented to the trial court a timely request,
§ 5.02(D)-(G). However, after both sides were finished, objection, or motion that states the specific grounds for the
the ALJ also allowed the Board members themselves to desired ruling, if they are not apparent from the context of
ask questions of the witnesses. 4 However, after the Board the request, objection, or motion. TEX.R.APP. P. 33.1(a); see
members questioned the witnesses, the ALJ refused to allow also TEX.R. EVID. 103(a)(1). Here, appellees raised their
appellees' counsel to further question witnesses to clarify due process arguments in the trial court; however, appellants
matters raised in response to the Board's questions. claim that appellees waived them by failing to raise them at
the Board hearing.
*247 Specifically, after the evidentiary part of the hearing
began and after several Board members had questioned one [8] In appeals from state agency contested case hearings
of appellees' witnesses, appellees' counsel asked if he could under the Administrative Procedure Act (APA), an appellant
clarify some matters with that witness: waives any arguments not set forth in a timely motion
for rehearing except for agreed appeals and appeals from
[ALJ]: Any further questions from the Board? The witness decisions in emergency cases. TEX. GOV'T CODE ANN.
may be excused. Thank you. §§ 2001.144(a)(3)-(4), .145(a) (Vernon 2000); Entergy
Gulf States, Inc. v. Pub. Util. Comm'n, 173 S.W.3d
[APPELLEES' COUNSEL]: Some questions, some of the
199, 210 (Tex.App.-Austin 2005, pet. denied). This
things I—
requirement ensures that the aggrieved party has exhausted
[ALJ]: I beg your pardon? all administrative remedies before seeking judicial review of
the agency's decision. Lindsay v. Sterling, 690 S.W.2d 560,
[APPELLEES' COUNSEL]: Because of some of the 563 (Tex.1985); *248 Brown v. Tex. Dep't of Ins., 34 S.W.3d
questions [from the Board], I have some additional 683, 687 (Tex.App.-Austin 2000, no pet.). The purpose of
questions for the witness if that's appropriate to clarify. a motion for rehearing is to put the agency on notice as
to the errors alleged by the party seeking judicial review.
[ALJ]: I don't think that's necessary for this witness. You've Suburban Util. Corp. v. Pub. Util. Comm'n, 652 S.W.2d 358,
had two opportunities to examine the witness. 364 (Tex.1983); Brown, 34 S.W.3d at 687.
[APPELLEES' COUNSEL]: I'd also like the record to
[9] But the APA applies only to state agency hearings;
reflect that the testimony was coming from the general
it does not govern hearings of the Board pursuant to the
public in the answer to some of the questions. 5 City's SOB ordinance. See TEX. GOV'T CODE ANN. §§
2001.001, .003(7) (Vernon 2000 & Supp.2006) (providing
that the APA is meant to provide uniform procedures for
[ALJ]: The Board cannot accept testimony from the general
state agencies, which are defined as parties with statewide
public.
jurisdiction that make rules or determine contested cases).
My instructions to it will be that they accept only The SOB ordinance does not provide for any rehearing by
testimony that I've admitted into evidence. the Board; it provides only for an appeal from the Board's

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City of Arlington v. Centerfolds, Inc., 232 S.W.3d 238 (2007)

decision to the district court. ARLINGTON, TEX., CODE,
SEXUALLY ORIENTED BUSINESS ORDINANCES art. Whether Appellees Have Property or Liberty Interest
III, §§ 4.08(B)-(C), 4.09. Thus, appellants exhausted all of Entitling Them to Procedural Due Process
the administrative remedies available to them before seeking [10] [11] The Fourteenth Amendment to the United States
judicial review of the Board's decision. Constitution provides, in pertinent part, that no state may
deprive any person of life, liberty, or property, without
Moreover, appellees' counsel did seek confirmation from the due process of law. U.S. CONST. amend. XIV. Procedural
ALJ that he would not be able to cross-examine members of due process requires that a governmental entity's *249
the public who made remarks during the public commentary; deprivation of life, liberty, or property, even if consistent
he also requested to ask further questions of at least one with substantive due process, must “be implemented in a fair
witness after Board members had questioned that witness, and manner.” United States v. Salerno, 481 U.S. 739, 746, 107
he also confirmed with the ALJ that he would not be able to S.Ct. 2095, 2101, 95 L.Ed.2d 697 (1987). The first inquiry in
ask follow-up questions of any other witnesses after similar any due process claim under the United States Constitution is
questioning of that witness by the Board. It was clear that the whether the plaintiff has been deprived of a protected property
ALJ understood appellants' concerns because he specifically or liberty interest. Am. Mfrs. Mut. Ins. Co. v. Sullivan, 526
instructed the Board that the public commentary was not to U.S. 40, 59, 119 S.Ct. 977, 989, 143 L.Ed.2d 130 (1999).
be considered as evidence. See TEX.R.APP. P. 33.1(a)(1)
(A); cf. Hassan v. Greater Houston Transp. Co., No. 01– Appellants argue that appellees had no constitutionally
05–00494–CV, 2007 WL 495242, at *4 (Tex.App.-Houston protected liberty or property interest requiring procedural due
[1st Dist.] Feb. 15, 2007, no pet. h.) (holding that complaint process by virtue of their nonconforming use status; in other
about jury charge was preserved when trial court clearly words, because appellees could validly operate only by virtue
understood complaint and ruled on it). Section 5.02(A) of the of a location exemption, they were not entitled to due process
Board's rules of procedure specifically provides that public protections in the exemption hearing. See Ky. Dep't of Corr.
comment will be taken before a Board hearing, and those v. Thompson, 490 U.S. 454, 460–62, 109 S.Ct. 1904, 1908–
same procedures do not provide for applicants to challenge 09, 104 L.Ed.2d 506 (1989) (holding that protected liberty
the Board's procedures. License and Amortization Appeal interests may arise from the Due Process Clause itself or the
Bd. Rules of Procedure § 5.02(A). Accordingly, we hold that laws of the states and that a state creates a protected liberty
appellants did not waive the contentions in their motion for interest by placing substantive limits on official discretion,
summary judgment that the Board's decision could not be such as “mandating the outcome to be reached upon a finding
upheld because of due process concerns related to the public that the relevant criteria have been met”); City of Univ. Park
comment portion of the Board hearing and the ALJ's refusal v. Benners, 485 S.W.2d 773, 778 (Tex.1972) (“[P]roperty
to allow appellants to requestion witnesses after the Board owners do not acquire a constitutionally protected vested right
members asked questions of those witnesses. in property uses once commenced or in zoning classifications
once made.”). 6
Accordingly, we hold that appellees did not waive their
complaints upon which the trial court granted them summary [12] However, appellants do not address appellees' reliance
judgment. We overrule appellants' second issue. on Lewis v. Metropolitan Savings and Loan Association—
a Texas Supreme Court case holding that an administrative
decision fails for arbitrariness if it does not comply
with procedural due process—rather than the Due Process
Procedural Due Process
Clause. 550 S.W.2d 11, 16 (Tex.1977). In Lewis, the
In their third issue, appellants claim that appellees failed to appellees contended that the appellant, the Savings and
establish their entitlement to summary judgment on their due Loan Commissioner, denied them procedural due process
process claims because (1) they had no liberty or property during an administrative hearing by excluding “competent
interest in the operation of an SOB in the specific location, and material evidence” proffered by the appellees. Id. at 12.
(2) they were given a sufficient opportunity to cross-examine The Commissioner contended that the administrative decision
all adverse witnesses, and (3) they cannot prove harm. could not be considered arbitrary if it was supported by
substantial evidence, so any procedural irregularities were

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City of Arlington v. Centerfolds, Inc., 232 S.W.3d 238 (2007)

irrelevant as long as substantial evidence existed to support risk of erroneous deprivation of a constitutionally protected
his decision. Id. at 13. interest under the procedures used and the likely benefit of
any additional procedures; and (3) the government's interest,
[13] The supreme court recognized that there can be including the fiscal and administrative burdens that additional
evidence in the administrative record that qualifies as procedural requirements would entail. Mathews, 424 U.S. at
substantial, yet the parties may have also been denied due 335, 96 S.Ct. at 903; see Than, 901 S.W.2d at 930. “Basic
process and the rudiments of fair play in the conduct of due process requires that when a decision maker is called
the proceeding. Id. at 13–14. The court also noted that upon to make a decision grounded on evidence, the parties
in that case in particular and in similar administrative involved should be provided fair notice and a meaningful
cases in which the decision maker is also a fact-finder, opportunity to present their evidence.” United Copper Indus.,
it was difficult or impossible to tell whether the improper Inc. v. Grissom, 17 S.W.3d 797, 805 (Tex.App.-Austin 2000,
exclusion of evidence (and, hence, the denial of due pet. dism'd as moot).
process) affected the result of the proceeding. Id. at 15.
Accordingly, the court concluded and held that “arbitrary [18] [19] In administrative proceedings, due process
action of an administrative agency cannot stand [regardless of requires that parties be accorded a full and fair hearing on
whether there is substantial evidence supporting the agency's disputed fact issues. City of Corpus Christi v. Pub. Util.
decision]. There is arbitrariness where the treatment accorded Comm'n, 51 S.W.3d 231, 262 (Tex.2001); Hammack v. Pub.
parties in the administrative process denies them due process Util. Comm'n, 131 S.W.3d 713, 731 (Tex.App.-Austin 2004,
of law.” Id. at 16. pet. denied). At a minimum, it requires that the “rudiments of
fair play” be observed. Hammack, 131 S.W.3d at 731 (quoting
Under Texas law regarding administrative hearings, appellees State v. Crank, 666 S.W.2d 91, 94 (Tex.1984) (op. on reh'g)).
in this case were entitled to procedural due process during This is not to say that administrative hearings must measure
*250 the administrative hearing before the Board. See id. up to judicial standards, but even they cannot be arbitrary or
at 13; J.B. Adver., Inc. v. Sign Bd. of Appeals of the City inherently unfair. City of Corpus Christi, 51 S.W.3d at 262
of Carrollton, Tex., 883 S.W.2d 443, 448–49 (Tex.App.- (citing Bexar County Sheriff's Civil Serv. Comm'n v. Davis,
Eastland 1994, writ denied); Closs v. Goose Creek Consol. 802 S.W.2d 659, 664 (Tex.1990), cert. denied, 502 U.S. 811,
ISD, 874 S.W.2d 859, 874 (Tex.App.-Texarkana 1994, no 112 S.Ct. 57, 116 L.Ed.2d 34 (1991)). Moreover, the Board's
writ). Accordingly, we reject appellants' argument that the own rules of procedure provide that the City may cross-
Board's decision was not subject to reversal for failure to examine any witnesses called by the applicant and that the
comply with procedural due process. applicant, in turn, may cross-examine any witnesses called
by the City. License and Amortization Appeal Bd. Rules of
Procedure § 5.02(E), (G).
Denial of Opportunity to Fully Examine Witnesses
Appellants next contend that appellees had no due process [20] [21] [22] [23] “In almost every setting where
right to cross-examine or re-examine witnesses after the important decisions turn on questions of fact, due process
Board members individually questioned them upon the requires an opportunity to confront and cross-examine
completion of appellants' and appellees' direct and cross- adverse witnesses.” Goldberg v. Kelly, 397 U.S. 254, 269, 90
examinations. S.Ct. 1011, 1021, 25 L.Ed.2d 287 (1970). Cross-examination
is a safeguard essential to a fair trial and a cornerstone in the
[14] [15] [16] [17] At a minimum, due process requiresquest for truth; longstanding principles of our jurisprudence
notice and an opportunity to be heard at a meaningful time recognize the right and necessity of full and complete cross-
and in a meaningful manner. Mathews v. Eldridge, 424 U.S. examination. Davidson v. Great *251 Nat'l Life Ins. Co.,
319, 333, 96 S.Ct. 893, 902, 47 L.Ed.2d 18 (1976); see 737 S.W.2d 312, 314 (Tex.1987). The right to cross-examine
Univ. of Tex. Med. Sch. at Houston v. Than, 901 S.W.2d a witness is a substantial one, and it is error to so restrict it
926, 930 (Tex.1995). Exactly what process is due in a given as to prevent the cross-examining party from going fully into
situation is measured by a flexible standard that depends on all matters connected with the examination in chief. Id. “The
the practical requirements of the circumstances. Mathews, right to cross[-] examine adverse witnesses and to examine
424 U.S. at 334, 96 S.Ct. at 902; see Than, 901 S.W.2d at 930. and rebut all evidence is not confined to court trials, but
The flexible standard balances the following three factors:
(1) the private interest affected by the state action; (2) the

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City of Arlington v. Centerfolds, Inc., 232 S.W.3d 238 (2007)

applies also to administrative hearings.” Richardson v. City the following exchange occurred when the Board was allowed
of Pasadena, 513 S.W.2d 1, 4 (Tex.1974) (emphasis added). to question Lozano:

[24] In addition, the limitation of redirect can limit a party's Q. Okay. Who is Alan Fitzgerald?
rights:
A. One of the managers.
Re-direct is intended to permit the
Q. Is he bilingual?
witness to explain answers given on
cross-examination and to amplify new A. No, he's not.
material elicited for the first time.
The intent is to prevent the jury Q. Were you on duty on December 19th about midnight,
from being left with a false and when they had the big fight in the parking lot?
incomplete picture created by the
A. No, I was not.
latitude counsel is afforded on cross-
examination and counsel's ability to *252 Q. Alan Fitzgerald was the manager on duty, right?
use leading questions. It is sometimes
said that re-direct examination for this A. Yes.
purpose is a matter of right.
Q. You're aware, I'm sure, that under the Ordinance it
Sims v. Brackett, 885 S.W.2d 450, 455 (Tex.App.-Corpus clearly states that the licensee, which you know, is the
Christi 1994, writ denied). manager, also, who represents the licensee, has to be fully
in possession and control of the premises and activities that
[25] The Texas Rules of Evidence give the trial court go on at all times.
“reasonable control over the mode and order of interrogating
witnesses and presenting evidence so as to [among other If you've got a 99 percent male, 80 percent Hispanic
things] (1) make the interrogation and presentation effective patronage, and you[r] manager at midnight doesn't speak
for the ascertainment of the truth ....” TEX.R. EVID. 611(a) Spanish, how do you maintain control?
(emphasis added). 7 A fair opportunity for the parties to prove A. He's not the only manager. We don't—we have more
their respective cases is essential to an administrative hearing than one manager at all times in a night shift.
comporting with due process. J.B. Adver., 883 S.W.2d at 449.
Denial of such an opportunity affects the ability of the fact- Q. But ultimately, somebody is in control.
finder to ascertain the truth of the dispute. See TEX.R. EVID.
102 (providing that the rules of evidence “shall be construed He's in charge, right?
to secure fairness in administration, ... to the end that the
I mean, you know, you can't—somebody has got to be the
truth may be ascertained and proceedings justly determined”);
man.
Sims, 885 S.W.2d at 455.
A. We delegate different responsibilities for different
[26] Here, appellees were afforded an opportunity to managers. I don't have one that's just totally over the night
perform direct examinations of their own witnesses and to shift.
cross-examine the City's witnesses. However, appellees were
denied the right to redirect or recross witnesses after the Board Q. Well, who's in charge of parking lot fights?
members themselves had asked those witnesses questions.
Some of the Board members' questions raised matters not A. We don't have anybody in charge of parking lot fights.
explored by either party on direct examination or cross-
Q. But, you see my point. You had an issue there, you've
examination; however, the ALJ refused to allow appellees to
got a bad problem with—the police had to respond to it,
ask further questions even after new matters were raised by
you had a fight in the parking lot.
Board members.

For example, after an extensive direct, cross, redirect, and
recross of Al Lozano, the general manager of Chicas Locas,

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City of Arlington v. Centerfolds, Inc., 232 S.W.3d 238 (2007)

surrounding properties had been set before Chicas Locas was
And nobody was real sure what happened because one of opened that year. After the Board's questioning of Hardin,
the reasons is, the manager couldn't communicate with the appellees' counsel made his initial request to ask additional
customers who were having the fracas. questions for clarification purposes, which the ALJ denied.
Would that be an accurate observation?
The tenor of the Board members' questions to these two
A. Yes. witnesses was, at times, confrontational, as if the Board
members had placed themselves in an adversarial role,
The fight referenced by the Board member was not raised by conducting cross-examination instead of neutrally gathering
either party in their direct or cross-examinations. Other Board information to assist in their fact-finding role. See Tex.
members asked Lozano questions about matters not raised in State Bd. of Med. Exam'rs v. Nacol, 696 S.W.2d 687, 688
either the direct or cross-examinations. (Tex.App.-Beaumont 1985, writ ref'd n.r.e.) (holding that
Board of Medical Examiners' decision was “made upon
In addition, after appellants' final re-cross of Lozano but unlawful procedure” because, among other things, “[t]he
before the Board members' questioning, the ALJ stated that Board acted like prosecutors rather than fact[-]finders and,
he was going to “limit recross and redirect to issues that were in voting, used the word ‘guilty’ to the allegations, rather
explicitly raised in the previous testimony.” However, the than ‘true.’ ”). Although the cases involving due process
ALJ placed no such limitations upon the Board members' rights speak mostly to the preservation of the right of cross-
questions. examination, here, even though appellees were allowed to
initially examine and cross-examine witnesses, they were
Another example of this limitation occurred after appellees deprived of the opportunity to fully explore all factual
and appellants finished questioning Dave Hardin, appellees' issues, including new issues, raised by the Board's questions
property values expert; the Board members then questioned during appellees' case-in-chief and the City's case-in-chief.
him extensively. After Hardin testified about the club's lack See J.B. Advertising, 883 S.W.2d at 449 (holding that
of impact on property values, Board member Knezek noted procedure by which the appellant's attorney was allowed to
that very few of the properties that Hardin had examined present questions to Chair of Board, who then referred those
in determining that the club did not have an impact on questions to the witness, denied the appellant the right to
surrounding property values had increased in value; thus, it cross-examination of witnesses, thus denying appellant due
appeared that the area around the club was stagnant and that course of law). Thus, the ALJ's refusal to allow appellees
the operation of the club could have no effect on surrounding the opportunity to further redirect after the Board members'
property values. Hardin responded, “Oh no, ... I wouldn't questions was in contravention of the truthseeking nature of
form that conclusion, no, ma'am. It could—you could have an adversarial, evidentiary hearing and could have affected
a stagnant area and an adult entertainment facility actually the fact-finder's ability to ascertain the truth in this case.
harm the area. You sure could.” When Board member Knezek We conclude and hold that the ALJ denied appellees the
asked if that meant that the commercial area was “on its way procedural due process that they were entitled to during
down,” Hardin responded that, yes, the appraisal board had the hearing by refusing to allow appellees to re-examine
reduced values on all commercial properties in the area on witnesses after the Board members had asked questions of
which the owners had protested their appraised values. those witnesses.

Another Board member quizzed Hardin about whether lights It is difficult if not impossible to gauge the effect of this
and noise from the club could be seen from a nearby restriction on the result of the proceeding because we do not
residential property. The only reference to noise made before know what testimony may have been elicited had the ALJ not
this question was by two citizens during the nonevidentiary denied appellees the right to re-examine the witnesses. See
public comment portion of the hearing. Hardin answered Lewis, 550 S.W.2d at 15–16. This difficulty is compounded
that as to lights, “I would think *253 you could, yes, sir.” by the difficulty in determining the effect, if any, of the
But with respect to noise, he said he wouldn't know how public comment portion of the hearing on the Board members.
to answer that. Finally, a third Board member got Hardin Although the commentary is supposed to be nonevidentiary
to admit that the appraised value data he had testified about and the ALJ specifically told the Board not to consider
would apply solely to La Bare since appraised values for it, at least one Board member asked a question of one of

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 9
City of Arlington v. Centerfolds, Inc., 232 S.W.3d 238 (2007)

appellees' witnesses that could have been based on the public
[28] Based on our review of the entire record, 9 we hold
comments. 8
that appellees' procedural due process rights were violated by
the restrictions on appellees' full and complete examination of
[27] Appellants point to the fact that the APA provides
public commentators and witnesses at the hearing. The active,
for public comment in state agency hearings. See TEX.
almost prosecutorial tone of the Board's comments, when
GOV'T CODE ANN. § 2001.029. However, the APA does
combined with the inability to discern whether the Board
not apply here because the City and Board are not state
impermissibly took into account public commentary that was
agencies. See id. § 2001.003(7). In addition, this section of
not available for cross-examination, leaves the impression
the APA applies to rulemaking hearings, not to contested case
that the hearing was inherently unfair to appellees. Therefore,
hearings. Id. § 2001.029. Rulemaking hearings are different
appellees conclusively proved that the Board's decision could
from contested case hearings in that *254 “rulemaking
not be upheld because it is arbitrary and capricious. See
procedures maximize ‘public participation in the rulemaking
Lewis, 550 S.W.2d at 16. Because an arbitrary decision cannot
process,’ a stated purpose of the APA, while contested case
be upheld even if supported by substantial evidence, there
procedures limit participation to those directly affected by
are no fact issues that would preclude summary judgment
the dispute.” R.R. Comm'n of Tex. v. WBD Oil & Gas Co.,
104 S.W.3d 69, 77 (Tex.2003) (footnote omitted). Here, the and require a remand, as urged by appellees. 10 See id. We
Board hearing is akin to a contested case, which the APA overrule appellants' third and fourth issues.
defines as “a proceeding, ... in which the legal rights, duties,
or privileges of a party are to be determined by a state agency
after an opportunity for an adjudicative hearing.” TEX. Conclusion
GOV'T CODE ANN. § 2001.003(1). Thus, the APA does
not support the practice of allowing unsworn public comment Having overruled appellants' four issues, we affirm the trial
that is not subject to cross-examination in an adjudicative court's judgment.
proceeding such as this one.

Footnotes
1 See id. § 4.09(B) (“The substantial evidence standard of review shall apply to such appeal.”). The substantial evidence standard of
review is deferential; it is generally described as a “limitation on the power of the courts to overturn a decision of an administrative
agency .... [unless it] is illegal, arbitrary or capricious; that is, that it is not reasonably supported by substantial evidence.” Bd. of
Firemen's Relief & Ret. Fund Trs. of Houston v. Marks, 150 Tex. 433, 242 S.W.2d 181, 182–83 (1951); Peaster ISD v. Glodfelty,
63 S.W.3d 1, 5 (Tex.App.-Fort Worth 2001, no pet.).
2 Appellees acknowledge in their brief that they advanced the no-findings-of-fact ground only in the alternative; therefore, our review
of the trial court's decision is limited solely to the cross-examination issues.
3 Accordingly, we also need not decide appellants' contentions regarding the construction of section 3.02.
4 Section 5.02(M) of the Board's rules of procedure provides that “Board members may ask questions of the participants in the hearing
at any point in the proceedings.” License and Amortization Appeal Bd. Rules of Procedure § 5.02(M). But “participants” is not
defined, so it is unclear to whom this term refers: to the parties, attorneys, or witnesses only, or to any person participating in the
proceedings? If we assign “participants” its ordinary meaning of “one that participates” in the proceedings, WEBSTER'S THIRD
NEW INTERNATIONAL DICTIONARY 1646 (2002), then presumably it applies even to those citizens who participate in the
public comment section of the hearing, even though that public comment is supposed to be nonevidentiary in nature and, therefore,
not for consideration by the Board.
5 It is not clear from the record whether testimony “was coming from the general public in the answer to some of the
questions.” [Emphasis added.] The record does show that Craft, who was not testifying at the time, volunteered an answer about
whether nearby property was occupied; however, his answer did not appear to be related to anything said in the public comment
section of the hearing. If a member of the public who was not a witness at the evidentiary part of the hearing volunteered testimony at
that time, it is not shown in the record. However, counsel's comment for the record—made after requesting to ask additional questions
of the witness after the individual Board members questioned that witness—can also be construed as a complaint that some of the
Board members' questions appeared to presume facts stated in some of the citizens' remarks made during the public comment portion
of the hearing.

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City of Arlington v. Centerfolds, Inc., 232 S.W.3d 238 (2007)

6 See also Hang On III, Inc. v. Gregg County, 893 S.W.2d 724, 726 (Tex.App.-Texarkana 1995, writ dism'd by agmt.) (citing Benners
for proposition that landowner has no constitutionally protected right to operate an SOB); Smith v. Copeland, 787 S.W.2d 420, 422
(Tex.App.-San Antonio 1990, no writ) (holding same); City of Houston v. MEF Enters., Inc., 730 S.W.2d 62, 63 (Tex.App.-Houston
[14th Dist.] 1987, no writ) (holding same).
7 The Board's rules of procedure provide that “[t]hese Rules of Procedure shall govern the proceedings of the Board in all cases. Robert's
Rules of Order Revised shall govern only when these rules are silent.” License and Amortization Appeal Bd. Rules of Procedure §
2.04. The rules do not incorporate the Texas Rules of Evidence; however, they do address certain evidentiary matters by providing
that the public comments are not evidentiary, that a party's evidentiary documents will not be admitted except for good cause unless
timely filed according to the Board's rules, and that certain evidence may be excluded upon a party's motion. Id. §§ 4.04, 5.02(A), 5.03.
8 One of the Board members asked Hardin about whether noise from the club could be heard from one of the residential properties
near the club.
9 See, e.g., Lewis, 550 S.W.2d at 15 (stating that court's determination of whether administrative agency has discharged its duty to
fully consider all surrounding facts and circumstances in fairness and justice to the competing parties “requires an examination of
the whole record”).
10 Our holding should not be read as determining whether substantial evidence exists to support the Board's ruling. The trial court's
order simply provides appellees with another opportunity to present their evidence to the Board in a fair and adequate hearing.

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 11
City of Corpus Christi v. Unitarian Church of Corpus Christi, 436 S.W.2d 923 (1968)

building permit to improve its property for church purposes.
The Church was told by a city department employee that
436 S.W.2d 923
the church property would have to be platted prior to the
Court of Civil Appeals of Texas.
issuance of the permit. The Church prepared a plat of the
Corpus Christi.
property, outlining the boundaries of its lot, designating utility
CITY OF CORPUS CHRISTI, Appellant, easements and submitted it to the City Planning Commission
v. for approval. After a hearing on the church's application,
UNITARIAN CHURCH OF the Commission conditionally approved the church's plat .
Approval was subject to the church dedicating a strip of
CORPUS CHRISTI, Appellee.
their land, 25 feet by 630 feet for the purpose of widening
No. 339. | Dec. 31, 1968. | an easement so that an existing street could be extended.
Rehearing Denied Feb. 13, 1969. The church was dissatisfied and appealed this decision to
the City Council seeking approval of their plat without the
After city council withheld approval of plat filed by church requirement of street dedication. After a hearing, the City
seeking building permit to improve its property for church Council denied the relief sought by the church. The church
purposes, church filed suit seeking declaratory judgment then filed suit in the district court seeking a declaratory
and writ of mandamus. The 28th District Court, Nueces judgment: that the City had no authority under the applicable
County, Horace Young, J., granted writ of mandamus and statutes, charters, and ordinances to require the church to file
ordered approval of plat as submitted and appeals were a map or plat of its property as a condition to granting the
taken. The Court of Civil Appeals, Nye, J., held that city building permit. The church sought additionally, the issuance
council's withholding of building permit sought by church to of a writ of mandamus to compel the City to approve their
improve its unplatted property, which had been annexed to submitted plat. The trial was had before the court without a
city, for church purposes on condition that 15% Of church's jury, resulting in a judgment granting the writ of mandamus
property be dedicated to complete street extension, one-half against the City and ordering approval of the plat as submitted
of which had been dedicated by owners of adjacent tract, was by the Church. The City has perfected its appeal. The Church,
unauthorized where church wished to obtain building permit although not dissatisfied with the judgment of the court, files
to build in connection with entire lot, with understanding that its cross appeal from the order of the court denying all other
such lot would never, under proposed plat, be subdivided into relief which included the City's right to require the Church to
two or more lots, and ordinances and statutes under which city file for approval, any plat of the lot involved.
council sought to justify condition contemplated subdivision
for subdivision development purposes. The Unitarian Church of Corpus Christi is a non-profit
religious corporation which acquired title to a certain lot
Affirmed. which is a 2 1/2 *926 acre tract of land. The church's lot was
a portion of lot 6 in Section ‘B’ of the Paisley Subdivision
which was originally platted into lots and blocks in 1896.
Attorneys and Law Firms Lot 6 of this subdivision was further subdivided prior to the
time the Paisley subdivision was annexed into the City of
*925 I. M. Singer, City Atty., Thomas D. McDowell, Asst. Corpus Christi. The church's grantor purchased one of these
City Atty., Corpus Christi, for appellant. re-subdivided lots or tracts prior to its annexation, although
the church itself purchased the subject lot, after the same
Boone, Davis, Cox & Hale, Owen D. Cox, Corpus Christi, for
was brought into the city limits. Situated on the lot is a
appellee.
small existing building which the church sought to improve
as a part of its building program. The church's lot faces a
major dedicated city street (Carroll Lane) on the southeast
OPINION side. The lot was and is presently served with public utilities.
Adjoining the church's property on the northeast side is a tract
NYE, Justice.
of land (also 2 1/2 acres) called the Hancock Tract which has
The Unitarian Church of Corpus Christi as the owner of heretofore been platted. The owners of the Hancock Tract had
certain property, applied to the City of Corpus Christi for a dedicated to the City a strip of land 25 feet by 630 feet, being

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
City of Corpus Christi v. Unitarian Church of Corpus Christi, 436 S.W.2d 923 (1968)

the other half of the Kay Street extension as a condition to
one hafl of the proposed extension of Kay Street. 1 The City
the approval of the plat and the subsequently granting of a
by its present action would require the Church to dedicate
building permit. See the following diagram.

[1] [2] [3] The Church is the owner of the property within has fulfilled all the requirements required by law. Mandamus
will issue to compel the issuing of building permit that has
the City that is not now platted into lots and blocks. The
been withheld without lawful reason. 40 Tex.Jur.2d, s 364,
charter of the City of Corpus Christi provides that the City
Municipal Corporations, p. 48.
‘* * * shall never grant any permit to construct or repair
any house or structure *927 within such area (unplatted
property) until such map shall be so approved and filed * * This is a limited type law suit involving a single lot owner
*.’ It follows as we discuss this point in more detail later, whose unplatted property was annexed into the City. The
that it would be necessary that as a condition precedent property owner wishes to obtain a building permit to build
to the granting of a building permit by the City, that the in connection with the entire lot, understanding that such lot
Church must file a plat of its unplatted property. It is likewise would not now or ever, under its proposed plat, be subdivided
proper for a city to require a property owner to obtain a into two or more lots.
building permit prior to the erection of a building. This [4] If the statutes, charter provisions or ordinances
requirement is a valid exercise of a municipality's police pertaining to the City of Corpus Christi do not impose upon
power. The Church's cross points in regard to the requirement the Church a legal obligation to dedicate a portion of its
of filing a plat to obtain a building permit are overruled. The land for street purposes under these facts, or if such statutes,
granting of the building permit is a governmental function. charter provisions or ordinances do not authorize the City
The permit must be granted, however, where the applicant to require a property owner to make such dedication, then

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
City of Corpus Christi v. Unitarian Church of Corpus Christi, 436 S.W.2d 923 (1968)

the issuance of a mandamus will be proper . Where the 'Hereafter every owner of any tract of land situated within
church has done all that the statutes and law demands, the the corporate limits * * * who may hereafter Divide the
authorized granting of a building permit becomes a mere same in two or more parts For the purpose of laying out any
ministerial duty, the performance of which may be compelled subdivision of any tract of land or any addition to any * * *
by mandamus. Thus where the City itself or by and through its city, or for laying out suburban lots or building lots, * * * shall
planning commission, in its construction of the law, deprives cause a plat to be made thereof * * *.' (emphasis supplied).
a citizen of an unquestionable legal right and there is no other
adequate remedy, the court having power to issue mandamus
may review the matter. Commissioners Court v. Frank Jester The City's ordinance above referred to defined a subdivision
Development Co., 199 S.W.2d 1004 (Tex.Civ.App.—Dallas as follows:
1947, n. r. e.) 'C. SUBDIVISION. A subdivision Is the division of any lot,
tract or parcel of land Into two or more parts, lots or sites, For
[5] [6] [7] The charter and ordinances of a home rule the purpose, whether immediate or future Of sale or division
city must be construed in light of constitutional and statutory of ownership. This definition also includes the resubdivision
provisions as they pertain to the charter provisions relating of land or lots which are a part of a previously recorded
thereto. No home rule charter or ordinance passed under the subdivision * * *.' (emphasis supplied)
home rule statute shall contain any provision inconsistent
with the general laws of the state. Such a home rule city 'D. SUBDIVIDER AND/OR DEVELOPER. The terms
possesses powers not denied by the statute or the constitution ‘subdivider’ and ‘developer’ are synonymous and used
so long as the City has incorporated those powers in its interchangeably, and shall include any person, * * * who does,
charter. Zachry v. City of San Antonio, 157 Tex. 551, 305 or participates in the Doing of, any act toward the subdivision
S.W.2d 558 (1957, affirming Tex.Civ.App. 296 S.W.2d 299). of land within the intent, scope, and purview of this ordinance.
The singular shall include the plural, and the plural shall
include the singular.' (emphasis supplied).
Therefore, if the City of Corpus Christi has such power, it
must be found within the following provisions of its charter, [8] The language of Section 1 of Art. 974 is plural and relates
the statutes or authorized ordinances. Article V, Section 6 of to a division of property into parts. The same is true of the
the charter of the City of Corpus Christi provides in part as City charter and the applicable provisions of its ordinances.
follows: It contemplates subdivision for subdivision development
'Any property within the City * * * Not now platted into purposes. The City's argument that the singular and plural
blocks and lots, shall be platted * * * to conform to the include each other is not applicable to the provisions. A
requirements of * * * (the) * * * Department of Public municipal charter is to be read as a whole and every word,
Works and Zoning and Planning Commission. Its owners, phrase, and expression must be considered and interpreted as
before such property is laid off and Subdivided shall file * if deliberately chosen and used for a purpose. 39 Tex.Jur.2d,
* * a correct map thereof. The City shall never pay for the s 45, Municipal Corporations, p. 397. The Church does not
property used for streets * * * within any such subdivision, * propose to divide its property into two or more parts or to lay
* *‘ (emphasis supplied) out a subdivision as stated in Art. 974a and the City's charter.

'* * * After approval such map shall be filed in the office of [9] [10] We believe that the applicability of the language
the County Clerk in the manner provided by law. The head in Art. 974a is controlled by the word ‘divide’. The statute
of the engineering * * * (Department) * * * shall never grant states that ‘every owner of any tract of land * * * who may
any permit to construct or repair any house or structure within hereafter Divide the same in two or more parts * * *’ controls
such area until such map shall be so approved and filed * * *.' the disposition of those who are affected thereby.

*928 The City, by ordinance adopted in part the rules and The City relies upon the case of Ayres v. City Council of Los
regulations governing the platting of land into subdivisions Angeles, 34 Cal.2d 31, 207 P.2d 1, 11 A.L.R.2d 503 (1949)
as provided in Art. 974a, Vernon's Ann.Civ.St. Section 1 of and Southern Pacific Company v. City of Los Angeles, 242
such article provides in part as follows: Cal.App.2d 38, 51 Cal.Rptr. 197 (1966). However, in each of

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
City of Corpus Christi v. Unitarian Church of Corpus Christi, 436 S.W.2d 923 (1968)

these cases an ordinance or statute gave the authority required necessary, and that a need for the street is created by the new
of them. use of land that is proposed by the owner.

It is urged upon us that since the City's platting ordinance [12] The City's own staff admitted that the Kay Street
provides that whenever a half street has already been provided extension was not a part of the City's general plan. However,
for, adjacent to a tract ‘to be subdivided,’ the other remaining the City argues, that its planning ordinance, which adopted
half street shall be platted in such Subdivision in accordance article 974a, V.A.T.S., comes within the police power of
with Section VI-A of the ordinance. (emphasis supplied). This the City which would authorize the City of make such
platting ordinance refers to subdivisions and the emphasis is requirement of the Church. The ordinance recites as its
on ‘subdivide’. The City summarizes the record and contends purpose:
that the overwhelming evidence shows that the trial court
'* * * The purpose of promoting health,
erred and abused its discretion in ordering a writ of mandamus
safety, morals and general welfare of the
to issue against the City to approve the Church's plat in the
citizens of the City of Corpus Christi
face of the statutes, charter and ordinance which govern the
and the area within five (5) miles of
approval of such plats. This is not a discretionary matter.
the corporate limits of the City of
There is no statute, charter or ordinance which would require
Corpus Christi and to lessen congestion
the Church as a single lot owner to dedicate a portion of
in the proposed streets, and to provide
its property for streets in order to get approval of its plat to
adequate light and air, and to prevent
obtain a building permit, where the Church does not propose
overcrowding of land, and to avoid
to subdivide the lot into smaller lots or otherwise divide it into
undue concentration of population, and
a subdivision.
to facilitate the adequate provision of
*929 We have no quarrel with the trial court's judgment water, sewerage, and other utilities, parks
that the various articles and ordinances make the reasonable and other public requirements that a
requirement that the Church must file a plat of its unplatted platting ordinance be promulgated * * *.'
lot. However, the withholding of a building permit upon the
condition that a portion (amounting to 15%) of the Church's
Irrespective of such all inclusive declarations of a city's police
property be dedicated to public use as a condition for the
powers, without specific lawful authorization effecting the
approval of such plat, is not by law authorized in this case.
factual situation of a particular property owner, a city is
[11] The Church, throughout its briefs, contends that the
not permitted to withhold a plat upon the condition that a
City is attempting to take the Church's property for public use
property owner make dedication of land for street purposes.
without paying adequate compensation therefor, in violation
The Supreme Court has said that:
of the Constitution of the State of Texas and the United
'It is a general and undisputed proposition of law that
States of America. Our Texas Supreme Court has held that
a municipal corporation possesses and can exercise the
city charter provisions and building code ordinances which
following powers, and no others: First, those granted in
require owners of land to plat their property into blocks and
express words; second, those necessarily or fairly implied
lots to conform with abutting streets are not unconstitutional
in or incident, to the powers expressly granted; their, those
and where the regulations appear to be reasonable and are
essential to the accomplishment of the declared objects and
made to promote the general convenience and public welfare,
purposes of the corporation—not simply convenient, but
such requirements come within the police power of the city.
indispensable. * * *‘ Foster v. City of Waco, 113 Tex. 352,
Halsell v. Ferguson, 109 Tex. 144, 202 S.W. 317 (1918).
255 S.W. 1104 at 1105 (1923).
The City contends that this is not a ‘taking’ since the Church
is not required to build, hence not required to plat, and
therefore does not have to make a street dedication. The City
[13] [14] Without constitutional, statutory or charter
says that it has not made any formal request of the Church
authorization it would not be a proper police function
to dedicate anything; that the City has only informed the
to require a property owner to dedicate its property
planning commission that a plat would not be approved unless
for a public purpose without compensation. Such action
it conforms with the plan of the City to the already established
would be contrary to the guarantee of the Federal and
and existing street pattern. In this connection the City submits
that its requirement of street dedication is reasonable and State Constitutions *930 in that regard. 2 In subdivision

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
City of Corpus Christi v. Unitarian Church of Corpus Christi, 436 S.W.2d 923 (1968)

the sovereign to prevent persons under its jurisdiction from
development, a city by statute and charter and/or ordinance
conducting themselves or using their property to the detriment
is authorized to require the dedication of streets, alleys and
of the general welfare. * * * However, it is universally
utility easements as a part of the orderly development of a
conceded that when land or other property is actually taken
city proper. There is a difference concerning the statutorily
from the owner and put to use by the public authorities, the
authorized dedication of streets in subdivisions, and the
constitutional obligation to make just compensation arises,
exercise of the police power to take private property for street
however much the use to which the property is put may
purposes without compensation. In subdivision development,
enhance the public health, morals or safety.' 1 Nichols,
the city is not taking private property for public use without
Eminent Domain ss 1.42, 1.42(1) (3d 1964).'
compensation, but is merely regulating the use thereof. This
distinction has been brought out in DuPuy v. City of Waco,
396 S.W.2d 103 at 107 (Tex.Sup.1965): We have considered all of appellant's points of error and they
are overruled.
“The distinguishing characteristic between eminent domain
and the police power is that the former involves the taking of The judgment of the trial court is affirmed.
property because of its need for the public use while the latter
involves the regulation of such property to prevent the use
SHARPE, J., concurs in the result.
thereof in a manner that is detrimental to the public interest.
The police power may be loosely described as the power of

Footnotes
1 The easement along the Hancock Tract has never been opened to the public as a street. The record does not reveal whether the
Hancock Tract was divided into lots when it was platted.
2 See Lombardo v. City of Dallas, 124 Tex. 1, 73 S.W.2d 475 (1934) for an excellent discussion of the exercise of the police power
by a municipal corporation).

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
City of Dallas v. Saucedo-Falls, 268 S.W.3d 653 (2008)

Attorneys and Law Firms
268 S.W.3d 653
Court of Appeals of Texas, *656 Barbara E. Rosenberg, Thomas P. Perkins, Janice S.
Dallas. Moss, James Pinson, City of Dallas Attorney's Office, Dallas,
TX, for Appellant.
CITY OF DALLAS, Appellant
v. Robert Charles Lyon, Robert Lyon & Associates, Rowlett,
Dora SAUCEDO–FALLS, Brigitte Gassaway, TX, Bob Gorsky, Christopher David Livingston, Lyon,
Shirley Gray, John Martinez, Troy McClain, Gorsky, Haring, and Gilbert, LLP, Dallas, TX, for Appellees.
Mona Neill, Floyd Simpson, William Turnage,
Before Chief Justice THOMAS and Justices FITZGERALD
Cynthia Villareal, Ron Waldrop, Thomas Tanksley, and LANG–MIERS.
Michael Pruitt, and Larry Anderson, Appellees.

No. 05–08–00029–CV. | Aug. 18,
OPINION
2008. | Rehearing Overruled Nov. 18, 2008.
Opinion by Justice LANG–MIERS.
Synopsis
Background: Police officers and firefighters brought suit This is an interlocutory appeal of the trial court's order
against city, after they were not granted five-percent pay granting in part and denying in part the City of Dallas's plea
increase pursuant to resolution passed by city. The 193rd to the jurisdiction. We reverse and render in part and reverse
Judicial District Court, Dallas County, David Evans, J., and remand in part for further proceedings.
denied city's plea to jurisdiction. City appealed. The Court
of Appeals, 172 S.W.3d 703, affirmed. City petitioned
for review. The Supreme Court, 218 S.W.3d 79, reversed
and remanded. The District Court granted city's plea to I. FACTUAL AND PROCEDURAL BACKGROUND
jurisdiction in part. City appealed.
In February 2002, a coalition of police officers and
firefighters presented the City with a signed petition seeking
a special election on a pay increase for the City's sworn police
Holdings: The Court of Appeals, Lang-Miers, J., held that: officers and firefighters equal to 17% of their base salary. The
City's secretary approved the petition and submitted it to the
[1] “taking” claims were not ripe; City Council. Negotiations for a salary increase between the
City and representatives of the police and fire departments
[2] city was not federal actor subject to Due Process Clause failed, and the City Council called for a special election on
of Fifth Amendment; the pay increase for May 4, 2002. In the meantime, on March
20, 2002, the City Council passed Resolution No. 02–0982
[3] plaintiffs did not have property interest in pay raises set (the March 2002 Pay Resolution), which approved a 5% pay
forth in language in resolution that was never adopted by city; increase in the base salary of each sworn employee of the
and police and fire departments for fiscal year (FY) 2002–03,
with a similar pay increase for the next two fiscal years. The
[4] ordinance did not create property right in specific pay March 2002 Pay Resolution provided that it would become
increases; but effective on October 1, 2002 if the voters did not approve the
17% pay increase in the May special election. The voters did
[5] plaintiffs were entitled to opportunity to replead to cure not approve the pay increase. On September 30, 2002, one
defect in Fourteenth Amendment due process claim. day before the March 2002 Pay Resolution was to become
effective, the City Council passed another resolution; this
one authorized a 5% pay increase for uniformed employees
Reversed and remanded in part, and reversed and rendered in below the rank of deputy chief only, not for all sworn
part. employees, and was to become effective October 29, 2002
(the September 2002 Pay Resolution). The City Council

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City of Dallas v. Saucedo-Falls, 268 S.W.3d 653 (2008)

passed an appropriations ordinance adopting the FY 2002–03
budget containing the revised pay increase approved in the In response, the City filed a second plea to the jurisdiction
September 2002 Pay Resolution. seeking dismissal of appellees' claims. The trial court granted
the City's plea to the jurisdiction on the state law claims, but
Appellees are City police officers and firefighters currently denied it on the section 1983 claim. The City appeals. 1
or formerly employed in the ranks of deputy chief or above
who did not receive a pay increase pursuant to the September
2002 Pay Resolution. They sued the City for back pay and
benefits they contend were required by the March 2002 Pay II. PLEA TO THE JURISDICTION
Resolution. The City filed a plea to the jurisdiction, which
A. Propriety of Plea to Challenge Validity of Claim
the trial court denied. The City appealed. Relying on Reata
Appellees initially contend that a plea to the jurisdiction is
Construction Corp. v. City of Dallas, No. 02–1031, 2004 WL
not the appropriate procedure by which to challenge their
726906 (Tex. Apr.2, 2004) (per curiam), withdrawn on reh'g,
section 1983 claim. They argue that the City does not have
197 S.W.3d 371 (Tex.2006), we affirmed the denial of the
immunity for a section 1983 claim and that the trial court
plea to the jurisdiction, concluding that the City waived its
should not consider the merits of the claim when it decides a
immunity from suit by asserting a counterclaim for attorney's
plea to the jurisdiction. They argue that the proper procedure
fees. *657 City of Dallas v. Saucedo–Falls, 172 S.W.3d
to test the merits of the claim is by a motion for summary
703, 709 (Tex.App.-Dallas 2005), rev'd on other grounds, 218
judgment. But the City contends that appellees' pleadings
S.W.3d 79 (Tex.2007). The City filed a petition for review in
were not sufficient to allege a valid section 1983 claim and
the Texas Supreme Court. While the petition was pending, the
that, because it is not a valid claim, the pleadings do not
Texas Supreme Court granted rehearing in Reata, withdrew
invoke the trial court's jurisdiction over that claim. It argues
its original opinion, and substituted a new opinion in its place.
that a plea to the jurisdiction is the proper procedure for such
See Reata Constr. Corp. v. City of Dallas, 197 S.W.3d 371
a challenge. We agree with the City.
(Tex.2006). The Texas Supreme Court noted that our opinion
in this case relied on the withdrawn and replaced Reata
[1] A party may challenge the trial court's subject matter
opinion. See City of Dallas v. Saucedo–Falls, 218 S.W.3d 79,
jurisdiction by filing a plea to the jurisdiction. Tex. Dep't
79 (Tex.2007). As a result, the court granted the City's petition
of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 225–
for review, reversed our judgment, and remanded this case to
26 (Tex.2004). Texas courts have considered the issue in
the trial court for further proceedings. Id. at 80.
other cases in which a governmental unit used the plea
to the jurisdiction procedure to challenge the validity of a
On remand to the trial court, appellees filed their fourth
section 1983 claim. See, e.g., *658 Myers v. Adams, 728
amended petition, asserting state law claims for breach
S.W.2d 771, 772 (Tex.1971) (affirming trial court's judgment
of contract, unjust enrichment, declaratory judgment, and
of dismissal of prison inmate's section 1983 claim because
mandamus and injunctive relief. Appellees also alleged, for
prisoner did not assert meritorious claim); Gomez v. Hous.
the first time, a claim under section 1983. See 42 U.S.C. §
Auth. of the City of El Paso, 148 S.W.3d 471, 476–82
1983 (2003). They alleged that they had a property right to the
(Tex.App.-El Paso 2004, pet. denied), cert. denied, 546 U.S.
5% pay increase contained in the March 2002 Pay Resolution
872, 126 S.Ct. 379, 163 L.Ed.2d 166 (2005); City of Fort
and that the City deprived them of that property right without
Worth v. Robles, 51 S.W.3d 436, 443–44 (Tex.App.-Fort
due process, in violation of the constitution and laws of the
Worth 2001, pet. denied), disapproved of on other grounds
United States. They further alleged that the City's failure to
by City of Grapevine v. Sipes, 195 S.W.3d 689, 695 & n. 5
give them the pay increase violated Ordinance No. 16084
(Tex.2006).
enacted by the City in 1979 (the 1979 Ordinance). They
contend that the 1979 Ordinance required the City to maintain
[2] [3] [4] When the plea to the jurisdiction challenges
a certain percentage pay differential between grades in the
the existence of jurisdictional facts, the court considers
sworn ranks of the police and fire departments, and the City's
the relevant evidence submitted by the parties when it is
failure to give them the 5% pay increase in accordance with
necessary to resolve the jurisdictional issue. Id. at 227. This
the March 2002 Pay Resolution violated the 1979 Ordinance
procedure generally mirrors that of a summary judgment
because it modified the pay differential between the ranks that
under rule of civil procedure 166a(c). Id. at 228. The plaintiff
existed before the September 2002 pay increase.
has the burden to plead facts affirmatively showing the

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City of Dallas v. Saucedo-Falls, 268 S.W.3d 653 (2008)

trial court has subject matter jurisdiction. Id. at 226. The 662 (1986). The City does not dispute that municipalities are
governmental unit then has the burden to assert and support included within the definition of “person” for purposes of
its contention, with evidence, that the trial court lacks subject a section 1983 claim. See Monell v. Dep't of Soc. Servs. of
matter jurisdiction. Id. at 228. If it does so, the plaintiff must New York, 436 U.S. 658, 690, 98 S.Ct. 2018, 56 L.Ed.2d 611
raise a material fact issue regarding jurisdiction to survive the (1978).
plea to the jurisdiction. Id. at 228. 2
[11] [12] [13] [14] The first step in analyzing appellees'
claim under section 1983 is to determine whether they have
B. Standard of Review alleged a property right recognized by federal law. See
[5] [6] [7] [8] [9] Whether the trial court has subject Albright v. Oliver, 510 U.S. 266, 271, 114 S.Ct. 807, 127
matter jurisdiction is a question of law which we review de L.Ed.2d 114 (1994); Board of Regents v. Roth, 408 U.S. 564,
novo. Miranda, 133 S.W.3d at 226. In conducting our review, 577, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972). Section 1983
we construe the pleadings liberally in favor of the plaintiff does not create substantive rights; it provides a remedy for a
and look to the plaintiff's intent. Id. at 226–27. We consider violation of a federal right created elsewhere. Albright, 510
the pleadings and the evidence pertinent to the jurisdictional U.S. at 271, 114 S.Ct. 807. Therefore, appellees must allege
inquiry. Id.; City of Dallas v. First Trade Union Sav. Bank, a property right created by a statute, ordinance, or regulation.
133 S.W.3d 680, 686 (Tex.App.-Dallas 2003, pet. denied). If See Roth, 408 U.S. at 577, 92 S.Ct. 2701 (property rights “are
the evidence creates a fact issue concerning jurisdiction, the created and their dimensions are defined by existing rules or
plea to the jurisdiction must be denied. Miranda, 133 S.W.3d understandings that stem from an independent source such as
at 227–28. If the evidence is undisputed or fails to raise a fact state law-rules or understandings that secure certain benefits
issue concerning jurisdiction, the trial court rules on the plea and that support claims of entitlement to those benefits”). The
to the jurisdiction as a matter of law. Id. at 228. This standard “hallmark” of a property right is “an individual entitlement
“protect [s] the plaintiffs from having to ‘put on their case grounded in state law which cannot be removed except ‘for
simply to establish jurisdiction.’ ” Id. (quoting Bland Indep. cause.’ ” Logan v. Zimmerman Brush Co., 455 U.S. 422, 430,
Sch. Dist. v. Blue, 34 S.W.3d 547, 554 (Tex.2000)). 102 S.Ct. 1148, 71 L.Ed.2d 265 (1982) (citing Memphis Light,
Gas & Water Div. v. Craft, 436 U.S. 1, 11–12, 98 S.Ct. 1554,
56 L.Ed.2d 30 (1978); Goss v. Lopez, 419 U.S. 565, 573–74,
95 S.Ct. 729, 42 L.Ed.2d 725 (1975); and Roth, 408 U.S. at
III. SECTION 1983
576–78, 92 S.Ct. 2701).
[10] Section 1983 provides in pertinent part:
Appellees' pleadings allege a section 1983 claim
Every person who, under color of encompassing violations of the Due Process Clause of the
any statute, ordinance, regulation, Fourteenth Amendment and the Just Compensation Clause
custom, or usage, of any State ... of the Fifth Amendment, as applied to the states through
subjects, or causes to be subjected, the Fourteenth Amendment. 3 See Williamson County Reg'l
any citizen of the United States or Planning Comm'n v. Hamilton Bank of Johnson City, 473
other person within the jurisdiction U.S. 172, 175 n. 1, 105 S.Ct. 3108, 87 L.Ed.2d 126 (1985).
thereof to the deprivation of any rights,
privileges, or immunities secured by
the Constitution and laws, shall be A. Fifth Amendment “Takings” Claim
liable to the party injured in an action [15] The trial court rendered a supplemental order in
at law. which it denied the City's plea to the jurisdiction on
appellees' “claims of a taking under the Fifth Amendment
42 U.S.C. § 1983. A claim under section 1983 must allege and 42 U.S.C. § 1983....” The City contends that appellees'
two essential elements: (1) the conduct complained of was takings *660 claim under the Fifth Amendment is not ripe
committed by a person acting under color of state *659 law, because they have not pursued a state takings claim. To
and (2) the conduct deprived a person of a federally protected the extent appellees' pleadings allege a violation of the Just
right. Parratt v. Taylor, 451 U.S. 527, 535, 101 S.Ct. 1908, 68 Compensation Clause of the Fifth Amendment, we agree. See
L.Ed.2d 420 (1981), overruled on other grounds by Daniels City of Dallas v. VRC LLC, 260 S.W.3d 60, 67 (Tex.App.-
v. Williams, 474 U.S. 327, 328, 106 S.Ct. 662, 88 L.Ed.2d

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City of Dallas v. Saucedo-Falls, 268 S.W.3d 653 (2008)

Dallas 2008, no pet. h.) (citing Williamson County Reg'l intent to provide a pay increase. It argued that the March
Planning Comm'n, 473 U.S. at 195, 105 S.Ct. 3108). 2002 Pay Resolution directed the city manager to submit an
increase in the budget but did not require the City Council to
Accordingly, we reverse the trial court's denial of the City's pass the increase. The City argues that appellees' pleadings
plea to the jurisdiction on appellees' Fifth Amendment takings do not allege a valid section 1983 claim because they did
claim and render judgment for the City on that claim. not have a property right to the pay increase contained in the
March 2002 Pay Resolution.

B. Claims for Violation of Due Process
[16] Appellees also alleged that the City violated their March 2002 Pay Resolution
due process rights guaranteed by the Fifth and Fourteenth The March 2002 Pay Resolution provides, in relevant part:
Amendments. U.S. CONST. amend. V, XIV, § 1. The Due
Process Clause of the Fifth Amendment to the United States SECTION 1. That the City Manager is directed to include
Constitution applies only to violations of constitutional rights in the budget for fiscal year 2002–03 a five percent increase
by the United States or a federal actor. See Jones v. City in the base salary of each sworn employee of the Police
of Jackson, 203 F.3d 875, 880 (5th Cir.2000). Appellees' and Fire Departments of the City, to be effective October
pleadings affirmatively negate that the City is a federal actor. 1, 2002.
As a result, the trial court erred by denying the City's plea to
SECTION 2. That it is the intent of the City Council that
the jurisdiction on this ground.
a five percent increase *661 in the base salary of each
sworn employee of the Police and Fire Departments also
We reverse the trial court's denial of the City's plea to the
be included in the budget for fiscal year 2003–04, to be
jurisdiction on appellees' claim for violation of the Due
effective October 1, 2003, and the budget for fiscal year
Process Clause of the Fifth Amendment and render judgment
2004–05, to be effective October 1, 2004.
for the City on this claim.
SECTION 3. That, if a police and fire pay proposition
[17] [18] [19] [20] [21] The Due Process Clause of the is submitted to the qualified voters of the City of Dallas
Fourteenth Amendment encompasses both substantive and at a May 4, 2002 special election and the proposition is
procedural due process. See Byers v. Patterson, 219 S.W.3d not approved by the qualified voters participating in the
514, 524–26 (Tex.App.-Tyler 2007, no pet.). Appellees do election, then this resolution will take effect on May 8,
not allege which of these they contend the City violated. 2002, after the City Council's canvassing of the results of
A violation of substantive due process occurs when the the May 4, 2002 election. If, however, a police and fire pay
government deprives individuals of constitutional rights by proposition is submitted at a May 4, 2002 special election
an arbitrary use of its power. Id. at 525. A procedural due and is approved by the qualified voters participating in the
process violation occurs when a government makes decisions election, then this resolution will have no effect, and it is
without appropriate safeguards. Id. at 526. Procedural due accordingly so resolved.
process requires an opportunity for a hearing appropriate to
the nature of the case. Id. Under either claim, appellees must [22] [23] The City, as a home rule city, derives it
allege a constitutionally protected property right. power to legislate from the Texas Constitution and the local
government code. See TEX. CONST. art. XI, § 5; TEX.
LOCAL GOV'T CODE ANN. § 51.072 (Vernon 2008); Int'l
1. Claim that the March 2002 Pay Resolution created a
Ass'n of Fire Fighters, Local 1173 v. City of Baytown, 837
property right
S.W.2d 783, 788 (Tex.App.-Houston [1st Dist.] 1992, writ
Appellees initially contend that the March 2002 Pay
denied). The power of a home rule city is subject to and
Resolution was final and binding on the City and required
may be limited only by its charter, the constitution, or by
the City to provide all sworn police officers and firefighters a
general law. Local 1173, 837 S.W.2d at 788. Under Texas
5% pay increase regardless of rank. They argue that the City
law, the governing body of a home rule city may set the
deprived them of that property right by not implementing the
amount of compensation for its employees. TEX. LOCAL
pay increase. The City argued in its plea to the jurisdiction that
GOV'T CODE ANN. § 141.004 (Vernon 2008).
appellees never had a property right to the 5% pay increase
and that the March 2002 Pay Resolution only announced the

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City of Dallas v. Saucedo-Falls, 268 S.W.3d 653 (2008)

[24] The City establishes its standards for compensation in Consequently, we conclude that the City Council acted within
its charter and code. See, e.g., DALLAS, TEX., CHARTER its legislative authority when it did not approve the pay
ch. XXIV, § 18 (2006); DALLAS CITY CODE §§ 34– increase contained in the March 2002 Pay Resolution. See
15–34–16 (1997). The City Council must approve all City Local 1173, 837 S.W.2d at 788. And, as a result, we also
employee position classifications and their corresponding conclude that appellees have not alleged “an individual
pay rates. DALLAS CITY CODE § 34–4(39) (1997) entitlement grounded in state law which cannot be removed
(defining Salary and Classification Schedule as “a city except ‘for cause’ ” created by that pay resolution. See Logan,
council-approved resolution that establishes all position 455 U.S. at 430, 102 S.Ct. 1148; City of Beaumont v. Bond,
classifications for city employment and the corresponding 546 S.W.2d 407, 410–11 (Tex.Civ.App.-Beaumont 1977,
pay rates”). The City Charter addresses the procedure writ ref'd n.r.e.). At most, appellees alleged that they had an
by which appropriations for pay increases are approved. expectation of a pay increase. See Roth, 408 U.S. at 577, 92
See DALLAS, TEX., CHARTER ch. XI, § 3 (2006). It S.Ct. 2701; Jackson v. Houston Indep. Sch. Dist., 994 S.W.2d
requires the city manager to submit an estimated budget 396, 399–400 (Tex.App.-Houston [14th Dist.] 1999, no pet.).
to the City Council on August 15 for the next fiscal year But because appellees have not alleged a vested property right
beginning October 1. The City Council then must pass an entitling them to federal protection pursuant to the March
appropriations ordinance on first reading; conduct a public 2002 Pay Resolution, they did not allege a valid section 1983
hearing on the proposed budget; publish the ordinance, noting claim based on that resolution. See Byers, 219 S.W.3d at 526.
items in the city manager's estimate that were omitted or
changed by the City Council; and, after ten days, pass
the appropriations ordinance on final reading. After final 2. Claim that the 1979 Ordinance created a property
passage, the appropriations become effective immediately right
and the funds are appropriated effective October 1. The only Appellees also argue on appeal that the City's decision to
authorized City expenditures are those made through the deny them a 5% pay increase by passing the September
City Council-approved appropriations ordinance. See id. § 6 2002 Pay Resolution violated the percentage pay differential
(2006) (“No money shall be drawn from the city treasury, nor requirement contained in the 1979 Ordinance, and, as a result,
shall any obligation for the expenditure of money be incurred, deprived them of a constitutionally protected property right.
except in pursuance of appropriation made by the council ....”) They contend that the 1979 Ordinance requires the City
& ch. XXIV § 18 (“The wages, hours and conditions of to maintain the current percentage pay differential and, by
employment of any and all of the city employees shall be fixed implementing the FY 2002–2003 budget, the City created
and approved by the city council.”). an ongoing disparity in their salaries that will be renewed
and increased each time the City implements a pay increase.
When the City Council passed the appropriations ordinance The City argues that appellees did not plead a property
for the FY 2002–2003 budget, the City Council did not right because whether government employees receive a pay
approve the pay raise contained in the March 2002 Pay increase is a legislative determination and not a protected
Resolution. Instead, it approved a 5% pay increase for sworn property right. It contends that appellees were never entitled
employees below a specified rank only. Although appellees to a 5% increase and the 1979 Ordinance does not provide an
argue that the March 2002 Pay Resolution is binding on the enforceable right.
City Council, they have not cited any authority to support
*662 that contention, and we have not found any authority
The 1979 Ordinance
stating that the City Council does not have the power to
[25] In a special election held on January 20,1979, the
modify or rescind its resolutions. 4 Additionally, appellees voters of Dallas approved two propositions concerning the
have not cited any authority stating that the March 2002 pay of employees in the police and fire departments. The
Pay Resolution was exempted from the procedure required City passed the 1979 Ordinance implementing those voter-
by the City Charter for implementing a pay increase for approved propositions. The relevant portion of the 1979
the next fiscal year. And the language of the March 2002 Ordinance provides:
Pay Resolution contemplates that the procedure would be
followed. Be it ordained that: ... (2) The current
percentage pay differential between
grades in the sworn ranks of the Dallas

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City of Dallas v. Saucedo-Falls, 268 S.W.3d 653 (2008)

Police Force and the Fire Fighter and the 1979 Ordinance was reasonably susceptible to more than
Rescue Force shall be maintained.... one meaning, and we remanded the issue to the trial court
for resolution by the fact-finder. Id. That issue has not been
Because the 1979 Ordinance was implemented following a resolved on remand. See City of Dallas v. Albert, 214 S.W.3d
voter-approved special election, the City Charter states that 631 (Tex.App.-Dallas 2006, pet. filed). However, because the
the *663 ordinance is binding on the City and cannot be 1979 Ordinance is binding on the City until it is amended
repealed or amended except by a vote of the people: or repealed by the voters, it arguably created a right to the
maintenance of a certain percentage pay differential that
If a majority of the qualified electors was violated when the City passed the September 2002 Pay
voting on said proposed ordinance Resolution limiting the pay increase to officers of a certain
shall vote in favor thereof, such rank. As a result, we conclude that appellees' pleadings allege
ordinance shall thereupon become a sufficient facts to raise a fact issue about whether they have a
valid and binding ordinance of the constitutionally protected property right. See Logan, 455 U.S.
city, and any ordinance proposed by at 430, 102 S.Ct. 1148; Roth, 408 U.S. at 577, 92 S.Ct. 2701;
petition, or which shall be adopted by a City of Beaumont, 546 S.W.2d at 410–11.
vote of the people, cannot be repealed
or amended except by a vote of the
people. 3. Claim that City's conduct violated Due Process Clause
In addition to alleging a constitutionally protected property
DALLAS, TEX., CHARTER ch. XVIII, § 14. It is undisputed right, appellees were also required to allege sufficient facts
that this ordinance has not been repealed or amended. to raise a fact issue about whether the City deprived them
of that property without due process. See Patterson, 219
In their live pleading, appellees alleged, “By omitting those S.W.3d at 525–26. On appeal, appellees argue that “final
holding the rank of Deputy Chief and above from the FY policymakers of the City decided to deny Plaintiffs a 5% raise.
2002–2003 budgeted pay raise, the pay differential between This denial occurred in direct contradiction to the Ordinance
the ranks as they existed before the raise has been modified in and the Resolution.” They contend that this is sufficient to
violation of the 1979 Ordinance 16084.” They later alleged, meet the pleading requirements. However, appellees did not
“Plaintiffs would show that pursuant to the [1979] Ordinance allege what process they were due, or that the City's action
and the [March 2002 Pay] Resolution that they had a property in denying *664 them the pay increase was arbitrary and
interest in receiving their 5% raise and that the City has capricious or denied them an opportunity to be heard. See
deprived them of their property interest, without due process, Logan, 455 U.S. at 428–35, 102 S.Ct. 1148; Patterson, 219
by not paying them their raise.” S.W.3d at 525–26.

[26] We construe these pleadings to state that the 1979 We conclude that appellees' pleadings do not affirmatively
Ordinance created a property right to the 5% pay increase demonstrate the trial court's jurisdiction on their Fourteenth
because the ordinance required the City to maintain the Amendment due process claim, but also do not affirmatively
percentage pay differential, and the pay increase that was demonstrate incurable defects in jurisdiction. Miranda, 133
passed, the September 2002 Pay Resolution, modified that S.W.3d at 226–27. As a result, Miranda requires that
required percentage pay differential. State law sources for appellees be given an opportunity to replead to cure the
property interests include municipal ordinances. See Roth, pleading defect. Id. Accordingly, we reverse the trial court's
408 U.S. at 577, 92 S.Ct. 2701. denial of the City's plea to the jurisdiction on appellees'
Fourteenth Amendment due process claim and remand to that
[27] We agree with the City that the 1979 Ordinance did court for further proceedings consistent with this opinion.
not create a property right to a specific pay increase, in
this case, a 5% pay increase. Additionally, this Court has
previously held that the 1979 Ordinance is ambiguous about
IV. CONCLUSION
whether the parties intended the percentage pay differential
language to apply to all pay resolutions passed after 1979. See We reverse the trial court's order denying the City's plea
Arredondo v. City of Dallas, 79 S.W.3d 657, 668 (Tex.App.- to the jurisdiction on appellees' takings and due process
Dallas 2002, pet. denied). In Arredondo, we concluded that

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City of Dallas v. Saucedo-Falls, 268 S.W.3d 653 (2008)

Amendment and section 1983 and remand that claim for
claims under the Fifth Amendment and section 1983 and
further proceedings consistent with this opinion.
render judgment for the City on those claims. We reverse the
trial court's order denying the City's plea to the jurisdiction
on appellees' due process claim under the Fourteenth

Footnotes
1 Appellees originally cross-appealed the trial court's order granting the City's plea to the jurisdiction on the state law claims, but they
moved to dismiss the appeal on those claims. We granted the motion, and those claims are not before us.
2 Appellees argue that Howlett v. Rose, 496 U.S. 356, 110 S.Ct. 2430, 110 L.Ed.2d 332 (1990), holds that a trial court must exercise
jurisdiction over a section 1983 action and cannot grant a plea to the jurisdiction dismissing that claim. We do not agree. Howlett held
that a state court could not refuse to entertain a section 1983 claim on the ground that the claim was barred by sovereign immunity.
See id. at 356, 110 S.Ct. 2430. It held that a state court could apply its own neutral procedural rules to federal claims, unless those
rules are preempted by federal law. Id. at 372, 110 S.Ct. 2430. The plea to the jurisdiction procedural rule is such a neutral state
procedural rule. See Thomas v. Allen, 837 S.W.2d 631, 632–33 (Tex.1992); Myers, 728 S.W.2d at 772.
3 Appellees' live pleading states, “the City has deprived [appellees] of their property interests, without due process, by not paying
them their raise.” Appellees' trial brief states that “the City decided to deny [appellees] a 5% raise. This denial occurred in direct
contradiction to the 1979 Ordinance and the Resolution.” At the hearing on the plea to the jurisdiction, counsel for appellees stated
the City passed the resolution that said, well, we're giving [the raise] to all the sworn employees except for you. And that's a
property right. It's clear. It's constitutional. And it's not an adverse—or it's not—yeah, it's not an adverse [sic] condemnation,
it's not a taking, it's a due process right (emphasis added).
Later, when the trial court asked counsel to explain the distinction between appellees' Fifth Amendment and Fourteenth Amendment
claims, he said, “I think what we're trying to do is tie that 14th Amendment—or tie the 5th Amendment in with the 14th
Amendment.” Although the record appears to indicate that appellees did not allege a taking claim under the Fifth Amendment,
the trial court's supplemental order denying the plea to the jurisdiction references appellees' “claims of a taking under the Fifth
Amendment and 42 U.S.C. § 1983” and specifically states that the claim is “allowed to go forward.”
4 We note that the Dallas City Charter appears to make a distinction between resolutions or ordinances passed by the City Council
and ordinances passed by voter propositions. In the latter situation where voters have passed a proposition approving an ordinance,
the ordinance is a “valid and binding ordinance of the city, and ... cannot be repealed or amended except by a vote of the people.”
DALLAS, TEX., CHARTER ch. XVIII, § 14 (2006).

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© 2015 Thomson Reuters. No claim to original U.S. Government Works. 7
City of El Paso v. El Paso Elec. Co., 851 S.W.2d 896 (1993)

intervened. See Public Utility Regulatory Act (PURA),
Tex.Rev.Civ.Stat.Ann. art. 1446c, § 69 (West Supp.1993);
851 S.W.2d 896
Texas Administrative Procedure and Texas Register Act
Court of Appeals of Texas,
(APTRA), Tex.Rev.Civ.Stat.Ann. art. 6252–13a, § 19 (West
Austin.
Supp.1993). In its final judgment, the district court affirmed
CITY OF EL PASO and Public the agency order in one part and reversed it in another,
Utility Commission of Texas, remanding the case to the Commission. The Commission and
v. the City appeal. See APTRA § 20. We will affirm the district-
court judgment.
EL PASO ELECTRIC COMPANY.

No. 3–92–038–CV. | March 10, 1993.
| Rehearing Overruled May 26, 1993. FUEL–RECONCILIATION PROCEEDINGS

Electric company and city sued for judicial review of An electric utility is generally entitled to recover through
final order issued by public utility commission in fuel its rates any sums expended for reasonable and necessary
reconciliation proceeding. The 147th Judicial District Court, operating expenses, including the cost of fuel and fuel-related
Travis County, F. Scott McCown, J., affirmed agency order items. PURA § 39(a). A utility incurs these fuel costs directly
in one part and reversed it in another, remanded case to when it generates its own electric power; it incurs them
commission, and commission and city appealed. The Court of indirectly, as an element of the price paid, when the utility
Appeals, Powers, J., held that: (1) commission was required buys electric power from another. Although the Company
to provide explanation for choice of meaning it assigned to generates its own electric power, it also purchases electric
word “prospectively” which produced inconsistent treatment power under a contract with Southwestern Public Service
of capacity costs in two back-to-back reconciliation periods, Company.
and (2) commission was not obliged to deduct all profit
from off-system sales in calculating company's known and Before 1983, the Commission calculated an electric utility's
reasonably predictable fuel costs. operating expenses (and hence the utility's rates) based on
actual fuel costs, authorizing the utility to “pass through”
Affirmed. automatically to its customers any increases or decreases in
such costs. 1 The legislature forbade the practice in 1983. 2
Attorneys and Law Firms To accommodate the new legislation, *898 the Commission
promulgated a set of rules known collectively as the “fuel
*897 Norman J. Gordon, Diamond, Rash, Gordon & rule.” 8 Tex.Reg. 3540 (1983) (16 Tex.Admin.Code § 23(b),
Jackson, P.C., El Paso, for City of El Paso. since amended).

Dan Morales, Atty. Gen., Mary A. Keeney, Asst. Atty. Gen., As a practical matter, the Commission cannot embark upon
Austin, for Public Utility Com'n of Texas. and decide a new rate case with each variation in fuel prices.
The agency therefore adopted, for its ratemaking, the device
John F. Williams, Clark, Thomas, Winters & Newton, Austin,
of a “fixed fuel factor.” This factor is the sum of a utility's
for El Paso Elec. Co.
“known costs” for fuel plus its “reasonably predictable fuel
Before POWERS, ABOUSSIE and B.A. SMITH, JJ. costs.” The latter element renders the sum a mere estimate
of the utility's fuel costs. Nevertheless, the estimate is fixed
Opinion for ratemaking purposes as the utility's hypothetical fuel cost;
it is used in calculating the utility's total operating expenses
POWERS, Justice. and, ultimately, the rates the utility is permitted to charge its
customers. 16 Tex.Admin.Code §§ 23.23(b)(2)(B), 23.23(c).
El Paso Electric Company and the City of El Paso sued
Because actual fuel costs may vary from the estimate, after
for judicial review of a final order issued by the Public
the rates go into effect, the utility may recover through its
Utility Commission in a contested case, a “fuel-reconciliation
rates more or less than the net income its rates were designed
proceeding” initiated by the Company in which the City
to produce. Consequently, the fuel rule provides for periodic

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City of El Paso v. El Paso Elec. Co., 851 S.W.2d 896 (1993)

adjustments or “reconciliations” of the difference between reducing its customers' bills by purchasing cheaper power
actual fuel costs and the hypothetical cost represented by from Southwestern. The Commission's decision in this earlier
the fixed-fuel factor. 16 Tex.Admin.Code § 23.23(b)(2)(H). case preceded by about nine months the amendment of the
The reconciliation may be part of a general rate case or an fuel rule to allow expressly for the reconciliation of capacity
independent reconciliation proceeding. Id. Depending on the costs upon a demonstration of “special circumstances”; that is
result of the reconciliation, the utility may be required to to say, the Commission viewed the equitable considerations
refund to its customers an over-recovery of fuel costs or it may as amounting to an implied exception to a general rule that
be permitted to recoup an under-recovery through surcharges capacity costs were non-reconcilable. It appears to *899 us
to its customers. 16 Tex.Admin.Code §§ 23.23(b)(2)(B), (F), self-evident, therefore, that “equitable” considerations could
(G). come within the express exception presently made by section
23.23(b)(2)(B)(ii) for “special circumstances.” No argument
is made to the contrary in the present appeal.

PURCHASED–POWER CAPACITY COSTS
The Commission's final order in docket number 6350 also
Not every fuel-related cost is includable in a utility's adopted a part of the examiner's report wherein he stated
fixed-fuel factor; consequently, not every fuel-related cost that he agreed with a witness's view that the capacity costs
is recoverable through the reconciliation process. One paid to Southwestern “should be treated as a non-reconcilable
excludable item is denominated “purchased power capacity expense prospectively.” This gives rise to a part of the present
costs.” The term “capacity costs” refers to one element of controversy.
the price charged by a seller of electric power—an element
that represents the seller's fixed costs in generating the power.
(Another element, denominated “energy charges,” represents Docket Number 8588
the seller's variable costs in generating the power—the cost
of fuel, for example). A Commission regulation presently The contested case now before us on appeal was conducted
excludes from a utility's fixed-fuel factor the capacity-cost under the Commission's docket number 8588. It is not a
element of purchased power “unless the utility demonstrates rate case but rather an independent reconciliation proceeding.
that such treatment is justified by special circumstances.” In this proceeding, the Company requested reconciliation of
16 Tex.Admin.Code § 23.23(b)(2)(B)(ii). The Commission's $4,202,090 in capacity costs paid to Southwestern between
regulations did not always allow for exceptions when July 31, 1985, and April 25, 1986, a period of about nine
“justified by special circumstances.” Before the regulation months. The period is the interval between the last day of the
was adopted, the Commission issued its final order in an reconciliation period covered in docket number 6350 (July
earlier contested case under the agency's docket number 6350. 31, 1985) and the effective date of the new rates established in
that contested case (April 25, 1986). As special circumstances
justifying reconciliation of the capacity costs paid in that
period, the Company pointed to the Commission's final order
Docket Number 6350
in docket number 6350, wherein the agency had declared
Docket number 6350 was a general rate case that that capacity costs should be treated as non-reconcilable
included a reconciliation proceeding. The Company satisfied “prospectively.” The word “prospectively” meant, according
the Commission that special considerations justified to the Company, from and after the effective date (April 25,
reconciliation treatment of the capacity costs the Company 1986) of the new rates established in docket number 6350.
paid to Southwestern, during the period March 1984 Hence, by force of that order, the Company was entitled
through July 1985, even though such costs would not to reconciliation of capacity costs paid in the nine-month
ordinarily be entitled to such treatment. The Commission's interval before the new rates became effective.
final order in docket number 6350 demonstrates that the
special considerations were “equitable” in nature: (1) the In its finding of fact 14 in docket number 8588, the
purchases of power from Southwestern had benefitted the Commission rejected the Company's contention, stating
Company's customers; (2) capacity costs were a necessary simply that the Company had “failed to show special
element of the Southwestern charges; and (3) it would circumstances warranting inclusion” of such capacity costs in
be inequitable to penalize the Company for successfully the reconciliation. The sole basis for this conclusion is found

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City of El Paso v. El Paso Elec. Co., 851 S.W.2d 896 (1993)

in a portion of the examiner's report, which the Commission “prospectively” was ambiguous in context, and nothing in
adopted in its final order: The word “prospectively,” as used the record before us suggests why the Commission preferred
in the final order in docket number 6350, meant from and after one date over another. We are left ultimately with the stark
July 31, 1985—the end of the reconciliation period covered conclusion that “prospectively” means from and after July
in docket number 6350—as opposed to the Company's 31, 1985, merely because that is what the examiner in docket
contention that the word meant from and after April 25, 1986, number 8588 decided it meant. Was the Commission legally
the effective date of the rates set in the Commission's final obliged to supply an actual reason or explanation for its choice
order in docket 6350. of meanings? We believe it was.

The Company sued for judicial review of this aspect of the We cannot find that the legislature has imposed upon the
Commission's final order in docket number 8588. The district Commission, by an explicit statutory enactment, a duty
court reversed the agency order on the ground that it was to supply an explanation or reason for its action. But
arbitrary and capricious in failing adequately to explain why such a requirement need not have a statutory origin. It is
the capacity charges were admitted to reconciliation in the preeminently a concomitant of a court's duty of judicial
one period and denied reconciliation in the next succeeding review, a duty assigned the trial court and this court in
period. The court remanded the case to the Commission to PURA § 69. This statute contemplates meaningful judicial
supply an explanation. In the Commission's only point of review, not a charade of the real thing; therefore it implies
error and in the City's first point of error, they complain of a power to require the Commission to supply any reasons or
this aspect of the district-court judgment. explanations necessary for the reviewing court to understand
the Commission's final order.

If the administrative action is to be
Discussion and Holdings tested by the basis upon which it
purports to rest, that must be set
[1] In its final order in the present case, the Commission
forth with such clarity as to be
gave a single ground for its decision regarding capacity costs:
understandable. It will not do for a
the Company failed to demonstrate the requisite “special
court to be compelled to guess at
circumstances” because the word “prospectively,” as used in
the theory underlying the agency's
the final order adjudicating docket number 6350, meant from
action; nor can a court be expected to
and after July 31, 1985. The final order in the present case,
chisel that which must be precise from
excluding capacity costs from reconciliation, must stand or
what the agency has left vague and
fall on that basis. We are not at liberty to sustain the order
indecisive. In other words, “We must
on some other basis we might imagine as being sufficient
know what a decision means before the
for the different treatment in the two cases—for example, an
duty becomes ours to say whether it is
apparent difference in the material factual circumstances as
right or wrong.”
between the two proceedings. We may judge the sufficiency
of the Commission's order solely on the basis given by S.E.C. v. Chenery Corp., 332 U.S. 194, 196, 67 S.Ct. 1575,
the agency itself for its decision; to do otherwise would 1577, 91 L.Ed. 1995 (1947) (emphasis added) (citations
constitute an invasion of the agency's province. Morgan omitted); see also S.E.C. v. Chenery Corp., 318 U.S. 80,
Drive Away, Inc. v. Railroad Comm'n, 498 S.W.2d 147, 152 94, 63 S.Ct. 454, 462, 87 L.Ed. 626 (1943) (“[T]he orderly
(Tex.1973); *900 Professional Mobile Home Transp. v. functioning of the process of review requires that the grounds
Railroad Comm'n, 733 S.W.2d 892, 904 (Tex.App.—Austin upon which the administrative agency acted be clearly
1987, writ ref'd n.r.e.). disclosed and adequately sustained.”) (emphasis added); see
generally Bernard Schwartz, Administrative Law § 7.29,
[2] We note first that the examiner's purported explanation at 429 (2d ed. 1984); Kenneth C. Davis, Administrative
—that the word “prospectively” meant from and after July Law Text § 16.07, at 326 (3d ed. 1972). The requirement
31, 1985—adds nothing to enlighten the Commission's naked of explanations or reasons is frequently imposed when it
conclusion that the Company had failed to demonstrate the appears to the reviewing court that an agency has departed
necessary special circumstances. Both the conclusion and from its earlier administrative policy or there exists an
the purported explanation are equally opaque. The word apparent inconsistency in agency determinations. Louis Jaffe,

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City of El Paso v. El Paso Elec. Co., 851 S.W.2d 896 (1993)

Judicial Control of Administrative Action 587 (1965); see, We hold, therefore, that the Commission's final order
e.g., Atchison, T. & S.F. Ry. Co. v. Wichita Bd. of Trade, 412 erroneously omitted to supply a necessary explanation for the
U.S. 800, 808, 93 S.Ct. 2367, 2375, 37 L.Ed.2d 350 (1973); choice of meaning it assigned to the word “prospectively,”
Secretary of Agric. v. United States, 347 U.S. 645, 653, 74 producing thereby the inconsistent treatment of capacity costs
S.Ct. 826, 831, 98 L.Ed. 1015 (1954). The requirement for in the two back-to-back reconciliation periods. As in Gulf
explanatory “reasons” should not be confused with a statutory States, the agency order in docket number 8588 referred
requirement that binds an agency to supply findings of fact only to the statement of an individual (the hearing examiner
in support of its conclusions of law, as in APTRA § 16(b). in docket number 6350) whose naked conclusion was not
“Reasons differ from findings in that reasons relate to law, explained in the record. We agree with the trial court that
policy, and discretion rather than to facts.” Davis, supra, at the failure to supply the necessary explanation was an abuse
326. Nevertheless, agencies frequently use findings of fact to of discretion under APTRA § 19(e)(6); it is immaterial that
explain the conclusions which express their choices in matters under the peculiar Texas view of “substantial evidence”
of discretion, law, and policy. Schwartz, supra, at 428–30. the omission would also amount to a want of “substantial
evidence” under APTRA § 19(e)(5).
[3] We believe the Supreme Court of Texas, in Public
Utility Commission v. Gulf States Utilities, 809 S.W.2d 201, The City and the Commission raise several arguments to
212 (Tex.1991), adopted a requirement that agencies must the contrary. They first complain the Company offered no
supply explanations or reasons when these are necessary to an “evidence” of special circumstances. It is clear from the
intelligent understanding of their final orders. There, the court record, however, that the Company was not relying upon
reversed a Commission decision because the agency record evidentiary grounds for its contention that such special
revealed that the Commission had apparently considered only circumstances existed in docket number 8588, the case
a single factor in taking a particular discretionary action we now review. Rather, the Company was relying upon
(dividing between a utility and its ratepayers the benefit legal grounds—that the final order in docket number 6350,
of proceeds received from the sale of a utility asset). The properly construed, encompassed the nine months for which
court noted that numerous other factors, including equitable reconciliation was requested in docket number 8588. Indeed,
considerations, *901 appeared applicable to the agency's the Commission in docket number 8588 rejected the claim
decision in the matter. In reversing the Commission's final for reconciliation on legal grounds, not evidentiary or factual
order, the court wrote that the agency “ignored” the other, grounds, by basing the agency ruling on a construction of the
apparently applicable factors, while referring only to the previous order, albeit in a manner contrary to that advocated
testimony of two witnesses whose conclusions were not by the Company. We do not understand that the term “special
explained in the record, and “the Commission did not circumstances” means evidentiary grounds exclusively, and
articulate its reasons for” deciding the issue based on the no party suggests that it does.
single factor alone. In its remand, the court refrained from
instructing the Commission to consider particular factors and The City and the Commission argue next that the examiner's
from prohibiting its consideration of other factors, leaving the report in docket number 6350 was “clear” in affirmatively
agency free to choose and “set forth the factors it considers and expressly prohibiting “prospective recovery of capacity
relevant” together with an explanation of “how these factors charges,” meaning “all capacity charges not placed in issue in
are evaluated in the present case.” Id. at 211–12. While the that docket.” We disagree.
court nominally reversed the agency order for a want of
“substantial evidence,” it is readily apparent that the court did The relevant part of the examiner's report declares: (1)
so only because of the rather peculiar meaning “substantial the examiner agreed that capacity costs “should be treated
evidence” bears in Texas administrative law—a meaning as a non-reconcilable expense prospectively”; (2) however,
that generally incorporates into a single legal precept both that would be inequitable (for specified reasons) with
arbitrary and capricious agency action under APTRA § 19(e) respect to “past payments” of such costs; (3) therefore, the
(6) and a true want of substantial evidence under APTRA § examiner recommends that “prior” capacity-cost expenses be
19(e)(5). See generally Kerry McGrath, Substantial Evidence included “in the reconciliation balance.” These declarations
Review in Texas—Still Insubstantial After All These Years, 44 are clear on one point—capacity costs paid before July
Baylor L.Rev. 223 (1992). 31, 1985, the end of the reconciliation period in docket
number 6350, would be reconcilable expenses under the

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City of El Paso v. El Paso Elec. Co., 851 S.W.2d 896 (1993)

examiner's recommendation. The declarations are not clear Commission's final order could not be reversed on the ground
in the sense urged by the City and the Commission—that that it was “arbitrary and capricious.” In support of their
they affirmatively and expressly prohibit reconciliation of the argument, the City and the Commission cite judicial decisions
capacity costs presently in dispute. In fact, the City offers no that were decided on arbitrary and capricious grounds on an
argument in support of its conclusion that the declarations apparent theory that these exhaust the possibilities and define
are “clear” in excluding these capacity *902 costs from the limits of arbitrary and capricious action under APTRA §
reconciliation; the Commission offers only the opaque 19(e)(6). See Lewis v. Metropolitan Sav. and Loan Ass'n, 550
generality that an administrative agency's interpretation of its S.W.2d 11 (Tex.1977); Railroad Comm'n v. Alamo Express,
order is entitled to judicial deference. 158 Tex. 68, 308 S.W.2d 843 (1958); Public Util. Comm'n
v. South Plains Elec. Coop., 635 S.W.2d 954 (Tex.App.—
We find in the declarations nothing to suggest that the Austin 1982, writ ref'd n.r.e.). We disagree with the theory. In
Commission, by adopting its examiner's report in docket any case, we are obliged to affirm the district-court judgment
number 6350, prohibited reconciliation of capacity-cost if it is correct on any legal ground. We have discussed those
expenses in the period July 31, 1985—April 25, 1986. Indeed, grounds above.
the examiner's declarations reasonably imply in context that
capacity costs paid in the period were entitled to the same For the reasons given, we overrule the Commission's only
equitable justification because April 25, 1986, was the date point of error and the City's first point of error.
when the examiner's declarations first acquired legal force
and effect by the Commission's adoption of them. The terms
of the examiner's recommendation do not suggest that the
OFF–SYSTEM SALES REVENUES
equitable considerations became inoperable on July 31, 1985,
or that the expressions “past payments” and “prior” capacity- Section 23.23(b)(2)(A) requires that a utility maintain and
cost expenses referred to a date other than the effective date provide the Commission information showing, among other
of the order in docket number 6350. things, the utility's “off-system sales revenues.” These are
revenues derived from a utility's sales of excess electric power
The City and the Commission argue that the Company's to other utilities. Under § 23.23(b)(2)(B)(i), the net revenues
contention amounts to no more than a complaint of from these sales may be set off against costs in calculating,
“regulatory lag” during the nine months between the end for reconciliation purposes, a utility's “known or reasonably
of the reconciliation period in docket number 6350 and predictable fuel costs.”
the effective date of the final order in that contested case.
And, they properly point out, losses occasioned merely In the reconciliation period of docket number 8588, the case
by regulatory lag are not recoverable by a utility. We we now review, the Company received from off-system sales
disagree with the theory. “Regulatory lag” refers to delay a net revenue equal to $3,099,564 above its costs for fuel and
in the “decisional process” of a regulatory agency. Railroad fuel-related items. In its final order, the Commission declined
Comm'n v. Lone Star Gas Co., 656 S.W.2d 421, 423 to deduct any part of this sum in calculating the Company's
(Tex.1983). The Company does not complain of any delay in known or reasonably predictable fuel costs. The agency noted
the “decisional process” in docket number 6350. It complains in its order, however, that in future reconciliation periods the
instead of the apparently arbitrary meaning assigned in the agency would deduct 75 *903 percent of such revenues in
present case to the word “prospectively” as that word was
calculating known or reasonably predictable fuel costs. 3 In
adopted in the Commission's final order in docket number
its finding of fact 11, the Commission stated: (1) profits from
6350. That choice of meaning, and not any delay in the
off-system sales result jointly from the Company's efforts to
“decisional process,” fixed the time period in dispute.
make such sales and from the availability of electric power
generated from facilities paid for, in effect, by the Company's
Finally, the City and the Commission argue that the
customers; (2) consequently, in future reconciliation periods
phrase “arbitrary and capricious,” recited in the district-court
the Commission would assign 75 percent of the profits to the
judgment as the basis for reversing the Commission's final
customers' benefit and 25 percent to the Company's benefit to
order, does not encompass the agency's failure to explain its
encourage the Company to continue making such sales; and
different treatment of capacity costs as compared to docket
(3) for the reconciliation period covered in docket number
number 6350. Hence, they contend, apparently, that the

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City of El Paso v. El Paso Elec. Co., 851 S.W.2d 896 (1993)

8588, however, the profits from off-system sales would
continue to be excluded from the reconciliation calculations. The breadth of discretion implied by these statutory
expressions is contradicted absolutely by the straightjacket
In its second point of error, the City argues the Commission theory that the City erects upon an implication imputed to
erred by not deducting all off-system sales revenues from the the term “total revenues.” Granted that some more particular
Company's known and reasonably predictable fuel costs and provision in PURA might have denied the Commission
contends the district court erred in affirming this aspect of the discretion to apportion net revenues from off-system sales,
agency order. expressly or by necessary *904 implication, we believe the
term “total revenues” is not such a provision. We believe,
for example, that the legislature did not intend that any
implication imputed to the term “total revenues” should deny
Discussion and Holdings the Commission discretion to divide such revenues if the
division was necessary to insure a rate that is “just and
[4] The City argues the Commission was obliged to deduct
reasonable” or to secure “efficiency” in utility operations and
all profits from off-system sales, in calculating the Company's
an acceptable “quality” in utility management. And we point
known and reasonably predictable fuel costs, because the
out that efficient operations and high-quality management
agency lacked the power to divide such profits and to assign
were the Commission's express objectives in choosing to
one part to the Company's benefit and another part to its
apportion sales revenues in this case.
customers' benefit. The City bases its argument on PURA
§ 41(c) which defines the “net income” factor used to fix a
The City suggests no general principle which prohibits the
utility's rates under PURA § 39(a). 4 PURA § 41(c) defines division and apportionments made in the present case; the
“net income” as “the total revenues of the public utility less City relies solely upon the implication it attributes to the term
all reasonable and necessary expenses as determined by the “total revenues.” This implication is not the Commission's
Commission.” (emphasis added). The substance of the City's interpretation of that expression, for section 23.23(b)(2)(B)(i)
argument is that the statutory term “total revenues” implies of that rule contemplates consideration of other “conditions
an entirety; hence it is not divisible in an agency proceeding or events” that bear upon a utility's fuel and fuel-related costs
that pertains to ratemaking. We disagree. in the reconciliation context. The division and apportionment
of future revenues in this case amounts to an agency
In PURA the Commission received from the legislature interpretation of the fuel rule. We see nothing unreasonable
powers that are broad and flexible: or ultra vires in that interpretation, and the fuel rule pertains
ultimately to a utility's operating expenses, not its revenues.
The commission has the general power to regulate and
supervise the business of every public utility within its
We, therefore, overrule the City's contention that the
jurisdiction and to do all things, whether specifically
Commission exceeded its power and discretion when it
designated in this Act or implied herein, necessary and
apportioned the off-system sales revenues.
convenient to the exercise of this power and jurisdiction.
[PURA § 16(a) ]
The City contends there was insufficient evidence adduced
The commission is hereby vested with all authority and in the agency proceeding to support a reasonable conclusion
power ... to insure compliance with the obligations of that an allocation of a part of the benefit to the Company
public utilities in this Act. [PURA § 37] would provide an incentive to make future sales of a like
kind for the ultimate benefit of its customers. The argument
It shall be the duty of the [commission] to insure that every refers to that part of the Commission's finding of fact 11
rate ... shall be just and reasonable. [PURA § 38] which stated the agency's reason for allocating 25 percent of
the profits to the benefit of the Company in the future. The
In fixing a reasonable return on invested capital, the
Commission's declaration merely explained why the agency
[commission] shall consider ... the efficiency of the utility's
made the allocation; it does not purport to be the declaration
operations, and the quality of the utility's management.
of a fact inferred by the agency from evidence adduced in
[PURA § 39(b) ].
the contested case. See Davis, supra. We overrule the City's
contention.

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City of El Paso v. El Paso Elec. Co., 851 S.W.2d 896 (1993)

a hypothetical cost of fuel may be used to calculate a
[5] The City contends finally that providing the Company
utility's “reasonable and necessary operating expenses” for
an incentive to make off-system sales was not a relevant
purpose of PURA § 39(a), while allowing concurrently for a
statutory factor in establishing reconcilable fuel costs;
consideration of some of the stated factors listed in PURA §
consequently, the Commission's decision on that basis
39(b) “in addition to other applicable factors.” If nothing else,
amounted to an abuse of discretion under South Plains
the allocation refers directly to “the efficiency of the utility's
Electric Cooperative, 635 S.W.2d at 957. We disagree.
operation.” In the words of PURA § 39(a), it is at least another
“applicable factor.” We overrule the City's contention.
In promulgating the fuel rule, the Commission responded
to the legislative prohibition against fuel-adjustment “pass-
For the reasons given, we overrule the City's second point of
throughs.” It has not been suggested that the fuel rule, based
error.
in part upon predicted fuel costs with periodic reconciliations
to actual costs, is an unreasonable rule or one out of harmony
Finding no error, we affirm the district-court judgment.
with PURA. We have held that the rule lay within the
Commission's statutory power to enact at its discretion.
The rule establishes, at bottom, an arrangement by which

Footnotes
1 See 16 Tex.Admin.Code § 23.23(b)(2)–(8) (1981, since amended).
2 PURA § 43(g)(1) provides that “[a] rate or tariff set by the commission shall not authorize a utility to automatically adjust and pass
through to its customers changes in fuel or other costs of the utility.” The provision was added by Acts 1983, 68th Leg., p. 647, ch.
146, § 2, effective August 29, 1983.
3 No party suggests that the futurity aspect of this part of the agency order should preclude judicial review. We see no reason why it
should. See Bernard Schwartz, Administrative Law § 9.1, at 522–25 (2d ed. 1984).
4 In a determination of allowable fuel costs, the original version of the Fuel Rule listed six costs to be considered, plus “other
costs associated with generated and purchased power.” 8 Tex.Reg. 3540 (1983) (16 Tex.Admin.Code § 23.23(b)(2)(B), since
amended). The rule further instructed that “the commission shall consider revenues and costs from these other activities, including
off-system sales, to assure that the ratepayers receive an appropriate portion of benefits associated with such revenues.” Id. (emphasis
added). Nothing in PURA or in the Commission's current regulations deals explicitly with the calculation of off-system sales in the
reconciliation of fuel costs.
Although the current version of the Fuel Rule does not contain specific reference to off-system sales, the general language has been
amended to require consideration of “other costs and revenues associated with generated or purchased power.” 16 Tex.Admin.Code
§ 23.23(b)(2)(B)(i) (emphasis added).

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City of El Paso v. Public Utility Com'n of Texas, 883 S.W.2d 179 (1994)
Util. L. Rep. P 26,411

Opinion
883 S.W.2d 179
Supreme Court of Texas. Justice ENOCH delivered the opinion of the Court, in which
Chief Justice PHILLIPS, Justices HIGHTOWER, HECHT,
CITY OF EL PASO, The State of Texas, and and CORNYN join.
Office of Public Utility Counsel, Petitioners,
v. This is an administrative appeal from an order of the
PUBLIC UTILITY COMMISSION OF TEXAS Public Utility Commission (Commission) setting rates to be
and El Paso Electric Company, Respondents. charged by El Paso Electric Company (EPEC). 1 The order
was consistent with a non-unanimous stipulation between
No. D–3053. | Argued Sept. 13, EPEC and several parties, including the Commission General
1993. | Decided June 22, 1994. Counsel. In its final order, the Commission authorized EPEC
| Rehearing Overruled Oct. 6, 1994. to capitalize and include in rate base deferrals associated
with certain post-in-service carrying costs and operating costs
Electric utility applied for rate increase. The Texas Public related to its investment in the Palo Verde Nuclear Generating
Utility Commission set rate, and judicial review was sought. Station (Palo Verde). The questions presented by this appeal
The 250th District Court, Travis County, Paul R. Davis, are first, whether the Commission acted within its discretion
Jr., J., upheld Commission's decision, and appeal was taken. by basing its final order, in part, on the nonunanimous
Withdrawing prior opinion, the Austin Court of Appeals, stipulation agreement, and second, whether the Commission
J. Woodfin Jones, J., 839 S.W.2d 895, affirmed in part, has the authority under the Public Utility Regulatory Act
reversed in part, and writ of error was sought. The Supreme
(PURA) 2 to allow a public utility to include in a utility's
Court, Enoch, J., held that: (1) Commission acted within its
rate base certain costs incurred during the “regulatory lag”
discretion by basing its final order, in part, on nonunanimous
stipulation agreement, and (2) inclusion of deferred costs in period. 3 We answer both issues yes, and consequently affirm
electric utility's rate base did not violate test year requirement. the judgment of the court of appeals in part and reverse in part.

Affirmed in part and reversed in part. In April 1987, EPEC filed an application for a rate increase
with the Commission seeking to recover costs associated
Spector, J., dissented and filed opinion in which Gonzalez, with its investment in the Palo Verde Project. EPEC sought
Doggett and Gammage, JJ., joined. rate treatment related to its investment in the two units
which had started commercial operation, Palo Verde Units
1 and 2. 4 On October 22, 1987, during the course of the
Attorneys and Law Firms hearing on EPEC's application, certain industrial intervenors
and the Commission General Counsel announced and filed
*181 Norman J. Gordon, El Paso, James G. Boyle, Austin,
Nanette G. Williams, David C. Caylor, El Paso, Luis A. a stipulation agreement intended to resolve the case. 5 The
Wilmot, San Antonio, Stephen Fogel, William L. Magness, Examiners scheduled an additional phase of the hearing
W. Scott McCollough, Dan Morales, Joe K. Crews and to consider the stipulation, and eventually recommended
Richard A. Muscat, Austin, for petitioners. to the Commission that the stipulation be rejected. The
Commissioners modified the proposed stipulation and, as
James W. Checkley, Alan Holman, Austin, Thomas S. modified, adopted its terms in its final order.
Leatherbury, Ferd C. Meyer, Jr., Kenneth C. Raney, Jr.,
Dallas, R. Eden Martin, Chicago, IL, Barry Bishop, John As part of its request for a rate increase, EPEC requested that
F. Williams, Austin, Harry M. Reasoner, Houston, Walter its rate base be increased *182 by the amount of carrying
Demond, Austin, Alton J. Hall, Jr., Houston, Norma K. costs and operating and maintenance costs it incurred during
Scogin, Dan Morales, Joe N. Pratt, and Davison W. Grant, the “regulatory lag” period. The utility had deferred these
Austin, for respondents. types of costs for Units 1 and 2, aggregating each type of
cost for each unit into a separate capital account. EPEC
obtained the Commission's prior permission to defer Unit
1 costs. 6 The Commission reserved the right, however, to

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Util. L. Rep. P 26,411

refuse subsequently to include the deferred costs in the rate
base to the extent they were unreasonable, related to plant
A.
not used and useful, or were spent or incurred imprudently.
Although EPEC did not obtain prior permission to defer its
post-in-service costs for Unit 2, it nevertheless deferred them. Reliance on the Non–Unanimous Stipulation
After the hearing, the Commission granted EPEC's request to
The City and OPUC contend that where no evidence existed
include the deferred costs for both units in the rate base.
to support its decision, the Commissioners erroneously relied
on the stipulation itself as a substitute for the evidence. The
The City of El Paso (City), the State of Texas (on behalf
City argues that by relying on the stipulation as opposed
of various state agencies located in western Texas) (State),
to the evidence, the Commissioners violated the statutory
and the Office of Public Utility Counsel (OPUC) sought
requirement that every finding be based exclusively on the
judicial review of the Commission's order, contending that
evidence. TEX.GOV'T CODE ANN. § 2001.141 (Vernon
the Commission erred by basing its order, in part, on the
Pamphlet 1994). The City analogizes the present case to a
non-unanimous stipulation. The City, State, and OPUC also
civil cause in which the court renders an agreed judgment
argued that the Commission lacked the authority to permit
without consent of all the parties. It contends that in adopting
EPEC to defer post-in-service costs, and subsequently to
the stipulation as a resolution of the case, the Commission
include the deferrals in the utility's rate base.
improperly imposed the terms of the settlement on the non-
The trial court upheld the Commission's order. The court signing parties.
of appeals affirmed the portion of the trial court's judgment
We reject the City's analogy. In Mobil Oil Corp. v. Federal
which affirmed the Commission's order allowing the
Power Commission, 417 U.S. 283, 94 S.Ct. 2328, 41 L.Ed.2d
inclusion of capitalized post-in-service operating costs in
72 (1974), the Supreme Court upheld the Federal Power
the utility's rate base. 839 S.W.2d 895, 934 (1991). The
Commission's final order establishing a rate structure that was
court of appeals reversed the portion of the trial court's
based, in part, on a non-unanimous stipulation. The Court
judgment which affirmed the Commission's order allowing
emphasized *183 the importance of considering a non-
the deferral of post-in-service carrying costs. Id. 7 All parties
unanimous proposal “on its merit:”
filed applications for writ of error to this court. For the reasons
stated below, we reverse the judgment of the court of appeals If a proposal enjoys unanimous support from all of the
to the extent that it disallows the deferral of post-in-service immediate parties, it could certainly be adopted as a
carrying costs. In all other respects, the judgment of the court settlement agreement if approved in the general interest of
of appeals is affirmed. the public. But even if there is a lack of unanimity, it may
be adopted as a resolution on the merits, if FPC makes an
independent finding supported by ‘substantial evidence on
I. the record as a whole’ that the proposal will establish ‘just
and reasonable’ rates for the area.

The Non–Unanimous Stipulation 417 U.S. at 314, 94 S.Ct. at 2348–49 (quoting Placid Oil Co.
v. Federal Power Comm'n, 483 F.2d 880, 893 (5th Cir.1973))
The City and OPUC make several arguments supporting their (emphasis in original).
position that the Commission erred by basing its order, in
part, on a non-unanimous stipulation. They ask this Court to In Docket No. 7460, the Commission's order provided, in
reverse the judgment of the court of appeals, contending that part:
its holding affirms an action of the Commission that is not
supported by substantial evidence, not consistent with Texas 4. Even where some parties to a proceeding do not agree
law, arbitrary and capricious and characterized by an abuse of to a stipulated result, it is reasonable to adopt such a
discretion. We do not accept the City's or OPUC's arguments. stipulation if:

(a) The parties opposing the stipulation have notice that the
stipulation may be considered by the Commission and an

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Util. L. Rep. P 26,411

opportunity to be heard on their reasons for opposing the the propriety of using the stipulation as a basis for resolving
stipulation; the contested issues. 839 S.W.2d at 903. Thus, we reject the
City's argument that the substantial rights of the City and other
(b) The matters contained in the stipulation are supported non-signatory parties were in some way prejudiced by the
by a preponderance of the credible evidence in the case; Commission's adoption of the non-unanimous stipulation.

(c) The stipulation is in accordance with applicable law;
The OPUC independently argues that the Commission's
(d) The stipulation results in just and reasonable rates; and; reliance on the non-unanimous stipulation agreement was
arbitrary and capricious because the Commission failed
(e) The results of the stipulation are in the public interest, to follow its own standards in relying on the stipulation.
including the interest of those customers represented by Specifically, the OPUC notes that the court of appeals
parties opposing the stipulation. concluded that the inclusion of deferred post-in-service
carrying costs violates PURA section 41(a); and, because
Docket No. 7460, supra note 1, at 1202–03 (emphasis the stipulation included provisions concerning treatment
added). 8 The Commission's order continued to conclude that: of deferred carrying charges, the stipulation violates the
Commission's own standard, see supra text above, that the
stipulation be “in accordance with applicable law.” As a
5. Pursuant to the Findings of Fact and Conclusions of Law
result, the OPUC argues that the court of appeals should have
set forth below, the Commission finds the Amended and
reversed and remanded the Commission's final order in toto.
Restated Stipulation, as modified, is a reasonable basis for
Because we conclude that the inclusion of deferred post-in-
resolution of the issues in this case and that adoption of
service carrying costs does not violate PURA section 41(a),
the Amended and Restated Stipulation, as modified, as the
see infra IV., the OPUC's argument on this point is moot.
basis of the Commission's Order in this proceeding is in the
public interest.
[2] An agency's decision is arbitrary or results from an
Finding of Fact No. 237 provided:
abuse of discretion if the agency: (1) failed to consider a
237. The provisions of the factor the legislature directs it to consider; (2) considers an
Amended and Restated Stipulation irrelevant factor; or (3) weighs only relevant factors that the
are reasonable and supported by legislature directs it to consider but still reaches a completely
a preponderance of the credible unreasonable result. Gerst v. Nixon, 411 S.W.2d 350, 360
evidence in this record and should n. 8 (Tex.1966). We agree with the court of appeals that
the City and OPUC have failed to establish that the use of
be adopted. 9
the stipulation as a partial basis for the final order involves
[1] It is clear from the Commission's order that, consistent consideration of factors other than those the legislature has
with Mobil Oil, the Commission's decision in Docket No. directed the Commission to consider. 839 S.W.2d 895, 903–
7460 was based on the merits; it was not simply an adoption 04.
of a non-unanimous “settlement.” The Commission made an
independent finding that the non-unanimous stipulation was
supported by a preponderance of the record evidence and
B.
resulted in just and reasonable rates. 10 Thus, contrary to the
City's arguments, the Commission's final order was consistent
with the requirement that every finding be based exclusively Section 21.151
on the evidence.
[3] Section 21.151 of the Public Utility Commission's Rules
of Practice and Procedure provides:
In addition to considering the non-unanimous stipulation on
its merits, the Commission provided all parties, including After the expiration of the time for
non-signatories, *184 the opportunity to be heard on the filing exceptions and replies thereto,
merits of the stipulation. As the court of appeals notes, the the examiner's report and proposal
Commission added an additional phase to the proceedings for decision will be considered by
devoted exclusively to receiving evidence and argument on the commission and either adopted,

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City of El Paso v. Public Utility Com'n of Texas, 883 S.W.2d 179 (1994)
Util. L. Rep. P 26,411

modified and adopted, or remanded to [4] [5] At its core, the substantial evidence rule is a
the examiner.... reasonableness test or a rational basis test. Railroad Comm'n
of Texas v. Pend Oreille Oil & Gas Co., 817 S.W.2d 36,
16 TEX.ADMIN.CODE § 21.151 (West 1990). The City and 41 (Tex.1991). The reviewing court, then, concerns itself
the OPUC argue that the Commission violated section 21.151 with the reasonableness of the administrative order, not the
by basing its final order on a modified stipulation over the correctness of the order. Id. In applying this test, we may not
examiner's recommendation. This argument is without merit. substitute our judgment as to the weight of the evidence for
First, section 21.151 does not speak to the Commission's that of the agency. Id. (the substantial evidence rule “prevents
ability to consider non-unanimous stipulations in reaching its the court from ‘usurping the agency's adjudicative authority
orders. Second, the Commission is free to accept or reject the even though the court would have struck a different balance’
examiner's recommendations. See Ross v. Texas Catastrophe ”).
Prop. Ins., 770 S.W.2d 641, 642 (Tex.App.—Austin 1989,
no writ). Section 21.151 does not require the Commission to Although substantial evidence is more than a mere scintilla,
accept or reject the examiner's report in its entirety. Rather, the evidence in the record actually may preponderate
the Commission may repudiate part of the examiner's report against the decision of the agency and nonetheless amount
and modify it by deletion as it did in this case. to substantial evidence. Texas Health Facilities Comm'n
v. Charter Medical–Dallas, Inc., 665 S.W.2d 446, 452
(Tex.1984). The true test is not whether the agency reached
C. the correct conclusion, but whether some reasonable basis
exists in the record for the action taken by the agency.
Id. The findings, inferences, conclusions, and decisions of
Findings of Facts/Substantial Evidence an administrative agency are presumed to be supported by
substantial evidence, and the burden is on the contestant to
In a final challenge to the Commission's use of the non-
prove otherwise. Id. at 453; Imperial American Resources
stipulation agreement, the City argues that “[t]he non-
Fund, Inc. v. Railroad Comm'n, 557 S.W.2d 280, 286
unanimous ‘stipulation’ used by the Commission ... is not
(Tex.1977); City of San Antonio v. Texas Water Comm'n, 407
supported by substantial evidence and key findings of fact
S.W.2d 752, 758 (Tex.1966).
drafted to support the final order are inadequate to satisfy
statutory requirements.” We will discuss the City's specific
The City argues that although the City, EPEC, and
substantial-evidence and finding-of-fact challenges. See infra
the Commission staff each offered expert testimony on
II–III. However, to the extent the City makes a general
the decisional imprudence issue, the evidentiary record
complaint against the stipulation, we agree with the court of
contains no specific reference to amount. Further, the City
appeals that the City has waived any argument on this point as
contends that the court of appeals erred by relying, in part,
its point and argument are too general to preserve error. The
on matters included in the non-unanimous stipulation to
City provides no substantive argument to support its legally
conclude that the Commission's decision was supported by
conclusory statements.
substantial evidence because the matters relied on were not
independently supported by a preponderance of the evidence.

*185 II. In the Findings of Fact, the Commission provided:

101. The Company was not entirely prudent in its planning
Substantial Evidence—“Decisional”
and management of its participation in the Palo Verde
Imprudence Disallowance 11 project.

The Commission concluded that due to imprudent decisions, 102. There is evidence in the record of imprudence in
$32 million of EPEC's costs should not be included in rate the Company's continuing evaluation of the level of its
base. Both the City and OPUC argue that the disallowance is participation in the Palo Verde Project. The parties to the
unsupported by substantial record evidence, claiming that the Amended and Restated Stipulation have quantified The
amount disallowed should have been greater. [sic] cost of such imprudence as $22 million as applied to
Units 1 and 2. The Company has conceded an additional

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City of El Paso v. Public Utility Com'n of Texas, 883 S.W.2d 179 (1994)
Util. L. Rep. P 26,411

$10 million disallowance to be applied to PVNGS Units 1 114, 116 (Tex.1988), cert. denied, 490 U.S. 1080, 109 S.Ct.
and 2. 2100, 104 L.Ed.2d 662 (1989). The true test is not whether
the agency reached the correct conclusion, but whether some
103. Quantification of the effects of imprudence requires reasonable basis exists in the record for the action taken
the exercise of judgment based upon the evidence. In light by the agency. Texas Health Facilities Comm'n v. Charter
of the evidence relating to prudence and the difficulties in Medical–Dallas, Inc., 665 S.W.2d 446, 452 (Tex.1984). We
quantification, the quantification of decisional imprudence agree with the court of appeals that the record contains
at $32 million for Units 1 and 2 is reasonable and substantial evidence to support a disallowance figure of
appropriate. zero for decisional imprudence; and, the record contains
substantial evidence to support a Commission finding that 50
Docket No. 7460, supra note 1, at 1250.
percent of EPEC's costs should have been disallowed. See
839 S.W.2d at 907. Thus, because of the admitted complexity
The record before this Court is extensive and contains
in valuing the decisional imprudence in this case, we hold
substantial information relevant to the Commission's inquiry
that there is a reasonable basis for the Commission to, in
on this issue. The evidence includes expert testimony offered
its discretion, select an amount within the range of figures
by the City, EPEC, and the Commission staff. The City's
witness, Ben Johnson, stated that in his opinion the EPEC provided by expert testimony of the parties. 14 Moreover, the
had made several imprudent decisions and that, as a result, City and OPUC have failed to explain why any one amount
within that range is more reasonable or better supported by
the Commission should disallow 50% of its costs. 12 EPEC
the evidence than the $32 million figure eventually reached
testified that there *186 should be a zero disallowance
by the Commission. The findings, inferences, conclusions,
because there simply was no decisional imprudence. The
and decisions of an administrative agency are presumed to
Commission staff offered testimony that certain aspects of
be supported by substantial evidence, and the burden is on
the Company's decision making process were imprudent.
the contestant to prove otherwise. Texas Health Facilities
However, the Commission's witnesses did not conclude that
Comm'n v. Charter Medical–Dallas, Inc., 665 S.W.2d 446,
the decision to participate in the project was itself imprudent.
452 (Tex.1984); Imperial American Resources Fund, Inc. v.
Rather, they focused on the perceived errors associated
Railroad Comm'n, 557 S.W.2d 280, 286 (Tex.1977); City of
with EPEC's decision making process. The Commission's
San Antonio v. Texas Water Comm'n, 407 S.W.2d 752, 758
witnesses noted that they were unaware of any theory that
(Tex.1966). We do not accept that the City and OPUC have
would enable them to recommend any specific disallowance
met their burdens to overcome the presumption in this case.
of project costs or capacity based on their conclusions. 13

The evidence before the Commission therefore ranged from
expert testimony that no imprudence disallowance should be *187 III.
imposed, to testimony that a 50% imprudence disallowance
should be imposed, and finally to testimony that there is
Final Revenue Requirement 15
no known theory to quantify the flaws in EPEC's decision
making process giving rise to its investment. In other words, The City complains generally about the revenue
several experts had significant differences of opinion on requirement determination and then makes specific
the proper method to determine and the proper amount contentions concerning particular components of the revenue
of EPEC's imprudence disallowance. These differences are requirement. The City argues that the final revenue
understandable when considering the enormous complexity requirement of the Commission was based solely on the non-
involved in a utility's decision to construct or purchase new binding stipulation agreement and not on the record evidence.
generating capacity. According to the city, the findings and conclusions adopted
by the Commission do not allow this Court to analyze the
[6] In conducting a substantial-evidence review, we must decision because the agreement between the parties is not
determine whether the evidence as a whole is such that evidence and not a statutory standard for review. We disagree.
reasonable minds could have reached the conclusion the
agency must have reached in order to take the disputed action. Finding of Fact No. 152 provides:
Texas State Bd. of Dental Examiners v. Sizemore, 759 S.W.2d

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Util. L. Rep. P 26,411

The City, OPUC, and State make several arguments
The preponderance of the evidence contesting the Commission's authority to permit the deferral
establishes that the company has a total of post-in-service costs, and the inclusion of the deferred costs
revenue requirement with components
in the utility's rate base. 16 In State of Texas v. Public Utility
as set forth in Exhibit B of the
Commission, 883 S.W.2d 190 (Tex.1994), we held that the
Amended and Restated Stipulation.
Commission possesses the authority to allow a utility to defer
Docket No. 7460, supra note 1, at 1260. This finding post-in-service costs in order to protect the utility's financial
is supported by twenty-five underlying findings of fact integrity. We further held that the subsequent inclusion of the
addressing the components of the total revenue requirement, deferred costs in the utility's rate base did not violate PURA
with each finding supported by record evidence. Id. at 1260– section 41(a), nor did it violate the rule against retroactive
1265 (Findings of Fact 153–87). Except for the specific ratemaking. As a result we reject the arguments of the City,
challenges to three of the components making up the total OPUC and State on these issues. We will address only those
revenue requirement, the City does not complain specifically issues that were not addressed in State of Texas v. Public
that any particular underlying finding supporting Finding Utility Commission. 17
of Fact No. 152 is not supported by substantial evidence.
We presume that the Commission's decision is supported by
substantial evidence. Charter Medical, 665 S.W.2d at 453.
*188 A.

[7] In addition, we reject the City's argument that the
Commission applied no statutory standard in determining Test Year Requirement
revenue requirements. As the City recognizes, the statutory
standard that controls revenue requirement determinations [8] PURA requires utilities to file for a rate
is that rates be fixed to permit the utility a reasonable increase by presenting revenue and expense data from
opportunity to earn a reasonable return on its invested capital the same 12–month period using an historical test
plus “reasonable and necessary” operating expense to provide year. TEX.REV.CIV.STAT.ANN. art. 1446c, § 3(t); 16
service. TEX.REV.CIV.STAT.ANN. art. 1446c, § 39(a). TEX.ADMIN.CODE § 23.21(a); Suburban Utility Corp. v.
The Commission's determination of the revenue requirement Public Utility Comm'n, 652 S.W.2d 358, 366 (Tex.1983). In
is supported by findings which detail the Commission's State of Texas v. Public Utility Commission, we held that an
resolution of contested issues regarding the Company's accounting order authorizing deferred accounting treatment
“reasonable and necessary” operating expenses. Thus, the does not violate the test year requirement because there is no
statutory standard for determining the revenue requirement requirement in PURA or the Commission's procedures that
was met. the Commission must follow a test year when determining
accounting policy. However, in the context of a rate case,
The City makes numerous challenges to three components of the test year requirement applies. Thus, we must address
the final revenue requirement, including (1) Operating and the argument that the actual inclusion of deferred costs in a
Maintenance expenses; (2) Employee Benefits; and (3) Taxes utility's rate base violates the test year requirement.
other than Federal Income Taxes. After reviewing the opinion
of the court of appeals, the briefs of the parties, and the record, The State argues that post-in-service costs were deferred
we conclude that the City's arguments on these issues are for up to 25 months and thus, the inclusion of such rates
without merit. The court of appeals correctly articulates the in EPEC's rate base violated the test year requirement. 18
error in the City's claims. 839 S.W.2d at 927–31. However, the Commission may, in its discretion, go outside
the test year when necessary to achieve just and reasonable
rates. In Suburban Utility Corp. v. Public Utility Commission,
652 S.W.2d 358, 366 (Tex.1983), we stated that “[c]hanges
IV.
occurring after the test period, if known, may be taken into
consideration by the regulatory agency to help mitigate the
Deferrals effects of inflation and in order to make the test year data as
representative as possible of the cost situation that is apt to
prevail in the future.” Because it ordered the deferral of post-

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Util. L. Rep. P 26,411

in-service costs, the Commission understood the impact of balance the interests of consumers with the complex financial
deferring post-in-service costs on the test year. It is within the consideration created by public utilities investing large
discretion of the Commission to consider expenditures that amounts of capital in nuclear plants. Proceeding on an ad hoc
occur outside the test year if such consideration will assist or “case-by-case” basis is fully understandable in the context
the Commission in making the test year as representative as of a newly created competitive market that involves complex
possible to the cost situation expected in the future. technical considerations and competing statutory objectives.
See Southwestern Bell Tel. Co. v. Public Util. Comm'n, 745
S.W.2d 918, 926–27 (Tex.App.—Austin 1988, writ denied);
see also Securities and Exch. Comm'n v. Chenery Corp.,
B.
332 U.S. 194, 202–03, 67 S.Ct. 1575, 1580–81, 91 L.Ed.
1995 (1947). As a result, we hold that the Commission was
Standards Applied within its discretion in proceeding on a “case-by-case” or
ad hoc basis and applying different standards in different
The Commission granted EPEC's request to defer post-in-
proceedings. 21
service costs for Unit 1 based upon a “financial integrity
and viability” standard. Docket No. 6350, supra note 6, at
1239–41. However, the Commission granted EPEC's unit
2 request for deferred accounting based on a “measurable V.
harm” standard. Docket No. 7460, supra note 1, at 1079.
The City argues that the use of two different standards
Conclusion
is arbitrary and capricious because the Commission has
created new standards for each decision concerning deferred We hold that the Commission did not err by basing its final
19
accounting. We disagree. order, in part, on a non-unanimous stipulation. Further, based
on our holding in State of Texas v. Public Utility Commission,
[9] In determining whether to allow a particular utility to 883 S.W.2d 190 (Tex.1994), we hold that the Commission
defer post-in-service costs, the Commission has discretion has the authority under PURA to include deferred post-in-
to proceed on an ad hoc or “case-by-case” basis. See, e.g., service costs in a utility's rate base. Further, the Commission
Securities and Exch. Comm'n v. Chenery Corp., 332 U.S. did not abuse its discretion by applying different standards in
194, 67 S.Ct. 1575, 91 L.Ed. 1995 (1947); National Labor determining whether to allow deferred accounting treatment
Relations Bd. v. Wyman–Gordon Co., 394 U.S. 759, 89 for Palo Verde Units 1 and 2. We reverse the court of appeals
S.Ct. 1426, 22 L.Ed.2d 709 (1969); *189 Southwestern to the extent that it disallows the deferral and inclusion in rate
Bell Tel. Co. v. Public Util. Comm'n, 745 S.W.2d 918, 926 base of deferred post-in-service carrying costs. In all other
(Tex.App.—Austin 1988, writ denied). In SEC v. Chenery respects, the judgment of the court of appeals is affirmed.
Corp., 332 U.S. 194, 202–03, 67 S.Ct. 1575, 1580–81, 91
L.Ed. 1995 (1947), the Court stated that ad hoc adjudication
may be preferable to a formal rulemaking proceeding where Justice SPECTOR, joined by Justice GONZALEZ, Justice
“the agency may not have had sufficient experience with DOGGETT, and Justice GAMMAGE, dissenting.
a particular problem to warrant rigidifying its tentative This case demonstrates the weakness of the safeguards relied
judgment into a hard and fast rule;” and where the problem upon today in State of Texas v. Public Utility Commission,
is so “specialized and varying in nature as to be impossible 883 S.W.2d 190 (Tex.1994). In that case, the majority
of capture within the boundaries of a general rule.” Both of defends its approval of deferred accounting treatment on
the foregoing considerations apply in the Commission's early the ground that deferred cost assets will be included in
attempts to define the proper standard to apply to deferred rate base only to the extent that they are deemed “prudent,
reasonable and necessary.” Id. at 197–198 n. 12. In the present
accounting cases. 20
case, however, the majority approves the Public Utility
Commission's application of a similar standard, despite a
Early in the process, the Commission was faced with
total lack of evidence supporting the Commission's findings.
numerous complex problems presented by the recent arrival
I dissent.
of nuclear generation plants. While remaining within the
statutory framework of PURA, the Commission had to

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City of El Paso v. Public Utility Com'n of Texas, 883 S.W.2d 179 (1994)
Util. L. Rep. P 26,411

At the rate hearings below, the City of El Paso presented
With the standard of review applied today, it is difficult to
extensive evidence concerning the imprudence of El Paso
imagine any Commission decision relating to prudence that
Electric Company's decisions to become involved in the Palo
would be set aside by the Court. This lack of review will be
Verde Project and to remain involved at the 15.8 percent
especially pernicious in the context of deferred cost assets.
participation level. See Tex. Pub. Utils. Comm'n, *190
Valuing the prudence of such assets will involve the same
Application of El Paso Electric Company for Authority to
degree of complexity as valuing the imprudence in this case.
Change Rates, Docket No. 7460, 14 TEX.P.U.C.BULL.
Thus, in approving deferred amounts for inclusion in rate
932, 965–84 (June 16, 1988). The City's expert testimony
base, the Commission may arbitrarily select a figure within
concluded that 50 percent of the cost of all three Palo Verde
a wide range, and its decision will effectively be immune
units should be disallowed as imprudent. Id. at 983. Using this
from judicial review. Judging by the example of this case, the
figure, some $350 million should have been disallowed for
figure selected will typically be much closer to the utility's
Unit 1 alone.
recommended figure than it is to the ratepayers'.
The Commission agreed that El Paso Electric was “not
I would hold that the disallowance for decisional imprudence
entirely prudent” in planning and managing its participation
must be based on the evidentiary record. Additionally, for
in the Palo Verde project. Id. at 1250. In determining the
the reasons stated in my dissenting opinion in State of Texas
amount of the disallowance, however, the Commission chose
v. Public Utility Commission, 883 S.W.2d at 205–209, I
not to rely on the evidence presented; instead, it seized upon
would hold that no expenses incurred after the beginning
a figure of $32 million that had been discussed in the course
of commercial operation may be capitalized and included
of settlement negotiations. Id. at 1250–51. El Paso Electric's
in rate base. Accordingly, I would remand this cause to the
own expert testified, in regard to the settlement amount, “I
Commission for a determination of rates in keeping with
don't think it really relates to anything.” The $32 million
traditional standards.
figure has no basis in reality; it resulted solely from the parties'
efforts to buy peace.
Parallel Citations
The majority cites no evidence in support of the $32
million disallowance, because none exists. Nonetheless, the Util. L. Rep. P 26,411
majority upholds the Commission's findings as supported by
substantial evidence. Supra at 186.

Footnotes
1 Tex. Public Utils. Comm'n, Application of El Paso Electric Company for Authority to Change Rates, Docket No. 7460, 14
TEX.P.U.C.BULL. 932, 1202 (June 16, 1988) (Docket No. 7460).
2 TEX.REV.CIV.STAT.ANN. art. 1446c (Vernon Supp.1994).
3 Generally, regulatory lag is the delay between the time when a utility's profits are above or below standard and the time when an
offsetting rate decrease or rate increase may be put into effect by commission order or otherwise. This delay is due to the inherent
inability in the regulatory process to allow for immediate rate decreases or increases. For purposes of this opinion, “regulatory lag”
is the period between the date a new plant begins commercial operation (the “in-service” date) and the effective date of the new rates
that result from including the new plant's costs in the rate base. See JAMES C. BONBRIGHT ET AL., PRINCIPLES OF PUBLIC
UTILITY RATES 96 (2d ed. 1988).
4 EPEC and four other utility companies agreed to partially fund and otherwise assist in building one or more nuclear steam electric
generating units, with attendant common facilities. Construction is complete on the common facilities and two of the five units
originally planned (Palo Verde Units 1 and 2). After construction began, EPEC modified its ownership interest in the units. Originally,
EPEC owned an undivided interest in each of the units as a tenant in common with the other four project participants. Although
EPEC retains its undivided interest in Unit 1, the company has sold its interest in Unit 2 and made arrangements to lease the unit
back for the duration of EPEC's involvement in the project.
5 EPEC, the Commission staff, and four corporate intervenors which purchased significant amounts of electricity from EPEC all signed
the stipulation.
6 The Commission authorized deferred accounting treatment for Unit 1 in Tex. Public Utils. Comm'n, Application of El Paso Electric
Company for Authority to Change Rates, Docket No. 6350, 13 TEX.P.U.C.BULL. 1091, 1239–41 (1986).

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City of El Paso v. Public Utility Com'n of Texas, 883 S.W.2d 179 (1994)
Util. L. Rep. P 26,411

7 The court of appeals separated the costs into two categories: (1) operating and maintenance costs, and (2) carrying costs. Our holding
makes no distinction between these costs.
8 We note that the Commission has used these same standards to evaluate non-unanimous settlements in several other dockets. See,
e.g., Tex. Public Utils. Comm'n, Application of El Paso Electric Company to Declare Palo Verde Unit 1 in Service, Docket No. 6764,
12 TEX.P.U.C.BULL. 1533, 1534–35 (November 14, 1986).
9 In addition to the recitations above, Conclusion of Law No. 28 stated: “The Amended and Restated Stipulation, as modified per
Finding of Fact No. 6, represents a reasonable resolution of the contested issues in this docket, is supported in the record, is in the
public interest, and should therefore be adopted, as the basis for the Commission's order in this case.” Docket No. 7460, supra note
1, at 1280.
10 We note that the Commission's Final Order included 237 separate, specific Findings of Fact concerning the rate increase. The
Commission specifically considered the amended and restated stipulation in the context of these findings as a whole. See Docket 7460,
supra note 1, at 1233–74. Thus, contrary to the City's and OPUC's contentions, the Commission's findings supporting its reliance
on the non-unanimous stipulation were not “wholly conclusory.” Further, because the Commission explicitly provided that it was
based on a review of the evidence in the record as a whole, we reject the City's contention that the Commission acted arbitrarily
and abused its discretion as a fact finder and decision maker by adopting a contested settlement “without a review of the record or
support in the evidentiary record.”
11 “Decisional” imprudence refers to EPEC's decisions to become involved in the Palo Verde Project, the extent of its involvement and
its decisions to remain in the project at the 15.8% participation level.
12 Although not clear from Mr. Johnson's testimony, under his suggested approach, the imprudence disallowance would have exceeded
$350 million.
13 We note that the Examiner likewise recognized flaws in EPEC's decision making process. However, the Examiner noted that “it is
too much to ask that one reconstruct the appropriate process fifteen years after the fact in order [to] find whether a decision made on
an inappropriate basis might still have been made on an appropriate one.” Docket No. 7460, supra note 1, at 981.
14 In affirming the Commission's order, the court of appeals relied in part on its determination that EPEC's agreement in the non-binding
stipulation to a $32 million disallowance constituted a “quasi-admission.” 839 S.W.2d at 907. The court of appeals concluded that
“[b]ecause it is a statement contrary to EPEC's pecuniary interest, the concession has some evidentiary weight.” Id. While we need
not address whether the EPEC's agreement in the non-binding stipulation constituted a “quasi-admission,” we note that it is debatable
as to whether EPEC's acceptance of a $32 million figure was in fact a statement against its pecuniary interest, considering that the
evidence could have supported a much higher disallowance. See supra note 12.
15 The final revenue requirement represents the total revenues needed by the utility in order to cover its reasonable and necessary
operating expenses and receive a return on the rate base.
16 The Commission allowed EPEC to include $74,503,575 of deferrals in rate base. Docket No. 7460, supra note 1, at 1258 (Finding
of Fact 144).
17 In State of Texas v. Public Utility Commission, 883 S.W.2d 190, we held that the Commission must consider to what extent the
inclusion of the deferred cost assets in rate base is actually necessary to preserve the utilities' financial integrity. 883 S.W.2d at 201.
We noted that such a determination should be made at the rate hearing. Id. Because no party argued that the Commission should have
made such a determination in this case, any argument on this point is waived.
18 The deferral period for Palo Verde Unit 1 was twenty-five months and for Unit 2 was nineteen months.
19 We note that in State of Texas v. Public Util. Comm'n, 883 S.W.2d 190 (Tex.1994), we held that the Commission possesses the
authority to authorize deferred accounting treatment of post-in-service costs. Further, we concluded that it was not an abuse of
discretion for the Commission to apply a financial integrity standard to determine whether to authorize deferred accounting because
that standard “ensured that the utilities will receive an opportunity to recover the minimum rates mandated by PURA.” Id. at 197.
However, in Office of Public Utility Counsel v. Public Util. Comm'n, 883 S.W.2d 190 (Tex.1994), we held that the measurable harm
standard lacked “a foundation in the regulatory scheme provided by PURA” and, as a result, the Commission abused its discretion
by applying the measurable harm standard to determine whether to allow deferred accounting. 883 S.W.2d at 196. We note that the
City does not contest the Commission's decision as to Unit 2 on the grounds that it was based on a standard that was too speculative.
Thus, we do not address that issue in this case.
20 In fact, the Commission ultimately concluded that the measurable harm standard was too speculative. See, e.g., Tex.Public Utils.
Comm'n, Petition of Houston Lighting and Power Company for Approval of Deferred Accounting Treatment for Limestone Unit 2
and the South Texas Project Unit 1, Docket No. 8230, 14 TEX.P.U.C.BULL. 2752, 2811 (April 19, 1989).
21 The Commission's discretion to proceed on a “case-by-case” basis is not absolute. When the underlying considerations that support
ad hoc adjudication are no longer present, then the Commission will be bound to follow the formal rulemaking procedures set out

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City of El Paso v. Public Utility Com'n of Texas, 883 S.W.2d 179 (1994)
Util. L. Rep. P 26,411

in the TEX.GOV'T CODE ANN. § 2001.141. See Southwestern Bell Tel. Co. v. Public Util. Comm'n, 745 S.W.2d 918, 926–27
(Tex.App.—Austin 1988, writ denied).

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

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City of San Antonio v. City of Boerne, 111 S.W.3d 22 (2003)
46 Tex. Sup. Ct. J. 848

control over all roads,” see TEX. LOC. GOV'T CODEE
111 S.W.3d 22 § 81.028(5), 1 or (ii) as agent of the State of Texas, see
Supreme Court of Texas. id. § 42.022(b). Because we hold that the Legislature has
neither expressly nor impliedly conferred such power upon
CITY OF SAN ANTONIO, Petitioner, a commissioners court under either section 81.028(5) or
v. 42.022(b), we reverse the court of appeals' judgment and
CITY OF BOERNE, Respondent. remand the case to the district court for further proceedings
consistent with this opinion.
No. 01–1054. | Argued Sept. 18,
2002. | Delivered June 26, 2003.
| Rehearing Denied Aug. 21, 2003.
I
City brought action for declaratory judgment and injunction
against nearby city, seeking to establish which city's BACKGROUND
extraterritorial jurisdiction included certain contested areas
of land. The 216th Judicial District Court, Kendall County, [1] The City of San Antonio and the City of Boerne
Stephen B. Ables, J., granted summary judgment in favor of stipulated to the relevant facts. On November 5, 1987,
plaintiff city. Nearby city appealed. The Court of Appeals, San Antonio's City Council passed an ordinance (the “San
61 S.W.3d 571, affirmed. Nearby city filed petition for Antonio Ordinance”) annexing certain property located in
review. The Supreme Court, Jefferson, J., held that: (1) the San Antonio's extraterritorial jurisdiction. 2 On the December
legislature's grant of general control over the roads does not 31, 1987 effective date of this annexation, San Antonio's
include the power to petition a city to annex certain portions extraterritorial jurisdiction expanded to include property
of a given county road, and (2) a county commissioners court that was previously unincorporated by any city. See id. §
is not entitled, as agent of the State, to petition a municipality 42.022(a).
for annexation.
After San Antonio passed its annexation ordinance, but before
Reversed and remanded. it became effective, a number of property owners in Kendall
and Comal Counties petitioned Boerne to include their
Smith, J., concurred in the judgment only. property within Boerne's extraterritorial jurisdiction. See id. §
42.022(b) (“The extraterritorial jurisdiction of a municipality
may expand beyond the distance limitations imposed by
Attorneys and Law Firms
Section 42.021 to include an area contiguous to the otherwise
*23 Harvey L. Hardy, Law Office of Harvey Hardy, Donald existing extraterritorial jurisdiction of the municipality if
S. Bayne, San Antonio City Attorney's Office, San Antonio, the owners of the area request the expansion.”). However,
for Petitioner. the property of those petitioning owners was too dispersed
to satisfy section 42.022(b)'s contiguity requirement. To
*24 Randall B. Richards, Law Offices of Randall B. overcome that obstacle, Boerne—which had agreed to
Richard, Boerne, for Respondent. coordinate the annexation process—accepted petitions from
Kendall and Comal County commissioners courts to include
Opinion various sections of their counties' roads within Boerne's
extraterritorial jurisdiction. Boerne then passed a number
Justice JEFFERSON delivered the opinion of the Court,
of ordinances (the “Boerne Ordinances”) extending its
in which Chief Justice PHILLIPS, Justice HECHT,
extraterritorial jurisdiction accordingly.
Justice ENOCH, Justice OWEN, Justice O'NEILL, Justice
SCHNEIDER, and Justice WAINWRIGHT joined.
Boerne concedes that, without including county roads, much
In this municipal annexation dispute, we consider whether a of the area is insufficiently contiguous to satisfy section
county commissioners court may petition a city to include 42.022(b). 3 By including these county roads, however,
portions of its county's roads within that city's extraterritorial Boerne believes it properly acquired jurisdiction over an area
jurisdiction (i) pursuant to the Legislature's grant of “general that, *25 absent the Boerne Ordinances, would be within

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City of San Antonio v. City of Boerne, 111 S.W.3d 22 (2003)
46 Tex. Sup. Ct. J. 848

the extraterritorial jurisdiction created by the San Antonio News, 22 S.W.3d 351, 357 (Tex.2000); El Paso Natural Gas
Ordinance. Thus, in contravention of Local Government Co. v. Minco Oil & Gas, Inc., 8 S.W.3d 309, 312 (Tex.1999).
Code section 42.022(c), San Antonio and Boerne effectively In construing a statute, our objective is to determine and
claimed authority over the same area. See id. § 42.022(c) give effect to the Legislature's intent. State v. Gonzalez, 82
( “The expansion of the extraterritorial jurisdiction of a S.W.3d 322, 327 (Tex.2002); see also TEX. GOV'T CODE
municipality through annexation, request, or increase in the § 312.005; Am. Home Prods. Corp. v. Clark, 38 S.W.3d
number of inhabitants may not include any area in the existing 92, 95 (Tex.2000). We look first to the “plain and common
extraterritorial jurisdiction of another municipality.”). meaning of the statute's words.” Gonzalez, 82 S.W.3d at 327.
If a statute's meaning is unambiguous, we generally interpret
In 1998, Boerne sued San Antonio, seeking a declaratory the statute according to its plain meaning. Id. We determine
judgment that the overlapping extraterritorial jurisdiction legislative intent from the entire act and not just its isolated
belonged to Boerne, not San Antonio. Boerne also sought a portions. Id. (citing Jones v. Fowler, 969 S.W.2d 429, 432
permanent injunction prohibiting San Antonio from asserting (Tex.1998)). Thus, we “ ‘read the statute as a whole and
jurisdiction over the contested land area. Based on stipulated interpret it to give effect to every part.’ ” Id. (quoting Jones,
facts, the trial court ruled that the overlapping property was 969 S.W.2d at 432). *26 With these principles in mind, we
validly within Boerne's extraterritorial jurisdiction before now turn to the parties' arguments.
the San Antonio Ordinance went into effect. The trial
court's judgment also provided that as of December 28,
1987, the effective date of the Boerne Ordinances, Boerne
III
had exclusive control over the overlapping extraterritorial
jurisdiction. The judgment “permanently enjoined [San
Antonio] from asserting any jurisdiction or authority, or DISCUSSION
attempting to enforce its ordinances, rules and/or regulations,
San Antonio and Boerne agree that the issue here is whether
over the area [ ] declared to be the exclusive extraterritorial
a county commissioners court may, either pursuant to powers
jurisdiction of [Boerne].”
set forth in Local Government Code section 81.028 or as
the State's agent under Local Government Code section
San Antonio appealed the trial court's judgment and
42.022(b), petition to include portions of county roads within
argued, among other things, that the Kendall and Comal
a given municipality's extraterritorial jurisdiction. See TEX.
County commissioners courts lacked authority to petition
LOC. GOV'T CODEE §§ 42.022, 81.028. Boerne argues that
Boerne to include segments of their counties' roads within
the Legislature's reenactment of section 42.002—subsequent
Boerne's extraterritorial jurisdiction. 4 The court of appeals
to section 81.028's enactment—establishes the Legislature's
affirmed the trial court's judgment, holding that “county
intent to give commissioners courts the authority to petition
commissioners, as agents for the State, were empowered to
for annexation. San Antonio, on the other hand, contends that
petition for inclusion in the extraterritorial jurisdiction of
the statutes are unrelated and that our construction of one
Boerne.” 61 S.W.3d 571, 579. In this Court, San Antonio
should not influence our construction of the other. Before
challenges the commissioners courts' authority to petition a
analyzing these contentions, we briefly trace the historical
city to annex county roads pursuant to Local Government
background of extraterritorial jurisdiction and annexation
Code sections 81.028 and 42.022. We granted San Antonio's
in Texas and discuss the source of and limitations on a
petition for review to resolve this issue. 45 Tex. Sup.Ct. J. 621
commissioners court's power.
(May 11, 2002).

A
II

Extraterritorial Jurisdiction
STANDARD OF REVIEW
Extraterritorial jurisdiction refers to “the unincorporated
[2] [3] [4] [5] We review matters of statutory
area that is contiguous to the corporate boundaries of the
construction de novo. See City of Garland v. Dallas Morning
municipality” and is located within a specified distance of

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City of San Antonio v. City of Boerne, 111 S.W.3d 22 (2003)
46 Tex. Sup. Ct. J. 848

those boundaries, depending upon the number of inhabitants Report to the 57th Legislature 4 (1960); O'Quinn, supra, at
within the municipality. Id. § 42.021. The purpose of 172. The first municipality to begin annexation procedures on
extraterritorial jurisdiction is “to promote and protect the unclaimed territory obtained jurisdiction over that property.
general health, safety, and welfare of persons residing in and Texas Legislative Council, supra, at 5 (discussing first
adjacent to the municipalities.” Id. § 42.001. reading process); Ashcroft & Balfour, supra, at 523–24. This
virtually unbridled annexation authority enabled cities to
Generally, a municipality's extraterritorial jurisdiction may claim territory without incurring any obligation to provide
not expand beyond legislatively prescribed limits. See id. new services or to formally annex the designated property.
§ 42.021. If the owners of a particular area request an Texas Legislative Council, supra, at 38–40; Ashcroft &
expansion, however, “[t]he extraterritorial jurisdiction of a Balfour, supra, at 524. The result, as noted by one
municipality may expand beyond the distance limitations commentator, was that “cities were quick to engage in
imposed by Section 42.021 to include an area contiguous annexation wars and to stake [their] claim[s].” Ashcroft &
to the otherwise existing extraterritorial jurisdiction of Balfour, supra, at 524; see also Texas Legislative Council,
the municipality.” Id. § 42.022(b). Boerne argues that supra, at 47 (discussing apparently “frivolous” and “spiteful”
the commissioners courts' petitions bring this case within motivations for annexation); O'Quinn, supra, at 172 (stating
section 42.022's exception permitting expansion beyond the that cities “turned annexation into a contest of communities”).
legislatively prescribed extraterritorial limits.

C
B

The Municipal Annexation Act of 1963
Municipal Annexation and the Home Rule Amendment
[7] In 1963, reacting to these widespread annexation wars,
[6] Before 1912, the Legislature created virtually all cities the Legislature passed the Municipal Annexation Act. 6
and municipal corporations. See TEX. CONST. art. XI, § 5 TEX.REV.CIV. STAT. art. 970a, § 1 (1963). The Act was
interp. commentary; see also Robert R. Ashcroft & Barbara designed “to curb the virtually unlimited power of home
Kyle Balfour, Home Rule Cities and Municipal Annexation rule municipalities to unilaterally annex territory.” Laidlaw
in Texas: Recent Trends and Future Prospects, 15 ST. Waste Sys., Inc. v. City of Wilmer, 904 S.W.2d 656, 663
MARY'S L.J. 519, 520 (1984). At that time, Texas permitted n. 1 (Tex.1995); Sitton v. City of Lindale, 455 S.W.2d 939,
annexation under only two circumstances: (i) pursuant to 941 (Tex.1970). The Act's main provisions limited cities'
the general law, usually by majority vote of the annexed annexation powers by: (i) requiring cities to complete the
residents, or (ii) by special act of the Legislature granting annexation process within ninety days; (ii) restricting the
or amending a specific city's charter. See TEX. CONST. art. annexed territory's size and shape; and (iii) prohibiting cities
XI, § 5 interp. commentary; Trueman O'Quinn, Annexing from annexing property that was not within the confines of
New Territory: A Review of Texas Law and the Proposals their extraterritorial jurisdiction. TEX.REV.CIV. STAT. art.
for Legislative Control of Cities Extending Their Boundaries, 970a, § 7 (1963). These limitations frame our discussion of a
39 TEX. L.REV. 172, 175 (1960). By adopting the Home commissioners court's authority.
Rule Amendment in 1912, Texas withdrew the Legislature's
power to grant and change home rule city charters by special
laws. 5 TEX. CONST. art. XI, § 5 *27 interp. commentary
D
(citing State ex rel. Wayland v. Vincent, 217 S.W. 402, 405
(Tex.Civ.App.-Amarillo 1919), aff'd, 235 S.W. 1084, 1088
(Tex.1921)). Commissioners Courts' Authority

[8] [9] [10] [11] A commissioners court's primary
With the Home Rule Amendment, home rule cities acquired
function is to administer its county's business affairs. Avery v.
the authority to annex property without the property owners'
Midland County, 406 S.W.2d 422, 426 (Tex.1966), vacated
consent and without first establishing a need for the new
*28 on other grounds, 390 U.S. 474, 485–86, 88 S.Ct.
area. Texas Legislative Council, Municipal Annexation: A
1114, 20 L.Ed.2d 45 (1968). Though they are creatures of the

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City of San Antonio v. City of Boerne, 111 S.W.3d 22 (2003)
46 Tex. Sup. Ct. J. 848

Texas Constitution, counties and commissioners courts are
subject to the Legislature's regulation. Orndorff v. State ex rel.
McGill, 108 S.W.2d 206, 210 (Tex.Civ.App.-El Paso 1937,
A
writ ref'd). The powers the Legislature confers on counties
and commissioners courts are duties rather than privileges.
Id. at 209. Thus, a commissioners court may exercise only General Control Over Roads
those powers expressly given by either the Texas Constitution
[12] The Legislature gave commissioners courts general
or the Legislature. Canales v. Laughlin, 147 Tex. 169,
control over the roads in 1876. See Act approved July 22,
214 S.W.2d 451, 453 (1948). When the Constitution or
1876, 15th Leg., R.S., ch. 55, § 4, 1876 Gen. Laws, reprinted
Legislature imposes an obligation on a commissioners court,
in 8 H.P.N. GAMMEL, LAWS OF TEXAS 1882–1897,
that commissioners court also has the implied authority to
887–88 (1898). At the time the parties' dispute arose, the
exercise the power necessary to accomplish its assigned duty.
relevant provision specifying a commissioners court's power
Anderson v. Wood, 137 Tex. 201, 152 S.W.2d 1084, 1085
provided:
(1941).
Each commissioners court may: (1)
Turning now to the parties' contentions, we must determine establish public ferries whenever the
whether the Legislature, in giving commissioners courts public *29 interest may require;
general control over the roads, expressly or impliedly (2) lay out and establish, change,
conferred the authority to petition a city to annex portions of discontinue, close, abandon, or vacate
county roads. public roads and highways; (3) build
bridges and keep them in repair; (4)
appoint road overseers and apportion
IV hands; (5) exercise general control
over all roads, highways, ferries, and
bridges in the counties....
ANALYSIS
TEX. LOC. GOV'T CODEE § 81.028 (emphasis added).
Boerne contends that, in enacting section 81.028, the
Because the Legislature did not define “general control,”
Legislature intended to give commissioners courts broad
we will use tools of statutory construction to determine
power over “all things involving, relating to or applicable to
its meaning. Cf. Cail v. Serv. Motors, Inc., 660 S.W.2d
[public] roads.” Specifically, Boerne asserts that the statute's
814, 815 (Tex.1983) (“If the disputed statute is clear and
“general control” language shows that the Legislature
unambiguous extrinsic aids and rules of statutory construction
authorized a commissioners court to voluntarily petition
are inappropriate.”) (citation omitted).
a city to include a county road within its extraterritorial
jurisdiction. Boerne further argues that, pursuant to Local
[13] [14] [15] A fundamental rule of statutory
Government Code section 42.022(b), a commissioners court
construction is to ascertain and give effect to the Legislature's
can, as the State's agent, exercise the State's power as owner
intent. State v. Terrell, 588 S.W.2d 784, 786 (Tex.1979);
to petition for annexation. San Antonio contends that neither
Imperial Irrigation Co. v. Jayne, 104 Tex. 395, 138 S.W.
section 81.028 nor 42.022(b) empowers a commissioners
575, 581 (1911). When general words (like “general control”)
court to petition a municipality to annex county roads. As
follow specific and particularized enumerations of powers
to section 81.028, San Antonio argues that the Legislature,
(like “establish public ferries” and “lay out and establish ...
in giving commissioners courts “general control” over the
public roads”), we treat the general words as limited and
roads, intended only to exercise those powers required to
apply them only to the same kind or class of powers as those
serve the traveling public, such as regulating traffic and
expressly mentioned. Stanford v. Butler, 142 Tex. 692, 181
designing, constructing, repairing, and maintaining public
S.W.2d 269, 272 (1944). We employ this rule to construe
roads. Moreover, San Antonio contends that, because the
specific terms no more broadly than the Legislature intended.
State does not own county roads, a commissioners court has
See id. Moreover, the meaning of particular words in a statute
no authority under section 42.022(b) to act as the State's agent
may be ascertained by reference to other words associated
in petitioning for annexation. 7

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City of San Antonio v. City of Boerne, 111 S.W.3d 22 (2003)
46 Tex. Sup. Ct. J. 848

with them in the same statute. County of Harris v. Eaton, 573 for inclusion in a city's extraterritorial jurisdiction is neither
S.W.2d 177, 179 (Tex.1978). expressly conferred nor necessarily implied to enable a
commissioners court to perform its delegated duty to provide
[16] [17] Applying these canons of construction, we safe roads for public travel. Accordingly, we reject Boerne's
conclude that the Legislature's grant of general control over broad construction of the phrase “general control,” and hold
the roads does not include the power to petition a city to that a county's commissioners court is without authority to
annex certain portions of a given county road. If, as Boerne petition for annexation of its county roads under section
contends, “general control” is read to include the power to 81.028.
petition for annexation, then there would have been no need
for the Legislature to illustrate in subsections one through
four the types of specific power a commissioners court may
B
utilize pursuant to section 81.028. See Spence v. Fenchler,
107 Tex. 443, 180 S.W. 597, 601 (1915) (“It is an elementary
rule of construction that, when possible to do so, effect Commissioners Courts as Agents of the State
must be given to every sentence, clause, and word of a
Although related to the parties' arguments about
statute so that no part thereof be rendered superfluous or
section 81.028, we analyze separately whether a county
inoperative.”). Because a commissioners court's power is
commissioners court, acting as the State's agent, can petition
limited to that which is expressly delegated to it by the Texas
Constitution or Legislature, or necessarily implied to perform a municipality to annex portions of the county's roads.
San Antonio and Boerne dispute whether the Legislature
its duties, we will not read the Legislature's grant of general
authorized commissioners courts to petition cities for
control to be more expansive than the type of powers set
annexation by enacting section 42.022, which provides:
forth in section 81.028. State ex rel. City of Jasper v. Gulf
States Utils. Co., 144 Tex. 184, 189 S.W.2d 693, 698 (1945) The extraterritorial jurisdiction of
(limiting commissioners courts' powers to those expressly a municipality may expand beyond
conferred or necessarily implied); Mo.-Kan.-Tex. Ry. Co. of the distance limitations imposed by
Tex. v. Thomason, 280 S.W. 325, 327 (Tex.Civ.App.-Austin Section 42.021 to include an area
1926, writ ref'd) (“It has long been the rule of the courts contiguous to the otherwise existing
to construe [exceptions to general rules] strictly.”). Section extraterritorial jurisdiction of the
81.028, when construed as a whole, “clearly contemplate[s] municipality if the owners of the areas
that the commissioners court of each county shall regard request the expansion.
[public transportation] as a system, to be laid out, changed,
repaired, improved, and maintained, as far as practical, as a TEX. LOC. GOV'T CODEE § 42.022(b) (emphasis added).
whole to the best interest and welfare of all the people of the Boerne focuses on the statute's reference to “owners.” It
county.” Canales, 214 S.W.2d at 454–55. Therefore, when we argues that “[t]he Legislature, acting for the State, has primary
construe a commissioners court's express power under section and plenary power to control and regulate public roads and
81.028, we focus on the statute's transportation and safety streets and it may delegate such powers to the counties in
aspects. In so doing, we hold that the Legislature intended to this state.” Boerne then reasons that, because the Legislature
limit a commissioners court's authority under section 81.028 gave commissioners courts general control over all roads in
to matters relating to public travel. See TEX. LOC. GOV'T section 81.028, a commissioners court may—with respect to
CODEE § 81.028. public roads within its jurisdiction—discharge the “owner's”
prerogative by petitioning for annexation.
*30 A commissioners court's actions are thus sanctioned
under section 81.028 only if related to its duty to protect the San Antonio repeats its earlier contention, which we have
public's interest in transportation. See Canales, 214 S.W.2d sustained, that the counties' “general control” over roads is
at 456–57. Unless the power to petition for annexation is not sufficient to give them the power to petition for inclusion
necessary for a commissioners court to carry out that function, in a municipalities' extraterritorial jurisdiction. San Antonio's
we will not imply that it has such power. See Gulf States position regarding the State's “ownership” of county roads,
Utils. Co., 189 S.W.2d at 698; Terrell v. Sparks, 104 Tex. however, has changed. In its initial briefing, San Antonio did
191, 135 S.W. 519, 521 (1911). Here, the power to petition not dispute that the State owned those roads, but argued that

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City of San Antonio v. City of Boerne, 111 S.W.3d 22 (2003)
46 Tex. Sup. Ct. J. 848

by the trial court in the first instance, and therefore we
the counties were never granted specific authority to assert the
express no opinion on the subject. Accordingly, we remand
State's ownership rights to petition for inclusion within a city's
the case to the trial court to determine San Antonio and
extraterritorial jurisdiction. Subsequently, at our request, the
Boerne's extraterritorial boundaries in light of our decision
State filed an amicus brief in which it denied fee simple
and to permit the parties to withdraw stipulated exhibits if
ownership of the roads. 8 San Antonio has now adopted the
warranted. TEX.R.APP. P. 60.2(d), 60.3; Members Mut. Ins.
State's position and argues that, because the State is not fee
Co. v. Tapp, 469 S.W.2d 792, 793 (Tex.1971) (remanding in
simple owner of the roads in question, the commissioners
the interest of justice because party misunderstood the effect
courts cannot exercise the State's “ownership” right to petition
of a trial stipulation).
for inclusion in Boerne's extraterritorial jurisdiction.

[18] Boerne correctly asserts, however, that the record in
this case does not reflect title to the roads, whether fee simple, V
easement or otherwise. We note that while the State is not
precluded from owning *31 county roads in fee simple, 9 CONCLUSION
we have generally held that unless otherwise provided in the
grant or conveyance, the owner of land abutting a street, [19] Commissioners courts have limited authority. They
alley, or public highway owns the fee to the center of the possess only those powers expressly conferred by the Texas
road, subject only to the easement in favor of the public to Constitution and the Legislature, and those necessarily
required to perform their delegated duties. By granting
a right of passage. 10 From the record presented on appeal,
commissioners courts general control over the roads, the
we can neither determine who “owns” the county roads nor
Legislature imposed on them a duty to make the roadways
the nature of that ownership. But we need not ascertain the
safe for public *32 travel. Simultaneously, the Legislature
exact nature of the State's interest to determine whether a
limited their powers to those expressly given or necessary to
county is authorized to petition a municipality for annexation
fulfill their obligations to the traveling public. Petitioning a
on the State's behalf. Nothing in section 42.022(b) clearly
municipality to annex portions of county roads is unrelated
permits a commissioners court, purportedly acting on behalf
to a commissioners court's specific duty to ensure safe
of the State, to advance purely provincial concerns for a subset
travel. And, because neither the Texas Constitution nor
of the counties' landowners. Because a commissioners court
the Legislature delegated any power the State may have
has only those powers expressly conferred or those powers
to petition a city for annexation to commissioners courts,
necessarily implied from other grants of power, we hold that
those courts cannot—on the State's behalf—petition a city
a commissioners court is not entitled, as agent of the State,
to include county roads within that city's extraterritorial
to petition a municipality for annexation. See Canales, 214
jurisdiction.
S.W.2d at 453.

We reverse the court of appeals' judgment and remand the
Finally, we note that the parties' assumption regarding
case to the district court for further proceedings consistent
ownership may affect the result of this case on remand.
with this opinion.
As outlined above, at the time they stipulated to exhibits
concerning extraterritorial boundaries, the parties were
operating under what may have been an incorrect assumption
regarding ownership of the roads at issue. For example, Justice SMITH concurred in the judgment only.
Boerne asserts that, if abutting property owners have
fee simple title to the centerline of the road, Boerne's
Parallel Citations
extraterritorial jurisdiction may be greater than its stipulations
at trial. The merit of Boerne's argument should be addressed 46 Tex. Sup. Ct. J. 848

Footnotes
1 Subsequent to this litigation, the Legislature recodified section 81.028 in the Transportation Code. See TEX. TRANSP. CODEE ch.
251. Because there is no substantive change in the statute, we refer to section 81.028—the statute in effect at the time the parties'
dispute arose.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 6
City of San Antonio v. City of Boerne, 111 S.W.3d 22 (2003)
46 Tex. Sup. Ct. J. 848

2 Extraterritorial jurisdiction is an unincorporated land area that is contiguous to a municipality's corporate boundary. See discussion
infra Part III.A.
3 Neither San Antonio nor Boerne contend that, even considering the disputed county roads, the area that Boerne seeks to annex is not
“contiguous to the otherwise existing extraterritorial jurisdiction of the municipality.” TEX. LOC. GOV'T CODEE § 42.022(b).
4 San Antonio also challenged whether, after it passed its ordinance upon “first reading,” Boerne could acquire jurisdiction over the
same property. The court of appeals held that the first city to actually complete the annexation process acquired jurisdiction over the
property. 61 S.W.3d 571, 576. Because San Antonio did not contest that holding here, we express no opinion on its merits.
5 Under the Home Rule Amendment, cities having more than five thousand inhabitants may adopt a home rule charter. See TEX.
CONST. art. XI, § 5. “Adopted in 1912, the home rule amendment ‘altered the longstanding practice of having special charters
individually granted and amended by the legislature’ for the State's larger cities.” Black v. City of Killeen, 78 S.W.3d 686, 692
(Tex.App.-Austin 2002, pet. denied) (quoting 22 David B. Brooks, Texas Practice: Municipal Law and Practice § 1.17 (2d ed.1999)).
The amendment effectively created home rule cities as “mini-legislatures.” Id. Cities adopting a home rule charter have the full power
of self government and look to the Legislature only for limitations on their power. Id. (citing Dallas Merchant's & Concessionaire's
Ass'n v. City of Dallas, 852 S.W.2d 489, 490–91 (Tex.1993)). Nonetheless, the Legislature retained the authority to prescribe
limitations on how cities exercised their annexation powers. Forwood v. City of Taylor, 147 Tex. 161, 214 S.W.2d 282, 286 (1948)
( “The result [of the Home Rule Amendment] is that now it is necessary to look to the acts of the legislature not for grants of power
to such cities but only for limitations on their powers.”).
6 The Municipal Annexation Act is currently codified at chapters 42 and 43 of the Local Government Code.
7 As discussed more fully in section IV.B infra, the parties originally assumed that the State owned the county roads at issue and
stipulated accordingly to proposed boundaries. Based on San Antonio's original construction of section 42.022(b), San Antonio argued
that, although the State owned such roads, it did not specifically delegate its power to petition for annexation to commissioners
courts; thus, absent this express delegation, a commissioners court could not exercise the State's authority as owner to petition for
annexation. See discussion supra Part III.B.
8 The State contends that “[t]he parties and the court of appeals' assumption that the State is the fee simple ‘owner’ of the strips of land
occupied by the county roads is incorrect” and that “the State owns only easements for the roads at issue.”
9 See TEX. LOC. GOV'T CODEE § 251.001(b) (“A municipality condemning land under this section may take a fee simple title to
the property if the governing body expresses the intention to do so.”).
10 Angelo v. Biscamp, 441 S.W.2d 524, 526 (Tex.1969) (“[A] deed to land abutting on a railroad right-of-way conveys title to the center
of the right-of-way unless a contrary intention is expressed in the instrument.”); State v. Williams, 161 Tex. 1, 335 S.W.2d 834, 836
(1960) (“When a conveyance is made of a piece of property abutting upon a public highway, it is natural to assume, in the absence of
an express reservation to the contrary, that the grantor intended to convey the same with all of the beneficial rights enjoyed by him
in its use.”); Humble Oil & Refining Co. v. Blankenburg, 149 Tex. 498, 235 S.W.2d 891, 893 (1951) (dedication of plazas, parks,
streets and alleys to the use and benefit of the public created an easement, not fee simple title); Cox v. Campbell, 135 Tex. 428, 143
S.W.2d 361, 362 (1940) (“The established doctrine of the common law is, that a conveyance of land bounded on a public highway,
carries with it the fee to the centre of the road, as part and parcel of the grant. Such is the legal construction of the grant, unless the
inference that it was so intended, is rebutted by the express terms of the grant.”).

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© 2015 Thomson Reuters. No claim to original U.S. Government Works. 7
Commissioners Court of Titus County v. Agan, 940 S.W.2d 77 (1997)
40 Tex. Sup. Ct. J. 355

a joint stipulation of uncontested facts. The trial court denied
the County Treasurer, Cynthia Agan's (Agan), summary
940 S.W.2d 77
judgment and granted the Commissioners Court's summary
Supreme Court of Texas.
judgment. The trial court denied the Commissioners Court
The COMMISSIONERS COURT OF recovery of attorneys' fees. The court of appeals reversed
TITUS COUNTY, Texas and Carl the trial court's judgment and rendered judgment for the
Johnson, County Auditor, Petitioners County Treasurer. That court also ordered the Commissioners
Court to return the payroll preparation responsibilities to
v.
the treasurer's office and to adequately fund the treasurer's
Cynthia AGAN, County Treasurer of
office. The court of appeals affirmed the trial court's denial of
Titus County, Texas, Respondent.
attorneys' fees for the Commissioners Court.
No. 96–0683. | Argued Nov.
We conclude the Commissioners Court did not abuse its
21, 1996. | Decided Feb. 21, 1997.
discretion when it transferred the payroll preparation duties
County treasurer brought declaratory judgment action against from the County Treasurer's office to the County Auditor's
county commissioners court and county auditor to challenge office. However, we find that the Commissioners Court
decision by commissioners court to assign payroll functions exceeded its authority by transferring certain other functions
to auditor. The 76th Judicial District Court, Titus County, from the County Treasurer to the County Auditor's office.
Joe D. Clayton, sitting by assignment, granted summary These functions belong to the County Treasurer's office. We
judgment in favor of county commissioners court. County affirm the court of appeals' denial of attorneys' fees to the
treasurer appealed. The Court of Appeals, Grant, J., 922 Commissioners Court. Accordingly, we affirm in part and
S.W.2d 640 reversed. On application for writ of error, the otherwise reverse the court of appeals' judgment and render
Supreme Court, Baker, J., held that: (1) commissioner's judgment accordingly.
court could assign payroll responsibility to auditor, and (2)
commissioners court improperly assigned to auditor county
treasurer's functions of making bank and child support I. FACTS
deposits, depositing payroll funds, and paying insurance
premiums. The summary judgment evidence and the stipulated
uncontested facts show that Agan is the elected County
Reversed in part and affirmed in part. Treasurer in Titus County. In 1987, Titus County hired a
part- *79 time assistant County Treasurer, or payroll clerk,
whose primary duty was preparing the county payroll. From
Attorneys and Law Firms 1987 until 1994, Agan and her assistant prepared the county
payroll. In 1994, the Titus County Commissioners Court
*78 Charles J. Hlavinka, Robert W. Weber, Texarkana, for
amended the county budget to combine administrative duties
petitioners.
involving county payroll, the insurance program, personnel,
Gary Shaver, Gregory P. Grajczyk, Longview, for and receiving purchase orders and their payment into one full-
respondent. time position assigned to the County Auditor's office. These
responsibilities had previously been divided between the
Opinion payroll clerk in the County Treasurer's office and a part-time
employee in the County Auditor's office, who had recently
BAKER, Justice. resigned. The County Treasurer's payroll clerk transferred
to the County Auditor's office to fill this new position. The
The issue in this case is whether the Commissioners Court
effect of these changes is to remove payroll preparation
of Titus County may divest the County Treasurer of payroll
responsibilities from Agan and transfer them to the County
preparation responsibilities and transfer these responsibilities
Auditor's office.
to the County Auditor. The County Treasurer filed a
declaratory judgment action challenging the Commissioners
As a County Auditor employee, the payroll clerk performs
Court's action. Both parties moved for summary judgment. In
the same functions as she did in the County Treasurer's
addition to their summary judgment evidence, the parties filed

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Commissioners Court of Titus County v. Agan, 940 S.W.2d 77 (1997)
40 Tex. Sup. Ct. J. 355

office. Her duties include: (1) collecting timesheets from include aspects of legislative, executive, administrative, and
all county departments, entering timesheet data into the judicial functions. Avery v. Midland County, 390 U.S. 474,
county computer system to generate payroll deductions 482, 88 S.Ct. 1114, 1119, 20 L.Ed.2d 45 (1968); Ector County
for FIT, FICA, Medicare, insurance, retirement, and child v. Stringer, 843 S.W.2d 477, 478 (Tex.1992).
support payments; (2) making FIT deposits with bank; (3)
making child support deposits with appropriate offices; (4) Our Constitution vests appellate jurisdiction and general
depositing payroll funds; (5) paying insurance premiums; supervisory control over a County Commissioners Court with
(6) preparing insurance claims; (7) wiring payments to third the district court subject to such exceptions and under such
party administrators; (8) answering questions about insurance regulations as the law may prescribe. TEX. CONST. art. V,
claims or payments; (9) preparing and transmitting W–2's and § 8. With a few narrow exceptions, the Legislature has not
1099's; and (10) preparing payroll checks. After the payroll prescribed procedures for the district court's exercise of this
clerk completes these functions, she delivers the payroll appellate jurisdiction or supervisory control. Ector County,
checks with the timesheets to the County Treasurer, Agan, for 843 S.W.2d at 479. The enabling legislation empowering the
verification, signature, and disbursement. As a result, Agan's district court repeats the Constitution's terms. TEX. GOV'T
payroll preparation responsibilities are diminished and she is CODE § 24.020; see also 35 DAVID BROOKS, COUNTY
the only person in her office. & SPECIAL DISTRICT LAW § 5.11 (Tex. Practice 1989).

[2] *80 Case law defines the scope of the district
court's jurisdiction. A party can invoke the district court's
II. PROCEDURAL HISTORY
constitutional supervisory control over a Commissioners
In response to the Commissioners Court's actions, Agan sued Court judgment only when the Commissioners Court acts
the Commissioners Court seeking to declare the decision beyond its jurisdiction or clearly abuses the discretion
illegal and to order the payroll function back to her office. conferred upon the Commissioners Court by law. Ector
The trial court granted the Commissioners Court's motion for County, 843 S.W.2d at 479 (citing Tarrant County v.
summary judgment and denied Agan's motion for summary Shannon, 129 Tex. 264, 104 S.W.2d 4, 9 (1937)).
judgment. The trial court held that the Commissioners
Court could legally give the auditor's office the payroll [3] [4] If the Commissioners Court acts illegally,
responsibilities. However, the trial court refused to award the unreasonably, or arbitrarily, a district court may so adjudge.
Commissioners Court attorney's fees. Agan appealed. Ector County, 843 S.W.2d at 479 (citing Lewis v. City of Fort
Worth, 126 Tex. 458, 89 S.W.2d 975, 978 (1936)). However,
The court of appeals reversed the trial court and rendered in reviewing a Commissioners Court judgment for abuse of
judgment for Agan. The court of appeals rested its decision discretion, the district court has no right to substitute its
on two Attorney General decisions, Op.Tex. Att'y Gen. No. judgment and discretion for that of the Commissioners Court.
JM–911 (1988) and Op.Tex. Att'y Gen. No. JM–986 (1988). Ector County, 843 S.W.2d at 479 (citing Lewis, 89 S.W.2d at
These opinions reason that the County Treasurer must prepare 978). The district court may order the Commissioners Court
the county payroll because the payroll functions are so to exercise its discretion, but cannot tell the Commissioners
intimately linked that the payroll functions cannot be divorced what decision to make. Ector County, 843 S.W.2d at 479.
from preparing the checks. Following this logic, the court of Once the Commissioners Court exercises its discretion, the
appeals decided that payroll preparation responsibilities must district court may review the order for abuse of discretion.
rest with the County Treasurer. The court of appeals affirmed Ector County, 843 S.W.2d at 479.
the trial court's decision to deny the Commissioners Court its
attorney's fees. The Commissioners Court appealed.
IV. APPLICABLE LAW

Our Constitution creates the County Treasurer's office:
III. STANDARD OF REVIEW
Except as otherwise provided by this
[1] Our Constitution establishes the Commissioners Court
section, the Legislature shall prescribe
as the county's principal governing body. TEX. CONST. art.
the duties and provide for the election
V, § 18. The powers and duties of the Commissioners Courts

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Commissioners Court of Titus County v. Agan, 940 S.W.2d 77 (1997)
40 Tex. Sup. Ct. J. 355

by the qualified voters of each county functions from the County Treasurer. The Commissioners
in this State, of a County Treasurer Court may provide funds for adequate personnel and supplies,
and a County Surveyor, who shall have if necessary, to permit the County Treasurer to perform the
an office at the county seat, and hold functions of the office. TEX. LOC. GOV'T CODEE § 83.006.
their office for four years, and until
their successors are qualified; and shall [5] [6] Several other statutes apply to the County
have such compensation as may be Treasurer, but do not grant the County Treasurer exclusive
provided by law. power to perform specific functions. For example, § 155.021
considers deductions. That section states, “[t]he County
TEX. CONST. art. XVI, § 44(a). This section establishes Treasurer or, if another officer is specified by law, that
the County Treasurer's office, but gives the Legislature the other officer shall make deductions from, or take other
responsibility to prescribe the treasurer's duties. similar actions with regard to, the compensation of county
employees....” TEX. LOC. GOV'T CODEE § 155.021
The Legislature established the County Treasurer's duties in § (emphasis added). If the statutory language is clear and
113 of the Local Government Code. The County Treasurer's unambiguous we give the statute its common everyday
enumerated functions include: meaning. Cail v. Service Motors, Inc., 660 S.W.2d 814,
815 (Tex.1983). This statute's ordinary meaning allows the
The county treasurer, as chief
County Treasurer or another county official to conduct *81
custodian of county funds, shall keep
the described function. Consequently, the Commissioners
in a designated depository and shall
Court does not abuse its discretion when it delegates a
account for all money belonging to the
function the Legislature has not exclusively delegated to the
county.
County Treasurer to another appropriate county official.
TEX. LOC. GOV'T CODEE § 113.001.
[7] [8] The Texas Uniform Declaratory Judgments Act
The county treasurer shall keep allows the trial court to award reasonable and necessary
an account of the receipts and attorney's fees and costs as are equitable and just. See
expenditures of all money that the TEX.CIV.PRAC. & REM.CODE § 37.009. The decision to
treasurer receives by virtue of the grant or deny attorney's fees and costs is within the trial court's
office and of all debts due and owed sound discretion. Oake v. Collin County, 692 S.W.2d 454,
by the county. The treasurer shall keep 455 (Tex.1985). We do not reverse the trial court's denial of
accurate, detailed accounts of all the attorney's fees unless the complaining party shows a clear
transactions of the treasurer's office. abuse of discretion. Oake, 692 S.W.2d at 455.

TEX. LOC. GOV'T CODEE § 113.002.

The county treasurer shall receive all V. APPLICATION OF LAW TO FACTS
money belonging to the county from
whatever source it may be derived. [9] [10] When, as here, both sides move for summary
judgment and the trial court grants one motion and denies
TEX. LOC. GOV'T CODEE § 113.003. the other, the reviewing court should review the summary
judgment evidence presented by both sides and determine
The county treasurer shall disburse all questions presented. See Jones v. Strauss, 745 S.W.2d
the money belonging to the county 898, 900 (Tex.1988). The reviewing court should render such
and shall pay and apply the money judgment as the trial court should have rendered. Jones, 745
as required by law and as the S.W.2d at 900. If a party brings the case to this Court and we
commissioners court may require or reverse the court of appeals, we should render the judgment
direct, not inconsistent with law. that the court of appeals should have rendered. Tobin v.
Garcia, 159 Tex. 58, 316 S.W.2d 396, 400–01 (1958).
TEX. LOC. GOV'T CODEE § 113.041(a). Enumerated or
core functions are fundamental to the County Treasurer's
office and the Commissioners Court cannot take core

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Commissioners Court of Titus County v. Agan, 940 S.W.2d 77 (1997)
40 Tex. Sup. Ct. J. 355

[11] Our Constitution does not specifically designate the salaries; and (3) the Commissioners Court can delegate the
county office which must prepare the payroll. Instead, it ministerial task of preparing salary warrants to the County
leaves this task to the Legislature. The Legislature has not Treasurer. Op.Tex. Att'y Gen. JM–986 at 3781 (1988).
assigned payroll preparation responsibilities to any county
official. Though the Legislature has enumerated several [12] [13] *82 While Attorney General's opinions are
functions that cannot be taken away from the County persuasive they are not controlling on the courts. Holmes v.
Treasurer, preparing the payroll is not one of them. Morales, 924 S.W.2d 920, 924 (Tex.1996). We disagree with
the Attorney General's conclusion that the payroll preparation
The budgetary decision to transfer the payroll preparation functions fall within the County Treasurer's core functions
responsibilities to the County Auditor's office is a legislative because the Legislature has not mandated those functions to
function for which the Commissioners Court receives another county official. It is clear that the Legislature has
broad discretion. See generally TEX.CONST. art. II, § 1 mandated that the County Treasurer must receive all money
(discussing separation of powers). Because the Legislature belonging to the county from whatever source derived and
has not assigned payroll preparation responsibilities, the the County Treasurer must disburse and apply county funds.
Commissioners Court acting in its legislative capacity may See TEX.LOC. GOV'T CODE §§ 113.003 and 113.041(a).
delegate the responsibilities to an appropriate county official. Conversely, we conclude the Commissioners Court may
The County Auditor is an appropriate county official. This is transfer any payroll responsibility to the County Auditor that
so because the County Auditor has the authority to perform the Legislature has not specifically delegated to the County
the clerical functions associated with payroll preparation. See Treasurer.
TEX.LOC. GOV'T CODE § 152.051 (stating that county
payroll officer means County Auditor within this subchapter); [14] Several of the transferred payroll responsibilities
TEX.LOC. GOV'T CODE § 155.002(a)(2) (requiring payroll involve disbursing county funds. Specifically, the County
deductions to be submitted to the County Auditor). Treasurer must: (1) make FIT deposits with the bank; (2)
make child support deposits with appropriate offices; (3)
Another statute suggests that anyone the Commissioners wire insurance payments to third party administrators; (4)
Court authorizes has the authority to administer payroll. deposit payroll funds; and (5) pay insurance premiums.
TEX.LOC. GOV'T CODE § 155.062(a)(2) (requiring Because the Legislature has given the treasurer the exclusive
insurance deduction requests to be submitted to county power to disburse funds, the Commissioners Court acted
officer authorized by Commissioners Court to administer beyond its authority in transferring these functions to the
payroll deductions). Thus, the Commissioners Court did not County Auditor. The Commissioners Court may properly
exceed its authority in transferring the payroll preparation assign the remaining payroll responsibilities to the County
responsibilities to the County Auditor. Auditor because they do not involve disbursement, payment,
or application of county funds. However, the Commissioners
In reaching its contrary conclusion, the court of appeals relied Court must allow the County Treasurer to perform those
on two Attorney General opinions, Op.Tex. Att'y Gen. No. functions legislatively delegated to her. There is no indication
JM–911 (1988), and Op.Tex. Att'y Gen. No. JM–986 (1988). in the record before us that the County Treasurer will require
JM–911 held that the County Treasurer is the only officer additional personnel or funding to perform these functions.
to whom the payroll function may be delegated because the
County Treasurer is the official authorized to pay and apply The trial court rendered judgment for the Commissioners
county money under TEX.LOC. GOV'T CODE § 113.041(a). Court but refused to grant the Commissioners Court attorney's
Op.Tex. Att'y Gen. JM–911 at 4144 (1988). The Attorney fees. The trial court has the discretion to deny attorney's fees
General decided that this responsibility is not constitutionally in declaratory judgment actions. See Oake, 692 S.W.2d at
or legislatively mandated but falls within the penumbra of 455. The record does not show that the trial court abused its
the treasurer's ministerial core functions. Op.Tex. Att'y Gen. discretion.
JM–911 at 4143 (1988). JM–986 applied this rationale to
counties with populations less than 190,000, holding: (1) the
County Treasurer is the proper county officer to conduct
VI. CONCLUSION
county payroll deductions; (2) the Commissioners Court must
approve the county payroll and issue warrants in payments of

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
Commissioners Court of Titus County v. Agan, 940 S.W.2d 77 (1997)
40 Tex. Sup. Ct. J. 355

making child support deposits with appropriate offices; (3)
[15] [16] The Legislature has assigned the County
wiring insurance payment to third party administrators; (4)
Treasurer certain core functions. The Commissioners Court
depositing payroll funds; and (5) paying insurance premiums
cannot allocate the County Treasurer's core functions to any
because they involve actual disbursement, payment, or
other officer, including the County Auditor. If the Legislature
application of county funds. However, this does not preclude
does not specifically assign a duty to the County Treasurer,
the County Auditor's office from preparing the documents
that duty is not one of the County Treasurer's core functions.
necessary to deposit, disburse, pay, or apply county funds,
The Commissioners Court may, within its discretion, assign
subject to the County Treasurer's approval, just as the
those non-core functions to other county officials the
County Auditor prepares payroll checks subject to the County
Legislature authorizes to perform those functions.
Treasurer's approval.
Because payroll preparation responsibilities are non-
We reverse the court of appeals' judgment for Agan, and
core functions of the County Treasurer's office, the
render judgment that the Commissioners Court properly
Commissioners Court can assign the payroll preparation
transferred payroll preparation responsibilities to the County
responsibilities to the County Auditor's office. However,
Auditor's office. We further render *83 judgment that the
the Commissioners Court cannot delegate to the County
Commissioners Court improperly transferred functions that
Auditor any payroll responsibility which requires actual
require disbursement, payment, or application of county
disbursement, payment, or application of county funds. These
funds. These responsibilities must remain in the County
duties are core functions of the County Treasurer's office.
Treasurer's office. We affirm the court of appeals' judgment
denying attorney's fees to the Commissioners Court.
Therefore, we hold the Commissioners Court properly
transferred the payroll preparation responsibilities to the
County Auditor. We hold the Commissioners Court exceeded
Parallel Citations
its authority and improperly transferred to the County Auditor
the functions of: (1) making FIT deposits with the bank; (2) 40 Tex. Sup. Ct. J. 355

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
Consumers Water, Inc. v. Public Utility Com'n of Texas, 774 S.W.2d 719 (1989)

Consumers applied on October 5, 1982, for a 40% rate
increase. On October 15, the Commission suspended the
774 S.W.2d 719
increase pursuant to the Public Utility Regulatory Act,
Court of Appeals of Texas,
Tex.Rev.Civ.Stat.Ann. art. 1446c, § 43(d) (Supp.1989)
Austin.
(PURA). On October 29, the Commission fixed interim
CONSUMERS WATER, INC., Appellant, rates at an approximately 14% increase. Subsequent hearings
v. occurred on February 28, and March 1 and 2, 1983. Using
PUBLIC UTILITY COMMISSION base figures from a previous “docket,” the hearings examiner
filed her report on May 11, 1983, recommending denial of
OF TEXAS, Appellee.
Consumers requested increase and recommending a decrease
No. 14509. | June 28, 1989. in monthly flat rates. The examiner also recommended
Consumers be ordered to refund to its customers the
Utility appealed from the judgment of the 331st Judicial difference between the interim rates and the suggested rates,
District Court, Travis County, Harley Clark, J., which and recommended that various improvements be ordered. The
sustained the order of the Public Utility Commission fixing Commission adopted the examiner's report in its final order
utility's water and sewer rates. The Court of Appeals of June 1, 1983. On January 6, *721 1984, the district court
dismissed the appeal for lack of jurisdiction, 707 S.W.2d heard Consumers appeal and sustained the Commission's
129, The Supreme Court reversed and remanded the case order on April 11, 1985.
to the Court of Appeals, 741 S.W.2d 348. The Court of
Appeals, Gammage, J., held that the Commission's failure to Consumers appealed the district court judgment pursuant to
consider adjusted value of invested capital in determining fair PURA § 69, and the Administrative Procedure and Texas
return, as required by statute, was arbitrary and capricious and Register Act, Tex.Rev.Civ.Stat.Ann. art. 6252–13a, § 19(e)
constituted an abuse of discretion. (Supp.1989) (APTRA). The Commission filed a cross-point
suggesting the court lacked jurisdiction because Consumers
Reversed and remanded. failed to timely file a motion for rehearing in the agency.
This Court dismissed the administrative appeal for lack
of jurisdiction, 707 S.W.2d 129, and the Supreme Court
Attorneys and Law Firms reversed our judgment and remanded the case to this Court for
disposition of the remaining points of error, 741 S.W.2d 348.
*720 Robert L. Burns, Sears and Burns, Houston, for
appellant.
[1] In its first and second points of error, Consumers
Jim Mattox, Atty. Gen., Stephen J. Davis, Asst. Atty. Gen., complains of the Commission's omission of findings of
Austin, for appellee. fact in its final order on the factors of current cost of
Consumers' property, adjustments for age and condition of
Before SHANNON, C.J., and GAMMAGE and ABOUSSIE, such property, and adjusted value of invested capital. PURA
JJ. § 41(a). Consumers contends the omission was arbitrary and
capricious and, therefore, reversible error under APTRA §
Opinion
19(e) (6). We agree. In determining whether an agency act
GAMMAGE, Justice. or omission is arbitrary and capricious, a reviewing court
must ascertain whether the agency abused its discretion by
Consumers Water, Inc. (Consumers) appeals from a district basing its decision on legally irrelevant factors, or by omitting
court judgment sustaining an order of the Public Utility to consider legally relevant factors—those the Legislature
Commission of Texas (the Commission) fixing Consumers' intended the agency to consider in reaching its decision in
water and sewer rates; and ordering refunds to customers, cases like the one in question. Gerst v. Nixon, 411 S.W.2d
various repairs and installations. We will reverse the 350, 360, n. 8 (Tex.1966); Starr County v. Starr Indus.
judgment of the district court and remand the cause for further Services, Inc., 584 S.W.2d 352 (Tex.Civ.App.1979, writ ref'd
proceedings. n.r.e.).

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Consumers Water, Inc. v. Public Utility Com'n of Texas, 774 S.W.2d 719 (1989)

In PURA § 40(a), the Legislature prohibited the Commission evidence introduced by the agency's staff. The staff, however,
to “prescribe any rate which will yield more than a fair provided evidence of only “total invested capital,” rather than
return upon the adjusted value of invested capital used and AVIC as required by PURA § 41(a), and the Commission
useful in rendering service to the public.” In PURA § 41, the determined only that factor in its final order.
Legislature explicitly prescribed the “rules” and factors to be
considered by the agency in arriving at its estimate of adjusted [2] Because PURA requires that the Commission consider
value of invested capital: AVIC when determining what constitutes a fair return, we
conclude the Commission's failure to do so was arbitrary and
Sec. 41. The components of adjusted value of invested capricious and constituted an abuse of discretion.
capital shall be determined according to the following
rules: [3] Furthermore, APTRA requires a final decision to
“include findings of fact and conclusions of law, separately
Adjusted Value of Invested Capital. Utility rates shall
stated.” APTRA § 16(b). “Findings of fact, if set forth in
be based upon the adjusted value of property used by
statutory language, must be accompanied by a concise and
and useful to the public utility in providing service[,]
explicit statement of the underlying facts supporting the
including where necessary to the financial integrity of
findings.” Id. This section is interpreted to require findings
the utility[,] construction work in progress at cost as
of underlying fact when an ultimate fact-finding embodies a
recorded on the books of the utility. The adjusted value
mandatory fact-finding set forth in the relevant enabling act,
of such property shall be a reasonable balance between
or when the ultimate fact-finding represents a criterion the
original cost less depreciation and current cost less an
legislature has directed the agency to consider in performing
adjustment for both present age and condition. The
its function. Texas Health Fac. v. Charter Medical–Dallas,
[Commission] shall have the discretion to determine a
665 S.W.2d 446, 451 (Tex.1984); Galveston County v. Texas
reasonable balance that reflects not less than 60% nor
Dept. of Health, 724 S.W.2d 115, 125 (Tex.App.1987, writ
more than 75% original cost, that is, the actual money
ref'd n.r.e.).
cost, or the actual money value of any consideration paid
other than money, of the property at the time it shall
[4] The Commission did not recite in its final order any
have been dedicated to public use, whether by the utility
findings on the statutorily required criteria of AVIC or its
which is the present owner or by a predecessor, less
elements as set out in PURA § 41(a). We conclude the
depreciation, and not less than 25% nor more than 40%
omission was arbitrary and capricious.
current cost less an adjustment for both present age and
condition. The [Commission] may consider inflation,
The Commission asserts that PURA was amended in 1983
deflation, quality of service being provided, the growth
to require a reasonable rate of return based on “invested
rate of the service area, and the need for the public
capital,” and argues that a remand to the agency would be
utility to attract new capital in determining a reasonable
futile because the statute would require the agency to find
balance.
exactly what it already found. This argument is without merit.
PURA § 41(a) (emphasis added).
[5] The 68th Legislature's amendments to PURA in 1983
Consumers offered evidence of the adjusted value of contain a savings clause providing that the amendments apply
invested capital (AVIC) and its elements. The hearings “only to a proceeding in which the statement of intent or
examiner rejected Consumers' calculation of AVIC, finding application is filed on or after the effective date of this
the calculation was not founded on reliable data and there was Act.” 1983 Tex.Gen.Laws, Ch. 274, § 2 at 1321. Because
no showing that Consumers' replacement cost calculations the amendments were effective on September 1, 1983, after
took into account current technology; and because the Consumers' application of October 5, 1982, the Commission
company failed to show its method for determining AVIC must follow the now-repealed provision requiring a finding
was reasonable, adequate and based on sound regulatory of AVIC.
theory. Although the Commission concedes that Consumers'
failure to carry its burden of showing AVIC would permit Consumers asserts in its seventh point of error that
the Commission to dismiss the application, the Commission, the Commission delayed this proceeding, resulting in a
instead, chose to order a *722 rate decrease based on confiscation of property, and requests that this Court render

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Consumers Water, Inc. v. Public Utility Com'n of Texas, 774 S.W.2d 719 (1989)

judgment. APTRA § 19(e), however, requires a reviewing
The judgment of the district court is reversed and the cause
court to remand a case to the agency when its final order is
is remanded for further proceedings not inconsistent with this
reversed on judicial review.
opinion.
We sustain Consumers' first two points of error, overrule its
seventh point of error, and need not reach its remaining points.

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Ector County v. Stringer, 843 S.W.2d 477 (1992)

In both cases, the court of appeals reversed the judgment
of the trial court and remanded the causes to the trial court
843 S.W.2d 477
for rendition of a judgment in favor of the constables for
Supreme Court of Texas.
past salary plus prejudgment interest and attorney's fees. 825
ECTOR COUNTY, Texas, Ector County S.W.2d 180. We hold that a trial court lacks jurisdiction to
Commissioners Court; Jack Crider, Bryan set a constable's salary. We thus reverse the judgments of the
Henderson, Ricky Jorgensen, Joe Hernandez, Jan *478 court of appeals and affirm those of the trial court.
Fisher, Bob Bryant, and Jim Jordan, Petitioners,
v.
Martin A. STRINGER, Respondent. Ector County v. Stringer
ECTOR COUNTY, Texas, Ector County
Martin Stringer served as a constable in Ector County from
Commissioners Court; Jack Crider, Bryan
January 1, 1985, to December 31, 1988. During this time,
Henderson, Ricky Jorgensen, Joe Hernandez, Jan he received a salary of $20 per month for the first forty-
Fisher, Bob Bryant, and Jim Jordan, Petitioners, five months and $100 per month for a subsequent three-
v. month period. In August 1989, Stringer filed suit requesting
Joe W. HILL, Respondent. additional reasonable compensation for the four-year period,
plus expenses and attorney's fees. He also sought an order
Nos. D–2313, D–2316. | Dec. 16, to require the Ector County Commissioners Court to set
1992. | Rehearing Overruled Jan. 20, 1993. reasonable compensation and normal fringe benefits during
the time he held office.
Constables brought action to obtain compensation and
expenses for services previously rendered. The 161st District
Following a bench trial, the trial court rendered a take-nothing
Court, Ector County, Tryon D. Lewis, J., determined that
judgment as to past benefits based on a determination that the
it lacked jurisdiction. Constables appealed. The El Paso
court was without jurisdiction to set a salary. However, the
Court of Appeals, Eighth Judicial District, 825 S.W.2d 180,
trial court made findings that “if the Court has the power to
reversed and remanded. Review was granted. The Supreme
determine the constable's salary,” a reasonable salary would
Court, Gonzalez, J., held that district court lacked jurisdiction
have been a rate of $1,500 per month.
to make salary determination for constables for past or future
service.
The court of appeals reversed the trial court's judgment
holding that the trial court had jurisdiction to consider the
Judgments of Court of Appeals reversed, and trial court
claim. Based on the trial court's findings, the court of appeals
affirmed.
held that Stringer was entitled to recover judgment in the
amount of $80,373.47 for the 48–month period, after allowing
Attorneys and Law Firms credit for the sum previously paid. The court of appeals also
held that Stringer was entitled to attorney's fees under Texas
*477 Joel B. Locke, Richard Bonner, Odessa, for petitioner. Civil Practice and Remedies Code section 38.001(1).

Will Hadden, Odessa, for respondent.

Ector County v. Hill
OPINION Joe Hill is currently a constable in Ector County.
Commencing on January 1, 1985, he received a salary of
GONZALEZ, Justice.
$20 per month for a period of 45 months and $100 per
[1] The main issue in these consolidated cases is whether a month thereafter. In August 1989, he filed suit in district court
trial court has jurisdiction to determine the salary allegedly for additional compensation for the four and one-half year
owed two constables for services rendered in the past. In period, plus expenses and attorney's fees. He also sought an
each case, the trial court held that it lacked jurisdiction and order requiring the Ector County Commissioners Court to set
thus rendered a take-nothing judgment against the constables. reasonable compensation and normal fringe benefits in the

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Ector County v. Stringer, 843 S.W.2d 477 (1992)

future for his services as constable. This suit was consolidated article 5, section 8, of the Constitution,
with the Stringer suit and after a trial before the court without and article 1908 of the Revised
a jury, the court rendered a judgment similar to the Stringer Civil Statutes [the predecessor of
judgment. The trial court held that it lacked jurisdiction to the Government code], can only be
determine what Hill's salary should have been for the period in invoked when it acts beyond its
question and correctly held that mandamus is the appropriate jurisdiction or clearly abuses the
remedy to obtain a reasonable salary determination for the discretion conferred on it by law.
future. 1 Although the trial court denied a monetary recovery,
Tarrant County v. Shannon, 129 Tex. 264, 104 S.W.2d 4, 9
the court found that a reasonable salary for the period in
(1937) (emphasis added). Accord, Yoakum County v. Gaines
question was $1,500 per month and that the total amount
County, 139 Tex. 442, 163 S.W.2d 393 (1942); Vondy v.
that would have been owed Hill at this rate plus prejudgment
Commissioners Court, 714 S.W.2d 417, 420 (Tex.App.–San
interest, after credit for the amount previously paid, was
Antonio 1986, writ ref'd n.r.e.).
$96,803.13.

[2] [3] One of the duties the constitution entrusts to
The court of appeals reversed the judgment of the trial
the discretion of the commissioners court is the setting of
court and remanded the cause for rendition of judgment in
constables' salaries. TEX. CONST. art XVI, § 61. In Vondy v.
conformance with the trial court's findings, plus prejudgment
Commissioners Court, 620 S.W.2d 104 (Tex.1981), we held
interest and attorney's fees. 825 S.W.2d 180. Because we hold
that this provision imposes a mandatory, ministerial duty on
that a trial court does not have jurisdiction to make salary
the commissioners courts to set a reasonable salary. Id. at 109.
determinations for constables for past or future service, we
Thus, while the district court may order the commissioners
reverse the judgments of the court of appeals and affirm those
court to carry out its constitutional duty to set a reasonable
of the trial court.
salary, the district court cannot substitute its discretion for
that of the commissioners by making that determination itself.
Article V, § 18 of the Texas Constitution establishes the
Id. Once the commissioners court acts, the district court may
commissioners court as the principal governing body of the
review the commissioners' orders to determine if they are
county. The powers and duties of the commissioners courts
include aspects of legislative, executive, administrative, and arbitrary, or otherwise constitute an abuse of discretion. Id. 2
judicial functions. Avery v. Midland County, 390 U.S. 474,
482, 88 S.Ct. 1114, 1119, 20 L.Ed.2d 45 (1968). In the area of a governing body's fiscal policy, the district
court's role is necessarily a limited one:
*479 The constitution vests in the district court “appellate
[A] court has no right to substitute
jurisdiction and general supervisory control over the County
its judgment and discretion for
Commissioners Court, with such exceptions and under such
the judgment and discretion of the
regulations as may be prescribed by law.” TEX. CONST.
governing body upon whom the law
art. V, § 8. With a few narrow exceptions, the legislature
visits the primary power and duty
has not prescribed procedures for exercising this appellate
to act. Of course, if such governing
jurisdiction or supervisory control. The enabling legislation
body acts illegally, unreasonably,
empowering the district court merely repeats the terms of
or arbitrarily, a court of competent
the constitution. TEX.GOV'T CODE § 24.020. See generally
jurisdiction may so adjudge, but there
35 DAVID BROOKS, COUNTY & SPECIAL DISTRICT
the power of the court ends.
LAW § 5.11 (Texas Practice 1989).
Lewis v. City of Fort Worth, 126 Tex. 458, 89 S.W.2d 975,
The scope of the district courts' jurisdiction has been defined 978 (1936).
by case law:
[4] [5] In short, the district court may order the
It is equally well settled that the
commissioners court to exercise its discretion, but cannot
supervisory power of the district
court over the judgments of a tell the commissioners what decision to make. 3 Once the
commissioners' court, as authorized by commissioners court exercises its discretion, the district court

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Ector County v. Stringer, 843 S.W.2d 477 (1992)

pay from the city for services rendered in a job classification
may review the order for abuse of discretion, but it cannot
at a higher pay rate than her regular job classification. Id.
substitute its discretion for that of the commissioners court. 4
at 143. The court in Mokwa stated that a trial court has
jurisdiction to determine the amount of back pay due. Id. at
*480 The court of appeals advanced a reason for
145. However, the principal issue in the case was entitlement
distinguishing Vondy v. Commissioners Court on grounds
to compensation at a pay level for a higher classification,
that “[t]he present suit does not seek to have a reasonable
for which the amount had been previously established by
salary set by the commissioners court, instead it seeks to have
the governing body. The issue was not that the pay levels
the district court render a judgment for services rendered in
had been established too low. Further, the back pay and
the past, and the standard by which to determine the amount
debt cases cited by the court of appeals do not involve a
due is ‘a reasonable salary.’ ” 825 S.W.2d at 181 (emphasis
constitutional provision and statutes which mandate that a
added). The court of appeals held that because Stringer's
reasonable salary be set only by the commissioners court. 5
claim is retrospective in nature, the claim is removed from
Reclassifying compensation due for the past services of a
the mandate of the Texas Constitution and the Texas Local
constable as a debt is ineffective to circumvent the authority
Government Code. We disagree. An award of damages as
of the commissioners court to set the salary of a constable.
requested here—in an amount determined by the trial court
without deference to the commissioners court's authority to
The court of appeals erred in holding that the trial court
set a reasonable salary—necessarily involves substituting the
had jurisdiction to determine and award a reasonable salary
district's discretion for that of the commissioners court.
for services rendered in the past by a constable and in
awarding attorney's fees and prejudgment interest. Therefore,
The back-pay cases cited in the court of appeals' opinion
the judgments of the court of appeals in both of these cases
do not change our analysis. For example, in Mokwa v. City
of Houston, 741 S.W.2d 142 (Tex.App.–Houston [1st Dist.] are reversed and those of the trial court are affirmed. 6
1987, writ denied), a police officer sought to recover back

Footnotes
1 The trial court issued writs of mandamus to each county commissioner and the County Judge and
COMMANDED [them] to forthwith set, as the official act of Ector County and of the Ector County Commissioners Court, a
reasonable salary, office and travel expense for Joe W. Hill as Ector County Constable of Precinct 4 for the Budget Year 1989–90.
The trial court also commanded the defendants to appear at a certain date to show the court that they had complied with the court's
order.
2 There may be other reasons why a commissioners court order could be an abuse of discretion. See Vondy v. Commissioners Court,
714 S.W.2d 417, 420 (Tex.App.–San Antonio 1986, writ ref'd n.r.e.) (“ ‘this supervisory jurisdiction can be invoked in a direct attack
in the district court when it is alleged that the Commissioners Court order is voidable as being arbitrary, capricious, unsupported by
substantial evidence or that the court has acted beyond its jurisdiction’ ”) (quoting Mobil Oil Corp. v. Matagorda County Drainage
Dist. No. 3, 580 S.W.2d 634, 638 (Tex.Civ.App.–Corpus Christi 1979) rev'd on other grounds, 597 S.W.2d 910 (Tex.1980)).
3 We need not address whether mandamus is available to order the commissioners court to determine a reasonable salary for the
constables' past services since such relief was not sought here.
4 In addition to the constitution, the Texas Local Government Code, section 152.011 states that “[t]he commissioners court of a county
shall set the amount of the compensation, office, and travel expenses, and all other allowances for county and precinct officers and
employees who are paid wholly from county funds.” TEX.LOC.GOV'T CODE § 152.011 (1988). Section 152.011 has been amended
since our decision in Vondy v. Commissioners Court, 620 S.W.2d 104 (Tex.1981). Act of May 1, 1987, 70th Leg., R.S., ch. 149,
§ 1, 1987 Tex.Gen.Laws 707, 927. When the legislature re-enacts a statute without material change, it may be considered to have
acquiesced in our earlier statutory interpretation. Because the amendments to the Texas Local Government Code did not in any way
alter our holding in Vondy v. Commissioners Court, our decision remains applicable. See Robinson v. Central Texas MHMR Center,
780 S.W.2d 169, 170 n. 4 (Tex.1989); First Employees Ins. Co. v. Skinner, 646 S.W.2d 170, 172 (Tex.1983).
5 Authorities relied upon by the court of appeals such as Mokwa v. City of Houston, 741 S.W.2d 142 (Tex.App.–Houston [1st Dist.]
1987, writ denied), and City of Galveston v. Russo, 508 S.W.2d 882 (Tex.Civ.App.–Houston [14th Dist.] 1974, writ ref'd n.r.e.),
involve municipal employees not subject to article XVI, § 61.

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Ector County v. Stringer, 843 S.W.2d 477 (1992)

6 The court of appeals awarded attorney's fees to Stringer and Hill under section 38.001 of the Texas Civil Practice and Remedies
Code. This issue is irrelevant because a party must be successful in the suit to recover attorney's fees. See Bomer v. Ector County
Commissioners Court, 676 S.W.2d 662 (Tex.App.–El Paso 1984, writ ref'd n.r.e.).

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
Gary Safe Co. v. A. C. Andrews Co., Inc., 568 S.W.2d 166 (1978)

was no consideration on the part of Andrews and that even if
consideration existed, Gary Safe could terminate the alleged
568 S.W.2d 166
contract at will. We hold that no consideration flowed to
Court of Civil Appeals of Texas, Dallas.
Gary Safe and that, consequently, no binding contract existed
GARY SAFE COMPANY, Appellant, between the parties. Accordingly, we reverse and render.
v.
Before the transaction now in question, Gary Safe, a
A. C. ANDREWS CO., INC., Appellees.
manufacturer, had sold safes to Andrews Company for
resale, although no agreement existed between Gary Safe
No. 19537. | May 31, 1978. |
and Andrews with respect to a designation of Andrews as
Rehearing Denied June 27, 1978.
a distributor or authorized dealer for safes manufactured
Appeal was taken from a judgment of the 44th District Court, by Gary. In the early 1960's, Andrews commenced selling
Dallas County, Joe Bailey Humphreys, J., granting recovery floor safes to Southland Corporation for their convenience
in action seeking sales commissions based upon an alleged stores, using Gary Safe as the supplier. In 1972, Southland
contract. The Court of Civil Appeals, Akin, J., held that where requested Andrews to make a particular under-the-counter
no promises were made on behalf of plaintiff to perform safe with a money drop for use in Southland's stores. Gary
any services, to refrain from competing, to compromise any Safe manufactured this particular safe, designated as Model
disputes or to do or refrain from doing anything in return 3421, according to specifications requested by Andrews.
for defendant's alleged promise to pay sales commissions on Between 1972 and 1973, Southland purchased 443 of these
sales plaintiff made to its established customer and defendant units through Andrews, with a gross profit to Andrews of
had legal right to sell directly to plaintiff's established $57.50 per unit.
customer without paying plaintiff any compensation, no
In December 1973, Andrews learned that Gary Safe
consideration existed for defendant's alleged agreement to
had contacted Southland proposing to sell safes directly
pay sales commissions so that there was no binding contract.
to Southland. Andrew's president, A. C. Andrews, then
protested in a letter to Gary that “one of the best ways to
Reversed and rendered.
mess up a good deal for everybody is for different people
from a producer-selling organization to call on personnel
Attorneys and Law Firms with a buying-using corporation.” In response, Gary Safe
gave assurance that it would not seek to deal with Southland
*167 Ralph I. Miller, Nancy L. Benoit, Thompson, Knight, directly. No contention is made by Andrews that these letters
Simmons & Bullion, Dallas, for appellant. constitute a contract. In January 1974, however, Gary Safe
wrote the following letter, which is now alleged to have
Wm. T. Andress, Jr., Dallas, for appellees. resulted in a binding contract:
Mr. A. C. Andrews
Opinion

AKIN, Justice. A. C. Andrews Company

This is an appeal by Gary Safe Company from a judgment Dallas, Texas
granting A. C. Andrews Co., Inc. recovery of $78,125.66 Dear Doc:
for sales commissions based upon an alleged contract. The
judgment also provides that Andrews is entitled to future sales Enclosed is a copy of a letter to Mr. Pobilatti of the Southland
commissions on all sales made by Gary to the Southland Corporation. After several telephone conversations he
Corporation. The trial court found that a letter sent by Gary seemed to be satisfied with the prices quoted in our letter to
to Andrews stating that Gary would pay $25 to Andrews for him.
each unit sold Southland became a binding contract by tacit
acceptance by Andrews. The court also found that under this From the prices quoted we will pay you a commission as
contract Andrews was entitled to a commission of $25 per unit follows:
for the life of the relationship between Gary and Southland.
Gary Safe attacks the judgment on the grounds that there

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Gary Safe Co. v. A. C. Andrews Co., Inc., 568 S.W.2d 166 (1978)

551, 555 (Tex.Civ.App. Tyler 1965, no writ). Therefore, the
A flat $25.00 on each unit known as model 3421, now
trial court's finding that no promises were made on behalf of
used by their stores. A commission of 5% For all other safe
Andrews is inconsistent with the conclusion that there existed
equipment, the 5% To be figured on the prices at which we
a “tacit understanding” whereby Andrews would not interfere
sell Southland Corporation.
with Gary's direct sales to Southland. This finding of no
promise on the part of Andrews is inconsistent also with the
I have seen no other way to go on this, Doc, and I hope it
court's conclusion of law that the relinquishment by Andrews
works out alright.
of its established customer, Southland, to direct sales by Gary,
and the surrender of a varying profit in exchange for fixed
Sincerely,
commission constituted consideration for the commission
arrangement. Indeed, Andrews could not point to any promise
Gary Safe Company
he made in return for the commission. Even if Andrews
Company had some interest in selling to Southland that it
Allen Royce
could relinquish or surrender, no promise of relinquishment
or surrender was given in return for the commission
The trial court found that this letter was an offer which payments. Since the trial court's finding conflicts with the
implied a “tacit understanding” that Andrews would not conclusions of law, the findings of fact must control, Howth v.
interfere with Gary's direct sales to Southland, and that when French Independent School District, 115 S.W.2d 1036, 1039
Andrews accepted the specified commissions it became a (Tex.Civ.App. Beaumont 1938), aff'd, 134 Tex. 211, 134
contract binding on Gary as long as Gary should sell safes S.W.2d 1036 (1940). Consequently, no consideration existed
to Southland. Nevertheless, the trial court also found that for Gary's agreement to pay commissions.
Andrews made no promises to perform service, to refrain
from competing, or to do or refrain from doing anything as
Finally, the trial court's conclusions of law are also
consideration for the commission payments. Additionally, the
inconsistent. The trial court correctly concluded that
trial court found *168 that Gary Safe had the right to sell
Gary Safe had a legal right prior to 1974 to sell
directly to Southland prior to the January 1974 letter and
directly to Southland Corporation without paying any
that all payments of commission were made by Gary Safe
compensation to the Andrews or Andrews Company but then
to Andrews through November 22, 1974 at which time Gary
erroneously concluded that Andrews Company relinquished
Safe terminated Andrews' commission payments.
its established customer when clearly Gary could have sold
[1] [2] Appellant Gary Safe contends that the trial court directly to Southland regardless of any agreement.
[3] The most that can be made of the alleged offer
erred in concluding that a “tacit understanding” that Andrews
is that it showed an intention by Gary to pay the
would not interfere with Gary's direct sales to Southland
commission specified in order to induce Andrews not
Corporation constitutes consideration for the January 21,
to compete in making direct sales to Southland, but
1974, letter because this tacit understanding is inconsistent
that the arrangement should not bind either party. Any
with the trial court's finding of fact that no promises were
promise, either expressed or implied by Andrews not to
made on behalf of Andrews to perform any services, to refrain
compete in the future would have been of doubtful validity
from competing, to compromise any disputes, or to do or
under the antitrust law, Tex.Rev.Civ.Stat.Ann. art. 7428
refrain from doing anything in return for these “ commission”
(Vernon 1960). Consequently, there was no consideration
payments, and that there were no negotiations concerning
for any supposed obligation by Gary to continue paying the
the commission arrangement. Appellant concludes that these
commissions.
findings negate consideration flowing to Gary. We agree. In
the absence of any benefit to the promisor or detriment to
the promisee legally derived from the promise sought to be For these reasons, we hold that the court erred in concluding
enforced, there is no consideration, and hence no contract. that a binding contract existed. Accordingly, we reverse the
E. g., Champlin Petroleum Co. v. Pruitt, 539 S.W.2d 356, judgment of the trial court on the counterclaim, and here
361 (Tex.Civ.App. Fort Worth 1976, writ ref'd n. r. e.); render judgment that Andrews take nothing.
Sanders v. Republic National Bank of Dallas, 389 S.W.2d

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Gary Safe Co. v. A. C. Andrews Co., Inc., 568 S.W.2d 166 (1978)

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Griggs v. U.S., 253 Fed.Appx. 405 (2007)

Opinion
253 Fed.Appx. 405
This case was not selected for PER CURIAM: 1
publication in the Federal Reporter.
Not for Publication in West's Federal Reporter Steven Griggs appeals the district court's denial of his habeas
See Fed. Rule of Appellate Procedure 32.1 petition under 28 U.S.C. § 2241. In denying the petition,
generally governing citation of judicial the district court held that Griggs had no protected liberty
decisions issued on or after Jan. 1, 2007. See interest in his conditional release prior to the expiration of his
also Fifth Circuit Rules 28.7, 47.5.3, 47.5.4. sentence under 18 U.S.C. § 3621(e). For the reasons below,
(Find CTA5 Rule 28 and Find CTA5 Rule 47) we VACATE and REMAND.
United States Court of Appeals,
Fifth Circuit.

Steven M. GRIGGS, Plaintiff–Appellant Background
v.
1. Statement of Facts
UNITED STATES of America, In 1994, Steven Griggs plead guilty to conspiracy to
et. al., Defendants–Appellees. manufacture, distribute, and possess 100 grams or more of
methamphetamine, in violation of 21 U.S.C. §§ 841(a)(1),
No. 04–10779. | Nov. 8, 2007.
846. He received a two-level enhancement at sentencing
Synopsis because he possessed a firearm during the offense; his
Background: Defendant convicted on a plea of guilty to ultimate sentence was 292 months of imprisonment. In
conspiracy to manufacture, distribute, and possess 100 grams November of 1995, he agreed to participate in the 500 Hour
or more of methamphetamine filed a habeas petition, seeking Residential Drug Abuse Program (“DAP”) at the El Reno,
a one-year reduction in his sentence due to his participation in Oklahoma Federal Correctional Institution. He entered the
a residential drug abuse treatment program. The United States residential phase on December 29, 1995.
District Court for the Northern District of Texas, 2004 WL
1084816, denied relief, and the defendant appealed. Four days later, on January 2, 1996, he was told he was
ineligible for early release under the DAP guidelines because
his crime was considered a crime of violence under 18
U.S.C. § 924(c)(3) and Program Statements 5162.02 and
Holding: The Court of Appeals held that res judicata barred 5330.10. After completing the residential phase in January
the Bureau of Prisons (BOP) from arguing that sentencing of 1997, Griggs filed a Request for Administrative Remedy
factors rendered defendant ineligible for a sentence reduction. seeking a one-year sentence reduction under 18 U.S.C.
§ 3621(e)(2)(B). The Bureau of Prisons (“BOP”) denied
the request on the ground that his drug conviction with a
Vacated and remanded.
sentence enhancement for possession of a firearm, constituted
a crime of violence, rendering him ineligible for early release.
Attorneys and Law Firms Griggs's administrative appeals were unavailing.

*405 Steven M. Griggs, Fort Worth, TX, pro se. In January of 1998, Griggs filed a § 1983 suit in the
United States District Court for the District of Columbia,
*406 Charles O. Dobbs, U.S. Attorney's Office, Northern challenging the BOP's ineligibility determination. The case
District of Texas, Fort Worth, TX, for Defendants–Appellees. was transferred to the United States District Court for
the Western District of Oklahoma, as Griggs was then
Appeal from the United States District Court for the Northern
incarcerated at the Federal Transfer Center in Oklahoma
District of Texas, USDC No. 4:04–CV–204A.
City. In December of that year, the Oklahoma federal court
Before JOLLY, HIGGINBOTHAM, and DENNIS, Circuit dismissed his suit for failure to state: 1) a § 1983 claim
Judges. because defendants were not state officials; 2) a claim for
compensatory damages because defendants were entitled to

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Griggs v. U.S., 253 Fed.Appx. 405 (2007)

sovereign immunity; and 3) a due process claim because he merit to warrant a transfer to the Northern District of Texas.”
had no protected liberty interest in his sentence reduction. Griggs v. U.S., 79 Fed.Appx. 359, 363 (10th Cir.2003).
The district court construed his request for injunctive or
declaratory relief as a 28 U.S.C. § 2241 petition. The Accordingly, the Tenth Circuit vacated the second Oklahoma
Oklahoma federal court adopted the Magistrate's Report and federal court judgment on the motion to compel and remanded
Recommendation, which concluded that Griggs “is entitled the case with instructions to transfer the case to the United
to be considered for a § 3621 sentence reduction ...” The States District Court for the Northern District of Texas. The
Oklahoma court then “directed [the BOP] to consider ... Texas district court adopted the reasoning of the Oklahoma
whether Plaintiff should receive a sentence reduction under district court and denied the petition. Griggs timely appeals.
18 U.S.C. § 3621 for his successful completion of the drug
treatment program without reliance upon sentencing factors.”
In January *407 of 1999, the Government filed a response 2. Conditional Release under 18 U.S.C. § 3621(e)
indicating that in October, 1998, prior to the Oklahoma As incentive for inmate participation in substance abuse
court's judgment, “[p]laintiff's eligibility for early release treatment programs, 18 U.S.C. § 3621(e)(2)(B) provides that
pursuant to 18 U.S.C. § 3621(e) was reviewed and granted on prisoners convicted of “nonviolent offenses who complete
October 20, 1998. Plaintiff's projected satisfaction date has [such a program] may apply for a sentence reduction of up
been recalculated ....” (emphasis in the original). to one year; the determination lies in the discretion of the
director of the Bureau of Prisons (“BOP”).” In May of 1995,
By September of 2001, Griggs had been transferred to the the BOP promulgated 28 C.F.R. § 550.58, which defines
Federal Medical Center in Fort Worth, Texas. At that time, “nonviolent offense” by excluding those offenders convicted
he filed a motion in the Oklahoma district court seeking of offenses that meet the definition of “crime of violence”
to compel the BOP to perform its duty. According to in 18 U.S.C. 924(c)(4). See Warren v. Miles, 230 F.3d 688,
Griggs, after his transfer the BOP rescinded his eligibility 691 (5th Cir.2000). In July of 1995, the BOP issued Program
for a sentence reduction. He alleged that the BOP's decision Statement 5162.02, which defines “crime of violence” within
violated a constitutionally-protected liberty interest in his the context of § 3621. Id. BOP's Change Notice CN–01
early release, created at the time the BOP determined that he to Program Statement 5162.02, clarified the definition of
was eligible under § 3621(e). The BOP, on the other hand, “crime of violence” by listing examples of ineligible inmates
explained that its decision to rescind was based on a recent and included inmates serving a sentence for drug conspiracy
United States Supreme Court decision upholding the validity enhanced for possession of a firearm, like Griggs. Id. at 691–
of the 1997 version of the regulations that permitted the BOP 92.
within its statutory discretion to consider sentencing factors.
See Lopez v. Davis, 531 U.S. 230, 235, 121 S.Ct. 714, 148 *408 We have held that, under the 1995 version of §
L.Ed.2d 635 (2001). 550.58, the BOP's “exclusion of ... drug convictions with
enhanced sentences due to possession of a weapon from
Ruling on Griggs' motion to compel, the Oklahoma federal eligibility for early release after substance abuse treatment is
court held that no liberty interest in a sentence reduction consistent with the letter and spirit of the [BOP]'s authority
had been created, and that Griggs could not establish a as derived from [§ 3621(e) ].” Venegas v. Henman, 126 F.3d
violation of due process. In addition, the Oklahoma federal 760, 761–62 (5th Cir.1997). The Tenth Circuit, however,
court determined that the BOP's decision did not constitute takes a different approach. Faced with the same question
retroactive application of a new BOP policy because the in 1998, that Circuit held that the language of the statute
BOP had always maintained that offenders with sentence “does not permit resort to sentencing factors or sentencing
enhancements for possession of a firearm at the time of the enhancements attached to the nonviolent offense[ ]” and that
offense were ineligible for § 3621(e) early release. On appeal, the BOP's construction of the 1995 version of the regulations
the Tenth Circuit construed Griggs' motion to compel as a § was therefore impermissible. Fristoe v. Thompson, 144 F.3d
2241 petition and determined that the Oklahoma federal court 627, 631 (10th Cir.1998). In essence, the 1995 regulations
lacked jurisdiction since Griggs was confined in Texas. The would not apply in the Tenth Circuit, thus rendering inmates,
Tenth Circuit took a “quick look” at the merits of Griggs' like Griggs, eligible for a sentence reduction; the regulations,
claims, and “conclude[d] that plaintiff's claims have sufficient however, would apply within the Fifth Circuit rendering
inmates, like Griggs, ineligible.

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Griggs v. U.S., 253 Fed.Appx. 405 (2007)

The BOP published a new § 550.58 in 1997. While the no more restrictive than policies in existence when it granted
new version of the regulation still excluded offenders Griggs eligibility; and 4) res judicata is not applicable to
in possession of a firearm during the offense, the 1997 successive federal habeas petitions.
regulation did not do so by defining “prisoner convicted of
a nonviolent offense” or “crimes of violence.” Lopez, 531 We agree with Griggs that res judicata bars the BOP from
U.S. at 235, 121 S.Ct. 714. “Instead, the [1997] regulation raising any arguments that Griggs must now be determined
relie[d] upon ‘the discretion allotted to the Director of ineligible based on sentencing factors. 4 Since the BOP's
the Bureau of Prisons in granting a sentence reduction to asserted bases below and on appeal for rescinding Griggs'
exclude [enumerated categories of] inmates.’ ” Id. (quoting eligibility rely on the applicability of sentencing factors,
Drug Abuse Treatment and Intensive Confinement Center we now reinstate Griggs' eligibility and order the BOP to
Programs: Early Release Consideration, 62 Fed.Reg. 53,690 comply with the previous court order and determine “whether
(Oct. 15, 1997)). In 2001, the Supreme Court upheld the Plaintiff should receive a sentence reduction under 18 U.S.C.
validity of the 1997 version of § 550.58. See Lopez, 531 U.S. § 3621 for his successful completion of the drug treatment
at 244, 121 S.Ct. 714. program without reliance upon sentencing factors.”

According to the BOP's Operations Memorandum, 2 an
inmate who successfully completes the residential phase of 1. Standard of Review
a DAP in a Tenth Circuit Institution remains eligible for We review issues of law related to a denial of habeas relief
his sentence reduction even if he is later transferred out of under § 2241 de novo. Royal v. Tombone, 141 F.3d 596,
the Tenth Circuit. The Memorandum states, however, that in 599 (5th Cir.1998). We also review pro se briefs liberally.
order to maintain that eligibility “an inmate whose offense Johnson v. Quarterman, 479 F.3d 358, 359 (5th Cir.2007)
includes sentence enhancement factors must have completed (citing Haines v. Kerner, 404 U.S. 519, 520, 92 S.Ct. 594, 30
the residential drug treatment program on or after April 28, L.Ed.2d 652 (1972)).
1998 in a Tenth Circuit institution.” Griggs completed the
residential program before April 28, 1998.
2. Res judicata Demands BOP Determine Griggs'
Eligibility for a Sentence Reduction Without Considering
Sentencing Factors
Analysis The dispositive question in this appeal is whether the BOP
can consider sentencing factors, such as the possession of a
On appeal, 3 Griggs argues 1) that the BOP violated his due firearm during the commission of the crime, in determining
process rights by retroactively applying a more restrictive Griggs' eligibility for a sentence reduction under 18 U.S.C.
version of 28 C.F.R. § 550.58, i.e., the 1997 regulations, § 3621. This exact issue was already litigated between the
in deciding to rescind the early release; 2) that his due parties. In the original action before the Oklahoma district
process rights were violated when the BOP rescinded the § court, the district court considered arguments from both
3621(e) sentence reduction without any written notification Griggs and the BOP concerning the use of sentencing factors
or opportunity to be heard and 3) his rights to the sentence in determining Griggs' eligibility for a sentence reduction. See
reduction should be preserved as res judicata and/or collateral Defendant's Motion to Dismiss and Brief to Support, at R.
estoppel. 126–27 (May 26, 1998).

The Government responds with several arguments: 1) the The district court granted Griggs habeas relief and
conditions of the Operations Memorandum are not fulfilled, fully adopted the Magistrate's *410 Report and
so Griggs did not maintain his eligibility when he was Recommendation, which rejected BOP's use of sentencing
transferred from the Tenth to the Fifth Circuit; 2) the BOP factors to determine Griggs' eligibility and concluded, as a
official who denied *409 Griggs eligibility erroneously matter of law, that Griggs “is entitled to be considered for
relied solely on Lopez, but should have relied on the Fifth a § 3621 sentence reduction....” R. at 344. To implement
Circuit's opinion in Venegas, which upheld the BOP's 1995 this decision, the district court granted habeas relief “to the
regulations; 3) even if the denial was based on Lopez, the BOP extent that the Bureau of Prisons is directed to consider ...
has always maintained that felons like Griggs are ineligible, without reliance on sentencing factors, whether plaintiff
and therefore the 1997 regulation as applied to Griggs was

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Griggs v. U.S., 253 Fed.Appx. 405 (2007)

should receive a sentence reduction under 18 U.S.C. § 3621.” The intervening transfer of the case from the Tenth Circuit
R. at 364a. The BOP never appealed the district court's to the Fifth Circuit does not affect the res judicata effect
adoption of the Magistrate's Report and Recommendation nor of the final Oklahoma court judgment. See In re Korean
the order granting habeas relief; therefore the report and order Air Lines Disaster of Sept. 1, 1983, 829 F.2d 1171, 1177
are final judgments with res judicata effect. Royal Ins. Co. (D.C.Cir.1987) (Ginsburg, D.H., J., concurring) (“[T]here are
of Am. v. Quinn–L Capital Corp., 960 F.2d 1286, 1293 (5th some circumstances in which a federal court is bound to apply
Cir.1992). We must now give full res judicata effect to this the decisions of another circuit, but they are the rare instances
original final judgment. United States v. Davenport, 484 F.3d where a preclusion doctrine so requires. The doctrines of res
321, 327 n. 10 (5th Cir.2007). judicata, collateral estoppel, and law of the case come to
mind.”); Skil Corp. v. Millers Falls Co., 541 F.2d 554, 558
“Res judicata is appropriate if (1) (6th Cir.1976) (applying res judicata effect to decision from
the parties are identical or in privity; the Seventh Circuit). Moreover, even if the original basis for
(2) the judgment in the prior action the Oklahoma district court decision was erroneous based
was rendered by a court of competent on changing intervening law, courts respect the finality of a
jurisdiction; (3) the prior action was previous judgment and accord the judgment full res judicata
concluded to a final judgment on the effect. Fed. Dep't Stores, Inc. v. Moitie, 452 U.S. 394, 398,
merits; and (4) the same claim or cause 101 S.Ct. 2424, 69 L.Ed.2d 103 (1981) (“Nor are the res
of action was involved in both suits.... judicata consequences of a final, unappealed judgment on the
If these conditions are satisfied res merits altered by the fact that the judgment may have been
judicata prohibits either party from wrong or rested on a legal principle subsequently overruled
raising any claim or defense in the later in another case.”); RecoverEdge L.P. v. Pentecost, 44 F.3d
action that was or could have been 1284, 1296 (5th Cir.1995) (“It is well settled, however, that
raised in support of or in opposition to even arguably erroneous judgments have preclusive effect if
the cause of action asserted in the prior the requirements for collateral estoppel are satisfied.”) (citing
action.” numerous Circuit cases for this proposition); Matter of Teal,
16 F.3d 619, 622 (5th Cir.1994) (“This conclusion comports
Matter of Swate, 99 F.3d 1282, 1286 (5th Cir.1996). The
with the well-known rule that a federal court may not abrogate
conditions for res judicata are fulfilled here. The parties
principles of res judicata out of equitable concerns.... Indeed,
are identical; the Oklahoma district court had competent
it must give res judicata effect to a prior judgment even if
jurisdiction over the original action; the prior action was
it would be voidable on appeal because of legal error.”); In
concluded to a final judgment (not appealed) on the merits;
re *412 Atlas Sewing Centers, Inc., 437 F.2d 607, 614 (5th
and the same cause of action is asserted in both habeas
Cir.1971) (“[Res judicata ] does not allow parties to await
petitions, i.e., whether determining Griggs' eligibility using
the event and then to determine that a judgment acquiesced
sentencing factors is appropriate. 5 Res judicata applies to in earlier ought to have been challenged.”). Therefore, even
any BOP argument that use of sentencing factors is now if the BOP may now challenge the basis for the district court
appropriate in considering whether to grant Griggs a sentence decision as arguably wrong under Fifth Circuit case-law or
reduction. 6 subsequent Supreme Court decisions, the finality and binding
effect of the decision is unaffected.
*411 Since the BOP later rescinded Griggs' eligibility based
on sentencing factors by citing to Lopez and Venegas, which The res judicata analysis also renders irrelevant the
are cases that upheld the BOP's use of sentencing factors in Government's use of the Operations Memorandum as a basis
eligibility decisions, the BOP has failed to comply with the to bar Griggs from maintaining his eligibility upon transfer
binding effect of the previous judgment barring the use of outside of the Tenth Circuit. 7 The Operations Memorandum
sentencing factors. We must now issue a remedy necessary is irrelevant to his appeal, because res judicata preserves his
to protect Griggs' judgment in the original district court eligibility after transfer. The Operations Memorandum offers
decision. “Prevailing parties are entitled to the protection Griggs a regulatory route to “maintain” his eligibility, but
and fruits of the judgments which become final.” Cliett v. Griggs does not need this regulatory mechanism to maintain
Hammonds, 305 F.2d 565, 572 (5th Cir.1962). his eligibility. Res judicata provides an alternative and

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Griggs v. U.S., 253 Fed.Appx. 405 (2007)

the BOP determines “whether Plaintiff should receive a
sufficient mechanism that maintains his eligibility without the
sentence reduction under 18 U.S.C. § 3621 for his successful
consideration of sentencing factors.
completion of the drug treatment program without reliance
upon sentencing factors” consistent with this opinion and
The Government's cited reasons for rescinding Griggs'
within a reasonable time period.
eligibility are all based on Griggs' sentencing factors, which
is a violation of the previous final court order from the
Oklahoma district court. Therefore, we now GRANT Griggs
Parallel Citations
habeas relief and REVERSE the Texas district court judgment
and REMAND this case to the Texas district court for 2007 WL 3302379 (C.A.5 (Tex.))
it to enforce the previous final court order and ensure

Footnotes
1 Pursuant to 5th Cir. R. 47.5, the court has determined that this opinion should not be published and is not precedent except under
the limited circumstances set forth in 5th Cir. R. 47.5.4.
2 The Operations Memorandum states:
To maintain eligibility upon transfer out of the Tenth Circuit, an inmate whose offense includes sentence enhancement factors
must have completed the residential drug treatment program on or after April 28, 1998 [i.e., the date the Tenth Circuit issued
its decision in Fristoe ], in a Tenth Circuit institution.
3 Griggs satisfied administrative exhaustion requirements. See Griggs v. United States, 2004 WL 1084816 *1 & n. 2 (N.D.Tex. May
13, 2004) (unpublished).
4 We may apply res judicata sua sponte. See Russell v. SunAmerica Sec., Inc., 962 F.2d 1169, 1172 (5th Cir.1992) (res judicata may
be raised sua sponte because the court may not ignore the legal effect of uncontroverted facts or decline to consider application
of controlling rules of law to dispositive facts). Moreover, in the pleadings below, the Government interprets Griggs' argument as
raising res judicata and collateral estoppel issues, and presents a counterargument that the “law of the case” should be the applicable
doctrine. The Government states in the record below:
Plaintiff argues he has been eligible for early release for nearly three years, and the Bureau of Prisons cannot now, on a whim,
take away that vested interest, essentially arguing the principle of res judicata or issue preclusion. Defendant counters that the
“law of the case” doctrine, and not issue preclusion, is applicable to this case.
Defendant's Response to Plaintiff's Motion to Compel An Officer Or Agency Of the United States To Perform Its Duty, R. 391,
393–94 (Sept. 21, 2001). We agree with Griggs. Griggs' claims below and on appeal are arguments based on the principles of
res judicata to enforce a previous judgment and compel the satisfaction of that judgment. See “Motion To Compel An Officer
or Agency Of The United States to Perform Its Duty.” R. at 376. Construed liberally, Griggs' motion requests a federal court to
enforce the previous order and grant of habeas relief.
5 We read the Magistrate's Report and Recommendation adopted by the district court as concluding that the use of sentencing factors
in determining Griggs' eligibility is not appropriate. “The effect of a decree, as an adjudication conclusive on the parties, is not
determined by isolated passages in opinion, but by examination of issues made and intended to be submitted and decided.” State of
Okla. v. State of Texas, 272 U.S. 21, 42–43, 47 S.Ct. 9, 71 L.Ed. 145 (1926).
6 The Government cites to Patrasso v. Nelson, 121 F.3d 297, 301 (7th Cir.1997) to argue that res judicata categorically does not apply
to federal habeas petitions. The Government misconstrues Patrasso because it is clear that Patrasso is discussing the res judicata
effect of a state post-conviction judgment on a federal habeas petition. Id; Carter v. Estelle, 677 F.2d 427, 442 n. 10 (5th Cir.1982).
Here, we are discussing the res judicata effect of a federal court decision on the same claim in a subsequent federal habeas action
urging the court to enforce the previous decision.
The Government is partially correct in that the res judicata doctrine applies differently in the habeas context; however, any
differences are not applicable in this case. “Modified” res judicata applies in the habeas context. United States v. Orozco–Ramirez,
211 F.3d 862, 867–68 (5th Cir.2000); see also Schlup v. Delo, 513 U.S. 298, 319, 115 S.Ct. 851, 130 L.Ed.2d 808 (1995) (calling
it a “qualified application of the doctrine of res judicata.”) In this “modified” form, res judicata does not fully apply in the habeas
context when a previous court decision denies habeas relief. McCleskey v. Zant, 499 U.S. 467, 480–81, 111 S.Ct. 1454, 113 L.Ed.2d
517 (1991); Sanders v. United States, 373 U.S. 1, 7, 83 S.Ct. 1068, 10 L.Ed.2d 148 (1963) (“At common law, the denial by a court
or judge of an application for habeas corpus was not res judicata.”).
On the other hand, a judgment granting a petitioner habeas relief is res judicata on the issues of law and fact necessarily involved
in the result. Collins v. Loisel, 262 U.S. 426, 430, 43 S.Ct. 618, 67 L.Ed. 1062 (1923); Anselmo v. Hardin, 253 F.2d 165, 169 (3d

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Griggs v. U.S., 253 Fed.Appx. 405 (2007)

Cir.1958); Harris v. Biszkowicz, 100 F.2d 854, 856 (8th Cir.1939); see also Younan v. Caruso, 51 Cal.App.4th 401, 59 Cal.Rptr.2d
103, 109 (1996) ( “While a final judgment granting habeas corpus relief is res judicata. ... an order denying the writ is not.”)
(internal citations omitted). An order granting habeas corpus, unlike a denial of habeas relief, is a “final judgment” and is res
judicata on issues in subsequent habeas petitions, since the petitioner is now enforcing a final court order. Compare Patterson
v. Haskins, 470 F.3d 645, 661 (6th Cir.2006); In Re Moody, 817 F.2d 365, 368 (5th Cir.1987) (“That further proceedings were
necessary to enforce the judgment .... does not mitigate the effect of the order. A judgment becomes final despite the fact that it
has not been executed. The finality of a decree is not impaired because some future order of the court may become necessary to
carry it into effect.”), with Potts v. Zant, 638 F.2d 727, 738 (5th Cir.1981) (“The doctrine of abuse of the writ has developed as
a result of the familiar rule of law that a denial of an application for habeas corpus is not res judicata with respect to subsequent
applications.”). The case-law permits the application of res judicata to successful habeas petitions as part and parcel of the power
of this court to enforce a final judgment in subsequent proceedings, whereas unsuccessful habeas petitions are subject to the “abuse
of the writ” doctrine empowering federal courts to control the potentially endless successive petitions attacking the conviction after
an initial denial of habeas relief. Cf. In re Cain, 137 F.3d 234, 235–36 & n. 1 (5th Cir.1998) (describing the federal court's “gate-
keeping” function under AEDPA and the “abuse of writ” doctrine).
7 Moreover, the BOP concedes the agency decision to rescind Griggs' eligibility was based solely (and erroneously) on Lopez. Reference
to other reasons for the decision to rescind Griggs' eligibility, including the Operations Memorandum, offered for the first time on
appeal is a “post hoc rationalization” advanced by an agency seeking to defend past agency decision against attack. See Burlington
Truck Lines, Inc. v. United States, 371 U.S. 156, 168–69, 83 S.Ct. 239, 9 L.Ed.2d 207 (1962) (“The courts may not accept appellate
counsel's post hoc rationalizations for agency action; [SEC. v. Chenery Corp., 332 U.S. 194, 196, 67 S.Ct. 1575, 91 L.Ed. 1995 (1947)
] requires that an agency's discretionary order be upheld, if at all, on the same basis articulated in the order by the agency itself.”).
In Chenery, the Court concluded that:
[A] simple but fundamental rule of administrative law ... is ... that a reviewing court, in dealing with a determination or judgment
which an administrative agency alone is authorized to make, must judge the propriety of such action solely by the grounds
invoked by the agency. If those grounds are inadequate or improper, the court is powerless to affirm the administrative action....
Id. We can also reject the Operations Memorandum argument and other post-hoc rationalizations on this ground.

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

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Hartford Cas. Ins. Co. v. State, 159 S.W.3d 212 (2005)

159 S.W.3d 212
Court of Appeals of Texas, OPINION
Austin.
BEA ANN SMITH, Justice.
HARTFORD CASUALTY
INSURANCE COMPANY, Appellant, In this case, we construe finance code section 153.402(c) 1
to determine whether the phrase “may collect from the
v.
The STATE of Texas, Appellee. proceeds of a bond” allows the State 2 to collect from a
surety an administrative penalty assessed against the surety's
No. 03–04–00072–CV. | Feb. 17, 2005. principal without first providing the surety with notice and
opportunity for a hearing. Appellant, Hartford Casualty
Synopsis Insurance Company (Hartford), contends that since the
Background: State brought action against currency statutory grant of authority regarding administrative penalties
exchange, its owners, and exchange's surety to collect found in finance code section 153.402(c) is discretionary, its
administrative penalty imposed without notice to surety and constitutional right to procedural due process entitles it as a
opportunity for hearing. The 345th Judicial District Court, surety to notice and opportunity for a hearing before it can be
Travis County, Margaret A. Cooper, J., ruled that the state held liable for an administrative penalty assessed against its
could collect the penalty from the surety. It appealed. principal. The State argues that it would have been useless to
provide Hartford with notice and a hearing because Hartford
was not a target of the administrative penalty. The district
[Holding:] The Court of Appeals, Bea Ann Smith, J., held court held that the penalty may be collected from Hartford.
that the surety had procedural due process right to notice
and opportunity for hearing on Banking Commissioner's In three issues on appeal, Hartford contends that (1)
discretionary decision to collect penalty from bond proceeds, construing finance code section 153.402(c) to allow the State
and, thus, the due process guarantees were implied in statute to collect from a surety, without notice or opportunity for
stating that the penalty may be paid and collected from the a hearing, the administrative penalty assessed against its
proceeds of a bond. principal violates the due process clauses of both the United
States and Texas Constitutions; (2) the trial court's order
violates the Texas Administrative Procedure Act (the APA),
Reversed and rendered. Administrative Code, and Finance Code; and that (3) the trial
court erred by awarding attorney's fees to the State. Because
when possible we interpret a statute in a manner that renders
West Codenotes it constitutional, we hold that notice and opportunity for a
hearing are implied into finance code section 153.402(c). FM
Limited on Constitutional Grounds
Props. Operating Co. v. City of Austin, 22 S.W.3d 868, 873
V.T.C.A., Finance Code § 153.402(c).
(Tex.2000). Thus, Hartford was denied its right to procedural
Attorneys and Law Firms due process. We reverse and render judgment that the State
cannot collect the administrative penalty from Hartford.
*213 David W. Holman, Byron C. Keeling, Diana M.
Sangalli, Holman & Keeling, *214 James D. Cupples,
Bridget Chapman, Williams, Cupples & Chapman, LLP,
Background
Houston, for appellant.
In 1997, Ernesto and Aida Bolmey requested and obtained
Jim Hill, David Randell, Asst. Atty's, Gen., Bankruptcy,
a license authorizing their company, Airport Exchange,
Collections Division, Austin, for appellee.
to operate four currency exchange shops at various
Before Chief Justice LAW, Justices B.A. SMITH and locations in Texas. To satisfy the licensing requirements,
PEMBERTON. Airport Exchange had to post a $300,000 bond with the
Commissioner. 3 Hartford agreed to furnish *215 the

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Hartford Cas. Ins. Co. v. State, 159 S.W.3d 212 (2005)

bond and act as surety for Airport Exchange. The surety Hartford had assisted the Department in reimbursing all of the
contract stated that the bond was “for the use and benefit identified aggrieved parties. Other than that acknowledgment,
of the Department and of any creditor of the applicant Hartford is not mentioned in either the proposal for decision
[Airport Exchange] for any liability incurred on any currency or the Commission's final order.
exchange or transmission conducted by the applicant as
licensee.” On January 27, 2003, the State sent a demand letter asking
Hartford to pay the $37,200 administrative penalty that had
In December 2001, Airport Exchange's counsel informed been imposed against Airport Exchange. This letter was
the Department that Airport Exchange had ceased doing the first notice that Hartford had received regarding the
business as a currency exchange company. He also administrative penalty. Hartford declined to pay the penalty.
admitted that Airport Exchange had failed to transmit In May 2003, the State commenced the present action against
funds that it had received from customers. He informed Airport Exchange, its owners—Ernesto & Aida Bolmey—
the Commissioner that Hartford, as surety, would have to and Hartford, seeking payment of the penalty. The State
fulfill the unmet obligations of his client. The day after argued to the trial court that finance code section 153.402(c)
receiving this information, the Commissioner, claiming a allows it to collect the penalty from the proceeds of the
threat of immediate and irreparable harm, issued a cease bond. Because neither Airport Exchange nor its owners
and desist order against Airport Exchange and the Bolmeys. responded to the State's petition, the trial court entered a
The Commissioner further ordered the Department to default judgment against Airport Exchange and the Bolmeys.
immediately seize all funds held in Airport Exchange's bank At *216 the conclusion of the bench trial, the trial court
accounts. The Department determined that in 186 separate ruled that the State could collect the penalty from Hartford
transactions Airport Exchange had accepted $83,433.52 from and further ordered Hartford to pay the State's attorney's fees.
customers, which it failed to transmit. Ernesto Bolmey This appeal followed.
admitted that he instructed his business manager to stop
transmitting the funds “so that they could use the money to
help finance their business operations.”
Standard of Review

Airport Exchange appealed the Commissioner's cease [1] [2] [3] [4] [5] In this case, we are asked to construe
and desist order to the Texas Finance Commission. finance code section 153.402(c) to determine whether it
The Commissioner filed a separate action with the allows the State to collect from a surety an administrative
Finance Commission seeking an administrative penalty penalty assessed against the surety's principal without first
against Airport Exchange and the Bolmeys. The Finance providing the surety with notice and opportunity for a hearing.
Commission referred both matters to an administrative law Statutory construction is a matter of law, which we review
judge (the ALJ) who consolidated the two matters and de novo. Johnson v. City of Fort Worth, 774 S.W.2d 653,
scheduled a hearing. Hartford was not notified of the hearing. 656 (Tex.1989). When interpreting a statute, our primary task
is to ascertain and effectuate the intent of the legislature.
The hearing was held on May 23, 2002. No representative Fleming Foods of Tex. v. Rylander, 6 S.W.3d 278, 284
of Airport Exchange or the Bolmeys appeared; likewise, (Tex.1999); Union Bankers Ins. Co. v. Shelton, 889 S.W.2d
Hartford sent no representatives since it did not know 278, 280 (Tex.1994); Sharp v. Clearview Cable TV, Inc.,
about the hearing. The only parties who appeared were 960 S.W.2d 424, 426 (Tex.App.-Austin 1998, pet. denied).
the Department and the Commissioner. In his proposal for Disputed provisions are to be considered in context, not in
decision, the ALJ noted that Airport Exchange's failure to isolation. Texas Workers' Comp. Comm'n v. Continental Cas.
appear at the hearing was “some evidence supporting an Co., 83 S.W.3d 901, 905 (Tex.App.-Austin 2002, no pet.); see
adverse inference” against it. The ALJ found that Airport also Fitzgerald v. Advanced Spine Fixation Sys., 996 S.W.2d
Exchange had violated multiple sections of the finance 864, 866 (Tex.1999). Texas courts are to consider, among
code and recommended that the appeal be denied. He also other factors, the language of the statute, legislative history,
determined that the Commissioner had “the discretion to the nature and object to be obtained, and the consequences
impose the requested penalty in the amount of $37,200.” that would follow from alternative constructions, even when
There was no finding that Hartford, as surety, had violated a statute is not ambiguous on its face. Helena Chem. Co. v.
any section of the finance code. Indeed, the ALJ noted that Wilkins, 47 S.W.3d 486, 493 (Tex.2001); Union Bankers Ins.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Hartford Cas. Ins. Co. v. State, 159 S.W.3d 212 (2005)

Co., 889 S.W.2d at 280. We further presume that in enacting a S.W.3d at 873. Additionally, as we will discuss, Hartford was
statute the legislature intended to comply with the federal and entitled to party status under the APA. Thus, we hold that the
state constitutions. Tex. Gov't Code Ann. § 311.021 (West due process guarantees of notice and opportunity for a hearing
1998). are implied into finance code section 153.402(c).

Therefore, because there is no dispute that Hartford has a
property interest in the $37,200 penalty assessed, we need
Discussion
only decide whether, under these circumstances, that interest
Due Process was sufficiently protected. The State argues that Hartford
[6] [7] [8] In its first issue, Hartford contends that received all of the due process to which it was entitled under
assessing an administrative penalty against a surety without Texas law. The State argues that (1) its interpretation of
affording it notice and an opportunity for a hearing deprives finance code section 153.402 does not violate Hartford's due
it of a property right without the constitutionally guaranteed process rights; (2) Hartford's presence at the administrative
due process of law. Texas Workers' Comp. Comm'n v. Patient hearing would have been meaningless; (3) when a surety
Advocates, 136 S.W.3d 643, 658 (Tex.2004). Individuals agrees to be liable for a particular judgment, notice is not
must be afforded both substantive and procedural due necessary; and (4) Hartford's substantive due process rights
process. Id. Substantive due process protects against the were satisfied.
arbitrary and oppressive exercise of government power,
regardless of the fairness of the procedures. Daniels v.
Finance Code Section 153.402
Williams, 474 U.S. 327, 331, 106 S.Ct. 662, 88 L.Ed.2d 662
[14] [15] The liability of a surety is determined by
(1986). The procedural due process guarantee protects against
the language of the bond. Geters v. Eagle Ins. Co., 834
arbitrary takings. County of Sacramento v. Lewis, 523 U.S.
S.W.2d 49, 50 (Tex.1992); Howze v. Surety Corp. of Am.,
833, 846, 118 S.Ct. 1708, 140 L.Ed.2d 1043 (1998).
584 S.W.2d 263, 266 (Tex.1979). Additionally, a statute
mandating the bond is made part of the bond contract,
[9] [10] [11] The due process clause in the state
and is controlling. Geters, 834 S.W.2d at 50. Therefore,
constitution requires the same level of due process as the
the State contends that the language of the bond, read in
federal constitution. University of Tex. Med. Sch. at Houston
conjunction with finance code sections 153.109 and 153.402,
v. Than, 901 S.W.2d 926, 929 (Tex.1995); see also Bell
provided Hartford with adequate notice that it was within
v. Texas Workers Comp. Comm'n, 102 S.W.3d 299, 304
the Commissioner's authority to collect the administrative
(Tex.App.-Austin 2003, no pet.) (stating that in matters of
penalty assessed against Airport Exchange from the bond
procedural due process, Texas courts traditionally follow
proceeds.
federal due process interpretations and consider federal
decisions on these matters persuasive authority). Questions of
Finance code section 153.109 requires a license holder
procedural due process require an analysis of (1) whether the
to post a bond or irrevocable letter of credit in favor
plaintiff has a constitutionally protected property or liberty
of the Department. Tex. Fin.Code Ann. § 153.109 (West
interest at stake, and (2) if so, what process is due to
Supp.2004–05). Finance code section 153.402(a) grants the
sufficiently protect that interest. Board of Regents of State
Commissioner authority to order a license holder to pay
Colleges v. Roth, 408 U.S. 564, 569–70, 92 S.Ct. 2701, 33
an administrative penalty if it is found that the licensee
L.Ed.2d 548 (1972). At a minimum, due process requires
violated finance code chapter 153 or any rule or order made
notice and an opportunity to be heard at a meaningful time
pursuant to chapter 153. Tex. Fin.Code Ann. § 153.402(a)(1–
and in a meaningful manner. *217 Mathews v. Eldridge, 424
3) (West 1998). Finance code section 153.402(c) states that
U.S. 319, 333, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976); Perry
“the penalty may be paid and collected from the proceeds
v. Del Rio, 67 S.W.3d 85, 92 (Tex.2001); University of Tex.
of a bond, letter of credit, or deposit required under section
Med. Sch. at Houston, 901 S.W.2d at 930.
153.109.” Tex. Fin.Code Ann. § 153.402(c) (West 1998).
[12] [13] Finance code section 153.402(c) is silent
[16] Hartford agrees that the language of sections
regarding the procedural due process rights of a surety.
153.402(a) and (c) is implied into its bond with Airport
However, if possible, we construe a statute in a manner
Exchange. However, Hartford argues that the language in
that renders it constitutional. FM Props. Operating Co., 22
section 153.402(c) “may be paid and collected from the

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Hartford Cas. Ins. Co. v. State, 159 S.W.3d 212 (2005)

proceeds of the bond” grants a discretionary right to collect an ever gain party status. 4 The Finance Commission's rules
administrative penalty from a bond, not a statutory mandate of procedure for contested case hearings and appeals state,
to do so. Hartford claims that the mere possibility that the “[P]arty status is limited to persons or entities with a legal
Commissioner may seek to collect the penalty from the bond right, duty, privilege, power, or economic interest that may
proceeds is insufficient to adequately notify a surety that the be directly affected by the outcome of the proceeding or who
Commissioner would do so in a particular case. are entitled to be parties pursuant to a statute or regulation
governing the particular proceeding.” 7 Tex. Admin. Code §
The word “may” creates a discretionary authority or 9.15(b) (West 2004). The rules further state, “[P]arty status
grants permission or a power. Tex. Gov't Code Ann. § will not be conferred on persons or entities that seek to litigate
311.016(1) (West 1998). Here, Hartford was on notice that the issues that are not by statute or regulation made part of the
Commissioner could collect the penalty from the bond, but it administrative proceeding in which party status is sought.”
had no knowledge that the Commissioner would attempt to do Id. § 9.15(c)(2). The State insists that the Commissioner's
so in this case. It was known by all parties that Hartford was decision to collect the penalty from the bond was not an
the surety for *218 Airport Exchange, yet no one notified issue at the hearing. However, because the statutory right to
Hartford of the administrative hearing. This lack of notice collect from the proceeds of the bond was discretionary, the
deprived Hartford of the opportunity to address the amount Commissioner's decision to do so or not was at issue. Thus,
of the bond and to argue that, based on the facts of this case, Hartford had an economic right that was directly affected by
the penalty should not be collected from Hartford. Therefore, the outcome of the hearing, and the issue it was seeking to
we conclude that section 153.402(c) does not by itself or in litigate was made part of the hearing by statute. Therefore,
conjunction with the bond agreement provide Hartford with party status could have been properly conferred on Hartford.
adequate notice to protect its interest in the $37,200 sought
by the State.
Particular Judgment Bonds
The State relies on Howze v. Surety Corp. of America, 584
Administrative Hearing S.W.2d at 265 to contend that Hartford was not entitled to
[17] The State contends that Hartford's presence at the notice of suits involving Airport Exchange. In Howze, the
administrative hearing would have been meaningless because supreme court discussed the general rule in Texas that when
the hearing concerned Airport Exchange's appeal of the cease a surety agrees to be liable for a particular judgment, then no
and desist order, as well as the Commissioner's imposition of notice need be given. Id. “However, when a surety contracts
an administrative penalty. Therefore, the State suggests that to be generally liable for all the undertakings of the principal,
Hartford's presence at the hearing was useless because the the surety must be given *219 notice and an opportunity to
statute imposed the administrative penalty without regard to defend the case before it is bound by the judgment.” Id. The
the surety's wrongdoing. See Bell, 102 S.W.3d at 305 (due State claims that the bond in this case is a particular judgment
process does not require a useless hearing when there are no bond and consequently, Hartford was not entitled to notice.
factual issues to dispute). We are not persuaded that Howze controls this dispute.

The State's argument fails to address the discretion afforded Applying Howze to this case undermines the purpose of the
to the Commissioner by the statute: Should an administrative general rule distinguishing particular judgment bonds from
penalty be assessed when it is clear that only the surety, not general undertaking bonds. The idea that it is unnecessary
the wrongdoer, will have to pay, and if so, in what amount? to provide notice to a surety who furnished a particular
Hartford contends that because the Commissioner had the judgment bond is based on the notion that any notice
discretion not to collect the penalty from the bond, Hartford would be redundant because the surety agreed to be liable
was entitled to notice and an opportunity to advocate that for specifically enumerated acts of the principal. A surety
position. We agree that the lack of notice deprived Hartford who furnishes this type of bond can and should adjust the
of an opportunity to protect its interest in the $37,200 sought premiums based on the principal's potential liability for those
by the State. specific acts. Here, neither the bond nor the relevant statute
imposes liability for all administrative penalties. Section
We are not swayed by the State's contention that the APA 153.402(c) only states that the administrative penalty may
does not require notice in this case. Essentially, the State be collected from the bond. As we discussed earlier, the
avers that if a person is not named as a party they cannot

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
Hartford Cas. Ins. Co. v. State, 159 S.W.3d 212 (2005)

The State sought and received attorney's fees pursuant to
Commissioner's right to collect from the bond proceeds is
government code section 2107.006. Tex. Gov't Code Ann.
discretionary. As a result, Hartford did not have knowledge
§ 2107.006 (West 2000) (stating that attorney general may
at the time it agreed to furnish Airport Exchange's bond
recover reasonable attorney's fees on behalf of state in any
that it would automatically be held liable for administrative
proceeding in which the state seeks to collect or recover a
penalties assessed against Airport Exchange. Therefore, we
delinquent obligation or damages). Having reversed the trial
conclude that Howze does not control this case.
court's judgment, we also reverse its award of attorney's fees.
We conclude that notice and an opportunity to be heard
were required before the Commissioner could collect the
administrative penalty from Hartford. Failing that, Hartford's Conclusion
right to procedural due process was violated. See Perry, 67
Because we hold that Hartford's right to procedural due
S.W.3d at 92. We reverse the judgment of the trial court. 5
process was violated, we reverse the judgment of the trial
court and render judgment that the State cannot collect the
Attorney's Fees administrative penalty from Hartford.

Footnotes
1 Section 153.402(c) states that “the penalty may be paid and collected from the proceeds of a bond, letter of credit, or deposit required
under section 153.109 or 153.110.” Tex. Fin.Code Ann. § 153.402(c) (West 1998).
2 Here, the Attorney General represents the Finance Commission (the Finance Commission), the Department of Banking (the
Department), and the Banking Commissioner (the Commissioner). The Department operates under the purview of the Finance
Commission. Tex. Fin.Code Ann. § 11.301 (West 1998). Likewise, the Commissioner serves at the will of the Finance Commission.
Tex. Fin.Code Ann. § 12.101(a) (West Supp.2004–05). For ease of reference, we will refer to these parties collectively as the State.
3 Finance code section 153.109 provides that a license holder shall post a bond with a qualified surety company or an irrevocable letter
of credit issued by a qualified financial institution. Tex. Fin.Code Ann. § 153.109(a) (West Supp.2004–05). The amount of the bond
or letter of credit are to be determined by the Commissioner. Id. § 153.109(b) (West Supp.2004–05).
4 Under the APA a “party” is “a person or state agency named or admitted as a party.” Tex. Gov't Code Ann. § 2001.003(4) (West 2000).
5 Because we hold that Hartford's right to procedural due process was violated, we do not address Hartford's arguments regarding
substantive due process and whether the trial court's order violated the Texas APA, Administrative Code, and Finance Code.

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
Hooper v. Generations Community Federal Credit Union, Not Reported in S.W.3d (2013)
2013 WL 2645111

suit, pleading various defenses and a counterclaim under the
Texas Debt Collection Act. Following a bench trial, the trial
2013 WL 2645111
court rendered judgment against Hooper and in favor of the
Only the Westlaw citation is currently available.
Credit Union in the amount of $20,600.36. The trial court also
SEE TX R RAP RULE 47.2 FOR rendered judgment that Hooper take nothing on his counter-
DESIGNATION AND SIGNING OF OPINIONS. claim. Hooper appealed.

MEMORANDUM OPINION
Court of Appeals of Texas,
DISCUSSION
San Antonio.
In Texas, collection of the amount due under a credit card
Bret Wayne HOOPER, Appellant
agreement is treated as a claim for a breach of contract.
v.
In re Tran, 351 B.R. 440, 445 (Bankr.S.D.Tex.2006),
GENERATIONS COMMUNITY
aff'd,369 B.R. 312 (S.D.Tex.2007); see Tully v. Citibank
FEDERAL CREDIT UNION, Appellee. (South Dakota), N.A., 173 S.W.3d 212, 215–20 (Tex.App.-
Texarkana 2005, no pet.). To recover for breach of contract,
No. 04–12–00080–CV. | June 12, 2013.
a plaintiff must show (1) the existence of a valid contract,
From the County Court at Law No. 7, Bexar County, Texas, (2) the plaintiff performed or tendered performance, (3) the
Trial Court No. 352061. David J. Rodriguez, Judge. defendant breached the terms of the contract, and (4) the
plaintiff suffered damages as a result of the defendant's
Attorneys and Law Firms breach. Transworld Leasing Corp. v. Wells Fargo Auto
Fin., LLC, No. 04–12–00036–CV, 2012 WL 4578591, at
Martin W. Seidler, Law Offices Of Martin W. Seidler, San *3 (Tex.App.-San Antonio 2012, pet. denied); McLaughlin,
Antonio, TX, for Appellant. Inc. v. Northstar Drilling Tech., Inc., 138 S.W.3d 24, 27
(Tex.App.-San Antonio 2004, no pet.). Thus, in this case, the
Robert P. Sims, Attorney At Law, San Antonio, TX, for
Credit Union had the burden to prove each element of a breach
Appellee.
of contract claim at trial. See Preston State Bank v. Jordan,
Sitting: KAREN ANGELINI, Justice, PATRICIA O. 692 S.W.2d 740, 744 (Tex.App.-Fort Worth 1985, no writ)
ALVAREZ, Justice, LUZ ELENA D. CHAPA, Justice. (affirming a take-nothing judgment in a suit to recover a credit
card debt when the bank failed to present evidence of the
contract between the bank and the credit card holder).
MEMORANDUM OPINION
Parties form a binding contract when the following elements
Opinion by KAREN ANGELINI, Justice. are present: (1) an offer; (2) an acceptance in strict compliance
with the terms of the offer; (3) a meeting of the minds; (4)
*1 Bret Wayne Hooper appeals from a $20,600.36 judgment each party's consent to the terms; and (5) the execution and
against him in a suit to recover the balance due on a credit delivery of the contract with the intent that it be mutual
card account. Because the evidence was legally insufficient and binding. Williams v. Unifund CCR Partners Assignee
to support the judgment, we reverse and render a take-nothing of Citibank, 264 S.W.3d 231, 236 (Tex.App.-Houston [1st
judgment. Dist.] 2008, no pet.). To be enforceable, a contract must be
sufficiently certain to enable a court to determine the rights
and responsibilities of the parties. T.O. Stanley Boot Co., Inc.
BACKGROUND v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex.1992). The
material terms of a contract must be agreed upon before a
Hooper was sued by Generations Community Federal Credit court can enforce the contract. Id. A breach of contract occurs
Union, formerly known as the San Antonio City Employees when a party to the contract fails or refuses to do something
Federal Credit Union. The Credit Union alleged Hooper had he has promised to do. West v. Triple B Services, LLP, 264
defaulted on a credit card agreement and, as a result, owed the S.W.3d 440, 446 (Tex.App.-Houston [14th Dist.] 2008, no
Credit Union $20,600.36 plus interest. Hooper answered the pet.).

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Hooper v. Generations Community Federal Credit Union, Not Reported in S.W.3d (2013)
2013 WL 2645111

its terms.” (emphasis added). Significantly, the “Agreement”
*2 In his second issue, Hooper argues the evidence was referenced in the document was never offered into evidence.
legally and factually insufficient to support each of the
elements of the Credit Union's breach of contract claim. The second relevant document, titled “Addendum to Platinum
In response, the Credit Union argues there was sufficient Mastercard Agreement,” appears to have been signed by
evidence of a credit card agreement. Notably, the Credit Hooper as the “Borrower/Cardholder” on March 21, 2007.
Union focuses on the first element of its breach of contract This document states that Hooper was approved for an
claim-the existence of a valid contract. The Credit Union does “Introductory Annual Percentage Rate of 3.90%” on balances
not explain how the evidence was sufficient to prove each of transferred from other financial institutions or credit card
the remaining elements of its breach of contract claim. issuers.

We review challenges to the legal sufficiency of the evidence *3 The Credit Union also presented the testimony of two
in a bench trial under the same standard used in reviewing the witnesses. First, the Credit Union called Hooper to testify.
sufficiency of the evidence in a jury trial. Rosas v. Comm'n In his testimony, Hooper acknowledged that his signature
for Lawyers Discipline, 335 S.W.3d 311, 316 (Tex.App.-San appeared on both of the above-referenced documents. Hooper
Antonio 2010, no pet.). When reviewing a legal sufficiency or also confirmed that he had received a credit card from the
“no evidence” challenge, we determine “whether the evidence San Antonio City Employees Federal Credit Union and that
at trial would enable reasonable and fair-minded people to he made use of that credit card. Furthermore, Hooper stated
reach the verdict under review.”City of Keller v. Wilson, 168 that he had received statements from “Card Services” but he
S.W.3d 802, 827 (Tex.2005); Rosas, 335 S.W.3d at 316.If the did not recall if they were for a San Antonio City Employees
appellant is challenging the legal sufficiency of the evidence Federal Credit Union account. Hooper also stated he had
to support a finding on which he did not have the burden of made payments to “Card Services.”
proof at trial, the appellant must demonstrate on appeal that
no evidence exists to support the adverse finding. Rosas, 335 Second, the Credit Union called one of its employees, Lorie
S.W.3d at 316.We sustain a legal sufficiency or “no evidence” Garcia, to testify. Garcia testified that customers were given
challenge when: (1) the record discloses a complete absence a copy of the Credit Line Account Agreement and Disclosure
of evidence of a vital fact; (2) the court is barred by rules of when they applied for credit. Garcia further stated that the
law or of evidence from giving weight to the only evidence Credit Line Account Agreement and Disclosure stated that
offered to prove a vital fact; (3) the evidence offered to prove credit cards were subject to a variable interest rate. Garcia
a vital fact is no more than a mere scintilla; or (4) the evidence stated that the current interest rate on Hooper's account was
establishes conclusively the opposite of the vital fact. Id. 18% because of the account's delinquent status. According
Evidence does not exceed a scintilla if it is so weak as to to Garcia, the prior interest rate on Hooper's account was
do no more than create a mere surmise or suspicion that the 9%. Finally, Garcia testified that the principal balance on
fact exists.Akin, Gump, Strauss, Hauer & Feld, L.L.P. v. Nat'l Hooper's account was $20,600.36 and that the interest balance
Dev. and Research Corp., 299 S.W.3d 106, 115 (Tex.2009). on Hooper's account was $4,080.30. No further evidence was
presented.
At trial, the evidence was as follows. The Credit Union
presented two documents that are relevant to our discussion. Although there was some evidence that Hooper obtained a
The first document, titled “Credit Line Account and Personal credit card from the Credit Union and that he used the credit
Loan Application,” indicates that Hooper applied for a credit card, there was no evidence establishing Hooper's specific
card, specifically a “Mastercard Platinum [* * * * * * * * obligations under the terms of an agreement. For example,
* * * *]7844 9 .0%.”This document appears to have been there was no evidence regarding Hooper's obligation to repay
signed by Hooper as an “applicant” on March 22, 2007. This the balance and interest on the account, including when
document states: “You agree and understand that if approved, his payments were due, where his payments were to be
[y]ou are contractually liable according to the applicable made, and what would transpire if he failed to make a
terms of the Credit Line Account Agreement and Disclosure. payment in accordance with the terms of an agreement. Nor
You will receive a copy of that Agreement no later than was there evidence indicating Hooper failed to comply with
the time of [y]our first credit advance and you promise to a particular term of an agreement, or otherwise failed to
pay all amounts charged to [y]our [a]ccount according to perform his obligations under an agreement. We conclude

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Hooper v. Generations Community Federal Credit Union, Not Reported in S.W.3d (2013)
2013 WL 2645111

the record discloses the complete absence of evidence of
the third element of the Credit Union's breach of contract
claim, i.e., that Hooper breached the terms of an agreement CONCLUSION
with the Credit Union. In the absence of evidence that
Hooper failed or refused to do something he promised to Because Hooper's second issue is dispositive of this appeal,
do under an agreement, the Credit Union failed to prove its we need not address his first issue. SeeTex.R.App. P. 47.1
breach of contract claim. See Pioneer Land & Cattle Co. (directing appellate courts to issue opinions that are as
v. Collier, No. 07–12–00320–CV, 2013 WL 2150814, at *6 brief as practicable but also address every issue raised and
(Tex.App.Amarillo 2013, no pet. h.) (concluding the trial necessary to the final disposition of the appeal). We reverse
court did not err in granting a no-evidence summary judgment the judgment of the trial court, and render judgment that
on the plaintiff's breach of contract claim when there was no Generations Community Federal Credit Union take nothing
evidence of the first, third, or fourth elements of the claim). by its suit.
We, therefore, hold the evidence was legally insufficient to
support the trial court's judgment. Hooper's second issue is
sustained.

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
In re Bailey, 975 S.W.2d 430 (1998)

(1) state the amount of the proposed minimum salary for
975 S.W.2d 430 each rank, pay grade, or classification;
Court of Appeals of Texas,
Waco. (2) state the effective date of the proposed salary increase;

In re John BAILEY. (3) designate five qualified voters to act as a committee
of petitioners authorized to negotiate with the
No. 10–98–293–CV. | Sept. 15, 1998. commissioners court under Subsection (g);

Members of the county sheriff's department sought writ of (4) be signed by a number of qualified voters equal to at
mandamus requiring county commissioners court to place least 25 percent of the number of voters who voted in the
a salary-increase proposal on election ballot. The Court of most recent countywide election for county officers.
Appeals, Vance, J., held that county commissioners court did
not have a clear duty to place proposal on election ballot, and Id. § 152.072(b).
mandamus would not lie to compel it to do so.
Once such a petition is filed, the statute gives the
Petition denied. Commissioners Court three options. It may: 1) adopt the
proposal as stated in the petition, 2) offer an alternative
proposal, or 3) call an election on the proposal. Id. §
Attorneys and Law Firms 152.072(c). If it chooses to offer an alternative and the
alternative is accepted by the committee of petitioners, no
*430 R. John Cullar, Mills, Millar, Matkin & Cullar, Waco,
election is necessary. Id. § 152.072(g).
for Relator.

James P. Allison, Allison, Bass & Associates, L.L.P., Austin,
for Respondent. FACTS

Before DAVIS, C.J., and CUMMINGS and VANCE, JJ. On May 11, 1998, a petition containing 4,091 signatures
was submitted to the Commissioners Court. It is undisputed
that this petition contains signatures from qualified voters
*431 OPINION equal to at least twenty-five percent of the number of voters
who voted in the most recent county-wide election for
VANCE, Justice. county officers. On June 5, the Commissioners Court voted
to offer an alternative salary proposal as contemplated in
John Bailey and other members of the Navarro County
section 152.072(c). The committee of petitioners rejected the
Sheriff's Department seek a writ of mandamus to order the
alternative proposal. On September 2, the Commissioners
Navarro County Commissioners Court to place a salary-
Court voted to place only a portion of the proposed salary
increase proposal on the November 3, 1998, election ballot as
plan on the ballot for the November 3 election. Bailey seeks
petitioned by 4,091 qualified voters under Local Government
to have the proposed plan placed on the ballot in its entirety.
Code section 152.072. See Tex. Loc. Gov't.Code Ann. §
152.072 (Vernon 1988 & Supp.1998). We will deny relief.

THE PROPOSAL
LOCAL GOVERNMENT CODE SECTION 152.072 The petition's proposed minimum salary plan contains two
sub-parts. The first sets a minimum salary for each member
Section 152.072 of the Local Government Code provides that
of the Navarro Sheriff's Department. The Commissioners
“the qualified voters of a county with a population of more
Court has agreed to submit this portion of the proposal to
than 25,000 may petition the Commissioners Court of the
the voters in the November 3 election. The portion to which
county to increase the minimum salary of each member of the
the Commissioners Court objects and therefore refuses to
sheriff's department.” Id. § 152.072(a). Such a petition must:
place on the ballot seeks, in addition to the fixed salary

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
In re Bailey, 975 S.W.2d 430 (1998)

proposed, to mandate that each member of the Sheriff's 10,000 or more to establish longevity pay for each member
Department receive “seniority pay” based on a specified “step of the fire and police department, counties with a population
plan.” The Commissioners Court argues that the petition under 150,000 do not have such an obligation. Compare
attempts to create a classification plan (i.e. step increases and TEX. LOC. GOV'T.CODE ANN. § 141.032 (Vernon 1988)
longevity pay) where no such plan exists and, as such, is not with § 152.074 (Vernon 1988). The city of McAllen was
contemplated by section 152.072's provisions providing for already under an obligation to provide longevity pay; thus,
“minimum salaries” and an “effective date.” Bailey, arguing the proposal did not “create” a compensation plan. Because
that the Commissioners Court's duty is purely ministerial, Navarro County is not under an obligation to provide
urges that the Commissioners Court has no discretion but longevity pay, the proposal in this case arguably steps outside
to put the proposed minimum salary plan on the ballot, the bounds of section 152.072.
regardless of whether it believes the proposal to be outside
the bounds of section 152.072.

IS MANDAMUS APPROPRIATE?

LONGEVITY PAY [2] [3] [4] Mandamus exists to command particular
performance when there is a clear duty to perform. See
[1] The portion of the proposal at issue attempts to O'Connor v. First Court of Appeals, 837 S.W.2d 94, 97
set longevity pay, which is not an existing method of (Tex.1992). Mandamus will issue when there is a legal duty
compensation within the Sheriff's Department. The only issue to perform a nondiscretionary, ministerial act, a demand for
is: does the Commissioners Court have any discretion about performance of that act, and a refusal. Anderson v. City of
whether to place on the ballot that portion of the proposal Seven Points, 806 S.W.2d 791, 793 (Tex.1991); Doctors
which attempts to set longevity pay? Bailey relies on Arenas Hosp. Facilities v. Fifth Court of Appeals, 750 S.W.2d 177,
*432 v. Board of Commissioners of the City of McAllen to 178 (Tex.1988). An act is ministerial when the law clearly
say that it has no discretion. Arenas v. Board of Com'rs of the spells out the duty to be performed by the official with
City of McAllen, 841 S.W.2d 957 (Tex.App.—Corpus Christi sufficient certainty that nothing is left to the exercise of
1992, orig. proceeding ). However, Arenas is distinguishable discretion. Id. Moreover, a writ of mandamus will not issue
from the present case. In Arenas, the City Commissioners of to compel a public official to perform an act which involves
the City of McAllen were petitioned under section 141.034 an exercise of discretion. Id.
of the Local Government Code. The proposal provided for
minimum salary increases for six personnel classifications Ordinarily, we have no jurisdiction in a mandamus
within the Police Department in addition to longevity pay for proceeding against county officials. TEX. GOV'T CODE
three of the six. TEX. LOC. GOV'T.CODE ANN. § 141.034 ANN. § 22.221(b) (Vernon Supp.1998). However, the
(Vernon 1988). Believing the petition failed to comply with question before us involves an election matter and the
section 141.034, the City Commissioners refused to act. The Legislature has broadly extended our mandamus jurisdiction
Corpus Christi Court held that the respondents could not to resolve election questions which, as here, are usually time-
totally ignore the petition, even though the petition may have sensitive. See TEX. ELEC.CODE ANN. § 273.061 (Vernon
requested more than a “proposed minimum salary.” The court 1986).
went on to say that it would “express no opinion concerning
whether the wording of the statute would bind respondents
only to the proposed minimum base salary should the voters
CONCLUSION
act favorably on the petition.” Arenas, 841 S.W.2d at 959.
Because it attempts to create a scheme for longevity pay
Although section 141.034 and section 152.072 of the which is neither required of Navarro County nor provided
Local Government Code are substantially similar, Arenas ' by the County, the petition in question arguably exceeds the
interpretation of section 141.034 must be read in conjunction limits of section 152.072. Because we cannot say that the
with other sections of the Local Government Code—sections Commissioners Court has a clear duty to act, mandamus will
which place different obligations on municipalities and not lie.
counties with regard to longevity pay. Although section
141.032 requires each municipality with a population of The petition for writ of mandamus is denied.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
In re Bailey, 975 S.W.2d 430 (1998)

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Integrity Group, Inc. v. Medina County Com'rs Court, Not Reported in S.W.3d (2004)
2004 WL 2346620

Sitting: CATHERINE STONE, Justice, SARAH B.
2004 WL 2346620 DUNCAN, Justice, PHYLIS J. SPEEDLIN, Justice.
Only the Westlaw citation is currently available.

SEE TX R RAP RULE 47.2 FOR
DESIGNATION AND SIGNING OF OPINIONS. MEMORANDUM OPINION

Court of Appeals of Texas, Opinion by SARAH B. DUNCAN, Justice.
San Antonio.
*1 The Integrity Group, Inc. appeals the trial court's
The INTEGRITY GROUP, INC., Appellant, summary judgment in favor of the Medina County
v. Commissioners Court. We hold the Commissioners Court
is without authority to reject Integrity's plat because of the
MEDINA COUNTY
lot size and therefore reverse the trial court's judgment and
COMMISSIONERS COURT, Appellee.
remand the cause for further proceedings consistent with this
No. 04-03-00413-CV. | Oct. 20, opinion.
2004. | Rehearing Overruled Feb. 7, 2005.
[1] In 1993 Integrity began the process of seeking approval
Synopsis to subdivide a 4.843-acre tract of land adjacent to Medina
Background: Developer brought action against the Medina Lake. Part of the tract is located over the Edwards Aquifer
County Commissioners Court, requesting injunctive and Recharge Zone; and Integrity plans on employing on-site
declaratory relief, as well as a writ of mandamus, after the sewage systems. Ultimately, in 1995, the Medina County
Commissioners Court denied final approval of developer's Commissioners Court denied final approval of Integrity's
plat application. The 38th Judicial District Court, Medina plat application “because the proposed plat does not meet
County, Antonio G. Cantu, J. (Assigned), granted the Medina County's Subdivision Rules and Regulations and/or
Commissioners Court's motion for summary judgment. checklist and is, therefore, not in compliance.”In response,
Developer appealed. Integrity sued the Commissioners Court for injunctive and
declaratory relief, as well as a writ of mandamus. See Medina
County Comm'rs Court v. Integrity Group, Inc., 944 S.W.2d
6, 7-8 (Tex.App.-San Antonio 1996, no writ); Medina County
[Holding:] The Court of Appeals, Sarah B. Duncan, J., held
Comm'rs Court v. Integrity Group, Inc., 21 S.W.3d 307,
that Commissioners Court lacked authority to reject plat
308-09 (Tex.App.-San Antonio 1999, pet. denied). The trial
because of lot size.
court granted the Commissioners Court's motion for summary
judgment, which contends that the Commissioners Court is
Reversed and remanded. authorized-as an agent for what is now called the Texas
Commission on Environmental Quality-to reject the plat
Stone, J., concurred with opinion. because it fails to comply with the one-acre minimum lot
requirement contained in the Subdivision Rules for Medina
County for subdivisions over the Edwards Aquifer Recharge
From the 38th Judicial District Court, Medina County, Texas, Zone. We disagree.
Trial Court No. 95-06-13409-CV; Antonio G. Cantu, 1 Judge
Presiding. [2] “[A] commissioners court[ ] shall exercise such powers
and jurisdiction over all county business, as is conferred
Attorneys and Law Firms by this Constitution and the laws of the State.”TEX.
CONST. art. V, § 18. “Texas courts have interpreted this
David W. Ross, Law Office of Ralph Brown, P.C., San to mean that, although a commissioners court may exercise
Antonio, for appellant. broad discretion through implied powers in conducting
county business, the legal basis for any action taken
George E. Hyde, Denton, Navarro, Rocha & Bernal, P.C., San
must be grounded ultimately in the Texas Constitution or
Antonio, for appellee.
statutes.”White v. Eastland County, 12 S.W.3d 97, 100

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Integrity Group, Inc. v. Medina County Com'rs Court, Not Reported in S.W.3d (2004)
2004 WL 2346620

(Tex.App.-Eastland 1999, no pet.). A commissioners court's for summary judgment on this ground. We therefore reverse
power relative to the plat approval process is found in Chapter the trial court's judgment and remand the cause for further
232 of the Texas Local Government Code. Under section proceedings consistent with this opinion. 3
232.002(a) of the Code, a commissioners court “may refuse to
approve a plat if it does not meet the requirements prescribed
by or under [chapter 232]or if any bond required under CATHERINE STONE, Justice, concurring.
[chapter 232] is not filed with the county.”TEX. LOC. GOV'T I concur with the court's judgment. I write separately,
CODE ANN. § 232.002(a) (Vernon Supp.2003). On the however, to address a contention presented by the Medina
other hand, if a developer meets the statutory requirements, County Commissioners Court that is not directly answered in
the commissioners court's duty to approve the plat becomes the majority opinion.
ministerial. 2
The Commissioners Court contends that the cases cited by
If the proposed plat is not located in a county near an Integrity (and relied upon by the majority) are not controlling
international border, the plat requirements prescribed by because the cases do not address a situation in which
chapter 232 are located in sections 232.001-.0032. Section the county has been given additional statutory authority
232.001(b) requires the plat to describe the subdivision by to regulate plats beyond the basic regulations specified in
metes and bounds, locate the subdivision with respect to an TEX. LOC. GOV'T CODE ANN.. § 232.001-.0032 (Vernon
original corner of the original survey of which it is a part, Supp.2004). The Commissioners Court claims that as the
state the dimensions of the subdivision and each lot, street, or authorized agent of the Texas Commission on Environmental
other part to be dedicated to public use, and be acknowledged Quality, it can impose a one-acre minimum lot size
by the owner or his agent and filed with the county clerk. requirement when use of on-site sewage disposal facilities
Id. § 232.001(b). The subdivision requirements concern road over the Edwards Aquifer Recharge Zone is contemplated.
development, drainage, and lot and block monumentation. This authority is allegedly derived from Chapter 366 of the
See id. at § 232.003. Additionally, if the source of water Texas Health and Safety Code and corresponding rules in the
for the subdivision is to be groundwater, section 232.0032 Texas Administrative Code. SeeTEX. HEALTH & SAFETY
permits a commissioners court to require a statement “that CODE ANN. § 366.001-.0924 (Vernon 2001 & Supp.2004);
adequate groundwater is available for the subdivision.”Id. 30 TEX. ADMIN. CODE § 285. Indeed, section 285.40 of
at § 232.0032. Chapter 232 thus does not require a plat to the Administrative Code provides that “[e]ach lot or tract of
include planned water and sewer facilities unless the plat is land on the recharge zone on which OSSFs [on-site sewage
located in a county near an international border. See id. at § facilities] are to be located shall have an area of at least one
232.022; § 232.023(b)(6). In short, the only “authority” the acre ... per single family dwelling.”30 TEX. ADMIN. CODE
Commissioners Court has cited, and the only authority we § 285.40(c)(1).
have found, that might permit a commissioners court to reject
a plat because of lot size is this statement in the Summary Recognizing that the Local Government Code does
of Facts in this court's opinion in Medina County Comm'rs not contain the one-acre minimum size requirement,
Court v. Integrity Group, Inc., 944 S.W.2d at 6:“Before the Commissioners Court argues that rules of statutory
the [Commissioners] [C]ourt grants a plat final approval, construction should be employed to harmonize applicable
the subdivider must comply with [Medina County's] rule provisions of the Local Government Code with the Health
governing lot sizes....”Id. at 7. However, this statement is and Safety Code. When the provisions are harmonized, the
made in the Summary of Facts; it is not supported by Commissioners Court contends it can reject Integrity's plat
authority; and it is clearly dicta since the opinion deals not because: (1) the land in question is over the Edwards Aquifer
with the plat approval process but with the Commissioners Recharge Zone; (2) use of OSSFs is contemplated; and (3)
Court's and the individual commissioners' official immunity. the plat does not provide for one-acre lots. The error in
See id.We therefore decline to give it weight in the plat the Commissioners Court argument, however, is that the
approval context. statutes relied upon by the Commissioners Court for authority
to impose a one-acre minimum lot size do not pertain to
*2 Because there is no statutory authority authorizing the the limited issue before the court at this time: the right of
Commissioners Court to reject a plat because of lot size, the the Commissioners Court to accept or reject the tendered
trial court erred in granting the commissioners court's motion plat. The Health and Safety Code and Administrative Code

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Integrity Group, Inc. v. Medina County Com'rs Court, Not Reported in S.W.3d (2004)
2004 WL 2346620

County, 906 S.W.2d 120, 122-23 (Tex.App.-Austin 1995,
provisions relied upon by the Commissioners Court concern
writ denied). While at first blush it may seem more efficient to
the permitting and construction of OSSFs. On the other hand,
submit plats only if they can meet other requirements, such as
the Local Government Code provisions at issue concern
the OSSF requirements, the two processes of accepting a plat
a county's authority to accept and file a tendered plat.
and permitting an OSSF are separate. That the two processes
There is no need to employ rules of statutory construction
remain separate does not diminish the Commissioners Court's
to harmonize the statutes because we are not faced with
role as an agent for the Commission on Environmental
conflicting statutory provisions.
Quality. Whether the Commissioners Court, as an agent for
the Commission on Environmental Quality, can ultimately
*3 The Commissioners Court has a ministerial duty to
regulate minimum lot sizes is a question for another day.
approve a plat that complies with the provisions of Chapter
232 of the Local Government Code. See Elgin Bank v. Travis

Footnotes
1 Sitting by assignment.
2 See, e.g., Elgin Bank of Texas v. Travis County, 906 S.W.2d 120, 123 (Tex.App.-Austin 1995, writ denied) (per curiam) (“Section
232.003 is the only authority upon which the county may base platting requirements.”); Projects American Corp. v. Hilliard, 711
S.W.2d 386, 389 (Tex.App.-Tyler 1986, no writ.)(“Under [the predecessor to chapter 232], the authority of the commissioners court
to approve plats is not discretionary. If a plat submitted meets all statutory requirements, the commissioners court cannot impose
additional requirements, but must approve such plat.”); Commissioners Court v. Frank Jester Dev. Co., 199 S.W.2d 1004, 1007
(Tex.Civ.App.-Dallas 1974, writ ref'd n.r.e.) (“When the platter has done all that the statute demands, [the commissioners courts duty
to authorize the filing of the plat] becomes a mere ministerial duty, the performance of which may be compelled by mandamus.”);
see alsoOp. Tex. Att'y Gen. Nos. JM-789 (1987) (“[T]he statutory powers granted to the county over subdivisions are plainly limited
to ordering certain standards to be applied to the physical dimensions and construction standards of streets and roads.... Thus, when
a person who seeks to file and record a plat has complied with all of the statutory requirements outlined in chapter 232 of the Local
Government Code, approval and filing of the plat becomes a mere ministerial duty.”); JM-534 (1986) (“If a person who seeks to
file and record a plat has complied with the statutory requirements outlined in [the predecessor to chapter 232], approval and filing
of the plat becomes a mere ministerial duty.”); JM-317 (1985) (“If the owner or owners of the tract of land subdivided in the plat
follow the specified statutory procedure outlined in [the predecessor to chapter 232], the commissioners court is not authorized to
reject the filing of the plat.”).
3 We express no opinion as to whether the Commissioners Court may effectively regulate minimum lot size in other contexts, such as
the building and sewage facility permitting processes.

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Lewis v. Metropolitan Sav. and Loan Ass'n, 550 S.W.2d 11 (1977)

Tex.Rev.Civ.Stat.Ann. art. 852a. The applicant, to be known
as the Gregg County Savings and Loan Association, is a
550 S.W.2d 11
petitioner here. The application was opposed by three existing
Supreme Court of Texas.
savings and loan associations in Gregg County, known
W. Sale LEWIS, Savings and Loan as Metropolitan Savings and Loan Association, Kilgore
Commissioner, et al., Petitioners, Savings and Loan Association, and Longview Savings and
v. Loan Association. The trial court sustained the approval
order of the Commissioner, also a petitioner here, but this
METROPOLITAN SAVINGS AND LOAN
judgment was reversed by the Court of Civil Appeals and
ASSOCIATION et al., Respondents.
the proceeding was remanded to the Commissioner with
No. B-5998. | March 9, 1977. instructions to deny the charter application. 535 S.W.2d 35.
We modify the judgment of the Court of Civil Appeals to
| Rehearing Denied May 25, 1977.
the extent of instructing the Commissioner to proceed in
Competing savings and loan associations sought review of a accordance with this opinion.
decision by the Savings and Loan Commissioner approving [1] The Court of Civil Appeals determined that the
charter application for the establishment of new savings and contestants, respondents here, were denied due process by
loan association in Gregg County. The 53rd Judicial District the hearing examiner in his exclusion from the administrative
Court, Travis County, Mace B. Thurman, Jr., J., affirmed record of competent and material evidence proffered by the
the Commissioner's order, and the contestants appealed. The contestants. 1 We granted writ of error to resolve the question
Court of Civil Appeals, O'Quinn, J., 535 S.W.2d 35, reversed of whether an approval order of the Savings and Loan
and remanded. Upon granting writ of error, the Supreme Commission is invalid for arbitrariness when the contesting
Court, Steakley, J., held that the Commissioner's approval parties are denied due process of law in the conduct of the
order, was invalid for arbitrariness where the contesting administrative hearing, notwithstanding that under the record
parties were denied due process of law in the conduct of the as made, the order may be said to have reasonable factual
administrative hearing, notwithstanding that under the record support under the precepts of the substantial evidence rule.
as made the order might be said to have reasonable factual We now answer this question in the affirmative.
support under the precepts of the substantial evidence rule.

Judgment affirmed as modified. *13 It is the basic contention of the Attorney General on
behalf of the Commissioner, and of counsel for the applicant
McGee, J., filed a dissenting opinion in which Greenhill, C. association, that the only test to be considered by the courts in
J., and Denton, J., joined. determining the issue of arbitrariness vel non of an approval
order of the Savings and Loan Commissioner is whether the
order is supported by substantial evidence. The argument in
Attorneys and Law Firms effect is that a denial of due process in the administrative
hearing becomes immaterial and beside the point if the order
*12 John L. Hill, Atty. Gen., Tom M. Pollan, Asst. Atty.
can be said to have reasonable evidentiary support in the
Gen., McKay & Wash, John J. McKay, Austin, Kenley,
administrative record.
Boyland, Hawthorn, Starr & Coghlan, Herbert Boyland,
[2] Broadly speaking, the substantial evidence rule is
Longview, for petitioners.
a court review device to keep the courts out of the
Heath, Davis & McCalla, Dudley D. McCalla, Austin, for business of administering regulatory statutes enacted by the
respondents. Legislature; but it remains the business of the courts to
see that justice is administered to competing parties by
Opinion governmental agencies. As stated by Professor Davis in his
Administrative Law Treatise, Vol. 4, s 29.01: “Although
STEAKLEY, Justice. the scope of judicial review of administrative action ranges
from zero to one hundred per cent, that is, from complete
This is an appeal from an order of the Savings and Loan
unreviewability to complete substitution of judicial judgment
Commissioner approving a charter for an additional savings
on all questions, the dominant tendency in both state courts
and loan association in Longview, Gregg County, Texas. See

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Lewis v. Metropolitan Sav. and Loan Ass'n, 550 S.W.2d 11 (1977)

and federal courts is toward the middle position known 432 S.W.2d 702 (Tex.1968). What occurs, then, at the
as the substantial-evidence rule. Under this rule, the court administrative hearing becomes of paramount importance in
decides questions of law but it limits itself to the test the statutory procedures established by Article 852a. If there
of reasonableness in reviewing findings of fact. Broadly, is evidence in an administrative record that can be said to
questions of law include not only common law, statutory qualify as substantial, the parties may yet have been denied
interpretation, and constitutional law, but also questions of due process and the rudiments of fair play in the conduct of the
administrative jurisdiction, of fair administrative procedure, *14 administrative hearing that produced the record upon
and of protection against arbitrary or capricious action or which the agency acted. See Reavley, Substantial Evidence
abuse of discretion.” and Insubstantial Review in Texas, 23 S.W.L.J. 239 (1969);
Berger, Administrative Arbitrariness and Judicial Review, 65
[3] [4] [5] In Texas, the substantial evidence rule had Colum.L.Rev. 55 (1965); Jaffe, The Right to Judicial Review,
its origin in appeals from orders of administrative agencies 71 Harv.L.Rev. 401 (1958).
under statutes requiring de novo review in court. In this type
of appeal the evidence is heard anew by the court and the [7] As indicated earlier, our primary concern in granting
conduct of the administrative hearing, and the evidence heard writ of error was whether the parties opposing the charter
by the agency, are of secondary, if any, importance. Trapp v. application were denied due process by rulings of the
Shell Oil Company,145 Tex. 323, 198 S.W.2d 424 (1946); hearing examiner that excluded competent and material
Cook Drilling Company v. Gulf Oil Corporation, 139 Tex. evidence from the administrative record, thus precluding its
80, 161 S.W.2d 1035 (1942); Shupee v. Railroad Commission consideration by the Commissioner in his decision process.
of Texas, 123 Tex. 521, 73 S.W.2d 505 (1934). In practical This is particularly represented by the exclusion from the
result, it has not taken much evidence under our decisions to record of what is identified as Contestant's Exhibit 34, and for
qualify as substantial. In fact, the evidence may be substantial the reasons now to be stated we hold that the opposing parties
and yet greatly preponderate the other way. Cf. Gerst v. were denied due process by this ruling.
Goldsbury, 434 S.W.2d 665 (Tex.1968). Moreover, most
contested administrative decisions are made in the context of
disputed facts with evidence of a substantial nature on both The case of the applicant for a charter to establish a fourth
sides. Even so, the proceedings of an administrative agency savings and loan association in Longview, Gregg County,
must meet the requirements of due process of law. Miller v. Texas, rested principally upon the testimony of Dr. Robert
Railroad Commission, 363 S.W.2d 244 (Tex.1962); Railroad Branson of Bryan, Texas, as an economic-expert witness. It
Commission v. Alamo Express, 158 Tex. 68, 308 S.W.2d 843 is evident from the approval order of the Commissioner that
(1958); Francisco v. Board of Dental Examiners, 149 S.W.2d he was greatly influenced by the testimony of this witness
619 (Tex.Civ.App.1941, error ref'd). in reaching his decision favorable to the application. It was
shown that Dr. Branson had supported similar applications
[6] We recognized in Gerst v. Nixon, 411 S.W.2d in prior proceedings and that in his testimony he had
350 (Tex.1966) that Article 852a s 11.12, relating to employed certain tests or standards in reaching his expert
judicial review of an order of the Savings and Loan opinion regarding the need for additional savings and loan
Commissioner, does not provide for the application of the test facilities. The methodology employed by Dr. Branson was
or procedures usually employed in determining the validity demonstrated in Contestant's Exhibit 3 which was admitted
of an administrative order; and further, that a hearing before into evidence by the hearing examiner for the purpose of
a hearing officer of the Savings and Loan Commissioner is a showing “the procedure this expert witness has used in the
different proceeding from the informal hearing considered by past.” Exhibit 3 contained a series of tables or ratios prepared
this Court in Cook Drilling Company v. Gulf Oil Corporation, by Dr. Branson in an earlier study in support of his testimony
supra. We also said that the effect of Article 852a was to in a prior proceeding. Gregg County was utilized in this study
adopt the rule that the Commissioner's order is to stand or as a comparable county.
fall upon the evidence adduced and matters noticed at the
The evidence identified as Contestant's Exhibit 34 was
Commissioner's hearing and not upon evidence originally
prepared by Dr. James R. Vinson, an expert witness for
produced at a subsequent trial de novo in court. However, the
the contesting parties. The Exhibit was predicated upon
method of review, i. e., under the substantial evidence rule, is
the methodology of Dr. Branson as exhibited in Exhibit
unchanged. Gerst v. Oak Cliff Savings and Loan Association,
3, with the economic information updated with respect to

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Lewis v. Metropolitan Sav. and Loan Ass'n, 550 S.W.2d 11 (1977)

Gregg County, Texas. This information was displayed in courts that refusal to receive competent and material evidence
the manner previously used by Dr. Branson and Exhibit 34 may be a denial of due process. The requirement that proper
demonstrated that on the basis of the update, Gregg County, evidence be received is a necessary counterpart of the rule that
Texas was at the opposite end of the scale from the tests or the agency must give due weight to all the evidence before
standards previously utilized by Dr. Branson. This witness it; refusal to consider proper evidence which has been duly
had previously found a need for a new association in the fact proffered falls within the condemnation that voids arbitrary
that the existing associations had a high buying income per administrative action.
association, whereas Gregg County was shown to have the
lowest buying income per association. Similarly, Dr. Branson If it appears that the excluded evidence could not materially
had previously found a need for a new association because have affected the outcome of the case if a remand to
of a low assets per capita figure, whereas Gregg County receive and consider the evidence improperly excluded
was shown to have the highest assets per capita. Finally, Dr. would amount to nothing more than “a postponement of
Branson had previously found need because of a high ratio of the inevitable,” the error committed is not prejudicial. But
income to assets, whereas Gregg County was shown to have normally it is impossible for a reviewing court to be assured
the lowest ratio of income to assets. that the outcome could not have been affected by the
consideration of the excluded testimony, and in the usual case
In our view, the evidence reflected in Exhibit 34 was clearly the necessary result of the exclusion of proper testimony is to
competent and relevant and the error in its exclusion required void the administrative order. Cooper, State Administrative
the reversal by the Court of Civil Appeals of the judgment Law, Vol. I (1965) pp. 403, 404.
of the trial court and the remand of the proceeding to the
Commissioner. From our study of the record we do not
consider that Exhibit 34 was offered by the Contestants for The governing rule was stated in Donnelly Garment Co.
the purpose of establishing a norm or standard, or criterion, v. NLRB, 123 F.2d 215 (8th Cir. 1941), and restated with
as argued by petitioners. Nor do we regard the evidence approval in NLRB v. Burns, 207 F.2d 434 (8th Cir. 1953), as
as cumulative even if, as asserted by petitioners without follows:
record references, “all of the facts in Exhibit 34 pertaining to “That a refusal by an administrative
Gregg County were in evidence before the Commissioner.” agency such as the National Labor
It is apparent to us that these arguments misconceive the Relations Board to receive and consider
evidentiary function and effect of Exhibit 34. The evidence competent and material evidence offered
in the Exhibit was proffered for the purpose of impeaching by a party to a proceeding before it,
the testimony of Dr. Branson and might well have been amounts to a denial of due process is not
viewed by the Commissioner as doing so. In such purpose open to debate. * * * That the Board
and effect, the evidence also tended to weaken the evidentiary would or might have reached no different
support for an additional savings and *15 loan association conclusion had the rejected evidence
in Gregg County, Texas. Of course, we cannot determine been received, is entirely beside the
what influence this excluded evidence might have had upon point. The truth is that a controversy tried
the Commissioner in his decision process. At the least, its before a court or before an administrative
exclusion may have affected the result, and in fairness to agency is not ripe for decision until
the opposing parties the Commissioner should have had all competent and material evidence
such evidence before him. Moreover, this comports with proffered by the parties has been received
the statutory directive of s 11.11(2) of Article 852a that and considered. . . .”
“(O)pportunity shall be afforded any interested party to
respond and present evidence and argument on all issues [8] In the eyes of the law there is no hearing unless a fair
involved in any hearing held under any provision of this Act.” opportunity is afforded the parties to prove their case before
an administrative agency. People ex rel. Hirschberg v. Board
Professor Cooper in his treatise on state administrative law
of Supervisors, 251 N.Y. 156, 167 N.E. 204, 211 (1929). See
draws these conclusions:
also Gallant's Case, 326 Mass. 507, 95 N.E.2d 536 (1950);
The exclusion of proper evidence may vitiate the agency's
Prince v. Industrial Comm'n, 89 Ariz. 314, 361 P.2d 929
decision, if it appears that its exclusion may have affected
(1961).
the result. State courts agree with decisions in the federal

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Lewis v. Metropolitan Sav. and Loan Ass'n, 550 S.W.2d 11 (1977)

[9] The decision of the Savings and Loan Commissioner
McGEE, J., dissents in an opinion in which GREENHILL, C.
is not governed by the precepts of the substantial evidence
J., and DENTON, J., join.
rule, and his responsibility is not one of determining if
a particular result will be supportable by application of McGEE, Justice, dissenting.
the rule to the administrative record. To the contrary, the
decision of the Commissioner is to be in the public interest I respectfully dissent.
after full consideration of all the surrounding facts and
I read the majority opinion to hold that the contestants in
circumstances, and in fairness and justice to the competing
this case, respondents herein, were denied due process of
parties. Essential to the discharge of this responsibility is an
law, primarily because of the exclusion of contestants' Exhibit
administrative record that presents the relevant and material
34, regardless of the fact that the Commissioner's order is
facts, and a determination by the courts of whether a particular
supported by substantial evidence.
administrative record fairly does so requires an examination
of the whole record. Article 852a does not establish a self- I disagree with the majority opinion in its holding that the
contained administrative process unreviewable by the courts
exclusion of Exhibit 34 was a violation of due process. There
for arbitrariness if the administrative record, no matter how are situations where the wrongful actions of the hearing
it came about, can be said to contain substantial evidence in officer would be so detrimental to the presentation of a
support of the ultimate action of the Commissioner. party's position that it would constitute a violation of due
process, but the wrongful exclusion of Exhibit 34 was not
*16 [10] This is not to say that an order of the the kind of error which would deny contestants due process
Commissioner is always insecure in court if the hearing of law. The majority states that excluding Exhibit 34 was
examiner has made mistakes in the admission or exclusion of harmful in that it could have impeached the testimony of
evidence, or in other respects. Nor is it to say that a hearing Dr. Branson. I believe that Exhibit 34 was only cumulative
examiner, who may or may not be trained or experienced of other evidence which sought to impeach Dr. Branson's
in the law, must measure up to judicial standards in the testimony and its exclusion was harmless. Contestants offered
conduct of an administrative hearing. 2 But it is to say, as Exhibit 3, a study done six years earlier by Branson which
we said in Gerst v. Nixon, 411 S.W.2d 350 (Tex.1966) that compared a different county, Bowie County, to eight other
arbitrary action of an administrative agency cannot stand. counties, one of which was Gregg County. Contestants'
There is arbitrariness where the treatment accorded parties Exhibit 3 was admitted to show the prior methodology used
in the administrative process denies them due process of by Branson and was admitted over the applicant's objection.
law. While we recognized in Gerst v. Nixon that the test The methodology used by Branson in the Gregg County
generally applied by the courts in determining the issue of study was substantially different than that used in the Bowie
arbitrariness is whether or not the administrative order is County study. Exhibit 3 had absolutely no relevance to the
reasonably supported by substantial evidence, we made clear charter application in Gregg County. The contestants then
in the original opinion and again on Motion for Rehearing that sought to admit Exhibit 34 which used the methodology of
the record there did not present a question of procedural due Exhibit 3 with updated figures. Exhibit 34 was excluded
process. by the *17 hearing commissioner. The majority opinion
states that the value of Exhibit 34 was its impeachment of
Branson's testimony. Exhibit 34 could not impeach Branson
The judgment of the Court of Civil Appeals is modified
as to the Gregg County study because the methodology used
so as to remand this proceeding to the Savings and Loan
by Branson in the Gregg County study was different from
Commissioner for further proceedings consistent with this
that used in the Bowie County study. I disagree with the
opinion; and as so modified, the judgment of the Court
majority opinion which holds that the exclusion of Exhibit
of Civil Appeals is affirmed. This modification will permit
34 was so harmful that it denied contestants due process of
the Commissioner to order a reopening of the hearings and
law. Remanding this case to receive and consider Exhibit 34
thereafter to reconsider his decision. See Article 852a s
is nothing more than “a postponement of the inevitable.” 1
11.12(6) and First Savings & Loan Ass'n of Del Rio, Texas v.
Cooper, State Administrative Law, at 404 (1965).
Lewis, 512 S.W.2d 62 (Tex.Civ.App.1974, writ ref'd n.r.e.).

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Lewis v. Metropolitan Sav. and Loan Ass'n, 550 S.W.2d 11 (1977)

evidence in the trial court by reason of Art. 3731a, s 1,
The exclusion of Exhibit 34 was not reversible error because
Vernon's Ann.Civ.Stat., is necessarily hearsay and whether
witnesses for contestants testified to what Exhibit 34 sought
favorable or unfavorable to San Antonio Association, could
to show. The purpose for introducing Exhibit 34, other
not serve to show that the Commissioner's rejection of the
than impeachment, was to show that Gregg County was not
application was not supported by substantial evidence. From
a good location for an association because the source of
the record we must assume it was merely cumulative of the
savings deposits was small, there was effective participation
evidence introduced.” 374 S.W.2d at 429.
by existing associations, and the potential for new customers
was not great. Contestants' expert, Dr. Vinson, testified to
the active participation and competition in the home loan See, Lewis v. Southmore Savings Ass'n, 480 S.W.2d 180, 184
business. The officers of the contestants testified that the (Tex.1972); Gerst v. Nixon, 411 S.W.2d 350, 357 (Tex.1966).
source of savings deposits was small due to the number
of associations and the competition for these loans. This The holding of the majority opinion requires reversal of
could be the result sought to be shown by ratio one in evidentiary errors made by hearing officers who are not
Exhibit 34. The officers of the contestants and Dr. Vinson required to be attorneys. The majority opinion states that
testified to the active participation by existing associations in not all evidentiary errors will require reversal and that the
securing deposits and in making loans. Ratio two in Exhibit hearing examiner does not have to meet judicial standards in
34 reflected this because Gregg County had a high ratio of the conduct of a hearing. The standard which these hearing
savings and loan assets per capita. Ratio three of Exhibit officers must meet is unannounced and the result of this
34 sought to show the potential for future customers by opinion seems to indicate that mistakes by hearing officers
comparing the savings and loan assets with the effective will be grounds for reversal just as in a judicial proceeding.
buying income of Gregg County. The officers of contestants The majority's holding will cause appellate courts to review
testified that the competition for customers was fierce and that every case in which contested evidence was excluded at the
there was not a great potential for new customers in Gregg hearing. I think this will result in hearing officers admitting
County. While none of this evidence was presented in ratio all contested evidence due to fear of reversal. This will
form as it was in Exhibit 34, the things that Exhibit 34 sought cause larger records of charter hearings, which are already
to show were testified to and were before the Commissioner. voluminous, and raise the problem of placing incompetent
evidence before the Savings and Loan Commissioner. The
In Benson v. San Antonio Savings Association, 374 S.W.2d argument could then be asserted that reversal is required
423 (Tex.1963), the unsuccessful applicant alleged denial of because the Commissioner considered incompetent evidence.
due process because the trial court refused to allow him access
to an investigative report of the Commissioner. This court *18 I would reverse the court of civil appeals and affirm
held that although refusal to allow examination of the report the order of the Commissioner granting the Savings and Loan
was error, the case did not have to be remanded. The court Association charter.
stated:
“All of this, however, does not require a reversal and remand
GREENHILL, C. J., and DENTON, J., join in this dissent.
of this case. The investigative report, even if admissible in

Footnotes
1 The Court of Civil Appeals also ruled that the fact findings of the Commissioner were not in compliance with the requirements of s
11.11(4) of Article 852a; and, further, that the approval order is not reasonably supported by substantial evidence. We do not reach
either of these questions under our disposition of the appeal.
2 Much has been written about the problem of judicializing administrative procedures. See Friendly, “Some Kind of Hearing,” 123
Pa.L.Rev. 1267 (1975); and the analysis by Professor Davis of the “residuum rule” that requires a reviewing court to set aside an
administrative finding unless the finding is supported by evidence which would be admissible in a jury trial. Davis, Administrative
Law Treatise, Vol. II, s 14.10 (1958). But see People v. Board of Supervisors, 251 N.Y. 156, 167 N.E. 204, 207 (1929) where it
was said: “(D) ecision is intrusted to men who cannot be presumed to be learned in technical rules of law; common sense dictates
the conclusion that they may not be required to apply rules which lie beyond what they may be presumed to know. Their decisions
must, of course, be based upon a consideration of the relevant facts and a fair opportunity must be afforded to present to them such
facts as should properly enter into their decisions.”

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Lewis v. Metropolitan Sav. and Loan Ass'n, 550 S.W.2d 11 (1977)

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

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Luminant Generation Co., L.L.C. v. U.S. E.P.A., 675 F.3d 917 (2012)
74 ERC 1417

[6] EPA's disapproval of regulation based on want of
replicable limitations on discretion of Texas Commission on
675 F.3d 917
Environmental Quality (TCEQ) director was arbitrary and
United States Court of Appeals,
capricious.
Fifth Circuit.

LUMINANT GENERATION COMPANY, L.L.C.;
Vacated and remanded.
Oak Grove Management Company, L.L.C.; Big
Brown Power Company, L.L.C.; Luminant Mining
Company, L.L.C.; Sandow Power Company, Attorneys and Law Firms
L.L.C.; Texas Association of Business; Texas
*920 Philip Stephen Gidiere, III, David R. Boyd, Steven
Association of Manufacturers; Texas Oil & Gas
G. McKinney, Balch & Bingham, L.L.P., Birmingham, AL,
Association; Chamber of Commerce of the United
Harry Max Reasoner (argued), Vinson & Elkins, L.L.P.,
States of America; State of Texas, Petitioners,
Houston, TX, John Aloysius Riley, Christopher Charles
v. Thiele, Bracewell & Giuliani, L.L.P., Austin, TX, Eric
UNITED STATES ENVIRONMENTAL Alan White, Vinson & Elkins, L.L.P., Washington, DC, for
PROTECTION AGENCY, Respondent. Petitioners Luminant Generation Co., L.L.C., Oak Grove
Management Co., L.L.C., Big Brown Power Co., L.L.C.,
No. 10–60891. | March 26, 2012. Luminant Mining Co., L.L.C., Sandow Power Co., L.L.C.
Synopsis Samara Lackman Kline, Van Beckwith, Anika Christine
Background: State of Texas, among others, sought review of Stucky, Baker Botts, L.L.P., Dallas, TX, Matthew G. Paulson,
Environmental Protection Agency's (EPA) disapproval, more Baker Botts, L.L.P., Austin, TX, for Petitioners Luminant
than three years after time within which it was statutorily Mining Co., L.L.C., Sandow Power Co., L.L.C., Texas Ass'n
required to act under Clean Air Act (CAA), of regulation of Business, Texas Ass'n of Manufacturers, Texas Oil &
promulgated by State providing for standardized permit for Gas Ass'n, Chamber of Commerce of the United States of
certain projects that reduced or maintained current emissions America.
rates.
Jon Niermann (argued), Asst. Atty. Gen., Office of the Atty.
Gen. for the State of Texas, John Reed Clay, Jr., Office of the
Atty. Gen., Office of the Sol. Gen., Austin, TX, for Petitioner
Holdings: The Court of Appeals, Jennifer Walker Elrod,
State of Texas.
Circuit Judge, held that:
Daniel Pinkston (argued), Sr. Lit. Atty., U.S. Dept. of Justice,
[1] EPA's reliance on state law in disapproving regulation was Environmental Defense Section, Denver, CO, Scott Fulton,
arbitrary and capricious; Lisa P. Jackson, EPA, Washington, DC, for Respondent.

[2] it owed no deference to EPA's interpretation of CAA as On Petition for Review of an Order of the United States
embracing “similar source” requirement; Environmental Protection Agency.

[3] it would not apply Chevron deference to EPA's Before BARKSDALE, GARZA and ELROD, Circuit
interpretation of CAA as set forth in appellate brief; Judges. *

[4] CAA did not authorize EPA to impose “similar source” Opinion
requirement on minor new source reviews (NSR);
*921 JENNIFER WALKER ELROD, Circuit Judge:

[5] EPA's imposition of “similar source” standard in This case requires us to review the EPA's disapproval, more
disapproving regulation was arbitrary and capricious; and than three years after the time within which it was statutorily
required to act, of three regulations promulgated by the State
of Texas. 30 Tex. Admin. Code §§ 116.610(a), 116.610(b),

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Luminant Generation Co., L.L.C. v. U.S. E.P.A., 675 F.3d 917 (2012)
74 ERC 1417

and 116.617. Pursuant to Texas's duty under the Clean Air Air Act is ... illustrated by the sharply contrasting, narrow
Act (“CAA” or “the Act”), 42 U.S.C. § 7401 et seq., to adopt role to be played by EPA.”); Michigan, 268 F.3d at 1083
and administer a statewide plan for implementing federal air (the EPA's “overarching role is in setting standards, not in
quality standards, those regulations provide for a standardized implementation”). This division of responsibility between the
permit for certain projects that reduce or maintain current states and the federal government “reflects the balance of state
emissions rates. Because the EPA had no legal basis on and federal rights and responsibilities characteristic of our
which to disapprove those regulations, we VACATE the federal system of government.” Fla. Power & Light Co., 650
agency's disapproval of Texas's regulations and REMAND F.2d at 581.
with instructions.
[5] Under the Act, SIPs are not supposed to be static. States
must periodically revise their SIPs as necessary to ensure
compliance with current NAAQS. 42 U.S.C. § 7410(a)(2)
I. BACKGROUND
(H). With a narrow exception not relevant here, the EPA
A. Statutory Background must review and approve or disapprove a SIP revision within
[1] [2] An “experiment in cooperative federalism,” 18 months of submission. §§ 7410(k)(1)(B), 7410(k)(2), and
Michigan v. EPA, 268 F.3d 1075, 1083 (D.C.Cir.2001), the 7410(k)(3). The EPA shall disapprove a SIP revision only
CAA “establishes a comprehensive program for controlling if “the revision would *922 interfere with any applicable
and improving the nation's air quality through state and requirement concerning attainment” of the NAAQS “or any
federal regulation.” BCCA Appeal Group v. EPA, 355 F.3d other applicable requirement” of the Act. § 7410(l ). As with
817, 821–22 (5th Cir.2003). The Act assigns responsibility SIP plans, if the revision meets all of the applicable CAA
to the EPA for identifying air pollutants and establishing requirements, the EPA must approve it. § 7410(k)(3) (The
National Ambient Air Quality Standards (NAAQS). 42 EPA “shall approve such submittal as a whole.”).
U.S.C. §§ 7408–7409. The states, by contrast, bear “the
primary responsibility” for implementing those standards. Among other requirements, SIPs must include permitting
BCCA Appeal Group, 355 F.3d at 822; see also § 7407(a) programs for the construction or modification of stationary
(“Each State shall have the primary responsibility for assuring sources. The EPA has termed these required permit programs
air quality within [its] entire geographic area.”); § 7401(a)(3) “New Source Review” (NSR). 74 Fed.Reg. 51,418, 51,421
(“[A]ir pollution prevention ... is the primary responsibility of (Oct. 6, 2009). For “major” NSR, which applies to the
States and local governments.”). construction or modification of stationary sources that meet
certain threshold emissions levels, the CAA sets forth the
[3] [4] To implement the NAAQS, the states must adopt parameters for the permit programs in considerable detail. 1
and administer State Implementation Plans (SIPs) that meet See 42 U.S.C. §§ 7470–7503. The implementing regulations
certain statutory criteria. § 7410. The states have “wide for major NSR are similarly extensive and complex, spanning
discretion in formulating [their] plan[s].” Union Elec. Co. 88 pages in the Code of Federal Regulations. See 40 C.F.R.
v. EPA, 427 U.S. 246, 250, 96 S.Ct. 2518, 49 L.Ed.2d §§ 51.165–51.166, pt. 51 appendix S.
474 (1976). “[S]o long as the ultimate effect of a State's
choice of emission limitations is compliance with the national In stark contrast, the CAA prescribes only the barest
standards for ambient air, the State is at liberty to adopt of requirements for “minor” NSR, which governs the
whatever mix of emission limitations it deems best suited to construction or modification of stationary sources that do
its particular situation.” Train v. Natural Res. Def. Council, not meet the emissions thresholds for major NSR. For minor
Inc. 421 U.S. 60, 79, 95 S.Ct. 1470, 43 L.Ed.2d 731 (1975). NSR, the Act requires simply that each SIP “include ...
With regard to implementation, the Act confines the EPA regulation of the modification and construction of any
to the ministerial function of reviewing SIPs for consistency stationary source within the areas covered by the plan as
with the Act's requirements. § 7410(k)(3) ( “[T]he [EPA] necessary to assure that [NAAQS] are achieved.” 42 U.S.C. §
Administrator shall approve [a SIP or SIP revision] as a 7410(a)(2)(C). The implementing regulations for minor NSR
whole if it meets all of the applicable requirements of are likewise sparse, spanning less than two pages in the Code
this chapter.” (emphasis added)); see also Fla. Power & of Federal Regulations. See 40 C.F.R. §§ 51.160–51.164.
Light Co. v. Costle, 650 F.2d 579, 587 (5th Cir.1981) The EPA has recognized that because “the Act includes no
(“The great flexibility accorded the states under the Clean specifics regarding the structure or functioning of minor NSR

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Luminant Generation Co., L.L.C. v. U.S. E.P.A., 675 F.3d 917 (2012)
74 ERC 1417

programs” and because the implementing regulations are standard permits to PCPs for any regulated pollutant. Id. at
“very general [,] ... SIP-approved minor NSR programs can 3064–65. Texas amended its standard permit program several
vary quite widely from State to State.” 74 Fed.Reg. 51,418, times in the following years and submitted those revisions
51,421 (Oct. 6, 2009). to the EPA for approval into Texas's SIP. See 68 Fed.Reg.
64,543, 64,547 (Nov. 14, 2003) (listing several SIP revision
submissions from 1994 to 2002 concerning Texas's standard
B. Facts and Proceedings permits program).
The Texas standardized permit at issue here applies only to
minor NSR, 2 and then only to pollution control projects In 2003, the EPA finally approved the standard permits
(PCPs). The regulations governing this permit (the PCP program into Texas's SIP, explaining that the program met
Standard Permit) are found at 30 Tex. Admin. Code § the applicable requirements of the CAA and its implementing
116.617. Those regulations authorize the standard permit for regulations. See id. at 64,546–64,547 (approving 30 Tex.
PCPs “that reduce or maintain currently authorized emission Admin. Code §§ 116.601–116.606, 116.610, 116.611,
rates for facilities authorized by a permit.” 3 § 116.617(a) 116.614, and 116.615). 4 The EPA explicitly declined to act
(1). *923 Detailed registration requirements apply. See §§ on § 116.617, which allows for a standard permit for PCPs.
116.617(d)(2)(A)-(F), 116.617(b)(1)(D) (incorporating the Id. at 64,547. The EPA commented that approval of § 116.617
standard permit registration requirements of § 116.611). was “not necessary” to its approval of the standard permits
The PCP Standard Permit is also subject to Texas's general program and that § 116.617 would “be addressed in a separate
conditions for standard permits, which impose additional action.” Id.
reporting, recordkeeping, and compliance requirements. See
§ 116.615. The executive director of the Texas Commission Texas amended § 116.617 in 2006 to limit the availability
on Environmental Quality (TCEQ) has the negative discretion of standard permits for PCPs to minor NSR only. See 31
to disallow the use of any PCP standard permit if Tex. Reg. 515, 516 (Jan. 27, 2006). At the same time, Texas
he “determines there are health effects concerns or the made necessary conforming amendments, as well as stylistic
potential to exceed a [NAAQS] ... until those concerns revisions, to SIP-approved §§ 116.610(a) and 116.610(b),
are addressed by the registrant to the satisfaction of the which set forth general parameters for the applicability of
executive director.” § 116.617(a)(3)(B). A “registration must Texas's standard permits program. See id.; see also 30 Tex.
be submitted no later than 30 days after construction or Reg. 6183, 6205 (Sept. 30, 2005) (proposed amendments).
implementation begins” only for replacement PCPs that These amendments were necessary to bring Texas's PCP
yield “no increases in authorized emissions of any air Standard Permit into compliance with federal standards after
contaminant.” § 116.617(d)(1)(A). By contrast, registration the D.C. Circuit vacated, as contrary to the CAA, an EPA rule
for new PCPs and replacement projects that will yield that had altogether exempted PCPs *924 from major NSR.
any increase in emissions must be submitted 30 days New York v. EPA, 413 F.3d 3, 40–42 (D.C.Cir.2005). After
before construction or implementation. § 116.617(d)(1)(B). adopting these amendments through notice and comment
Construction or implementation may not begin until 30 days rulemaking, on February 1, 2006, Texas resubmitted its newly
after TCEQ receives the registration or until the executive amended versions of §§ 116.617, 116.610(a), and 116.610(b),
director issues written acceptance. Id. among other provisions, to the EPA for approval into Texas's
SIP. See 74 Fed.Reg. 48, 467, 48,471 (Sept. 23, 2009). Thus,
Texas's PCP Standard Permit is just one component of Texas's pursuant to the Act's eighteen-month deadline, the EPA was
broader standard permits program. That program originated required by statute to take action on Texas's submission by
in 1993, when Texas promulgated standard permits for PCPs August 1, 2007, at the latest.
that reduce emissions of volatile organic compounds (VOCs)
and nitrogen oxides (NOx). See 18 Tex. Reg. 8597 (Nov. More than two years after the statutory deadline had
19, 1993) (VOC standard permit); 18 Tex. Reg. 3409 (May passed, the EPA proposed disapproval of Texas's submission
28, 1993) (NOx standard permit). The next year, after notice on September 23, 2009. See id. at 48,467. In proposing
and comment and a public hearing, Texas adopted regulations disapproval of Texas's PCP Standard Permit (§ 116.617),
that set forth the general requirements for Texas's standard the EPA did not identify any provision of the CAA or its
permits program. 19 Tex. Reg. 3055 (Apr. 22, 1994). In implementing regulations that Texas's program violated. See
that same rulemaking, Texas expanded the availability of 74 Fed.Reg. at 48,475–76. Instead, the EPA asserted that

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Luminant Generation Co., L.L.C. v. U.S. E.P.A., 675 F.3d 917 (2012)
74 ERC 1417

“each minor NSR SIP Standard Permit ... is required to specifying how the Director's discretion is to be implemented
be applicable to narrowly defined categories of emission for the case-by-case determinations.” *925 Id. at 56,447.
sources rather than a category of emission types.” Id. The EPA conceded in its brief that it again failed to provide
at 48,476 (emphasis in original). The only authorities any explanation for its disapproval of §§ 116.610(a) and
that the EPA cited for this purported requirement were 116.610(b).
several internal memoranda and guidance documents, and
a handful of rulemakings in which the EPA took action or Invoking our jurisdiction under 42 U.S.C. § 7607(b),
proposed action concerning the adoption of general permit numerous petitioners timely filed petitions for our review. 5
programs into other states' SIPs. Id. at 48,476 n. 11. The Only the EPA's disapproval of 30 Tex. Admin. Code §§
EPA also stated that “another major concern is that this 116.610(a), 116.610(b), and 116.617 are presently before us.
Standard Permit is designed for case-by-case additional
authorization, source-specific review, and source-specific
technical determinations.” Id. at 48,476. The EPA explained
its concern as follows: “There are no replicable conditions II. STANDARD OF REVIEW
in the PCP Standard Permit that specify how the [TCEQ]
[6] [7] When reviewing EPA action under the CAA,
Director's discretion is to be implemented for the individual
we apply the standard of review provided for in the
determinations.” Id. The EPA cited no authority to tether
Administrative Procedure Act (APA). See Texas v. EPA,
its concern to any applicable provision of the CAA. See id.
499 F.2d 289, 296 (5th Cir.1974). Under the APA, we
Moreover, as the EPA conceded in its brief, it provided no
must hold unlawful and set aside agency action that is
explanation for why it proposed disapproval of §§ 116.610(a)
“arbitrary, capricious, an abuse of discretion, or otherwise
and 116.610(b).
not in accordance with law.” 5 U.S.C. § 706(2)(A). We must
also set aside agency action that is “in excess of statutory ...
The EPA issued its final rule disapproving, inter alia, §§
authority.” § 706(2)(C). Agency action
116.617, 116.610(a), and 116.610(b), on September 15, 2010,
more than three years after the statutory deadline. 75 Fed.Reg. is arbitrary and capricious “if the agency has relied on
56,424 (Sept. 15, 2010). Although the EPA averred in its factors which Congress has not intended it to consider,
opening “Summary” section that it disapproved Texas's PCP entirely failed to consider an important aspect of the
Standard Permit “because it does not meet the requirements problem, offered an explanation for its decision that
of the CAA for a minor NSR Standard Permit program,” runs counter to the evidence before the agency, or is so
id., the EPA again failed to identify a single provision of implausible that it could not be ascribed to a difference in
the Act that Texas's program violated, let alone explain its view or the product of agency expertise.”
reasons for reaching its conclusion. Instead, in its discussion
of Texas's PCP Standard Permit, the EPA stated no less than Tex. Oil & Gas Ass'n v. EPA, 161 F.3d 923, 933 (5th Cir.1998)
five times that it was disapproving the permit because it (quoting Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto.
“does not meet the requirements of the Texas Minor NSR Ins. Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 77 L.Ed.2d 443
Standard Permits Program.” Id. at 56,447 (emphasis added); (1983)).
see also id. at 56,444; id. at 56,445 (twice expressing the
same conclusion); id. at 56,447 (same). In other words, the [8] [9] We must disregard any post hoc rationalizations
EPA utilized Texas law as its benchmark in disapproving of the EPA's action and evaluate it solely on the basis of
§ 116.617, not the CAA or its implementing regulations. the agency's stated rationale at the time of its decision.
Indeed, even when responding to comments that discussed See Burlington Truck Lines, Inc. v. United States, 371
whether § 116.617 meets the requirements of the CAA, the U.S. 156, 168–69, 83 S.Ct. 239, 9 L.Ed.2d 207 (1962)
EPA did not address that question, but instead concluded (“The courts may not accept appellate counsel's post hoc
that the PCP Standard Permit does not meet the requirements rationalizations for agency action; Chenery requires that an
of Texas's SIP-approved standard permits program. See 75 agency's discretionary order be upheld, if at all, on the same
Fed.Reg. at 56,445 (EPA's response to Comments 2 and 3). basis articulated in the order by the agency itself.” (citing
The EPA also reiterated the objections from its proposed SEC v. Chenery Corp., 332 U.S. 194, 196, 67 S.Ct. 1575,
disapproval that § 116.617 “does not apply to similar sources” 91 L.Ed. 1995 (1947))). “Review of agency action under §
and “lacks the requisite replicable standardized permit terms 706(2)'s ‘arbitrary or capricious' standard is limited to the

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Luminant Generation Co., L.L.C. v. U.S. E.P.A., 675 F.3d 917 (2012)
74 ERC 1417

record before the agency at the time of its decision.” Geyen and construction of any stationary source within the areas
v. Marsh, 775 F.2d 1303, 1309 (5th Cir.1985); see also Camp covered by the plan as necessary to assure that [NAAQS]
v. Pitts, 411 U.S. 138, 142, 93 S.Ct. 1241, 36 L.Ed.2d 106 are achieved”); § 7410(l ) (the EPA may disapprove a
(1973) (“[T]he focal point for judicial review should be the SIP revision only if “the revision would interfere with
administrative record already in existence, not some new any applicable requirement concerning attainment” of the
record made initially in the reviewing court.”). NAAQS “or any other applicable requirement of [the Act]”).
As the EPA itself has recognized, nowhere does the Act
authorize EPA review of SIP revisions for conformity with
state law: “Section [7410(l) ] requires us to evaluate proposed
III. DISCUSSION
SIP revisions in relation to applicable requirements of the
The EPA concedes that it acted arbitrarily and capriciously CAA, not state rules.” 73 Fed.Reg. 60,957, 60,961 (Oct.
by failing to supply any reason for its disapproval of §§ 15, 2008) (emphasis in original) (approving a revision to
116.610(a) and 116.610(b) and consents to vacatur. We Alabama's SIP).
therefore vacate the EPA's disapproval of these provisions
and turn to § 116.617. [13] In this case, the EPA overstepped the bounds of
its narrow statutory role in the SIP approval process. As
Petitioners contend that the EPA acted arbitrarily and mentioned, on five separate occasions the EPA gave as its
capriciously and in excess of its statutory authority reason for disapproving the PCP Standard Permit that it “does
by applying three different incorrect legal standards in not meet the requirements of the Texas Minor NSR Standard
disapproving 30 Tex. Admin. Code § 116.617. First, Permits SIP.” 75 Fed.Reg. 56,424, 56,445 (Sept. 15, 2010)
Petitioners argue that the EPA improperly reviewed the PCP (emphasis added). This attempt by the EPA to enforce state
Standard Permit for compliance with Texas law, when the law standards was ultra vires. It was “in excess of statutory ...
EPA's only authorized function was to *926 review the authority,” in contravention of 5 U.S.C. § 706(2)(C). In
permit for compliance with the applicable requirements of addition, because state law is a “factor[ ] which Congress has
the CAA. Second, Petitioners argue that the EPA's so-called not intended [the EPA] to consider,” the EPA's reliance on it
“similar source” requirement does not exist in any of the CAA was arbitrary and capricious. State Farm, 463 U.S. at 43, 103
provisions governing minor NSR. Third, Petitioners argue S.Ct. 2856.
that the applicable federal law imposes no “replicability”
requirement and, therefore, the EPA had no basis on which The EPA now attempts to discount its repeated invocation of
it could have properly determined that the TCEQ Director's state law standards by pointing to its passing assertions in its
discretion under § 116.617 violated the Act. As we now final rule that the “EPA is disapproving the [PCP Standard
explain, each of Petitioners' arguments is correct. Permit] because it does not meet the requirements of the
CAA,” 75 Fed.Reg. at 56,424, and that the “EPA reviews a
SIP revision submission for its compliance with the Act and
A. The EPA's Reliance on Texas Law EPA regulations.” Id. at 56,447. This will not do, however,
[10] [11] [12] It is beyond cavil that the EPA may because these bald assertions are belied by the entirety of
consider only the requirements of the CAA when reviewing the EPA's discussion of the PCP Standard Permit. Nowhere
SIP submissions. The Act provides that the EPA “shall in either the proposed or final disapproval does the EPA
approve [a SIP] submittal as a whole if it meets all of the explain how the PCP Standard Permit is inconsistent with any
applicable requirements of [the Act].” 42 U.S.C. § 7410(k) particular provision of the Act. In addition to the EPA's five
(3). This statutory imperative leaves the agency no discretion unambiguous statements that it relied on Texas law, a holistic
to do anything other than ensure that a state's submission review of the EPA's analysis demonstrates that it evaluated
meets the CAA's requirements and, if it does, approve it the PCP Standard Permit for compliance with the features
before the passage of its statutory deadline. Moreover, the of Texas's SIP-approved standard *927 permits program,
provisions of the Act that govern minor NSR and the EPA's not the requirements of the CAA. See, e.g., id. at 56,445
review of SIP revisions make no allowance for the EPA to (discussing at length the ways in which the PCP Standard
evaluate the submission for compliance with state law. See permit purportedly “does not meet the requirements of”
§ 7410(a)(2)(C) (the Act's only requirement for minor NSR Texas's standard permits program). The EPA impermissibly
is that each SIP “include ... regulation of the modification

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treated Texas's standard permits program as if it were the concedes that these documents do not interpret the relevant
6 statutory provisions—that is, those that govern SIP approval
applicable legal standard.
of minor NSR. See 75 Fed.Reg. at 56,447 (“The utility
of these citations is not in the specific subject matter they
B. The So–Called “Similar Source” Requirement address, but in their discussion of the regulatory principles to
In addition to disapproving the PCP Standard Permit for be applied in reviewing permit schemes that adopt emission
not complying with the EPA's interpretation of Texas law, limitations created through standardized protocols.”). 8
the agency also disapproved it on the grounds that its
availability is not limited to “similar sources.” 75 Fed.Reg. [15] [16] [17] [18] Nevertheless, we must still consider
at 56,447. According to the EPA's proposed disapproval, whether we owe some measure of deference to the EPA's
the “similar source” requirement limits the availability of interpretation of the Act in its appellate brief, which
each standard permit to a “narrowly defined categor[y] of represents the first time it has argued that the CAA authorizes
emission sources,” such as “oil and gas facilities, asphalt it to impose a “similar source” requirement on minor NSR.
concrete plants, and concrete batch plants.” 74 Fed.Reg. at Chevron deference is out of the question. See Pool Co. v.
48,476 & n.10. Petitioners challenge the EPA's authority Cooper, 274 F.3d 173, 177 n. 3 (5th Cir.2001) (litigation
to impose a “similar source” requirement, arguing that no briefs are not entitled to Chevron deference). Still, we
such requirement exists in any applicable provision of the ordinarily must afford a weaker form of deference under
CAA or its implementing regulations. The EPA parries that Skidmore v. Swift & Co., 323 U.S. 134, 65 S.Ct. 161, 89
it has “properly tie[d] the requirement that general permits L.Ed. 124 (1944), to agency interpretations of statutes they
be limited to similar sources to CAA section 110(a)(2) [42 administer that do not carry the force of law and, therefore,
U.S.C. § 7410(a)(2) ] requirements that control measures do not command Chevron deference. Mead, 533 U.S. at 234–
be enforceable.” The EPA then points to several agency 35, 121 S.Ct. 2164. The deference due under Skidmore varies
guidance documents that are said to “elucidate principles” with the persuasive force of the agency interpretation. See
relevant to its interpretation of the Act—presumably out of id. at 228, 121 S.Ct. 2164. In Mead, the Court described
the hope that we will apply Chevron deference in reviewing as “near indifference” the level of Skidmore deference due
that interpretation. See Chevron, U.S.A., Inc. v. Natural Res. “an interpretation advanced for the first time in a litigation
Def. Council, Inc., 467 U.S. 837, 842–43, 104 S.Ct. 2778, 81 brief.” Id. (citing Bowen v. Georgetown Univ. Hosp., 488
L.Ed.2d 694 (1984). Petitioners reply that the EPA's “similar U.S. 204, 212–13, 109 S.Ct. 468, 102 L.Ed.2d 493 (1988)).
source” requirement merits no deference and is without In discussing the deference question in Bowen, the Court
support in the CAA. explained that “[d]eference to what appears to be nothing
more than an agency's convenient litigating position would
[14] We first address what level of deference, if any, we owe be entirely inappropriate.” Bowen, 488 U.S. at 213, 109 S.Ct.
to the EPA's interpretation of § 7410(a)(2) as embracing a 468. Thus, it appears that although we are bound to extend
“similar source” requirement. We do not owe any deference to some modicum of deference to the EPA's appellate counsel's
that interpretation based on the EPA's insistence on a “similar interpretation, that degree of deference is minimal. See Mead,
source” requirement in its proposed and final disapproval. 533 U.S. at 228, 121 S.Ct. 2164 (the approach outlined in
That is because nowhere in the rulemaking record does the Skidmore “has produced a spectrum of judicial responses,”
EPA even hint that the “similar source” requirement reflects with deference to litigation briefs at the lowest end of that
its interpretation of any applicable provision of the CAA spectrum).
or its implementing regulations. 7 There is thus no agency
interpretation in the rulemaking record to which to defer. [19] Even affording Skidmore deference to the EPA's
See United States v. Mead Corp., 533 U.S. 218, 226–27, interpretation of the CAA, we agree with the Petitioners that
121 S.Ct. 2164, 150 L.Ed.2d 292 (2001) (setting forth the the Act does not authorize the EPA to impose a “similar
framework for when and to what degree courts must defer source” requirement on minor NSR. 9 We have already
to agency interpretation “of a particular statutory provision”). made clear that the Act empowers the EPA to disapprove
For this same reason we owe *928 no deference to the a SIP revision only “if the revision would interfere with
“similar source” requirement based on the EPA's citation any applicable requirement concerning attainment [of the
to agency guidance documents. See 74 Fed.Reg. at 48,476 NAAQS] ... or any other applicable requirement of [the Act].”
n.11 (citing various agency guidance documents). The EPA

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§ 7410(l ). Otherwise the EPA must approve the revision. § restrictions upsets the Act's careful balance between state and
7410(k)(3). federal authority. Union Elec. Co., 427 U.S. at 250, 96 S.Ct.
2518; see also Fla. Power & Light Co., 650 F.2d at 587 (“The
*929 We can quickly dispense with any supposition that great flexibility accorded the states under the Clean Air Act
inclusion of a “similar source” rule in the PCP Standard is ... illustrated by the sharply contrasting, narrow role to
Permit is necessary to prevent interference with the NAAQS. be played by EPA.”). This structural principle applies with
The Texas regulations governing the PCP Standard Permit special force in this case because, as previously discussed, the
provide that “[t]his standard permit must not be used to Act imposes only *930 the most minimal of requirements
authorize [any PCP] that ... the [TCEQ] executive director on minor NSR.
determines [has] the potential to exceed a [NAAQS].” 30 Tex.
Admin. Code § 116.617(a)(3)(B). Given this provision, which [20] Because the so-called “similar source” requirement is
makes the PCP Standard Permit unavailable for any PCP neither necessary to safeguard the NAAQS nor warranted by
that has even the potential to cause a breach of the NAAQS, any applicable provision of the Act, we must conclude that the
we cannot say that the permit “would interfere” with the EPA's insistence upon it here was unjustified. Like the EPA's
NAAQS. 42 U.S.C. § 7410(l ) (emphasis added). Indeed, it is reliance on its interpretation of Texas law, its imposition of
impossible for the PCP Standard Permit to cause interference a “similar source” standard was arbitrary and capricious. See
with the NAAQS, provided that we assume, as we ought, State Farm, 463 U.S. at 43, 103 S.Ct. 2856 (agency action is
that Texas will enforce this provision of its own regulations. “arbitrary and capricious if the agency has relied on factors
See City of Seabrook, Tex. v. EPA, 659 F.2d 1349, 1367 (5th which Congress has not intended it to consider”). The EPA's
Cir.1981) (admonishing that the “EPA could assume [that attempt to graft a “similar source” rule onto the applicable
the] state would implement [its regulations and if it] fails to provisions of the CAA was also a violation of 5 U.S.C.
do so, then either the EPA or a concerned citizen may bring § 706(2)(C), which requires reviewing courts to set aside
an enforcement action”). agency action that is “in excess of statutory ... authority.”

Nor can we accept the EPA's argument that its “similar
source” requirement is an applicable provision of the Act. C. “Replicability”
First, the “similar source” requirement finds no purchase [21] Petitioners further argue that the EPA lacked the
in the text of any applicable provision of the Act. See § authority to disapprove the PCP Standard Permit based on
7410(a)(2)(C) (each SIP minor NSR program need only its view that the permit affords the TCEQ Director too much
“include ... regulation of the modification and construction discretion under certain circumstances. The EPA took issue
of any stationary source within the areas covered by the plan with this provision of the permit because, in the EPA's
view, it does not include any “replicable” limits on how the
as necessary to assure that [the NAAQS] are achieved”). 10
Director is to exercise his discretion. In a different context,
In addition, the inclusion of a “similar source” requirement
the EPA has defined “replicability” to mean “procedures
elsewhere in the Act is strong evidence that the requirement
[that] are sufficiently specific and nonsubjective so that two
does not apply to minor NSR. Title V of the CAA, which
independent entities applying the procedures would obtain
governs operating permits, explicitly imposes a “similar
the same result.” 57 Fed.Reg. 13,498, 13,568 (Apr. 16, 1992)
source” limitation. Compare § 7661c(d) (operating permit
(outlining guidelines for states when developing an overall
rules) with § 7410 (containing the requirements for minor
SIP control strategy). The EPA's proposed disapproval
NSR); see Keene Corp. v. United States, 508 U.S. 200,
expressed its objection as follows: “There are no replicable
208, 113 S.Ct. 2035, 124 L.Ed.2d 118 (1993) (“ ‘[W]here
conditions in the PCP Standard Permit that specify how the
Congress includes particular language in one section of a
Director's discretion is to be implemented.” 74 Fed.Reg. at
statute but omits it in another ..., it is generally presumed
48,476. The EPA explained in its final rule that one reason
that Congress acts intentionally and purposely in the disparate
it was disapproving Texas's PCP Standard Permit is that
inclusion or exclusion.’ ”) (quoting Russello v. United States,
it “lacks the requisite replicable standardized permit terms
464 U.S. 16, 23, 104 S.Ct. 296, 78 L.Ed.2d 17 (1983)).
specifying how the Director's discretion is to be implemented
Finally, the structure of the CAA militates against reading
for the case-by-case determinations.” 75 Fed.Reg. at 56,447.
an extra-statutory requirement into the Act's limitations on
Petitioners contend that the EPA's reliance on this rationale
state discretion. Because the states enjoy “wide discretion”
was impermissible because there is no applicable provision of
in implementing the Act, the imposition of newfound
the Act or the EPA's implementing regulations that requires

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a state's minor NSR program to include replicable permit are persuasive, see Mead, 533 U.S. at 234–35, 121 S.Ct.
11 2164 (Skidmore deference due agency interpretations that
conditions.
do not qualify for deference under Chevron), in our view
*931 Petitioners are correct. The EPA had no legal basis to the General Preamble's discussion of “replicability” does
demand “replicable” limitations on the Director's discretion. not reflect a persuasive interpretation of the provisions of
Not once in its proposed or final disapproval, or in its the CAA applicable to minor NSR. As the State of Texas
argument before this court, has the EPA pointed to any correctly observes in its reply brief, the General Preamble
applicable provision of the Act or its regulations that includes “does not expressly address Minor NSR SIP revisions”
a “replicability” standard. Moreover, the EPA cannot argue and was issued in response to CAA amendments “dealing
that the lack of replicable conditions would interfere with the with SIP requirements for major sources in nonattainment
NAAQS because, as we have explained, § 116.617(a)(3)(B) areas” (emphasis in original).
can only serve to protect the NAAQS. Thus, the EPA had
no statutory basis under 42 U.S.C. § 7410(l ) to disapprove *932 Like Texas law and the “similar source” limitation,
Texas's SIP revision because of “replicability” concerns. “replicability” is not a legal standard that the Act authorizes
the EPA to enforce when reviewing a state's minor NSR
[22] This straightforward conclusion is unaffected by the program. Thus, the EPA acted “in excess of statutory ...
EPA's invocation of an agency policy document, entitled authority,” and thereby violated 5 U.S.C. § 706(2)(C), by
the “General Preamble for the Implementation of Title I disapproving the PCP Standard Permit based on the want of
of the Clean Air Act Amendments of 1990.” 57 Fed.Reg. replicable limitations in 30 Tex. Admin. Code § 116.617(a)
13,498 (Apr. 16, 1992) [hereinafter General Preamble]. The (3)(B). Moreover, “replicability” was (yet another) “factor[ ]
only portion of the rulemaking record that discusses the which Congress has not intended [the EPA] to consider,”
General Preamble is Section IV.A of the proposed rule, which meaning the EPA's reliance on it was (yet again) arbitrary
begins with the heading: “What are the Requirements for and capricious agency action. State Farm, 463 U.S. at 43, 103
EPA's Review of a Submitted Major NSR SIP Revision?” S.Ct. 2856.
74 Fed.Reg. at 48,471–72 (emphasis added). The EPA's
discussion of the PCP Standard Permit appears pages later,
in Section VII of the proposed rule, under the heading: IV. CONCLUSION
“Does the Submitted PCP Standard Permit Meet the Minor
NSR SIP Requirements?” Id. at 48,475–76. Thus, it is post This chapter in regulatory history has lasted almost two
hoc rationalization for the EPA now to argue that it relied decades. Texas submitted its first two standard permits for
on the General Preamble in concluding that § 116.617(a) PCPs to the EPA for approval in 1994. Texas made various
(3)(B)—which indisputably applies only to minor sources amendments to these permits over the years, and promptly
—“lacks the requisite replicable standardized terms.” 75 submitted each amendment to the EPA. The most recently
Fed.Reg. at 56,447 (final rule). We must disregard this amended version is the PCP Standard Permit at issue in
post hoc rationale. See Burlington Truck Lines, 371 U.S. this case. Despite an eighteen-month statutory deadline,
at 168–69, 83 S.Ct. 239. Moreover, even if we were to the EPA did not take action on any of these submissions
consider the 1992 General Preamble, it would not change our until September 15, 2010. At that late date, the EPA
conclusion that the CAA does not impose a “replicability” disapproved the PCP Standard Permit—submitted four and
standard on minor NSR. We do not owe Chevron deference a half years earlier—based on its purported nonconformity
to the General Preamble because, by its own terms, it does with three extra-statutory standards that the EPA created out
not carry the force of law. See Mead, 533 U.S. at 226– of whole cloth. Moreover, the EPA did this in the context
27, 121 S.Ct. 2164 (Chevron deference only due agency of a cooperative federalism regime that affords sweeping
statutory interpretations “promulgated in the exercise of” discretion to the states to develop implementation plans and
the agency's delegated authority “to make rules carrying the assigns to the EPA the narrow task of ensuring that a state
force of law”). The General Preamble states unequivocally plan meets the minimum requirements of the Act. The EPA
that it represents only the “EPA's preliminary interpretations, applied these unauthorized standards to disapprove of a state
and thus do[es] not bind the States and the public as a program for projects that reduce air pollution and that, under
matter of law.” 57 Fed.Reg. at 13,498. Although Skidmore the Act's plain terms, is subject to only the most minimal
instructs us to defer to agency interpretations insofar as they regulation.

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(“[A]n agency literally has no power to act ... unless and until
Congress confers power upon it.”).
Because the EPA waited until more than three years after
the statutory deadline to act on Texas's submission, we order
We VACATE the EPA's disapproval of *933 30 Tex.
the EPA to reconsider it expeditiously. On remand, the EPA
Admin. Code §§ 116.610(a), 116.610(b), and 116.617
must limit its review of Texas's regulations to ensuring that
and REMAND with instructions that the EPA reconsider
they meet the minimal CAA requirements that govern SIP
these regulations and approve or disapprove them most
revisions to minor NSR, as set forth in 42 U.S.C. § 7410(a)
expeditiously.
(2)(C) and § 7410(l ). If Texas's regulations satisfy those
basic requirements, the EPA must approve them, as § 7410(k)
(3) requires. 12 That is the full extent of the EPA's authority Parallel Citations
in the SIP-approval process because that is all the authority
that the CAA confers. See La. Pub. Serv. Comm'n v. FCC, 74 ERC 1417
476 U.S. 355, 374, 106 S.Ct. 1890, 90 L.Ed.2d 369 (1986)

Footnotes
* Emilio M. Garza, Circuit Judge, concurs in the judgment only.
1 The CAA's requirements for major NSR differ depending on whether a region is designated “nonattainment,” “attainment,” or
“unclassifiable.” Part D of the Act, which governs nonattainment NSR, refers to “major stationary sources.” 42 U.S.C. § 7502(c)
(5). The Act defines that term as sources that have the potential to emit 100 tons or more of a regulated pollutant. § 7602(j). Part C
of the Act, which applies the prevention of significant deterioration (PSD) program to attainment and unclassifiable regions, see §
7471, uses the term “major emitting facility.” § 7475. The Act defines that term as certain specified types of stationary sources that
have the potential to emit 100 tons or more of a regulated pollutant and all other stationary sources that have the potential to emit
250 tons or more of a regulated pollutant. § 7479(1). For convenience, the EPA refers to both statutory terms as “major sources.”
74 Fed.Reg. 51,418, 51,421 n.11 (Oct. 6, 2009).
2 If a project's collateral emissions meet the threshold level for major NSR, it must obtain an individual permit pursuant to Texas's
major NSR permitting program. 30 Tex. Admin. Code § 116.617(b)(1)(C) (incorporating § 116.610(b)).
3 Although somewhat counterintuitive, PCPs can fall within the bailiwick of the CAA's regulations because although the projects by
definition reduce or maintain emissions of the primary pollutant, they have the potential to cause incidental increases in the emissions
of other regulated pollutants.
4 The EPA took no action on 30 Tex. Admin. Code § 116.610(d). 68 Fed.Reg. at 64,547.
5 Petitioners are Luminant Generation Company, LLC; Oak Grove Management Company, LLC; Big Brown Power Company,
LLC; Luminant Mining Company, LLC; Sandow Power Company, LLC; Texas Association of Business; Texas Association of
Manufacturers; Texas Oil & Gas Association; Chamber of Commerce of the United States; and the State of Texas.
6 Nor could the EPA have lawfully treated Texas's SIP-approved standard permits program as a proxy for the CAA's requirements in
this case, as the EPA suggested at oral argument. That the standard permits program meets the CAA's requirements does not mean
that it supplants those requirements in the next case. It may be that the program passed CAA muster with flying colors, and that the
PCP Standard Permit could likewise satisfy the Act even assuming, for argument's sake, that it does not meet the high standards of
the standard permits program and is significantly less environmentally protective (assumptions that Petitioners vigorously dispute
and that seem unlikely given that PCPs are, by definition, environmentally protective).
7 To the contrary, the EPA suggested in its final rule that the “similar source” standard derives from Texas law. See, e.g., 75 Fed.Reg.
at 56,444 (“Under the Texas Standard Permits Minor NSR SIP, an individual Standard Permit must be limited to new or existing
similar sources.”). Insofar as the “similar source” requirement reflects the EPA's interpretation of Texas law, imposition of it here
is ultra vires for the reasons discussed above in Part III.A.
8 The EPA stated in its final disapproval that “[t]he memoranda cited in the proposal were cited for the purpose of providing
documentary evidence of how EPA has exercised its discretionary authority when reviewing general permit programs similar to the
Texas Standard Permits SIP.” Id. (emphasis added). This statement reflects a misapprehension by the EPA of its authorized role in
the SIP-approval process. As discussed above, the EPA does not possess any “discretionary authority” in that process. See 42 U.S.C.
§ 7410(k)(3). Only the states enjoy discretion in implementing the dictates of the CAA. See, e.g., Union Elec. Co., 427 U.S. at 250,
96 S.Ct. 2518 (“Each State is given wide discretion in formulating its [SIP].”).

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9 We note that the interpretation advanced in the EPA's brief is not particularly persuasive because the agency's brief merely asserts,
without any statutory analysis or support, that the “EPA properly ties the requirement that general permits be limited to similar sources
to CAA section 110(a)(2) requirements that control measures be enforceable.”
10 The EPA also argues that a “similar source” limitation is necessary to ensure enforceability. The only mention of enforceability in
§ 7410 is the requirement that SIPs “include enforceable emission limitations and other control measures ... as may be necessary
or appropriate to meet the applicable requirements of this chapter.” § 7410(a)(2)(A). However, the only requirement in this chapter
applicable to minor NSR is that the SIP include “regulation of the modification and construction of any stationary source within
the areas covered by the plan as necessary to assure that [NAAQS] are achieved.” § 7410(a)(2)(C). As explained above, the PCP
Standard Permit necessarily meets this requirement because it is unavailable for any PCP that has even the potential to cause a breach
of the NAAQS.
11 Petitioners also point out that the lack of “replicable” conditions is not problematic here because the permit only grants the Director the
discretion to require more of registrants if he is concerned that a registration will threaten public health or the NAAQS. The provision
at issue states: “This standard permit must not be used [if] the executive director determines there are health effects concerns or the
potential to exceed a [NAAQS] ... until those concerns are addressed by the registrant to the satisfaction of the executive director.”
30 Tex. Admin. Code § 116.617(a)(3)(B). We confess that we are at a loss to comprehend the EPA's concern. Subsection 116.617(a)
(3)(B) in no way jeopardizes the NAAQS. Instead, it safeguards them. It provides a safety valve procedure whereby, in the event a
registration should present even the potential of threatening the NAAQS or public health, the Director is authorized to intervene and
require the registrant to take additional steps to protect air quality.
Moreover, the EPA's concern about the Director's discretion is especially perplexing in light of its approval, just seven months
before it disapproved Texas's PCP Standard Permit, of similar Georgia regulations that are less environmentally protective and
afford the Georgia director far greater discretion than the Texas Director. See 75 Fed.Reg. 6,309 (Feb. 9, 2010) (approving Ga.
Comp. R. & Regs. 391–3–1–.03(6)(j) into Georgia's SIP). Georgia's regulations exempt PCPs from minor NSR construction
permitting. Ga. Comp. R. & Regs. 391–3–1–.03(6)(j). The EPA approved this provision because it “applies to minor sources only.”
75 Fed.Reg. at 6,312. So too does Texas's PCP Standard Permit. 30 Tex. Admin. Code § 116.617(b)(1)(C). The Georgia director
has discretion whether or not to require certain ongoing monitoring and reporting requirements. See Ga. Comp. R. & Regs. 391–3–
1–.03(2)(c) (“As a condition for the issuance of an operating permit, the Director may require the applicant to conduct performance
tests and monitoring and provide reports concerning operations.”). By contrast, Texas's detailed reporting, recordkeeping, and
monitoring requirements are mandatory. See 30 Tex. Admin. Code §§ 116.617(b)(1), 116.617(e).
12 It is difficult to conceive, and the EPA has not suggested, how it could disapprove the PCP Standard Permit under the appropriate
statutory factors. The provisions of the CAA that apply to minor NSR require state regulation only insofar as is necessary to assure
achievement of the NAAQS, see 42 U.S.C. §§ 7410(a)(2)(C), 7410(l ), and Texas's regulations provide that “[t]his standard permit
must not be used to authorize [any PCP] that ... the [TCEQ] executive director determines [has] the potential to exceed a [NAAQS].”
30 Tex. Admin. Code § 116.617(a)(3)(B). In addition, we have already concluded that each of the EPA's grounds for disapproval
was unlawful. Finally, when pressed at oral argument, the EPA was unable to identify any legal deficiency with the PCP Standard
Permit—other than its supposed failure to meet the EPA's extra-statutory requirements that today we hold unlawful—despite the
half decade the EPA has had to evaluate it. Nevertheless, we defer to the agency to reevaluate Texas's regulations in light of the
proper CAA standards.

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Madden v. Texas Bd. of Chiropractic Examiners, 663 S.W.2d 622 (1983)
15 Ed. Law Rep. 1376

David Madden and the Sherman College of Straight
Chiropractic appeal a trial-court judgment that affirms a
663 S.W.2d 622
final order issued by the Texas State Board of Chiropractic
Court of Appeals of Texas,
Examiners. The order denies Madden permission to take a
Austin.
licensing examination administered by the Board. We will
David MADDEN, et al., Appellants, reverse the judgment below and order that the proceedings be
v. remanded to the Board.
TEXAS BOARD OF CHIROPRACTIC
EXAMINERS, Appellee.
THE REGULATORY STATUTE
No. 13790. | Dec. 21, 1983.
| Rehearing Denied Jan. 11, 1984. The Board regulates the practice of “chiropractic” as that
word is defined in § 1 of the statute. Tex.Rev.Civ.Stat.Ann.
Applicant, who had applied to take state chiropractic art. 4512b (Supp.1982). Under § 5a of the statute, only
licensure examination, and chiropractic college brought individuals licensed by the Board may lawfully practice
action for judicial review of State Board of Chiropractic chiropractic. Section 10 requires that the Board administer an
Examiners' final order determining that applicant was not examination to “[a]ll applicants ... not otherwise licensed ...,”
eligible to sit for the state board examination on ground of which class Madden is a member. The applicant must,
that chiropractic college he had attended was not a bona under § 10, “successfully pass” the examination before he
fide reputable chiropractic school. The 98th Judicial District may receive a license. To be admitted to the examination,
Court, Travis County, Charles D. Mathews, J., affirmed the the applicant must be a citizen of the United States and
Board's final order, and applicant and chiropractic school present to the Board “satisfactory evidence” showing: (a) he
appealed. The Court of Appeals, Powers, J., held that: (1) is over age eighteen and of good moral character; (b) he
applicant was denied due process of law by manner in which has completed sixty semester hours of college courses at an
Board determined he was ineligible to take examination institution other than a chiropractic school; and (c) he is a
administered by the Board, and (2) applicant was entitled, graduate of a “bona fide reputable chiropractic” school having
at minimum, to notice and opportunity to direct evidence “entrance requirements and [a] course of instruction ... as
and argument, in addition to cross-examination and object to high as those of the better class of chiropractic schools in the
contrary evidence, at whatever narrower issues of reliability, United States ....” A “reputable chiropractic school,” it is said
validity, and reputability were encompassed within new in § 10,
definition of “bona fide reputable chiropractic” school
adopted by Board at hearing on Board's refusal to accept his shall maintain a resident course of
application. instruction equivalent to not less than
four (4) terms of eight (8) months
Reversed and remanded with instructions. each, or a *624 resident course of
not less than the number of semester
hours required by The University of
Attorneys and Law Firms Texas for the granting of a Bachelor
of Arts degree; shall give a course of
*623 Gerald H. Beckman, Huertz, Beckman & Rodriguez,
instruction in the fundamental subjects
Corpus Christi, for appellants.
named in Section 12 of [the] Act; and
Mark White, Atty. Gen., Eva King Loutzenhiser, Asst. Atty. shall have the necessary teaching force
Gen., for appellee. and facilities for proper instruction in
all of said subjects.
Before SHANNON, POWERS and BRADY, JJ.
Section 10 of art. 4512b also provides that “[t]he Board
Opinion
is authorized to adopt and enforce rules of procedure not
POWERS, Justice. inconsistent with the statutory requirements” applicable to
the licensing of new practitioners. Section 4(d) requires

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Madden v. Texas Bd. of Chiropractic Examiners, 663 S.W.2d 622 (1983)
15 Ed. Law Rep. 1376

the Board to “adopt guidelines for educational preparation Council on Chiropractic Education or
and acceptable practices for all aspects of the practice of the equivalent thereof.
chiropractic.” Section 14a authorizes the Board to exclude
from its examinations any person who fails to comply with Madden and Sherman College of Straight Chiropractic sued
art. 4512b, including the provisions of § 10 which relate to the Board in a district court of Travis County, seeking
educational preparation. various forms of relief against the Board's decision refusing
Madden admission to the examination. An agreed judgment
[1] Finally, § 14(f) provides that “[i]f the Board proposes was evidently rendered in the case, requiring the Board to
to refuse a person's application for a license, ... the person is abrogate its rule of June 11, 1975 and requiring, in addition,
entitled to a hearing before the Board.” While this provision a hearing as to whether Madden's chiropractic education
is unenlightening for the reason that it does not specify the qualified under the more general standards of art. 4512b,
issues to be considered and determined in such “hearing,” it § 10—specifically whether Sherman College of Straight
does imply an adjudicatory hearing, invoking the provisions Chiropractic was a “bona fide reputable chiropractic school”
of the Texas Administrative Procedure and Texas Register within the meaning of that section.
Act (APTRA), Tex.Rev.Civ.Stat.Ann. art. 6252–13a (1982)
relative to contested cases and their judicial review. See The Board conducted an evidentiary hearing in Austin, Texas,
APTRA § 18(a). on September 26, 1981, following which the Board issued
its final order dated November 7, 1981. The order sets forth
thirty-five findings of fact and two conclusions of law. The
THE CONTROVERSY Board's conclusions of law read as follows:

The record reveals that Madden wrote the Board on 1. A chiropractic college must either show accreditation
September 10, 1979, stating that he would soon graduate by an accrediting body viewed as reliable by the Board
from the Sherman College of Straight Chiropractic and that or show a valid reason why such accreditation cannot be
he wished to take the examination administered by the obtained and otherwise give proof *625 of reputable
Board, for which he requested the necessary application status in order to be a bona fide and reputable school for
form. The Board replied that he was not eligible to take the the purposes of Section 10, Article 4512b, V.A.C.S.
examination because the Board “does not recognize credits
2. Sherman College of Straight Chiropractic located in
from Sherman College of Straight Chiropractic” as being
Spartanburg, South Carolina, is not a bona fide reputable
sufficient to meet the “entrance requirements for taking the
school as that term is used in Section 10, Article 4512b,
licensure examinations given by the Board.” In a subsequent
V.A.C.S., and defined by the Board, and therefore, it is
letter to Madden, the Board explained further that it “only
accepts credits from those Chiropractic colleges which are ORDERED that David Madden a Sherman College
accredited by the Counsel [sic] on Chiropractic Education” graduate, is not eligible to sit for the state board
and that the Board had determined that Sherman College of examination.
Straight Chiropractic was not accredited by that body. It is
undisputed that Sherman College of Straight Chiropractic is Madden and the College attacked the Board's final order by
not accredited by “the accrediting Commission of the Council a motion for rehearing and an amended motion for rehearing
on Chiropractic Education ....” The Board's position in the filed in the agency. The latter was not acted upon and
matter was dictated by its rule adopted June 11, 1975, which therefore overruled by operation of law. APTRA § 16(e).
reads as follows:
Madden and the College sued in a Travis County district court
All applicants for licensure who have for judicial review of the Board's final order, setting forth
matriculated in a chiropractic college many contentions that the Board's decision violated various
after October 1, 1975 must present statutes applicable to the proceedings in the agency. These
evidence of having graduated from a generally revolve around the contention that the Board was
chiropractic college having status [sic] not permitted to use the examination provisions of art. 4512b
with the accrediting commission of the as a means of implementing its philosophy that a particular
branch or doctrine of chiropractic was superior to another

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Madden v. Texas Bd. of Chiropractic Examiners, 663 S.W.2d 622 (1983)
15 Ed. Law Rep. 1376

—in this instance that the “mixer” doctrine of chiropractic [4] [5] The Board possesses both rule-making and
was superior to that of “straight” chiropractic, the difference adjudicatory powers. Art. 4512b, §§ 4(a), 14(f). The Board
between the two doctrines being primarily a difference as was therefore arguably free in its informed discretion to
to the proper scope allowed chiropractic practitioners in the announce and apply the new definition in an ad hoc
matter of diagnosis. 1 The district court affirmed the Board's adjudicative proceeding rather than by promulgation of a
final order based upon that court's finding that the order “is general rule through an exercise of its rule-making power.
reasonably supported by substantial evidence and is in all SEC v. Chenery Corp., 332 U.S. 194, 202–03, 67 S.Ct. 1575,
respects valid, legal and proper.” This appeal ensued. 1580–81, 91 L.Ed. 1995 (1947); State Bd. of Ins. v. Deffebach,
631 S.W.2d 794, 799 (Tex.Civ.App.1982, writ ref'd n.r.e.). 2
The Board's action in assigning the new meaning to the
term “bona fide chiropractic” school nevertheless raised the
HOLDING AND DISCUSSION
question of fundamental fairness for that new meaning was
[2] In the amended motion for rehearing filed by Madden applied for the first time to Madden in the decision in his
and the College in the Board proceedings, and in their suit for contested case and as the sole basis for denying him entrance
judicial review in district court, they contended, as they do to the examination. 3
here, that Madden was denied due process of law in violation
of the Fourteenth Amendment to the Constitution of the [6] [7] Among the elements of procedural due process
United States. We hold that Madden was denied due process of law are notice and hearing. City of Houston v. Fore,
of law owing to the manner in which it was determined that 412 S.W.2d 35, 37 (Tex.1967). These elements have a well-
he was ineligible to take the examination administered by the understood meaning of their own. To be meaningful, “notice”
Board. and “hearing” require previous notice and a hearing relative
to the issues of fact and law which will control the result
[3] The provisions of the Fourteenth Amendment apply to to be reached by the administrative *627 tribunal. Morgan
the exercise of state power through an administrative tribunal v. United States, 304 U.S. 1, 18–19, 58 S.Ct. 773, 776–77,
having jurisdiction over the rights or privileges of a licensed 82 L.Ed. 1129 (1938) (“Those who are brought into contest
occupation. Rector v. Texas Alcoholic Beverage Commission, with the Government in a quasi-judicial proceeding aimed at
599 S.W.2d 800 (Tex.1980); Francisco v. Board of Dental the control of their activities are entitled to be fairly advised
Examiners, 149 S.W.2d 619 (Tex.Civ.App.1941, writ ref'd). of what the Government proposes and to be heard upon its
proposals before it issues its final command. ” (emphasis
The Board having abrogated its rule of June 11, 1975, added)); Gonzales v. United States, 348 U.S. 407, 413, 75
Madden's hearing was ostensibly to be determined under S.Ct. 409, 412, 99 L.Ed. 467 (1955) (In order that a selective
the general standards of art. 4512b, § 10, including service registrant may effectively present his case before the
the broad issue of whether his college was a “bona appeal board of the service, he “must be cognizant of all
fide reputable chiropractic” school having the minimum the facts before the Board as well as the overall position of
curriculum requirements specified in the section. At the the Department of Justice” in opposition to his claim, and
conclusion of Madden's case, however, the Board first apprising him of these matters after the decision, but before
assigned meaning to the statutory term “bona fide reputable he is required to file a motion for rehearing, comes too late.)
chiropractic” *626 school: the school must be accredited These elements of fundamental fairness were particularly
“by an accrediting body viewed as reliable by the Board”; undermined in Madden's case by the essentially subjective
or a valid reason must be shown “why such accreditation and undefined terms of the controlling definition ultimately
cannot be obtained,” coupled with proof that the school “is settled upon by the Board in its final order: “an accrediting
otherwise ... of reputable status.” That is the meaning we body viewed as reliable by the Board ”; “a valid reason why
derive from the Board's first conclusion of law. It has not been such accreditation cannot be obtained”; “and otherwise give
suggested to us that the Board was unable for some reason proof of reputable status.” (emphasis added).
to formulate the controlling definition before commencement
of Madden's case so that the hearing which followed would [8] The emphasized words and phrases imply the greatest
have meaning. range of legal and factual possibilities and Madden was
entitled, at minimum, to notice and an opportunity to
direct evidence and argument at whatever narrower issues

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Madden v. Texas Bd. of Chiropractic Examiners, 663 S.W.2d 622 (1983)
15 Ed. Law Rep. 1376

of fundamental fairness implicit in the concepts of “notice”
of reliability, validity, and reputability were encompassed
and “hearing.”
within those words and phrases since they were to be the
controlling issues of fact and law in his case. Similarly, he was
We reverse the final order of the Board and the judgment
entitled to test by cross-examination any contrary evidence
of the district court. The cause is remanded to the district
and to make objections to its admissibility if that were dictated
court with instructions that it be remanded to the Board for
by the nature of the evidence and the context made by
proceedings not inconsistent with this opinion.
the controlling issues. “Opportunity must be afforded all
parties to respond and present evidence and argument on
all issues involved.” APTRA § 13(d). This is more than a
Parallel Citations
statutory requirement; it expresses the constitutional guaranty
15 Ed. Law Rep. 1376

Footnotes
1 Among allegations made by Madden and the College were their charges that the Board had unlawfully delegated to the accrediting
commission of the Council on Chiropractic Education the Board's power to determine what schools were “bona fide reputable
chiropractic schools” under art. 4512b, § 10; that the Board's abrogation of its previous rule was “cosmetic only” and that the
Board continued unfairly and subjectively to apply its terms to Madden's case; that the Board's refusal to allow Madden to take the
examination was arbitrary, capricious, unreasonable, and in deprivation of Madden's constitutional rights; and that the result of the
Board's adoption of the “mixer” branch or doctrine of chiropractic effectuates a systematic violation of the laws of the State of Texas
governing the practice of chiropractic, for the permissible scope of diagnosis allowed chiropractic practitioners under those laws is
that consistent with “straight” chiropractic and contrary to that of “mixer” chiropractic.
Madden and the College prayed for the following relief: that the final order of the Board be set aside; that the College be
“recognized” as a “bona fide, reputable school of chiropractic”; that Madden be permitted to take the examination; that the Board
be enjoined “from engaging in any dilatory tactics to delay the effect of the relief granted” in the court's final judgment; and, for
general relief.
2 The following quotation from Chenery, 332 U.S. at 202, 67 S.Ct. at 1580 briefly summarizes the applicable principles:
Since the Commission, unlike a court, does have the ability to make new law prospectively through the exercise of its rule-
making powers, it has less reason to rely upon ad hoc adjudication to formulate new standards of conduct within the framework
of the [constitutive] Act. The function of filling in the interstices of the Act should be performed, as much as possible, through
this quasi-legislative promulgation of rules to be applied in the future. But any rigid requirement to that effect would make
the administrative process inflexible and incapable of dealing with many of the specialized problems which arise.... Not every
principle essential to the effective administration of a statute can or should be cast immediately into the mold of a general rule.
Some principles must await their own development, while others must be adjusted to meet particular, unforeseeable situations.
In performing its important functions in these respects, therefore, an administrative agency must be equipped to act either by
general rule or by individual order. To insist upon one form of action to the exclusion of the other is to exalt form over necessity.

Hence we refuse to say that the Commission ... was forbidden from utilizing this particular proceeding for announcing and
applying a new standard of conduct.... That such action might have a retroactive effect was not necessarily fatal to its validity.
Every case of first impression has a retroactive effect, whether the new principle is announced by a court or by an administrative
agency .... (citations omitted)
See also 1 F. Cooper, State Administrative Law, 177–85 (1965), discussing the circumstances when the agency's choice to proceed
by ad hoc adjudication may constitute an “abuse of discretion” under statutes such as APTRA. The matter is not raised by Madden
and the College in the present case; however, the foregoing principles should not be confused with an issue they do raise, and that
is the issue of due process of law within a contested-case context once the choice is made by the agency to proceed on that basis.
3 We may in this instance evaluate the Board's final order solely upon the basis stated therein for its refusal to admit Madden to the
examination—that his graduation from Sherman College of Straight Chiropractic did not satisfy the statutory requirement that he
graduate from a “bona fide reputable chiropractic” school.
[A] reviewing court, in dealing with a determination or judgment which an administrative agency alone is authorized to make,
must judge the propriety of such action solely by the grounds invoked by the agency. If those grounds are inadequate or improper,
the court is powerless to affirm the administrative action by substituting what it considers to be a more adequate or proper basis.
To do so would propel the court into the domain which Congress has set aside exclusively for the administrative agency.

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Madden v. Texas Bd. of Chiropractic Examiners, 663 S.W.2d 622 (1983)
15 Ed. Law Rep. 1376

SEC v. Chenery Corp., supra, 332 U.S. at 196, 67 S.Ct. at 1577.

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
Mass Marketing, Inc. v. Gaines, 70 S.W.3d 261 (2001)

70 S.W.3d 261
Court of Appeals of Texas, FACTUAL AND PROCEDURAL BACKGROUND
San Antonio.
Gaines slipped and fell on one or two grapes in a Super S
MASS MARKETING, INC. d/ Foods store in Dilley, *263 Texas. 1 The area where she
b/a Super S Foods, Appellant, slipped was a high traffic area of the store. Gaines testified
v. that before she slipped on the grapes, they were green and
Josie GAINES, Appellee. undamaged. Gaines also stated that the grapes did not appear
to have been smashed or walked on prior to her fall, and she
No. 04–00–00578–CV. | Dec. 26, 2001. did not believe that any Super S Foods employees were aware
of grapes on the floor prior to her fall. Gaines acknowledged
Customer brought slip and fall action against store. The
that the grapes she slipped on could have been on the ground
81st Judicial District Court, Frio County, Olin B. Strauss, J.,
for only a few seconds before she fell.
entered judgment on a jury verdict that awarded customer
$65,000.00. Store appealed. The Court of Appeals, Catherine
Moments before Gaines fell, store manager Manuel DeLeon
Stone, J., held that evidence was sufficient to find that store
was assisting a female customer with her groceries. The
had actual or constructive knowledge of dangerous condition
customer had a child sitting in the shopping cart eating grapes
in store, which consisted of presence of one or two grapes on
out of a bag. The grapes were hanging out of the bag, but
floor.
DeLeon saw no grapes fall to the ground. After bagging the
female customer's groceries, DeLeon moved her basket and
Affirmed.
“glanced” to see if any grapes were on the floor. He saw
no grapes. After assisting the customer to her car, DeLeon
Tom Rickhoff, J., dissented and filed an opinion.
returned and looked at the floor two more times for the
presence of any grapes. DeLeon stated that he “glanced” three
Attorneys and Law Firms times to check for any presence of fallen grapes. DeLeon
testified that his use of the word “glance” is synonymous with
*262 Rinaldo J. Gonzalez, Law Offices of Rinaldo J. looking for a reasonable amount of time.
Gonzalez, san Antonio, for Appellant.
Also present before the fall was the cashier, Evarista Esqueda.
Stephen F. White, Mark E. Macias, White & Davis, P.C., San Esqueda testified that she remembered the customer and her
Antonio, for Appellee. child eating grapes. Esqueda never saw a grape on the ground
prior to Gaines' fall. While Esqueda stated that the grape was
Sitting: PHIL HARDBERGER, Chief Justice, TOM
“probably” dropped by the child, she did not see any fall. No
RICKHOFF, Justice, CATHERINE STONE, Justice.
witnesses testified that they had seen or were aware of any
grapes on the floor.

OPINION

CATHERINE STONE, Justice. ANALYSIS

Mass Marketing, Inc. d/b/a Super S Foods (Super S Foods) [1] [2] To recover in a premise defect case, a plaintiff must
appeals the trial court's judgment in Josie Gaines's premise establish:
liability suit. After she slipped and fell in the Super S Foods
store, Gaines brought a negligence suit against Super S Foods; (1) Actual or constructive knowledge of some condition on
the jury awarded damages of $65,000.00. Super S Foods the premises by the owner/operator;
contends there is no evidence to support the jury's finding and
(2) that the condition posed an unreasonable risk of harm;
the trial court erred in overruling its motions for a directed
verdict, judgment notwithstanding the verdict, and new trial.
We affirm.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Mass Marketing, Inc. v. Gaines, 70 S.W.3d 261 (2001)

vital fact. Id. There is more than a scintilla of evidence if the
(3) that the owner/operator did not exercise reasonable care evidence “rises to a level that would enable reasonable and
to reduce or eliminate the risk; and fair-minded people to differ in their conclusions.” Havner,
953 S.W.2d at 711 (quotation omitted).
(4) that the owner/operator's failure to use such care
proximately caused the plaintiff's injuries.
Evidence of Actual or Constructive Knowledge
Keetch v. Kroger Co., 845 S.W.2d 262, 264 (Tex.1992).
[6] DeLeon testified that he looked three separate times to
Super S Foods argues there is insufficient evidence to
see if grapes had fallen. Gaines argues that the inspection
support the jury's finding that Super S Foods had actual or
was not done reasonably. Based on the evidence presented,
constructive knowledge of the dangerous condition in the
the jury reasonably inferred that the child eating grapes at
store. Gaines was an invitee on Super S Foods's property.
the supermarket checkout line dropped the grape that Josie
Super S Foods owed Gaines a duty to exercise ordinary
Gaines ultimately slipped on. The testimony of Evarista
care to protect her from risks of which Super S Foods was
Esqueda and Manuel DeLeon establishes that this child
actually aware, and also from risks that it should have been
was in the checkout line just a few brief minutes before
aware of after a reasonable inspection. Motel 6 G.P., Inc. v.
Gaines proceeded through the checkout line. There is no
Lopez, 929 S.W.2d 1, 3 (Tex.1996) (per curiam). Constructive
testimony that any other customer purchased grapes in the
knowledge can be found if a reasonably careful inspection
few intervening moments before Gaines fell. This state of the
would have revealed an unreasonable risk. Corbin v. Safeway
evidence establishes that it was more likely than not that the
Stores, Inc., 648 S.W.2d 292, 295 (Tex.1983).
grape fell on the floor some point while (1) the child was
eating the grapes, or (2) the checkout clerk, Esqueda, took
Standard of Review the open bag of grapes from the child, weighed the grapes
[3] [4] The standard for reviewing legal sufficiency is on the scale, re-bagged the grapes, and then placed them in
well-established. In determining if there is legally sufficient the shopping cart. This testimony establishes more than just
evidence, we review all the evidence in the light most a mere possibility of how long the grape was on the floor;
favorable to the verdict and indulge every reasonable it establishes more likely than not that the grape was on the
inference in favor of the verdict. Merrell Dow Pharms., Inc. floor just a few brief moments.
v. Havner, 953 S.W.2d 706, 711 (Tex.1997). *264 A no
evidence challenge will be sustained if: The question then becomes whether a few brief moments was
a sufficient amount of time to charge Super S with notice.
(a) there is a complete absence of evidence of a vital fact; In this case, it was. Both DeLeon and Esqueda saw the child
eating the grapes as the grapes dangled out of the bag. Both
(b) the court is barred by rules of law or of evidence from DeLeon and Esqueda were aware of the danger posed by the
giving weight to the only evidence offered to prove a vital presence of any grapes on the floor. Indeed, knowledge of
fact; this potential danger is why DeLeon “glanced” at the floor.
The jury was free to judge DeLeon's credibility and take his
(c) the evidence offered to prove a vital fact is no more than
testimony at face value when he stated that he “glanced” at the
a mere scintilla; or
floor several times and found no grapes. The jury could have
(d) the evidence conclusively establishes the opposite of believed that DeLeon did not look for a reasonable amount of
the vital fact. time for any grapes on the floor. Rather, the jury could have
determined that on this busy day when DeLeon was called
Id. (citing Robert W. Calvert, “No Evidence” and to the front checkout line to help bag groceries, he merely
“Insufficient Evidence” Points of Error, 38 TEX. L.REV. “glanced” at the floor—he merely took “a quick or cursory
361, 362–63 (1960)). look.” WEBSTER'S COLLEGIATE DICTIONARY 519–20
(9th ed.1991). The jury evidently found that DeLeon's cursory
[5] If there is more than a scintilla of evidence to support the look was insufficient, and there is more than a scintilla of
finding, the legal sufficiency challenge must fail. Kindred v. evidence to support their conclusion.
Con/Chem, Inc., 650 S.W.2d 61, 63 (Tex.1983). There is less
then a scintilla of evidence when the evidence “is so weak as Accordingly, we overrule the point of error and affirm the trial
to do no more than create a mere surmise or suspicion” of a court's judgment.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Mass Marketing, Inc. v. Gaines, 70 S.W.3d 261 (2001)

of paper were strewn around nearby was no evidence that the
grape had been on the floor long enough to charge the store
with notice)); see also H.E. Butt Grocery Store v. Hamilton,
Dissenting opinion by TOM RICKHOFF, Justice. 632 S.W.2d 189, 191 (Tex.App.—Corpus Christi 1982, no
writ)(holding that testimony that grapes were stepped on and
*265 TOM RICKHOFF, Justice, dissenting.
that the juices from both red and green grapes had blended
Because the “circumstantial evidence [ ] relied upon to prove
together was no evidence of how long the grapes were on the
constructive notice” did not establish “that it is more likely
floor).
than not that the dangerous condition existed long enough to
give [Super S Foods] a reasonable opportunity to discover
In summary, it was Gaines's burden to demonstrate that “it
the condition,” I respectfully dissent from the majority's
was more likely than not” that the grapes had been on the floor
holding to the contrary. Wal–Mart Stores, Inc. v. Gonzalez,
long enough to charge Super S Foods with notice. However as
968 S.W.2d 934, 936 (1998). The evidence in the record
in Gonzalez, “the circumstantial evidence ... supports only the
reveals that none of the witnesses had seen or were aware
possibility that the dangerous condition existed long enough
of any grapes on the floor prior to the time Gaines fell. In
to give [Super S Foods] a reasonable opportunity to discover
addition, there is very little circumstantial evidence to show
it.” Gonzalez, 968 S.W.2d at 936. “This rule, while harsh and
how long the grapes were actually on the floor. It is clear,
demanding on plaintiffs, is nevertheless well established and
from the record, that the grapes were neither smashed nor
plaintiffs must always discharge the burden of proving that
soiled with dirt, which tends to show that the grapes were
the dangerous condition was either known to the defendant
probably not on the ground very long. Furthermore, even if
or had existed for such a length of time that he should have
the grapes had been damaged, the Texas Supreme Court has
known it.” Id. at 938 (quoting Henderson v. Pipkin Grocery
held that such evidence alone is insufficient to show how long
Co., 268 S.W.2d 703, 705 (Tex.Civ.App.—El Paso 1954, writ
the grapes had been on the floor. Gonzalez, 968 S.W.2d at 937
dism'd w.o.j.)). Accordingly, I find that there is insufficient
(citing H.E. Butt Grocery Co. v. Rodriguez, 441 S.W.2d 215,
evidence from which the jury could have inferred that the
217 (Tex.Civ.App.—Corpus Christi 1969, no writ)(holding
grapes were on the floor long enough for Super S Foods to
that testimony that the grape on which plaintiff slipped was
have had a reasonable opportunity to discover them.
squashed and muddy, that the floor was dirty, and that pieces

Footnotes
1 There is some conflicting testimony in the record involving how many grapes Josie Gaines slipped on. Gaines testified that she
slipped on two of four or five grapes on the floor. The store manager and checker stated there was only one grape.

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Mitchell Energy Corp. v. Federal Energy Regulatory Commission, 651 F.2d 414 (1981)

it would be helpful, by way of background, to briefly
summarize the meaning of dedication under the Natural Gas
651 F.2d 414
Act and the operative facts of this case.
United States Court of Appeals,
Fifth Circuit.
Under s 7(c) of the Natural Gas Act (15 U.S.C.A. s
MITCHELL ENERGY CORPORATION, Petitioner,
717f(c)), producers who sell natural gas to pipelines for
v.
resale in interstate commerce must obtain a certificate of
FEDERAL ENERGY REGULATORY
public convenience and necessity from the Federal Energy
COMMISSION, Respondent. Regulatory Commission. Section 7(b) of the Act (15
U.S.C.A. s 717f(b)) obligates these producers to continue
No. 80-1166. | July 24, 1981.
supplying gas in the interstate market until the Commission
Gas producer petitioned for review of Federal Energy authorizes an “abandonment.”
Regulatory Commission order refusing to declare that certain United Gas Pipe Line Co. v. McCombs, 442 U.S. 529, 531,
natural gas was not dedicated to interstate commerce, and 99 S.Ct. 2461, 2463, 61 L.Ed.2d 54, 59 (1979) (footnotes
instead directing producer to apply for authority to abandon omitted); accord Harrison v. FERC, 567 F.2d 308, 310 (5th
interstate service. The Court of Appeals, Henderson, Circuit Cir. 1978). 2 See generally California v. Southland Royalty
Judge, held that Commission failed to adequately explain its Co., 436 U.S. 519, 98 S.Ct. 1955, 56 L.Ed.2d 505 (1978);
reasons, requiring remand for further consideration. Sunray Mid-Continent Oil Co. v. FPC, 364 U.S. 137, 80
S.Ct. 1392, 4 L.Ed.2d 1623 (1960); *416 Sun Oil Co. v.
So ordered. FPC, 364 U.S. 170, 80 S.Ct. 1388, 4 L.Ed.2d 1639 (1960);
Falcon Petroleum v. FERC, 642 F.2d 780, 784-85 (5th Cir.
1981); Harrison; Gulf Oil Corp. v. FPC, 563 F.2d 588 (3d
Attorneys and Law Firms Cir. 1977), cert. denied, 434 U.S. 1062, 98 S.Ct. 1235, 55
L.Ed.2d 762 (1978); Mitchell Energy Corp. v. FPC, 533
*415 Morgan, Lewis & Bockius, Frank P. Saponaro, Jr.,
F.2d 258 (5th Cir. 1976); Vreeland v. FPC, 528 F.2d 1343
Washington, D. C., for petitioner.
(5th Cir. 1976). The Commission has never authorized
Jerome Feit, Jane C. Murphy, Joanne Leveque, Attys., F. E. Mitchell to abandon interstate service so if the gas in
R. C., Washington, D. C., for respondent. dispute has ever been dedicated it is still dedicated. On
the other hand, if the gas has not been dedicated Mitchell
Petition for Review of An Order of the Federal Energy can put it into intrastate commerce without first procuring
Regulatory Commission (Texas Case). the Commission's approval. But cf. Mesa Petroleum Co. v.
FPC, 441 F.2d 182 (5th Cir. 1971) (abandonment authority
Before HENDERSON, ANDERSON and SAM D.
necessary even where no certificate).
JOHNSON, Circuit Judges.
In the early 1950's Natural Gas Pipeline Company
Opinion (hereinafter referred to as “Natural”) developed plans to
extend its pipeline into Texas. 3 As part of these plans
HENDERSON, Circuit Judge. Natural entered into a long-term gas purchase agreement with
numerous producers, including Oil Drilling, Inc. (hereinafter
Mitchell Energy Corporation (hereinafter referred to as
referred to as “Oil Drilling”), Mitchell's predecessor. The
“Mitchell”) petitions for review of a Federal Energy
agreement “covered” all gas (except certain production, not
Regulatory Commission 1 order refusing to declare that here in issue, reserved for development and operation of the
certain natural gas was not dedicated to interstate commerce, leases) from any wells located on the property described in the
and instead directing Mitchell to apply for authority to
sellers' 4 leases, including after-acquired leases, in a defined
abandon interstate service. We do not now decide whether the
geographic area of about 400,000 acres in and around Wise
gas in question is dedicated. We agree that the Commission
failed to adequately explain its reasons, and therefore remand County, Texas. 5 Natural had the option to refuse to connect
the case for further consideration. Before probing into the wells too far from its gathering lines or those producing only
Commission's duty to engage in reasoned decision making small quantities of gas. 6 If Natural rejected such a well,

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Mitchell Energy Corp. v. Federal Energy Regulatory Commission, 651 F.2d 414 (1981)

the agreement provided for the release of the surrounding [2] [3] Although the certificate controls, the Commission
acreage. The controversy in this case involves gas from wells oftentimes issues a certificate that simply authorizes the
subject to the contractual release provision. 7 service described in the application, which, in turn, frequently
simply requests authorization for the service required under
Late in October of 1954, Natural, Oil Drilling and others the contract. See, e. g., Sun Oil Co., 364 U.S. at 175, 80
applied to the Commission for certificates of public S.Ct. at 1391, 4 L.Ed.2d at 1642. In such cases the scope
convenience and necessity authorizing construction of the of the certificate can be ascertained only by examining
pipeline and the gas sales. Oil Drilling's application asked the application, and perhaps the contract. Harrison; Gulf.
for a certificate for the sale of gas to Natural under the It follows that in this case there are at least two arguable
agreement which was incorporated by reference. In 1956 the ways that gas subject to the contractual release provision
Commission ordered “(c) ertificates of public convenience was dedicated to interstate commerce. It could be said that
and necessity be and the same are hereby issued to Oil Drilling the certificate dedicates all the gas described in the contract,
(and others), authorizing the sale ... of natural gas in interstate cf. Southland, 436 U.S. at 527-28, 98 S.Ct. at 1959-60,
commerce to Natural as set forth in their applications and in 56 L.Ed.2d at 512-13 (ambiguity of “dedication”), and that
the record in these proceedings....” Natural Gas Pipeline Co., the contract dedicates the gas involved here. This is the
16 FPC 81, 98 (1956), aff'd sub nom. Oklahoma Natural Gas Commission's explanation before us. Alternatively one could
Co. v. FPC, 257 F.2d 634 (D.C.Cir.), cert. denied, 358 U.S. urge that the certificate by its own terms included the gas.
This approach, which does not require any reference to the
948, 79 S.Ct. 603, 3 L.Ed.2d 567 (1959). 8
terms of the contract or application, is apparently the basis of

On April 28, 1978, Mitchell sought a Commission declaration the order. 9
that the gas from seventeen wells never connected by
Natural, and thus impliedly rejected, was not dedicated to [4] If the controlling law is comparatively simple, its
interstate commerce. The Commission denied the request application to the facts of this case is not so clear. Despite
for declaratory relief and ordered Mitchell to apply for its duty to do so, the Commission did not articulate the
permission to abandon the wells. Mitchell's application for theory supporting its determination, let alone explain its
reconsideration was denied when the Commission failed to reasoning. See FPC v. Texaco, Inc., 417 U.S. 380, 395-96,
act on its request. Mitchell then petitioned for review. 94 S.Ct. 2315, 2325-2326, 41 L.Ed.2d 141, 155 (1974);
SEC v. Chenery Corp., 332 U.S. 194, 196-97, 67 S.Ct.
*417 The question before the Commission was whether 1575, 1577-1579, 91 L.Ed. 1995, 1999 (1947); 5 U.S.C.A. s
the 1956 certificate covered gas from wells that were not 557(c). This perfunctory treatment of a complicated issue was
connected by Natural, pursuant to its contract rights. If the gas improper, and it is apparent to us that the Commission failed
was within the scope of the certificate, it was dedicated for to give meaningful consideration to Mitchell's contentions.
purposes of the Natural Gas Act when service was initiated, We therefore remand to the Commission for the elaboration
see, e. g., Falcon, at 784, and remains so dedicated. it should have provided in the first place. See 15 U.S.C.A. s
717r(b); 5 U.S.C.A. s 706.
[1] By accepting a certificate of public convenience and
necessity a gas company agrees to perform the service [5] [6] Although it has been said many times and in many
authorized therein, even if that service is not required by ways, we repeat
the underlying contract. Southland; Sunray; Sun Oil Co. But
a reviewing court, in dealing with a determination
see NGPA s 2(18)(B)(iii), 15 U.S.C.A. s 3301(18)(B)(iii)
or judgment which an administrative agency alone is
(reversion's effect on dedication). The Commission is free to
authorized to make, must judge the propriety of such action
issue a certificate obligating an applicant to perform service
solely by the grounds invoked by the agency. If those
exceeding that for which it sought authorization. Sunray. So,
grounds are inadequate or improper, the court is powerless
as the parties agree, the ultimate question is whether the
to affirm the administrative action by substituting what it
certificate dedicated the gas. If it did, the gas is dedicated
considers to be a more adequate or proper basis. To do so
to interstate commerce regardless of the terms of the 1954
would propel the court into the domain which Congress has
contract.
set aside exclusively for the administrative agency.

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Mitchell Energy Corp. v. Federal Energy Regulatory Commission, 651 F.2d 414 (1981)

*418 ... If the administrative action is to be tested by the Order at 3-4 (citations omitted). 10
basis upon which it purports to rest, that basis must be set
forth with such clarity as to be understandable. It will not do The several quotations are all correct statements of law,
for a court to be compelled to guess at the theory underlying but are not in any way dispositive of our problem. The
the agency's action; nor can a court be expected to chisel Commission had to decide whether the gas subject to the
that which must be precise from what the agency has left contractual release provisions was covered by the certificate.
vague and indecisive. There is no question but that if it was, it is dedicated now.
Omitting the inapposite portions then, the Commission's
SEC v. Chenery Corp., 332 U.S. at 196-97, 67 S.Ct. at
explanation of its conclusion that the certificate included the
1577-78, 91 L.Ed. at 1999; accord, Pitre Bros. Transfer,
gas reduces to this:
Inc. v. United States, 580 F.2d 140 (5th Cir. 1978). But cf.
Bowman v. Arkansas-Best Freight, 419 U.S. 281, 285-86, The Commission does not agree with Mitchell's contention
95 S.Ct. 438, 441-442, 42 L.Ed.2d 447, 456 (1974) (remand that the subject gas is not dedicated in interstate commence
unnecessary if agency's rationale can be “discerned”); (sic) to Natural. Mitchell has commenced deliveries under
Colorado Interstate Gas Co. v. FPC, 324 U.S. 581, 595, 65 its certificate from acreage covered by its contract with
S.Ct. 829, 836, 89 L.Ed. 1206, 1219 (1945) (same). Natural. “The service in which (a) producer engages is
distinct from the contract which regulates his relationship
Because we hold that the Commission did not adequately with the transmission group....” The certificate issued to
explain the basis of its action, it is appropriate to reproduce Mitchell did not provide for pre-granted Section 7(b)
here in its entirety the order's brief “Discussion.” authorization with respect to those wells subsequently

The Commission does not agree with Mitchell's contention released from the contract by the purchaser 11 Nor did the
that the subject gas is not dedicated in interstate commence Commission either by the issuance of the certificate or
(sic) to Natural. Mitchell has commenced deliveries under the *419 acceptance of the contract for filing as a rate
its certificate from acreage covered by its contract with schedule approve the contractual release provisions.
Natural. “The initiation of interstate service pursuant
to the certificate dedicated all of the acreage which is
It follows that the Commission must deny Mitchell's
subject to that certificate.” “Once dedicated, there can be
petition for a declaratory order.
no withdrawal of that supply from continued interstate
[7] This is simply not enough. The key to the order is the
movement without Commission approval.” “The service in
conclusional statement that “the Commission (did not) either
which (a) producer engages is distinct from the contract
by the issuance of the certificate or the acceptance of the
which regulates his relationship with the transmission
contract for filing as a rate schedule approve the contractual
company....” Furthermore, “the obligation to serve the
release provisions.” That is indeed the point, and this is
interstate market imposed by a certificate of unlimited
the Commission's answer. However, while the Commission
duration can not be terminated by private contractual
may interpret its certificates, it must give interested parties
arrangements.” Thus, all of the acreage covered by
and reviewing courts at least some idea of the process of
Mitchell's certificate is dedicated in interstate commerce to
interpretation. SEC v. Chenery Corp.; Pitre Bros. The order
Natural. The certificate issued to Mitchell did not provide
says the certificate did not approve the release provision, yet
for pre-granted Section 7(b) authorization with respect to
it never discusses the contract, see FPC v. Texaco, Inc., 417
those wells subsequently released from the contract by the
U.S. 380, 396, 94 S.Ct. 2315, 2325, 41 L.Ed.2d 141, 156
purchaser. Nor did the Commission either by the issuance
(1974), and the Commission's 1956 opinion, which doubled
of the certificate or the acceptance of the contract for
as the certificate, does not even mention the release clause.
filing as a rate schedule approve the contractual release
See note 8, supra.
provisions. Accordingly, Mitchell's service obligation can
not be terminated unless Mitchell obtains Commission
Before us the Commission claimed that “the certificate
approval under Section 7(b).
covered all the acreage dealt with in Mitchell's contract with
It follows that the Commission must deny Mitchell's Natural,” and “Mitchell's contract with Natural did not except
petition for a declaratory order. from dedication the leases at issue here.” This argument may
be a strong one, but as far as we can tell the order construed

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Mitchell Energy Corp. v. Federal Energy Regulatory Commission, 651 F.2d 414 (1981)

The Commission should have the opportunity to clarify its
the certificate, not the contract. 12 The order does not focus
meaning.
on the contract and “we cannot ‘accept appellate counsel's
post hoc rationalizations for agency action’; for an agency's
The case is REMANDED to the Commission for further
order must be upheld, if at all, ‘on the same basis articulated
proceedings consistent with this opinion.
in the order by the agency itself.’ ” FPC v. Texaco, 417 U.S.
at 397, 94 S.Ct. at 2326, 41 L.Ed.2d at 156 (citations omitted).

Footnotes
1 FERC assumed most of the duties of the Federal Power Commission on October 1, 1977. In this opinion the term “Commission”
refers to one or the other agency, depending on the date of the action discussed.
2 The law in this area is by and large settled. This analysis of natural gas law is undertaken only to provide the background for our
administrative law holding. We do not decide any open question on the underlying dedication issue. Any appearance to the contrary
is inadvertent. Nor is it our purpose to make any conclusive interpretation of the contract and certificate involved in this case.
3 The Commission has never ruled on the truth of these facts, and even if its argument on the law eventually prevails, Mitchell has
yet to prove the facts it alleges. Again, our discussion is by way of background. Should the proceedings require. The Commission
is free to make whatever determinations of fact are appropriate.
4 The contract referred to all sellers collectively as “Seller.”
5 The parties disagree on the meaning of this section of the contract.
6 The quantity of gas required of a well increased with its distance from Natural's planned facilities. The contract also provided for
the release of depleted wells.
7 The parties apparently entered into a roll-over contract in 1977, and the Commission accepted it for filing in 1978. The Commission's
order does not mention this contract, and the parties have not furnished us with a copy.
8 Two alternative pipeline proposals were before the Commission, and the order was addressed primarily to their relative merits. The
Commission found it “appropriate to dispose briefly of such questions as arise in respect of the application( ) of ... Oil Drilling.” 16
FPC at 90. The scope of the dedication was not considered.
9 This difference is critical to the scope of our review. The Commission's construction of its certificates is entitled to great weight
and commensurate deference. Cf. Seaboard Coast Lie Railway Co. v. United States, 599 F.2d 650, 652 (5th Cir. 1979) (deference to
ICC interpretation of merger conditions); Harrison, 567 F.2d at 311 (noting Commission's position). On the other hand, despite the
Commission's “expertise and familiarity with natural gas contracts,” Zachary v. FERC, 621 F.2d 155, 157 (5th Cir.), cert. denied, --
U.S. --, 101 S.Ct. 795, 66 L.Ed.2d 611 (1980), its interpretation of a contract or application is entitled to less weight, Harrison. But see
Gulf, 563 F.2d at 616 n. 4 (Aldisert, J., dissenting) (Commission maintains that its interpretation of contracts also carries great weight).
10 The omitted citations do not remedy the want of explanation. Even so far as they support the propositions for which they are cited,
they only say that once gas is dedicated to interstate commerce it stays dedicated. This is not in issue. Once again, our question more
precisely the Commission's question is whether the gas was once dedicated.
11 As both parties note, “pregranted abandonment (authority) was contrary to Commission practice in 1956....” FERC brief at 17 n. 15.
12 In fact, the order's assertion that the 1956 certificate did not approve the release provisions suggests that the Commission read the
contract (as opposed to the certificate) as not dedicating the gas.

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
Mobile County v. City of Saraland, 501 So.2d 438 (1986)

pipe under Bayou Sara Avenue. The permit from Saraland
is necessary to complete the county's drainage system to
501 So.2d 438
improve the Blackjack community, an unincorporated area of
Supreme Court of Alabama.
Mobile County. Blackjack is bordered on the north by the City
MOBILE COUNTY, a political subdivision of of Satsuma, on the east by the City of Mobile, and on the south
and body corporate in the State of Alabama and west by the City of Saraland. The streets of Blackjack
v. are unpaved, and the condition of the roads is deplorable as
a result of the lack of drainage. The county, seeking to solve
CITY OF SARALAND, Alabama,
the drainage problem, secured a grant of $318,000.00 from
a municipal corporation.
the Department of Housing and Urban Development, which,
84-460. | Oct. 3, 1986. | As when added to county funds, would pay the cost of the project.
All that remains to be done in order for the county to proceed
Corrected on Denial of Rehearing Jan. 9, 1987.
with the drainage project is a permit from Saraland to install a
County sought writ of mandamus to require city to grant pipe under Bayou Sara Avenue. The county has permits from
county permit to install drainage pipe across right-of-way the City of Satsuma and the U.S. Army Corps of Engineers.
of city street. The Circuit Court, Mobile County, Telfair J.
Mashburn, J., denied petition for writ, and county appealed. Meanwhile, prior to requesting a permit from Saraland to
The Supreme Court, Almon, J., held that: (1) construction of install the pipe under the street, the county asked the Saraland
drainage pipe was not prohibited by constitutional provision City Council to bring condemnation proceedings against the
requiring permission of city for use of its streets for land needed for the project within Saraland city limits. When
construction of public utility, as drainage pipe was not public the city did not bring the condemnation proceeding, the
utility; (2) city council's refusal to grant permit was arbitrary county filed an action in December 1983 to condemn the
and capricious; and (3) mandamus was only remedy available right-of-way. The city resisted.
to require city to grant permit.
In March 1984, the probate court denied the county's
Reversed and remanded. application to condemn. No appeal was taken by the county.
The county eventually purchased the land from the property
Houston, J., concurred in result. owners within Saraland city limits. The county continued to
negotiate with Saraland for street excavation and requested
a permit pursuant to Saraland Ordinance 206. Section one
Attorneys and Law Firms of this ordinance provides that before any excavation can be
done on a Saraland city street a permit must first be obtained
*438 James C. Wood and J. Randall Crane of Simon, Wood
from the city clerk. Section five provides that before any
& Crane, Mobile, for appellant.
permit to excavate is granted a bond must be furnished in
*439 Richard L. Thiry of Thiry, Maples & Bronson, Mobile, double the amount of the cost of the repairs necessary to
for appellee. return the street to its original condition. The county posted a
sufficient surety bond pursuant to the ordinance.

ALMON, Justice. Although the ordinance provides that a request for a permit
shall be filed with the clerk, the county's request was
Mobile County appeals from an order of the circuit court
addressed to the city council. However, no issue is made of
denying its petition for a writ of mandamus directing the
this technicality.
City of Saraland to grant Mobile County a permit to install a
drainage pipe across the right-of-way of Bayou Sara Avenue.
Saraland maintained at the trial that it refused to issue a
We reverse and remand to the circuit court of Mobile County
permit because of its concern with the impact of the drainage
for that court to issue an order granting the writ of mandamus.
system on pollution and the flooding of Bayou Sara Creek.
The mayor testified that the refusal was partly because of
The county requested a permit from Saraland pursuant to
political pressure from the Saraland citizens. The county's
Saraland's ordinance providing for street excavation. The
engineers testified, however, that the drainage system would
county sought the permit in order to install a drainage

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Mobile County v. City of Saraland, 501 So.2d 438 (1986)

reduce surface water pollution because it would help prevent the furnishing of electricity, telephone service, gas, water, or
the water table from rising. steam, or transportation on the streets themselves, and are
principally operated by private entities.
After hearing the evidence, the trial judge made findings of
fact and conclusions of law. First, the court held that the [1] None of the annotated cases interpreting any of these
county had no legal right to the permit because the city had the sections appears to involve a sewer or drainage system.
absolute authority under Art. XII, § 220, Constitution 1901, Instead, § 220 has been held to govern the granting a franchise
to determine who may be granted a permit. Alternatively, to use the city streets. Crabtree v. City of Birmingham, 292
the court held that to grant or deny a permit was within the Ala. 684, 299 So.2d 282 (1974), and cases cited therein. We
discretion of the city council, and that the council did not conclude that the proposed drainage pipe is not a “public
abuse its discretion. Second, the court held that the county utility” within the meaning of § 220, and therefore that its
was not entitled to the writ of mandamus because it had construction cannot be prohibited by reference to this section
other remedies, and that the county was attempting to use of the Constitution of 1901. Cf. Opinion of the Justices, 263
mandamus as a substitute for appeal. Third, the court affirmed Ala. 174, 81 So.2d 699 (1955), holding that a tunnel is not a
the city's *440 defenses of res judicata, collateral estoppel, utility for purposes of § 228.
and laches.
[2] The trial court's alternative ground for denying the
Section 220, Constitution 1901, provides: petition on its merits, that the city was within its discretion
in denying the permit, must also fall. We find that the
“No person, firm, association, or city council's refusal to grant the county a permit pursuant
corporation shall be authorized or to the provisions of its Ordinance 206 was arbitrary and
permitted to use the streets, avenues, capricious. The county complied with all of the provisions
alleys, or public places of any city, of the ordinance. The city clerk testified that she routinely
town, or village for the construction granted permits under the ordinance; that the applications for
or operation of any public utility permits never went to the mayor; that the application filed
or private enterprise, without first by the county was the first to be denied since 1978, and she
obtaining the consent of the proper further testified that, had the application come to her initially,
authorities of such city, town, or she would have issued the permit. The trial court held that the
village.” denial of the permit by the city was discretionary and that it
did not abuse its discretion. We do not agree. The city had
The trial court held that the county was a person or no flood plain management plan; it had no ordinance on the
corporation, and further held that the proposed drainage subject, and its decision appears not to have been based on
system was a public utility. We do not agree that the proposed any expert opinion. In fact, the city did not consult an expert
drainage pipe comes within the ambit of this section of until after the petition for mandamus was filed by the county.
the Constitution. Section 228 prohibits a city or town from This Court stated in Pritchett v. Nathan Rodgers Construction
granting a right to use its streets, etc., “for the construction or & Realty Corp., 379 So.2d 545 (Ala.1980), that mandamus
operation of water works, gas works, telephone or telegraph will lie to order an official not to exercise his discretion in
line, electric light or power plants, steam or other heating an arbitrary and capricious manner. Further, the Court stated
plants, street railroads, or any other public utility,” for longer that a city has the power to regulate for the protection of the
than 30 years. Similarly, Code 1975, § 37-4-1, defines health of its citizens, but that that power cannot be exercised
“utility” for the Code chapter on “Public Utilities Other arbitrarily. In Pritchett the Court found that the city was
Than Transportation Companies or Motor Vehicle Carriers,” proceeding to grant or deny applications on an arbitrary case-
including as the only arguably pertinent provision: “Any by-case basis, as the City of Saraland appears to have done
plant, property or facility for the supply, storage, distribution, in this case.
or furnishing to or for the public of water for manufacturing,
municipal, domestic or other uses.” These provisions do not [3] Contrary to contentions of the city, mandamus is the only
include drainage systems, which allow for the run-off of remedy available to the county to prevent a failure of justice.
rainwater and are normally constructed and maintained by The county has a clear right to improve the conditions of the
government entities; instead, the enumerated utilities are for Blackjack community. Drainage of the area is the first link

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Mobile County v. City of Saraland, 501 So.2d 438 (1986)

in the chain of improvement. The county should *441 not
be denied that right for arbitrary reasons-particularly political TORBERT, C.J., and MADDOX, JONES, SHORES,
pressure. In Foshee v. State, 210 Ala. 155, 97 So. 565 (1923), ADAMS and STEAGALL, JJ., concur.
this Court held that a writ of mandamus could be used to
prevent a failure of justice where there is a clear right and HOUSTON, J., concurs in the result.
there is an absence of any other adequate remedy to correct
the errors of an inferior tribunal. See Katz v. Alabama State ON APPLICATION FOR REHEARING
Board of Medical Examiners, 351 So.2d 890 (Ala.1977).
PER CURIAM.
We hold that the denial of the permit to excavate Bayou Sara
Avenue was arbitrary and capricious. The trial court's order OPINION CORRECTED; APPLICATION OVERRULED.
denying the writ is reversed, and the cause remanded. The
writ is due to be granted.
TORBERT, C.J., and MADDOX, JONES, ALMON,
REVERSED AND REMANDED. SHORES, ADAMS, HOUSTON and STEAGALL, JJ.,
concur.

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Moffitt v. Town of South Padre Island, Not Reported in S.W.3d (2001)
2001 WL 34615363

Moffitt owns Lot 1, Block 192 of Fiesta Isles Subdivision
in South Padre Island, Texas, and has owned this property
2001 WL 34615363
for twenty-five to thirty years. It is one of only five lots
Only the Westlaw citation is currently available.
zoned as single-family residential lots on the beach in the
NOTICE: NOT DESIGNATED FOR PUBLICATION. Town. The lot is located on the corner of Gulf Boulevard
UNDER TX R RAP RULE 47.7, UNPUBLISHED and Sapphire Circle, and the rear of the lot faces the beach.
OPINIONS HAVE NO PRECEDENTIAL In November of 1999, Moffitt applied with the Planning and
VALUE BUT MAY BE CITED WITH THE Zoning Commission of the Town of South Padre Island (the
NOTATION “(not designated for publication).” “Commission”) for a proposed replat in order to subdivide
her property, putatively 100 feet wide, into two equal single
OPINION family residential lots.
Do not publish. Tex.R.App. P. 47.3(b).
Court of Appeals of Texas, The Commission published notice of Moffitt's proposed
Corpus Christi-Edinburg. replat, and gave neighboring realty owners written notice
under section 212.015 of the Texas Local Government
Kay B. MOFFITT, Appellant,
Code.SeeTEX. LOC. GOV'T CODE ANN. § 212.015
v. (Vernon 1999). After the hearing, the Commission denied the
TOWN OF SOUTH PADRE requested replat on grounds that the resulting lots failed to
ISLAND, Texas, Appellee. meet the minimum size required by the Town of South Padre
Island's Code of Ordinances (the “Code”). The proposed
No. 13-00-453-CV. | Nov. 1, 2001. replat was resubmitted to the Commission in December
of 1999, and again the Commission denied the replat.
On appeal from the 107th District Court of Cameron County,
Moffitt appealed the Commission's decision to the Board of
Texas.
Aldermen, who also denied the replat. Moffitt then filed an
Attorneys and Law Firms action in district court for mandamus or temporary injunction,
arguing that because her proposed replat met all requirements
Francisco J. Zabarte, for Kay B. Moffitt. of the Code and the Texas Local Government Code, the
approving authority had a ministerial duty to approve the
Paul Y. Cunningham, for Town of South Padre Island, Texas.
replat and did not have discretion to deny it. After an
Before Chief Justice VALDEZ and Justices DORSEY and evidentiary hearing, the trial court denied Moffitt's requested
RODRIGUEZ. relief, and this appeal ensued.

Moffitt presents three issues for review. She contends that
(1) there was no evidence or insufficient evidence to support
OPINION
the trial court's finding of fact that the replat would not
Opinion by Chief Justice VALDEZ. meet the minimum square footage as required by section
20-6(c)(4) of the South Padre Island Code of Ordinances;
*1 Kay B. Moffitt requested the trial court to issue a writ (2) the uncontroverted evidence or overwhelming evidence
of mandamus ordering the Town of South Padre Island (the established that the replat met all requirements of the South
“Town”) to approve the replat and subdivision of Lot 1, Block Padre Island Code of Ordinances and section 212.010 of
192, Fiesta Isles Subdivision, South Padre Island, Texas into the Texas Local Government Code, therefore, the trial court
two single family residential lots. The trial court denied should have found that the Town had a ministerial duty to
her request for mandamus relief and dismissed her cause of approve the replat; and (3) the trial court erred in denying
action. We affirm the decision of the trial court. mandamus relief because the uncontroverted evidence or
overwhelming evidence established that the replat met all
requirements of the South Padre Island Code of Ordinances
and the Texas Local Government Code.
Factual and Procedural Background

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Moffitt v. Town of South Padre Island, Not Reported in S.W.3d (2001)
2001 WL 34615363

injunction. Kirschke v. City of Houston, 330 S.W.2d 629,
631 (Tex.Civ.App.-Houston [1st Dist.] 1959, writ ref'd
Municipal Control of Plats and Subdivisions
n.r.e.)(refusal to issue building permit), rev'd on other
*2 Under the Texas Local Government Code, a grounds, Austin v. Teague, 570 S.W.2d 389, 394 (Tex.1978).
municipality's power to regulate subdivisions is broad.
See Elgin Bank of Texas v. Travis County, 906 S.W.2d
120, 121-23 (Tex.App.-Austin 1995, writ denied)(comparing Standard of Review
regulation powers of county and municipality). The
governing body of a municipality may adopt rules governing An action for a writ of mandamus initiated in the trial court
plats and subdivisions of land within the municipality's is a civil action subject to appeal as any other civil suit.
jurisdiction to promote the health, safety, morals, or general Anderson v. City of Seven Points, 806 S.W.2d 791, 792 n. 1
welfare of the municipality and the safe, orderly, and healthful (Tex .1991); Dallas Area Rapid Transit v. Dallas Morning
development of the municipality. TEX. LOCAL GOV'T News, 4 S.W.3d 469, 473 (Tex.App.-Dallas 1999, no pet.);
CODE ANN. § 212.002 (Vernon 1999). The municipal City of Beaumont v. Spivey, 1 S.W.3d 385, 389 (Tex.App.-
authority approves a plat only if the plat conforms to the Beaumont 1999, pet. denied). In such actions, we review
general plan of the municipality and its current and future the trial court's findings of fact and conclusions of law in
streets, alleys, parks, playgrounds, and public utility facilities. accordance with standards generally applicable to a trial
SeeTEX. LOCAL GOV'T CODE ANN. § 212.010 (Vernon court's findings and conclusions. Anderson, 806 S.W.2d at
1999). The plat must also conform to the general plan 794 n. 2; Dallas Area Rapid Transit, 4 S.W.3d at 473; City
for the extension of the municipality, taking into account of Beaumont, 1 S.W.3d at 389; Univ. Of Texas v. Texas
access to and extension of sewer and water mains and the Legal Found., 958 S.W.2d 479, 481 (Tex.App.-Austin 1997,
instrumentalities of public utilities. Id. Further, the plat must no pet.). We review findings of fact for legal and factual
conform to any rules adopted to promote the health, safety, evidentiary support, and we review conclusions of law de
morals, or general welfare of the municipality. Id. However, novo. Dallas Area Rapid Transit, 4 S.W.3d at 473; City of
the municipal authority responsible for approving plats must Beaumont, 1 S.W.3d at 389.
approve a plat or replat that is required to be prepared under
this subchapter and that satisfies all applicable regulations. *3 While findings of fact have the same force and
TEX. LOCAL GOV'T CODE ANN. § 212.005 (Vernon dignity as a jury's verdict upon jury questions, they are not
1999). The foregoing rules that govern the issuance of plats conclusive when a complete reporter's record appears in the
are equally applicable to replats. SeeTEX. LOCAL GOV'T record, as here. See Catalina v. Blasdel, 881 S.W.2d 295,
CODE ANN. § 212.001 (Vernon 1999)(the definition of 297 (Tex.1994); Tucker v. Tucker, 908 S.W.2d 530, 532
“plat” includes a replat). (Tex.App.-San Antonio 1995, writ denied). If a reporter's
record is filed, unchallenged findings of fact are binding on
the appellate court unless the contrary is established as a
matter of law, or if there is no evidence to support the finding.
Mandamus
See McGalliard v. Kuhlmann, 722 S.W.2d 694, 696-97
A writ of mandamus will issue to compel a public official to (Tex.1986). The trial court's findings of fact are reviewed
perform a ministerial act. Anderson v. City of Seven Points, for legal and factual sufficiency of the evidence to support
806 S.W.2d 791, 793 (Tex.1991). An act is ministerial when them by the same standards that are applied in reviewing the
the law clearly spells out the duty to be performed by the legal or factual sufficiency of the evidence supporting jury
official with sufficient certainty that nothing is left to the findings. Autohaus, Inc. v. Aguilar, 794 S.W.2d 459, 461
exercise of discretion. Id. Generally, mandamus will not issue (Tex.App.-Dallas 1990, writ denied); see Ortiz v. Jones, 917
to compel a public official to perform an act which involves S.W.2d. 770, 772 (Tex.1996) (per curiam).
an exercise of discretion.Id. However, mandamus may issue
in a proper case to correct a clear abuse of discretion by a The legal conclusions of the trial court are not binding upon
public official. Id. an appellate court; instead, the appellate court is free to draw
its own legal conclusions. See Pegasus Energy Group, Inc.
If a landowner believes that a municipality's action is v. Cheyenne Pet. Co., 3 S.W.3d 112, 121 (Tex.App.-Corpus
arbitrary, then it may obtain relief by mandamus or mandatory Christi 1999, pet. denied); Austin Hardwoods, Inc. v. Vanden

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Moffitt v. Town of South Padre Island, Not Reported in S.W.3d (2001)
2001 WL 34615363

Berghe, 917 S.W.2d 320, 322 (Tex.App.-El Paso 1995, writ
denied). When reviewing the trial court's legal conclusions, Both constructions are equally valid in the absence of any
we evaluate them independently, determining whether the clarifying evidence, but in this case we have evidence that
trial court correctly drew the legal conclusions from the facts. the persons charged with enforcing the ordinance apply the
Dallas Morning News v. Bd. of Trs., 861 S.W.2d 532, 536 latter construction. See Citizens Active in San Antonio v.
(Tex.App.-Dallas 1993, writ denied). Conclusions of law will Bd. of Adjustment, 649 S.W.2d 804, 806 (Tex.App.-San
be upheld on appeal if the judgment can be sustained on any Antonio 1983, no writ) (the interpretation of an ordinance by
legal theory supported by the evidence. Mack v. Landry, 22 the officials charged with its enforcement may be accorded
S.W.3d 524, 528 (Tex.App.-Houston [14th Dist.] 2000, no weight in construing the ordinance); City of Grand Prairie v.
pet.); Spiller v. Spiller, 901 S.W.2d 553, 556 (Tex.App.-San Finch, 294 S.W.2d 851, 854 (Tex.Civ.App.-Dallas 1956, no
Antonio 1995, writ denied). writ). Specifically, Robert Fudge, the public works director
for the Town, testified that the minimum size of a lot that
was recorded as of November 7, 1979, was the square footage
as recorded in 1979. There is no evidence in the record
Size Requirements for Replat supporting Moffitt's alternative construction of the ordinance.
Accordingly, we overrule Moffitt's second and third points of
In her second and third issues, Moffitt argues that her
error. Under this interpretation of the ordinance, we need not
proposed replat met all requirements of the Town of South
address Moffit's first point of error. SeeTEX.R.APP. P. 47.1.
Padre Island, including minimum lot size, and therefore
Nevertheless, we further note that the record does not support
the Board of Aldermen had a ministerial duty to approve
the legal and factual sufficiency challenge raised in Moffitt's
her replat, and the trial court erred in failing to grant
first point of error.
mandamus relief. The trial court's ultimate conclusion was
that “Plaintiff's proposed replat did not meet the requirements
An examination of the relevant plats and testimony pertaining
of the Zoning Ordinance of the Town (Section 20-6(C)(4)
thereto shows that the original plat, as a corner lot, has
of the Town of South Padre Island Code of Ordinances).”
a curved edge affecting both the frontage and size of the
Section 20-6(C)(4) provides that “the minimum area of a
lot. As an initial matter, the City staff had calculated the
lot shall be 5,000 square feet or as recorded in the county
frontage of Moffitt's lot as 99.95 feet rather than 100 feet,
courthouse as of November 7, 1979.”
thus precluding the creation of two 50 feet wide lots. Further,
although Moffitt's surveyor testified that the corner lot has a
We begin our analysis of this issue by noting that the
50 foot frontage, he admitted that the frontage included some
ordinance at issue is subject to differing interpretations.
of the curved edge of the lot abutting Sapphire Circle, and
Under one construction (Moffitt's proposed construction), the
that it is “a matter of opinion” which part of the curve fronts
word “or” can be interpreted to imply “whichever is lesser,”
on Sapphire Circle and can be calculated as lot width. This
as in the following construction:
evidence is legally and factually sufficient to sustain the trial
the minimum area of the lot shall be court's finding that the replat would not meet the legislative
5000 square feet or as recorded in the intent for minimum square footage as contained in section
county courthouse as of November 7, 20-6(C)(4).
1979, whichever is lesser.

*4 Under another equally reasonable construction, the word
Conclusion
“or” can be read to imply “whichever is applicable,” as in the
following construction: The judgment of the trial court will not be set aside if there
is any evidence of a probative nature to support it, and this
the minimum area of the lot shall be
Court may not substitute its findings of fact for those of the
5000 square feet or as recorded in the
trial court if there is any evidence in the record to sustain
county courthouse as of November 7,
the trial court's findings. Ray v. Farmers' State Bank of
1979, whichever is applicable based
Hart, 576 S.W.2d 607, 609 (Tex.1979); Harlingen Irrigation
on the date of recordation.
Dist. Cameron County No. 1 v. Caprock Comm. Corp., No.
13-99-396-CV, 2001 Tex.App. LEXIS 3680, *17 (Corpus

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Moffitt v. Town of South Padre Island, Not Reported in S.W.3d (2001)
2001 WL 34615363

findings and the record evidence, Moffitt's proposed replat
Christi May 31, 2001, no pet.). The trial court's conclusion
would fail to comply with the Code even if the Code were
that Moffitt's proposed replat did not meet the requirements of
construed to require a minimum size of 5,000 square feet.
section 20-6(C)(4) of the Town of South Padre Island Code of
Given our determination that Moffitt's proposed replat failed
Ordinances was supported by legally and factually sufficient
to meet the requisites of the Town's Code of Ordinances,
evidence.
we need not address the other issues raised by appellant.
SeeTEX.R.APP. P. 47.1.
*5 It is uncontradicted that Moffitt's proposed replat would
fail to comply with the Code if the Code were construed
The judgment of the trial court is affirmed.
to preclude the subdivision of lots that had been recorded
by 1979. Moreover, based on our review of the trial court's

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
Morgan Drive Away, Inc. v. Railroad Commission of Texas, 498 S.W.2d 147 (1973)

of the trial court denying a permanent injunction on the
ground of the validity of an order of the Railroad Commission
498 S.W.2d 147
granting Transit Homes, Inc. a specialized motor carrier
Supreme Court of Texas.
certificate. Our jurisdiction is not questioned. See Sec. 3
MORGAN DRIVE AWAY, INC., et al., Appellants, —b of Article V of the Constitution of Texas; Article
v. 1738a; 1 Rule 499a, Texas Rules of Civil Procedure; Railroad
RAILROAD COMMISSION Commission of Texas v. Manziel, 361 S.W.2d 560, 93
OF TEXAS et al., Appellees. A.L.R.2d 432 (Tex.1962); and Railroad Commission v. Shell
Oil Co., 146 Tex. 286, 206 S.W.2d 235 (1947).
No. B—3684. | April 25, 1973.
Transit Homes, Inc., an appellee here in addition to the
Specialized motor carrier filed application to amend its Railroad Commission, is the holder of a specialized motor
certificate authorizing transportation of used house trailers so carrier certificate authorizing the transportation of used house
as to authorize transportation of certain commodities between trailers from Harlingen, Texas, to all points in Texas and
all points within the state. The Railroad Commission granted vice versa. It filed application with the Commission to amend
the application and protestants filed suit challenging grant of its certificate so as to authorize the transportation of the
the application. The District Court, No. 98, Travis County, following commodities between all points in Texas:
Jones, J., rendered judgment in favor of the applicant-carrier (1) Trailers, including house trailers, mobile homes, and other
and protestants appealed. The Supreme Court, Steakley, structures moving on wheeled undercarriages;
J., held that statements in examiner's report, which was
adopted by the Commission, that protestants had relied upon (2) Appurtenances for the items named in (1) above, when
foreign based power units not properly registered with the moving therewith; and
Commission for handling of intrastate traffic, that witnesses
testified regarding instances where protestants had been (3) Equipment, materials and supplies used in connection
unable to supply appropriate equipment when and as needed with the itmes named in (1) and (2) above when moving
and that, ‘in consideration of the above,’ protestants were not therewith, between all points in Texas.
providing fully adequate service for handling of all traffic in
intrastate commerce did not meet fact-finding requirements
of statute. See Secs. 1(i) and 5a of Article 911b. The application was
opposed by Morgan and National Trailer. Each is the holder
Reversed and rendered. of certificates issued by the Commission authorizing the
transportation of house trailers between all points in Texas.
Pope, J., dissented and filed opinion in which Denton, J.,
After hearing and various administrative steps, some later
joined.
noticed, the Commission granted the application of Transit in
its entirety. Morgan and National Trailer thereupon filed suit
Attorneys and Law Firms as an appeal under the provisions of Sec. 20 of Article 911b to
set aside the granting order, and to enjoin Transit's operations
*148 Robinson, Felts, Starnes & Nations, Mert Starnes and under the certificate issued pursuant thereto. After trial to the
Phillip Robinson, Austin, for appellants. court, a take nothing judgment was entered against Morgan
and National Trailer and all injunctive relief sought by them
John Hill, Atty. Gen., James H. Cowden and Rex H. White, was denied. This direct appeal was then taken.
Jr., Asst. Attys. Gen., Doherty & Robertson, James M.
Doherty and Pat H. Robertson, Austin, for appellees. Appellants level a three-pronged attack upon the order of the
Commission. They *149 say, first, that an initially served
Opinion examiner's report to the Commission that recommended a
denial of Transit's application ‘is still the only lawful order
STEAKLEY, Justice.
in this case,’ notwithstanding the subsequent withdrawal of
This is a direct appeal by Morgan Drive Away, Inc. and the report as issued in error and the subsequent adoption by
National Trailer Convoy, Inc., appellants, for a judgment order of the Commission of a successor examiner's report

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Morgan Drive Away, Inc. v. Railroad Commission of Texas, 498 S.W.2d 147 (1973)

that recommended the granting of the application. Appellants the form of exceptions prior to action of the Commission
say, second, that, even so, the findings in the examiner's upon the report and recommended order. This administrative
report which became those of the Commission by adoption process thus brings to the Commission for official action
in the Commission order, do not meet the fact finding in a contested proceeding the hearing record, the report
requirements of Sec. 5a(d) of Article 911b. They cite our and recommendation of the examiner, *150 and the
holdings to such effect in Miller v. Railroad Commission, exceptions of parties that are adversely affected by the
363 S.W.2d 244 (Tex.1962); Thompson v. Hovey Petroleum recommendation. The order of the Railroad Commission
Co., 149 Tex. 554, 236 S.W.2d 491 (1951); and Thompson v. issued in response to all of this constitutes the official
Railroad Commission, 150 Tex. 307, 240 S.W.2d 759 (1951). action of the Commission. It alone has binding force.
Appellants say, finally, that the order of the Commission An administrative mistake in the preliminary proceedings
is not reasonably supported by substantial evidence. We whereby a report and recommendation contrary to, and in fact
overrule the first contention; sustain the second; and so do not not that of, the examiner is necessarily subject to correction;
reach the third. otherwise, the actual report and recommendation of the
examiner would not receive the attention of the parties or be
The administrative circumstances giving rise to the first attack given consideration by the Commission. This is emphasized
on the order of the Commission were these. Rule 43 of the by the fact that the procedural rules of the Commission
effective Rules of Procedure for the Transportation Division contemplate service upon the parties of the actual report and
of the Commission, the pertinent text of which is copied in recommendation of the examiner, not a mistaken one; and
the margin, 2 provides that in all contested proceedings the it can properly be said that these rules also contemplate the
examiner for the Commission shall prepare and file a report inherent power of the Commission to approve and affirm
and recommended order which shall be filed with the Director corrective acts of its administrative personnel to accomplish
of the Division and served by him on each party of record. this purpose. We hold that the erroneously issued report here
In this instance the examiner initially filed with the Director was ineffective for any purpose.
a report and recommendation that the application of Transit
be denied. This was dated January 31, 1972 and was served [4] [5] The Second and Third Points of Error which
on the parties. On the following February 2, the Director attack the granting order of the Commission are related.
notified the parties that the report had been issued in error They require us to decide whether the fact findings in the
and that it was withdrawn. Then, under date of February 3, order meet the statutory requirements; and, if so, whether the
1972, a successor report and recommended order likewise order is reasonably supported by substantial evidence. We
signed by the examiner was served on the parties, and this recognized in Miller v. Railroad Commission, 363 S.W.2d
report recommended that Transit's application be granted 244 (Tex.1962), that assistance to the Courts in exercising
in its entirety. Exceptions were filed by the appellants to their function of reviewing such orders is a statutory function
the successor order and were overruled by the Commission. of the fact finding requirement, and that the sufficiency of
Under date of June 1, 1972, the Commission issued its official findings to meet the requirements of the statute must be
order in which, as to this, it was found that the initial report related to the issues and the evidence in each case separately.
and recommended order was served as the result of a clerical This is but to recognize the logic that determination of the
error; that it was withdrawn by notice to all parties; and that validity Vel non of an administrative order under the precepts
its withdrawal was procedurally correct and legally effective. of the substantial evidence rule should be made in the light of
[1] [2] [3] A hearing examiner of the motor transportation the findings of fact upon which the order of the Commission
division of the Railroad Commission serves the function of is predicated, where such findings are required by statute.
hearing the evidence offered by applicants for motor carrier In such case it is reasonable to proceed from the premise
operating rights, and that offered by existing carriers or other that the facts found were regarded by the Commission to
parties who may appear in opposition to the application. have reasonable support in the evidence and to support its
His subsequent report to the Commission, accompanied action. So a fact finding requirement has substantial statutory
by a recommended order, is an internal administrative purpose and is more than a technical prerequisite.
device whereby the examiner may report his findings
and recommendation to the Commission. The report also
performs the office of affording parties in disagreement an The fact finding statutory requirement governing applications
opportunity to present their views to the Commission in to operate as a specialized motor carrier is found in Sec. 5a(d)
of Article 911b, as follows:

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Morgan Drive Away, Inc. v. Railroad Commission of Texas, 498 S.W.2d 147 (1973)

‘The order of the Commission granting briefs, appellees point to portions of two paragraphs in the
said application and the certificate issued third section of the adopted order which they argue supplies
thereunder shall be void unless the the requisite findings of fact as to the existing services. These
Commission shall set forth in its order paragraphs are quoted in full in the margin, 3 and contain the
full and complete findings of fact only express reference in the adopted order to the adequacy or
pointing out in detail the inadequacies of not of the existing services. It is also clear that the conclusions
the services and facilities of the existing in the second of the two quoted paragraphs do not qualify
carriers, and the public need for the as fact findings under the rationale of Miller, supra, where
proposed service.’ we held that statements that ‘service is inadequate in that
the service is not available when needed’ and ‘trucks and
facilities are not available when needed’ do not provide
The order of the Commission under attack contains the sufficient findings of basic facts from which the Court can
following: determine if reasonable grounds existed for issuance for the
‘THE COMMISSION FINDS that after order; as well as under the rationale of Thompson, supra,
statutory notice the said application where similar statements were recognized as no more than a
was heard before the Commission's finding of an ultimate conclusion, partly in the words of the
Examiners, and that Examiner . . . made statute.
and filed his corrected report herein,
served February 3, 1972, containing
his findings of fact and conclusions So we turn to the first of the quoted paragraphs. Each of its
of law thereon, which report is hereby three sentences is no more than a reference to the evidence
adopted and made a part hereof, and said with no stated findings of fact. Appellees quote as directly
proceedings was duly submitted.’ relating to this issue a portion of one sentence, as follows:
‘(p)rotestants have relied upon foreignbased power units, not
properly registered with the Texas Railroad Commission,
As thus stated, the Commission did not purport to for the handling of intrastate traffic in Texas, contrary to
independently set forth findings of fact; the parties agree, the Commission's regulations.’ But this sentence begins as a
however, that the Commission adopted the report of the recitation that ‘(t)he evidence further indicates that in some
examiner and that we look there to determine compliance, or instances . . .,’ so it is no more than a reference to the evidence
not, with the statutory fact finding requirements. without any purport as a finding of fact. Even so, it implies no
more than an adverse criticism of the actions of the protesting
The adopted report is divided into three sections entitled carriers ‘in some instances.’ Appellees also urge the sentence
Statement of the Case, Statement of Facts, and Discussions which reads ‘(t)he public witness testimony includes specific
and Conclusions. It will not be quoted in full so as not testimony regarding instances wherein protestants have been
to further extend this opinion. The parties recognize that unable to supply appropriate equipment when and as needed
the findings of fact are to be found, if at all, in the third for the movement of traffic moving in Texas intrastate
section. These findings must relate, as the statute says, to commerce.’ But here again the sentence is not drawn or stated
the inadequacies in the services and facilities of the existing in terms of a finding of fact; it is no more than a recitation
carriers *151 and to the public need for the proposed service. of certain matters which were included in the public witness
The findings may be sufficient as to both, or as to neither, or testimony.
as to only one. But under the statute they must be sufficient [7] Appellees say, however, that the first sentence in the next
as to both for the order to stand. succeeding paragraph converts the foregoing into acceptable
[6] The order under review contains a lengthy general *152 and sufficient findings of fact. This sentence reads:
discussion of conditions in the mobile home industry and ‘(i)n consideration of the above, the Examiner concludes
perhaps findings of fact could be gleaned that point to the that protestants are not providing a fully adequate service
public need for the proposed service. But we do not reach for the handling of the involved traffic in Texas intrastate
this since the immediately apparent problem is the absence of commerce.’ Appellees argue that these sentences represent
findings of fact which qualify under the statute with respect a finding that the public witnesses had been unable to
to the services and facilities of the existing carriers. In their secure trucks when needed; and that they constitute ‘direct

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Morgan Drive Away, Inc. v. Railroad Commission of Texas, 498 S.W.2d 147 (1973)

findings that the examiner is relying upon such testimony in
concluding that ‘protestants are not providing a fully adequate I respectfully dissent. The majority has concluded that the
service for the handling of the involved traffic in Texas commission's order falls short of the statutory requirement
intrastate commerce.‘‘ It may well be that the Commission that it contain full and complete findings of fact. Art. 911b,
relied upon the recited evidence in reaching its conclusions; Sec. 5a(d). The order incorporates the examiner's report and
but there are no findings of fact pertaining to what may have recommended order, and attached to that was a summation of
been ‘included’ in the public witness testimony, or to any copious proof offered by both the applicant and protestants.
inadequacies in the existing services. Quite clearly there are
The conclusion reached by the majority flows from its
no findings of fact that are full and complete in pointing
disregard of many portions of the six-page report of
out such inadequacies in detail. We may consider only what
the examiner and its attention to only two conclusionary
was written by the Commission in its order, and we must
paragraphs of that document which paragraphs it reads with
measure its statutory sufficiency by what it says. This is the
a hostile eye. I should think that all parts of the report
teaching of Miller, Hovey, Thompson, supra; and cf. Alamo
should be examined. When we do that we learn that twenty
Express, Inc. v. Union City Transfer, 158 Tex. 234, 309
public witnesses asked for better service than they now
S.W.2d 815 (1958). The orders in Hovey and Thompson
receive and only one public witness appeared against the
contained exhaustive summations of the evidence and it could
applicant. There were findings *153 of four-fold growth
have been inferred that the Commission subjectively relied
in the public's use of mobile homes over a ten-year period,
thereon in the approval orders. But Thompson stands for
and that this increase was to the extent of almost 25,000
the propositions that to be valid an order must contain more
units during the year prior to the hearing. Texas plants
than references to the testimony of witnesses or to what their
which fabricate such units have increased from 43 in 1968
testimony may have included; and that summations of the
to 126 at the time of the hearing and other plants are being
evidence are not findings of fact Miller says further that
built. Paralleling this exceptional growth of the mobile home
findings of basic facts cannot be presumed from findings of a
industry, there has been an increase in what the witnesses
conclusional nature; and that under the mandatory language
called ‘bootlegging’ by unauthorized transporters of mobile
of the statute, the findings of fact must fully and completely
homes. In 1966 there were 18 cases of illegal transportation
point out any inadequacies in the services and facilities of the
whereas in 1970 there were 281 cases filed against illegal
existing carriers. Were we to reach the substantial evidence
carriage of such units. Applicant's public witnesses testified
point, we would look in vain for findings to test against the
that the protestants have been unable to supply transportation
evidence in such respects.
when needed. The commission found that the application is
supported by manufacturers located in every part of Texas
Morgan Drive Away, Inc. v. Railroad Commission, 483 who ship, receive and influence the movements of such units
S.W.2d 320 (Tex.Civ.App.1972, writ ref'd n.r.e.), is urged from and between points scattered throughout Texas.
by appellees as our most recent review of an order of the
‘In consideration of the above,’ that is, the recitals contained
Commission granting motor carrier operating rights where
in the foregoing parts of the report, the examiner concluded
the attack upon the order was as here. The intermediate court
that the two protestants are not providing fully adequate
there stated that it had examined the order of the Commission
service for handling the intrastate traffic in such units, the
and had concluded that the findings met the test stated in
proposed new service is required by the public convenience
Miller v. Railroad Commission, Supra, 363 S.W.2d 244,
and necessity, and the new service will result in improvement
246. We likewise examined the order and agreed with that
in existing service. The examiner concluded that any loss
conclusion. A comparison of the order there, and the one
of intrastate traffic to the protestants would be more than
under review here, discloses controlling difference in the
offset by the increase in the traffic which is resulting from the
nature and completeness of the fact findings.
growth in the mobile home industry.
The judgment of the trial court is reversed and judgment is
The majority cites in support of its decision, Miller v. Railroad
here rendered vacating the order of the Commission.
Commission, 363 S.W.2d 244 (Tex.1963); Thompson v.
Railroad Commission, 150 Tex. 307, 240 S.W.2d 759 (1951)
Dissenting opinion by POPE, J., joined by DENTON, J. and Thompson v. Hovey Petroleum Co., 149 Tex. 554, 236
S.W.2d 491 (1951), neither of which has an order comparable
POPE, Justice (dissenting).

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Morgan Drive Away, Inc. v. Railroad Commission of Texas, 498 S.W.2d 147 (1973)

lack of full and complete findings in the commission's order
to the one here questioned. More recently this court wrote
which granted a certificate to Warfield Walker to transport
Alamo Express, Inc. v. Railroad Commission, 407 S.W.2d
mobile homes in northeast Texas. The commission's findings
479, 485 (Tex.1966), wherein we said concerning those three
followed the same format as that employed in this case.
cases:
The commission invoked its common knowledge of the
In Miller, the finding of fact was
‘tremendous increase in the use and transportation of mobile
embodied in a single sentence, which
homes in Texas within the last ten years' as well as the
was clearly inadequate. In Thompson, the
increase in recreational facilities and the mobility of college
order contained a recital of the evidence
students who use mobile homes. The court of civil appeals
but no findings of fact from the evidence.
concluded in that case, as did this court, ‘that a court upon
In Hovey, railroads as well as motor
reading them (the findings) can fairly and reasonably say
carriers protested the grant of additional
that they either do or do not support the required ultimate
authority to an applicant. The order
statutory findings of inadequacy of the services and facilities
found that an inadequate number of tank
of existing carriers and a genuine public need for the proposed
cars were furnished by the railroads but
service.’ Miller v. Railroad Commission, Supra.
wholly failed to find that an inadequate
number of tank trucks were furnished by I would conclude that proof of an exceptional growth of a new
the protesting motor carriers. It was a industry over a short time-span, and a projected continuation
case of no finding at all upon the material *154 of that growth would be valid findings which support
issues. the need for new competitive carrier services.

I would affirm the judgment of the trial court upholding the
This court recently considered the application for writ of validity of the commission's order.
error in Morgan Drive Away, Inc. v. Railroad Commission
of Texas, 483 S.W.2d 320 (Tex.Civ.App.1972, writ ref'd
DENTON, J., joins in this dissent.
n.r.e.), wherein the same two protestants urged the same

Footnotes
1 References are to Vernon's Ann.Civ.St.
2 Rule 43: The Examiner's Report and Recommended Order.
In all contested proceedings, and in all uncontested proceedings wherein the examiner recommends action other than that sought
by the applicant, petitioner, or complainant, he shall prepare and file with the Director a report and recommended order. . . . She
report and recommended order shall contain a brief statement of the nature of the case and the issues, a complete discussion of the
evidence, the findings of fact and ultimate conclusions based thereon. A copy thereof shall be served forthwith by the Director on
each party of record.
3 ‘Virtually all of applicant's public witnesses complain of a lack of equipment availability from protestants Morgan and National. The
public witness testimony includes specific testimony regarding instances wherein protestants have been unable to supply appropriate
equipment when and as needed for the movement of traffic moving in Texas intrastate commerce. The evidence further indicates
that in some instances protestants have relied upon foreign-based power units, not properly registered with the Texas Railroad
Commission, for the handling of intrastate traffic in Texas, contrary to the Commission's regulations.
‘In consideration of the above, the Examiner concludes that protestants are not providing a fully adequate service for the handling
of the involved traffic in Texas intrastate commerce. Applicant has established by substantial evidence that the service proposed is
required by the public convenience and necessity, and has established further that the service it proposes will result in a material
improvement in existing transportation service.’

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
Nucor Steel-Texas v. Public Utility Com'n of Texas, 363 S.W.3d 871 (2012)

John C. Wander, Michael J. Tomsu, Vinson & Elkins,
363 S.W.3d 871 LLP, Elizabeth R.B. Sterling, Assistant Attorney General,
Court of Appeals of Texas, Environmental Protection & Administrative Law Division,
Austin. Austin, TX, Howard Fisher, Oncor Electric Delivery
Company LLC, Matthew C. Henry, Richard L. Adams, Jo
NUCOR STEEL–TEXAS, a Division
Ann Biggs, Vinson & Elkins, LLP, Dallas, TX, for appellee.
of Nucor Corporation, Appellant,
v. Jonathan S. Day, Tammy Cooper, Lino Mendiola III,
PUBLIC UTILITY COMMISSION OF TEXAS, Andrews Kurth LLP, Thomas L. Brocato, Lloyd, Gosselink,
Oncor Electric Delivery Company and Texas Energy Rochelle & Townsend, PC, Austin, TX.
Future Holdings Limited Partnership, Appellees.
Before Justices PURYEAR, PEMBERTON and ROSE.
No. 03–10–00430–CV. | March 15, 2012.

Synopsis OPINION
Background: Steel company, as intervenor in proceedings
for electric provider's proposed acquisition of utility, sought DAVID PURYEAR, Justice.
review of Public Utilities Commission (PUC) determination
that acquisition was in public interest. The 98th Judicial Texas Energy Future Holdings Partnership (“Texas Energy”)
District Court, Rhonda Hurley, J., affirmed. Steel company sought to acquire Oncor Electric Delivery Company
appealed. (“Oncor”), which is a transmission-and-distribution electric
utility. Under the relevant statutory scheme, the Public
Utility Commission (“Commission”) is required to analyze
whether the acquisition of a regulated utility is in the public
Holdings: The Court of Appeals, David Puryear, J., held that: interest. See Tex. Util.Code Ann. § 14.101 (West Supp.
2011). Consequently, Texas Energy and Oncor filed various
[1] construction of regulatory statutes by PUC as prohibiting business commitments with the Commission regarding the
review and enforcement of stipulations that did not relate to acquisition *874 and asserted that the proposed acquisition
utility was reasonable and consistent with governing statutes; was in the public interest. In response, Nucor Steel–Texas,
a division of Nucor Corporation (“Nucor”), intervened
[2] PUC acted within its discretion in allowing individual and opposed the proposed acquisition. Ultimately, the
witnesses to withdraw their previously-filed testimony; Commission determined that the transaction was in the public
interest, and the district court upheld that determination. On
[3] PUC staff member was not a “party” to proceedings, and appeal, Nucor challenges the Commission's construction of
therefore testimony originally proposed by staff member but the statutes setting out the public-interest analysis relevant
later withdrawn was not admissible as admission by party- to the proposed transaction. Essentially, Nucor argues that
opponent; and the Commission's erroneous construction foreclosed the
admission of certain evidence and testimony that Nucor
[4] evidence was sufficient to support finding that agreed, contends should have been considered as part of the public-
non-unanimous stipulation regarding proposed acquisition interest analysis. In addition, Nucor also contends that the
was reasonable and in public interest. Commission's public-interest determination is not adequately
supported by the evidence in the record. We will affirm the
judgment of the district court.
Affirmed.

Attorneys and Law Firms STATUTORY FRAMEWORK

*873 Nelson H. Nease, Brickfield, Burchette, Ritts & Stone, As mentioned above, this case involves the acquisition of
P.C., Austin, TX, for appellant. a utility. For some time now, the legislature has imposed

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Nucor Steel-Texas v. Public Utility Com'n of Texas, 363 S.W.3d 871 (2012)

various restrictions on certain business transactions involving Section 14.101.” Id. In addition, the provision states that
public utilities. See Tex. Util.Code Ann. § 14.101. A the Commission “may reasonably interpret and enforce
restriction relevant to this case states that if a public utility conditions adopted under” the new provision. Id.
is going to enter into a transaction that “involves the sale
of at least 50 percent of the stock of the utility,” the utility When Texas Energy and Oncor informed the Commission
must report the transaction to the Commission “within a about the proposed transaction, they filed various
reasonable time.” Id. § 14.101(b). After being informed of commitments relating to the transaction. Before performing
the transaction, the Commission is required to investigate the public-interest analysis in this case, the Commission
the proposed transaction in order “to determine whether the *875 asked the parties to provide briefing regarding the
action is consistent with the public interest.” Id. Further, scope of the types of information that the Commission
the legislature provided the Commission with the following may consider in light of the deregulation of the electric
various factors to consider in making its public-interest market. In particular, although the Commission was not
determination: faced with the prospect of being asked to actually enforce
one of the proposed commitments, the Commission asked
(1) the reasonable value of the property, facilities, or the parties to explain whether the Commission has the
securities to be acquired, disposed of, merged, transferred, authority to enforce every commitment that is made or
or consolidated; whether its authority is limited to commitments that affect the
regulated transmission-and-distribution-electric utility. After
(2) whether the transaction will:
the parties filed their briefs, the Commission determined that
(A) adversely affect the health or safety of customers or its enforcement authority is limited to stipulations affecting
employees; the regulated utility. In light of that determination, the
Commission made evidentiary rulings limiting the types of
(B) result in the transfer of jobs of citizens of this state evidence that may be admitted in the public-interest hearing
to workers domiciled outside this state; or to evidence demonstrating how the regulated utility will be
affected by the transaction and by the various stipulations
(C) result in the decline of service; made by Texas Energy and Oncor. The determination
regarding the scope of the Commission's enforcement
(3) whether the public utility will receive consideration
authority and the accompanying evidentiary rulings form the
equal to the reasonable value of the assets when it sells,
leases, or transfers assets; and basis for this appeal. 1

(4) whether the transaction is consistent with the public
interest.
BACKGROUND
Id. If the Commission ultimately concludes that the
With the preceding in mind, we now summarize the events
transaction is not in the public interest, the Commission
that led to the dispute at issue. As described previously,
will “take the effect of the transaction into consideration
Oncor is a transmission-and-distribution electric utility. See
in ratemaking proceedings and disallow the effect of the
Tex. Util.Code Ann. § 31.002(19) (West 2007) (defining
transaction if the transaction will unreasonably affect rates or
“transmission and distribution utility”). During the time
service.” Id. § 14.101(c).
relevant to this appeal, Oncor was a wholly owned subsidiary
of TXU Corp. At that time, TXU Corp. also owned two other
Recently, the legislature enacted another provision that is
companies that were affiliated with Oncor. Those companies
related to the public-interest analysis. See id. § 39.262(o )
were TXU Energy (a retail-electric provider) and Luminant
(West Supp. 2011). In particular, the new provision provides
(a power-generation company).
that if a utility or a person seeking to “acquire or merge
with” the utility “files with the [C]ommission a stipulation,
Texas Energy sought to acquire TXU Corp. in its entirety,
representation, or commitment” as part of its filing under
and Texas Energy and Oncor informed the Commission
section 14.101, the Commission “may enforce the stipulation,
about the proposed acquisition. See id. § 14.101 (requiring
representation, or commitment to the extent that” it “is
public utilities to report proposed sales or acquisitions to
consistent with the standards provided by this section and
Commission so that Commission may investigate proposed

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Nucor Steel-Texas v. Public Utility Com'n of Texas, 363 S.W.3d 871 (2012)

transactions). Nucor and various other parties intervened and only intended to empower the Commission to enforce
opposed the proposed acquisition. commitments that related to a public utility and did not
intend to allow the Commission to “evaluate or enforce
When Texas Energy initiated the acquisition, it made several any commitment made that relates to [an] affiliate of [a]
business commitments, and Texas Energy and Oncor filed a public utility.” In light of that determination, the Commission
stipulation with the Commission that set out all of the various reasoned that it could “only address commitments that
commitments. The filed stipulation explained that some of directly affect Oncor” in the public-interest analysis under
the commitments were designed “to support the separateness section 14.101 of the utilities code. See id. § 14.101.
of Oncor from the rest of TXU Corp. and its subsidiaries.”
However, the stipulation also detailed other commitments Soon after the Commission issued its limiting order, Nucor
that were “unrelated to Oncor's *876 business [or] the filed discovery requests regarding the four commitments
[Commission] proceeding” and that were only included for previously discussed that were “unrelated to Oncor's
“the sake of completeness.” Many of those commitments business,” but Texas Energy and Oncor objected to the
addressed Oncor's affiliates and are the subject of part of the discovery requests as exceeding the scope of the proceeding.
dispute at issue in this case. Specifically, the controversial The Commission sustained those objections. Later, Nucor
commitments were promises to reduce the rates charged by attempted to file testimony pertaining to, among other things,
the retail-electric provider, to maintain majority ownership of the four commitments. When seeking the admission of
TXU Corp. for more than five years, to reduce the number the testimony, Nucor insisted that the Commission should
of planned coal units, and to invest resources into emerging consider the offered testimony because it demonstrated that
energy technologies. the sale of Oncor will have a negative impact on the State as a
whole. As with the discovery requests, Oncor moved to strike
Early on in the application process, the Commission asked the testimony as being beyond the scope of the proceeding,
the various parties to brief certain procedural issues regarding and the Commission agreed in part and struck portions of the
the scope of the newly adopted subsection 39.262(o ) of the offered testimony that it determined were beyond the scope
utilities code. See id. § 39.262(o ). As discussed previously, of the proceeding.
that provision empowers the Commission to enforce
stipulations filed as part of the approval process. In essence, During the course of the proceeding, Texas Energy and Oncor
the Commission wanted input from the parties regarding agreed to amend their initial stipulation in order to address
whether the Commission's new statutory authority to enforce the concerns of some of the intervening parties. Several of
commitments allowed it to enforce all commitments that are the intervening parties *877 endorsed the amendments, and
made or whether the authority is limited only to commitments Texas Energy, Oncor, and many of the intervening parties
related to the public utility. Although the Commission was adopted the new stipulation. The new stipulation did not
not being asked to enforce any specific stipulation at that contain the four controversial commitments that did not
time, the Commission was seeking clarification regarding the pertain to Oncor. Nucor did not endorse the new stipulation
types of information that it could consider during the public- and continued to object to the acquisition by arguing that the
interest determination regarding the proposed transaction by stipulation was not in the public interest.
Texas Energy and Oncor. In other words, the Commission
elicited responses regarding whether the Commission is When contesting the stipulation, Nucor relied on testimony
limited to considering how commitments will affect the utility that had been previously submitted by parties that originally
or whether the Commission may more globally consider the objected to the merger but had now changed their minds.
effect of the commitments. Shortly after Nucor filed its objections, the parties whose
evidence Nucor relied on moved to withdraw their previously
After receiving various responses, the Commission issued filed testimony. Because the now-settling parties withdrew
an order stating that its review of a proposed business their testimony, Texas Energy and Oncor moved to strike
transaction under the utilities code is limited in scope. the portion of Nucor's filings that relied on the withdrawn
Specifically, the Commission determined that it could only testimony. The Commission granted the motions to strike
enforce commitments that directly related to a public utility. and thereby removed portions of Nucor's filed testimony and
Essentially, the Commission reasoned that in light of the exhibits.
recent deregulation of the electric industry, the legislature

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Ultimately, the Commission issued an order concluding that Commission's interpretation, the supreme court noted that
the proposed acquisition and stipulation were in the public rather than being clear and unambiguous, the meaning of the
interest, and Nucor appealed the Commission's order. See term “public interest” is instead an amorphous concept. Id. at
Tex. Gov't Code Ann. § 2001.144(a) (West 2008) (explaining 628.
when agency decision is final in contested case), § 2001.145
(West 2008) (stating that final agency decision is appealable). After setting out the dispute in the case, the supreme court
The district court affirmed the Commission's final order, and outlined the proper *878 standard by which courts review
Nucor appeals the district court's judgment. an agency's construction of an ambiguous statute that the
agency is charged with enforcing. Although generally stating
that statutory construction is a question of law that appellate
courts review de novo, id. at 624 (citing First Am. Title Ins.
DISCUSSION
Co. v. Combs, 258 S.W.3d 627, 631 (Tex.2008)); see also
On appeal, Nucor presents three issues challenging the Fireman's Fund County Mut. Ins. Co. v. Hidi, 13 S.W.3d 767,
district court's affirmance of the Commission's final order. 768–69 (Tex.2000) (stating that when performing statutory
First, Nucor contends that the Commission erred when it construction, courts should look to plain meaning of words
determined that the provisions of the utilities code described used in statute), the court also explained that reviewing courts
above only authorized the Commission to “evaluate and also give “serious consideration” or “some deference” to an
enforce” the commitments made by Texas Energy that agency's interpretation of a statute that it is charged with
directly affected Oncor (the public utility). Relatedly, Nucor enforcing, Texas Citizens, 336 S.W.3d at 624–25, provided
asserts that the Commission erred by concluding that it that the statutory language at issue is “ambiguous,” id. at 625
could not consider “any broader public interest evaluation (quoting Fiess v. State Farm Lloyds, 202 S.W.3d 744, 747–
of the entire transaction.” Second, Nucor challenges the 48 (Tex.2006)), and provided that the agency's interpretation
Commission's decision based on the previous determinations “ ‘is reasonable and does not contradict the plain language
to limit Nucor's permissible discovery requests and to remove of the statute,’ ” id. (quoting Tarrant Appraisal Dist. v.
portions of Nucor's filed testimony. Finally, Nucor argues that Moore, 845 S.W.2d 820, 823 (Tex.1993)); see also id. (stating
the Commission's approval of the stipulation by Texas Energy that “ ‘alternative unreasonable constructions do not make’
and Oncor was not adequately supported by evidence in the ” statute ambiguous (quoting Fiess, 202 S.W.3d at 748)).
record. In addition, the court explained that it “is precisely when
a statutory term is subject to multiple understandings that
we should defer to an agency's reasonable interpretation.”
The Commission's Interpretation of the Scope of its Id. at 628. The court then emphasized that deference is
Authority particularly warranted when the statutory term at issue is “as
[1] As mentioned above, Nucor challenges the amorphous as ‘public interest,’ ” when the agency oversees
Commission's construction of the various statutes that govern “a complex regulatory scheme,” and when the analysis to be
the public-interest analysis that the Commission was required performed “implicates” the agency's technical expertise. Id. at
to perform in this case. After this appeal was filed, the 629–30. Finally, the court reasoned that because an agency's
supreme court was confronted with a similar situation in interpretation “of a statute it is charged with administering”
which an agency determined that the statutes at issue only has “to be reasonable and in accord with the statute's
limited the type of information that it may consider when plain language,” an agency's construction does not have to be
performing a public-interest analysis. Railroad Comm'n v. “the only—or the best—interpretation in order to warrant ...
Texas Citizens for a Safe Future & Clean Water, 336 deference.” Id. at 628.
S.W.3d 619 (Tex.2011). As in the present case, a party
challenged the agency's construction as being too narrow As with the agency involved in Texas Citizens, the
and inconsistent with the relevant governing scheme, id. at Commission is charged with overseeing a complex regulatory
622–23, and the supreme court explained that the “crux of scheme. See Tex. Util.Code Ann. §§ 11.002(c) (stating that
the dispute, then, is whether the term ‘public interest’ is purpose of public utility regulatory act is to grant Commission
a broad, open-ended term, encompassing any conceivable authority to protect customers of electric services), 14.001
subject potentially affecting the public, or a more narrow (West 2007) (bestowing upon Commission power to regulate
term,” id. at 624. When determining whether to uphold the public utilities within its jurisdiction). Also, the issue in this

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Nucor Steel-Texas v. Public Utility Com'n of Texas, 363 S.W.3d 871 (2012)

case involves the boundaries of a similarly amorphous public- wording in the statute supports the opposite conclusions. In
interest determination that falls within the Commission's addition, Nucor argues that the factors listed in the public-
technical expertise. See id. § 14.101. Accordingly, we apply interest analysis under section 14.101—value of property to
the same standard of review that was applied in Texas be acquired, adverse health or safety effects, transfer of jobs,
Citizens. 2 decline of service, consideration given for acquisition, and
public interest—are broad considerations that may be applied
*879 [2] In challenging the Commission's construction to anyone seeking to acquire a transmission-and-distribution
of the statutes as prohibiting review and enforcement of utility *880 under subsection 39.262(o ). See id. §§ 14.101,
stipulations that do not relate to Oncor, Nucor asserts that 39.262(o ).
“nowhere in Section 39.262(o ) are there the limitations
the Commission claims.” More specifically, Nucor argues In addition, Nucor insists that construing the statutes in
that no language requires that a stipulation have a “direct the manner suggested by the Commission would render
effect” on the transmission-and-distribution utility and subsection 39.262(o ) a “functional nullity” because even
asserts that the Commission's determination provides no though the language of the statute seems to expand
guidance regarding when something directly affects a utility. the Commission's power, the Commission's interpretation
Instead, Nucor contends that although the Commission provides the Commission “with no more and no less authority
typically only has authority over regulated utilities, the plain than it had under Section 14.101(b) to review mergers and
language of subsection 39.262(o ) expansively empowered acquisitions of regulated utilities.” See Tex. Gov't Code Ann.
the Commission to review and enforce any stipulation given § 311.021 (West 2005) (explaining that when construing
as part of a filing under section 14.101, “no matter who statutes, courts should presume that legislature intended
made the stipulation.” As support for this proposition, Nucor entire statute to be effective). Moreover, Nucor contends
notes that subsection 39.262(o ) applies to stipulations that if the legislature had intended the limitation suggested
made by “an electric utility or transmission and distribution by the Commission, the legislature could have easily said
utility or a person seeking to acquire or merge with an that when it promulgated subsection 39.262(o ). See USA
electric utility or transmission and distribution utility.” Tex. Waste Servs. of Houston, Inc. v. Strayhorn, 150 S.W.3d
Util.Code Ann. § 39.262(o ) (emphasis added). In light of 491, 494 (Tex.App.-Austin 2004, pet. denied) (explaining
this provision as well as the broad definition for “person” that courts presume that every word was deliberately chosen
found in the utilities code, Nucor urges that subsection and that excluded words were left out on purpose). Finally,
39.262(o ) plainly empowers the Commission to enforce any Nucor argues that the Commission's construction improperly
stipulation filed regardless of whether the stipulation had an favors Texas Energy's private interest in avoiding oversight
effect on the regulated transmission-and-distribution utility of the deregulated portions of the acquisition over the
and to determine whether all filed stipulations are in the public's interest in having “review and enforcement of
public interest. See id. § 11.003(14) (West 2007) (defining [all] commitments beneficial to the public that were placed
“[p]erson” as including individuals, partnerships, mutual or before the Commission, even if not directly applicable to
cooperative associations, and corporations”); see also id. Oncor.” See Tex. Gov't Code Ann. § 311.021(5) (stating that
§ 39.262(o ) (stating that Commission “may reasonably when performing statutory construction, courts presume that
interpret and enforce conditions adopted under this section”). “public interest is favored over any private interest”).

Similarly, Nucor contends that there is no statutory support Nucor presents a reasonable construction of the various
in section 14.101 for the limitations imposed by the statutes involved to the extent that the language of the statutes
Commission. In making this assertion, Nucor notes that could be read as empowering the Commission to review and
subsection 14.101(b) requires the Commission to determine enforce all stipulations that are filed as part of a section 14.101
if a “transaction” is in the “public interest” and asserts application. However, the question to be decided in this case
that nothing in the remainder of section 14.101 “suggests is whether the Commission's interpretation is also reasonable,
that the ‘transaction’ under review is limited to the public consistent with the governing statutes, and therefore, entitled
utility (in this case Oncor) or that the ‘public interest’ is to deference.
somehow limited exclusively to the regulated electric utility
transmission and distribution service.” Id. § 14.101. To When construing the statutes involved, the Commission took
the contrary, Nucor insists that the plain meaning of the note of the foundational shift in the Texas electricity market

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that occurred in the time between when section 14.101 was considering whether a proposed transaction is in the public
originally enacted and when section 39.262 was amended interest under section 14.101 of the utilities code. See Tex.
to add subsection 39.262(o ). At the time section 14.101 Util.Code Ann. § 14.101.
was enacted, utilities were operating as monopolies that
were regulated by the Commission. See CenterPoint Energy The Commission's limiting interpretation is supported by
Houston Elec., LLC v. Gulf Coast Coal. of Cities, 252 S.W.3d the language in section 14.101. Section 14.101 applies
1, 7 (Tex.App.-Austin 2008) (on reh'g), aff'd in part, rev'd to transactions involving a “public utility” and imposes
in part sub nom., State v. Public Util. Comm'n, 344 S.W.3d obligations and restrictions on public utilities. See id.
349 (Tex.2011). Under this scheme, a region in Texas “was After deregulation, Oncor remained a public utility by
served by a single vertically integrated utility,” Cities of statutory directive, but the affiliated companies did not.
Corpus Christi v. Public Util. Comm'n, 188 S.W.3d 681, 684 See id. §§ 11.004 (defining “public utility” as including
(Tex.App.-Austin 2005, pet. denied), meaning that a single electric utilities), 31.002(6) (West 2007) (specifying that
utility “produced, transported, and retailed electricity” for term “electric utility” includes transmission-and-distribution
the region, Reliant Energy, Inc. v. Public Util. Comm'n, 101 utility but expressly excluding power-generation companies
S.W.3d 129, 133 (Tex.App.-Austin 2003), rev'd in part sub and retail-electric providers); see also id. § 36.001(a) (West
nom., CenterPoint Energy, Inc. v. Public Util. Comm'n, 143 2007) (authorizing Commission to “regulate rates of an
S.W.3d 81 (Tex.2004). electric utility”). Accordingly, the Commission's construction
of section 39.262(o ) as pertaining only to stipulations
However, in 1999, the legislature enacted various statutes that involving Oncor is consistent with the focus in section 14.101
began the transition to a competitive retail-service industry. on public utilities.
See Act of May 27, 1999, 76th Leg., R.S., ch. 405, 1999
Tex. Gen. Laws 2543 (current version at Tex. Util.Code Ann. In light of the dramatic change in the electric market and
§§ 39.001–.910 (West 2007 & Supp. 2010)). Under the new in light of the Commission's newly diminished regulatory
competitive market, “the formerly integrated utilities were role, the Commission's construction of the statutes at issue is
required to ‘unbundle’ and divide into three separate entities: reasonable and consistent with the language of the statutes
(1) retail electric providers, (2) power-generation companies, at issue as well as the entire statutory structure changing
and (3) transmission-and-distribution utilities.” Gulf Coast, the Texas electric market to a competitive and deregulated
252 S.W.3d at 7; see Tex. Util.Code Ann. § 39.051(a)-(b) market. See Jones v. Fowler, 969 S.W.2d 429, 432 (Tex.1998)
(West 2007). *881 “After the deregulation process was (explaining that when determining legislative intent, entire
completed, the power-generation and retail electric markets act, not isolated portions, must be considered). 4
would be subject to the ‘normal forces of competition’
and ‘customer choices,’ but the transmission-and-distribution *882 We also observe that the Commission's interpretation
utilities would remain regulated by the Commission.” Gulf is consistent with the legislative history pertaining to the
Coast, 252 S.W.3d at 8 (quoting Tex. Util.Code Ann. § enactment of subsection 39.262(o ). See Tex. Gov't Code Ann.
39.001(a) (West 2007)). § 311.023(3) (West 2005) (explaining that when construing
statutes, court may consider legislative history). Subsection
Consistent with the statutory mandate, a formerly integrated 39.262(o ) was enacted by house bill 624 in 2007. Act of
utility was unbundled and divided into Oncor, an affiliated May 23, 2007, 80th Leg., R.S., ch. 1186, § 1, 2005 Tex.
retail-electric provider, and an affiliated power-generation Gen. Laws 4049, 4049. That same year, a competing bill,
company. As a result, only Oncor was still subject to senate bill 482, was also proposed and covered many of
regulation by the Commission, but its affiliated companies the same topics addressed by house bill 624. Ultimately,
were not. In light of this dramatic regulatory shift, the senate bill 482 did not pass, but it contained a provision
Commission concluded that its enforcement powers under that was identical to that of subsection 39.262(o ) with the
subsection 39.262(o ) extended only to stipulations that exception of the section numbers. Compare Tex. Util.Code
affected the company over which it had regulatory authority Ann. § 39.262(o ), with Conf. Comm. Rep't, S.B. 482, 80th
(Oncor) and not to stipulations that related to companies Leg., R.S., at p. 24 (May 20, 2007); see Conf. Comm. Rep't,
affiliated with Oncor but did not directly affect Oncor. 3 S.B. 482, 80th Leg., R.S., Section–by–Section Analysis, at p.
For that reason, the Commission also determined that it may 16. When discussing the breadth of the enforcement power
only consider evidence related to the regulated utility when bestowed by senate bill 482, representative Miller explained

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Nucor Steel-Texas v. Public Utility Com'n of Texas, 363 S.W.3d 871 (2012)

that the proposed amendments only dealt with “regulated 1; Tex. Const. art. I, §§ 3, 19. When reviewing an agency's
industries, which are the transmission lines” and do “not rulings on the admission or exclusion of evidence, appellate
touch generation [or] retail.” H.J. of Tex., 80th Leg., R.S. courts apply an abuse-of-discretion standard. Texas Dep't
1866 (2007). Further, Miller confirmed that the amendment of Pub. Safety v. Nordin, 971 S.W.2d 90, 93 (Tex.App.-
did not “impact competitive companies.” Id. 5 Houston [14th Dist.] 1998, no pet.); see Tex. Gov't Code
Ann. § 2001.174(2)(F) (West 2008) (stating that courts may
Moreover, we cannot agree with Nucor's assertion that the reverse agency order under substantial-evidence standard
Commission's interpretation renders subsection 39.262(o ) a when order is “arbitrary or capricious or characterized by
functional nullity. Although it is true that the Commission's abuse of discretion or clearly *884 unwarranted exercise
interpretation of the statutes *883 at issue more sharply of discretion”). Under this standard, an agency abuses its
limits the Commission's authority to review and enforce discretion if it acts without reference to any guiding rules and
stipulations than the interpretation offered by Nucor, that fact principles or if its actions are arbitrary or unreasonable. See
does not render subsection 39.262(o ) a nullity. Further, prior City of San Benito v. Rio Grande Valley Gas Co., 109 S.W.3d
to the enactment of subsection 39.262(o ), the Commission 750, 757 (Tex.2003).
had no express statutory authority to enforce stipulations
filed as part of a notification of a proposed transaction First, Nucor challenges the Commission's order denying
under section 14.101. In fact, in reviewing a filing under several of its discovery requests. See 16 Tex. Admin. Code §
section 14.101, the Commission is only explicitly permitted 22.141 (2011) (setting scope and forms of discovery). Those
to “disallow the effect of the transaction if the transaction requests related to the four commitments that were originally
will unreasonably affect rates or service” and to “take the filed by Texas Energy and that did not relate to Oncor (the
effect of the transaction into consideration in ratemaking public utility). For that reason, the Commission determined
proceedings.” Tex. Util.Code Ann. § 14.101(c). However, that the discovery requests were beyond the scope of the
subsection 39.262(o ) granted the Commission the additional proceeding. See id. (stating that parties may obtain discovery
authority to enforce stipulations made as part of a filing under on matters “relevant to the subject matter in the proceeding”
section 14.101. Id. § 39.262(o ). unless matters are privileged or exempted under rules of
evidence or civil procedure).
Furthermore, although Nucor correctly points out that
the Commission's interpretation shields portions of the Second, Nucor disputes the Commission's order striking
transaction pertaining to affiliated companies from oversight parts of Dennis W. Goins's testimony. Nucor had previously
by the Commission, in light of the fact that the affiliated filed testimony from Goins that addressed, among other
companies are no longer subject to regulation by the things, Oncor's affiliates, the four commitments discussed
Commission, we cannot agree with Nucor's assertion that the previously, and the scope of subsection 39.262(o ). For
Commission's interpretation somehow improperly elevated that reason, Oncor filed a motion to strike parts of Goins's
testimony from Nucor's filings, and the Commission granted
Texas Energy's private interests over that of the public. 6
the motion in part and struck various portions of the
testimony.
Because we conclude that the Commission's construction
of subsection 39.262(o ) is reasonable and consistent with
As discussed above, the Commission determined that the
the plain language of that statute as well as the statutes
governing statutes only authorized the Commission to review
deregulating the electric industry, we hold that the trial court
and enforce stipulations that bear upon a regulated utility,
properly upheld the Commission's construction. Accordingly,
and we concluded that the Commission's construction is
we overrule Nucor's first issue on appeal.
reasonable, consistent with the governing statutory scheme,
and therefore, entitled to deference. In light of that
The Commission's Limitations on Discovery and the determination, we cannot conclude that the Commission
Admission of Testimony abused its discretion by denying Nucor's discovery requests
[3] In its second issue, Nucor argues that various evidentiary for information that did not pertain to Oncor or by striking
rulings by the Commission denied it the right to a full hearing testimony that also did not address Oncor. See Tex. Gov't
and violated its due process rights and its right to equal Code Ann. § 2001.051 (West 2008) (stating that party
protection under the law. See U.S. Const. amend. XIV, § in contested case is entitled to opportunity to present

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Nucor Steel-Texas v. Public Utility Com'n of Texas, 363 S.W.3d 871 (2012)

evidence on issues “involved in the case”); Tex. Util.Code to withdraw the testimony by Roach and Pollock that they had
Ann. § 14.054(b)(1) (West 2007) (addressing settlements of previously submitted.
contested cases and saying that parties are entitled to hearing
“on issues that remain in dispute”). In fact, Nucor essentially On appeal, Nucor contends that the Commission erred by
conceded in its reply brief that this portion of its second allowing the Commission Staff and Texas Industrial to
issue is dependent on a determination that the Commission withdraw the previously filed testimony of Roach and Pollock
improperly narrowed the scope of its review. and also asserts that it was error to allow the Commission
Staff and Texas Industrial to withdraw their testimony
[4] In its second issue, Nucor also criticizes another decision after having the opportunity to review the testimony that
by the Commission that limited other testimony that Nucor Nucor filed. Under the Commission's rules, the only express
sought to introduce. As mentioned before, several parties prohibition on the ability to withdraw evidence during
in addition to Nucor originally objected to the proposed proceedings before the Commission limits the ability of an
acquisition of Oncor. The Commission Staff also initially individual to withdraw evidence after it has been admitted
objected to the proposed transaction. When the parties and the into the record. 16 Tex. Admin. Code 22.225(e) (2011)
Commission Staff objected, they filed testimony from various (stating that party may withdraw evidence after it has been
witnesses contending that the proposed transaction was not in admitted into record only by agreement of all parties to
the public interest. Under Commission rules, testimony from proceeding). As mentioned above, although the testimony
expert witnesses must be pre-filed, but the testimony is not at issue was pre-filed with the Commission, both the
admitted into the record until it is offered by a witness and Commission Staff and Texas Industrial withdrew their pre-
until the witness testifies that the “testimony is a true and filed testimonies before they were admitted into the record.
accurate representation of what the testimony would be if See id. § 22.225(a)-(b). Nucor has not referred us to any rule,
the testimony were to be given orally at the time the written statute, or case law that explicitly prohibits the Commission
testimony is offered into evidence.” 16 Tex. Admin. Code from allowing individuals to withdraw proposed testimony
§ 22.225(a)-(b) (2011). Although the testimony at issue was before it is admitted into the record. It is also worth noting
pre-filed with the Commission, it was not admitted into the that Nucor has not referred us to any request that it made
administrative record. After Texas Energy agreed to modify to the Commission after the parties withdrew their testimony
the stipulations that it originally proposed in order to address that asked for an extension of time to file or to modify its
some of the concerns of the objecting parties, the Commission testimony in response to the withdrawal.
Staff and many of the parties that originally objected to the
acquisition *885 changed their minds and endorsed the Furthermore, as described previously, the pre-filed testimony
proposed transaction. was initially offered to show that the proposed transaction was
not in the public interest, and the Commission authorized the
Because Nucor was concerned that some of the previously withdrawal after Texas Energy and Oncor made significant
objecting parties might withdraw the testimony that they had modifications to the proposed transaction. Moreover, as a
previously filed, Nucor asked the Commission to inquire result of those modifications, neither Texas Industrial nor the
whether the parties intended to have their previously filed Commission Staff continued to believe that the transaction
testimony offered into evidence. The Commission issued was against the public interest. In fact, they endorsed the
an order asking all intervening parties as well as the modified transaction.
Commission Staff to confirm “whether their previously filed
direct testimony will be offered into evidence.” After the In light of the above, including the changes made to the
order was issued, Nucor submitted its proposed testimony, stipulation, we cannot conclude that the Commission abused
including Goins's testimony. Goins's proposed testimony its discretion by allowing the Commission Staff and Texas
partially relied on the testimony of a Commission Staff Industrial to withdraw their previously filed testimony.
witness, Dr. Craig Roach, and a witness for Texas Industrial
Energy Consumers (“Texas Industrial”), Jeffry Pollock, [5] After Texas Industrial and the Commission Staff
that had been filed prior to Texas Energy's modifications. withdrew the testimony of Roach and Pollock, Texas
Nucor also attached as an exhibit to Goins's testimony a Energy and Oncor filed a motion to strike the portions of
copy of Roach's testimony. However, after Nucor filed its Goins's proposed testimony that discussed and extensively
testimony, the Commission Staff and Texas Industrial elected quoted from the withdrawn testimony as well as the exhibit

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containing Roach's testimony. Specifically, Texas Energy and withdrawn could not be admitted as an admission by a party-
Oncor argued that *886 because the testimony of Roach opponent.
and Pollock had been withdrawn, the portions of Goins's
testimony quoting and referring to their testimony as well [6] For different reasons, we also believe that Nucor's
as the exhibit constituted impermissible hearsay. See Tex. reliance on the rule as support for the admission of testimony
Gov't Code Ann. § 2001.081 (West 2008) (stating that rules previously filed by Texas Industrial is equally misplaced. At
of evidence apply to hearings before Commission); Tex. the time that Texas Industrial initially offered the testimony,
Admin. Code § 22.221 (2011) (same). In other words, Texas *887 the interests of Texas Industrial and Nucor were
Energy and Oncor stated that because those pages “simply aligned because they each opposed the proposed transaction.
restate[d] testimony by” witnesses whose testimony had been Moreover, after Texas Industrial initially filed the proposed
withdrawn, “Goins' restatement of their testimony is hearsay testimony of Pollock, Texas Industrial entered into the
—an out of court statement offered to prove the truth of the agreed stipulation that settled all of its issues pertaining to
matter asserted.” See Tex.R. Evid. 801(d) (defining hearsay the proposed transaction. That settlement effectively ended
as “a statement, other than one made by the declarant while Texas Industrial's participation in the case. Although Texas
testifying at the trial or hearing, offered in evidence to prove Industrial still filed a brief and participated in the hearings
the truth of the matter asserted”). After reviewing the motion, after entering into the stipulation, its primary involvement
the Commission granted the motion in part and struck all of in the case was limited to demonstrating that it was now in
the testimony by Goins that discussed or quoted the testimony favor of the transaction and stating its reasons for no longer
of Roach and Pollock as well as the exhibit containing Roach's contesting the transaction. For these reasons, we believe that
testimony. 7 the Commission could reasonably have determined that the
testimony originally proposed by Texas Industrial and then
On appeal, in addition to challenging the Commission's withdrawn was not admissible as an admission by a party-
decision to allow the Commission Staff and Texas Industrial opponent in the case.
to withdraw the testimony of Roach and Pollock, Nucor also
challenges the Commission's decision to strike the portion [7] As mentioned above, Nucor also contends that portions
of Goins's testimony that discussed or quoted the withdrawn of Goins's testimony as well as the accompanying exhibit
testimony as well as the exhibit containing Roach's testimony. were admissible under an exception to the hearsay rule.
Specifically, Nucor contends that the parts of Goins's
In contesting the Commission's ruling, Nucor alleges that the testimony discussing and quoting the Commission Staff's
portions of Goins's testimony quoting and summarizing the witness (Roach) as well as the exhibit containing Roach's
testimony of Roach and Pollock as well as the accompanying testimony were admissible as public records. Id. R. 803(8)
exhibit are either not hearsay or fall within an exception to (C). The public-record exception provides, in relevant part,
hearsay. First, Nucor contends that they are admissions by that the following types of documents are not excluded by the
party-opponents and, therefore, are not hearsay by definition. general prohibition against the admission of hearsay:
See id. R. 801(e)(2) (setting out circumstances in which
Records, reports, statements, or data compilations, in any
statement may be admitted as admission by party-opponent).
form, of public offices or agencies setting forth:

However, we believe that Nucor's reliance on the rule (C) in civil cases as to any party ..., factual findings
addressing statements by party-opponents is misplaced. That resulting from an investigation made pursuant to
rule, by its terms, applies only to admissions by a party to authority granted by law;
the proceeding. Id. The Commission was the adjudicative
body with which Nucor sought to file testimony, not a unless the sources of information or other circumstances
party to the proceeding. Accordingly, the Commission could indicate lack of trustworthiness.
reasonably have concluded that its Staff did not qualify as
a “party” to that proceeding as that term is used in the Id.
rule governing admissions by party-opponents. Accordingly,
the Commission could have determined that the testimony Nucor contends that the requirements of the rule were
originally proposed by the Commission Staff and later met because Roach was paid by the Commission Staff to
prepare testimony and because his testimony “is essentially

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a report reflecting his expert opinion and conclusions hearsay rule. Moreover, because the testimony and exhibit
regarding the underlying transaction.” Further, Nucor argues were offered to prove that Pollock and Roach objected
that Roach's testimony regarding the protective measures to the proposed transaction, we cannot conclude that the
that should be imposed as part of the transaction “are Commission abused its discretion by striking the testimony
factual findings resulting from his investigation, which was and the exhibit as hearsay. See Tex.R. Evid. 801, 802. 8
conducted pursuant to instructions given by Staff, under
authority granted by law.” Finally, Nucor alleges that the [8] In a final challenge to the Commission's decision to
Commission Staff must have considered Roach's testimony strike portions of Goins's testimony, Nucor contends that
to be trustworthy or else they would not have retained his the Commission's order granting Texas Energy and Oncor's
services or initially filed the testimony. motion to strike is arbitrary and unreasonable on its face
because the Commission “refused to grant Nucor's argument
However, Nucor has referred to no statute, rule, or case that testimony filed by Oncor [and Texas Energy] should be
concluding that proposed testimony from an expert witness stricken on the same grounds” that Oncor and Texas Energy
who was hired by the Commission Staff qualifies as a public alleged in their motion to strike. Stated differently, Nucor
record. Further, although Roach was hired by the Commission alleges that because the Commission struck the portion of
Staff, no showing was made that he was under the supervision Goins's testimony that discussed testimony by other witnesses
of the Commission Staff when he researched and prepared his that had been withdrawn, the Commission should have also
testimony. Cf. Fibreboard Corp. v. Pool, 813 S.W.2d 658, struck the rebuttal testimony filed by Texas Energy and Oncor
676 (Tex.App.-Texarkana 1991, writ denied) (stating that that responded to testimony that had been withdrawn.
rule 803(8) “is applicable only when the exhibit is prepared
by public officials or employees under their supervision in As support for this argument, Nucor refers to its
the performance of their official duties,” that “[d]ocuments administrative filing entitled “Nucor Steel–Texas' Response
prepared by private individuals and filed with a governmental to TEF's and Oncor's Motion to Strike Supplemental Direct
agency are not official documents as contemplated by Rule Testimony of Dr. Dennis W. Goins.” In that filing, Nucor
803(8),” and that even if individual preparing document is argued that the portions of Goins's testimony that Texas
under contract with agency, document is not public record if Energy and Oncor objected to should not be stricken because
individual preparing document was not under supervision of they were relevant to the subject matter at issue, were
public official). In addition, Nucor has provided no support admissible under the public-record exception to hearsay, and
for the *888 proposition that a hired expert's proposed were admissions by a party-opponent. Near the end of the
testimony could qualify as “factual findings resulting from response, Nucor asserted that Texas Energy and Oncor had
an investigation made pursuant to authority granted by law.” “made no attempt to withdraw their own rebuttal testimony,
Although the Commission Staff hired Roach to prepare almost all of which was prepared to refute direct testimony
testimony, that does not automatically render his review of that their co-Signatories have now elected to withdraw.”
the proposed transaction an investigation performed under Further, Nucor argued that in light of Texas Energy and
“authority granted by law.” Oncor's contentions that portions of Goins's testimony should
be stricken, the Commission “should strike all of Movants'
Finally, we have been unable to find any support for the rebuttal testimony responding to witnesses whose testimony
idea that the mere filing of proposed testimony renders the will not be offered into evidence at hearing” and then listed
testimony a public record under rule 803(8). The absence of the rebuttal testimony of six witnesses that had been filed by
support is even more compelling in a case like this where the Texas Energy or Oncor.
testimony was pre-filed but was not admitted into the record
before it was withdrawn. See 16 Tex. Admin. Code 22.225(a)- However, nothing in the title of the filing indicates that Nucor
(b). was actually seeking *889 to strike the testimony of any
witness; on the contrary, the title stated that the filing was
In light of the preceding, we cannot conclude that the a response to Texas Energy and Oncor's motion to strike
Commission abused its discretion by failing to conclude testimony. Furthermore, with the exception of the argument
that the portion of Goins's testimony at issue as well as the regarding Texas Energy's and Oncor's witnesses that was
accompanying affidavit were admissions by party-opponents discussed above, the whole thrust of the filing was that
or that they qualified under the public-record exception to the Goins's testimony should be admitted in its entirety. See In re

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Brookshire Grocery Co., 250 S.W.3d 66, 72–73 (Tex.2008) conclusory assertions that the transaction and stipulation
(explaining that nature of motion and relief sought are not were in the public interest. See Tex. Gov't Code Ann.
ascertained by simply looking at motion's caption and that § 2001.141(b)-(d) (West 2008) (stating that final decision
courts also look to substance of motion); Finley v. J.C. Pace, must contain findings of fact and conclusions of law, that
Ltd., 4 S.W.3d 319, 320 (Tex.App.-Houston [1st Dist.] 1999, findings may only be based on evidence and matters that
no pet.) (stating that substance of motion is gleaned from body were “officially noticed,” and that findings, “if set forth
of motion and from “prayer for relief”). Furthermore, the in statutory language, must be accompanied by a concise
prayer for relief failed to alternatively plead that in the event and explicit statement of the underlying facts supporting the
that the Commission grants Texas Energy and Oncor's motion findings”). Further, Nucor contends that the Commission's
to strike, the Commission should also strike the testimony order is improper because it contains no reference to evidence
that Nucor highlighted. In fact, the prayer makes no mention in the record. 9
of striking any testimony at all. On the contrary, the prayer
requested “that [Texas Energy] and [Oncor's] Motion to *890 [9] [10] As discussed previously, most of the parties
Strike be denied and that Nucor be granted such further relief to this administrative proceeding entered into an agreed
to which it may be entitled.” In addition, after the Commission stipulation, and the Commission approved that stipulation
granted Texas Energy and Oncor's motion to strike, Nucor and incorporated the stipulation into its order. Various cases
did not file its own motion to strike the testimony of the have described the manner in which agencies may use non-
six witnesses listed in its response, nor did it object when unanimous stipulations. See City of Corpus Christi v. Public
those witnesses' testimonies were later admitted into the Util. Comm'n, 51 S.W.3d 231 (Tex.2001); City of El Paso
administrative record. Cf. Tex.R.App. P. 33.1 (explaining that v. Public Util. Comm'n, 883 S.W.2d 179 (Tex.1994). In
in order to preserve complaint for appellate review, party particular, an administrative agency is required to consider
must make complaint to trial court in “a timely request, the stipulation “on its merits,” Corpus Christi, 51 S.W.3d
objection, or motion”); see also Kaufman v. Commission for at 263 (Owen, J., concurring), and may not simply adopt
Lawyer Discipline, 197 S.W.3d 867, 875 (Tex.App.-Corpus a non-unanimous stipulation, City of El Paso, 883 S.W.2d
Christi 2006, pet. denied) (stating that party waives right to at 183. Stated differently, the incorporation of a non-
raise appellate claim if not presented below). unanimous stipulation is proper when an agency makes its
own independent finding that the stipulation satisfies the
In light of the preceding, we cannot conclude that the relevant governing criteria based on substantial evidence
Commission's order granting Texas Energy and Oncor's in the record as a whole, see id. (discussing adoption of
motion to strike was arbitrary or unreasonable or that the non-unanimous stipulation in rate context and stating that
Commission abused its discretion when it issued the order. adoption is proper if agency makes finding that proposal will
establish reasonable rates for area (quoting Mobil Oil Corp.
Having found no abuse of discretion in any of the rulings that v. Federal Power Comm'n, 417 U.S. 283, 314, 94 S.Ct. 2328,
Nucor argued were erroneous, we cannot conclude that the 41 L.Ed.2d 72 (1974))), and when the agency “provides all
Commission's evidentiary rulings deprived Nucor of the right parties, including non-signatories, the opportunity to be heard
to a fair hearing or violated Nucor's constitutional rights to on the merits of the stipulation,” id. at 183–84; see 16 Tex.
due process and equal protection. Admin. Code § 22.206 (2011) (providing that when some
parties have reached agreement on some or all issues, each
party to proceeding still has right to full hearing on issues still
The Commission's Order Is Supported by Substantial
Evidence in dispute). 10
In its third issue, Nucor contends that there is no evidence
supporting the Commission's finding that the non-unanimous As a preliminary matter, we note that Nucor was given
stipulation was in the public interest. Nucor groups its various the opportunity to be heard regarding the stipulation and
assertions into three sets of arguments. the proposed transaction. Although the Commission limited
the scope of the proceeding in light of its interpretation of
In its first set of arguments, Nucor argues that section 39.262(o ), Nucor fully and actively participated in the
the Commission's order does not satisfy the statutory hearings regarding the approval of the transaction, including
requirements for a final administrative decision because the cross-examining the chief executive officer of Oncor, and
Commission's order amounted to no more than bald and

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filed expert testimony as well as several exhibits contesting
that the proposed transaction was in the public interest. 100. Based upon the record evidence and the
commitment offered by Oncor relative to specific
[11] Having considered whether Nucor was given an performance and customer service standards, the merger
opportunity to be heard on the merits of the stipulation, we will not result in a decline in service.
now consider whether the Commission made its own finding
...
that the stipulation satisfied the requirements of section
14.101 *891 and whether that determination is supported by 102. The merger, coupled with the terms of the
substantial evidence. At the conclusion of the proceeding, the stipulation, as amended, is in the public interest.
Commission issued its order approving the transaction. The
order is thirty pages in length and contains 102 findings of fact See id. § 14.101(b)(2), (4). The Commission also found
and 10 conclusions of law. In the introductory paragraphs of that “[b]ased upon the commitment by [Texas Energy] and
the order, the Commission concluded that “the merger fulfills Oncor that Oncor will not seek to include merger costs in
the requirements set forth in” section 14.101 and “that the future rate requests, the merger will not result in Texas
stipulation reached by certain parties ... fulfills the standards ratepayers bearing merger-related costs unrelated to the
for approval of non-unanimous stipulation[s] set forth ... in corresponding benefits to Texas ratepayers.”
City of El Paso v. Public Utility Commission.” Next, the At the end of the order, the Commission concluded that
Commission set out the background of the case, including the “merger, coupled with the terms of the stipulation, as
identifying the various parties involved in the case, listing amended, meet the requirements set forth in” section 14.101
the various hearings that were conducted, and summarizing “to support a public interest finding”; that the “stipulation, as
the proposed transaction and the stipulation entered into by amended, is in the public interest”; and that the “stipulation,
various parties. Following the discussion of the merger, the as amended, satisfies all of the Commission's standards for
Commission directly incorporated all of the commitments review of a non-unanimous stipulation.”
made in the non-unanimous stipulation in findings of fact 43
through 95. The findings underlying the Commission's public-interest
determination are supported by substantial evidence in
After listing the commitments in the stipulation, the the *892 record. A party challenging an order by the
Commission found that “[b]ased on the record evidence, Commission “bears the burden of overcoming a presumption
the terms of the stipulation reached by certain parties that the Commission's findings are supported by substantial
in this docket are reasonable” and that “the stipulation evidence.” Nucor Steel v. Public Util. Comm'n, 168 S.W.3d
reached by certain parties in this docket is in the public 260, 267 (Tex.App.-Austin 2005, no pet.). When determining
interest.” Then, the Commission made findings specific to the whether an agency's actions are supported by substantial
requirements from subsection 14.101(b). See Tex. Util.Code evidence, courts are prohibited from substituting their
Ann. § 14.101(b). Although the Commission concluded that judgment for the Commission's “as to the weight of the
several of the factors listed in subsection 14.101 did not evidence on questions committed to agency discretion.”
apply because “the merger does not involve the sale of a Cities of Abilene, San Angelo, & Vernon v. Public Util.
utility's assets or a merger of operating utilities,” 11 see id. § Comm'n, 146 S.W.3d 742, 748 (Tex.App.-Austin 2004,
14.101(b)(1), (3), the Commission made findings regarding no pet.) (citing Tex. Gov't Code Ann. § 2001.174 (West
the remaining factors. Specifically, the Commission found as 2008)); see also Tex. Util.Code Ann. § 15.001 (stating that
follows: judicial review of agency action is under substantial-evidence
standard); Tex. Gov't Code Ann. § 2001.174(2) (allowing
court to reverse agency determination if it is not supported
98. Based upon the record evidence and the commitments by substantial evidence). In making this determination, courts
offered by Oncor, the merger will not adversely affect the are not asked to verify whether “the agency reached the
health or safety of Oncor's customers or employees. correct conclusion, but whether some reasonable basis exists
in the record for the agency's action.” Cities of Abilene, San
99. No party presented evidence to rebut [Texas Angelo, & Vernon, 146 S.W.3d at 748. In fact, the evidence
Energy]'s position that the merger will not result in may actually preponderate against the Commission's finding
the transfer of jobs of citizens of this state to workers and be upheld as long as there is enough evidence to suggest
domiciled out of this state.

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that the Commission's “determination was within the bounds separate company from [its] affiliates and that Oncor will be
of reasonableness.” Id. protected from any possible negative impacts from financial
difficulties at those affiliates.” Goltz also testified that as
Several witnesses testified that the proposed transaction was a result of the stipulation, Oncor agreed to provide the
in the public interest. For example, Dr. William Avera, rate credit discussed above and to not seek to recoup the
Texas Energy's witness, testified that the terms of the expenses associated with the transaction through its rates.
stipulation “ensure Oncor's financial independence with Further, Goltz stated that Oncor's customers will receive
several ring-fencing provisions and commit [Texas Energy] the benefit of improvements to Oncor's efficiency and of
to maintaining Oncor's capital structure and limiting its additional demand-side-management spending and that under
embedded debt cost.” Furthermore, Avera clarified that the the stipulation, Oncor is required to either maintain or
ring-fencing portions of the stipulation isolated Oncor from improve its transmission-and-distribution system. In addition,
the financial risks or expenses of its affiliates and “ensures Goltz related that the transaction will not adversely affect any
that the risk” from affiliates “does not negatively impact the of Oncor's customers or employees because “Oncor will be
financial viability of the utility.” In addition, Avera explained managed no differently after the closing of the [t]ransaction”
that the terms of the stipulation also “ensure Oncor's and that “Oncor has historically provided safe, reliable
operational independence” and “preserve Oncor's financial service.” Additionally, Goltz clarified that the transaction will
independence.” Then, Avera related that “[b]ecause Oncor's not result in the transfer of jobs to workers out of Texas and
operations will not be directly affected, the merger does not “will not result in a decline of Oncor's services.”
threaten the health or safety of customers or employees,
jobs in Texas, or quality of service.” Additionally, Avera In addition to the testimony of Texas Energy's witnesses,
explained that as a result of the stipulation, Texas Energy Oncor also offered testimony *894 from its chief executive
“will expend substantial funds on demand-side management officer, Robert Shapard. Shapard agreed that the transaction
and energy efficiency programs.” Avera clarified that the was “in the public interest in accordance with [subsection]
demand-side-management expenditures will be $200 million 14.101(b) and considering the factors identified therein.” In
“over the amount included in Oncor's rates.” Further, Avera his testimony, Shapard agreed with the portions of Goltz's
testified that the stipulation requires Oncor to “make capital testimony regarding how the requirements of the stipulation
expenditures on its traditional system ... during the next separate Oncor from its affiliates and protect Oncor from
five years.” Moreover, Avera stated that the stipulation any negative impacts stemming from one of its affiliate's
“establishes detailed reliability and performance standards” financial problems. Shapard also discussed the benefits to
that will be effective for five years after the transaction Oncor's customers, including the credit, the additional money
and that “Oncor also agreed to customer service metrics spent on demand-side management and energy-efficiency
for maintaining street lights and handling customer service programs, and the fees that Oncor agreed not to recover in
requests.” its next rate case. Furthermore, Shapard explained that the
stipulation requires Oncor to make significant investments
Finally, Avera explained that the stipulation provided in its transmission-and-distribution system, which Shapard
additional benefits to the public that were “beyond the characterized as a “major concession by [Texas Energy] and
Commission's authority to order.” In particular, Avera Oncor.” Shapard also related that under the stipulation, Oncor
referenced Oncor agreeing to issue a $72 million credit to is required to meet certain “aggressive” reliability standards
its customers as well as agreeing to not seek recovery for that will lead to rebate payments “if the standards are not
various expenses in future rate cases, including a $35 million achieved.” Finally, Shapard testified that the transaction will
write-off to Oncor's storm reserve and a $20.9 million write- not result in a decline in service to Oncor's customers due to
off resulting from the restructuring of Oncor's regulated the capital-investment commitments under the stipulation as
assets. 12 well as the additional reliability standards that will be applied
and that because Oncor “will be managed no differently after
*893 Another witness for Texas Energy, Frederick Goltz, the closing of the [t]ransaction,” the acquisition will not affect
similarly testified that the stipulation and transaction were the health or safety of its employees.
“undoubtedly consistent with the public interest.” As with
Avera, Goltz explained that the stipulation is designed “to A witness for the Commission Staff, Darryl Tietjen, also
provide reasonable assurance that Oncor will function as a testified that the transaction was in the public interest. He

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Nucor Steel-Texas v. Public Utility Com'n of Texas, 363 S.W.3d 871 (2012)

explained that the stipulation represented “an acceptable case. Essentially, Nucor theorizes that had the rate case
resolution of contested issues in this proceeding as well as in continued, the Commission might have discovered that
Oncor's current rate proceeding.” In addition, Tietjen listed Oncor's excess revenue well exceeded the amount offered as
various benefits arising from the stipulation, including the a credit and that without evidence of Oncor's cost of service,
investments in demand-side management, the decision by the Commission was unable to evaluate the reasonableness
Oncor to not seek recovery of certain expenses, and the of the credit. 13 Regarding the write-offs, Nucor contends
credit that will be given to Oncor's customers. Furthermore, that the benefit of the write-offs is illusory because there is
Tietjen explained that the stipulation serves the public interest no guarantee or evidence “that Oncor would have requested
by providing “certainty on the resolution of a variety of recovery of any of these expenses in its 2008 rate case, or that
issues, it ensures an outcome that, in the aggregate, is at least the Commission would have granted that request.”
equal to—or, in some instances, possibly better than—what
would result from continued litigation.” Moreover, Tietjen Rather than challenge the evidentiary support for the
summarized the various commitments that were designed stipulation as a whole, Nucor posits the concept that
to keep Oncor independent and to insulate Oncor from any reviewing courts may only affirm a Commission's order
potential negative effects stemming from one of its affiliates. approving a non-unanimous stipulation if each term of a
Tietjen also mentioned the promise by Oncor to adhere to stipulation is individually supported by substantial evidence.
certain reliability standards as well as Oncor's promise to Even assuming that Nucor's assertion is correct, its challenge
pay $3.6 billion over the next five years “to support the to these particular findings still fails. As summarized
traditional Oncor system” and to “ensure Oncor's adherence above, various witnesses testified that the credit and the
to at least the same levels of capital investment that would write-offs represented a benefit to Oncor's customers and
have occurred absent the merger transaction.” were in the public interest. Moreover, although Nucor
correctly points out that Oncor's rate case was dismissed
In light of the preceding, we must conclude that the prior to a final determination regarding whether and to
Commission considered the stipulation on its merits, made its what amount Oncor had accumulated excess revenue, that
own finding that the stipulation satisfied the relevant statutory uncertainty does not necessitate a conclusion that the finding
requirements, and provided all parties with an opportunity to regarding the $72 million credit was erroneous. Similarly,
address the merits of the stipulation. We must also conclude the fact that the dismissal of the rate case foreclosed the
that the stipulation is supported by substantial evidence in the possibility of finding out whether the Commission would
record as a whole. have authorized recoveries during the rate case for the
write-offs that Oncor agreed to make under the stipulation
In its second set of arguments, Nucor contends that two of the does not render the findings pertaining to those write-offs
commitments contained in the stipulation and that were relied improper. Undeniably, the stipulation, by its nature as a
on by the Commission in its determination could not support settlement agreement, foreclosed knowledge of the ultimate
the Commission's conclusion that the proposed transaction outcome had the parties fully litigated the various claims,
was in the public interest. The first is the one-time $72 million but Nucor's challenges ignore the actual benefits obtained
credit offered by Oncor to retail-electric providers that the from the settlement, including a speedier resolution of the
providers would then pass on to their retail customers. The issues and recovery without the need for and added expense
Commission found that the credit represented “a great benefit of continued and protracted litigation. Moreover, although
for Texas retail consumers.” The second *895 involved the Nucor correctly points out that the Commission may have
$56 million in write-offs to Oncor's storm reserve and from ultimately forbidden recovery of the expenses that were
restructuring fees that Oncor promised not to include in its written off under the stipulation or concluded that Oncor
future rate case. had obtained excess revenues well beyond $72 million,
the Commission could have as easily made the opposite
When attacking the propriety of the credit, Nucor asserts determinations. In other words, the stipulation might have
that none of the settling parties provided any testimony given a benefit that otherwise would not have been given had
demonstrating that the amount of the credit, $72 million, the rate case continued.
was adequate. In making this contention, Nucor refers to
the fact that the credit was given in exchange for the In its final set of arguments, Nucor argues that the write-offs
Commission's decision to dismiss Oncor's then-pending rate had no bearing on whether the proposed transaction was in the

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Nucor Steel-Texas v. Public Utility Com'n of Texas, 363 S.W.3d 871 (2012)

proposed transaction in a utility's “ratemaking proceedings.”
public interest. In other words, Nucor argues that the write-
Tex. Util.Code Ann. § 14.101(c).
offs related to Oncor's *896 rate case but were not relevant
to the proposed acquisition of Oncor. 14
For all the reasons previously given, we overrule Nucor's third
issue on appeal.
Although those write-offs pertained to Oncor's then-pending
rate case, we can find no support for the proposition that
a concession relating to a rate case could not be included
in a stipulation filed under section 14.101 or in an order CONCLUSION
by the Commission endorsing the stipulation. This seems
Having overruled all three of Nucor's issues on appeal, we
particularly true given that the Commission is authorized
affirm the judgment of the district court.
under subsection 14.101(c) to consider the effects of a

Footnotes
1 In addition to the provision authorizing the enforcement of stipulations, the legislature also recently promulgated other statutory
provisions pertaining to transactions involving an electric utility. See Tex. Util.Code Ann. § 39.262(l )-(n) (West Supp. 2011). As with
section 14.101, the new statutory provisions require utilities to inform the Commission about certain proposed transactions and state
that the Commission must approve a transaction provided that it “finds that the transaction is in the public interest.” Id. § 39.262(l
), (m). These additional statutory provisions also include new factors for the Commission to consider when it performs a public-
interest analysis. Id. § 39.262(m) (listing following factors for consideration: whether transaction will adversely affect reliability of
service, availability of service, or cost of service). However, the legislature expressly limited the applicability of those new factors
to proposed business transactions that were filed with the Commission after the filing at issue in this case. Id. § 39.262(n) (stating
that subsections (l ) and (m) do not apply to transactions in which agreement was executed before April 1, 2007, provided that filing
for review before Commission was filed before May 1, 2007). Accordingly, the Commission did not consider the new provisions
when performing its public-interest analysis.
2 In its reply brief, Nucor asserts that the Commission's interpretation is not entitled to any deference because “the Commission provided
no discernible reason for making its decision.” We disagree. Although Nucor correctly points out that the Commission did not refer to
the arguments made by Texas Energy or Oncor regarding the Commission's authority under subsection 39.262(o ), the Commission
did provide a basis in its order for its limited construction of section 39.262(o ). In particular, the Commission stated as follows:
The Commission finds that the legislative intent of the language in § 39.262(o ) indicates that this section only applies to the
public utility and to commitments that directly affect the public utility. While the Commission has examined a wide variety of
issues related to public utility transactions using the public interest standard in § 14.101(b)(4), most of these proceedings took
place prior to S.B. 7 and a restructured electric industry in ERCOT, and are not directly comparable to this proceeding. The
restructuring of the electric industry in Texas, as well as the legislative history concerning § 39.262(o ), limit the Commission's
review of the pending transaction. Therefore, the Commission's determination ... is that the Commission cannot evaluate or
enforce any commitment made that relates to the affiliate of the public utility, and can only address commitments that directly
affect Oncor.
In its brief, Nucor also contends that the more thorough explanation for the limited construction that is found in the Commission's
appellate brief should be disregarded because it amounts to nothing more than impermissible “post hoc rationalization.” See Trans–
American Van Serv., Inc. v. United States, 421 F.Supp. 308, 319 (N.D.Tex.1976) (stating that reviewing courts may not search
record for “post hoc rationalizations that the [agency] itself has not articulated as a basis for its result”). Although the Commission
elaborated on its construction in its appellate brief, the main thrust of the Commission's briefing on this issue is the same as that
expressed in its order: that the Commission does not have authority over the companies affiliated with Oncor because it currently
only has authority over public or regulated utilities. Accordingly, we cannot conclude that the Commission's briefing on the issue
represents the sort of post hoc rationalization that we should disregard.
3 As support for its assertion that the Commission's limited interpretation of subsection 39.262(o ) is incorrect, Nucor refers to two cases
addressing controversies arising prior to deregulation in which courts broadly described the Commission's authority over agreements
between parties. See In re Entergy Corp., 142 S.W.3d 316, 324 (Tex.2004) (stating that merger agreement between utility and various
parties was basis for Commission's approval of merger and that administrative character that gave effect to merger agreement also
gave Commission authority to adjudicate disputes arising from agreement); Public Util. Comm'n v. Southwestern Bell Tel. Co., 960
S.W.2d 116, 119–20 (Tex.App.-Austin 1997, no pet.) (explaining that power to conduct adjudicative proceedings necessarily includes

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Nucor Steel-Texas v. Public Utility Com'n of Texas, 363 S.W.3d 871 (2012)

“power to accept and act upon an agreement between the parties that removes from dispute and litigation a subsidiary issue of fact or
law” and “power to formulate and award a reasonable remedy to effectuate the agreement”). However, nothing in either of those cases
compels a conclusion that the Commission's limited interpretation, particularly in light of the deregulation of the electric market, is
inconsistent with the governing statutory language.
4 We note that subsection 39.262(o ) does not require the Commission to enforce stipulations filed. See Tex. Util.Code Ann. § 39.262(o
). Instead, the legislature stated that the Commission “may enforce” filed stipulations. Id. Accordingly, the legislature has left the
decision regarding whether to enforce a stipulation to the Commission's discretion. See Tex. Gov't Code Ann. § 311.016(1) (West
2005) (explaining that legislature's use of word “[m]ay creates discretionary authority”). Even assuming that the Commission could
exert authority over stipulations unrelated to a public utility, in light of the legislature's decision to deregulate the electric market, we
would be unable to conclude that the Commission abused its discretion by refusing to consider stipulations that do not relate to Oncor.
See Tex. Gov't Code Ann. § 2001.174(2)(F) (West 2008) (allowing court to reverse agency's order if agency's determinations are
“arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion”); Downer v. Aquamarine
Operators, Inc., 701 S.W.2d 238, 241–42 (Tex.1985) (explaining that action is abuse of discretion if it occurs without reference to
any guiding rules or principles or is arbitrary or unreasonable).
5 Although we generally recognize that courts should be wary of using the legislative history for statutes that were not enacted in
order to divine the meaning of a statutory provision that actually became law, see Entergy Gulf States, Inc. v. Summers, 282 S.W.3d
433, 442–43 (Tex.2009), we believe that the legislative history for senate bill 482 is noteworthy in this case given that the relevant
statutory language proposed in senate bill 482 is identical to the language enacted and codified into subsection 39.262(o ), compare
Conf. Comm. Rep't, S.B. 482, 80th Leg., R.S., at p. 24 (May 20, 2007), with Tex. Util.Code Ann. § 39.262(o ).
In its reply brief, Nucor refers to the summary provided by the Texas Legislative Council as support for its broader interpretation of
subsection 39.262(o ). See Texas Legislative Council, Summary of Enactments, 80th Leg., R.S., at 432 (2007); see also Tex. Gov't
Code Ann. § 323.001 (West 2005) (specifying who members of council are). In that summary, the Council wrote that house bill 624
authorizes the Commission “to enforce” a “stipulation, representation, or commitment” filed by an electric utility, transmission-
and-distribution utility, or “acquisition or merger party.” Summary of Enactments, 80th Leg., R.S., at 432. After referring to this
language, Nucor urges that the language in the summary demonstrates that the legislature intended to make all stipulations filed be
subject to enforcement by the Commission regardless of whether the stipulations directly affect a regulated utility. Although the
report does not specify whether a stipulation must directly affect a regulated utility to be enforceable, the report does not explicitly
contradict the Commission's interpretation either.
6 As discussed previously, in addition to enacting subsection 39.262(o ), the legislature also added other subsections to section 39.262
but limited the applicability of those subsections to transactions occurring after the one at issue in this case. See Tex. Util.Code
Ann. § 39.262(l ), (m). One of those new subsections—subsection 39.262(m)—provides factors for the Commission to consider
when deciding whether a proposed transaction is in the public interest. Although that subsection does not apply to the transaction
here, the factors provide some insight regarding what the legislature intended the Commission to consider after deregulation. It is
worth noting that the legislature directed the Commission to consider whether “the transaction will adversely affect the reliability
of service, availability of service, or cost of service of the ... transmission and distribution utility.” Id. § 39.262(m) (emphasis
added). Further, although the provision also allows the Commission to consider those effects on an “electric utility,” the definition
of electric utility does not include power-generation companies or retail-electric providers that were unbundled from a formerly
integrated utility. See id. § 31.002(6), (10), (17) (West 2007) (defining electric utility, power-generation company, and retail-electric
provider). Accordingly, the legislature has limited the factors to be considered, and this limitation is consistent with the Commission's
construction of subsection 39.262(o ) as applied to transactions filed under section 14.101.
7 On appeal, Nucor contends that the Commission erred by striking portions of Goins's testimony without setting out the reasons
why the testimony should be removed. Although Nucor correctly points out that the ordering paragraph does not explicitly say
why portions of Goins's testimony were stricken, Texas Energy and Oncor's motion provided only one basis for the removal of the
testimony at issue. In particular, they urged that nearly all of the testimony appearing on pages eight through eleven as well as the
entirety of the accompanying exhibit was hearsay. Moreover, the Commission summarized in its order the hearsay arguments made
by Texas Energy and Oncor and the responsive arguments made by Nucor and then stated that it was striking the testimony of Goins
“[a]fter reviewing the pleadings” by the parties. Accordingly, we cannot agree with Nucor's assertion that the Commission's order
was improper because it provided no basis for the exclusion.
8 In its reply brief, Nucor also contends that the stricken parts of Goins's testimony as well as the exhibit were admissible “as the
deliberate creation of hearsay exceptions by the [Commission] in permitting parties to withdraw testimony after having had a chance
to review Nucor's testimony addressing the settlement.” Having reviewed the record, we cannot agree with Nucor's assertion that the
Commission's actions could have somehow created a hearsay exception.

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Nucor Steel-Texas v. Public Utility Com'n of Texas, 363 S.W.3d 871 (2012)

9 Nucor also contends that the order is improper and may not be upheld because it contains no discussion of the arguments or evidence
offered by the non-settling parties. However, Nucor has referred to no statutory authority or case law for that proposition, and we
have been unable to find any. To the contrary, although we were construing a prior version of the Administrative Procedure Act,
this Court has concluded that the Commission is only required to state findings that support “its ultimate findings; it is not required
to state facts that it rejected and upon which it did not rely in reaching its conclusions.” See Pedernales Elec. Coop. v. Public Util.
Comm'n, 809 S.W.2d 332, 337 (Tex.App.-Austin 1991, no writ).
10 Nucor also asserts that the Commission's order cannot be upheld because the Commission did not make a specific finding that the
stipulation “resulted in just and reasonable rates.” As support for the proposition that the Commission is required to make that type
of finding, Nucor refers to City of El Paso v. Public Utility Commission, 883 S.W.2d 179 (Tex.1994). That case involved a situation
in which a regulated utility sought to increase its rates. Id. at 181. Because El Paso was a rate case, the supreme court explained that
the Commission was required to independently find that the stipulation resulted in just and reasonable rates.
However, the present case is not a rate case. Rather, this case involves the acquisition of a public utility under section 14.101 of
the utilities code. See Tex. Util.Code Ann. § 14.101 (West 2007). Accordingly, we cannot conclude that the Commission's failure
to make the specific finding suggested by Nucor would constitute grounds for overturning the Commission's order.
11 We note that Nucor makes no specific challenge to the Commission's determination that the provisions in subsection 14.101(b)
pertaining to the value of the utility's assets and the consideration offered under the transaction had no applicability to the public-
interest analysis at issue.
12 Throughout its first and third issues, Nucor complains that although the Commission's interpretation of the governing statutes limited
its ability to consider or enforce commitments to those that directly related to Oncor, the Commission in its public-interest analysis
approved stipulations made by “Oncor's unregulated affiliates and unregulated third party market participants.” Given that the
Commission's construction prohibited Nucor from introducing evidence regarding effects of the transaction beyond those relating
to Oncor, Nucor insists that the Commission erred by including commitments relating to unregulated companies. Moreover, Nucor
argues that “under the Commission's reading of the law, there is no way to enforce these commitments” and that the allegedly
problematic commitments may be disregarded “without penalty.”
The commitments Nucor is referring to are the promise to spend $200 million on demand-side management and the $72 million
credit Oncor agreed to give to its customers. Specifically regarding the credit, Oncor promised to give the credit to its retail-
electric-provider customers. Under the stipulation, the retail providers are required to pass the credit on to their retail customers. In
challenging the propriety of this stipulation, Nucor asserts that the Commission will be unable to enforce the commitment because
it depends on the actions of unregulated companies. Admittedly, although we need not make a final determination regarding the
issue, we do note that based on the Commission's construction, it is not entirely clear that the Commission would be able to force the
unregulated companies to pass the credit on to their customers. However, the Commission would unquestionably be able to enforce
the commitment as it relates to the obligations imposed on Oncor. See Tex. Util.Code Ann. § 39.262(o ); see also id. § 14.101(c)
(authorizing Commission to take “the effect of the transaction into consideration in ratemaking proceedings”). For that reason, we
cannot agree with Nucor's assertion that the Commission's inclusion of this commitment in its order was somehow improper.
Under the demand-side-management commitment, Texas Energy agreed to fund $200 million for demand-side-management
programs. Further, the commitment required Oncor, through the funding given by Texas Energy, to spend $100 million on demand-
side-management issues. The commitment also extensively listed the manner in which Oncor was required to spend the money,
including using $16 million for low-income-customer programs. Finally, the commitment explained that Texas Energy would be
giving the other $100 million to Texas Energy “affiliates other than Oncor.” Other than mentioning Texas Energy's decision to
provide funding for companies other than Oncor, the stipulation and the Commission's order make no further reference to that
funding. Accordingly, we cannot conclude that the mere mention of this promise, without more, was reversible error or could have
somehow invalidated the Commission's limited construction of the governing statutes.
13 In this set of arguments, Nucor again challenges the Commission's decision to not address or include in its order the evidence that
Nucor offered regarding the stipulation. In particular, Nucor contends that the Commission should have addressed the testimony
by Goins stating that the credit was tied to the Commission's decision to dismiss Oncor's then-pending rate case that was initiated
when the Commission Staff estimated that Oncor's rates led to $80 million in excess revenue. In footnote nine, we addressed similar
arguments made by Nucor, and for those same reasons, we reject this challenge as well.
14 Although it did not contest the following findings in its opening brief, in its reply brief, Nucor seems to challenge several findings
regarding steps that were taken to “minimize any deleterious impact the merger might otherwise have on Oncor.” Specifically, Nucor
contends that those commitments in the stipulation “do absolutely nothing to determine whether with those measures and other
elements the merger/acquisition is in the public interest.”
As discussed earlier, the legislature provided factors for the Commission to consider when performing a public-interest analysis,
including whether a proposed transaction will result in a decline in service and, more generally, whether the acquisition “is

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Nucor Steel-Texas v. Public Utility Com'n of Texas, 363 S.W.3d 871 (2012)

consistent with the public interest.” See Tex. Util.Code Ann. § 14.101(b)(1)-(4). Given this language, we cannot conclude that
the Commission's decision to consider commitments designed to protect the public utility from potential financial ruin was
unreasonable or inconsistent with the plain language of the governing statutes. See Railroad Comm'n v. Texas Citizens for a Safe
Future & Clean Water, 336 S.W.3d 619, 625 (Tex.2011).

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© 2015 Thomson Reuters. No claim to original U.S. Government Works. 18
O'Connor v. First Court of Appeals, 837 S.W.2d 94 (1992)

Appeals, where the case was submitted to a panel consisting
of Justices Jon N. Hughes, Sam Bass and D. Camille Dunn.
837 S.W.2d 94
In accordance with the court's customary practice, a proposed
Supreme Court of Texas.
opinion was eventually circulated to all members of the court
Michol O'CONNOR, Justice, for comments. Justice O'Connor, exercising her prerogative
First Court of Appeals, Relator, under Rule 79(e) of the Texas Rules of Appellate Procedure, 1
v. made a written motion to submit the case for en banc hearing;
FIRST COURT OF APPEALS, Respondent. but the motion failed to receive a majority vote. When the
opinion in Fought v. Solce was issued, 2 O'Connor informed
No. D–1571. | Sept. 16, 1992. the court that she planned to file a dissent from the order
denying en banc consideration. A majority of the full court
Justice of Court of Appeals and plaintiff in underlying action
then voted to deny O'Connor leave to file the dissent, and
sought writ of mandamus directing Court of Appeals to
accordingly instructed its clerk by written order not to file the
instruct its clerk to file the Justice's dissent from denial
dissent. When O'Connor presented her dissent for filing, it
of motion to hear an appeal en banc. The Supreme Court,
was refused.
Mauzy, J., held that: (1) when Court of Appeals votes against
hearing a case en banc, any member of court is entitled to file a
O'Connor argues that a court of appeals has a duty to allow a
dissent, regardless of whether that judge was on original panel
nonpanel justice to file a dissent from the court's denial of a
deciding case, and the Court of Appeals has nondiscretionary
motion for en banc consideration. We agree.
duty to allow filing of such a dissent, and (2) mandamus
would issue if court failed to vacate its order instructing its
Rule 90(e) of the Texas Rules of Appellate Procedure
clerk not to file dissent.
provides in part that “[a]ny justice may file an opinion
concurring in or dissenting from the decision of the court of
Writ conditionally granted.
appeals.” The First Court of Appeals construes this provision
to mean that any justice on the panel deciding the case
Phillips, C.J., concurred with an opinion.
may file a dissenting opinion; but neither policy *96 nor
precedent supports that interpretation of the rule.
Attorneys and Law Firms
The viability of the First Court's interpretation must be
*95 Hon. Michol O'Connor, pro se. considered in light of Texas Rule of Appellate Procedure 79,
which governs panel and en banc submission in the courts
Steven A. Gibbins, Jay L. Winckler, Austin, John D. Ellis, Jr., of appeals. The adoption of Rule 79 was made possible by
Katherine Lynn Levy, Houston, for respondent. the passage in 1978 of a constitutional amendment permitting
courts of civil appeals to sit in sections. See Act of May 25,
1977, 65th Leg., R.S., 1977 Tex.Gen.Laws 3366 (proposing
OPINION amendment to Tex. Const. art. V, § 6). That amendment was
not intended to splinter the courts of appeals into new, distinct
MAUZY, Justice.
courts; it was intended “to authorize the increase in size of
In this original proceeding, Justice Michol O'Connor of the existing Courts of Civil Appeals to meet population demands
First Court of Appeals seeks a writ of mandamus directing rather than creating more new courts.” HOUSE COMM.
that court to instruct its clerk to file O'Connor's dissent from ON CONST. AMENDMENTS, BILL ANALYSIS, S.J.R.
the denial of a motion to hear an appeal en banc. Richard 45, 65th Leg., R.S. (1977). The enabling statute accordingly
Fought, the appellant in the underlying suit, seeks the same allowed courts of civil appeals to sit in panels of three or more,
relief. We conditionally grant the writ of mandamus. as in the federal circuit courts of appeals. Act of May 27,
1977, ch. 624, 65th Leg., R.S., 1977 Tex.Gen.Laws 1531. 3
In the underlying case, Richard Fought sued Dr. David Solce
for medical malpractice. The trial court granted summary [1] The provisions of Rule 79 reflect the view that a court
judgment for Dr. Solce. Fought appealed to the First Court of of appeals is a single, unitary body, even though it may sit in
panels. Unless a court of appeals chooses to hear a case en

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
O'Connor v. First Court of Appeals, 837 S.W.2d 94 (1992)

banc, the decision of a panel constitutes the decision of the 584, 585 (9th Cir.1987) (“Denial of rehearing en banc does
whole court. See Tex.R.App.P. 79(a). Thus, the rule provides not foreclose the opportunity to point out where the opinion
for en banc review when necessary to maintain uniformity of distorts what the district court did, to underline certain *97
the court's decisions. Tex.R.App.P. 79(e). difficulties the opinion creates, and finally to point out
alternative avenues that the opinion does not cut off.”). In
[2] Because a court of appeals is an integral body, even when the Fifth Circuit Court of Appeals alone, there are abundant
it sits in panels, we construe the words “any justice” in Rule examples of dissents from the denial of en banc review. 5
90(e) to signify any justice serving on the court of appeals.
To read the rule more restrictively would divide the court into Our interpretation is also consistent with previous practice
distinct subparts, effectively disenfranchising those members in other Texas courts. Though no Texas court has expressly
of the court who were not on the original panel deciding the addressed the present issue, nonpanel justices have dissented
case. See generally Textile Mills Sec. Corp. v. Commissioner from the denial of motions for rehearing en banc in the Court
of Internal Revenue, 314 U.S. 326, 333, 62 S.Ct. 272, 277, 86
of Criminal Appeals 6 and in at least one court of appeals. 7
L.Ed. 249 (1941).

By enabling Justice O'Connor to file her dissent, our
A nonpanel member's dissent from denial of en banc review
construction of Rule 90(e) avoids any potential constitutional
serves the same salutary purposes served by any other
difficulties, see Davenport v. Garcia, 834 S.W.2d 4
dissenting opinion: chiefly, promoting the uniformity and
(Tex.1992); Ex parte Tucker, 110 Tex. 335, 337–38, 220
correctness of the court's decisions. Chief Justice Hughes of
S.W. 75, 76 (1920), posed by a restrictive interpretation of
the United States Supreme Court once called the dissenting
the rule. See Federal Sav. & Loan Ins. Corp. v. Glen Ridge
opinion
I Condominiums, Ltd., 750 S.W.2d 757, 759 (Tex.1988)
an appeal to the brooding spirit of (statutes should be construed to avoid doubts of their
the law, to the intelligence of a constitutionality).
future day, when a later decision may
possibly convert the error into which We hold that when a court of appeals votes against hearing
the dissenting judge believes the court a case en banc, any member of the court is entitled to file a
to have been betrayed. dissent, regardless of whether the judge was on the original
panel deciding the case. The court of appeals has a duty under
CHARLES EVAN HUGHES, THE SUPREME COURT OF Rule 90(e) to allow the filing of such a dissent, and this duty is
THE UNITED STATES 68 (1937). As with any other dissent, non-discretionary. Cf. Cowan v. Fourth Court of Appeals, 722
the prospect of a dissenting opinion by a nonpanel member of S.W.2d 140 (Tex.1987) (court of appeals has no discretion to
the court of appeals “heightens the opinion writer's incentive deny a party the right to file a motion for rehearing).
to ‘get it right.’ ” Ruth Bader Ginsburg, Remarks on Writing
Separately, 65 WASH.L.REV. 133, 144 (1990); see also Karl [3] [4] Mandamus will issue when there is a legal
M. ZoBell, Division of Opinion in the Supreme Court: A duty to perform a non-discretionary act, a demand for
History of Judicial Disintegration, 44 CORNELL L.Q. 186, performance, and a refusal. Doctors Hosp. Facilities v. Fifth
211 (1959). Court of Appeals, 750 S.W.2d 177, 178 (Tex.1988). Because
O'Connor and Fought have established all three requisites,
Our interpretation of Rules 79 and 90(e) is consistent they are entitled to mandamus relief. We are confident that
with practice in the federal circuit courts of appeals, on the First Court will vacate its order instructing its clerk not to
which this state's panel system was modelled. 4 The federal file the dissent at issue. The writ will issue only if the court
rule governing en banc review, Fed.R.Civ.P. 35, does not fails to do so.
expressly address the right to dissent from an order overruling
a motion for en banc review; but nonetheless, such dissents
are common. See Isaacs v. Kemp, 782 F.2d 896, 897 n. 1 Concurring opinion by PHILLIPS, C.J., joined by COOK,
(11th Cir.1986) (“Dissents from orders denying rehearing en HECHT and CORNYN, JJ.
banc have proliferated in our court ... to the point where
the practice may be said to have become institutionalized.”); PHILLIPS, Chief Justice, concurring.
Golden Eagle Distrib. Corp. v. Burroughs Corp., 809 F.2d

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
O'Connor v. First Court of Appeals, 837 S.W.2d 94 (1992)

341, 56 S.Ct. 466, 480, 80 L.Ed. 688 (1936) (Brandeis, J.,
I concur in the judgment of the Court, but I am not willing
concurring); San Antonio General Drivers, Helpers Local No.
to join in that portion of the opinion which suggests that
657 v. Thornton, 156 Tex. 641, 647, 299 S.W.2d 911, 915
our interpretation of Tex.R.App.P. 90(e) is premised, in
(1957).
part, on a desire to avoid a potential constitutional defect.
I believe that our interpretation of Rule 90(e) is correct.
*98 Accordingly, there is no need to reach, and I express
no opinion regarding, relator's argument that the Court of COOK, HECHT and CORNYN, JJ., join in this concurring
Appeals' decision infringes upon her constitutional rights. opinion.
See Ashwander v. Tennessee Valley Authority, 297 U.S. 288,

Footnotes
1 Rule 79(e) provides in part:
A vote need not be taken to determine whether a cause shall be heard or reheard en banc unless a justice of the en banc court
requests a vote. If a vote is requested and a majority of the membership of the en banc court vote to hear or rehear the case en
banc, the case will be heard or reheard en banc; otherwise, it will be decided by a panel of the court.
2 Fought v. Solce, 821 S.W.2d 218 (Tex.App.—Houston [1st Dist.] 1991, writ requested).
3 The statute, which amended Tex.Rev.Civ.Stat.Ann. art. 1812 (Vernon 1964), is now codified as amended at sections 22.222–.223
of the Texas Government Code.
4 See HOUSE COMM. ON JUDICIAL AFFAIRS, BILL ANALYSIS H.B. 1355, 65th Leg., R.S. (1977).
5 See, e.g., Eichenseer v. Reserve Life Ins. Co., 894 F.2d 1414 (5th Cir.1990); Trevino v. General Dynamics Corp., 876 F.2d 1154
(5th Cir.1989); U.S. v. Lawrence County School Dist., 808 F.2d 1063 (5th Cir.1987); Hagerty v. L & L Marine Services, Inc., 797
F.2d 256 (5th Cir.1986); Dahl v. Pinter, 794 F.2d 1016 (5th Cir.1986); Grandstaff v. City of Borger, 779 F.2d 1129 (5th Cir.1986);
Levine v. CMP Publications, Inc., 753 F.2d 1341 (5th Cir.1985); Cleburne Living Center, Inc. v. City of Cleburne, 735 F.2d 832
(5th Cir.1984); U.S. v. M/V Big Sam, 693 F.2d 451 (5th Cir.1982); Lubbock Civil Liberties Union v. Lubbock Indep. Sch. Dist., 680
F.2d 424 (5th Cir.1982); Cook v. Hudson, 515 F.2d 762 (5th Cir.1975); Johnson v. Mississippi, 491 F.2d 94 (5th Cir.1974); U.S. v.
Buras, 475 F.2d 1370 (5th Cir.1972); Greco v. Seaboard C.L.R. Co., 468 F.2d 822 (5th Cir.1972); Logue v. U.S., 463 F.2d 1340 (5th
Cir.1972); Becker v. Thompson, 463 F.2d 1338 (5th Cir.1972); Novak v. Beto, 456 F.2d 1303 (5th Cir.1972); Pendergraft v. Cook,
449 F.2d 1372 (5th Cir.1971); Johnson v. Oil Transport Co., 445 F.2d 1402 (5th Cir.1971); Schnautz v. Beto, 416 F.2d 214 (5th
Cir.1969); Whirl v. Kern, 407 F.2d 781 (5th Cir.1968).
6 See Miller v. State, 702 S.W.2d 586 (Tex.Crim.App.1981); Hightower v. State, 629 S.W.2d 920 (Tex.Crim.App.1981); Williams
v. State, 622 S.W.2d 95 (Tex.Crim.App.1981); Hamilton v. State, 621 S.W.2d 407 (Tex.Crim.App.1981); Rushing v. State, 621
S.W.2d 606 (Tex.Crim.App.1981); Young v. State, 621 S.W.2d 779 (Tex.Crim.App.1981); Green v. State, 615 S.W.2d 700
(Tex.Crim.App.1980); Garcia v. State, 605 S.W.2d 565 (Tex.Crim.App.1980); Mason v. State, 604 S.W.2d 83 (Tex.Crim.App.1980);
Hernandez v. State, 603 S.W.2d 848 (Tex.Crim.App.1980); Ex Parte Solete, 603 S.W.2d 853 (Tex.Crim.App.1980); McNiel v.
State, 599 S.W.2d 328 (Tex.Crim.App.1980); Hardison v. State, 597 S.W.2d 355 (Tex.Crim.App.1980); Ozuna v. State, 587
S.W.2d 385 (Tex.Crim.App.1979); Cleland v. State, 575 S.W.2d 296 (Tex.Crim.App.1978); Johnson v. State, 573 S.W.2d 778
(Tex.Crim.App.1978); Brewer v. State, 572 S.W.2d 940 (Tex.Crim.App.1978).
7 See Molnar v. Engels, Inc., 705 S.W.2d 224 (Tex.App.—San Antonio 1985, writ ref'd n.r.e.).

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© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Pritchett v. Nathan Rodgers Const. and Realty Corp., 379 So.2d 545 (1979)

December 28, 1978. On that date his request was tabled.
Rodgers also attended the council's meetings on January 15,
379 So.2d 545
16, and 18. No decision was made at these meetings because
Supreme Court of Alabama.
too few council members attended to meet the quorum
Charles H. PRITCHETT, etc., et al. required for a vote. Mr. Rodgers also attended the January 25,
v. 1979, meeting of the council, at which no action was taken on
NATHAN RODGERS CONSTRUCTION his request, and the mayor informed him that taking no action
was equivalent to denying his request. Rodgers testified that
AND REALTY CORP.
he had a telephone conversation with the mayor on January
78-467. | Nov. 21, 1979. | 3, 1979, during which the mayor led him to believe that there
Rehearing Denied Jan. 11, 1980. would be no problem with obtaining the council's permission
to connect his apartments to the sewer system. After this
Proceeding was brought by apartment complex owner for conversation, Rodgers obtained financing for his apartments.
writ of mandamus against city maintenance mechanical Rodgers testified that Mr. Isherwood, the city engineer, and
inspector, mayor and five councilmen for writ of mandamus several of the city councilmen told him that there would be
to show cause why they should not grant permission for no problem with obtaining a permit: “It's just a matter of
connection of apartment complex to city sanitary sewer formality of going before the council, then, voting on it and,
system. The Circuit Court, Mobile County, Ferrill D. McRae, then, the permit being issued.”
J., issued peremptory writ ordering mayor and council
members to grant permission, and mayor and councilmen The minutes of the special meeting of the Saraland City
appealed. The Supreme Court, Torbert, C. J., held that record Council on October 3, 1977, show that a motion was passed
amply supported finding that council acted arbitrarily and “that no apartments be allowed to tie into our sewer whether
capriciously in denying permit to apartment complex owner it is available or not until the council can check to see if
and thus, based on that finding, trial court properly issued it is feasible.” The same minutes show that a Mr. Palmer
writ. appeared after the motion was adopted and requested that he
be allowed to tie his apartment on Richie Street into the sewer
Affirmed. system of Saraland. The record shows, and the city clerk, Mrs.
Potter, testified, that Mr. Palmer's request was granted after
that motion had passed. In November of 1978, Mr. Isherwood
Attorneys and Law Firms wrote the council and recommended that the city declare
a moratorium on all future requests for connection to the
*545 Mayer W. Perloff, Mobile, for appellants.
sanitary sewer system. The Circuit Court of Mobile County
Mitchell G. Lattof, Mobile, for appellee. found that approximately 600 more units could be attached to
the sewer system without creating a health problem and that
Opinion plaintiff's proposed apartment complex would be equivalent
to about seven units.
*546 TORBERT, Chief Justice.
The trial court further found that:
The appellee, plaintiff below, Nathan Rodgers Construction
and Realty Corp., filed a petition for a writ of mandamus The city council has not declared a moratorium as
against Charles Pritchett, the maintenance mechanical recommended by the Engineer nor adopted any motion or
inspector of the City of Saraland, and Richard Prescott, the resolution relating thereto.
mayor of Saraland, as well as five of the city's councilmen
to show cause why they should not grant permission for the The 600 units which can still be connected to the sanitary
connection of plaintiff's sixteen-unit apartment complex to sewer system have not been assigned by any motion,
the sanitary sewer system of the City of Saraland. Nathan ordinance or resolution of the City Council to the property
Rodgers, president of the plaintiff corporation, testified that owners involved in the current sewer project and they are
he first appeared before the council and requested permission available to be issued to the public at large.
to connect the plaintiff's sixteen-unit apartment complex
to the sanitary sewer system in the City of Saraland on

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Pritchett v. Nathan Rodgers Const. and Realty Corp., 379 So.2d 545 (1979)

for denying the building permit and that the decision was
In addition, on or about January 18, 1979, Nathan J. thus arbitrary and capricious. These allegations, if supported
Rodgers, President of the Plaintiff corporation, met with by proof, are sufficient to require the issuance of a writ
Mayor Richard H. Prescott, Jr., and some of the City of mandamus because though a city may regulate matters
Councilmen and was led to believe that the request of of health and sanitation through reasonable ordinances or
the Plaintiff corporation for permission to connect to resolutions, it may not regulate on an arbitrary case-by-case
said sanitary sewer system would be granted at the next basis. Code 1975, s 11-47-131, entitled “Powers as to health,
meeting of the City Council to be held on January 25, sanitation and quarantine generally,” reads:
1979, and acting on this belief the Plaintiff corporation
completed its permanent financing for said apartment In addition to the powers granted to them by the applicable
complex project and thereby incurred substantial liability, provisions of this title or any other provisions of law,
and the defendant's subsequent refusal to permit the all cities and towns of this state shall have the following
Plaintiff to connect to said sanitary sewer system and powers, and the councils or other governing bodies of such
to issue the building permit applied for, which are mere cities and towns May Provide By Ordinance Or Resolution
ministerial functions or duties required to be performed by for the exercise or enforcement of the same:
the Defendants, although the same had been demanded, are
actions which are arbitrary, capricious and without lawful (1) To prevent the introduction of contagious, infectious
right. or pestilential diseases into such cities or towns;

(2) To establish and regulate a sufficient quarantine, not
*547 On April 9, 1979, the circuit judge issued a peremptory
inconsistent with laws of the state, in the towns and cities
writ of mandamus to the mayor of Saraland and several
and within the police jurisdiction thereof and to punish
council members ordering them to grant the plaintiff, Nathan
any breach of quarantine law;
Rodgers Construction and Realty Corp., permission to
connect its apartments to the sanitary sewer system of the City (3) To Adopt Such Ordinances And Regulations As
of Saraland. The mayor and councilmen brought this appeal, The Council Or Other Governing Body May Deem
alleging that it was error for the trial court to issue the writ Necessary To Insure Good Sanitary Condition in public
of mandamus. places or in private premises in the cities and towns; and

[1] The appellant argues, and we agree, that the petition must (4) To prescribe the duties and fix the salaries and
on its face state facts which show that the petitioner is entitled compensation for such health officials as they may deem
to have this extraordinary writ granted. Ex parte Alabama necessary.
Power Co., 280 Ala. 586, 196 So.2d 702 (1967); Lassiter
Code 1975, s 11-47-131 (emphasis added).
v. Werneth, 275 Ala. 555, 156 So.2d 647 (1963); Guaranty
Funding Corporation v. Bolling, 288 Ala. 319, 260 So.2d
589 (1972). “Mandamus is an extraordinary legal remedy, This statute is a reenactment of previous statutes (Code
grantable only when petitioner show(s) a clear, specific legal 1940, Tit. 37 ss 491, 492) which codified the judicially
right for the enforcement of which there is no other adequate created principle that a state, pursuant to its police power,
remedy.” All American Life and Casualty Co. v. Moore, 286 may regulate for the protection of its citizens' health. This
Ala. 492, 242 So.2d 661 (1970). See also: Campbell v. City of concept, however, is not a license to abuse the police power
Hueytown, 289 Ala. 388, 268 So.2d 3 (1972). The appellant by applying it capriciously and arbitrarily.
contends that the petition in the instant case does not meet
the requirements established by this court for a mandamus to Where a statute confers on a
issue. We disagree. municipality the power to regulate the
use of sewers, and neither defines the
[2] [3] The application for mandamus in the instant case limits of that power nor prescribes
avers that the decision of the city council to reject the the manner of its exercise, the
request of Nathan Rodgers Construction and Realty Corp., to municipality is necessarily invested
connect its apartments to the sanitary sewer system was made with power to exercise its discretion,
without the aid of reasonable regulations concerning health and the courts will not interfere with
and sanitation, and without any statement of the reasons

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Pritchett v. Nathan Rodgers Const. and Realty Corp., 379 So.2d 545 (1979)

114 Ala. 659, 21 So. 1017; Ex parte Tower Mfg. Co., 103
such action Unless It Appears To Be
Ala. 415, 15 So. 836; Ex parte Dowe, 54 Ala. 258.
Unreasonable Or Arbitrary.
Foshee v. State, 210 Ala. at 156, 157, 97 So. at 566 (emphasis
64 C.J.S. Municipal Corporations s 1805, p. 265, (1950)
(emphasis added). added). See also: Williams v. Board of Dental Examiners, 222
Ala. 411, 133 So. 11 (1931); Katz v. Alabama State Board of
*548 [4] Appellant argues that the council's decision to
Medical Examiners, 351 So.2d 890 (Ala.1977).
grant or deny a permit is discretionary, and the trial court's
finding that the decision was ministerial is in error. Whether
[5] Clearly, the city has the power to regulate for the
that decision was discretionary or ministerial, it is clear that
protection of the health of its citizens, but that power can
the council can not exercise its discretion in an arbitrary
not be exercised arbitrarily. In this case the city had adopted
manner. Appellant argues mandamus will not lie to order a
no moratorium on connections to its sewer system, but was
person to exercise his discretion in a particular manner. We
proceeding to grant or deny these connections on a case-by-
agree; however, mandamus will lie to order an official not to
case basis. This was an abuse of the discretion placed with
exercise his discretion in an arbitrary or capricious manner.
the city council.
In Foshee v. State, 210 Ala. 155, 97 So. 565 (1923), this court
held:
[6] [7] When the trial court hears evidence ore tenus, its
As a general rule a writ of mandamus will not issue to conclusions will not be disturbed on appeal unless palpably
review an exercise of judicial or quasi judicial discretion, erroneous. Rice v. Hill, 278 Ala. 342, 178 So.2d 168 (1965);
and this rule applies to the approval of official bond. Payne Custred v. Jefferson County, 360 So.2d 285 (Ala.1978).
v. Spragins, 207 Ala. 264, 92 So. 466; Mobile Co. v. Peterson v. Jefferson County, 372 So.2d 839 (Ala.1979). The
Cleveland, 76 Ala. 321; Ex parte Harris, 52 Ala. 87, 23 record amply supports the trial court's finding that the council
Am.Rep. 559. acted arbitrarily and capriciously in denying this permit to
Nathan Rodgers Construction and Realty Corp. Based on that
This rule, however, has an exception in this jurisdiction, for finding, the trial court properly issued the writ.
in some cases The Writ of Mandamus Has Been Employed
to correct errors of inferior tribunals, and to prevent a AFFIRMED.
failure of justice where there is a clear right and there is
an absence of any other adequate remedy, and it has also
been employed To Prevent An Abuse Of Discretion, Or To
BLOODWORTH, FAULKNER, ALMON and EMBRY, JJ.,
Correct An Arbitrary Action Outside Of The Exercise Of
concur.
a Reasonable Discretion. 26 Cyc. 189; Wilson v. Duncan,

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© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Public Utility Com'n of Texas v. South Plains Elec. Co-op., Inc., 635 S.W.2d 954 (1982)

manner and in derrogation of the standards mandated by the
635 S.W.2d 954 Public Utility Regulatory Act. 1
Court of Appeals of Texas, Austin.
The district court thought so and reversed and set aside
PUBLIC UTILITY COMMISSION the Commission's order and remanded the case to the
OF TEXAS, et al., Appellants, Commission. We affirm the judgment of the trial court.
v.
SOUTH PLAINS ELECTRIC The facts are these. On May 25, 1979, Lubbock filed its
COOPERATIVE, INC., Appellee. application with the Commission seeking dual certification
for its municipal electric utility to serve three areas recently
No. 13624. | July 21, 1982. annexed by the City which, at the date of such annexations,
| Rehearing Denied July 28, 1982. were singly certificated to South Plains. Hearings on the
merits were held before two different hearing examiners
The 98th District Court, Travis County, Hume Cofer, J., for the Public Utility Commission from January 21, 1980,
reversed and set aside an order of the Public Utility through January 29, 1980. A third hearing examiner issued
Commission and remanded the case, and an appeal was a report recommending against the City's application.
taken. The Court of Appeals, Phillips, C. J., held that proper However, by order dated September 3, 1980, as modified by
standards and issues set out in Public Utility Regulatory Order on Motion for Rehearing dated November 21, 1980, the
Act for granting application of city for an amendment of its PUC granted the application of the City for an amendment of
certificate of public convenience and necessity to allow its its certificated service area boundaries, to include the newly
municipal electric utility to serve three areas recently annexed annexed areas of the City.
by city were not followed by Public Utility Commission
in its decision to deny application, thus requiring a remand It should be noted that this is not the first time for one of
to enable Commission to again review application, where the three areas in question to be before the Commission or
decision was based, not on a criteria or standard found in this Court. In a much earlier proceeding, Southwestern Public
statute or in any rule or regulation, but on ground that “a city Service Company, an investor-owned utility serving a large
that has a municipally-owned utility has a right to serve its area in the panhandle and, in Lubbock, along with the city
constituency, serve the people within the city.” utility, had sought dual certification with the co-op in one of
the new areas involved in this litigation. The City was made
Affirmed. a party over its objection. The application of Southwestern
was denied by the PUC, but a certificate was granted the
City, even though it had made no application for one. This
Attorneys and Law Firms
grant was later reversed upon appeal because the City had
*954 Mark White, Atty. Gen., J. Scott Wilson, Asst. Atty. not sought a certificate, but specifically without prejudice
Gen., Don R. Butler, Austin, John C. Ross, Jr., City Atty., to the right of the City to file a subsequent application for
James P. Brewster, Asst. City Atty., Lubbock for appellants. certification. Southwestern Public Service Company v. Public
Utility Commission, 578 S.W.2d 507 (Tex.Civ.App.-Austin
B. D. St. Clair, McGinnis, Lochridge & Kilgore, Austin, for 1979, writ ref'd n.r.e.). The Court did not pass on the merits
appellee. of the City's application.

Opinion The City, contended then that it need not seek certification
from the PUC in order to serve the citizens within its corporate
*955 PHILLIPS, Chief Justice.
limits. This issue was subsequently decided contrary to its
The parties hereto, both public utilities-one municipally contention. City of Lubbock v. South Plains Electric Co-
owned, are vying to serve three subdivisions in the City of operative, Inc., 593 S.W.2d 138 (Tex.Civ.App.-Amarillo
Lubbock. The principal question for decision is whether the 1979, writ ref'd n.r.e.). The City subsequently filed its
Public Utility Commission, in granting a dual certificate to the application for certification in Docket 2616, which is the
municipally owned utility, acted in an arbitrary and capricious present case on appeal here. The City of Lubbock has
steadfastedly taken the position that it was not required to

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Public Utility Com'n of Texas v. South Plains Elec. Co-op., Inc., 635 S.W.2d 954 (1982)

secure a certificate of convenience and necessity from the which they as taxpayers help to support, either directly or
Commission and was, in fact, running concurrent lines to one indirectly.
of these new areas without permission when they were halted
by an injunction upheld by the Court in City of Lubbock v. 37. It is in the public interest that Lubbock Power and
South Plains Electric Cooperative, supra. Light, a municipal utility owned by the City of Lubbock, be
allowed to provide retail electric service to all consumers
Appellants bring some eight points of error which they within the city's municipal boundaries.
have winnowed into three principal areas of controversy: (1)
was the PUC order in form and substance in compliance The original findings of underlying facts made by the
with the requirements of the Administrative Procedure and examiner (with several modifications subsequently made by
Texas Register Act, Tex.Rev.Civ.Stat.Ann. art. 6252-13a the Commission and not pertinent here) were that:
(Supp.1982)?; (2) were the proper standards and issues for
South Plains is now rendering and
determination set out in PURA, followed by the PUC in its
is capable of continuing to render
decision?; (3) were the findings and orders of the PUC based
reasonable and adequate service to
upon substantial evidence?
the disputed areas; South Plains has
always made itself available to serve
Inasmuch as we do not find that the question of substantial
disputed areas, has trained service men
evidence plays any part in our decision, we will say no more
on call at all times and is capable of
about it. Since we find the order invalid our discussion will
providing underground service; South
be directed, principally, to question No. 2 above.
Plains has laid extensive distribution
lines in the disputed area; there
The areas involved were singly certificated to South Plains
is insufficient evidence of a need
by the Commission in *956 1976. At this time, South Plains
for additional service justifying dual
was the only electric utility serving the three areas in question.
certification of utilities; South Plains
Pursuant to its duties and responsibilities as a public utility
is willing and able to provide street
under PURA, South Plains has constructed and operated all
lighting and other energy needed by
facilities necessary to render adequate retail electric service to
the City in the disputed areas; it costs
the areas in question, and, as found by the Commission in this
more to serve on a per customer
case, has in fact provided adequate service to such areas, both
basis in areas with duplication of
before and after annexation of these areas by the City. Despite
system construction; dual certification
this fact, since the areas have become annexed to Lubbock,
of utilities results in overbuilding
development has become imminent and right to service has
because both utilities are required
become very attractive.
to serve 100% of the customers
in the area if requested to do so;
In our judgment the grant of the city's application was
South Plains will be harmed by dual
based on a criterion or standard not found in the statute or
certification because it will have to
in any Commission rule or regulation. That criterion was,
share its service area and revenues
apparently, expressed by the Chairman of the Commission
generated therefrom while incurring
when the Commission decided to grant the application when
costs required to supply 100% of
he remarked that “a city that has a municipally-owned utility
the service area; dual certification
has a right to serve its constituency, serve the people within
results in duplication of facilities; dual
the city.” This view was undoubtedly spelled out in the
certification will result in increased
Commission's September 1980 order. Findings 36 and 37
costs due to duplicated facilities and
which are as follows:
other expenses; the quality of service
36. Community values are promoted by allowing a rendered by South Plains is adequate;
municipally-owned utility to extend its services to all and South Plains' rates are lower than
areas within the municipal boundaries, because all citizens LPL's.
should be allowed the opportunity to be served by a utility

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Public Utility Com'n of Texas v. South Plains Elec. Co-op., Inc., 635 S.W.2d 954 (1982)

Yet despite these findings of basic, underlying facts which We also overrule appellant's point that South Plain's motion
are overwhelmingly in favor of South Plains, the Commission for rehearing was inadequate to preserve their contention
decided to grant Lubbock Power & Light's application. of whether the Commission's finding of public convenience
and necessity is supported by the underlying facts stated,
Consequently, the only inference of ultimate fact that can found, or adopted by the Commission and whether its ultimate
reasonably be drawn is that the requested certificate enabling finding and decision were based on impermissible standards
Lubbock Power and Light to serve the area along with and criteria.
South Plains is not necessary for the service, accommodation,
convenience and safety of the public as is required by In response to the first order entered by the Commission
section 54(b) of PURA. Indeed, these findings negate dated September 3, 1980, South Plains pointed out to the
the requirements necessary under 54(b) for sustaining a Commission in a variety of ways that the decision of the
certificate of public convenience and necessity for the City. Commission is not supported by proper findings of fact.
Specifically, in point 5 of its motion for rehearing, South
It seems clear that under PURA municipally-owned utilities, Plains pointed out that the Commission erred in entering
as retail public utilities, are no different from any other conclusion of Law No. 5 because it is not supported by the
retail public utility with respect to certificates of *957 findings of fact made or adopted by the Commission. South
public convenience and necessity. 2 Section 54(b) of PURA Plains further contended that in its motion for rehearing that
states that the Commission may grant applications and issue conclusion of Law No. 5 is not supported by and is contrary
certificates “only if the Commission finds that the certificate to the statutory standards and criteria set forth in PURA.
is necessary for the service and accommodation, convenience South Plains also argued that findings of fact Nos. 36 and 37
and safety of the public;” Then in paragraph (c) the Act (which were the only findings made by the Commission in its
states that “certificates of convenience and necessity shall be September 3, 1980 order to support conclusion No. 5) were
granted on a nondiscriminatory basis after consideration by not proper findings because they are based on impermissible
the Commission of the adequacy of existing service, the need criteria for the determination of public convenience and
for additional service ....” necessity.

As we stated above, the basic underlying facts found by the In addition, the Commission was aware of and fully
Commission overwhelmingly favor South Plains and also understood the complaint of South Plains and attempted to
point to a lack of such findings necessary to uphold the respond and buttress its decision by amending several of its
order in favor of Lubbock Power & Light. It is difficult for prior fact findings.
us to find other than that because Lubbock Power & Light
is a municipally-owned utility, it was given a preference Appellees have a cross-point asking this Court to render this
not sanctioned by the PURA. As held by the trial court, cause in their favor rather than remanding the case to the
municipally-owned status is not a relevant factor under the agency for further proceedings. We do not agree.
statute and does not constitute statements or findings of
underlying facts supporting the ultimate statutory findings of We are of the opinion the district court properly remanded the
convenience and necessity. We hold that the order is fatally cause to the agency for further proceedings consistent with
deficient and the trial court correctly set it aside. the conclusions of the district court. In those instances where
revision of an administrative order requires a reconsideration
Another decision of this Court makes it clear that under the of matters that are committed by law to the initial decision of
Administrative Procedure Act an agency's consideration of the agency, a court should remand the cause to the agency.
a non-statutory standard amounts to arbitrary and capricious It should not seek to substitute its discretion for that of the
action requiring reversal. Starr County v. Starr Industrial agency. 2 F. Cooper, State Administrative Law 776 (1965).
Services, Inc., 584 S.W.2d 352 (Tex.Civ.App.-Austin 1979,
writ ref'd n.r.e.); see Vandygriff v. Sabine Valley Savings & *958 As the Commission improperly considered non-
Loan, 613 S.W.2d 523 (Tex.Civ.App.-Austin 1981, writ ref'd statutory standards in arriving at its order granting the
n.r.e.). application for an amendment of its certificate, it is the task
of the agency to again review the application for amendment,
absent any consideration of the non-statutory standard. The

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Public Utility Com'n of Texas v. South Plains Elec. Co-op., Inc., 635 S.W.2d 954 (1982)

decision to grant or not to grant the application is plainly that
Appellee's cross-point is overruled and the judgment of the
of the agency on remand and not that of the reviewing courts
district court is in all things affirmed.
by rendition of judgment, since the grant or denial of the
application requires consideration of matters vested by law in
the Commission and not in the courts.

Footnotes
1 Tex.Rev.Civ.Stat.Ann. art. 1446c (1980) hereinafter, PURA.
2 Southwestern Public Service Co. v. Public Utility Comm'n, 578 S.W.2d 507 (Tex.Civ.App.-Austin 1979, writ ref'd n.r.e.); see also,
City of Brownsville v. Public Utility Comm'n, 616 S.W.2d 402 (Tex.Civ.App.-Texarkana 1981, writ ref'd n.r.e.). City of Lubbock v.
South Plains Electric Cooperative, 593 S.W.2d 138 (Tex.Civ.App.-Amarillo 1979, writ ref'd n.r.e.).

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© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
Railroad Com'n of Texas v. Coppock, 215 S.W.3d 559 (2007)

215 S.W.3d 559
Court of Appeals of Texas, *561 OPINION
Austin.
DAVID PURYEAR, Justice.
RAILROAD COMMISSION OF TEXAS and
Our opinion and judgment issued on December 29, 2006, are
Dos Republicas Resources Co., Inc., Appellants,
withdrawn, and the following opinion is substituted.
v.
Theodosia COPPOCK, Juanita Alvarado, Dos Republicas Resources Co., Inc. (“Dos Republicas”)
Guadalupe Davila, and Kickapoo asked the Railroad Commission of Texas (the “Commission”)
Traditional Tribe of Texas, Appellees. to extend its surface coal mining permit under the provisions
of the Texas Surface Coal Mining and Reclamation Act
No. 03–05–00097–CV. | Feb. 1, 2007. codified in the natural resources code, but Theodosia
Coppock, Juanita Alvarado, Guadalupe Davila, and Kickapoo
Synopsis
Traditional Tribe of Texas (the “appellees”) opposed the
Background: Neighboring landowners appealed Railroad
extension. Ultimately, the Commission granted the extension,
Commission's decision to extend coal mining company's
and the appellees appealed the Commission's decision. The
surface coal mining permit. The 201st Judicial District Court,
district court concluded that the Commission's basis for
Travis County, Scott H. Jenkins, J., entered judgment for
granting the extension, namely the lack of a market for
landowners. Commission and company appealed.
Dos Republicas to sell its coal, was not authorized under
the natural resources code. See Tex. Nat. Res.Code Ann. §
134.072 (West 2001). Dos Republicas and the Commission
Holdings: The Court of Appeals, David Puryear, J., held that: appeal the district court's judgment, and we will reverse the
court's judgment.
[1] Commission had the authority to grant company's request
for a permit extension, even though three-year deadline had
expired, and
BACKGROUND

[2] company could obtain permit extension due to In 1992, Dos Republicas applied to the Commission for a
unfavorable market conditions beyond the control of and permit to allow it to engage in coal mining on a 2700–acre
without the fault or negligence of the company. tract in Eagle Pass, Texas, and the Commission approved the
permit in 1994. However, Dos Republicas did not request that
the permit be issued at that time.
Reversed and remanded.

For years, Dos Republicas attempted to enter into an
Attorneys and Law Firms agreement to sell its coal to the Comision Federal de
Electricidad (“CFE”), a state-owned electricity provider in
*560 Chesley N. Blevins, Rebecca L. Fink, Lloyd Gosselink Mexico that operates two coal-fired plants near Eagle Pass.
Blevins Rochelle & Townsend, P.C., Nathan M. Bigbee, In 1999, CFE became concerned about the financial security
Assistant Attorney General, Natural Resources Division, of the mining company that had been its coal supplier. As
Austin, for appellants. a result, it alerted Dos Republicas that, in early 2000, it
would be issuing a request for proposals asking companies
Enrique Valdivia, Texas RioGrande Legal Aid, San Antonio, to submit bids offering to supply CFE with coal and asked
David O. Frederick, Lowere & Frederick, John G. Soule, Dos Republicas to issue a bid. To ensure that it would
Scott Douglass & McConnico, L.L.P., Austin, for appellees. have a supply when necessary, Dos Republicas asked the
Commission to issue the permit it had previously approved,
Before Justices PATTERSON, PURYEAR and SMITH. * and the Commission issued the permit in April 2000.

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Railroad Com'n of Texas v. Coppock, 215 S.W.3d 559 (2007)

Due to a number of political changes and pressure from opposed the extension. 3 She claimed that, because the
various interested parties, CFE never issued its request for three-year deadline had passed by the time of the hearing,
proposals. Employees from mines in Mexico complained that the Commission had no authority to grant an extension.
importing coal from Texas might eliminate their jobs. In Alternatively, she argued that the Commission should
addition, during this time, the governing political party in deny the extension because the conditions allowing for
Mexico changed, and the leaders of CFE were replaced. an extension found in section 134.072 were not satisfied.
Specifically, she asserted that the absence of a market in
Dos Republicas continued its efforts to enter into an which Dos Republicas could sell its coal could not justify an
agreement with CFE, and, in 2001, CFE again indicated extension.
that it would issue a request for proposals. However, as had
happened previously, no request was ever issued. Instead, The hearing examiner concluded that the Commission had
CFE entered into a long-term supply contract with a Mexican jurisdiction to consider the request for an extension because
mining company, Coahuila Industrial Minera (“Coahuila”). the request for an extension was filed prior to the three-year
deadline. Further, she concluded that the Commission should
Prior to and after CFE entered into a contract with Coahuila, grant the extension because Dos Republicas's failure to begin
Dos Republicas unsuccessfully attempted to find other market mining was due to *563 the absence of a market for the
options for selling its coal. Even though Dos Republicas coal and that the market condition was “beyond the control
asked the Commission to issue it a mining permit, it never and without the fault or negligence” of Dos Republicas. The
began mining coal at the Eagle Pass mine and, eventually, Commission adopted the examiner's proposal for decision and
filed an application with the Commission seeking to terminate granted the extension.
its permit. Although Dos Republicas asked that its permit be
terminated, the natural resources code also contains an early The appellees appealed the Commission's order to the
termination provision mandating that a mining permit will district court. See Tex. Gov't Code Ann. § 2001.171 (West
expire within three years of *562 its issuance if the permit 2000) (person who has exhausted all administrative remedies
holder has not begun “surface coal mining” operations by that and is aggrieved by final agency decision is entitled to
date. Tex. Nat. Res.Code Ann. § 134.072(a); 1 see also id. § judicial review). In its judgment, the district court concluded
134.004(20) (West 2001) (definition of “surface coal mining that the Commission had jurisdiction over the extension
operations”). Dos Republicas filed its application to terminate request because the Commission has authority over a
its permit shortly before the three-year termination date. request as long as it is filed within three years of the
permit's issuance. However, the court also concluded that
Just before the three-year termination deadline passed, “[s]ubsection 134.072(b) does not authorize the Commission
Coahuila contacted Dos Republicas and indicated that it was to grant an extension based upon the absence of a market or
interested in purchasing the Eagle Pass mining operation. other economic, political, or social conditions that are beyond
Consequently, Dos Republicas filed a request to withdraw its the control of and without the fault or negligence of the
application to terminate the permit and also filed a request to permit holder.” Dos Republicas and the Commission appeal
extend its permit beyond the three-year deadline. The natural the district court's judgment.
resources code allows the Commission to grant “reasonable
extensions” if it is shown that the extensions are necessary
because of:
STANDARD OF REVIEW
(1) litigation that precludes the beginning of operations or
In addressing the issues raised in this appeal by the
threatens substantial economic loss to the permit holder; or
appellants and the appellees, we must necessarily construe the
(2) conditions beyond the control and without the fault or relevant provisions of the natural resources code. Statutory
negligence of the permit holder. construction is a question of law, which we review de novo.
State v. Shumake, 199 S.W.3d 279, 284 (Tex.2006). In
Id. § 134.072(b). 2 determining the meaning of a statute, our primary purpose
is to determine the legislature's intent when enacting the
The Commission referred the matter to a hearings examiner. statute, and we begin with the language used in the statute. Id.
Coppock, a landowner near the Eagle Pass property, Every word in a statute is presumed to have been used for a

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Railroad Com'n of Texas v. Coppock, 215 S.W.3d 559 (2007)

purpose and every word excluded is presumed to have been [1] On appeal, the appellees assert that the Commission
excluded for a purpose. Laidlaw Waste Sys., Inc. v. City of lacked the authority to grant the permit extension because
Wilmer, 904 S.W.2d 656, 659 (Tex.1995). Further, we look the three-year deadline specified in the statute had expired.
to the entire act and do not look at a single provision isolated Before we address this issue, we note that there is some
from the remainder of the act. Watts v. City of Houston, question about whether the appellees may make this cross-
126 S.W.3d 97, 100 (Tex.App.-Houston [1st Dist.] 2003, no claim without first filing a notice of appeal. The Commission
pet.); see also Tex. Gov't Code Ann. § 311.021(2) (West and Dos Republicas contend that the appellees may not
2005) (presume that entire statute was meant to be effective). bring this cross-claim on appeal because they failed to file
We should not adopt a construction of a statute that will a notice of appeal. See Tex.R.App. P. 25.1 (party who seeks
render the statute meaningless or lead to absurd results. See to alter trial court's judgment must file notice of appeal),
Watts, 126 S.W.3d at 100; see also Tex. Gov't Code Ann. § 26.1 (specifying deadlines for filing notices of appeal). The
311.021(3) (West 2005) (in construing statutes, we presume appellees, on the other hand, insist that this issue may be
that just and reasonable result was intended). Finally, the considered on appeal. Specifically, they assert that it was
construction of a statute by the administrative agency charged unnecessary for them to file a notice of appeal because they
with its enforcement is entitled to serious consideration so are not seeking more favorable relief than that granted by
long as the construction is reasonable and does not contradict the district court. See First Gen. Realty Corp. v. Maryland
the plain language of the statute. Tarrant Appraisal Dist. v. Cas. Co., 981 S.W.2d 495, 503 (Tex.App.-Austin 1998, pet.
Moore, 845 S.W.2d 820, 823 (Tex.1993); Anderson–Clayton denied) (because appellees' arguments did not ask for relief
Bros. Funeral Home, Inc. v. Strayhorn, 149 S.W.3d 166, greater than that granted by trial court, appellees were not
178 (Tex.App.-Austin 2004, pet. denied) (even if there are required to file notice of appeal). Rather, they argue that they
other reasonable interpretations, we will accept agency's are simply seeking to affirm the final judgment of the district
construction of statute if it is consistent with language court and that they raise this issue merely as an alternative
and purpose of statute); see also Tex. Gov't Code Ann. § ground for affirming the district court's judgment. See Helton
311.023(6) (West 2005) (in construing statutes, courts may v. Railroad Comm'n, 126 S.W.3d 111, 119–20 (Tex.App.-
consider administrative construction of statute regardless of Houston [1st Dist.] 2003, pet. denied) (noting distinction
whether statute is considered ambiguous). This is particularly between cross-points that require separate notice of appeal
true when the statute involves a complex subject matter. and claims that merely seek to raise alternate grounds
Buddy Gregg Motor Homes v. Motor Vehicle Bd., 156 S.W.3d opposing recovery by appealing party). In the interests of
91, 99 (Tex.App.-Austin 2004, pet. denied). However, for justice, we will address their argument.
nontechnical questions of law and other questions not lying
within an agency's expertise, courts do not defer to an [2] The appellees insist that Dos Republicas's permit
agency's interpretation. Id. terminated automatically on April 11, 2003, because Dos
Republicas had not commenced surface mining and had not
obtained an extension by that date. In support of this assertion,
the appellees contend that nothing in the natural resources
DISCUSSION
code provides that requesting an extension within the three-
On appeal, the Commission and Dos Republicas contend that year deadline will toll the termination deadline or allows for
the district court erred when it reversed the Commission's a conditional extension pending a final determination by the
*564 order granting Dos Republicas's extension because Commission. In response, the Commission argues that it may
the extension was authorized by the natural resources code. grant an extension request after the three-year deadline as
In response, the appellees assert that the extension was long as the request was filed within the three-year cutoff.
not authorized by statute and that the Commission did not
have the authority to grant the extension after the three-year The Commission's interpretation of the statute is consistent
deadline. with the language of the statute. Nothing in the natural
resources code necessitates that the Commission rule on an
extension request before the three-year deadline passes in
The Commission Possessed Authority to Address Dos order for the extension to be effective. See Tex. Nat. Res.Code
Republicas's Extension Request Ann. § 134.072. The lack of a Commission deadline for
issuing its decision is instructive given that the code provides

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specific deadlines for agency action in other contexts. For may not be opposed, hearings may or may not be scheduled
example, section 134.080 of the code mandates that the on the proposed extension, and there is no statutory deadline
Commission issue a decision regarding a permit revision filed for the Commission releasing its decision, this interpretation
by a permit holder within 90 days of receiving the application would lead to unfair results. For example, under the appellees'
for revision. See id. § 134.080 (West 2001); see also Tex. interpretation, a permit holder who files for an extension just
Gov't Code Ann. § 2001.146(c) (West 2000) (agency must act prior to the termination deadline would receive an extension
on motion for rehearing within 45 days or motion is overruled as long as the Commission issued the extension by the three-
by operation of law). year deadline, whereas a permit holder who files a request
for an extension well in advance of the deadline would not
*565 Moreover, the code does not mandate that a permit receive an extension if the Commission is unable to grant
holder file an extension request within a given time prior the extension by the cut-off date. 4 We cannot adopt an
to the termination date in order to allow the Commission to interpretation that would lead to such arbitrary results. See
fully consider the request. The lack of a specific deadline by Watts, 126 S.W.3d at 100.
which a permit holder must file a request is noteworthy when
looking at other code provisions. The section concerning This construction is also supported by the effect of the
permit renewals explicitly provides a deadline by which an extension provisions. Cf. Tex. Gov't Code Ann. § 311.023(1)
applicant must file a permit renewal application that is prior (West 2005) (in interpreting statute, courts may consider
to the permit expiration date. Specifically, section 134.078 “object sought to be attained”). Section 134.072 terminates
provides as follows: a permit, regardless of the length of the permit's effective
term, within three years of the permit's issuance if the permit
Application for permit renewal must
holder has not begun mining operations. Tex. Nat. Res.Code
be made not later than the 120th day
Ann. § 134.072; see also id. § 134.071 (West 2001) (allowing
before the date the existing permit
Commission to issue permits with terms of five years or
expires.
more). Given that section 134.072 can shorten the effective
Tex. Nat. Res.Code Ann. § 134.078 (West 2001); see also term of a mining permit by imposing a three-year deadline,
16 Tex. Admin. Code § 12.106(b)(2) (2006) (requiring *566 the Commission's interpretation that a request for an
permit holder to file permit renewal 180 days before permit extension is effective if filed within the three-year deadline
expires), (b)(3) (2006) (requiring permit holder to file permit seems logical and equitable.
revision application 180 days before it expects to revise its
operations). The absence of a similarly worded deadline in the For all the reasons previously given, we conclude that the
extension context supports the Commission's interpretation, Commission's interpretation of the statute is consistent with
which allows for the filing of an extension request up to the section 134.072 and further conclude that the Commission
three-year termination deadline. See Laidlaw Waste Sys., Inc., had the authority to grant Dos Repulicas's extension request
904 S.W.2d at 659 (presume that every word omitted was even though the three-year termination date had passed.
purposefully excluded). Accordingly, we affirm that portion of the district court's
judgment.
Furthermore, if the appellees' interpretation of the statute
were correct, applicants would have the onerous task of
The Statute Allows Extension Requests to be Granted
estimating how far in advance they would need to file an
for Market Reasons
extension request in order to allow the Commission time
[3] In their only issue on appeal, the Commission and Dos
to fully review the application and issue its decision prior
Republicas contend that the district court erred by reversing
to the expiration of the three-year deadline. In addition,
the Commission's order. Specifically, they argue that the
the appellees' construction would effectively eliminate
absence of a market for the coal present at the Eagle Pass
extensions for events occurring between the time a permit
mine was a condition outside of Dos Republicas's control that
holder should file an extension request to ensure that a timely
occurred “in the absence of any fault or negligence” on behalf
decision is issued and the three-year termination date. Given
of Dos Republicas and that, therefore, the Commission was
that the possible reasons for requesting an extension might
vary in complexity, the amount of time necessary for full authorized by statute to grant the extension. 5
consideration of a request will vary, the extension may or

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The appellees, on the other hand, contend that the district distinguishable. The appellees refer to Day v. Tenneco, Inc.,
court correctly concluded that the Commission was not 696 F.Supp. 233 (S.D.Miss.1988); Huffines v. Swor Sand
authorized to issue an extension to Dos Republicas. First, the & Gravel Co., Inc., 750 S.W.2d 38 (Tex.App.-Fort Worth
appellees argue that the language of subsection 134.072(b) 1988, no writ); and Valero Transmission Co. v. Mitchell
(2), which is the subsection relevant in this appeal, acts Energy Corp., 743 S.W.2d 658 (Tex.App.-Houston [1st Dist.]
as a force majeure provision that prohibits an extension 1987, no writ), for the proposition that unfavorable market
unless the permit holder has physically been prevented from conditions cannot justify a permit extension under subsection
commencing operations due to “conditions beyond its control (b)(2). Although the courts in these cases did conclude that
and without its fault or negligence.” Further, the appellees poor market conditions do not excuse a party's obligation
contend that Dos Republicas was not actually prevented from to perform under a contract, see Day, 696 F.Supp. at 236;
mining and, therefore, insist that Dos Republicas should not Huffines, 750 S.W.2d at 40; and Valero, 743 S.W.2d at 663,
have been given an extension for its conscious choice not to this case does not involve a contractual dispute or a breach
begin mining. of contract claim. Furthermore, in two of the cases cited, Day
and Valero, the contracts at issue specifically contained a
[4] [5] We disagree with the appellees' assertion. There is force majeure clause that the courts were required to interpret:
no requirement listed in 134.072 that a permit holder must be there is no comparable provision in this case. 6
“physically” prevented from engaging in mining operations to
obtain an extension. Further, we have been unable to find any [6] Second, the appellees analogize the effect of Dos
case applying the doctrine of force majeure to the issuance Republicas's failure to begin mining operations to the effect
of a permit by a state regulatory authority. The doctrine of a lessee's failure to undertake physical efforts to drill under
is designed to protect parties to a contract and excuses a the terms of an oil and gas lease. Specifically, they contend
party's nonperformance because of events outside the control that, under an oil and gas lease, a lessee's failure to engage
of the parties. See Black's Law Dictionary 445 (abridged in physical activity on the leased property will terminate the
6th ed.1991); see also Perlman v. Pioneer Ltd. P'ship, 918
lease at the end of the lease's primary term 7 and will not
F.2d 1244, 1248 n. 5 (5th Cir.1990) (force majeure describes
allow for renewal, and they insist that a similar result should
particular type of event, which may excuse performance
apply here. See Smith & Weaver, Texas Law of Oil & Gas §
under contract). The scope and applicability of the doctrine is
4.5 (2000) (“A lessee cannot safely rely upon activities which
dependent upon the terms specified in a contract. See Zurich
do not involve actual physical activity on the land such as ...
Am. Ins. Co. v. Hunt Petroleum (AEC), Inc., 157 S.W.3d 462,
applying ... for a drilling permit.... [T]he reported cases speak
466 (Tex.App.-Houston [14th Dist.] 2004, no pet.); see also
in terms of actual physical contact with the leased premises.”).
Perlman, 918 F.2d at 1248 n. 5 (should look to language of
contract to determine parties' intent concerning whether event
However, the appellees have not referred us to cases holding
complained of excuses performance); Sun Operating Ltd.
that a permit holder's failure to engage in mining activities
P'ship v. Holt, 984 S.W.2d 277, 282–83 (Tex.App.-Amarillo
is equivalent to a lessee's failure to drill under an oil and
1998, pet. denied) (much of historic meaning of phrase force
gas lease, and we see no reason to adopt such a rule. The
majeure is gone and, therefore, scope and application of
circumstances and expectations surrounding the issuance of
doctrine is “utterly dependent upon the terms of the contract in
a permit are remarkably different than those present during
which it appears”); 30 Samuel Williston & Richard A. Lord,
the formation of an oil and gas lease. Unlike a mining permit,
A Treatise on the Law of Contracts § 77:31 (4th ed. 1990
an oil and gas lease involves two parties to an agreement,
& Supp.2004) (specific language of clause indicates what
not a single party and a regulatory agency. Because *568
events will excuse performance and typical clause *567
the issuance of a permit by the Commission does not involve
states that party's performance is subject to “acts of God, war,
two parties entering into a contract for mutual economic
government regulation, terrorism, disaster, strikes ... civil
benefit, the need for a termination due to non-production is
disorder, curtailment of transportation facilities, or any other
not as pressing because the Commission does not receive an
emergency beyond the parties control”).
economic benefit from a mining company corresponding to
the amount of coal mined. Cf. id. (if lessee under oil and
In addition, the cases the appellees refer to in support of
gas lease does not begin drilling, it is obligated to pay lessor
their assertion that, under the doctrine of force majeure,
delay rental). Further, the economic effects of a coal mining
market conditions cannot justify a permit extension are
company's actions are only one factor for the Commission

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to consider when issuing, extending, or terminating a permit; it believes an extension is necessary due to “conditions
as highlighted by the appellees, the Commission is also beyond the control and without the fault or negligence of
charged with considering, among other things, the potential the permit holder.” Tex. Nat. Res.Code § 134.072(b)(2);
environmental effects from coal mining and the effects on see also Webster's Seventh New Collegiate Dictionary 235
neighboring landowners. See Tex. Nat. Res.Code Ann. § (7th ed.1973) (“condition” means “a restricting or modifying
134.003 (West 2001). factor”). On its face, this language is broad enough to justify
the Commission's extension for market conditions that are not
Third, the appellees urge that, because Dos Republicas was caused by the permit holder.
aware that it did not have a market established when it filed
for a permit in 1994 and was aware of the social and political Further, we disagree with the appellees' contention that the
instability present in Mexico when it asked for the permit to be inclusion of the phrase *569 “substantial economic loss”
issued, Dos Republicas assumed those market risks knowing in subsection 134.072(b)(1) and its exclusion in subsection
that it was obligated to begin mining operations within three 134.072(b)(2) indicates the legislature's intent that economic
years or lose the permit. Accordingly, they contend that the conditions, including the lack of a viable coal market, cannot
permit should not be extended because the potential market be used to justify a permit extension. See Tex. Nat. Res.Code
problems were foreseeable. Ann. § 134.072(b); see also Mid–Century Ins. Co. of Tex.
v. Kidd, 997 S.W.2d 265, 274 (Tex.1999) ( “doctrine of
We disagree with the appellees' assertion that the fact that expressio unius est exclusio alterius is simply an aid .... [and]
the event was foreseeable bars invocation of the extension [a]s a rule of reason and logic, it should not be mechanically
provision. There is no requirement in section 134.072 applied to compel an unreasonable interpretation”). The
mandating that conditions justifying a permit extension must subsections apply in different contexts. Subsection (b)(1)
have been unforeseeable to the permit holder. See id. § applies only to situations where the permit holder is involved
134.072. Moreover, many of the conditions that the appellees in litigation that either precludes the beginning of mining
insist would justify a permit extension will no doubt be or threatens economic loss to the permit holder regardless
foreseeable to a certain extent, including natural disasters and of whether the litigation was initiated due to some fault of
individuals filing suit against the company. the permit holder. Subsection (b)(2) applies when conditions,
which are not caused by the permit holder, are present
Fourth, the appellees note that subsection 134.072(b)(2) and warrant an extension. Unlike subsection (b)(1), which
does not specifically authorize an extension for economic is expressly limited to instances where the permit holder
reasons but note that subsection 134.072(b)(1) does allow for is involved in some type of litigation, subsection (b)(2)
extension due to economic concerns. Subsection 134.072(b) applies to a broader number of situations and provides no
(1) allows the Commission to grant an extension if the permit express limitation on its applicability except that the permit
holder is involved in “litigation that precludes the beginning holder cannot be the cause of the condition resulting in the
of operations or threatens substantial economic loss.” Id. § failure to mine. Due to the distinct situations in which these
134.072(b)(1) (emphasis added). The appellees insist that if statutes apply, we believe that the legislature's failure to
potential economic loss was a factor to be considered under include the phrase “economic loss” in subsection (b)(2) is
subsection (b)(2), the legislature would have incorporated no indication that the lack of a market cannot be used to
that language into the section. Cf. Laidlaw Waste Sys., Inc., justify an extension. The legislature specified that economic
904 S.W.2d at 659 (Tex.1995) (when legislature employs conditions are permissible considerations when determining
term in one section of statute and excludes it from another, whether to grant an extension under the first part of subsection
term should not be implied into section it was excluded from). 134.072(b). We can discern no reason to exclude economic
conditions as permissible factors for the Commission to
We cannot adopt the appellees' construction of section consider when determining whether to grant an extension
134.072. Although subsection 134.072(b)(2) does not under the more broadly written second part of subsection
specifically list “economic conditions” or “the lack of a 134.072(b).
market” as permissible reasons justifying a permit extension,
the subsection does not list any specific situation justifying an Finally, the appellees refer to federal case law and to the
extension. Instead, the subsection uses very broad language legislative history accompanying the federal counterpart to
authorizing the Commission to grant an extension when the Texas Surface Coal Mining and Reclamation Act as

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Railroad Com'n of Texas v. Coppock, 215 S.W.3d 559 (2007)

support for the proposition that market conditions cannot on maintaining current environmental reclamation standards
justify an extension. First, the appellees refer to Shawnee Coal and the fact that the Texas reclamation regulations in effect
Co. v. Andrus, 661 F.2d 1083 (6th Cir.1981). In Shawnee, when Dos Republicas first obtained its permit are different
the Office of Surface Mining, Reclamation, and Enforcement from the regulations in effect now, the appellees insist that
(the “Office”) concluded that Shawnee was in violation of the Dos Republicas's permit should not have been extended for
Act because it had stockpiles of coal products that released economic reasons. Cf. 30 U.S.C.A. § 1201(d) (expansion of
toxic runoff and ordered Shawnee to comply with the Act coal mining requires establishment of “appropriate standards
and its accompanying regulations. The district court granted to minimize damage to the environment”), (k) (West
an injunction in favor of Shawnee preventing enforcement 1986) (Act is necessary to “mitigate adverse environmental
of the Office's orders, but the Sixth Circuit reversed because effects”).
Shawnee had not exhausted its administrative remedies prior
to filing suit. Shawnee Coal Co., 661 F.2d at 1092. During a However, the fact that the federal statute was enacted with
subsequent administrative proceeding, Shawnee argued that a focus on implementing current environmental reclamation
it was unable to comply with the Office's orders because standards does not mandate a conclusion that a permit
it could not sell the stockpiled coal products due to a cannot be extended for market reasons under the Texas
depressed market. See Coalex Report 305 available at http:// statute. If anything, the focus on reclamation standards
www.osmre. gov/coalex/coalex305.htm (last modified Mar. indicates the need for agency expertise in determining
24, 1999). The administrative law judge concluded that what standards to enforce and whether a permit should be
Shawnee had to either comply with the regulations in question extended. Furthermore, the administrative code authorizes the
or no longer conduct operations. Id. Commission to review an existing permit and modify the
permit's provisions to ensure compliance with the Surface
The appellees' reliance on this case is misplaced. Shawnee Mining and Reclamation Act and the relevant administrative
was ordered by the Office to comply with an environmental code provisions. See 16 Tex. Admin. Code § 12.225 (2006).
regulation relating to surface coal mining and subsequently Therefore, the Commission can compel a permit holder to
sought injunctive relief from having to comply with the comply with more recent reclamation requirements prior to
order. Dos Republicas has not failed to comply with nor the permit's termination.
has it been ordered to comply with a regulation. Further,
it is not seeking injunctive relief from compliance with an Dos Republicas and the Commission's assertion that
environmental regulation. Rather, it is *570 attempting to the Commission may consider market conditions when
extend the termination date of its mining permit, which is an determining whether to grant an extension is also supported
action authorized by the natural resources code. by the broad authority the legislature bestowed upon the
Commission. The natural resources code specifies that
Next, the appellees refer to the legislative history the Commission has been granted exclusive jurisdiction
accompanying the Surface Mining Control and Reclamation over surface coal mining and reclamation activities, has
Act. Like the Texas statute, the federal statute also provides been charged with enforcing the relevant portions of the
that a permit will terminate within three years if no mining code, and has been given the authority to issue rules
activity is undertaken but allows a permit to be extended pertaining to mining and reclamation activities that are
for reasons similar to those articulated in section 134.072. consistent with the code. See Tex. Nat. Res.Code Ann.
See 30 U.S.C.A. § 1256(c) (West 1986); see also id. § 1253 §§ 134.011 (Commission given broad powers, including
(West 1986 & Supp.2006) (states may obtain jurisdiction over power to adopt rules, issue and revoke permits, conduct
mining if states develop program capable of implementing hearings, issue orders requiring miners to take certain actions,
Act). The Senate Committee's 1977 analysis of the act and order cessation of mining activities), 134.012(a)(1)
recognized that permits may be issued and renewed without (Commission has exclusive jurisdiction), 134.013 (West
operations being undertaken and specified that one of the 2001) (Commission required to adopt rules relating to surface
reasons for the three-year deadline is to ensure “that no one coal mining and reclamation), 134.161–.181 (West 2001)
will be locked into outdated reclamation requirements” that (enforcement powers of Commission). It has also been
were in effect when the permit was issued. S.Rep. No. 95– specifically charged with determining whether a permit
128, at 74 (1977), U.S.Code Cong. & Admin.News 1977, extension should be granted. Moreover, the two types
593, 612. Based on the federal legislative history's emphasis of circumstances described by section 134.072 as *571

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Railroad Com'n of Texas v. Coppock, 215 S.W.3d 559 (2007)

of whether something should be considered capital or expense
justifying an extension are broadly written. Accordingly, the
should be “left to the agency created to centralize expertise
Commission's interpretation of section 134.072 is entitled to
in this area and granted broad authority concerning just
judicial respect. See Hammack v. Public Util. Comm'n of Tex.,
such matters”). Accordingly, deference to the Commission's
131 S.W.3d 713, 723 (Tex.App.-Austin 2004, pet. denied);
expertise regarding the conditions warranting an extension is
see also Moore, 845 S.W.2d at 823.
appropriate.
Furthermore, the appellees' arguments ignore the need for
For all the reasons previously given, we conclude that the
agency expertise in determining whether a permit extension
Commission's interpretation of section 134.072 as allowing
should be granted. See Hammack, 131 S.W.3d at 723
for a permit extension due to unfavorable market conditions
(legislature bestows powers upon agency with idea that
“beyond the control and without the fault or negligence of
its goals will be more effectively realized by employing
the permit holder” is consistent with the plain language of
agency's “specialized judgment, knowledge, and expertise”).
the statute. Accordingly, we conclude that the Commission
The code specifies that the Commission “may” grant an
did not exceed its authority when it granted Dos Republicas's
extension and further states that, in determining whether to
extension request because of unfavorable market conditions.
grant an extension, the Commission must consider whether
Therefore, we sustain Dos Republicas and the Commission's
the permit holder's failure to mine is the result of events
issue on appeal.
beyond the control of the permit holder and must determine
whether granting the extension is “necessary.” See Tex.
Nat. Res.Code Ann. § 134.072(b)(2); see also Tex. Gov't
Code Ann. § 311.016(1) (West 2005) (word “may” creates CONCLUSION
discretionary authority). If the Commission determines that
an extension is necessary, the agency must also determine Having concluded that the Commission had the authority to
a “reasonable” extension time. Tex. Nat. Res.Code Ann. issue Dos Republicas's extension and having sustained Dos
§ 134.072(b). These determinations necessarily involve an Republicas and the Commission's issue on appeal, we reverse
assessment of the circumstances surrounding the permit the judgment of the district court and remand the case for
holder's activities and knowledge of the factual situations that further proceedings consistent with this opinion.
might justify a permit extension. Cf. State v. Public Util.
Comm'n, 883 S.W.2d 190, 195 n. 6 (Tex.1994) (determination

Footnotes
* Bea Ann Smith, Justice (retired), Third Court of Appeals, sitting by assignment. See Tex. Gov't Code Ann. § 74.003(b) (West 1998).
1 Subsection 134.072(a) reads as follows:
A permit terminates if the permit holder has not begun the surface coal mining operation covered by the permit on or before the
third anniversary of the date on which the period for which the permit is issued begins.
Tex. Nat. Res.Code Ann. § 134.072(a) (West 2001).
2 The administrative rule interpreting section 134.072 contains nearly identical language. It provides:
(b) Automatic termination shall occur as follows:
(1) a permit shall terminate, if the permittee has not begun the surface coal mining and reclamation operation covered by the
permit within 3 years of the issuance of the permit;
(2) the Commission may grant reasonable extensions of time for commencement of these operations, upon receipt of a written
statement showing that such extensions of time are necessary, if:
(A) litigation precludes the commencement or threatens substantial economic loss to the permittee; or
(B) there are conditions beyond the control and without the fault or negligence of the permittee
16 Tex. Admin. Code § 12.219(b) (2006). Because the rule is nearly identical to the statute, we will limit our discussion to the
statute.
3 Coppock owns a cattle ranch near Dos Republicas's proposed mine site. She opposed the extension because she was concerned about
how mining operations might affect the groundwater under her ranch. The remaining appellees—Juanita Alvarado, Guadalupe Davila,
and Kickapoo Traditional Tribe of Texas—did not intervene until after the hearing examiner's proposal for decision was issued.
4 In this case, almost a year passed between Dos Republicas's filing for an extension and the Commission's decision granting the
extension.

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Railroad Com'n of Texas v. Coppock, 215 S.W.3d 559 (2007)

5 Whether the Commission's order was supported by substantial evidence is not at issue in this case. For this reason, we focus solely
on whether the Commission exceeded its statutory authority by issuing the extension.
6 The appellees also assert that in Day v. Tenneco, Inc., the Mississippi court concluded that market conditions cannot be used to excuse
a party's performance under a statute. 696 F.Supp. 233, 235–36 (S.D.Miss.1988). The statute listed various events that would excuse
a party's nonperformance under a contract and included a catch-all phrase for events “beyond the control of such party.” See id. at
235–36 (citing former Miss.Code Ann. § 75–2–617 (1972)). However, as discussed previously, this case does not involve a contract
dispute, and Dos Republicas is not attempting to avoid an obligation by invoking a statute excusing performance under a contract.
7 A primary term is “a period of time at the end of which the [leasehold] estate granted will terminate but which estate may be extended
by some other provision, usually one for production.” Fox v. Thoreson, 398 S.W.2d 88, 91 (Tex.1966); see also Eastern Energy, Inc.
v. SBY P'ship, 750 S.W.2d 5, 6 (Tex.App.-Houston [1st Dist.] 1988, no writ) (“primary term of the lease is the maximum period of
time for which the lessee can maintain lease rights without drilling”).

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South Plains Lamesa Railroad, Ltd. v. High Plains..., 52 S.W.3d 770 (2001)

52 S.W.3d 770
Court of Appeals of Texas, ON MOTION FOR REHEARING
Amarillo.
REAVIS, Justice.
SOUTH PLAINS LAMESA RAILROAD, LTD.
On original submission, we reversed and rendered in part and
and Kitten Family Living Trust, Appellants,
severed and remanded in part for further proceedings. High
v. Plains Underground Water District No. 1 (District) has now
HIGH PLAINS UNDERGROUND WATER filed a motion for rehearing. We overrule the motion, but
CONSERVATION DISTRICT NO. 1, Appellee. withdraw our original opinion of January 25, 2001 and, in lieu
thereof, issue the following opinion. Our judgment of January
No. 07–00–0089–CV. | April 17, 2001. 25, 2001 is unaffected.
Landowner and trust brought action for declaratory relief
By this appeal, South Plains Lamesa Railroad, Ltd. (South
that water district erred in revoking one water well permit
Plains) and the Kitten Family Living Trust (Kitten Trust)
and denying another water well permit and for attorney
challenge a summary judgment denying their request for
fees. The 364th District Court, Lubbock County, Bradley
declaratory relief and awarding attorney's fees to the District.
S. Underwood, J., entered summary judgment in favor
By their four issues, they ask 1) whether the trial court erred
of water district, and landowner and trust appealed. The
in granting the motion for summary judgment of the District,
Court of Appeals reversed and rendered in part and severed
2) whether the District could reopen and revoke a water well
and remanded in part for further proceedings. On district's
application four months after granting the permit absent a
motion for rehearing, the Court of Appeals, Reavis, J.,
finding of changed circumstances, 3) whether the District
held that: (1) water district lacked authority to deny or
could apply an ad hoc standard not part of its rules to deny a
revoke water well permits for “disproportionate taking”
water well permit even though the application had satisfied all
in relation to tract size as rule cited as authority had no
of the District's rules, and 4) whether the District can nullify
provision relating to disproportionate taking or minimum
the rule of capture. In this appeal, we must determine the
tract size; (2) district was not clearly authorized by statute
validity of the action of the District revoking one water well
to deny permit on ground of disproportionate taking; (3)
permit and denying another permit on the ground that it was
legislature did not establish reasonable standards to guide
proper to avoid the pumping of a disproportionate amount
water district in exercising its rule-making powers; and
of water as it relates to the tract size and the District's well
(4) water district lacked discretionary power to regulate
spacing regulations. Because none of the eleven cases cited by
disproportionate taking of groundwater and could only have
the District involve groundwater districts or their rule making
regulated groundwater rights by rule adopted after public
authority, we conclude that the question presented is a case
notice and hearing requirements.
of first impression. Based upon the rationale and authorities
expressed herein, we reverse and render in part; and sever and
Reversed and rendered in part, severed and remanded for
remand in part for further proceedings.
further proceedings.

[1] Section 59(a) of Article XVI of the Texas Constitution
Attorneys and Law Firms provides that the Legislature shall pass all laws as may
be appropriate to water conservation and development and
*773 William R. Power, Arlington, Leonard J. Kolanowski section 59(b) authorizes the creation of districts to have the
III, Keller, for appellant. authority as may be conferred by the law, which *774
subsection (a) directs the Legislature to enact. By section
McWhorter Cobb & Johnson LLP (Gary R. McLaren),
Lubbock, for appellee. 36.0015 of the Water Code, 1 the Legislature has declared
that regional groundwater districts are the State's preferred
Before BOYD, C.J., and QUINN and REAVIS, JJ. method of groundwater management and under section
36.001(15), a district is a political subdivision exercising
State powers and such districts stand upon the same footing

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South Plains Lamesa Railroad, Ltd. v. High Plains..., 52 S.W.3d 770 (2001)

as a county. Lewis Cox & Son v. High Plains Underground 37.001–37.011 (Vernon 1997), specifically section 37.009.
Water, 538 S.W.2d 659, 663 (Tex.Civ.App.—Amarillo 1976, The answer of the District included a general denial and a
writ ref'd n.r.e.). request for an award of attorney's fees pursuant to section
37.009. After traditional motions for summary judgment were
On December 9, 1997, the District approved water well filed by all parties, the trial court granted the motion for
application permit no. 8149-A that allowed the Kitten Trust to summary judgment of the District and awarded attorney's
drill, equip, and produce a water well on its easement covering fees to the District. Before we commence our analysis of the
a small tract owned by South Plains. After the Kitten Trust issues, we first set out the appropriate standard of review.
drilled and equipped a well and constructed a pipeline at a
cost of approximately $30,000, on April 13, 1998, adjoining
landowners filed a protest to the Kitten Trust application for
*775 Summary Judgment Standard of Review
water well permit no. 8149–A. Following a hearing on May
12, 1998, the Board of the District passed a motion to disallow [2] [3] [4] [5] [6] For a party to prevail on a traditional
water well permit no. 8149–A, which provided that the Board motion for summary judgment under Tex.R. Civ. P. 166a(c),
found: he must conclusively establish the absence of any genuine
question of material fact and that he is entitled to judgment
1. That the legal description supplied by Plaintiff Kitten
as a matter of law. Tex.R. Civ. P. 166a(c). This requirement
Trust in Water Well Application 8149–A was not of
dictates that when the defendant is the movant, he must
sufficient detail to apprise Defendant of the size of the tract
conclusively negate at least one of the essential elements
on which the well was to be drilled.
of the plaintiff's cause of action. Likewise, a defendant
2. That if the size of the tract had been known, it is who conclusively establishes each element of an affirmative
unlikely that the Lubbock County Committee would have defense is entitled to summary judgment. Randall's Food
recommended its approval. Markets, Inc. v. Johnson, 891 S.W.2d 640, 644 (Tex.1995).
In Nixon v. Mr. Property Management Co., 690 S.W.2d 546,
3. That Water Well Permit 8149–A would have allowed a 548–49 (Tex.1985), the Court set out the standard by which
disproportionate amount of water to be pumped as it relates we are to review a summary judgment:
to the tract size and Defendant District's well spacing
regulations as they relate to gallons per minute per acre as 1. The movant for summary judgment has the burden of
set by the District's spacing rules. showing that there is no genuine issue of material fact and
that it is entitled to judgment as a matter of law.
Then, on May 13, 1998, South Plains filed its water well
application permit no. 8209 that remedied alleged procedural 2. In deciding whether there is a disputed material fact issue
deficiencies in the Kitten Trust application. On July 13, precluding summary judgment, evidence favorable to the
1998, the same adjacent landowners filed a protest to water non-movant will be taken as true.
well application no. 8209. At a hearing on July 14, 1998,
3. Every reasonable inference must be indulged in favor of
the District Board denied application permit no. 8209 even
the non-movant and any doubts resolved in its favor.
though the District Board Manager reported to the Board
that the application complied with the District's spacing Once the movant has established a right to summary
requirements. 2 In response to request for admissions, the judgment, the non-movant has the burden to respond to the
District admitted that the District's Board of Directors on July motion for summary judgment and present to the trial court
14, 1998, voted to deny South Plains's application permit no. any issues that would preclude summary judgment. City of
8209 “to prevent disproportionate taking of water.” Houston v. Clear Creek Basin Authority, 589 S.W.2d 671,
678 (Tex.1979); Barbouti v. Hearst Corp., 927 S.W.2d 37,
By their trial pleadings, South Plains and the Kitten Trust 64 (Tex.App.—Houston [1st Dist.] 1996, writ denied). Issues
contended that the action of the District in revoking which the non-movant contends preclude the granting of a
application permit no. 8149-A and denying application permit summary judgment must be expressly presented to the trial
no. 8209 was in error as a matter of law, and they also sought court by written answer or other written response to the
attorney's fees in accordance with the Uniform Declaratory motion and not by mere reference to summary judgment
Judgments Act, Tex. Civ. Prac. & Rem.Code Ann. §§ evidence. McConnell v. Southside Indep. School Dist., 858

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South Plains Lamesa Railroad, Ltd. v. High Plains..., 52 S.W.3d 770 (2001)

S.W.2d 337, 341 (Tex.1993). Issues not expressly presented
to the trial court in writing shall not be considered on appeal
Applicable Water Code Provisions
as grounds for reversal. Tex.R. Civ. P. 166a(c). Further,
all theories in support of or in opposition to a motion for [8] [9] Because water regulation is essentially a duty
summary judgment must be presented in writing to the trial of the Legislature, Sipriano v. Great Spring Waters of
court. Casso v. Brand, 776 S.W.2d 551, 553 (Tex.1989). America, 1 S.W.3d 75, 80 (Tex.1999), and the Legislature has
declared districts to be the preferred method of groundwater
[7] Where, as here, both sides move for summary judgment management, we first review several provisions of chapter 36
and the trial court grants one motion and denies the other, of the Water Code entitled “Groundwater Districts.” A district
on appeal, we review the summary judgment evidence of has only such powers and authority as “may be conferred
both sides and determine all questions presented, and render by law.” Tex. Const. Art. XVI, § 59(b). Because the power
judgment the trial court should have rendered. Bradley of a district is limited by the terms of applicable statutes
v. State ex rel. White, 990 S.W.2d 245, 247 (Tex.1999); authorizing its creation and a district can exercise no authority
Greg Lair, Inc. v. Spring, 23 S.W.3d 443, 446 (Tex.App.— that the Legislature has not clearly granted, Tri–City Fresh
Amarillo 2000, pet. denied). Water Supply Dist. No. 2 v. Mann, 135 Tex. 280, 142 S.W.2d
945, 948 (1940), the statutes must be closely examined to
determine if any statute clearly grants a district the authority
Summary Judgment Grounds to revoke or deny a well permit to prevent the production of
a disproportionate amount of water as it relates to the tract
As the sole ground for their motion for summary judgment, size and a district's well spacing regulations as they relate to
the Kitten Trust and South Plains contended that they were gallons per minute per acre.
entitled to summary judgment because the District's Board did
not have the authority under law to revoke a well permit, or [10] After defining certain terms and stating the purpose
refuse to issue a well permit, based on the reason that to permit of groundwater districts, by section 36.002, the Legislature
such a well would “allow a disproportionate amount of water confirmed ownership rights of groundwater. That section
to be pumped as it relates to the tract size and the District's provides:
well spacing regulations as they relate to gallons per minute
per acre as set by the District's spacing rules.” We construe The ownership and rights of the
owners of the land and their lessees
the grounds 3 of the motion *776 for summary judgment
and assigns in groundwater are hereby
by the District to be (1) section 36 .253, which provides that
recognized, and nothing in this code
the burden of proof is on the petitioner and the challenged
shall be construed as depriving or
rule order or act shall be deemed prima facie valid and the
divesting the owners or their lessees
substantial evidence rule as defined by section 2001.174 of
and assigns of the ownership or rights,
the Texas Government Code, and (2) a general allegation
subject to rules promulgated by a
that the District complied with groundwater statutes and local
district.
rules.
(Emphasis added). By using the term code and not chapter,
By their first issue, the Kitten Trust and South Plains contend this section applies to groundwater notwithstanding any
the trial court erred in granting the motion for summary provision to the contrary in any other chapter of the Water
judgment of the District and by the third issue, they contend Code. Because a statute is presumed to have been enacted
the District did not have the lawful authority to apply an ad by the Legislature with complete knowledge of the existing
hoc 4 standard not part of its rules to deny a water well permit law and with reference to it, Acker v. Texas Water Com'n,
even though the applicant has satisfied all of the District's 790 S.W.2d 299, 301 (Tex.1990), by enactment of this section
rules. Also, by their fourth issue, they contend the District effective September 1, 1995, the Legislature recognized the
cannot nullify the rule of capture. Because these three issues rule of capture as it applies to groundwater according to
and argument thereunder present the issue of lawful authority the decisions of the Texas Supreme Court in Houston &
of the District and its rule making power, we will consider T.C. Ry. Co. v. East, 98 Tex. 146, 81 S.W. 279 (1904) and
them together. City of Corpus Christi v. City of Pleasanton, 154 Tex. 289,
276 S.W.2d 798, 801 (Tex.1955). Under section 36.001(1) a

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South Plains Lamesa Railroad, Ltd. v. High Plains..., 52 S.W.3d 770 (2001)

district is defined as an authority created under section 59, Because this ground raises questions of statutory authority of
article XVI of the Texas Constitution that has the authority a district, we will combine our analysis with the contentions
to “regulate the spacing of water wells, the production from of the Kitten Trust and South Plains presented in their motion
water wells, or *777 both.” However, spacing of wells or for summary judgment and presented here by their first, third,
regulation of production from water wells is not defined. and fourth issues complaining that the District did not have
the authority under law to revoke a well permit or refuse
To implement the management responsibility, the rule to issue a well permit, because to permit such a well would
making power of a district is covered by subchapter “allow a disproportionate amount of water to be pumped as it
D. Among other provisions, section 36.101(a) gives a relates to the tract size the District's well spacing regulations
district rule making authority “to control subsidence or as they relate to gallons per minute per acre as set by the
prevent waste of groundwater and to carry out the powers District's spacing rules.”
and duties provided by this chapter.” Section 36.116
specifically addresses well spacing and production. This
section authorizes a district to provide for well spacing and
Application Met Spacing Requirements
regulation of production to (1) minimize the drawdown of
the water table or (2) the reduction of artesian pressure [12] It is undisputed that at the hearing, the Board Manager
(3) to control subsidence or (4) to prevent waste. Because of the District reported to the Board that the application
a district is not a state agency with statewide jurisdiction, complied with the District's spacing requirements. Minutes
but is a regional political subdivision, the Administrative of the District hearing regarding application permit no. 8209
Procedure and Practice Act does not apply, 5 except that state in part that:
section 2001.174 of the Government Code is made applicable
under section 36.253 for purposes of judicial review of district Mr. Wyatt said that Application
actions. for Permit Number 8209 meets
the spacing requirements of the
Water District. However, the question
remains as to whether a 4–inch well on
De Novo Review the 100–foot wide right- *778 of-way
would take a disproportionate amount
[11] By its first ground for its motion for summary
of water from the strip of land on
judgment, the District urged that the challenged rulings of
which it is located.
the District are deemed prima facie valid and the substantial
evidence rule applied. Sections 36.251 through 36.254 of By interrogatory number 7, the Kitten Trust and South Plains
the Water Code contain provisions regarding judicial review asked the District if any of its rules authorized or specified
of any rule or order made by a district. As applicable here, a “disproportionate taking” or similar standard for the grant
section 36.253 provides that any challenged law, rule, order, or denial of water well permits and, if so, requested that the
or act shall be “deemed prima facie valid,” and the section rule be identified. By its answer, the District designated its
provides that the substantial evidence rule covered by section Rule 8 entitled “Minimum Spacing of Wells,” as authorizing
2001.174 of the Government Code shall also apply upon the district to deny a water well application permit because
judicial review of a district's rule or order. However, where, of “disproportionate taking” or similar standard. As material
as here, the ruling of a district is challenged on the ground herein, the rule provides in part:
that it did not have the authority to revoke a well permit or
refuse to issue a well permit for the purpose of disallowing a
disproportionate amount of water to be pumped as it related
to the tract size, our review of this question of law is de novo. RULE 8—MINIMUM SPACING OF WELLS
Matter of Humphreys, 880 S.W.2d 402, 404 (Tex.1994).
(a) Wells to be drilled after the effective date of these rules
Accordingly, the first ground of the District is not applicable.
shall be spaced as follows:

By its second ground, the District contended that it “complied A well to be equipped with a four-inch or smaller pump
with state groundwater statutes and local district rules shall be located at least 200 yards from the nearest well
in rendering the decisions which are now challenged....” or authorized well site; a well to be equipped with a five-

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South Plains Lamesa Railroad, Ltd. v. High Plains..., 52 S.W.3d 770 (2001)

inch pump shall be located at least 250 yards from the permit and denying the other application for a well permit was
nearest well or authorized well site; a well to be equipped improper.
with a six-inch pump shall be located at least 300 yards
from the nearest well or authorized well site; a well to Moreover, the action of the District prohibiting “a
be equipped with an eight-inch pump shall be located at disproportionate amount of water *779 to be pumped as it
least 400 yards from the nearest well or authorized well relates to tract size” was not otherwise authorized by statute
site; and a well to be equipped with a ten-inch or larger because (1) such authority was not clearly authorized by
pump shall be located at least 440 yards from the nearest the Legislature, (2) the statute did not provide reasonable
well or authorized well site. An authorized well site is standards to guide the District in exercising its powers, (3) the
not a permit to drill. An authorized well site shall be: District was not authorized to deny a permit to prohibit the
pumping of a disproportionate amount of water to be pumped
(1) The location of a proposed well on an application as it relates to tract size based upon its alleged discretionary
duly filed until such application is denied; or power.

(2) The location of a proposed well on a valid permit.

Not Clearly Authorized
***
[13] [14] Following the decisions of the Supreme Court
(b) It is contemplated that the pumps of the respective sizes
in Sipriano v. Great Spring Waters of America, 1 S.W.3d 75
set out above shall refer to the inside diameter of the pump
(Tex.1999) and Barshop v. Medina Under. Wat. Cons. Dist.,
column pipe and shall produce water at the ordinary or
925 S.W.2d 618 (Tex.1996), it is firmly established that (1)
usual pumping rates of pumps of such sizes. The ordinary
the common law rule of capture that an owner has the right
or usual pumping rates of such pumps are to be regarded
to withdraw underground percolating water is not correlative
as follows:
but is “absolute,” and is not subject to the reasonable use rule
adopted by some other jurisdictions, remains the law in Texas,
*** and (2) as provided by section 59, article XVI of the Texas
Constitution adopted in 1917, that groundwater regulation is
If the pump which is to be used by the applicant is of a
a duty imposed on the Legislature. 6 The need for legislative
different size or type, or is to be operated at a different
regulation of water continues to be recognized. Sipriano,
rate in gallons per minute from the pumps in general use
1 S.W.3d at 79. Even though the Legislature has declared
as set out above, such facts shall be made known in the
that groundwater districts are the State's preferred method of
application; and in such case, the actual rate at which the
groundwater management, we must review the Water Code to
well is to be pumped shall be the determining factor in the
determine if the Legislature has clearly authorized the action
spacing for such well instead of the size of the pump. A
of the District.
pump to be operated against an artificial head in a closed
or semi-closed system shall be given special consideration.
[15] In Tri–City Fresh Water Supply Dist. No. 2 v. Mann,
135 Tex. 280, 142 S.W.2d 945, 948 (1940), the Court held
*** that a district “can exercise no authority that has not been
clearly granted by the Legislature.” The clearly granted test
The rule contains no provisions that would authorize
was reaffirmed in Quincy Lee Company v. Lodal & Bain
the denial of a permit because a well would produce a
Engineers, 602 S.W.2d 262, 264 (Tex.1980). Accordingly,
disproportionate amount of water from the land on which the
we presume that the applicable Water Code provisions were
proposed well is located and does not establish a minimum
enacted by the Legislature with complete knowledge of the
tract size. Further, if the proposed well site meets the
rule that any authority granted to a district must be clearly
minimum distance requirement between wells, the size of the
granted. Acker v. Texas Water Com'n, 790 S.W.2d 299, 301
tract and its shape or dimensions are irrelevant for purposes of
(Tex.1990).
Rule 8. Accordingly, because the application complied with
the spacing rule, the District's action in revoking the well
The action of the District to prevent the pumping of a
disproportionate amount of water as it relates to the tract size

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South Plains Lamesa Railroad, Ltd. v. High Plains..., 52 S.W.3d 770 (2001)

is contrary to the rule of capture as applied to underground code sections mention regulations to prevent waste, control
water in Texas law as established by East, 81 S.W. at 279, subsidence, or avoid reduction of artesian pressure, but none
and its progeny, and also prohibited by section 36.002. 7 of the sections authorize a rule creating a “reasonable use”
Moreover, although section 36.101 authorizes the District rule or address the issue of disproportionate production of
to make rules to control subsidence or prevent waste of water as it relates to tract size. We recognize that the last
groundwater, and section 36.116 authorizes the District clause of section 36.002, which provides that the announced
to provide for spacing of water wells and regulation of public policy is “subject to rules promulgated by a district,” is
production of wells for the four purposes stated in the nevertheless ineffective to authorize the action of the District
section, these sections do not clearly authorize the District to deny and revoke well permits in order to prevent the
to revoke or deny a well permit to prohibit the production production of a disproportionate amount of water as it relates
of a disproportionate amount of groundwater as it relates to to tract size because the subject is not mentioned in any
the tract size. Because the right to withdraw underground of the sections authorizing regulations, and the statute does
percolating water is not correlative, but is “absolute,” and not establish reasonable standards to guide the agency in
the Legislature has not enacted a “reasonable use” rule exercising its rule making power as applied to the expressed
as exists in other jurisdictions, Barshop, 925 S.W.2d at public policy favoring the rule of capture.
625, and considering that by section 36.002, the Legislature
provided that nothing in the Code shall deprive or divest the
owners of groundwater of their ownership rights, we hold Section 36.002 Requires Rule
that the applicable Code provisions do not clearly authorize
the District to enact a regional rule to *780 prohibit the [20] Moreover, the decision of the District based on
production of a disproportionate amount of groundwater as it discretion vested “in a groundwater District by the Legislature
relates to the size of the tract or to implement a reasonable to regulate a natural resource” does not support the action of
use rule. the District. The District does not cite any specific section of
the Water Code granting such discretionary powers and we
have found none. Further, under section 36.002, which, as
applicable to groundwater, prevails over any other provision
No Reasonable Standards
in the Water Code to the contrary, groundwater ownership
[16] [17] [18] In Texas, legislative power is defined rights are “subject to rules,” but the section does not
broadly and includes the power to set public policy. FM make groundwater ownership rights subject to discretionary
Properties Operating v. City of Austin, 22 S.W.3d 868, 873 decisions of the District.
(Tex.2000). Article XVI Section 59 of the Texas Constitution
charged the Legislature with the duty of groundwater [21] As above discussed, the source of the District's
conservation and authorized the creation of districts to have authority is legislative action and the District has no power
“the authority to exercise such rights, privileges and functions that is not clearly granted by the Legislature. Mann, 142
concerning the subject matter of this amendment as may S.W.2d at 948. Section 36.101 *781 gives the District
be conferred by law.” By section 36.002, the Legislature the discretion to promulgate rules under the procedure that
announced the state wide public policy regarding the rule of is also prescribed by the Legislature, but neither section
capture as applied to groundwater. It is important to note that 36.101 nor section 36.002 define the term “rule” as applicable
none of the applicable code provisions make any reference here. 9 As applied to section 36.002, we conclude that the
to the size of the tract upon which a proposed well is to be word rule contemplates an established standard prescribing
located or address the issue of production of disproportionate a guide for conduct, regulation or principle that does not
8 include discretionary acts of the District Board. Black's
volumes of water as it relates to tract size. This omission is
significant because omissions are presumed to be intentional. Law Dictionary, 1331 (6th ed.1990). Because section 36.002
Matter of Ament, 890 S.W.2d 39, 41 (Tex.1994). requires that regulation of groundwater ownership rights must
be by rule promulgated by the District, not discretionary
[19] Although the Legislature may delegate powers to the decisions, the District did not have the authority to implement
District to carry out legislative purposes, it must establish such regulation without a rule adopted after public notice
reasonable standards to guide the District in exercising those and public hearing are required by Section 36.101(b). We
powers. FM Properties Operating, 22 S.W.3d at 873. Several

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conclude that the action of the District cannot be supported severed and the cause is remanded to the trial court for its
on the ground of its alleged discretion. determination and rendition of judgment in accordance with
this opinion and its determination of the severed question.
[22] We have not overlooked the District's argument that its
action was proper under sections 36.113(d)(2) and 36.1131(b)
(8). However, section 36.113(d)(2) is not applicable because
QUINN, J., concurring.
it is concerned with the proposed use of water and not the size
of the tract where the well is located. Also, section 36.113(d) QUINN, Justice, concurring.
(2) does not apply because water withdrawal may be limited I join in the judgment rendered by the majority and concur
to prevent waste, but prevention of waste was not the basis in that portion of the opinion discussing the Conservation
of the District's actions. Further, these sections cited by the District's deviation from Rule 8. So too do I write to
District clearly do not authorize it to revoke or deny a well say that the actions of an administrative body must be
permit because such a well would allow a disproportionate reasonable to survive judicial review. Implicit in this standard
amount of water to be pumped as it relates to the tract size of reasonableness lies the concept of prior notice or what
and the well spacing regulations as they relate to gallons per some would call fundamental fairness.
minute as set by the spacing rules. Accordingly, we hold
that the District's second ground will not support summary Admittedly, administrative bodies may regulate on an ad
judgment, and issues one, three, and four of the Kitten Trust hoc or case-by-case basis. Securities & Exchange Comm'n
and South Plains are sustained. Our sustension of these issues v. Chenery Corp., 332 U.S. 194, 202, 67 S.Ct. 1575, 1580,
pretermits consideration of their second issue. 91 L.Ed. 1995 (1947); Southwestern Bell Tel. Co. v. Public
Utility Comm'n, 745 S.W.2d 918, 926 (Tex.App.—Austin
[23] As was also presented in Barshop, 925 S.W.2d at 637, 1988, writ denied); Madden v. Texas Bd. Chiropractic
the final matter which we must address is the trial court's Examiners, 663 S.W.2d 622, 626 (Tex.App.—Austin 1983,
award of attorney's fees to the District under section 37.009 writ ref'd n.r.e.). Despite that power, however, those
of the Texas Civil Practice and Remedies Code, which may appearing before the administrative body must be afforded
be awarded or denied in accordance with the discretion of prior notice of the issues of fact and law which will
the trial court. Oake v. Collin County, 692 S.W.2d 454, 455 control the result to be reached by the body. Madden v.
(Tex.1985). Here, by its motion for summary judgment, the Texas Bd. Chiropractic Examiners, 663 S.W.2d at 626
District also sought an award of attorney's fees and the trial (imposing, ad hoc, a requirement restricting the practice
court's order granted the motion for summary judgment and of chiropractic medicine to those who have graduated
awarded $9,500 in attorney's fees. As in Barshop, because from an accredited institution). Violating the latter principle
this award may no longer be valid, and because the award of contravenes fundamental fairness and renders the agency
attorney's fees in declaratory judgment actions is within the decision arbitrary and unreasonable. Id. at 626-27. In short,
discretion of the trial court, we remand this cause to the trial an administrative body cannot say that factors A, B, and C
court for it to consider and exercise its discretion regarding determine a particular result and then interject factor D once
attorney's fees, if any, which should be awarded to the parties the proceeding has begun.
in the underlying case.
As expressed in the majority opinion at bar, Rule 8 said
In conclusion, rendering judgment the trial court should have nothing about a minimum number of acres needed to obtain
rendered, the judgment of the trial court signed January 18, particular well permits. So, to use that factor as a basis to
2000, is reversed and the motion for summary judgment of revoke a permit already issued and deny another application
the Kitten Trust and South Plains is granted. It is further pending issuance constitutes a deprivation of fundamental
ordered that the actions of the District in revoking the Kitten fairness. That is, the Kitten Family Living Trust and South
Trust application permit no. 8149–A and the denial of South Plains Lamesa Railroad, Ltd. were entitled to prior notice
Plains's water well application permit no. 8209 are hereby of the facts and law which would control the Conservation
declared to be null and void because such acts were in excess District's ultimate decision. Those two entities being denied
of the lawful authority of the District. That portion of the that entitlement by the District, the latter's decision cannot
judgment regarding whether attorney's fees and costs should stand. Madden v. Texas Bd. Chiropractic Examiners, supra.
be awarded *782 to either party and the amount thereof is

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 7
South Plains Lamesa Railroad, Ltd. v. High Plains..., 52 S.W.3d 770 (2001)

For the foregoing reason, I concur in the judgment of the
majority.

Footnotes
1 Unless otherwise designated all references are to the Texas Water Code Annotated (Vernon 2000).
2 Uncontroverted by the District.
3 Rule 166a(c) of the Texas Rules of Civil Procedure provides that a motion for summary judgment shall state the specific grounds
therefor.
4 Ad hoc. For this special purpose. Black's Law Dictionary 41 (6th ed.1990).
5 See Tex. Gov't Code Ann. § 2001.003(7) (Vernon 2000).
6 Because the rule of capture applies only to groundwater, our analysis will be limited to chapter 36 entitled Groundwater Districts.
7 Section 36.002 provided in part “and nothing in this code shall be construed as depriving or divesting the owners ... of their ownership
or rights....”
8 The action of the District was based on its decision to prohibit the production of volumes of water that it considered to be a
disproportionate amount of water from the strip of land on which it is located. However, because the District does not cite any code
provision or other authority or commentary supporting such a test it appears to be an attempt to apply a “reasonable use” rule.
9 The Administrative Procedure and Practice Act does not apply because the District is not a statewide agency. Section 2001.003(7).

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 8
Santoya v. Pereda, 75 S.W.3d 487 (2002)

capacity as County Auditor of Maverick County, Texas
(“Pereda”). The summary judgment was granted based on the
75 S.W.3d 487
trial court's finding that Pereda did not abuse his discretion in
Court of Appeals of Texas,
refusing to pay the increased salaries to Santoya and Iracheta
San Antonio.
set forth in a Compromise and Settlement Agreement between
Leonard SANTOYA, in his capacity as Justice of the Santoya, Iracheta, and the Commissioners' Court of Maverick
Peace for Precinct 1 of Maverick County, and Cesar County, Texas (“Commissioners' Court”). We reverse the
Iracheta, in his capacity as Justice of the Peace for trial court's judgment and render judgment ordering Pereda to
pay Santoya and Iracheta in accordance with the terms of the
Precinct 3 of Maverick County, Texas, Appellants,
settlement agreement.
v.
Carlos A. PEREDA, Jr., in his capacity as County
Auditor of Maverick County, Texas, Appellee.
BACKGROUND
No. 04–00–00825–CV. | Jan. 16, 2002. |
In 1999, the Commissioners' Court raised the salaries of
Rehearings Overruled Feb. 11 and March 18, 2002.
Santoya and Iracheta to $13,000; however, it raised the
County employees petitioned for writ of mandamus to salaries of two other justices of the peace to $23,000. The
compel county auditor to compensate them in accordance Commissioners' Court justified the salary differential based
with settlement agreement they entered into with county on the greater amount of revenue collected by the other two
commissioners' court. The 365th Judicial District Court, justices from traffic fines. Although Santoya and Iracheta
Maverick County, Amado J. Abascal, III, J., granted summary sought a hearing before the salary grievance committee, 1
judgment for county auditor. Employees appealed. The Court the salary grievance committee determined that the notice
of Appeals, Alma L. Lopez, J., held that incorporation of provided by Santoya and Iracheta was untimely and refused
terms of settlement agreement into court decree was not to grant them a hearing.
prerequisite to enforceability of agreement.
After unsuccessfully attempting to resolve the dispute
Reversed and rendered. without litigation, Santoya and Iracheta filed suit against
the Commissioners' Court alleging that the Commissioners'
Karen Angelini, J., filed dissenting opinion. Court had acted illegally in basing their compensation on
the amount of traffic fines they collected. After the lawsuit
was filed, the county judge was informed by the attorney
Attorneys and Law Firms
general's office that the Texas Transportation Code prohibits
*488 David Riojas, Javier Riojas, Texas Rural Legal Aid, basing the compensation of justices *489 of the peace on
Inc., Eagle Pass, for appellants. the amount of revenue generated in traffic fines. 2 In view
of that information, the Commissioners' Court voted to settle
Alejandra I. Villarreal, Ron H. Mata, Wickliff & Hall, P.C., their dispute with Santoya and Iracheta. A letter agreement
San Antonio, for appellee. dated November 19, 1999, was signed by the attorneys for
the parties, documenting a settlement agreement that had been
Sitting: ALMA L. LÓPEZ, Justice, CATHERINE STONE,
reached on November 17, 1999.
Justice, KAREN ANGELINI, Justice.

Opinion In accordance with the terms of the settlement agreement,
Santoya and Iracheta filed a motion to dismiss their lawsuit on
Opinion by: ALMA L. LÓPEZ, Justice. November 22, 1999. On November 24, 1999, the trial court
entered an order dismissing the lawsuit with prejudice, noting
Leonard Santoya, in his capacity as Justice of the Peace “the Court having been fully informed in the premises finds
for Precinct 1 of Maverick County (“Santoya”) and Cesar that all things in controversy having been fully comprised and
Iracheta, in his capacity as Justice of the Peace for Precinct settled by and between the parties.” On January 14, 2000, the
3 of Maverick County, Texas (“Iracheta”) appeal a summary trial court signed the compromise and settlement agreement
judgment granted in favor of Carlos A. Pereda, Jr., in his containing the terms of the settlement stating “IT IS SO

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Santoya v. Pereda, 75 S.W.3d 487 (2002)

ORDERED, ADJUDGED AND DECREED.” On February The party moving for summary judgment carries the burden
1, 2000, the trial court signed an order vacating its January of establishing that no material fact issue exists and that it
14, 2000, order because it had lost plenary jurisdiction on is entitled to judgment as a matter of law. *490 Rhone–
December 24, 1999. Poulenc, Inc. v. Steel, 997 S.W.2d 217, 223 (Tex.1999).
When reviewing a summary judgment, we take as true
On March 7, 2000, Pereda, without the authority of the all evidence favorable to the nonmovant. Id. We indulge
Commissioners' Court, informed Santoya and Iracheta that every reasonable inference and resolve any doubts in the
the salary paid based on the settlement agreement was not nonmovant's favor. Id.
authorized because the trial court vacated its order. When
Santoya and Iracheta did not reimburse the county for the [3] [4] When competing motions for summary judgment
alleged “overpayment,” Pereda deducted the “overpayment” are filed, and one is granted and the other denied, the
from their subsequent payroll checks. reviewing court must review the summary judgment evidence
presented by both sides and determine all questions presented.
Santoya and Iracheta filed a petition for writ of mandamus in Commissioners Court of Titus County v. Agan, 940 S.W.2d
the trial court seeking to compel Pereda to compensate them 77, 81 (Tex.1997). We are required to consider all summary
in accordance with the terms of the settlement agreement. judgment grounds the trial court ruled on and the movant
Pereda filed a motion for summary judgment, asserting preserved for appellate review that are necessary for final
that because Santoya and Iracheta did not have a valid disposition of the appeal. Cincinnati Life Ins. Co. v. Cates,
district court order setting aside the budgeted salaries or a 927 S.W.2d 623, 626 (Tex.1996).
salary grievance recommendation increasing their salaries,
their entitlement to the increased salaries was not clearly
established. Pereda testified in his deposition that his duty
DISCUSSION
to pay the increased salaries would have been clearly
established if the trial court's order stating that the terms [5] [6] Mandamus relief is available if a plaintiff proves
of the compromise and settlement agreement are “ordered, that he is entitled to payment as a matter of law and
adjudged and decreed” had not been set aside. Santoya an auditor withholds payment without legal justification.
and Iracheta filed a counter motion for summary judgment Smith v. McCoy, 533 S.W.2d 457, 460 (Tex.Civ.App.-Dallas
and provided affidavits establishing that the Commissioners' 1976, writ dism'd); Ham v. Garvey, 155 S.W.2d 976, 977
Court considered itself bound by the settlement agreement (Tex.Civ.App.-San Antonio 1941, no writ). Pereda contends
and that Pereda was acting without the authority or consent that he had a legal justification for withholding payment
of the Commissioners' Court. The trial court granted Pereda's because the salary increases were not approved by the salary
summary judgment finding that Pereda “did not abuse his grievance committee or court order. However, Pereda does
discretion in refusing to pay the increased salaries.” not cite any legal authority to support his position that the
Commissioners' Court did not have the authority to settle a
pending lawsuit involving a claim regarding the illegality of
STANDARD OF REVIEW the court's action in setting a salary.

[1] [2] A writ of mandamus will issue to compel a public [7] Clearly, a commissioners' court has the general authority
official to perform a ministerial act. Anderson v. City of Seven to settle pending lawsuits. See TEX. LOCAL GOV'T CODE
Points, 806 S.W.2d 791, 793 (Tex.1991). An act is ministerial ANN. 115.021 (Vernon 1999); County of Bexar v. Garcia,
when the law clearly spells out the duty to be performed by 974 S.W.2d 107, 109 (Tex.App.-San Antonio 1998, no pet.)
the official with sufficient certainty that nothing is left to the (noting possibility of settlement by commissioners' court as
exercise of discretion. Id. A writ of mandamus generally will reason for presentment requirement); Op. Tex. Att'y Gen. No.
not issue to compel a public official to perform an act which LO–98–103 (1998) (noting authority of commissioners' court
involves an exercise of discretion. Id. However, this rule is not to settle lawsuit). If this were not the case, a county, which
without exception-a writ of mandamus may issue in a proper can act only through its commissioners' court, would never be
case to correct a clear abuse of discretion by a public official. able to resolve litigation through settlement. Nueces County
Id. v. De Pena, 953 S.W.2d 835, 836 (Tex.App.-Corpus Christi
1997, no pet.).

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Santoya v. Pereda, 75 S.W.3d 487 (2002)

Pereda's position appears to be that in the absence of a formal Dissenting opinion by: KAREN ANGELINI, Justice.
order by a trial court adopting the provisions of a settlement I respectfully dissent.
agreement entered into by a county, the settlement agreement
does not establish the legal right to payment thereunder. A mandamus cannot issue to compel an official to perform
However, a trial court has discretion in incorporating the a discretionary act. Anderson v. City of Seven Points, 806
terms of a settlement agreement into a final decree. TEX. CIV. S.W.2d 791, 793 (Tex.1991). Because County Auditor Carlos
PRAC. & REM.CODE ANN. 154.071(b) (Vernon 1999). A. Pereda, Jr. was performing a discretionary act when he
The incorporation of the terms of the settlement agreement refused to pay the increased salaries to Leonard Santoya and
into a court decree is not a prerequisite to the enforceability Cesar Iracheta, I would affirm the judgment of the trial court.
of the agreement. TEX. CIV. PRAC. & REM.CODE ANN.
154.071(a) (Vernon 1999). The settlement agreement was Section 112.006 of the Texas Local Government Code grants
legally enforceable when the parties reached a settlement the county auditor “general oversight of the books and
and executed the written agreement. Id. Furthermore, the records” of county offices and charges the auditor with the
trial court impliedly adopted and approved the terms of the “strict enforcement of the law governing county finances.”
settlement agreement on November 24, 1999, by dismissing TEX. LOC. GOV'T CODE ANN.. § 112.006 (Vernon 1999).
the lawsuit filed by Santoya and Iracheta based on the terms “In a county with a county auditor, the county treasurer and
and conditions of the settlement agreement. The trial court's the county depository may not pay a check or warrant unless
order vacating its subsequent signature on the final settlement it is countersigned by the county auditor to validate it as
agreement does not vacate its initial action dismissing the a proper and budgeted item of expenditure.” Id. § 113.043
underlying lawsuit based on the terms and conditions of (emphasis added). Further, section 113.064 mandates,
the parties' settlement agreement, thereby recognizing the
(a) In a county that has the office of county auditor, each
validity of that agreement.
claim, bill, and account against the county must be filed
in sufficient time for the auditor to examine and approve
[8] Chapter 152 of the Texas Local Government Code
it before the meeting of the commissioners court. A claim,
establishes the general procedure for setting salaries of
bill, or account may not be allowed or paid until it has been
elected *491 officials through the budgetary process. No
examined and approved by the auditor.
provision in chapter 152 precludes a commissioners' court
from resolving litigation involving the legality of a salary (b) The auditor shall stamp each approved claim, bill, or
in a peaceable manner. In fact, such a provision would be account. If the auditor considers it necessary, the auditor
directly contrary to the state's policy of encouraging the may require that a claim, bill, or account be verified by an
peaceable resolution of disputes and the early settlement of affidavit indicating its correctness.
pending litigation through voluntary settlement procedures.
TEX. CIV. PRAC. & REM.CODE ANN. 154.002 (Vernon Id. § 113.064(a)-(b) (emphasis added). “The county auditor
1999); Elbaor v. Smith, 845 S.W.2d 240, 250 (Tex.1992). may not audit or approve a claim unless the claim was
Accordingly, Pereda failed to conclusively establish a legal incurred as provided by law.” Id. § 113.065. Thus, pursuant
justification for withholding payment. Since Santoya and to the Texas Local Government Code, “the approval of
Iracheta established their entitlement to payment as a matter the auditor is a condition precedent to the exercise of the
of law, they were entitled to mandamus relief. commissioners court's authority to order payment of claims.”
Smith v. McCoy, 533 S.W.2d 457, 459 (Tex.Civ.App.-Dallas
1976, writ dism'd) (citing Anderson v. Ashe, 99 Tex. 447, 90
S.W. 872, 873 (1906)). This statutory authority granted to the
CONCLUSION
auditor creates “a delicate system of checks and balances”
The trial court's order is reversed. Judgment is rendered to protect the county's funds. Id. While the commissioners
ordering Pereda to pay Santoya and Iracheta in accordance court has the authority to expend county funds, it may not
with the terms of the settlement agreement between the do so without the approval of the auditor “whose approval
Commissioners' Court, Santoya and Iracheta. may not be arbitrarily withheld.” Id. Likewise, the auditor
has no authority to order the expenditure of county funds
without the approval of the *492 commissioners court. Id.

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Santoya v. Pereda, 75 S.W.3d 487 (2002)

see also id. No. JC–0147 (1999) (“The salaries of employees
“[T]hese statutory requirements make the approval of a claim
and non-elected county officers may be changed by a budget
against the county (or a payment thereof) a discretionary
amendment at any time, while the salaries of elected officers
act of the auditor rather than a mere ministerial act.” Id.
may be changed only once a year, ‘during the regular budget
“To hold [otherwise] would remove one of the safeguards
hearing and adoption proceedings.’ ”). Santoya and Iracheta's
in this system of checks and balances and would permit
increase in salary was not adopted through the budget process.
a commissioners court to disburse county funds without
restraint.” Id.
Besides chapter 152, the only other means of increasing the
salary of an elected official is through an order by a district
In the instant case, the auditor withheld his approval based
court. See TEX. CONST. art. V, § 8 (“The District Court shall
on his reading of chapter 152 of the Texas Local Government
have appellate jurisdiction and general supervisory control
Code and article V, section 8 of the Texas Constitution.
over the County Commissioners Court…”). On November
Section 152.011 of the Texas Local Government Code
22, 1999, Santoya and Iracheta filed a motion to dismiss
mandates that the commissioners court shall set the amount
their lawsuit against the commissioners court with prejudice,
of the compensation for county and precinct officers. TEX.
informing the trial court that the parties had settled. The trial
LOC. GOV'T CODE ANNN § 152.011 (Vernon 1999).
court dismissed the lawsuit on November 24, 1999. After the
Section 152.013 describes the procedure for setting amounts
trial court lost plenary power, it signed an order approving
of compensation for elected officers:
the settlement agreement. On February 1, 2000, it vacated
(a) Each year the commissioners court shall set the salary, this order, noting that it had no authority to sign the order.
expenses, and other allowances of elected county or Therefore, there is no court order directing *493 Pereda
precinct officers. The commissioners court shall set the that Santoya and Iracheta's claim was valid. All that was
items at a regular meeting of the court during the regular established as a matter of law was that the commissioners
budget hearing and adoption proceedings. court had entered into a settlement agreement. However, the
commissioners court does not have authority to unilaterally
(b) Before the 10th day before the date of the meeting, increase the salary of an elected official. See TEX. LOC.
the commissioners court must publish in a newspaper of GOV'T CODE ANN.. §§ 113.043, 113.064 (Vernon 1999);
general circulation in the county a notice of: Smith, 533 S.W.2d at 459. As such, Santoya and Iracheta did
not establish the validity of their claim as a matter of law. See
(1) any salaries, expenses, or allowances that are
Smith, 533 S.W.2d at 460 (“[W]hen a plaintiff proves that he
proposed to be increased; and
is entitled to payment as a matter of law, and, when there is
(2) the amount of the proposed increases. no legal justification for the auditor withholding approval of
the claim or payment thereof, mandamus will lie.”) (emphasis
(c) Before filing the annual budget with the county clerk, added). When presented with a difficult legal question, an
the commissioners court shall give written notice to each auditor acts within his official discretion to deny a claim and
elected county and precinct officer of the officer's salary to require that its validity be established in a court of law. See
and personal expenses to be included in the budget. id. at 459–60. I would hold that Pereda, faced with a difficult
legal question, was acting within his discretion. As such, the
Id. § 152.013. 1 The Attorney General has interpreted this trial court properly granted summary judgment in favor of
section to require that salaries of elected county and precinct Pereda.
officers be set during the regular budget hearing. “It is clear
that since the county attorney is an elected official, the salary For the above reasons, I dissent and would affirm the
for that office may be considered and adopted only during the judgment of the trial court.
regular, annual budget hearing and adoption proceedings.”
Op. Tex. Att'y Gen. No. JM–839 (1988) (emphasis added);

Footnotes
1 See TEX. LOCAL GOV'T CODE ANN. § 152.016 (Vernon 1999).
2 See TEX. TRANSP. CODE ANN. § 720.002 (Vernon 1999).

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Santoya v. Pereda, 75 S.W.3d 487 (2002)

1 Additionally, section 152.016 outlines the procedure for an elected county or precinct officer to complain about the setting of his or
her salary to the Salary Grievance Committee. TEX. LOC. GOV'T CODE ANN. . § 152.016 (Vernon 1999). Appellants' request for
a hearing before the Salary Grievance Committee was denied for being untimely.

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
Securities and Exchange Commission v. Chenery Corp., 332 U.S. 194 (1947)
69 P.U.R.(NS) 65, 67 S.Ct. 1575, 91 L.Ed. 1995

acted. We therefore directed that the case be remanded to
the Commission for such further proceedings as might be
67 S.Ct. 1575
appropriate. On remand, the Commission reexamined the
Supreme Court of the United States
problem, recast its rationale and reached the same result. The
SECURITIES AND EXCHANGE COMMISSION issue now is whether the Commission's action is proper in
v. light of the principles established in our prior decision.
CHENERY CORPORATION et al.
When the case was first here, we emphasized a simple
SAME but fundamental rule of administrative law. That rule is
v. to the effect that a reviewing court, in dealing with a
FEDERAL WATER & GAS CORPORATION. determination or judgment which an administrative agency
alone is authorized to make, must judge the propriety of such
Nos. 81 and 82. | Argued Dec. 13— action solely by the grounds invoked by the agency. If those
16, 1946. | Decided June 23, 1947. | grounds are inadequate or improper, the court is powerless
Rehearing Denied Oct. 13, 1947. See 68 S.Ct. 26. to affirm the administrative action by substituting what it
considers to be a more adequate or proper basis. To do so
Separate petitions by Chenery Corporation and others and
would propel the court into the domain which Congress has
by the Federal Water & Gas Corporation to review an order
set aside exclusively for the administrative agency.
of the Securities and Exchange Commission disapproving an
amendment to reorganization plan. A judgment of the United We also emphasized in our prior decision an important
States Court of Appeals, District of Columbia, reversed corollary of the foregoing rule. If the administrative action
the order, 154 F.2d 6, and the Securities and Exchange is to be tested by the basis upon which it purports to rest,
Commission brings certiorari. that basis must be set forth with such clarity as to be
understandable. It will not do for a court to be compelled
Judgment reversed. *197 to guess at the theory underlying the agency's action;
nor can a court be expected to chisel that which must be
Mr. Justice FRANKFURTER and Mr. Justice JACKSON precise from what the agency has left vague and indecisive.
dissenting. In other words, ‘We must know what a decision means before
the duty becomes ours to say whether it is right or wrong.’
On Writs of Certiorari to the United States Court of Appeals United States v. Chicago, M., St. P. & P.R. Co., 294 U.S. 499,
for the District of Columbia. 511, 55 S.Ct. 462, 467, 79 L.Ed. 1023.

**1578 Applying this rule and its corollary, the Court
Attorneys and Law Firms was unable to sustain the Commission's original action.
The Commission had been dealing with the reorganization
**1577 Mr. *195 Roger S. Foster, of Philadelphia, Pa., for
of the Federal Water Service Corporation (Federal), a
petitioner.
holding company registered under the Public Utility Holding
Mr. *196 Spencer Gordon, of Washington, D.C., for Company Act of 1935, 49 Stat. 803, 15 U.S.C.A. s 79 et
Chenery Corporation and others. seq. During the period when successive reorganization plans
proposed by the management were before the Commission,
Mr. Allen S. Hubbard, of New York City, for Federal Water the officers, directors and controlling stockholders of Federal
& Gas Corporation. purchased a substantial amount of Federal's preferred stock on
the over-the-counter market. Under the fourth reorganization
Opinion plan, this preferred stock was to be converted into common
stock of a new corporation; on the basis of the purchases of
Mr. Justice MURPHY delivered the opinion of the Court.
preferred stock, the management would have received more
This case is here for the second time. In S.E.C. v. Chenery than 10% of this new common stock. It was frankly admitted
Corporation, 318 U.S. 80, 63 S.Ct. 454, 87 L.Ed. 626, we that the management's purpose in buying the preferred stock
held that an order of the Securities and Exchange Commission was to protect its interest in the new company. It was also
could not be sustained on the grounds upon which that agency

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Securities and Exchange Commission v. Chenery Corp., 332 U.S. 194 (1947)
69 P.U.R.(NS) 65, 67 S.Ct. 1575, 91 L.Ed. 1995

plain that there was no fraud or lack of disclosure in making provide *199 for the issuance of now common stock of
these purchases. the reorganized company. This stock was to be distributed
to the members of Federal's management on the basis of the
But the Commission would not approve the fourth plan so shares of the old preferred stock which they had acquired
long as the preferred stock purchased by the management was during the period of reorganization, thereby placing them in
to be treated on a parity with the other preferred stock. It felt the same position as the public holders of the old preferred
that the officers and directors of a holding company in process stock. The intervening members of Federal's management
of reorganization under the Act were fiduciaries and were joined in this request. The Commission denied the application
under a duty not to trade in the securities of that company in an order issued on February 7, 1945. Holding Company
during the reorganization period. 8 S.E.C. 893, 915-921. And Act Release No. 5584. That order was reversed by the Court
so the plan was amended to provide that the preferred stock of Appeals, 154 F.2d 6, which felt that our **1579 prior
acquired by the management, unlike that held by others, decision precluded such action by the Commission.
was not to be converted *198 into the new common stock;
instead, it was to be surrendered at cost plus dividends The latest order of the Commission definitely avoids the
accumulated since the purchase dates. As amended, the plan fatal error of relying on judicial precedents which do not
was approved by the Commission over the management's sustain it. This time, after a thorough reexamination of the
objections. 10 S.E.C. 200. problem in light of the purposes and standards of the Holding
Company Act, the Commission has concluded that the
The Court interpreted the Commission's order approving this proposed transaction is inconsistent with the standards of ss 7
amended plan as grounded solely upon judicial authority. and 11 of the Act. It has drawn heavily upon its accumulated
The Commission appeared to have treated the preferred stock experience in dealing with utility reorganizations. And it has
acquired by the management in accordance with what it expressed its reasons with a clarity and thoroughness that
thought were standards theretofore recognized by courts. If it admit of no doubt as to the underlying basis of its order.
intended to create new standards growing out of its experience
in effectuating the legislative policy, it failed to express itself The argument is pressed upon us, however, that the
with sufficient clarity and precision to be so understood. Commission was foreclosed from taking such a step
Hence the order was judged by the only standards clearly following our prior decision. It is said that, in the absence
invoked by the Commission. On that basis, the order could of findings of conscious wrongdoing on the part of Federal's
not stand. The opinion pointed out that courts do not impose management, the Commission could not determine by an
upon officers and directors of a corporation any fiduciary order in this particular case that it was inconsistent with the
duty to its stockholders which precludes them merely because statutory standards to permit Federal's management to realize
they are officers and directors, from buying and selling the a profit through the reorganization purchases. All that it could
corporation's stock. Nor was it felt that the cases upon which do was to enter an order allowing an amendment to the plan so
the Commission relied established any principles of law or that the proposed transaction could be consummated. Under
equity which in themselves would be sufficient to justify this this view, the Commission would be free only to promulgate
order. a general rule *200 outlawing such profits in future utility
reorganizations; but such a rule would have to be prospective
The opinion further noted that neither Congress nor the in nature and have no retroactive effect upon the instant
Commission had promulgated any general rule proscribing situation.
such action as the purchase of preferred stock by Federal's [1] We reject this contention, for it grows out of
management. And the only judge-made rule of equity which a misapprehension of our prior decision and of the
might have justified the Commission's order related to fraud Commission's statutory duties. We held no more and no less
or mismanagement of the reorganization by the officers than that the Commission's first order was unsupportable
and directors, matters which were admittedly absent in this for the reasons supplied by that agency. But when the case
situation. left this Court, the problem whether Federal's management
should be treated equally with other preferred stockholders
After the case was remanded to the Commission, Federal
still lacked a final and complete answer. It was clear that
Water and Gas Corp. (Federal Water), the surviving
the Commission could not give a negative answer by resort
corporation under the reorganization plan, made an
to prior judicial declarations. And it was also clear that the
application for approval of an amendment to the plan to
Commission was not bound by settled judicial precedents in

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Securities and Exchange Commission v. Chenery Corp., 332 U.S. 194 (1947)
69 P.U.R.(NS) 65, 67 S.Ct. 1575, 91 L.Ed. 1995

a situation of this nature. 318 U.S. at page 89, 63 S.Ct. at page no general rule or regulation covering the matter would be
460, 87 L.Ed. 626. Still unsettled, however, was the answer unjustified.
the Commission might give were it to bring to bear on the
facts the proper administrative and statutory considerations, [3] It is true that our prior decision explicitly recognized the
a function which belongs exclusively to the Commission possibility that the Commission might have promulgated a
in the first instance. The administrative process had taken general rule dealing with this problem under its statutory rule-
an erroneous rather than a final turn. Hence we carefully making powers, in which case the issue for our consideration
refrained from expressing any views as to the propriety of an would have been entirely different from that which did
order rooted in the proper and relevant considerations. See confront us. 318 U.S. at pages 92, 93, 63 S.Ct. at pages
Siegel v. Federal Trade Commission, 327 U.S. 608, 613, 614, 461, 462, 87 L.Ed. 626. But we did not mean to imply
66 S.Ct. 758, 760, 761, 90 L.Ed. 888. thereby that the failure of the Commission to anticipate this
problem and to promulgate a general rule withdrew all power
from that agency to perform *202 its statutory duty in this
When the case was directed to be remanded to the case. To hold that the Commission had no alternative in this
Commission for such further proceedings as might be proceeding but to approve the proposed transaction, while
appropriate, it was with the thought that the Commission formulating any general rules it might desire for use in future
would give full effect to its duties in harmony with the cases of this nature, would be to stultify the administrative
views we had expressed. Ford Motor Co. v. National Labor process. That we refuse to do.
Relations Board, 305 U.S. 364, 374, 59 S.Ct. 301, 307, 83
L.Ed. 221; Federal Radio Commission v. Nelson Bros. Bond
& Mortgage Co., 289 U.S. 266, 278, 53 S.Ct. 627, 633, 77 Since the Commission, unlike a court, does have the ability
L.Ed. 1166, 89 A.L.R. 406. This obviously meant something to make new law prospectively through the exercise of
more than the entry of a perfunctory order giving parity its rule-making powers, it has less reason to rely upon ad
treatment to the management holdings of preferred stock. hoc adjudication to formulate new standards of conduct
The fact that the Commission had committed a legal error within the framework of the Holding Company Act. The
in its first disposition of the case certainly gave Federal's function of filling in the interstices of the Act should be
*201 management no vested right to receive the benefits of performed, as much as possible, through this quasi-legislative
such an order. See Federal Communications Commission v. promulgation of rules to be applied in the future. But any
Pottsville Broadcasting Co., 309 U.S. 134, 145, 60 S.Ct. 437, rigid requirement to that effect would make the administrative
442, 84 L.Ed. 656. After the remand was made, therefore, process inflexible and incapable of dealing with many of
the Commission was bound to deal with the problem afresh, the specialized problems which arise. See Report of the
performing the function delegated to it by Congress. It was Attorney General's Committee on Administrative Procedure
again charged with the duty of measuring the proposed in Government Agencies, S. Doc. No. 8, 77th Cong., 1st
treatment of the management's preferred stock holdings by Sess., p. 29. Not every principle essential to the effective
relevant and proper standards. Only in that way could the administration of a statute can or should be cast immediately
legislative policies embodied in the Act be effectuated. into the mold of a general rule. Some principles must
[2] The absence of a general rule or regulation governing await their own development, while others must be adjusted
management trading during reorganization did not affect the to meet particular, unforeseeable situations. In performing
Commission's duties in relation to the particular **1580 its important functions in these respects, therefore, an
proposal before it. The Commission was asked to grant or administrative agency must be equipped to act either by
deny effectiveness to a proposed amendment to Federal's general rule or by individual order. To insist upon one form
reorganization plan whereby the management would be of action to the exclusion of the other is to exalt form over
accorded parity treatment on its holdings. It could do that necessity.
only in the form of an order, entered after a due consideration [4] In other words, problems may arise in a case which the
of the particular facts in light of the relevant and proper administratvie agency could not reasonably foresee, problems
standards. That was true regardless of whether those standards which must be solved despite the absence of a relevant
previously had been spelled out in a general rule or regulation. general rule. Or the agency may not have had sufficient
Indeed, if the Commission rightly felt that the proposed experience with a particular problem to warrant rigidifying
amendment was inconsistent with those standards, an order its tentative judgment into a hard and fast rule. Or *203 the
giving effect to the amendment merely because there was problem may be so specialized and varying in nature as to

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Securities and Exchange Commission v. Chenery Corp., 332 U.S. 194 (1947)
69 P.U.R.(NS) 65, 67 S.Ct. 1575, 91 L.Ed. 1995

be impossible of capture within the boundaries of a general
rule. In those situations, the agency must retain power to deal
with the problems on a case-to-case basis if the administrative The Commission concluded that it could not find that the
process is to be effective. There is thus a very definite place reorganization plan, if amended as proposed, would be ‘fair
for the case-by-case evolution of statutory standards. And and equitable to the persons affected (thereby)’ within the
the choice made between proceeding by general rule or by meaning of s 11(e) of the Act, under which the reorganization
individual, ad hoc litigation is one that lies primarily in was taking place. Its view was that the amended plan would
the informed discretion of the administrative agency. See involve the issuance of securities on terms ‘detrimental to the
Columbia Broadcasting System v. United States, 316 U.S. public interest or the interest of investors' contrary to ss 7(d)
407, 421, 62 S.Ct. 1194, 1202, 86 L.Ed. 1563. (6) and 7(e), and would result in an ‘unfair or inequitable
distribution of voting power’ among the Federal security
[5] Hence we refuse to say that the Commission, which holders within the meaning of s 7(e). It was led to this result
had not previously been confronted with the problem of ‘not by proof that the interveners (Federal's management)
management trading during reorganization, was forbidden committed acts of conscious wrongdoing but by the character
from utilizing this particular proceeding for announcing and of the conflicting interests created by the interveners' program
applying a new standard of conduct. Cf. **1581 Federal of stock purchases carried out while plans for reorganization
Trade Commission v. R. F. Keppel & Bro., 291 U.S. 304, were under consideration.’
54 S.Ct. 423, 78 L.Ed. 814. That such action might have
The Commission noted that Federal's management controlled
a retroactive effect was not necessarily fatal to its validity.
a large multi-state utility system and that its influence
Every case of first impression has a retroactive effect,
permeated down to the lowest tier of operating companies.
whether the new principle is announced by a court or by
The financial, operational and accounting policies of
an administrative agency. But such retroactivity must be
the parent and its subsidiaries were therefore under the
balanced against the mischief of producing a result which
management's strict control. The broad range of business
is contrary to a statutory design or to legal and equitable
judgments vested in Federal's management *205 multiplied
principles. If that mischief is greater than the ill effect of the
opportunities for affecting the market price of Federal's
retroactive application of a new standard, it is not the type
outstanding securities and made the exercise of judgment
of retroactivity which is condemned by law. See Addison v.
on any matter a subject of greatest significance to
Holly Hill Co., 322 U.S. 607, 620, 64 S.Ct. 1215, 1222, 88
investors. Added to these normal managerial powers, the
L.Ed. 1488, 153 A.L.R. 1007.
Commission pointed out that a holding company management
obtains special powers in the course of a voluntary
And so in this case, the fact that the Commission's order might reorganization under s 11(e) of the Holding Company Act.
retroactively prevent Federal's management from securing the The management represents the stockholders in such a
profits and control which were the objects of the preferred reorganization, initiates the proceeding, draws up and files
stock purchases may well be outweighed by the dangers the plan, and can file amendments thereto at any time.
inherent in such purchases from the statutory standpoint. If These additional powers may introduce conflicts between the
that is true, the argument of retroactivity becomes nothing management's normal interests and its responsibilities to the
more than a claim that the Commission lacks power to enforce various classes of stockholders which it represents in the
the standards of *204 the Act in this proceeding. Such a reorganization. Moreover, because of its representative status,
claim deserves rejection. the management has special opportunities to obtain advance
[6] The problem in this case thus resolves itself into a information of the attitude of the Commission.
determination of whether the Commission's action in denying
Drawing upon its experience, the Commission indicated that
effectiveness to the proposed amendment to the Federal
all these normal and special powers of the holding company
reorganization plan can be justified on the basis upon which
management during the course of a s 11(e) reorganization
it clearly rests. As we have noted, the Commission avoided
placed in the management's **1582 command ‘a formidable
placing its sole reliance on inapplicable judicial precedents.
battery of devices that would enable it, if it should choose to
Rather it has derived its conclusions from the particular facts
use them selfishly, to affect in material degree the ultimate
in the case, its general experience in reorganization matters
allocation of new securities among the various existing
and its informed view of statutory requirements. It is those
classes, to influence the market for its own gain and to
matters which are the guide for our review.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
Securities and Exchange Commission v. Chenery Corp., 332 U.S. 194 (1947)
69 P.U.R.(NS) 65, 67 S.Ct. 1575, 91 L.Ed. 1995

manipulate or obstruct the reorganization required by the though subconsciously, upon many of the decisions to be
mandate of the statute.’ In that setting, the Commission made in the course of the reorganization. Accordingly, the
felt that a management program of stock purchase would Commission felt that all of its general considerations of the
give rise to the temptation and the opportunity to shape the problem were applicable to this case.
reorganization proceeding so as to encourage public selling [7] The scope of our review of an administrative order
on the market at low prices. No management could engage wherein a new principle is announced and applied is no
in such a program without raising serious questions as to different from that which pertains to ordinary administrative
whether its personal interests had not opposed its duties action. The wisdom of the principle adopted is none of our
‘to exercise disinterested judgment in matters pertaining to concern. See Board of Trade of Kansas City, Mo. v. United
subsidiaries' accounting, budgetary and dividend policies, States, 314 U.S. 534, 548, 62 S.Ct. 366, 373, 86 L.Ed. 432.
to present *206 publicly an unprejudiced financial picture Our duty is at an end when it becomes evident that the
of the enterprise, and to effectuate a fair and feasible plan Commission's action is based upon substantial evidence and
expeditiously.’ is consistent with the authority granted by Congress. See
National Broadcasting Co. v. United States, 319 U.S. 190,
The Commission further felt that its answer should be 224, 63 S.Ct. 997, 1013, 87 L.Ed. 1344.
the same even where proof of intentional wrongdoing on
the management's part is lacking. Assuming a conflict of [8] [9] We are unable to say in this case that the
interests, the Commission thought that the absence of actual Commission erred in reaching the result it did. The facts
misconduct is immaterial; injury to the public investors and being undisputed, we are free to disturb the Commission's
to the corporation may result just as readily. ‘Questionable conclusion only if it lacks any rational and statutory
transactions may be explained away, and an abuse of foundation. In that connection, the Commission has made
investors and the administrative process may be perpetrated a thorough examination of the problem, utilizing statutory
without evil intent, yet the injury will remain.’ Moreover, **1583 standards and its own accumulated experience with
the Commission was of the view that the delays and the reorganization matters. In essence, it has made what we
difficulties involved in probing the mental processes and indicated in our prior opinion would be an informed, expert
personal integrity of corporate officials do not warrant any judgment on the problem. It has taken into account ‘those
distinction on the basis of evil intent, the plain fact being ‘that more subtle factors in the marketing of utility company
an absence of unfairness or detriment in cases of this sort securities that gave rise to the very grave evils which the
would be practically impossible to establish by proof.’ Public Utility Holding Company Act of 1935 was designed to
correct’ and has relied upon the fact that ‘Abuse of corporate
Turning to the facts in this case, the Commission noted the
position, influence, and access to information may raise
salient fact that the primary object of Federal's management
questions so subtle that the law can deal with them effectively
in buying the preferred stock was admittedly to obtain the
only by prohibitions *208 not concerned with the fairness
voting power that was accruing to that stock through the
of a particular transaction.’ 318 U.S. at page 92, 63 S.Ct. at
reorganization and to profit from the investment therein. That
page 461, 87 L.Ed. 626.
stock had been purchased in the market at prices that were
depressed in relation to what the management anticipated
[10] [11] Such factors may properly be considered by the
would be, and what in fact was, the earning and asset value of
Commission in determining whether to approve a plan of
its reorganization equivalent. The Commission admitted that
reorganization of a utility holding company, or an amendment
the good faith and personal integrity of this management were
to such a plan. The ‘fair and equitable’ rule of s 11(e) and
not in question; but as to the management's justification of its
the standard of what is ‘detrimental to the public interest
motives, the Commission concluded that it was merely trying
or the interest of investors or consumers' under s 7(d)(6)
to ‘deny that they made selfish use of their powers during
and s 7(e) were inserted by the framers of the Act in order
the period when their conflict of interest, vis-a-vis public
that the Commission might have broad powers to protect the
investors was in existence owing to their purchase program.’
various interests at stake. 318 U.S. at pages 90, 91, 63 S.Ct.
Federal's management had *207 thus placed itself in a
at pages 460, 461, 87 L.Ed. 626. The application of those
position where it was ‘peculiarly susceptible to temptation
critera, whether in the form of a particular order or a general
to conduct the reorganization for personal gain rather than
regulation, necessarily requires the use of informal discretion
the public good’ and where its desire to make advantageous
by the Commission. The very breath of the statutory language
purchases of stock could have an important influence, even

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
Securities and Exchange Commission v. Chenery Corp., 332 U.S. 194 (1947)
69 P.U.R.(NS) 65, 67 S.Ct. 1575, 91 L.Ed. 1995

amount of weight by appellate courts. It is the product of
precludes a reversal of the Commission's judgment save
administrative experience, appreciation of the complexities
where it has plainly abused its discretion in these matters. See
of the problem, realization of the statutory policies, and
United States v. Lowden, 308 U.S. 225, 60 S.Ct. 248, 84 L.Ed.
responsible treatment of the uncontested facts. It is the type
208; I.C.C. v. Railway Labor Executives Ass'n, 315 U.S. 373,
of judgment which administrative agencies are best equipped
62 S.Ct. 717, 86 L.Ed. 904. Such an abuse is not present in
to make and which justifies the use of the administrative
this case.
process. See Republic Aviation Corporation v. National
Labor Relations Board, 324 U.S. 793, 800, 65 S.Ct. 982,
The purchase by a holding company management of that 986, 89 L.Ed. 1372, 157 A.L.R. 1081. Whether we agree or
company's securities during the course of a reorganization disagree with the result reached, it is an allowable judgment
may well be thought to be so fraught with danger as to which we cannot disturb.
warrant a denial of the benefits and profits accruing to the
Reversed.
management. The possibility that such a stock purchase
program will result in detriment to the public investors is not
a fanciful one. The influence that program may have upon the Mr. Justice BURTON concurs in the result.
important decisions to be made by the management during
reorganization is not inconsequential. Since the officers and The CHIEF JUSTICE and Mr. Justice DOUGLAS took no
directors occupy fiduciary positions during this period, their part in the consideration or decision of this case.
actions are to be held to a higher standard than that imposed
**1584 Mr. Justice FRANKFURTER and Mr. Justice
upon the general investing public. There is thus a reasonable
JACKSON dissent, but there is not now opportunity for
basis for a value judgment that the benefits and profits
a response adequate to the issues raised by the Court's
accruing to the management from the stock purchases should
opinion. These concern the rule of law in its application to
be prohibited, regardless of the good faith involved. And
the administrative process and the function of this Court in
*209 it is a judgment that can justifiably be reached in terms
reviewing administrative action. Accordingly, the detailed
of fairness and equitableness, to the end that the interests
grounds for dissent will be filed in due course.
of the public, the investors and the consumers might be
protected. But it is a judgment based upon public policy, a For dissenting opinion of Mr. Justice JACKSON, see 332
judgment which Congress has indicated is of the type for the U.S. 194, 67 S.Ct. 1760.
Commission to make.
Parallel Citations
The Commission's conclusion here rests squarely in that area
where administrative judgments are entitled to the greatest 69 P.U.R.(NS) 65, 67 S.Ct. 1575, 91 L.Ed. 1995

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 6
Slavin v. City of San Antonio, 330 S.W.3d 670 (2010)

Antonio's Dangerous Structure Determination Board (“the
Board”). The district court remanded consideration of Edward
330 S.W.3d 670
Slavin Sr.'s property back to the Board and affirmed the
Court of Appeals of Texas,
Board's order as to Edward Slavin, Jr. and Sheila Slavin
San Antonio.
(collectively, “the Slavins”). The Slavins appeal on due
Edward SLAVIN, Sr., Edward Slavin, process grounds. The City filed a cross-appeal arguing the
Jr., and Sheila Slavin, Appellants, trial court improperly remanded Slavin Sr.'s property to the
v. Board and improperly did not rule on its request for attorney's
fees.
CITY OF SAN ANTONIO, Appellee.

No. 04–09–00601–CV. | Oct. 27, 2010.
DUE PROCESS
Synopsis
Background: Property owners appealed decision of the city [1] The Slavins do not challenge the sufficiency of the
dangerous structure determination board issuing a repair and evidence in support of the Board's order. Instead, the Slavins
demolition order. The 225th Judicial District Court, Bexar contend they were improperly denied the opportunity to
County, Larry Noll, J., affirmed decision with respect to two conduct discovery and offer evidence on the issue of whether
property owners, but remanded matter with respect to third their due process rights had been violated by the Board's
property owners. Owners appealed. City cross-appealed. alleged fraud, bad faith, or abuse of discretion.

*672 After the Board issued its demolition order, the Slavins
Holdings: The Court of Appeals, Sandee Bryan Marion, J., appealed to district court. The City filed the Verified Return
held that: of Writ of Certiorari containing the record of the hearing
before the Board. At some point, the Slavins served the City
[1] owners' due process rights were not violated, and with discovery requests “dealing with due process issues in
front of the” Board. It is unclear what form these requests
[2] city could not rely on notice to owner by posting or took, but in any event, the City did not respond and, instead,
publication. filed for a protective order. The Slavins filed a motion to
compel. At a pretrial hearing, Judge Martha Tanner heard
the motion to compel, and subsequently denied it. Later at
Affirmed. trial, Judge Noll refused to reconsider Judge Tanner's ruling,
and the Slavins' attorney asked and was allowed to make
a “proffer” on the record of what he expected to find in
Attorneys and Law Firms discovery. The Slavins stated they had two witnesses who
would testify that the Board was comprised of City employees
*671 Edward L. Bravenec, McKnight & Bravenec, San
who conferred with the City attorney before making their
Antonio, TX, for Appellants.
decision “and then they do whatever the City recommends.”
Samuel C. Adams, Office of the City Attorney, San Antonio, The Slavins also said they had witnesses who would “testify
TX, for Appellee. that a number of people are prevented from testifying in
front of the” Board. Finally, they asserted they could show
Sitting: CATHERINE STONE, Chief Justice, SANDEE that “the board ruled six to zero [in] 99.9 percent of the
BRYAN MARION, Justice, STEVEN C. HILBIG, Justice. cases. When the board appears, they don't allow people to
ask questions directly. They only allow questions to be asked
through the board. Numerous witnesses are not allowed to
OPINION present evidence....”

Opinion by: SANDEE BRYAN MARION, Justice. The Slavins also asserted that the only issue before Judge
Tanner was the motion to compel discovery and her ruling
The underlying case involves an appeal to the district court
on that motion did not dictate what evidence Judge Noll
from a repair and demolition order issued by the City of San

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Slavin v. City of San Antonio, 330 S.W.3d 670 (2010)

could hear at the trial. The Slavins argued that a footnote in the administrative record, the trial court sua sponte raised
this court's opinion in Perkins v. City of San Antonio, 293 the issue because the record indicated Slavin Sr. may not
S.W.3d 650 (Tex.App.-San Antonio 2009, no pet.), allowed have received proper notice. Another example is found in
them to present evidence to Judge Noll on their due process the Lewis opinion wherein the record indicated the hearing
claims. In Perkins, a panel of this court discussed the type of examiner excluded competent and material evidence from
review that must be conducted when reviewing a repair and the administrative record, thus precluding its consideration
demolition order such as the one here. The court held that a by the Commissioner in his decision. 550 S.W.2d at 14.
“pure substantial evidence” review was appropriate, but the The appellate court held that “[t]he requirement that proper
court also stated as follows in a footnote: evidence be received is a necessary counterpart of the rule that
the agency must give due weight to all the evidence before
We note, however, that in addition it; refusal to consider proper evidence which has been duly
to reviewing whether substantial proffered falls within the condemnation that voids arbitrary
evidence supports the Board's order, administrative action.” Id. at 15 (internal citation omitted).
an arbitrary action of an administrative
agency cannot stand, including any [2] We conclude the record from the hearing before the
action that deprives a party of due Board does not indicate a due process violation in this case.
process; therefore, the trial court also Even if the Slavins are correct that the Board is comprised
is permitted to consider whether the entirely of City employees, the record does not reveal the
proceedings before the Board satisfied Board acted in any arbitrary manner. Our review of the
the requirements of due process. transcript of the Board hearing reveals that at no time were
the Slavins prevented from asking questions of any witness,
Id. at 654 n. 2.
the Slavins were allowed to speak on each property, at no
time were they prevented from testifying, and they did not
On appeal, the Slavins assert this footnote allows for the type
attempt to present any evidence. Therefore, we hold the trial
of discovery they requested for the purpose of determining
court did not err in refusing to allow additional discovery
due process violations, such as fraud, bad faith, or abuse of
to be conducted or additional evidence to be placed into the
discretion.
record. 1
Under a pure substantial evidence review, the trial court
must consider only the factual record made before the
administrative body in determining whether substantial SERVICE ON EDWARD SLAVIN, SR.
evidence supports the Board's order. Id. at 654. However,
an agency's final order may be supported by substantial [3] In its cross-appeal, the City asserts the trial court erred
evidence and yet be invalid for arbitrariness. Lewis v. Metro. in reversing the Board's order with regard to all property in
Sav. & Loan Ass'n, 550 S.W.2d 11, 13–14 (Tex.1977). An which Slavin Sr. has an interest. According to the City, it
administrative agency acts in an arbitrary manner when the mailed notice to Slavin Sr., and because proof that he actually
treatment accorded to parties in the administrative process received the notice is not required, notice by publication and
denies them due process of law. Id. at 16. posting was sufficient. 2

We do not agree that a broad allegation that a landowner's The San Antonio Municipal Code requires that pre-notice of
due process rights are violated because the administrative a hearing before the Board “shall be: (1) Personally to the
body considering whether to issue a repair and demolition owner in writing; or (2) By letter addressed to the owner
order is composed entirely of City employees rather than at the owner's post office address.” SAN ANTONIO, TX.,
impartial citizens is per se the type of claim envisioned by MUN. CODE § 6–162(b)(1), (2). “If personal service cannot
the Lewis and Perkins courts. Instead, *673 any alleged be obtained or the owner's post office address is unknown
due process violation must be founded in the record that was [service *674 may be]: a. By publication at least twice
made before the Board. For example, as discussed further within ten (10) consecutive days; and b. By posting the notice
below, the trial court here considered whether Slavin Sr. on or near the front door of each building on the property
received proper notice of the hearing. Neither the Slavins nor to which the violation relates.” Id. § 6–162(b)(3) (emphasis
the City raised notice as an issue. Instead, while reviewing added).

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Slavin v. City of San Antonio, 330 S.W.3d 670 (2010)

arguments and recommendations on this issue and continued
The Texas Local Government Code also requires that the the hearing until the next day.
record owners of the affected property must be given notice
of all proceedings: “(1) by personal delivery, by certified The next day, the City stated it went back to the original
mail with return receipt requested, or by delivery by the record that was before the Board and found the other side of
United States Postal Service using signature confirmation the envelope, and the City asked to supplement the record
service....” TEX. LOC. GOV'T CODE ANN.. § 54.035(a)(1) before the trial court. The trial court then asked how the copy
(West Supp. 2010). If the owner is unknown, notice must could be added to the record if nothing indicated the copy was
be given “by posting a copy of the notice on the front door of an original document reviewed by the Board and the copy
of each improvement situated on the affected property or as was not sponsored or certified by the Board, anyone from
close to the front door as practicable.” Id. at § 54.035(a)(2). Code Compliance, or the City's Housing and Development
“The notice must be posted and either personally delivered Services Department. The City then recommended a stay in
or mailed on or before the 10th day before the date of the the proceedings and the court could “reverse the portion with
hearing before the commission panel and must state the date, [Slavin Sr.] ... and that would bring it back ... for a de novo
time, and place of the hearing. In addition, the notice must review of ... the entire *675 process.” The trial court decided
be published in a newspaper of general circulation in the to affirm as to everyone except Slavin Sr., and as to him “it's
municipality on one occasion on or before the 10th day remanded back to the Board for further proceedings to start
before the date fixed for the hearing.” Id. at § 54.035(b). The the process.”
Local Government Code further provides as follows: “When
a municipality mails a notice in accordance with this section Nothing in this record supports the City's contention on appeal
to a property owner, lienholder, or registered agent and the that personal service on Slavin Sr. could not be obtained or
United States Postal Service returns the notice as ‘refused’ or that the notice sent to Slavin Sr. was returned as unclaimed,
‘unclaimed,’ the validity of the notice is not affected, and the undelivered, or refused. Because the City did not establish
notice is considered delivered.” Id. at § 54.035(f) (emphasis that service on Slavin Sr. was unsuccessful, it was not entitled
added). to rely on notice by posting or publication. Therefore, we
conclude the trial court did not err in remanding the cause as
Thus, the City is correct that it may provide notice to a to Slavin Sr. because the record does not show the validity of
landowner by publication or posting. However, we do not service of the notice.
agree that such notice is proper in the absence of evidence
that personal service on the landowner could not be obtained.
Here, the record contains a copy of (1) the Notice of Public
ATTORNEY'S FEES
Hearing addressed to Slavin Sr., (2) a copy of the United
States certified mail receipt addressed to Slavin Sr. indicating [4] The City also contends the trial court erred by not
the notice was sent by certified mail on March 13, 2009, awarding it attorney's fees. A district court “shall allow
and (3) a copy of the back of the “green card.” The “green to the municipality all attorney's fees and other costs and
card” is not signed by Slavin Sr. or anyone else evidencing expenses” “[i]f the decision of the municipality is affirmed
its receipt. The City contends the notice was subsequently or not substantially reversed but only modified.” Id. at §
returned as “unclaimed,” but nothing in the record supports 214.0012(h) (West 2008). On appeal, the City asserts that
this contention. The only stamp on the back of the “green because the trial court found in its favor as to all property
card” reads “Received Apr 17 2009,” a date after the Board owners except Slavin Sr., it should be awarded its attorney's
hearing. At the hearing before the trial court, the City's fees. At the end of the hearing the trial court told the City
attorney stated he thought the “Received” stamp was placed “[w]hen this case comes back up, I will deal with this issue
there by a City employee when the City received the notice [regarding fees]. I'm not going to deal with it now.” The City's
back from the post office. The City wanted to supplement attorney did not object. Therefore, the City has not established
the record before the trial court with a copy of the side error on the part of the trial court.
of the envelope that, according to the City, showed the
number of attempts at delivery to Slavin Sr. The trial court
voiced its concern that its review was limited to the record
brought before it; however, the court was willing to entertain CONCLUSION

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Slavin v. City of San Antonio, 330 S.W.3d 670 (2010)

We overrule all issues on appeal and affirm the trial court's
judgment.

Footnotes
1 On appeal, the Slavins also assert they were denied a fair hearing under the due process clause of both the U.S. and Texas constitutions.
In a single sentence under their argument they contend the City's “statute is unconstitutional because it has persons with a pecuniary
interest (their jobs) making the decision” to tear down structures on private property. Also in a single sentence, the Slavins contend
the City may be going beyond its authority to “destroy[ ] houses” on a nuisance abatement pretext, and in doing so “is completing
an unjustified taking.” We do not address these complaints because the Slavins do not cite to the specific City ordinance with which
they take issue and which they claim is unconstitutional; they make no argument as to how any ordinance is unconstitutional either
facially or as applied; and they do not elaborate on their takings claim or establish the elements of such a claim.
2 There appears to be no dispute that the City published notice of the hearing in the “Daily Commercial Recorder”; posted notice on
the Slavins' property, although it is unclear whether notice was posted on every building on the property; and sent a copy of the notice
to the Oak Grove Estates Neighborhood Association and the Bexar County District Clerk's Office.

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
Starr County v. Starr Indus. Services, Inc., 584 S.W.2d 352 (1979)

584 S.W.2d 352 I.
Court of Civil Appeals of Texas, Austin.
Hearing was held on September 29, 1976, in Rio Grande
STARR COUNTY, Appellant, City and testimony was concluded on that same day. The
v. record was held open twenty days for certain supplemental
STARR INDUSTRIAL SERVICES, INC., Appellee. information which was supplied and the record was then
closed.
No. 12899. | June 20, 1979.
On January 7, 1977, the Board considered the application
Applicant was denied his application for solid waste permit by and the hearing examiner's report in connection with the
Water Quality Board. Intervenor county appealed judgment application. On that same day the Board voted to deny the
of the 98th District Court, Travis County, Hume Cofer, application and a written order was prepared in which the
J., setting aside and vacating Board's order and remanding reasons for the denial of the permit were stated. The order was
cause to its successor, Texas Water Commission, for further entered February 3, 1977.
proceedings. The Court of Civil Appeals, Phillips, C. J., held
that a significant part of Board's action was arbitrary and The administrative record in this case is extensive and
capricious where applicant had complied with requirements highly detailed. Appellee requested a permit to operate a
of Board's staff for permit and where Board based its decision, commercial industrial solid waste management site to be
at least in part, on local opposition to application. located approximately nine miles northwest of Rio Grande
City in Starr County, Texas. The site was to consist of a
Judgment affirmed. landfill type operation on an 81-acre tract leased by appellee
wherein certain stabilized and neutralized industrial wastes
would be buried in trenches and surrounded and covered
Attorneys and Law Firms
*354 with clay-rich soil. The anticipated active life of the
*353 Robert Wilson, McGinnis, Lochridge & Kilgore, site was three to four years, and the permit sought provided
Austin, for appellant. for various safeguards and monitoring of the site, both during
its active life and for a period of time after closure.
Edward C. Small, Dennis R. Reese, Small, Craig &
Werkenthin, Austin, for appellee. The original application contained extensive and detailed
information concerning the character of the wastes,
Opinion
operations and closing of the facility. The details of many
PHILLIPS, Chief Justice. aspects of the application were modified and supplemented
by additional information and specifications subsequently
Appellee filed an application with the Texas Water Quality submitted as a result of conferences with, and requests by, the
Board requesting approval for a Class I industrial solid waste Board's staff.
permit for a landfill to be located in Starr County, Texas.
The Board 1 denied the application after a hearing. Appellee The Board's technical staff, using the application and
appealed the denial of the order to the district court wherein information supplied by appellee, along with its own
Starr County intervened. information resources, drafted a proposed permit which it
felt would include all of the provisions necessary for the
The trial court reviewed the order and rendered judgment protection of ground and surface waters, public and private
setting aside and vacating the Board's order and remanding property and the general health and public welfare. The
the cause to its successor, Texas Water Commission, for provisions of the proposed permit were explained by the staff
further proceedings. Intervenor, Starr County, subsequently and fully discussed at the public hearing which was held at
perfected its appeal from the judgment. Rio Grande City.

We affirm. The principal opposition to the permit came from the county
judge of Starr County, the Rio Grande City Chamber of

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Starr County v. Starr Indus. Services, Inc., 584 S.W.2d 352 (1979)

Commerce, and from a state senator. The general tenor of the
objections was that the opponents were totally against any 2. The lease agreement for a term of only five years
Class I toxic waste dump in Starr County. will not allow for adequate supervision, control or
monitoring of the site after it is closed.
Consequently, in a letter from the Board's executive director,
3. The operation of an industrial solid waste
Hugh Yantis, Jr., who was a member of the hearing
management site in Starr County at the location
commission, it was stated: “It appears that the site and the
proposed is inconsistent with the future land use
technical factors surrounding it are sustainable as permitting
and development in the area.
an industrial solid waste disposal operation,” but concluded
that the application could be denied “on the basis of the 4. The adamant local opposition to the application for
express views of the people within the county.” At the hearing a proposed industrial solid waste management site
of the Board on January 7, 1977, a Board member moved that evidences that the granting of a permit would be
the permit be denied for the reason that: contrary to the welfare of the people in the area.

“I likewise am reluctant to imply
that we have veto power over the CONCLUSIONS OF LAW
local government and I must conclude,
Based on all findings of fact, the following conclusions of
all the arguments possibly to the
law are made:
contrary, that there is considerable
local opposition on the part of the local *355 3. There has been full compliance with all
governments, more than just one, and applicable provisions of Chapter 21 of the Texas
I'm inclined to agree with Mr. Yantis.” Water Code and Section 4 of the Solid Waste
Disposal Act and the accompanying Rules of Practice
The motion carried and the permit was denied.
and Procedure of the Texas Water Quality Board
concerning the application for a permit.“
A written order, denying the application, was entered on
In its motion for rehearing, appellee offered to comply
February 3, 1977, and included the following pertinent
with some of the new requirements, but the Board simply
findings and conclusions.
overruled the motion.

“FINDINGS OF FACT
II.
1. The construction and management of the industrial solid
The Administrative Procedure and Texas Register Act (APA)
waste disposal site as proposed is inadequate to prevent
provides that the courts shall remand the case for further
or minimize adverse public health and environmental
proceedings “. . . if substantial rights of the appellant
impact from accidents resulting from the transportation,
have been prejudiced because the administrative findings,
processing, and disposal of industrial solid waste, which
inferences, conclusions, or decisions are:
includes hazardous and toxic materials, because of the
following:
(1) in violation of constitutional or statutory provisions;
(a) the proposed staffing pattern at the site would allow for
extended periods of time during which no one would be
(2) in excess of the statutory authority of the agency;
at the site; and

(3) made upon unlawful procedure;
(b) the lack of resources or necessary equipment in Starr
County to adequately handle the possibility of accidents
(4) affected by other error of law;
from fire, explosions, or traffic mishaps.

(5) Not reasonably supported by substantial evidence in view
of the reliable and probative evidence in the record as a whole;
or

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Starr County v. Starr Indus. Services, Inc., 584 S.W.2d 352 (1979)

whether the agency order was based on a consideration of all
relevant factors. The reviewing court may not substitute its
(6) Arbitrary or capricious or characterized by abuse
judgment for that of *356 the agency. Citizens to Preserve
of discretion or clearly unwarranted exercise of
Overton Park v. Volpe, 401 U.S. 402, 91 S.Ct. 814, 28
discretion.“ (Emphasis added). Tex.Rev.Civ.Stat.Ann. art.
L.Ed.2d 136 (1971). There must appear a rational connection
6252-13a, s 19(e) (Supp.1978). 2
between the facts and the decision of the agency. Bowman
Transportation, Inc. v. Arkansas-Best Freight System, Inc.,
[1] In distinguishing between paragraphs five and six, the
419 U.S. 281, 95 S.Ct. 438, 42 L.Ed.2d 447 (1974); 5
legislature has decided that arbitrary and capricious action
B. Mezines, J. Stein and J. Gruff, Administrative Law s
or abuse of discretion by an administrative board is of equal
51.03, at 51-33 (1979). Stated differently, the reviewing
proscription as that action “not reasonably supported by
court must remand “. . . if it concludes that the agency has
substantial evidence.” In other words, subsection six sets out
not actually taken a hard look at the salient problems and
a basis for invalidation of an agency order in addition to and
has not genuinely engaged in reasoned decision-making.”
distinct from subsection five.
Texas Medical Association v. Mathews, 408 F.Supp. 303, 305
(W.D.Tex.1976). That court set aside an order because the
This conclusion is more difficult than would appear merely
agency had been subjected to pressure from congressional
from reading section 19(e). The well recognized explanation
sources.
of the substantial evidence rule has blended the two concepts,
substantial evidence and arbitrary or capricious, into one
The major factor that runs throughout arbitrary-capricious
standard of review. The substantial evidence rule is generally
review cases is that parties must be able to know what is
described as a limitation on the power of the courts to overturn
expected of them in the administrative process. We believe
a decision by an administrative agency in that there must
this notice was lacking in the present case.
be a showing “. . . the administrative decision is illegal,
arbitrary, or capricious; that is, that it is not reasonably
[5] As we stated above, the appellee worked quite closely
supported by substantial evidence.” Board of Firemen's Relief
with the Board's staff, and, apparently, had complied with all
and Retirement Fund Trustees v. Marks, 150 Tex. 433, 242
of the staff's requirements for a permit when, to its surprise,
S.W.2d 181, 182-83 (1951). Accord, e. g., Gerst v. Cain,
the Board denied the permit citing additional requirements
388 S.W.2d 168 (Tex.1965); Chemical Bank and Trust Co.
that had neither been expected by appellee nor proposed by
v. Falkner, 369 S.W.2d 427 (Tex.1963); Industrial Accident
the Board's staff. In addition, the Board found: “The adamant
Board v. O'Dowd, 157 Tex. 432, 303 S.W.2d 763 (1957).
local opposition to the application for a proposed industrial
Stated in even stronger language, “. . . an arbitrary action
solid waste management site evidences that the granting of a
cannot stand and the test generally applied by the courts in
permit would be contrary to the welfare of the people in the
determining the issue of arbitrariness is whether or not the
area.” Nowhere in the Act is local opposition mentioned for
administrative order is reasonably supported by substantial
consideration as a standard to govern the Board's decision and
evidence.” Gerst v. Nixon, 411 S.W.2d 350, 354 (Tex.1966).
such opposition, standing alone, should have no part in the
Board's decision-making process. Yet obviously it did.
[2] The Texas Supreme Court has expressly qualified the
language of Gerst v. Nixon, Supra, in Lewis v. Metropolitan
[6] Inasmuch as we find that a significant part of the Board's
Savings and Loan Association, 550 S.W.2d 11 (Tex.1977).
action herein was arbitrary and capricious under Section 19(e)
There the Court made it clear that an order may be supported
(6) of the Administrative Procedure Act, we need not reach
by substantial evidence and yet be invalid for arbitrariness.
the substantial evidence question raised by appellant. Because
“(A)rbitrary action of an administrative agency cannot stand.
appellee's substantial rights were prejudiced by entry of the
There is arbitrariness where the treatment accorded parties in
agency order, the district court correctly set aside the order
the administrative process denies them due process of law.”
and remanded the cause to the agency for further proceedings.
Id. at 16.
The judgment is affirmed.
[3] [4] In determining whether an agency has acted
arbitrarily or capriciously the reviewing court must decide

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Starr County v. Starr Indus. Services, Inc., 584 S.W.2d 352 (1979)

Footnotes
1 Now consolidated into the Texas Department of Water Resources.
2 Section 19(e) (and its subsections) is applicable where the relevant statute “. . . authorizes review under the substantial evidence rule,
or where the law does not define the scope of judicial review.” The Solid Waste Disposal Act is silent as to the scope of judicial
review; therefore, section 19(e) applies to this case.

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
Stolte v. County Of Guadalupe, Not Reported in S.W.3d (2004)
2004 WL 2597443

Court. The application was denied on the grounds that (1)
the County did not want a 0.911-acre dedication, (2) several
2004 WL 2597443
lots had less than 100 feet of road frontage on Muehl Road,
Only the Westlaw citation is currently available.
and (3) the number of driveways onto Muehl Road was
SEE TX R RAP RULE 47.2 FOR excessive. Stolte filed a second application, which also was
DESIGNATION AND SIGNING OF OPINIONS. denied. Stolte then sued the County, and asked the trial
court to issue a writ of mandamus directing the County to
OPINION “acknowledge approval” of the plat application. Stolte again
Court of Appeals of Texas, filed his plat application, this time removing the proposed
San Antonio. 0.911-acre dedication. The application was again denied.

James R. STOLTE, Jr., Trustee, Appellant
Stolte filed a motion for summary judgment in which he
v. requested that the trial court issue a writ of mandamus
COUNTY OF GUADALUPE, Appellee. directing the County to approve the plat application, refund
to him $345.00 as required by Texas Local Government
No. 04-04-00083-CV. | Nov. 17, 2004.
Code section 232.0025(i), and pay him all taxable court
From the 25th Judicial District Court, Guadalupe County, costs. The trial court denied the motion, and concluded the
Texas, Trial Court No. 03-1092-CV; Gus J. Strauss, Judge County has the inherent authority, pursuant to Texas Local
Presiding. Government Code Chapter 232, “to reject a plat application
in the interest of public health and safety in the absence of
Attorneys and Law Firms a specific and properly adopted county regulation addressing
such issue.”The trial court allowed Stolte to appeal the
Frank B. Suhr and David G. Pfeuffer, Brazle & Pfeuffer, interlocutory order pursuant to Texas Civil Practice and
L.L.P., New Braunfels, for appellant. Remedies Code section 51.014(d), and stated the controlling
question of law as: “whether a county has the legal authority
Robert E. Etlinger, 1st Assistant County Attorney, Seguin, for
to reject a plat application due to the width of the lot or due
appellee.
to the number of driveways accessing a public road in the
Sitting: ALMA L. LÓPEZ, Chief Justice, CATHERINE absence of a specific and properly adopted county regulation
STONE, Justice, SANDEE BRYAN MARION, Justice. addressing such issues.”The trial court found that the parties
agreed there were no material issues of fact, and the facts
asserted in Stolte's motion and the County's response were
true and not in dispute.
OPINION

Opinion by SANDEE BRYAN MARION, Justice.
STANDARD OF REVIEW
*1 In this appeal we determine whether Guadalupe County
has the inherent authority to reject a plat application in the Under traditional summary judgment standards, a party
interest of public health and safety in the absence of a specific moving for summary judgment has the burden of establishing
statute or a properly adopted county regulation. We conclude as a matter of law that no genuine issue of material fact exists
that it does not, and reverse the trial court's judgment and as to one or more essential elements of the plaintiff's cause
remand for further proceedings. of action. Casso v. Brand, 776 S.W.2d 551, 556 (Tex.1989);
Nixon v. Mr. Property Mgmt. Co., 690 S.W.2d 546, 548-49
(Tex.1985); Medina County Comm'r Court v. The Integrity
BACKGROUND Group, Inc., 21 S.W.3d 307, 309 (Tex.App.-San Antonio,
1999, pet. denied). If the defendant meets this burden, the
James Stolte is the owner and developer of a 154.641-acre plaintiff must then raise a genuine issue of material fact on
tract of land lying in Guadalupe County, Texas. Seeking that element. Gonzalez v. City of Harlingen, 814 S.W.2d 109,
to subdivide the tract into fifty-five lots, Stolte filed a 112 (Tex.App.-Corpus Christi 1991, writ denied).
plat application with the Guadalupe County Commissioners

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Stolte v. County Of Guadalupe, Not Reported in S.W.3d (2004)
2004 WL 2597443

*2 A party can invoke the district court's constitutional development of the unincorporated
supervisory power over a commissioners court only when the area of the county.
commissioners court acts beyond its jurisdiction or clearly
abuses the discretion conferred upon the commissioners court TEX. LOC. GOV'T CODE ANN. § 232.101(a) (Vernon
by law. Commissioners Court of Titus County v. Agan, 940 Supp.2004).
S.W.2d 77, 80 (Tex.1997); Medina County, 21 S.W.3d at 309.
A writ of mandamus may issue to compel a public official to Stolte readily concedes the County has the right to enact rules
perform a ministerial act. Anderson v. City of Seven Points, and regulations for the public's safety and welfare pursuant
806 S.W.2d 791, 793 (Tex.1991). An act is ministerial when to section 232.101(a). Stolte also acknowledges that Chapter
the law clearly spells out the duty to be performed by the 232 authorizes the County to adopt other rules. SeeTEX.
official with sufficient certainty that nothing is left to the LOC. GOV'T CODE ANN. §§ 232.102; 232.103; 232.104.
exercise of discretion. Id. However, Stolte argues that because the County has not in
fact enacted any rules and regulations regarding lot frontages
or the number of driveways, the County has no authority to
deny his plat application. The County does not dispute Stolte's
DISCUSSION assertion that it has no such rules or regulations. Instead, the
County contends Cowboy Country Estates v. Ellis County,
On appeal, the County first argues that because Stolte
692 S.W.2d 882 (Tex.App.-Waco 1985, no writ), supports
“effectively stipulated” that the design of his subdivision
its argument under section 232.101. We disagree with the
creates a safety hazard, he should be precluded from arguing
County.
that the County and trial court abused their discretion
in denying his plat application. Nowhere in the County's
*3 Unlike the trial court below, the court in Cowboy
response to Stolte's motion for summary judgment is
Country Estates dealt with specific statutes addressing the
there a statement of fact that his design creates a safety
specific dispute between the parties. For example, one of
hazard. Instead, the County's response and attached affidavits
the issues on appeal was whether the development was a
reference “safety concerns” and “safety issues” and, in its
“subdivision” within the meaning of the applicable statutes
response, the County accused Stolte of “arguing” that he is
examined by the court. Id. at 885-86.On that issue, the court
entitled to “develop a subdivision whose design/configuration
held, “The manifest overall purpose of the statutes concerned
clearly gives rise to hazards to public safety ....“ We do not
is to give counties the power to control subdivisions to
consider Stolte's failure to dispute the “concerns” raised in
protect its citizens in matters of public health and sanitation,
the County's response as rising to the level of a stipulation or
drainage, and maintenance of public roads.”Id. at 886.The
a judicial admission. Even if it did, this does not resolve the
issue of inherent authority was not before the Cowboy
legal issue presented by the trial court.
Country Estates court. Therefore, this case does not support
the County's argument that it has inherent authority to regulate
The County next argues it has the inherent authority to
subdivisions in the absence of a specific statute or rule.
regulate subdivisions for the public's safety pursuant to Texas
Instead, we hold that a county's authority to grant or deny
Local Government Code section 232.101, which provides as
plat applications must be based on a specific statute or
follows:
rule. Those statutes and rules are contained in the Texas
By an order adopted and entered in the Local Government Code and other rules properly enacted
minutes of the commissioners court under section 232.101. See The Integrity Group, Inc. v.
and after a notice is published in Medina County Comm'r Court, No. 04-03-00413-CV, slip
a newspaper of general circulation op. at 2 (Tex.App.-San Antonio Oct. 20, 2004, no pet.
in the county, the commissioners h.) (“A commissioners court's power relative to the plat
court may adopt rules governing plats approval process is found in Chapter 232 of the Texas Local
and subdivisions of land within the Government Code.”).
unincorporated area of the county to
promote the health, safety, morals, Local Government Code section 232.003 sets forth
or general welfare of the county subdivision requirements, none of which specifies the
and the safe, orderly, and healthful number of driveways or lot frontages. But see id.
§ 232.003(8) (allowing commissioners court to adopt

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Stolte v. County Of Guadalupe, Not Reported in S.W.3d (2004)
2004 WL 2597443

American Corp. v. Hilliard, 711 S.W.2d 386, 389 (Tex.App.-
reasonable specifications that provide for drainage in the
Tyler 1986, no writ); see also Elgin Bank, 906 S.W.2d at
subdivision); see also Elgin Bank of Texas v. Travis County,
122. The County does not contend Stolte's plat application
Texas, 906 S.W.2d 120, 123 (Tex.App.-Austin 1995, writ
does not meet any specific statutory requirement. Therefore,
denied)(“Section 232.003 authorizes the commissioner's
the County's authority to approve Stolte's plat under section
court to adopt rules regulating the design and construction
232.002 is not discretionary. See Medina County, 21 S.W.3d
of roads.”). Although section 232.003 is the only section
at 309; Projects American Corp., 711 S.W.2d at 389;see also
under Chapter 232 that sets forth specific subdivision
The Integrity Group, slip op. at 2 (“... if the developer meets
requirements, a county may adopt other rules governing
the statutory requirements, the commissioners court's duty to
plats and subdivisions. SeeTEX. LOC. GOV'T CODE ANN.
approve the plat becomes ministerial.”).
§§ 232.101; 232.102; 232.103; 232.104. For example, the
Local Government Code authorizes the County to enact
The County's final argument is that it should not be required
rules and regulations for the public's safety and welfare.
to imagine every possible scenario under which land may
SeeTEX. LOC. GOV'T CODE ANN. §§ 232.101 (“Rules”);
be developed. We do not discount the County's concern for
232.102 (major thoroughfare right-of-ways); 232.103 (“Lot
the welfare of its residents, and we understand the County's
Frontages”); 232.104 (“Set-backs”). A county may also
concern that a large number of driveways entering onto a
impose additional requirements pursuant to other statutory
county road may pose safety issues for residents along that
authority. See Medina County, 21 S.W.3d at 310. Here, the
road. However, a county's authority to grant or deny a plat
County has adopted other rules applicable to plats, which
application is limited by statute or other properly adopted
are contained in the Guadalupe County Subdivision Rule
rules, and in this case, there is no statute or other rule
Book. The County Engineer admitted in his deposition that
governing lot frontages or driveways. Therefore, the County's
the County's rule book contains no requirements regarding
duty to grant the plat application was ministerial in nature and
minimum lot frontage, number of driveways, or the distance
the trial court erred in denying Stolte's motion for summary
between driveways, and the County has not adopted any such
judgment and his request for mandamus relief.
rules pursuant to Local Government Code Chapter 232.

*4 “The commissioners court of the county in which
land is located must approve ... a plat required by Section CONCLUSION
232.001.”Id. § 232.002(a); see also Medina County, 21
S.W.3d at 309. A commissioners court cannot require We reverse the trial court's judgment and remand the cause
additional substantive requirements not contained within the for further proceedings consistent with this opinion.
statute for a plat if the submitted plat meets all statutory
requirements. Medina County, 21 S.W.3d at 309; Projects

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© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Texas Alcoholic Beverage Commission v. Good Spirits, Inc., 616 S.W.2d 411 (1981)

County Court was appealed to the Texas Alcoholic Beverage
Commission (hereinafter called “Commission”).
616 S.W.2d 411
Court of Civil Appeals of Texas, Waco.
On January 17, 1979, a hearing was held before the Hon. John
TEXAS ALCOHOLIC BEVERAGE Bingaman, a Hearings Examiner of and for the Commission,
COMMISSION, Appellant, after which said examiner tendered his “Proposal for
v. Decision” which included findings of fact, conclusions of
law, and a recommendation that the applications made by
GOOD SPIRITS, INC., Appellee.
Good Spirits be granted. However, on March 19, 1979,
No. 6193. | April 30, 1981. the Commission acting by and through Hon. Joe Darnall,
Assistant Administrator of the Commission, entered an order
Alcoholic Beverage Commission appealed from an order of wherein the findings of fact made by the Hearings Examiner
the 150th District Court, Bexar County, James C. Onion, P.J., were adopted but which order refused and denied the
reversing the Commission's order denying applications for applications in question. From this order of the Commission,
a wine only package store permit and for a beer retailer's Good Spirits perfected its appeal to a District Court of
off-premises license. The Court of Civil Appeals, James, Bexar County, which court, sitting without a jury, after
J., held the order of Commission denying application for a hearing, entered judgment reversing the Commission's order
wine only package store permit and for a beer retailer's off- and ordered the applications in question to be granted and the
premises license on ground that the applicant was a subterfuge licenses issued. In essence, the trial court found that there was
corporation was not supported by substantial evidence and not substantial evidence to support the Commission's order,
was arbitrary. and that such order was arbitrary.

Affirmed. The Commission appeals from the trial court's judgment
upon one point of error, to wit, that the trial court erred
in not affirming the Commission's order because (Appellant
Attorneys and Law Firms says) the Commission's findings were reasonably supported
by substantial evidence. We overrule this point of error and
*412 Mark White, Atty. Gen., John W. Fainter, Jr., First
affirm the trial court's judgment.
Asst. Atty. Gen., Ted L. Hartley, Executive Asst. Atty. Gen.,
W. Barton Boling, Asst. Atty. Gen., El. Paso, W. Reed
The pertinent facts herein are virtually undisputed, and are
Lockhoof, Asst. Atty. Gen., Austin, for appellant.
fairly presented in the “findings of fact” as made (after certain
William F. Stolhandske, Stolhandske, Simmons & amendments) by the Hearings Examiner and as adopted by
Stolhandske, San Antonio, for appellee. the Commission, as follows, to wit:

“1. That on September 28, 1978, Good Spirits, Inc., made
OPINION original application for a Wine Only Package Store Permit
and a Beer Retailer's Off-Premises License for the premises
JAMES, Justice. located at 11743 West Avenue, San Antonio, Texas.

This is an appeal from a judgment of a district court reversing “2. That Thomas C. Reynolds is currently the president of the
an order of the Texas Alcoholic Beverage Commission. We Applicant hereafter, Good Spirits, Inc.
affirm the district court's judgment.
“3. That Mr. Reynolds was approached in 1977 by a
On September 28, 1978, Plaintiff-Appellee Good Spirits, representative of Albertson's, Inc., with the idea of forming
Inc., a Texas Corporation, made applications for a Wine Good Spirits.
Only Package Store Permit and for a Beer Retailer's Off-
Premises License. On October 25, 1978, a hearing was held “4. That Albertson's is an out of state corporation with its main
before the County Judge of Bexar County after which both of offices in Florida.
Good Spirits' applications were approved. Said order of the

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Texas Alcoholic Beverage Commission v. Good Spirits, Inc., 616 S.W.2d 411 (1981)

“5. That prior to being approached by Albertson's, Mr.
Reynolds had no prior experience in the alcoholic beverage c. Good Spirits pays 4½% of its gross sales to Albertson's
business. to lease the premises for alcoholic beverage sales.

d. The life of the lease is one year after which time either
“6. That the basic structure of Good Spirits was set up before
party may terminate on thirty days notice.
Mr. Reynolds became involved.
e. The manager of the Albertson's grocery store is also the
“7. That Good Spirits is currently owned as follows: Thomas manager of Good Spirits.
C. Reynolds 5300 shares voting stock; Mr. Harris 5300 shares
voting stock; and Albertson's, Inc. 9,400 shares non-voting f. The manager of Good Spirits is paid $125.00 per month.
stock.
g. The two assistant managers of each Albertson's are also
under contract as the assistant managers of Good Spirits.
“8. That when a stockholder wishes to sell his stock, the other
shareholders must either approve the sale or buy the stock h. Good Spirits employs no one else except the president,
themselves.
Mr. Reynolds, who is paid $100.00 per week.

“9. That Good Spirits was financed with money from Mr. i. Good Spirits is not obligated to hire Albertson's
Reynolds, Mr. Harris, Albertson's, Inc., and a $200,000.00 employees but does so because of the marketing experience
loan from Frost National Bank in San Antonio, Texas, of the Albertson's manager and because it is economically
guaranteed by Albertson's, Inc. profitable for Good Spirits.

*413 “10. That Good Spirits subsequently renegotiated said j. Good Spirits has the right to hire and fire all employees.
note and later extinguished the Frost Bank note with a new
k. Good Spirits' managers, subject to the approval of
note from Brooks Field National Bank in San Antonio, Texas,
Mr. Reynolds, order and pay for alcoholic beverages as
guaranteed by Mr. Reynolds personally.
necessary and set competitive prices for the beverages
Good Spirits sells.
“11. That in the first year of operation, Good Spirits made
approximately $139,000.00 in note payments. l. Each Good Spirits location has its own checking account
to pay for alcoholic beverages.
“12. That Good Spirits has paid no dividends to its
stockholders. m. Good Spirits pays 1½% of its gross sales to Albertson's
under a service contract.
“13. That Good Spirits makes a net profit of approximately
7% of sales. n. The service contract may be terminated by either party
upon thirty days notice.
“14. That Good Spirits presently holds permits for seven
o. Under the service contract, Albertson's provides
locations throughout the State of Texas.
accounting services, use of cash registers, and employees
to ring up sales.
“15. That if the permit and license applied for is granted, the
operation under said permit and license would be virtually the p. Included in the accounting service, Albertson's provides
same as the current operations at the seven other locations. purchase and sales records, bank statements, filing of all
tax returns, weekly sales reports, payment of license fees,
“16. That the current Good Spirits businesses operate as payment of invoices and quarterly reports and financial
follows: statements.

a. Each is located in an Albertson's grocery store. q. Under the service contract Good Spirits also pays
directly to Albertson's $1040.00 per quarter at each
b. The area in which Good Spirits operates inside
location for Albertson's employees to stock the shelves and
Albertson's is not sectioned off from the area used by
cooler of Good Spirits.
Albertson's.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Texas Alcoholic Beverage Commission v. Good Spirits, Inc., 616 S.W.2d 411 (1981)

adopted, and based upon said fact findings, the Commission
r. Good Spirits has a right to hire an independent auditing reached opposite conclusions of law from those of the
firm to audit books which Albertson's keeps under the Hearings Examiner, and thereupon refused and denied the
service contract for Good Spirits. applications in question.
s. Other than a small sign inside the premises, Good Spirits
More specifically, the conclusions of law found by the
does no advertising.
Commission are as follows:

“17. Mr. Reynolds takes an active part in overseeing all
“A. That there is substantial evidence to conclude that the
aspects of the operation of Good Spirits.”
Applicant, Good Spirits, Inc., is a subterfuge corporation
for Albertson's, Inc., a foreign corporation with its principal
The “Proposal for Decision” made by the Hearings Examiner
offices in a State other than Texas, in violation of Section
went on to recite that “after consideration of the above
109.53 of the Texas Alcoholic Beverage Code.
findings of fact, the Hearings Examiner concludes the
following (Conclusions of Law):
“B. That there is substantial evidence to conclude that
the Applicant, Good Spirits, Inc., will not have and
“A. That there is not substantial evidence to conclude that
maintain exclusive occupancy and control of the entire
the Applicant, Good Spirits, Inc., is a subterfuge corporation
licensed premises in every phase of the storage, distribution,
for *414 Albertson's, Inc., a foreign corporation with its
possession, transportation, and sale of all alcoholic beverages
principal offices in a State other than Texas, in violation of
purchased, stored, or sold on the licensed premises, in
Section 109.53 of the Texas Alcoholic Beverage Code.
violation of Section 109.53 of the Texas Alcoholic Beverage
Code.
“B. That there is not substantial evidence to conclude
that the Applicant, Good Spirits, Inc., will not have and
“C. That there is substantial evidence to conclude that the
maintain exclusive occupancy and control of the entire
Applicant, Good Spirits, Inc., has entered into a device,
licensed premises in every phase of the storage, distribution,
scheme, or plan, which surrenders control of the employees,
possession, transportation, and sale of all alcoholic beverages
premises, or business of the said Applicant to persons other
purchased, stored or sold on the licensed premises, in
than the said Applicant, in violation of Section 109.53 of the
violation of Section 109.53 of the Texas Alcoholic Beverage
Texas Alcoholic Beverage Code.”
Code.

At the time of the hearing before the Hearings Examiner,
“C. That there is not substantial evidence to conclude that
Appellee Good Spirits was currently operating seven
the Applicant, Good Spirits, Inc., has entered into a device,
locations in the State of Texas under Texas Alcoholic
scheme, or plan which surrenders control of the employees,
Beverage Commission Licenses, all upon the same mode
premises, or business of the said Applicant to persons other
of operation as was proposed to be done pursuant to
than the said Applicant, in violation of Section 109.53 of the
the applications now in question. Moreover, prior to
Texas Alcoholic Beverage Code.”
the commencement of the operation of any of these
seven places of business, representatives of Appellee
Good Spirits went to Austin, Texas, and had a face
“RECOMMENDATION. to face conference with Mr. Joe Darnall, the Assistant
Administrator of the Commission hereinabove referred to,
“It is the recommendation of the Hearings Examiner that at which conference Appellee presented the instruments
the original application of Good Spirits, Inc., for a Wine forming the basis of the proposed business operation to
Only Package Store Permit and a Beer Retailer's Off-Premises determine whether they were in proper form and not in
License be GRANTED.” conflict with the Code. More specifically, Appellee presented
the proposed service agreements, employment contracts,
As stated before, Mr. Darnall, the Assistant Administrator of leases, corporate structure, and operational procedures to be
and for the Commission, entered the order of the Commission used in the conduct of business. At this conference Mr.
dated March 19, 1979, now appealed from, wherein the Darnall thoroughly reviewed the matters presented and told
findings of fact made by the Hearings Examiner were

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Texas Alcoholic Beverage Commission v. Good Spirits, Inc., 616 S.W.2d 411 (1981)

Spirits, and it was in the best business interest of Albertson's
Appellee's representatives that same were acceptable to the
to assist Good Spirits in its financing. There is nothing
Commission and were not in violation of the Texas Alcoholic
in this record to show anything except that Good Spirits
Beverage Code.
was operating independently and free of Albertson's control.
Although both corporations worked in close conjunction with
Since the Commission has approved Appellee's applications
each other, pursuant to their agreements and operations, we
seven times previously, what is the reasoning behind the
fail to see any aspect thereof that constitutes a violation of the
Commission's refusing the permits the eighth time? *415
Texas Alcoholic Beverage Code.
Appellant Commission argues that in the instant hearing,
the Commission learned for the first time that Albertson's,
[1] [2] [3] We recognize that this Court is not to
Inc., an out of State corporation, had gratuitously guaranteed
substitute its discretion for that committed to the agency by
a $200,000.00 note executed by Good Spirits to the Frost
the Legislature, but is to sustain the agency if its decision
National Bank of San Antonio, and that this one act made
is reasonably supported by substantial evidence. However, if
Good Spirits a subterfuge corporation in violation of Section
the evidence as a whole is such that reasonable minds could
109.53 of the Texas Alcoholic Beverage Code. We do not
not have reached the conclusion that the agency must have
agree.
reached in order to justify its action, then the order must be
set aside. Trapp v. Shell Oil Co., Inc., (1946) 145 Tex. 323,
This $200,000.00 note transaction was originally
198 S.W.2d 424.
consummated prior to the previous seven approvals of
applications by Mr. Darnall, was a debt of Good Spirits, and
The substantial evidence rule is a court review device to keep
was paid for entirely out of the funds of Good Spirits. This
the courts out of the business of administering regulatory
original note was thereafter renegotiated with Frost National
statutes enacted by the Legislature, but it remains the business
Bank and subsequently paid off by the securing by Good
of the courts to see that justice is administered to competing
Spirits of a new loan from Brooks Field National Bank in San
parties by governmental agencies. Lewis v. Metropolitan
Antonio, which last-mentioned note was guaranteed by Mr.
Savings and Loan Assn., (Tex.1977) 550 S.W.2d 11.
Reynolds personally. In short, this debt complained of by the
Commission was paid off in full prior to the hearing on the
In the case at bar, we agree with the trial court that the
application in question. This loan was presented as a part of
Commission's findings and conclusions are not reasonably
the operational structure of Good Spirits for the first seven
supported by substantial evidence, and that under the record
approved applications.
before us, the Commission's order was arbitrary. We therefore
affirm the trial court's judgment.
We are unable to see how Albertson's guaranty of this
$200,000.00 note for Good Spirits would cause Good Spirits
AFFIRMED.
to be and become a subterfuge corporation. After all,
Albertson's was a minority non-voting stockholder of Good

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
Texas Dept. of Ins. v. State Farm Lloyds, 260 S.W.3d 233 (2008)

Attorneys and Law Firms
260 S.W.3d 233
Court of Appeals of Texas, *236 Karen Pettigrew, Asst. Atty. Gen., Financial Litigation
Austin. Div., Austin, for Appellants.

TEXAS DEPARTMENT OF INSURANCE Susan G. Conway, Graves, Dougherty, Hearon & Moody, PC,
and Mike Geeslin, in his Capacity as Austin, for Appellee.
Commissioner of Insurance, Appellants
Before Chief Justice LAW, Justices WALDROP and
State Farm Lloyds, Cross–Appellant
HENSON.
v.
STATE FARM LLOYDS, Appellee
Texas Department of Insurance and Mike
OPINION
Geeslin, in his Capacity as Commissioner
of Insurance, Cross–Appellees. DIANE M. HENSON, Justice.

No. 03–07–00168–CV. | July 24, 2008. This appeal concerns a rate supervision order issued by
the Commissioner of Insurance (the “commissioner”). The
Synopsis order revoked State Farm Lloyds's ability to file and use
Background: Homeowners insurer petitioned for review, its insurance rates without prior approval from the Texas
declaratory judgment, and injunctive relief after Insurance
Department of Insurance (“TDI”). 1 State Farm Lloyds filed
Commissioner revoked ability to file and use rates without
a petition for judicial review, declaratory judgment, and
prior approval. The 250th Judicial District Court, Travis
injunctive relief in the district court. On cross-motions for
County, Scott H. Jenkins, J., entered summary judgment that
summary judgment, the district court granted each of the
Commissioner had authority to issue the order, but that it was
parties' motions in part and denied each motion in part,
arbitrary and capricious. Appeal and cross-appeal were taken.
holding that the commissioner had authority to issue the order
on one or more of the grounds listed except the ground that
State Farm Lloyds had exercised its right to judicial review.
Holdings: The Court of Appeals, Diane M. Henson, J., held The court further found that the supervision order was not
that: based on substantial evidence, was arbitrary and capricious,
and violated State Farm Lloyds's due process rights. Both
[1] the order was final and reviewable; parties appeal. We affirm the judgment of the trial court as
to the commissioner's authority to issue the rate supervision
[2] insurer had no right to a contested case hearing; order. In so doing, we uphold the trial court's finding that the
commissioner's order was arbitrary and capricious. As to due
[3] order was arbitrary and capricious in considering at least process and substantial evidence, we hold that a contested
one legally irrelevant factor; and case hearing was not required and, therefore, reverse the
trial court's judgment on those points. Accordingly, because
[4] Commissioner had authority to issue the order. we agree that the rate supervision order was arbitrary and
capricious, we affirm the trial court's judgment reversing the
rate supervision order. Because no contested case hearing was
Affirmed in part and reversed in part. required, we decline to remand the case to TDI for further
proceedings.

West Codenotes

Recognized as Unconstitutional FACTUAL AND PROCEDURAL BACKGROUND
V.A.T.S. Insurance Code, art. 5.26–1, § 4(Expired)
In response to problems existing under the flexible rate-
setting scheme in effect prior to 2003, including a largely

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Texas Dept. of Ins. v. State Farm Lloyds, 260 S.W.3d 233 (2008)

unregulated homeowners insurance market and escalating proposed rates immediately, but TDI can review and either
insurance rates, the Texas Legislature passed Senate Bill 14, disapprove the rates before they go into effect or disapprove
which amended the insurance code, establishing a new system further use of the filed rates after they go into effect. Id. art.
for regulating residential property insurance rates. Act of June 5.13–2, §§ 5, 7.
2, 2003, 78th Leg., R.S., ch. 206, 2003 Tex. Gen. Laws 907;
House Research Organization, Bill Analysis, Tex. S.B. 14, On June 26, 2003, State Farm Lloyds made its required
78th Leg., R.S. (2003); House Comm. Report, Tex. S.B. 14, rate filing under article 5.26–1, submitting its then-existing
78th Leg., R.S. (2003). When *237 legislators proposed SB rates as its initial rates. On August 18, 2003, TDI notified
14, ninety-five percent of the Texas homeowners insurance State Farm Lloyds of its determination that the rates must
market was unregulated, and insurance premiums in Texas be reduced by twelve percent because the rates “are not
were the highest in the country, often for reduced coverage. reasonable for the risks to which they apply.” State Farm
House Research Organization, Bill Analysis, Tex. S.B. 14, Lloyds appealed.
78th Leg., R.S. (2003); House Comm. Report, Tex. S.B. 14,
78th Leg., R.S. (2003). The new system set out in SB 14 Contesting TDI's determination, State Farm Lloyds requested
required insurers to file their rates with TDI, and TDI could a hearing before the commissioner under the terms of article
review and approve or disapprove these rates. Act of June 2, 5.26–1. See id. art. 5.26–1, §§ 3–4. The commissioner
2003, 78th Leg., R.S., ch. 206, 2003 Tex. Gen. Laws 907. heard the merits of the case on September 2 and 3, 2003.
To prevail in its appeal under the terms of article 5.26–
The system established by SB 14 was to be implemented in 1, State Farm Lloyds was required to show by clear and
three phases. Article 5.26–1, effective June 11, 2003, through convincing evidence that the rate reduction specified by TDI
September 1, 2004, set out the procedure by which insurers would produce inadequate rates. Id. art. 5.142, § 2(b)(2). An
were to quickly establish their initial rates under the new inadequate rate was defined as a rate that is “insufficient to
rate-regulation program. Tex. Ins.Code Ann. art. 5.26–1, § 2 sustain projected losses and expenses” and “endangers the
(West Supp.2004–2005). Under article 5.26–1, insurers were solvency of an insurer using the rate.” Id.; see also id. art.
required to file their initial regulated rates with TDI within 5.26–1, § 1(b) (“The definitions adopted under article 5.142
twenty days of the effective date of SB 14—June 11, 2003— of this code apply to this article.”). Following the hearing, the
and to implement the rates immediately. Id. art. 5.26–1, § 2(a). commissioner issued a final order affirming the department's
Within forty days of the filing deadline, TDI was required rate reduction, stating in a *238 single conclusion of law that
to review and either approve or modify the initial rates. Id. the rates recommended by TDI would produce adequate base
art. 5.26–1, § 2(b). If TDI failed to act within the designated rates for State Farm Lloyds.
statutory time period, the insurer's filed rates were deemed
approved. Id. art. 5.26–1, § 2(c). State Farm Lloyds appealed the commissioner's
determination to district court. The district court granted
The second phase of implementation was governed by article summary judgment in favor of State Farm Lloyds, declaring
5.142, effective June 11, 2003, through December 1, 2004, the department's actions void and unenforceable, vacating
which provided temporary rate-regulation procedures that the commissioner's rate order, and denying the department's
required prior approval of a new rate before the new rate request to remand the case for further administrative
could be used. Id. art. 5.142 (West Supp.2004–2005). Under proceedings. According to the district court, article 5.26–
the terms of article 5.142, insurers could change their initial 1 was unconstitutional on its face and as applied, violating
article 5.26–1 rates by filing their rates with TDI and awaiting the due course of law provision of the Texas Constitution
the commissioner's approval before implementing these rates. and the due process clause of the United States Constitution.
Id. art. 5.142, § 5. Article 5.26–1 was also unconstitutional, the court found,
because it violated the takings provisions of both the Texas
The final phase of implementation went into effect after Constitution and the United States Constitution. Further, the
December 1, 2004, and was governed by article 5.13–2. Id. court found that the department had denied State Farm Lloyds
art. 5.13–2, § 5 (West Supp.2004–2005). Under the terms due process by failing to follow the applicable contested case
of article 5.13–2, insurers were permitted to file rates and provisions of the Administrative Procedure Act (“APA”) and
implement the rates immediately without prior approval. Id. TDI's own contested case rules. See Tex. Gov't Code Ann.
This permanent file-and-use system allows insurers to use §§ 2001.051–.178 (West 2000); 28 Tex. Admin. Code §§

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Texas Dept. of Ins. v. State Farm Lloyds, 260 S.W.3d 233 (2008)

1.1–1.90 (2003). The commissioner and TDI appealed to this
Court. See Geeslin v. State Farm Lloyds, 255 S.W.3d 786 (1) From January 13, 2003 to the present State Farm
(Tex.App.-Austin 2008, no pet. h.). Lloyds has charged rates that were determined by the
Commissioner to be excessive and in violation of Texas
Nine days after the trial court declared TDI's rate order law, and which should have been reduced by twelve
void, TDI initiated disciplinary action against State Farm (12%).
Lloyds, seeking to prevent State Farm Lloyds from charging
(2) The Commissioner has repeatedly sought to
its current rates, which, according to TDI, were excessive,
correct the excessive rates charged by State Farm
to require State Farm Lloyds to pay restitution to affected
Lloyds, has attempted to prevent State Farm Lloyds
policyholders, and to impose sanctions on State Farm Lloyds.
from further charging excessive rates, and has
See Tex. Ins.Code Ann. arts. 1.02, 5.144 (West Supp.2004–
attempted to obtain refunds for State Farm Lloyds'
2005 & Supp.2007). The parties filed cross-motions for
policyholders charged such excessive rates in the
summary judgment in district court, seeking declarations as
past through means afforded him under Texas law.
to TDI's authority to act and impose sanctions under article
1.02 and chapters 82 and 84 of the insurance code. 2 See id. (3) In response to the Commissioner's efforts, State
art. 1.02, §§ 82.051–.056, 84.021–.022 (West Supp.2005). Farm Lloyds repeatedly failed to reduce excessive
rates or pay refunds, continued to file excessive
The trial court denied State Farm Lloyds's motion for rates, and prevented a final determination of
summary judgment and granted TDI's motion, holding that whether its rate was legal.
TDI could seek restitution and sanctions from State Farm
Lloyds based on State Farm Lloyds's allegedly excessive (4) Since September 2003, State Farm Lloyds
rates. State Farm Lloyds appealed to this Court. The matter is has avoided and thwarted any judicial
pending under cause number 03–05–00524–CV. procedure to determine whether their rates are
excessive, unreasonable or unfairly discriminatory.
On December 6, 2004, the commissioner issued a rate Instead, State Farm Lloyds has challenged the
supervision order, determining that “State Farm Lloyds' rates Commissioner's regulatory authority on procedural
require supervision because of the rating practices of State grounds, forestalling the effective application of
Farm Lloyds.” According to the commissioner's order, “State such authority, and preventing a final determination
Farm Lloyds has charged excessive rates for homeowners of whether State Farm Lloyds' homeowners rates
insurance from June 11, 2003, to the present.” State Farm are legal.
Lloyds sought judicial review of this order in district court,
(5) In May 2006 State Farm Lloyds again filed
arguing that the order was invalid because it was based on
rates that were determined by the Commissioner
excessive rates, not rating practices. On July 7, 2005, the
to be excessive, inadequate, unreasonable, and/or
trial court granted State Farm Lloyds's motion for summary
unfairly discriminatory for the risks to which they
judgment in cause number GN500537 without stating the
apply in violation of Texas law. Specifically:
grounds, ordering “that Commissioner's Order No. 04–1164
dated December 6, 2004 is REVERSED.” The parties did not a) the provision for non-catastrophe incurred losses
appeal this judgment. and loss adjustment expenses is excessive;

On May 30, 2006, pursuant to article 5.13–2, State Farm b) the provision for hurricane losses and loss
Lloyds filed new proposed homeowners insurance rates with adjustment expenses is excessive;
TDI. In response, on July 21, 2006, the *239 commissioner
c) the provision for fixed expenses is excessive;
issued both an order disapproving State Farm Lloyds's
rate filing and the supervision order at issue in this case, d) the provisions for underwriting profits,
which indefinitely revoked State Farm Lloyds's right to file contingencies, and surplus note produce an
and use its rates without prior approval from TDI. 3 The unreasonably high rate of return;
rate supervision order was based on the following “Rating
Practices Requiring Supervision”: e) the adjustment to remove mold losses did not
remove mold losses for years prior to 2001, even

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Texas Dept. of Ins. v. State Farm Lloyds, 260 S.W.3d 233 (2008)

though State Farm Lloyds reported such losses Farm Lloyds's due process rights in issuing the order, that
in previous TDI data calls; the order was not supported by substantial evidence, and that
the commissioner's decision to issue the order was arbitrary
f) the premium trend factor for inflation was and capricious. The court granted summary judgment for
inadequate relative to movement in Texas the department on the grounds that the commissioner had
building costs in recent years, and thus produced authority to issue the supervision order on all grounds except
an excessive rate indication; the ground that State Farm Lloyds exercised its right to
judicial review. The court did not reach the question of
g) the zone system used to classify risk and
whether res judicata and collateral estoppel prevented the
price insurance results in large rate differences
commissioner from issuing the supervision order.
between adjacent geographical areas which are
not actuarially justified, and result in unfair
On May 22, 2008, this Court issued its decision in the
discrimination between policyholders of the
first rate appeal. Geeslin v. State Farm Lloyds, 255 S.W.3d
same class and essentially the same hazard in
786. We concluded that the portion of section 4 of
violation of Texas law;
article 5.26–1 setting out the insurer's proof requirement
*240 h) the selection of territorial rate relativities is unconstitutional on its face and as applied to State
results in rates for certain territories that do not Farm Lloyds and that State Farm Lloyds was denied any
reasonably relate to their actual risk exposure; constitutionally meaningful review of TDI's rate order.
Accordingly, we affirmed the judgment of the trial court as
i) the indicated territorial relativities are to the insurer's proof requirement and as to due process. We
inconsistently applied, resulting in excessive severed the unconstitutional provision requiring an insurer
rates for many policyholders; to prove that a rate reduction by TDI would produce
inadequate rates, reversed the trial court's judgment as to the
j) the two percent retained hurricane risk provision constitutionality of the remainder of the statute, and remanded
is unsupported and excessive; to the department for further proceedings consistent with
the opinion. As we explained, under the remaining, valid
k) the relative risk attributable to hurricanes is
provisions of article 5.26–1, an insurer must show by clear
improperly used to determine the needed overall
and convincing evidence that a rate filed under article 5.26–1
company operating return, even though non-
is “just, reasonable, adequate, not excessive, and not unfairly
hurricane losses represent the vast majority of
discriminatory for the risks to which it applies,” which means
expected company exposure, and are less risky,
that the rate must allow for a “reasonable profit,” but not one
resulting in an overstated rate of return; and
that is “unreasonably high in relationship to the insurance
l) the proposed substantial increase in the cost coverage provided.” See Tex. Ins.Code Ann. art. 5.26–1, §
of excess of loss reinsurance purchased by 2(b), art. 5.142, §§ 2(b)(1–3), 3(d), art. 1.02(c)(1–3).
State Farm Lloyds from State Farm Mutual
Automobile Insurance Company is unsupported We now address the validity of the rate supervision order at
and not reasonable. issue in this third appeal.
State Farm Lloyds filed suit in district court, seeking
judicial review of the rate supervision order and a judicial
declaration that the commissioner had no authority to issue
*241 ANALYSIS
the supervision order on the grounds stated. The parties filed
cross-motions for summary judgment in the district court. On Standard of review
March 21, 2007, the district court granted in part and denied [1] The material facts are not in dispute, and the propriety of
in part the motions of both parties, and reversed and remanded summary judgment is a question of law. Westcott Commc'ns,
the commissioner's supervision order. The court granted Inc. v. Strayhorn, 104 S.W.3d 141, 145 (Tex.App.-Austin
summary judgment for State Farm Lloyds in part, finding that 2003, pet. denied). We review the district court's summary
the commissioner had no authority to issue the supervision judgment de novo. Valence Operating Co. v. Dorsett, 164
order on the grounds that State Farm Lloyds exercised its S.W.3d 656, 661 (Tex.2005); Provident Life & Accident
right to judicial review, that the commissioner violated State Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex.2003). When

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Texas Dept. of Ins. v. State Farm Lloyds, 260 S.W.3d 233 (2008)

the material facts are not in dispute, both parties move for of the Commissioner of Insurance” and is signed by the
summary judgment, and the district court grants one motion commissioner. Under the plain language of the statute, such
and denies the other, we review the summary judgment an order can be reviewed by the district court.
evidence presented by both sides, determine all questions
presented, and render the judgment that the district court The department argues that, because chapter 36 provides
should have rendered. Texas Workers' Comp. Comm'n v. that “[j]udicial review of the action is under the substantial
Patient Advocates of Tex., 136 S.W.3d 643, 648 (Tex.2004); evidence rule and shall be conducted under Chapter 2001,
FM Props. Operating Co. v. City of Austin, 22 S.W.3d 868, Government Code,” this particular supervision order is not
872 (Tex.2000). reviewable. According to the department's reasoning, because
no hearing was held and no administrative record was created,
there is nothing for the district court to review. We disagree.
The department's appeal Although the statute *242 sets out a substantial evidence
The trial court granted summary judgment in favor of State standard of review, nothing in the language of the statute
Farm Lloyds on the grounds that the commissioner had no requires that there have been an administrative hearing
authority to issue the supervision order based on State Farm and corresponding administrative record as a prerequisite
Lloyds's exercise of its right to judicial review, that the for judicial review. Such an interpretation would lead
manner in which the commissioner issued the supervision to the conclusion that TDI could simply refuse to hold
order violated State Farm Lloyds's due process rights, that the administrative hearings and then issue an order that would be
supervision order was not supported by substantial evidence, immune from judicial review, a result that could hardly be
and that the commissioner's decision to issue the order contemplated by the statutory review process. See Fleming
was arbitrary and capricious. The department appeals these Foods of Tex., Inc. v. Rylander, 6 S.W.3d 278, 284 (Tex.1999)
determinations. (explaining that a court should not adopt a statutory
construction that would render the statute meaningless or lead
to absurd results).
Jurisdiction
[2] In its first point of error, the department argues that
[3] Further, the APA provides that when a court reviews an
this Court and the trial court have no jurisdiction to review
agency decision under the substantial evidence rule,
the rate supervision order. According to the department,
because the applicable statute requires no hearing, there is [the] court may not substitute its judgment for the judgment
no administrative record for this Court to review, and this of the state agency on the weight of the evidence on
Court cannot review the supervision order under the terms questions committed to agency discretion but:
of either the insurance code or the government code. State
Farm Lloyds responds that this Court and the trial court have (1) may affirm the agency decision in whole or in part;
jurisdiction over its claim under the Uniform Declaratory and
Judgments Act (“UDJA”) and pursuant to chapter 36,
subchapter D, of the insurance code and that State Farm (2) shall reverse or remand the case for further
Lloyds has an independent common-law right to judicial proceedings if substantial rights of the appellant have
review. been prejudiced because the administrative findings,
inferences, conclusions, or decisions are:
Chapter 36 of the insurance code grants broad authority
(A) in violation of a constitutional or statutory
for judicial review of the commissioner's actions. The
provision;
statute authorizes judicial review of a “decision, order,
rate, rule, form, or administrative or other ruling of (B) in excess of the agency's statutory authority;
the commissioner.” Tex. Ins.Code Ann. § 36.201 (West
Supp.2007). Section 36.202 further provides: “[a]fter failing (C) made through unlawful procedure;
to get relief from the commissioner, any insurance company
(D) affected by other error of law;
or other party at interest, who is dissatisfied with an action
of the commissioner may file a petition for judicial review
against the commissioner as defendant.” Id. § 36.202 (West
Supp.2007). The supervision order is entitled “Official Order

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Texas Dept. of Ins. v. State Farm Lloyds, 260 S.W.3d 233 (2008)

the district court have jurisdiction to address State Farm
(E) not reasonably supported by substantial evidence Lloyds's claim under chapter 36 of the insurance code. See
considering the reliable and probative evidence in Tex. Ins.Code Ann. §§ 36.201–.202.
the record as a whole; or
Having concluded that the district court and this Court have
(F) arbitrary or capricious or characterized by abuse
jurisdiction to address State Farm Lloyds's claims pursuant to
of discretion or clearly unwarranted exercise of
chapter 36 of the insurance code, we overrule the department's
discretion.
first point of error. 4
Tex. Gov't Code Ann. § 2001.174. Thus, the substantial
evidence standard of review requires only that the court “not
substitute its judgment for the judgment of the state agency Hearing
on the weight of the evidence” but allows the court to address [5] In its second point of error, the department argues
other aspects of the decision, including whether the decision that the commissioner was not required to hold a hearing
violated a constitutional or statutory provision, whether the and develop a record before issuing the rate supervision
agency acted outside its authority in issuing the decision, order. According to the department, because no hearing was
and whether the agency violated procedural requirements in required, the supervision order cannot be found to be arbitrary
issuing the decision. Id. Several of State Farm Lloyds's claims and capricious because of a lack of substantial evidence. As
—that the actions for which the commissioner placed it under support for this argument, the department argues that nothing
supervision are not “rating practices,” that the supervision in section 5A of article 5.13–2 expressly requires a hearing
order is arbitrary and capricious, that the commissioner acted and that State Farm Lloyds has no property right in the
outside his authority in issuing the supervision order, and that statutory file-and-use system and, therefore, no constitutional
its due process rights were violated—do not require review right to a hearing. State Farm Lloyds counters that its statutory
of an administrative record, and all are authorized grounds right to file and use its rates without prior approval is a
for reversal or remand of a decision under the APA. See id. constitutionally protected property interest; therefore, its due
§ 2001.174(2). process rights were violated when the commissioner issued
the supervision order without first holding a hearing.
[4] The department further argues that, to be reviewable, an
agency order must be final. Here, the department contends, This Court has long held that, absent express statutory
there is no final order to review. Although the department authority, the APA does not independently provide a right to
cites cases to support its position and explains the rationale a contested case hearing. Texas Logos, L.P. v. Texas Dep't
behind requiring a final order before review, it never of Transp., 241 S.W.3d 105, 123 (Tex.App.-Austin 2007, no
adequately explains why the supervision order does not pet.); Eldercare Props., Inc. v. Texas Dep't of Human Servs.,
qualify as a final agency action. According to the department, 63 S.W.3d 551, 557 (Tex.App.-Austin 2001, pet. denied),
“[t]he order State Farm Lloyds challenges sets a regulatory overruled on other grounds by Texas Dep't of Protective &
process in motion; that process gives State Farm Lloyds Regulatory Servs. v. Mega Child Care, Inc., 145 S.W.3d
the opportunity to be heard and ultimately seek judicial 170, 173 (Tex.2004); Best & Co. v. State Bd. of Plumbing
review of orders that result from that process.” We find Exam'rs, 927 S.W.2d 306, 309–10 (Tex.App.-Austin 1996,
the department's analysis unpersuasive. *243 An agency writ denied). 5 State Farm Lloyds does not contend that any
order does not become interlocutory simply because it provision in the statute requires a hearing before an order is
affects the administrative process. The department is correct issued pursuant to article 5.13–2, section 5A, and we find
that the supervision order allows State Farm Lloyds to none. In the absence of express statutory authority, State Farm
file rates for the commissioner's review and to request Lloyds had no right to a contested case hearing.
an administrative hearing if the commissioner disapproves
those rates; however, nothing in that established process [6] [7] State Farm Lloyds argues that, even in the absence
allows State Farm Lloyds to challenge the supervision order of express statutory authority, it was entitled to a contested
itself. The only means of challenging the commissioner's case hearing because its statutory right to file and use its rates
supervision order is to seek judicial review of the order. We is a constitutionally protected property interest that cannot be
find nothing in the order to suggest that it is not a final, taken away without due process. There is no vested right in
completed agency action. We conclude that this Court and the continuation of a current law. *244 Subaru of Am. v.

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Texas Dept. of Ins. v. State Farm Lloyds, 260 S.W.3d 233 (2008)

David McDavid Nissan, Inc., 84 S.W.3d 212, 219 (Tex.2002);
Board of Med. Exam'rs for Tex. v. Nzedu, 228 S.W.3d 264, (1) an insurer's rates require supervision because of the
273 (Tex.App.-Austin 2007, pet. denied). In Subaru, the court insurer's financial condition;
explained:
(2) an insurer's rates require supervision because of the
that no one has a vested right in insurer's rating practices; or
the continuance of present laws in
(3) a statewide insurance emergency exists.
relation to a particular subject, is a
fundamental proposition; it is not open Tex. Ins.Code Ann. art. 5.13–2, § 5A. The legislature is
to challenge. The laws may be changed unlikely to have intended that a contested case hearing be
by the Legislature so long as they do held to determine whether a statewide emergency exists.
not destroy or prevent an adequate Requiring such a hearing would require the participation
enforcement of vested rights. There of all regulated insurers in Texas and would defeat the
cannot be a vested right, or a property statute's purpose of providing the commissioner with quick
right, in a mere rule of law. and efficient means for addressing a statewide insurance
emergency. The same could be true for an insurer's financial
Subaru, 84 S.W.3d at 219 (quoting Middleton v. Texas Power
condition. An insurer's financial condition may become such
& Light Co., 108 Tex. 96, 185 S.W. 556, 560 (1916)). The
that the commissioner is compelled to quickly issue a rate
distinction between a vested right and a “mere rule of law”
supervision order to protect Texas policyholders. In setting
turns on whether the statute granting the right in question is
up such a process, the legislature likely contemplated giving
substantive or procedural in nature. See id.
the commissioner a tool by which he could quickly and
expeditiously address acute issues that may arise with insurers
Here, the protected right claimed by State Farm Lloyds is
the right to a certain procedure in setting its rates. In other or with the insurance market as a whole. 6 *245 Requiring
words, the vested right claimed by State Farm Lloyds is not a contested case hearing, which is often a slow and lengthy
the right to set a certain rate but the right to a certain procedure proceeding, is inconsistent with this intent.
in setting that rate. State Farm Lloyds is, thus, claiming a
property interest in a procedural rather than a substantive In sum, we conclude that no statutory provision requires
right. While State Farm Lloyds may have a vested right in the commissioner to hold a contested case hearing before
a reasonable rate, we find no vested right in the method of issuing a rate supervision order, that State Farm Lloyds has
establishing or reviewing those rates. no constitutionally protected right in any given rate setting
procedure, and that the legislature did not intend to require a
Further, the language of the statute points to the legislature's contested case hearing under section 5A. We therefore hold
intent that no contested case hearing be required before the that a contested case hearing was not required, and we reject
commissioner issues a rate supervision order. The primary State Farm Lloyds's contentions that the supervision order is
rule in statutory interpretation is that a court must give effect void on those grounds.
to legislative intent. Crown Life Ins. Co. v. Casteel, 22 S.W.3d
378, 383 (Tex.2000). In determining legislative intent, we Also subsumed in the department's second point of error is its
read the statute as a whole and interpret it in a manner that challenge to the trial court's conclusions that the supervision
gives effect to all and not just isolated portions. City of San order was not supported by substantial evidence and that
Antonio v. City of Boerne, 111 S.W.3d 22, 25 (Tex.2003). The the order was arbitrary and capricious. As to substantial
statute at issue here provides: evidence, because we agree with the department that no
hearing is or was required, no administrative record is or was
(a) The commissioner by order may require an insurer developed. Absent an administrative record, no substantial
to file with the commissioner all rates, supplementary evidence review is required or even possible. However, as
rate information, and any supporting information State Farm Lloyds recognizes, even without an administrative
as prescribed by this section if the commissioner record, judicial review may still be possible on other grounds:
determines that: “Even if State Farm Lloyds were not entitled to a hearing,
the District Court's reversal of the Supervision Order is still
correct. The Order is also arbitrary and capricious because

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Texas Dept. of Ins. v. State Farm Lloyds, 260 S.W.3d 233 (2008)

it is based on legally irrelevant factors, and is in excess of granting summary judgment for State Farm Lloyds, the trial
the Commissioner's statutory authority.” State Farm Lloyds is court determined that the commissioner had no authority to
apparently arguing that, if no hearing was required, reversal issue the supervision order on the grounds that State Farm
of the order could still be had, but reversal would have to be Lloyds exercised its right to judicial review. The department
based on grounds other than a lack of substantial evidence. did not appeal this determination. Thus, even if some of the
factors on which the order was based were relevant, at least
As the department's final component in its second point of one of the factors was irrelevant. In other words, even if the
error, we next address whether the supervision order was commissioner also considered other legally relevant factors,
arbitrary and capricious. Implied in the department's single the order was based in part on at least one legally irrelevant
sentence on this issue is its argument that because State Farm factor. The commissioner's supervision order did not consider
Lloyds was not entitled to a hearing, and because there was each factor as an independent ground for rate supervision;
no requirement that the supervision order be supported by rather, the order was based on all of the “rating practices
substantial evidence, the supervision order cannot be arbitrary identified.” Because the commissioner considered at least one
or capricious. According to the department: “Because no legally irrelevant factor in issuing his order, we agree that the
hearing is required, the absence of a hearing record does order is arbitrary and capricious.
not make the order invalid or arbitrary and capricious as
not supported by substantial evidence.” The department, Having found that no hearing was required and, therefore, that
however, provides no additional argument on this point. no substantial evidence review was required, we reverse the
judgment of the trial court as to those points. However, having
[8] [9] [10] An agency's order is arbitrary and capricious determined that the commissioner's order was arbitrary and
if the order is not supported by substantial evidence. Texas capricious, we affirm the trial court's judgment as to that
Health Facilities Comm'n v. Charter Medical–Dallas, Inc., point. Because we have upheld one of the trial court's grounds
665 S.W.2d 446, 454 (Tex.1984). Even if supported by for reversal of the supervision order, we accordingly uphold
substantial evidence, however, an agency order may be the trial court's reversal of that order; however, because we
arbitrary and capricious if a denial of due process has have found that no contested case hearing was required, we
prejudiced the litigant's rights or if the agency has improperly decline to remand the case to TDI for further proceedings.
based its decision on non-statutory criteria. Id.; Kawasaki
Motors Corp. U.S.A. v. Texas Motor Vehicle Comm'n,
855 S.W.2d 792, 794–95 (Tex.App.-Austin 1993, no writ). State Farm Lloyds's appeal
Similarly, an agency decision may be found to be arbitrary The trial court granted summary judgment in favor of
and capricious if it is based on legally irrelevant factors the department on the grounds that the commissioner had
or if legally relevant factors were not considered or if the authority to issue the supervision order on one or more of
agency reached an unreasonable result. City of El Paso v. the grounds stated in the order, except the ground that State
Public Util. Comm'n, 883 S.W.2d 179, 184 (Tex.1994); Dunn Farm Lloyds exercised its right to judicial review. State Farm
v. Public Util. Comm'n, 246 S.W.3d 788, 791 (Tex.App.- Lloyds appeals these determinations.
Austin 2008, no pet.) (“We will consider an administrative
agency's decision to be arbitrary and capricious or an abuse
Rating practices
of discretion if the agency reaches a completely unreasonable
[12] In its first point of error, State Farm Lloyds argues
*246 result after weighing the relevant factors established
that the commissioner lacks authority to issue the supervision
by the legislature.”).
order on the grounds that State Farm Lloyds charged or
filed excessive rates. According to State Farm Lloyds, the
[11] Here, we have already determined that, because State
grounds on which the commissioner based his order are not
Farm Lloyds was not entitled to a hearing, there has been
rating practices under article 5.13–2, section 5A; therefore,
no due process violation, and there was no requirement that
the commissioner had no authority to issue the order on those
the order be supported by substantial evidence. We must
grounds. The department responds that State Farm Lloyds's
now determine whether the commissioner's decision was
interpretation of rating practices is too narrow and that “
arbitrary and capricious because the commissioner based
‘rating practices' includes an insurer's activities relating to all
the order on legally irrelevant factors, failed to consider
matters involved in the filing and use of rates.”
legally relevant factors, or reached an unreasonable result. In

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Texas Dept. of Ins. v. State Farm Lloyds, 260 S.W.3d 233 (2008)

The insurance code defines rates as “the cost of insurance were “excessive, inadequate, unreasonable, and/or unfairly
per exposure unit ... before any application of individual risk discriminatory for the risks to which they apply” because,
variations based on loss or expense considerations.” Tex. among other reasons:
Ins.Code Ann. art. 5.13–2, § 3(a)(5). The insurance code
does not define rating practices, and the term appears only g) the zone system used to classify risk and price
in section 5A of article 5.13–2. According to the department, insurance results in large rate differences between
because article 5.13–2's express purpose is to “promote the adjacent geographical areas which are not actuarially
public welfare by regulating rates to prohibit excessive, justified, and result in unfair discrimination between
inadequate, or unfairly *247 discriminatory rates,” in the policyholders of the same class and essentially the same
context of article 5.13–2, an insurer's rating practices must hazard in violation of Texas law;
include “all matters involved in the filing and use of rates,”
h) the selection of territorial rate relativities results in rates
including:
for certain territories that do not reasonably relate to their
1) whether or not the rating system has an unfair impact on actual risk exposure;
certain segments of the insured population or otherwise
i) the indicated territorial relativities are inconsistently
violates public policy objectives;
applied, resulting in excessive rates for many
2) the marketing objectives embodied in existing or policyholders;
proposed rating structures;
These grounds (grounds g, h, and i) do not implicate State
3) whether or not the rating structures or prices are based Farm Lloyds's rate, which is defined as “the cost of insurance
on sound actuarial principles; and per exposure unit ... before any application of individual risk
variations based on loss or expense considerations”; rather,
4) whether or not the rates represent a continuation of these grounds implicate State Farm Lloyds's application of its
past approaches that have been repeatedly rejected or rates to individual policyholders. Thus, even assuming that
otherwise been shown to be in error. the commissioner has no authority to address rates through
an article 5.13–2, section 5A, supervision order, and that
State Farm Lloyds counters that, by context, rating practices excessive rates must be addressed under the specific rate
refer only to how an insurer applies its various filed disapproval provisions set out in section 7 of article 5.13–
rates to different insured individuals and businesses. State 2, as State Farm Lloyds contends, the commissioner has the
Farm Lloyds points out that the word “rating” appears in authority to issue a supervision order on the basis of the
two other definitions included in article 5.13–2. A “rating above-mentioned practices because those practices involve
manual” is defined as “a publication or schedule that not the rates *248 themselves but the application of rates to
lists rules, classifications, territory codes and descriptions, individual policyholders. We, therefore, agree with the trial
rates, premiums, and other similar information used by an court that “the Commissioner has authority to issue Official
insurer to determine the applicable premium charged an Order No. 06–0746 on one or more of the grounds stated in
insured.” Tex. Ins.Code Ann. art. 5.13–2, § 3(a)(6). Similarly, Official Order 06–0746, except on the ground that State Farm
“supplementary rating information” is defined as information
Lloyds exercised its right to judicial review.” 7 We overrule
“used by the insurer to determine the applicable premium for
State Farm Lloyds's first point of error.
an insured.” Id. art. 5.13–2, § 3(a)(8). Thus, according to State
Farm Lloyds, because other definitions that include the term
“rating” apply to “determine the applicable premium” for an Res judicata and collateral estoppel
insured, a rating practice, similarly, is intended to refer only [13] In its second point of error, State Farm Lloyds argues
to how an insurer applies its filed rates to individual insureds. that res judicata prohibits the commissioner from issuing the
supervision order on the ground that State Farm Lloyds's
Even if we accept State Farm Lloyds's interpretation of existing rates are excessive. According to State Farm Lloyds,
the meaning of rating practices, however, we find that one by reversing the commissioner's December 6, 2004 rate
or more of the grounds included in the commissioner's supervision order in cause number GN500537, the trial court
supervision order involves the application of State Farm found that State Farm Lloyds's rates cannot be placed under
Lloyds's filed rates to individual insureds. Specifically, the
order finds that State Farm Lloyds's May 6, 2006 filed rates

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Texas Dept. of Ins. v. State Farm Lloyds, 260 S.W.3d 233 (2008)

supervision on this ground and, because the department did
Here, as in his 2004 rate supervision order, the commissioner
not appeal the judgment, the department is bound by it.
concluded that “[f]rom January 13, 2003 to the present State
Farm Lloyds has charged rates that were determined by the
[14] [15] [16] [17] [18] The general doctrine of res
Commissioner to be excessive and in violation of Texas
judicata encompasses two distinct categories: (1) res judicata,
law, and which should have been reduced by twelve percent
or claim preclusion, and (2) collateral estoppel, or issue
(12%).” Unlike the 2004 supervision order, however, we
preclusion. Barr v. Resolution Trust Corp., 837 S.W.2d 627,
conclude that the commissioner's 2006 supervision order
628 (Tex.1992). Res judicata, or claim preclusion, precludes
was based in part on State Farm Lloyds's rating practices.
relitigation of claims that have been finally adjudicated or
Nothing in the trial court's 2005 judgment prohibits issuing a
that arise out of the same subject matter and that could have
supervision order based on rating practices. The trial court's
been litigated in the prior action. Amstadt v. United States
judgment simply determines that the commissioner's 2004
Brass Corp., 919 S.W.2d 644, 652 (Tex.1996). It requires
order is invalid. Here, the 2006 supervision order includes
proof of the following elements: (1) a prior final judgment on
one or more grounds that are based on rating practices,
the merits by a court of competent jurisdiction; (2) identity
not excessive rates. We conclude that, to the extent that
of parties or those in privity with them; and (3) a second
the commissioner's 2006 supervision order included rating
action based on the same claims as were raised or could
practices, the order was not prohibited by res judicata or
have been raised in the first action. Id. Collateral estoppel,
or issue preclusion, is more narrow than res judicata because collateral estoppel. 9 Accordingly, we overrule State Farm
it only prevents relitigation of identical issues of fact or law Lloyds's second point of error.
that were actually litigated and essential to the judgment in a
prior suit. Barr, 837 S.W.2d at 628. Once an actually litigated
and essential issue is determined, that issue is conclusive in CONCLUSION
a subsequent action between the same parties. Van Dyke v.
Boswell, O'Toole, Davis & Pickering, 697 S.W.2d 381, 384 Having concluded that the commissioner's order included
(Tex.1985). one or more grounds that qualify as rating practices under
article 5.13–2, section 5A, and that, to that extent, the
In the 2004 supervision order that was the subject of commissioner's order was not prohibited by res judicata
the trial court's 2005 summary judgment order in cause or collateral estoppel, we overrule State Farm Lloyds's
number GN500537, the commissioner set out only the points of error. We further conclude that State Farm Lloyds
following rating practice: “Based on the information currently was entitled to judicial review and accordingly overrule
available to TDI, State Farm has charged excessive rates for the department's jurisdictional complaint. Finding that State
homeowners insurance from June 11, 2003, to the present.” Farm Lloyds was not entitled to a contested case hearing
State Farm Lloyds sought review of the commissioner's and that no substantial evidence review was required, we
2004 order in district court and filed a motion for summary sustain the department's complaint as to these points, but,
judgment, arguing that the order was invalid because it holding that the commissioner's order was arbitrary and
was based on excessive rates, not rating practices. The capricious, we overrule the department's complaint as to this
trial court granted summary judgment in part, voiding the point. Accordingly, we affirm the trial court's order reversing
commissioner's 2004 rate supervision order. 8 Thus, the trial the commissioner's supervision order; however, because no
court's order determined only that the 2004 supervision order contested case hearing was or is required, we decline to
was void. The judgment did not determine the validity of remand the case to TDI for further proceedings.
any other future rate supervision order, as future *249 rate
supervision orders could be based on completely different and
valid criteria.

Footnotes
1 Because their interests do not diverge, we refer to appellants// cross-appellees collectively as the “department,” but, when necessary
in recounting historical facts, we distinguish between the actions of the commissioner and TDI.

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Texas Dept. of Ins. v. State Farm Lloyds, 260 S.W.3d 233 (2008)

2 While the case was pending in district court, TDI referred the disciplinary action to the State Office of Administrative Hearings
(“SOAH”) for hearing. The SOAH judge abated the action pending final decision by this Court in the first rate appeal, cause number
03–05–00067–CV.
3 State Farm Lloyds requested a hearing on the commissioner's rate disapproval order pursuant to section 7(b) of article 5.13–2. See
Tex. Ins.Code Ann. art. 5.13–2, § 7 (West Supp.2004–2005). A contested case on the rate disapproval order is pending at SOAH.
The rate disapproval order is not at issue in this appeal.
4 Having determined that jurisdiction exists under chapter 36, subchapter D, of the insurance code, we need not address State Farm
Lloyds's additional arguments that jurisdiction also exists under the Uniform Declaratory Judgments Act (“UDJA”) and that it has
an independent common-law right to judicial review.
5 Neither party has asserted a basis for our distinguishing or departing from these decisions.
6 In the context of this case, we are compelled to note that this broad authority is granted only to address rating practices, and we
express no opinion here as to whether all grounds included in the commissioner's rate supervision order are included within the scope
of a rating practice.
7 We do not address whether the commissioner had authority to issue the rate supervision order on the ground that State Farm Lloyds
exercised its right to judicial review, as the department does not appeal this issue.
8 The trial court denied the remainder of the summary judgment as moot. Because the trial court had invalidated the rate supervision
order, it no longer needed to determine whether rates filed by State Farm Lloyds pursuant to the order were deemed approved by
operation of law under article 5.13–2, section 5A(d).
9 Similarly, to the extent that the commissioner issued the order based on excessive rates rather than rating practices, the order might
be prohibited by res judicata. As noted, we have found that three specific grounds amount to rating practices and, therefore, affirm
the trial court's conclusion that “the Commissioner has authority to issue Official Order No. 06–0746 on one or more of the grounds
stated in Official Order 06–0746, except on the ground that State Farm Lloyds exercised its right to judicial review”; however, we
neither address nor decide whether other specific grounds in the supervision order are based on rating practices or excessive rates.

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 11
Thomas v. Casale, 924 S.W.2d 433 (1996)

Another co-respondent named by Linda in the divorce action
924 S.W.2d 433
is Robert's alleged alter ego, Seahorse Pool Corporation.
Court of Appeals of Texas,
Linda joined the co-respondents on a theory that Robert
Fort Worth.
defrauded her by secretly depositing money belonging to the
Patricia Susan THOMAS, Appellant, marital estate into a bank account that the evidence shows
v. was created before or during Patricia's divorce and existed
Linda Lorraine CASALE, Appellee. in her name. Linda's suit alleged that Robert had paramours
on whom he lavished excessive gifts and expenditures with
No. 2–95–178–CV. | June 13, 1996. community funds, and that, without Linda's knowledge,
| Rehearing Overruled July 11, 1996. Robert wasted and squandered portions of the community
estate and misused his corporation as a conduit for that
Husband's paramour appealed from order of the 231st District purpose.
Court, Tarrant County, Randy Catterton, J., which required
her to pay into registry of court amounts which husband had Although the petition only implies that Patricia was Robert's
allegedly spent on paramour. The Court of Appeals, Holman, paramour, the evidence establishes that she was. At times,
J., held that: (1) Uniform Fraudulent Transfer Act was not Robert arranged for employment of Patricia and her son by
applicable; (2) wife did not establish that paramour knew Seahorse Pool Corporation. Linda's suit alleged that Robert
about husband's intent to defraud community estate; and (3) devised a conspiracy to defraud her and that Patricia had
there was no evidence to conclude that money still on deposit notice of Robert's intent to injure Linda's community property
in paramour's account at the time of judgment was an in-kind rights. In her unverified answer, Patricia said she was not
equivalent to the money that husband had deposited in the a party to fraud and denied that she had ever known of
account. Robert's alleged intent to injure Linda's rights. Patricia also
answered that the money Robert transferred into her account
Affirmed in part and reversed and rendered in part. was presumed to be subject to his sole management control
and disposition and that she had no notice to the contrary.
Livingston, J., dissented without opinion.
The divorce was granted after the court considered the
evidence and issues in a four-day bench trial ending March 2,
Attorneys and Law Firms 1995. Patricia did not attend the trial, but her attorney did. The
judgment was signed April 27, 1995 and ordered Patricia to
*434 Elizabeth Sturdivant Kerr, Watson, Kerr & Parker,
surrender $61,753.00 of the money in her bank account. The
P.C., Fort Worth, for Appellant.
court made findings of fact and conclusions of law supporting
Gary L. Nickelson and Sydney A. Beckman, Law Offices of its judgment.
Gary L. Nickelson, Fort Worth, for Appellee.
Patricia appeals on grounds that the evidence was both legally
Before DAUPHINOT, RICHARDS and HOLMAN, JJ. and factually insufficient to support the trial court's findings
or conclusions that: (1) Patricia knew the deposits into her
bank account were community funds from Linda and Robert's
OPINION marital estate, (2) Patricia knew Robert intended to injure
Linda by hiding the funds in Patricia's account, (3) Robert had
HOLMAN, Justice. never made Patricia the owner of the funds on deposit, (4)
Robert retained control of the deposited funds, and (5) that
The trial court granted Linda Lorraine Casale a divorce from
Patricia was liable to Linda under either TEX. FAM. CODE
Robert Nicholas Casale. Linda named Patricia Susan Thomas
ANN. § 3.57 (Vernon 1993) or TEX. BUS. & COM. CODE
as a co-respondent in the divorce, and Patricia is the only
ANN. § 24.001 (Vernon 1987) (Uniform Fraudulent Transfer
appellant. We affirm the judgment in all respects except the
Act).
portion that orders Patricia to deposit $61,753.00 into the
registry of the court. We reverse only *435 that portion of
the judgment, as we will discuss.

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Thomas v. Casale, 924 S.W.2d 433 (1996)

An intimate relationship between Patricia and Robert began A two-page document admitted in evidence over the objection
in 1992 after he separated from Linda but before the divorce of Patricia's attorney, lists the dates and amounts of bank
was granted. Robert testified that Patricia and her own deposits made by or through Robert between April 1993
husband divorced on March 31, 1993 and that Patricia had her and July 1994 into the savings account he and Patricia were
own savings account. Sometime during March 1993, Robert sharing during that time. Those deposits totaled $68,752.93,
moved into Patricia's home, and they agreed to share living and although the money came from Robert, some of the
expenses. Patricia already had approximately $68,000 of her deposits were taken to the bank by Robert and some by
own money on deposit in her savings account at NationsBank, Patricia. While both Robert's and Patricia's names were on
and Robert's name was authorized for that account in April the account, its balance at some point rose above $131,000.
1993. His name was removed from the account in June 1994, Robert testified that during the fourteen-month period in
almost eight months before trial. which he deposited a total of $68,752.93 into the account,
he also withdrew a total of approximately $68,000 and used
[1] On appeal, Patricia's challenge to the legal sufficiency is portions “[t]o defray some living expenses,” to buy a bedroom
a “no evidence” point. In determining “no evidence” points suite for Patricia's home, and to pay Patricia $250 per month
of error, we are to consider only the evidence and inferences for using her car, although Robert owned a Cadillac that
that tend to support the finding and disregard all evidence and both he and Patricia drove during that time. In May 1994,
inferences to the contrary. Catalina v. Blasdel, 881 S.W.2d Robert bought the car from Patricia with $10,000 he withdrew
295, 297 (Tex.1994); T.O. Stanley Boot Co. v. Bank of El from the account. He also used money he withdrew from the
Paso, 847 S.W.2d 218, 221 (Tex.1992). If there is more than account to pay twenty-four months' worth of his own living
a scintilla of such evidence to support the finding, the claim expenses.
is sufficient as a matter of law, and any challenges go merely
to the weight to be accorded the evidence. Browning–Ferris, Two other documents were admitted in evidence without
Inc. v. Reyna, 865 S.W.2d 925, 928 (Tex.1993). objection, that list twelve trips taken by Robert and Patricia.
The lists do not include the dates of every trip, but each
[2] [3] A “no evidence” point of error may only be trip appears to have been made while the divorce was
sustained when the record discloses one of the following: (1) pending. Eight appear to have been within the time that
a complete absence of evidence of a vital fact; (2) the court Robert and Patricia shared the savings account, and those
is barred by rules of law or evidence from giving weight eight destinations were Colorado, New Jersey, Minnesota,
to the only evidence offered to prove a vital fact; (3) the California, New York, England, Mexico, and St. Martin
evidence offered to prove a vital fact is no more than a Island in the Dutch West Indies. Robert also testified about
mere scintilla of evidence; or (4) the evidence establishes their trip to St. Croix in the Virgin Islands.
conclusively the opposite of a vital fact. Juliette Fowler
Homes, Inc. v. Welch Assocs., 793 S.W.2d 660, 666 n. 9 Eight of Patricia's ten points of error attack the legal and
(Tex.1990); *436 Robert W. Calvert, “No Evidence” and factual sufficiency of the evidence to support these four
“Insufficient Evidence” Points of Error, 38 TEX. L. REV. findings of fact by the trial court:
361 (1960). There is some evidence when the proof supplies
a reasonable basis on which reasonable minds may reach 25. The Court finds that although the funds in the amount
different conclusions about the existence of the vital fact. of $68,742.21 were in an account in the name of [Patricia]
Orozco v. Sander, 824 S.W.2d 555, 556 (Tex.1992). at the time of trial, no transfer was ever made by [Robert or
Linda] to [Patricia]. [Challenged by points of error number
[4] Patricia's challenge to the factual sufficiency of the three and eight.]
evidence is an “insufficient evidence” point of error, which
....
places on her the burden of showing that the evidence
supporting the finding is so weak or the evidence to the 27. The Court finds that at sometimes during the pendency
contrary is so overwhelming that the trial court result is of the divorce, NationsBank account number 16306099677
clearly wrong and manifestly unjust. Cain v. Bain, 709 had [Robert's] name on it; the Court further finds, however,
S.W.2d 175, 176 (Tex.1986). that at all times during the pendency of the divorce,
[Robert] had control over the funds in [the account].
[Challenged by points of error number four and nine.]

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Thomas v. Casale, 924 S.W.2d 433 (1996)

.... Linda replies that findings of fact numbers 25, 27, 34, and
36 are immaterial to Patricia's appeal because Patricia did not
34. The Court finds that [Patricia] knew that [Robert] was
challenge the following fact findings that Linda contends are
depositing community funds in the [account]. [Challenged
sufficient to support the judgment:
by points of error number one and six.]
No. 24.—that the $68,742.21 in Patricia's bank account
....
at the time of trial was Robert and Linda's community
36. The Court finds that [Patricia] knew that [Robert] property.
intended to injure the rights of [Linda] by his hiding
No. 28.—that Robert deposited community funds in the
community property funds in [the account]. [Challenged by
bank account for the purpose of hiding them from Linda in
points of error number two and seven.]
an attempt to avoid a just and right division of community
assets.
Under points of error numbers five and ten, Patricia argues
that she should not be required to comply with the trial court's No. 30.—that Robert and Linda did not intend the
order to pay Linda $61,753.00 because the evidence was $68,742.21 to be a gift to Patricia.
neither legally nor factually sufficient to support the trial
court's implied finding that Linda had met the burden of proof No. 31.—that the $68,742.21 was never delivered or
required by either TEX. FAM. CODE ANN. § 3.57 (Vernon transferred to Patricia as a gift.
1993) or TEX. BUS. & COM. CODE ANN. § 24.001 (Vernon
1987). No. 32.—that Patricia never accepted the $68,742.21 as a
gift from Robert or Linda.
*437 [5] We first conclude that the Uniform Fraudulent
No. 37.—that Robert intentionally hid community assets
Transfer Act is not applicable and that the trial court made
from Linda in the hopes that she could not find them and
no implied finding that it does apply. Although the term
the court could not divide them.
“creditor” is defined by section 24.002(4) of the Act, id., to
include a spouse who has a claim for property fraudulently
[6] [7] [8] The general rule is that a finding of fact not
transferred by the other spouse, we presume that the trial
challenged in a point of error is binding on the appellate court.
court's conclusions of law do not mention the Act because
Atascosa County Appraisal Dist. v. Tymrak, 815 S.W.2d
there is no evidence in the record that Robert was insolvent
364, 367 (Tex.App.—San Antonio 1991, no writ), aff'd, 858
during the time he shared an account with Patricia or that
S.W.2d 335 (Tex.1993). Unchallenged findings of fact also
the sharing of the account left Robert with “unreasonably
bind the parties, and a party complaining that a trial court's
small” assets or debts beyond his ability to pay. The Act does
findings or conclusions are incorrect or incomplete has a
not apply in the absence of such evidence. See id. § 24.005
procedure available in trial court for requesting specified,
(Vernon Supp.1996), § 24.006 (Vernon 1987).
additional, or amended findings. See TEX. R. CIV. P. 298;
Des Champ v. Featherston, 886 S.W.2d 536, 541 (Tex.App.
Neither do the conclusions of law mention TEX. FAM.
—Austin 1994, no writ); James Holmes Enter. Inc. v. John
CODE ANN. § 3.57 (Vernon 1993), but Patricia asks us
Bankston Const. & Equip. Rental, Inc., 664 S.W.2d 832,
to accept her contention that a reasonable inference to be
834 (Tex.App.—Beaumont 1983, writ ref'd n.r.e.). However,
drawn from findings of fact numbers 25, 27, 34, and 36 is
an equally significant principle is that findings of fact bind
that, despite legal and factual insufficiency of the evidence,
an appellate court only if the findings are supported by
the trial court related those four findings to the evidentiary
evidence of probative force. See Block v. Waters, 564 S.W.2d
requirements of section 3.57. That section enables a court to
113, 115 (Tex.Civ.App.—Beaumont 1978, no writ) (citing
void a community property transfer made by one spouse with
Stephenson v. Perlitz, 537 S.W.2d 287, 289 (Tex.Civ.App.—
the intent to injure the rights of the other spouse, provided
Beaumont 1976, writ ref'd n.r.e.)). Unchallenged findings of
the spouse who asks the court to grant that remedy meets
fact are binding on the appellate court “unless the contrary is
the burden of proving that the transferee had notice of the
established as a matter of law, or if there is no evidence to
transferor's intent to injure the other spouse's rights. TEX.
support the finding.” McGalliard v. Kuhlmann, 722 S.W.2d
FAM. CODE ANN. § 3.57 (Vernon 1993).
694, 696 (Tex.1986).

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Thomas v. Casale, 924 S.W.2d 433 (1996)

To recap, the record shows that before Robert came along,
[9] Patricia argues that the evidence shows no more than Patricia had approximately $68,000 in her savings account;
conjecture that she ever knew that Robert intended to defraud then, Robert's name was added to the account and another
and injure Linda's rights. Linda testified that “I believe” $68,752.93 was deposited by or through him; during the
Patricia had “complete knowledge” that Robert was acting to same period in which those deposits were made, Robert also
defraud the marital estate by putting the money in the account. withdrew at least $68,000 from the account and spent it on
Linda conceded, however, that aside from her “belief,” she himself and Patricia; the account balance at time of trial was
had no personal knowledge of what Robert may have told $68,742.21, and the evidence established that $7,000 in the
Patricia about the deposits made in the account. *438 account did not come from Robert. On this evidence, the
Earlier, Linda told the court that she only had a “gut feeling” trial court allowed Patricia to keep $7,000 of the account
that Robert was putting their money in an account under balance and ordered her to surrender the other $61,753.00 to
Patricia's name, but became fully convinced of it when she the registry of the court. The court later ordered that the funds
looked through some trash and found a four-word note written be released from the registry and paid to Linda.
by Robert that said: “Deposit in savings, please.” Linda's
direct examination by her lawyer continued: Although there is proof that Robert put community funds into
Patricia's account, there also is proof that he withdrew about
Q. Now, it doesn't say anything about there on there that the same amount and spent it. We conclude that the evidence
Pat's name with an account or anything, does it? left the trial court with nothing more than speculation about
the extent of Patricia's knowledge of whether the deposits
A. No, it doesn't.
made were community property and about Robert's possible
Q. But that's how you became convinced; is that correct? motives for placing the money into her bank account when he
had accounts of his own. Although the trial court easily may
A. Absolutely. have speculated that Patricia, living with Linda's husband
and having just gone through her own divorce, was a willing
The issue on appeal is not whether Robert defrauded the participant in a plan to defraud Linda of a share of community
community estate. That was established at trial and is not funds, neither suspicion nor conjecture equates to proof
challenged by Patricia. Her appeal is based on a contention by a preponderance of the evidence. Connell v. Connell,
that the evidence was legally and factually insufficient to 889 S.W.2d 534, 539 (Tex.App.—San Antonio 1994, writ
prove that she knew about Robert's fraudulent intent or that denied).
the money deposited was community property. Although
Linda testified that she knew of no savings account in Robert's Having searched the record for the evidence and inferences
name at the time she discovered the note in the trash, none that tend to support findings of fact numbers 34 and 36, we
of her testimony was sufficient to prove her vital factual find none. Whether Patricia knew that the transitory funds
allegations that Patricia knew that the money deposited was were community property and whether she knew that the
community property or knew that the deposits were made to funds were deposited with the intent to hide them and injure
defraud Linda. Linda's rights in the marital estate, are vital facts not proved
in the trial of Linda's cause of action against Patricia.
The only witnesses who testified at trial were Robert, Linda,
a process server, a certified public accountant who had [10] [11] Because there is no dispute that the money from
been engaged to evaluate Seahorse Pool Corporation, and Robert was deposited into an account on which Patricia was
the attorneys who testified about attorney fees. We are not a person jointly authorized with Robert to withdraw funds,
directed to any evidence that, while she shared the bank we find no evidence in the record supporting finding of fact
account with Robert, Patricia had notice of Robert's intent number 25 that the deposited funds were never transferred
to defraud Linda or injure her rights to community assets. to her. Robert's name was removed from the account in June
Neither are we persuaded that a trial court may infer such 1994, eight months before the divorce trial, and we find no
proof merely by weighing the credibility of those who evidence in the record supporting finding of fact number
testified. *439 27 that Robert had control of the funds in the account
at all times while the divorce was pending.

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Thomas v. Casale, 924 S.W.2d 433 (1996)

an implied finding by the trial court that Linda had met the
[12] There is no evidence to conclude that the money still
burden of proof required by TEX. FAM. CODE ANN. § 3.57
on deposit in Patricia's account at the time of judgment was
(Vernon 1993). We overrule points five and ten only with
an in-kind equivalent to the money that Robert had deposited.
regard to their reliance upon TEX. BUS. & COM. CODE
Well before trial, he had already withdrawn and spent as much
ANN. § 24.001 (Vernon 1987).
money as he had deposited, if not more. We conclude that
the evidence afforded the trial court no basis in law or fact
We hold that Linda Lorraine Casale has no lawful right to
to order Patricia to surrender $61,753.00 to Linda. Patricia's
the $61,753.00 deposited in the registry of the court under the
own funds in the account exceeded that amount before Robert
judgment. We reverse the portion of the judgment that orders
added the funds that he later withdrew and spent.
Patricia Susan Thomas to deposit $61,753.00 into the registry
of the court. We also reverse the trial court's post-judgment
Although Patricia does not challenge finding of fact number
order that the trial court clerk pay that sum of money to Linda
24 on appeal, we find no evidence to support that finding that
Lorraine Casale from the registry of the court. On that issue,
all of the funds in Patricia's account at the time of trial were
we render judgment that Patricia Susan Thomas is entitled to
the community property of Robert and Linda, and we reject
have the $61,753.00 returned to her by the trial court, and the
Linda's contention that the other unchallenged findings of fact
clerk of that court is ordered to pay to Patricia Susan Thomas,
numbers 28, 30, 31, 32, and 37 are alone sufficient to support
from the registry, $61,753.00 plus the interest, if any, that may
the judgment against Patricia.
have accrued. In all other respects, the judgment is affirmed.
Points of error numbers one, two, three, four, six, seven,
eight, and nine are sustained. We sustain points of error
numbers five and ten only with regard to their assertion that LIVINGSTON, J., (nonpanel) dissents without opinion.
the evidence is legally and factually insufficient to support

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
Van Brunt v. BancTexas Quorum, N.A., 804 S.W.2d 117 (1989)
14 UCC Rep.Serv.2d 931

The two issues in this case are: (1) whether BancTexas
Quorum, N.A. gave John and Susan Van Brunt sufficient
804 S.W.2d 117
notice of its intent to sell the Van Brunts' collateral pursuant
Court of Appeals of Texas,
Dallas. to section 9.504(c) of the Uniform Commercial Code 1 ; and
(2) whether the Van Brunts' four-acre tract was entitled
John and Susan VAN BRUNT, Appellants, to a homestead exemption. The trial court concluded that
v. BancTexas complied with section 9.504 of the Code and that
BANCTEXAS QUORUM, N.A. the Van Brunts' four-acre tract was not a homestead. We
and Pat Greer, Appellees. reverse the trial court's judgment on its notice finding and
render judgment that BancTexas is not entitled to sue the
No. 05–87–01165–CV. | Aug. 15, 1989. | Van Brunts for a deficiency. We affirm the trial court on its
Opinion on Motion for Rehearing May 8, 1990. judgment finding that the four-acre tract was not a homestead.

Bank brought action against guarantors of note seeking John Van Brunt was the president of a company known
deficiency judgment. The District Court, Collin County, as Labels Unlimited, Inc. This company executed five
rendered judgment for bank, and ruled that four-acre parcel of promissory notes totaling an amount in excess of $840,000
land was not homestead of guarantors. Both parties appealed. payable to BancTexas. To secure the debt, Labels Unlimited
The Court of Appeals, Baker, J., held that: (1) bank failed executed security agreements granting BancTexas a security
to give adequate notice to guarantors of its intent to sell interest in its equipment, inventory, and receivables. John
collateral at private sale, and (2) trial court's finding that land Van Brunt executed an agreement personally guaranteeing all
was not homestead of guarantors was not manifestly wrong of the obligations of Labels Unlimited to BancTexas.
or unjust. On motion for rehearing, the Court, Kinkeade, J.,
held that bank was not precluded from seeking deficiency Labels Unlimited defaulted on the notes and declared
judgment on note which was secured by both personal bankruptcy. The bankruptcy court authorized the bankruptcy
property and real estate, even though bank failed to give trustee to abandon the secured property to BancTexas.
adequate notice of its intent to sell personal property. Subsequently, on January 6, 1987, BancTexas sent John Van
Brunt notice of *120 its intent to sell the collateral. On
Affirmed in part, and reversed in part. January 29, 1987, BancTexas sent notice to both Labels
Unlimited and John Van Brunt of its intent to conduct a
Kinkeade, J., dissented from original opinion, and filed public auction on February 18, 1987, in Lawrence, Kansas,
opinion. the site of one of Labels Unlimited's plants. BancTexas held
the public auction on that date, and John Van Brunt was there.
Baker, J., dissented from opinion on rehearing, and filed At the auction BancTexas announced that it reserved the right
opinion. to reject all bids. Shawnee Sales and Marketing submitted
the highest bid of $40,000. However, BancTexas rejected
this and all other bids. Subsequently, Causey Mason, the
Attorneys and Law Firms
person BancTexas hired to organize the auction, telephoned
*119 Robert M. Nicoud, Harvey G. Joseph, Dallas, for John numerous persons who had attended the auction, and other
and Susan Van Brunt. individuals, in an attempt to negotiate a higher sales price.
Shawnee increased its bid to $55,000 and purchased the
G. Roland Love, Cynthia Hollingsworth, Dallas, for property. BancTexas did not notify John Van Brunt of its
BancTexas Quorum. attempts to sell the property after the public auction.

Before McCLUNG, BAKER and KINKEADE, JJ. On the homestead issue, the facts are that in 1981 the Van
Brunts purchased a two-acre tract of land and subsequently
Opinion
built a home on it. In 1982, John Van Brunt purchased a
BAKER, Justice. contiguous four-acre tract, which is the property in dispute.
The trial court found that John Van Brunt had previously
listed the four-acre tract as a separate asset in his financial

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Van Brunt v. BancTexas Quorum, N.A., 804 S.W.2d 117 (1989)
14 UCC Rep.Serv.2d 931

statements. Pat Greer, a vice president of BancTexas, testified disposition is to be made shall be sent
that John Van Brunt told Greer that he was holding the by the secured party to the debtor, if he
property for investment purposes. The Van Brunts testified has not signed after default a statement
that they used the four acres for family recreation, mowed the renouncing or modifying his right to
tract two or three times a year, and occasionally threw grass notification of sale.
seed on it. They also stated that the family dog had the full run
of all six acres. While BancTexas and John Van Brunt were § 9.504(c). The purpose of requiring reasonable notification is
negotiating a business loan, BancTexas required John Van to provide the debtor sufficient notice to enable him to protect
Brunt to pledge the four-acre tract as collateral. BancTexas his interest in the collateral. See MBank Dallas v. Sunbelt
requested a title company to prepare a deed of trust and title Mfg., Inc., 710 S.W.2d 633, 636 (Tex.App.—Dallas 1986,
policy on the four-acre tract in connection with the loan; writ ref'd n.r.e.). Such notification gives the debtor *121 the
however, the title company refused because it determined that opportunity to pay the debt, find a buyer, or to attend the sale
the four-acre tract was a part of the Van Brunts' homestead. and bid on the property or have others do so, to the end that
BancTexas then prepared an affidavit of nonhomestead as the property will not be sacrificed by a sale at less than its true
to the four-acre tract and a homestead designation as to the value. See Wright v. Interfirst Bank Tyler, 746 S.W.2d 874,
two-acre tract. Both John and Susan Van Brunt executed this 877 (Tex.App.—Tyler 1988, no writ). Official comment 5 to
affidavit. BancTexas then completed and funded the loan. section 9.504 states:

“Reasonable notification” is not
The trial court rendered judgment that BancTexas recover
defined in this Article; at a minimum
from John Van Brunt the unpaid principal on the notes
it must be sent in such time that
together with interest due through the date of judgment. The
persons entitled to receive it will have
trial court also rendered judgment that the four-acre tract
sufficient time to take appropriate
was not a homestead and denied injunctive relief to the Van
steps to protect their interests by taking
Brunts.
part in the sale or other disposition if
they so desire.
In their first point of error, the Van Brunts contend that
the trial court erred in holding that BancTexas complied § 9.504 comment 5.
with the notice requirements of section 9.504 of the Code.
The Van Brunts argue that the notice of the public auction [2] The letter that BancTexas sent John Van Brunt on
does not constitute notice of the subsequent private sale. January 6, 1987, notified him that BancTexas intended to sell
The Van Brunts assert that because they received no notice all the collateral under the terms of its security agreement. The
of the private sale, BancTexas is not entitled to sue for a January 29, 1987 letter from BancTexas to John Van Brunt
deficiency, and the trial court should have rendered judgment notified him that:
that BancTexas take nothing on the deficiency claims. See
Tanenbaum v. Economics Laboratory, Inc., 628 S.W.2d 769, [P]ursuant to the provisions of Section
771 (Tex.1982); Gentry v. Highlands State Bank, 633 S.W.2d 9.504 of the Texas Uniform Code,
590, 591 (Tex.App.—Houston [14th Dist.] 1982, writ ref'd). BancTexas will hold a public auction
We agree and hold that BancTexas failed to give the Van of the Collateral which is located at
Brunts sufficient notice. the Labels plant in Lawrence, Kansas
on February 18, 1987, at 12:00 p.m.
[1] The relevant portion of section 9.504 provides: The public auction will be held at the
Labels plant located at 2201 Haskell,
Unless collateral is perishable or Lawrence, Kansas 60044.
threatens to decline speedily in value
or is of a type customarily sold John Van Brunt attended the public auction. When the auction
on a recognized market, reasonable started, Mason, the person BancTexas hired to evaluate and
notification of the time and place liquidate the collateral, announced that BancTexas reserved
of any public sale or reasonable the right to reject all bids. At the end of the auction,
notification of the time after which BancTexas rejected all bids. Shawnee had submitted the
any private sale or other intended highest bid of $40,000. Subsequently, without notice to John

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Van Brunt v. BancTexas Quorum, N.A., 804 S.W.2d 117 (1989)
14 UCC Rep.Serv.2d 931

Van Brunt, Mason telephoned some of the persons who informed him that BancTexas intended to sell the collateral.
were at the public auction and a few other persons, and he This letter did not contain any notice of whether the sale
eventually sold the collateral to Shawnee for $55,000. would be public or private, nor did it contain any notice of
an anticipated date of a sale. BancTexas's January 29, 1987
The Van Brunts argue that BancTexas's reserving the right to letter notified John Van Brunt that BancTexas intended to
reject all bids at the public auction did not constitute notice sell the collateral at a public auction, specifying the place,
that BancTexas would sell the collateral privately if it rejected the date, and the time. BancTexas concedes that no further
bids made at the public auction. The Van Brunts contend that notice of any kind was given to the Van Brunts concerning
the notice of the public auction does not constitute notice of the additional efforts to sell the collateral at a private sale
a subsequent private sale. See Wright, 746 S.W.2d at 877; following the public auction on February 18, 1987.
Gateway Aviation, Inc. v. Cessna Aircraft Co., 577 S.W.2d
860, 862 (Mo.Ct.App.1978). The Van Brunts argue that, Based on the facts of this case, we hold that the Van Brunts
pursuant to section 9.504(c) of the Code, they were entitled did not have reasonable notice that BancTexas intended to
to notice of a specific date after which BancTexas would sell the collateral privately. We cannot assume that the Van
proceed to otherwise dispose of the collateral. We agree. Brunts could not have taken action to protect their interests
if they had been given notice of the private negotiations
In Wright, a creditor sent the debtor a notice that if he did not following the public auction. See Gateway, 577 S.W.2d at
repay the note, the creditor would sell the collateral under the 862. BancTexas fails to persuade us by their argument that
terms of the security agreement. The creditor later notified they should not be penalized for attempting to obtain a higher
the debtor that the creditor intended to sell the collateral at price for the collateral. We wish to make it clear that we
a public auction, specifying the date and time. The creditor do not disapprove such attempts to secure a higher price for
apparently never conducted a public auction and ended up the collateral; we only disapprove the failure to notify the
selling the collateral at a private sale at a later date. The debtors. Because it failed to give proper notice, BancTexas is
court held, as a matter of law, that notice of a public sale not entitled to sue for a deficiency judgment against the Van
did not constitute “reasonable notification” of the subsequent Brunts. Tanenbaum, 628 S.W.2d at 772. We sustain the Van
private sale. The court noted that the purpose of the notice Brunts' first point of error. Because of our disposition of this
requirement was to enable the debtor to protect his interest in point of error, we deem it unnecessary to consider the Van
the collateral. Wright, 746 S.W.2d at 875, 877. Brunts' points of error numbers two through five.

In Gateway, the creditor gave the debtor notice of a public [3] In their sixth point of error, the Van Brunts argue
auction, held the public auction, and rejected the highest bid that the evidence is legally and factually insufficient to
of $130,000. Subsequently, the creditor sold the collateral at a support the trial court's findings that the four-acre tract was
private sale for $134,000. The creditor did not give the debtor not a homestead. An appellate court, in reviewing a legal
notice of its intent to sell the collateral privately. In Gateway, insufficiency point, must consider only the evidence and the
the court reasoned that because the debtor could have taken inferences tending to support the finding and disregard all
measures to protect his interest in the collateral, the failure to evidence and inferences to the contrary. See Garza v. Alviar,
give the debtor notice of the private sale was fatal to recovery 395 S.W.2d 821, 823 (Tex.1965). On the other hand, when
for the deficiency. Gateway, 577 S.W.2d at 862. an appellate court considers a factual insufficiency assertion,
all of the evidence in the record must be considered to decide
In our view, these cases correctly state the law applicable the issue. Garza, 395 S.W.2d at 823. Only if the finding is so
to this case. Where a creditor intends to sell collateral against the great weight and preponderance of the evidence
privately, section 9.504(c) of the Code requires “reasonable as to be manifestly unjust will the finding be set aside. See In
notification of the time after which any private sale or other re King's Estate, 150 Tex. 662, 244 S.W.2d 660, 661 (1951).
intended disposition is to be made....” See § 9.504(c). At
a minimum, “reasonable notification” requires that persons [4] The Van Brunts executed an affidavit that the four-acre
entitled to notice have sufficient time “to take appropriate tract was not their homestead. This fact alone provides some
steps *122 to protect their interests by taking part in the sale evidence to support the trial court's finding. The Van Brunts'
or other disposition if they so desire.” See § 9.504 comment no evidence argument is without merit.
5. BancTexas's January 6, 1987 letter to John Van Brunt

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Van Brunt v. BancTexas Quorum, N.A., 804 S.W.2d 117 (1989)
14 UCC Rep.Serv.2d 931

[5] [6] [7] To establish homestead rights, the claimant VAN BRUNT AND SUSAN VAN
must show a combination of both overt acts of homestead BRUNT; but if the following property
usage and the intention on the part of the owner to claim the ever has been the homestead of those
land as a homestead. Lifemark Corp. v. Merritt, 655 S.W.2d parties, they are estopped from so
310, 314 (Tex.App.—Houston [14th Dist.] 1983, writ ref'd claiming....
n.r.e.). The Van Brunts testified that they used the four acres
for family recreation and enjoyment which included family The Van Brunts also quote the corresponding finding of fact
picnics, family recreational games, and company picnics. which contains similar language. The Van Brunts argue that,
They mowed the four-acre tract two or three times a year and on the one hand, the trial court finds that the four-acre tract
occasionally threw grass seed on it. The family dog had the was never a homestead; however, on the other hand the court
full run of all six acres. Pat Greer, BancTexas's vice president, impliedly finds that the tract was a homestead and that the
said that John Van Brunt told him that Van Brunt was holding Van Brunts are estopped from so claiming. The Van Brunts
the property for investment purposes. The general rule is that argue that these two findings conflict and are therefore fatal
the testimony of interested witnesses, such as the parties to to the judgment. See Woodyard v. Hunt, 695 S.W.2d 730, 732
the suit, merely raises a fact issue to be determined by the fact (Tex.App.—Houston [1st Dist.] 1985, no writ).
finder. See Lifemark, 655 S.W.2d at 315.
Both the judgment and the finding of fact are worded in the
The two-acre and four-acre tracts were purchased separately. alternative. Because we have held that the four-acre tract was
Both of the Van Brunts executed an affidavit that the four-acre never a homestead, we agree with the trial court's first finding.
tract was not a homestead. John Van Brunt had previously Because we agreed with this finding, we need not consider the
listed the four-acre tract as a separate asset in his financial second alternate finding. We disregard this finding, and the
statements. Based on this record, we cannot say that the trial conflict, if any, is immaterial. See Border State Life Ins. Co. v.
court's finding that the four-acre tract was not a homestead Noble, 138 S.W.2d 119, 123 (Tex.Civ.App.—El Paso 1940,
is *123 manifestly wrong or unjust. We overrule the Van writ dism'd judgmt cor.) We hold that there is no conflict
Brunts sixth point of error. between the finding of fact and the judgment rendered by the
trial court. We overrule the Van Brunts' eighth point of error.
In their seventh point of error, the Van Brunts argue that
the trial court erred in finding that they were estopped from BancTexas has asserted one cross point, arguing that if this
asserting the homestead exemption because once property is Court determines that the four-acre tract was a homestead,
impressed with homestead character, the representations of then the homestead was an urban homestead and not a rural
the owners that the property is not a homestead have no effect. homestead. Because we have not held that the four-acre tract
They rely on Braden Steel Corp. v. McClure, 603 S.W.2d 288 is a homestead, we need not consider the merits of this cross
(Tex.Civ.App.—Amarillo 1980, no writ) and Blomgren v. point.
Van Zandt, 126 S.W.2d 506 (Tex.Civ.App.—Eastland 1939,
no writ). Because the trial court found that the four-acre tract We reverse the trial court's judgment granting a deficiency
was not impressed with a homestead character, the estoppel in favor of BancTexas and render judgment that BancTexas
finding is moot. Braden Steel and Blomgren do not apply to take nothing from the Van Brunts on the BancTexas suit
the facts of this case. We overrule the Van Brunts' seventh for deficiency. See TEX.R.APP.P. 81(c). We affirm the trial
point of error. court's judgment that the four-acre tract was not a homestead.

[8] In their eighth point of error, the Van Brunts contend
that the trial court made fatally inconsistent and contradictory Dissenting opinion by KINKEADE, J.
findings of fact and conclusions of law. They quote the
portion of the judgment that provides: KINKEADE, Justice, dissenting.
The majority holds that the trial court erred in its finding on
IT IS FURTHER ORDERED, the issue of notice of sale from BancTexas to the Van Brunts.
ADJUDGED, AND DECREED, that I respectfully dissent from that holding.
the following property is not, at the
date of the judgment, nor has it
ever been, the homestead of JOHN

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The majority correctly states the facts of the case and the letter dated January 29, 1987, BancTexas informed John Van
key issue of whether the notice of public sale, followed by a Brunt:
private sale for more money than was bid at the public sale,
was also sufficient notice of the private sale. I would hold that [P]ursuant to the provisions of Section
such notice was sufficient. 9.504 of the Texas Uniform Code,
BancTexas will hold a public auction
The relevant portion of section 9.504 provides: of the Collateral which is located at
the Labels plant in Lawrence, Kansas
Unless collateral is perishable or on February 18, 1987, at 12:00 p.m.
threatens to decline speedily in value The public auction will be held at the
or is of a type customarily sold Labels plant located at 2201 Haskell,
on a recognized market, reasonable Lawrence, Kansas 60044.
notification of the time and place
of any public sale or reasonable John Van Brunt attended the public auction. At the
notification of the time after which any commencement of the sale, Mason, the person BancTexas
private sale or other intended *124 hired to evaluate and liquidate the secured collateral, orally
disposition is to be made shall be sent notified all those present at the auction that BancTexas
by the secured party to the debtor, if he reserved the right to reject all bids. After the auction
has not signed after default a statement concluded, BancTexas rejected all bids. Shawnee submitted
renouncing or modifying his right to the highest bid of $40,000. Subsequently, without notifying
notification of sale. John Van Brunt, Mason telephoned some of the individuals
who had attended the auction and a few other persons. Mason
TEX.BUS. & COM.CODE ANN. § 9.504(c) (Tex.UCC)
eventually sold the collateral to Shawnee for $55,000.
(Vernon Supp.1989) (emphasis added). 1 The purpose of the
Code's requirement of reasonable notification is to provide the The majority holds that BancTexas's action in reserving the
debtor sufficient notice to enable him to protect his interest in right to reject all bids at the public auction did not constitute
the collateral, MBank Dallas N.A. v. Sunbelt Manufacturing, notice that BancTexas would sell the collateral privately if
Inc., 710 S.W.2d 633, 636 (Tex.App.—Dallas 1986, writ ref'd it rejected all the bids at the public auction. The majority
n.r.e.), “by paying the debt, finding a buyer or being present holds that the notice of the public auction does not constitute
at the sale to bid on the property [at public auction] or have notice of a subsequent private sale. See Wright, 746 S.W.2d
others do so, to the end that it not be sacrificed by a sale at less at 877; Gateway Aviation, Inc. v. Cessna Aircraft Co., 577
than its true value.” Wright v. Interfirst Bank Tyler, N.A., 746 S.W.2d 860, 862–63 (Mo.Ct.App.1978). The Court holds that
S.W.2d 874, 877 (Tex.App.—Tyler 1988, no writ) (emphasis the Van Brunts were entitled to notice of a specific date after
added). The official comment to section 9.504 states: which BancTexas would proceed to otherwise dispose of the
collateral. See Tex.UCC § 9.504(c). For the reasons given
below, I disagree.
“Reasonable notification” is not defined in this Article; at a
minimum it must be sent in such time that persons entitled
The majority relies on Wright v. Interfirst Bank Tyler, N.A. to
to receive it will have sufficient time to take appropriate
support its holding. In Wright, on March 23, 1984, the bank
steps to protect their interests by taking part in the sale or
wrote the debtor that if he did not repay his note, the bank
other disposition if they so desire.
would sell the collateral according to the terms of the security
Tex.UCC § 9.504 comment 5.
agreement. Wright, 746 S.W.2d at 875 n. 3. On April 2, 1984,
By letter dated January 6, 1987, BancTexas informed John
the bank wrote the debtor that the bank intended to sell the
Van Brunt of the following: “This letter shall constitute
collateral at a public auction to be held on April 13, 1984. The
formal notice to you that the real property, improvements,
bank apparently never conducted a public auction and ended
personal property and other collateral (the ‘Property’)
up selling the collateral privately on May 24, 1984. The court
covered by the applicable documentation securing the
held that notice of a public sale did not constitute “reasonable
repayment of the Indebtedness will be sold in accordance
notification” of the subsequent private sale as a matter of law.
with the terms of the applicable security documentation.” By
*125 Wright, 746 S.W.2d at 877. The court noted that the

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purpose of the notice requirement was to enable the debtor to collateral privately. I note that section 9.504 of the Code
protect his interest in the collateral. does not require the creditor to notify the debtor of whatever
attempts the creditor is making to sell the collateral; rather,
The majority also relies on Gateway Aviation Inc. v. Cessna section 9.504 merely requires the creditor to inform the debtor
Aircraft Co.. In Gateway, the creditor gave the debtor notice that, as of a certain date, the creditor will attempt to sell the
of a public auction, held the public auction, rejected the collateral privately. Once the creditor informs the debtor that
highest bid of $130,000, and subsequently sold the collateral the creditor intends to sell the collateral as of a certain date,
for $134,000. The creditor did not give the debtor a notice of the creditor has fulfilled its burden. From that point, the Code
its intent to sell the collateral privately. Gateway, 577 S.W.2d leaves the debtor to fend for himself on how best to protect
at 861. The court reasoned that because the debtor could have his interests.
taken measures to protect his interest in the collateral, the
failure to give the debtor notice of the private sale was fatal. In this case, John Van Brunt was present at the public auction
Gateway, 577 S.W.2d at 862. and witnessed BancTexas's efforts to prevent the property
from selling at less than its full value. Acting in the interest
I am not persuaded by these cases. Where a creditor intends of John Van Brunt, BancTexas negotiated a price that was
to sell collateral privately, section 9.504 of the Code requires $15,000 higher than the highest auction bid. BancTexas'
“reasonable notification of the time after which any private actions saved John Van Brunt that amount of loss. It is
sale or other intended disposition is to be made....” Tex.UCC interesting to note that, based on the record in this case,
§ 9.504(c). At a minimum, “reasonable notification” requires BancTexas would have been better off taking the $40,000
the persons with interests in the collateral to have sufficient bid at the public auction because BancTexas then would not
time “to take appropriate steps to protect their interests by have lost its right to pursue the Van Brunts for the deficiency,
taking part in the sale or other disposition if they so desire.” which in this case amounts to approximately $637,000. On the
Tex.UCC § 9.504 comment 5. BancTexas's January 6, 1987, facts of this case, I would hold that the Van Brunts had notice
letter to John Van Brunt informed him that BancTexas that BancTexas intended to sell the collateral on February 18,
intended to sell the collateral. Failure of a notice to state 1987, or thereafter, either publicly or privately, and that the
whether the creditor intends to sell the collateral privately Van Brunts had until February 18, 1987, to act on that notice.
or at public auction is not fatal to the notice for purposes of I would overrule the Van Brunts' first point of error. Based on
section 9.504(c). Hall v. Crocker Equipment Leasing, Inc., this holding, I would rule on *126 points of error numbers
737 S.W.2d 1, 3 (Tex.App.—Houston [14th Dist.] 1987, two through five as follows:
writ denied). Accordingly, the only element arguably missing
from the January 6, 1987, letter is the time after which In point of error two, the Van Brunts contend that
BancTexas intended to make a private sale. BancTexas's purported notice did not give them sufficient
time to protect their interests. The Van Brunts argue that even
BancTexas's January 29, 1987, letter informed John Van if the rejection of all bids at the public auction constituted
Brunt that BancTexas intended to sell the collateral on notice that BancTexas intended to sell the collateral privately,
February 18, 1987, at a public auction. Considering both thereafter they had no time to take any steps to protect their
the January 6 and January 29 letters together, I would hold interest in the collateral. I disagree. As of February 18, 1987,
that the Van Brunts had reasonable notification that they the Van Brunts had notice for approximately one month, by
had until February 18, 1987, to take whatever steps they virtue of the January 6, 1987, letter, that BancTexas intended
could to protect their interest in the collateral. The fact that to sell the collateral. The January 29, 1987, letter told the Van
BancTexas did not sell the collateral on February 18, 1987, Brunts that they had until February 18, 1987, to protect their
did not deprive the Van Brunts of an opportunity to protect interests. The Van Brunts do not argue that these periods were
their interest in the collateral; to the contrary, BancTexas's insufficient or unreasonable. I would overrule the Van Brunts'
refusal to accept the $40,000 high bid provided the Van point of error number two.
Brunts additional time to pursue other avenues.
In point of error three, the Van Brunts contend that a notice
On the basis of the facts of this case, I would hold that when under section 9.504 must be written and not oral. This Court
BancTexas rejected all the bids at the auction, the Van Brunts has previously held that a notice under section 9.504 may be
had reasonable notice that BancTexas intended to sell the oral. MBank Dallas, N.A. v. Sunbelt Mfg., Inc., 710 S.W.2d

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633, 635–36 (Tex.App.—Dallas 1986, writ ref'd n.r.e.). I BancTexas's failure to provide adequate notice pursuant to
would overrule point of error number three. the Texas Business and Commerce Code precludes it from
seeking a deficiency judgment against the Van Brunts for the
In point of error four, the Van Brunts argue that because the unpaid balance of one of the five promissory notes executed
notice was not given by a secured party, it failed to comply by Labels Unlimited. Specifically, BancTexas contends that
with section 9.504. The Van Brunts focus their argument Labels Unlimited's personal property, sold by BancTexas in
on Mason's oral statement that BancTexas reserved the right February 1987, did not secure the $200,000 note executed
to reject all bids at the auction. The Van Brunts maintain by Labels Unlimited on March 29, 1985, and guaranteed
that there is no evidence that Mason was BancTexas's agent by the Van Brunts. The trial court found that the unpaid
for purposes of giving the Van Brunts notice. I disagree. principal balance of this note was $145,549.50, and the
BancTexas hired Mason to perform the February 18, 1987, unpaid accrued interest was $8,837.81. BancTexas contends
public auction. Mason performed the auction on behalf of that all parties concede, and the record *127 confirms,
BancTexas. I would hold that Mason had the authority to give these facts. We disagree with BancTexas's contention that
the Van Brunts notice. I would overrule point of error four. personal property did not secure the $200,000 note. In a case
of first impression in Texas, we find that, as both real and
In point of error five, the Van Brunts argue that the sale personal property secured the note, BancTexas had the option
of the collateral was not commercially reasonable; therefore, under section 9.501(d) of the Texas Business & Commerce
BancTexas is not entitled to a deficiency judgment. The Van Code 1 to proceed under that Code as to the personal property,
Brunts argue that where a party does not receive notice, and later proceed under the Texas Property Code as to
the creditor may not recover the deficiency. Tanenbaum the real property, without being adversely affected by any
v. Economics Laboratory, Inc., 628 S.W.2d 769, 772 defects in its personal property foreclosure proceedings. See
(Tex.1982); Gentry v. Highlands State Bank, 633 S.W.2d 590, TEX.PROP.CODE ANN. § 51.002 (Vernon 1984).
591 (Tex.App.—Houston [14th Dist.] 1982, writ ref'd). The
Van Brunts are correct in asserting that where a debtor does [9] When executed in March 1985, the $200,000 note listed
not receive notice of the sale of his property, the creditor may as security a deed of trust on the four-acre tract located in
not recover any deficiency from the debtor. However, I would Collin County, the same property involved in the homestead
hold that the Van Brunts had sufficient notice; therefore, those dispute. When BancTexas notified the Van Brunts of its
authorities would not apply. I would overrule point of error intention to sell Labels Unlimited's collateral under the terms
five. of its security agreements, BancTexas included the $200,000
note as one of the notes in the notice. BancTexas also stated
I concur in the remainder of the majority opinion, and I would in that notice that it intended to conduct the sale pursuant
affirm the judgment of the trial court. to its rights under those security agreements, including one
dated November 30, 1985. That security agreement, executed
subsequent to the $200,000 note, provided that the security
Before the court en banc.
interest created, secured “all obligations and indebtedness
owed to [BancTexas] direct or indirect, now existing or
OPINION ON MOTION FOR REHEARING hereafter arising.” Paragraph two of that security agreement
described as security all of Labels Unlimited's personal
KINKEADE, Justice. property. Accordingly, the record reflects that both real and
personal property secured the $200,000 note.
We withdraw that portion of this Court's opinion entered
on August 15, 1989, to the extent that this Court held
[10] The Code defines a “security interest” as an interest
that BancTexas Quorum, N.A., could not seek a deficiency
in personal property or fixtures, and “collateral” as property
judgment on the March 29, 1985 promissory note. The
subject to a security interest. See §§ 1.201(37), 9.105(a)
following is now the opinion of this Court only with regard
(3). By its very terms, the Code's provisions setting forth
to that note.
procedures regarding “collateral” or “security interests” apply
solely to personal property. The Code does not apply to the
All parties to this appeal have filed motions for rehearing.
creation or transfer of an interest in or lien on real estate:
In its motion for rehearing, BancTexas contends that this
Court erred in its opinion and judgment by holding that

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secured party “proceeds as to both,”
§ 9.104 Transactions Excluded From Chapter and this Part does not *128 apply in
either action. But subsection [d] does
This chapter does not apply
give him an option to proceed under
.... this Part as to the personal property.

(10) except to the extent that provision is made for § 9.501, comment 5.
fixtures ..., to the creation or transfer of an interest in or lien
on real estate, including a lease or rents thereunder. [11] Under section 9.501(d), if the security agreement
covers both real and personal property, the secured party
§ 9.104(10). may proceed as to both in accordance with his rights and
remedies in respect of the real property. The Code default
Section 9.501(d) states: rules then become inapplicable. Alternatively, the secured
party may proceed under the Code as to the personal property.
§ 9.501 Default; Procedure When Security Agreement 1A Coogan, Hogan, and Vagts, Bender's UCC Service (MB)
Covers Both Real and Personal Property § 8.07[5] (1984). Comment 5 to section 9.501(d) states that
separate actions may be considered proceeding “as to both”
....
real and personal property. Section 9.501(d) provides an
(d) If the security agreement covers both real and personal option to proceed separately under the Code as to the personal
property, the secured party may proceed under this property. See § 9.501(d), comment 5. Section 9.501(d) and
subchapter [the subchapter entitled “Default”] as to the comment 5 exclude any mention of proceeding under the
personal property or he may proceed as to both the real Code as to the real property.
and the personal property in accordance with his rights and
remedies in respect of the real property in which case the Several courts in other jurisdictions that have enacted the
provisions of this subchapter do not apply. Uniform Commercial Code have construed provisions with
language identical to section 9.501(d) and comment 5. The
§ 9.501(d). Illinois Supreme Court held that the language of section
9.501(d) and its comment indicate that when both real and
Comment 5 to section 9.501 states: personal property secure a debt, secured creditors have the
option upon the debtor's default to proceed against both
5. The collateral for many corporate
the real and personal property collateral in separate actions,
security issues consists of both real
whether concurrently or successively. If the secured creditor
and personal property. In the interest
chooses to proceed in separate actions, the default provisions
of simplicity and speed subsection
of the Uniform Commercial Code apply only with regard to
[d] permits, although it does not
the personal property. Kramer v. Exchange National Bank of
require, the secured party to proceed
Chicago, 118 Ill.2d 277, 113 Ill.Dec. 248, 252, 515 N.E.2d 57,
as to both real and personal property
61 (1987); see also Brenton State Bank of Jefferson v. Tiffany,
in accordance with his rights and
440 N.W.2d 583, 587 (Iowa 1989); State Bank v. Hansen,
remedies in respect of the real
302 N.W.2d 760, 764 (N.D.1981); Bank of Spring Valley v.
property. Except for the permission
Wolske, 144 Wis.2d 762, 424 N.W.2d 744, 747 (App.1988).
so granted, this Act leaves to other
state law all questions of procedure
[12] [13] Through the enactment of section 9.501, the
with respect to real property. For
drafters of the Uniform Commercial Code intended to
example, this Act does not determine
broaden the options available to a secured creditor upon a
whether the secured party can proceed
debtor's default. Kramer, 113 Ill.Dec. at 252, 515 N.E.2d
against the real estate alone and later
at 61. Courts must interpret section 9.501(d) in light of
proceed in a separate action against the
the overall policy of the Uniform Commercial Code to
personal property in accordance with
expand creditors' remedies with respect to personal property
his rights and remedies against the real
collateral. Courts cannot interpret the section to reduce the
estate. By such separate actions the
rights of secured creditors with respect to personal property in

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cases where both real property and personal property secure
a debt. Wiley v. Bank of Fountain Valley, 632 P.2d 282, 285 The dissent stops short of the Hildner court's suggestion that
(Colo.App.1981). The creditor may choose either to proceed a secured creditor's failure to comply with the Code when
as to both the real and personal property in accordance with foreclosing on personal property requires cancellation of a
real property law in one action or in separate actions. See § real estate mortgage taken as additional security. The dissent
9.501(d), comment 5. The creditor may also opt to proceed simply treats the real property collateral as additional personal
against the personal property under the Code, but has no property collateral, and then applies the Tanenbaum rule
option to proceed as to the real property under the Code. See to preclude BancTexas from seeking a deficiency in either
§§ 1.201(37), 9.105(a)(3), 9.104(10), 9.501(d). proceeding.

Under the reasoning of the dissent to this opinion on [14] Application of a rule must advance the policy that
motion for rehearing, BancTexas can foreclose on its real gives rise to the rule in the first instance. This concept
and personal property liens but cannot seek a deficiency is fundamental to our system of jurisprudence, as well as
in either proceeding. In its original opinion, the majority to a proper application of the Uniform Commercial Code.
holds that BancTexas's failure to provide adequate notice Barclays Bank D.C.O. v. Mercantile National Bank, 481 F.2d
precludes it from seeking a deficiency judgment against the 1224, 1230 (5th Cir.1973). The Code does not provide for
Van Brunts, citing Tanenbaum v. Economics Laboratory, the elimination of a deficiency because of a secured creditor's
Inc., 628 S.W.2d 769 (Tex.1982). However, the Tanenbaum failure to comply with its default provisions. Rather, the Code
Court found that the legislature, in enacting two sections provides that a secured creditor may hold a debtor liable for
of the Code governing disposition of collateral, intended to a deficiency. § 9.504(b). Because the secured creditor's loss
put the creditor to an election either to sell the repossessed of its right to seek a deficiency is judicially imposed, we
collateral pursuant to section 9.504 or to retain the collateral must closely examine the Tanenbaum Court's rationale for
in complete satisfaction of the debt pursuant to section 9.505. eliminating that right. See Barclays Bank D.C.O., 481 F.2d
The Court held that, because the creditor had not complied at 1230. In Tanenbaum, a creditor with a security interest
with the notice provisions of section 9.504, it, in effect, had only in personal property sought to hold a debtor liable
elected to retain the collateral in complete satisfaction of for a deficiency after seizing and destroying that collateral.
the debt. Tanenbaum, 628 S.W.2d at 771. If, as alleged by The Tanenbaum Court, in seeking to prevent a secured
the dissent to this opinion, failure to give adequate notice creditor's abuse, found that the creditor's failure to give
precludes BancTexas from seeking a deficiency as to both proper notice to the debtor when disposing of the collateral
the real and personal property, it also precludes BancTexas under section 9.504 of the Code resulted in an election to
from foreclosing on its real property *129 lien because retain the collateral in full satisfaction of the debt, an option
the sale of the personal property would have satisfied all available under section 9.505 when a secured party takes
indebtedness. See, e.g., Hildner v. Fox, 17 Ill.App.3d 97, 308 possession of the debtor's personal property after default.
N.E.2d 301, 303 (1974). The Hildner court suggested that a The election is triggered by an irrebuttable presumption that
secured creditor's failure to comply with the Code and notify the creditor has proceeded under section 9.505 rather than
the debtor of a foreclosure on personal property requires under section 9.504. The result comports with section 1.106
cancellation of a real estate mortgage taken as additional of the Code, which provides that the remedies provided under
security. However, the Illinois Supreme Court implicitly the Code “shall be liberally administered to the end that
rejected the Hildner court's suggestion when it concluded the aggrieved party may be put in as good a position as
that section 9.501(d) gives a secured creditor the option to if the other party had fully performed.” When the debt is
proceed against both the real and personal property collateral also collateralized by real property, however, as to which
in separate actions. Kramer, 113 Ill.Dec. at 252, 515 N.E.2d section 9.505 is inapplicable, the basis for the irrebuttable
at 61. Further, according to one commentator who expressly presumption addressed in Tanenbaum is absent. Application
disapproved the Hildner court's comment, the language of of the Tanenbaum rule under these differing circumstances
section 9.501(d) “would seem to cut the other way, driving is not warranted because of the additional penalty damages
a wedge between any defect in the Code foreclosure and which the secured creditor thereby suffers with respect to the
rights under a real estate mortgage.” CLARK, THE LAW real property interest. The Code prohibits interpretation of its
OF SECURED TRANSACTIONS UNDER THE UNIFORM provisions to impose penalty damages. See § 1.106.
COMMERCIAL CODE § 4.03(4), n. 159 (2d ed. 1988).

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The Van Brunts agreed to provide both real and personal Section 9.501(d) provides that if the security agreement
property to secure the $200,000 note, and to provide only covers both real and personal property, the secured party
personal property to secure the other four promissory notes. may proceed as to both in accordance with his rights and
In its original opinion, the majority applied the Tanenbaum remedies in respect to the real property or the secured party
rule to preclude BancTexas from seeking a deficiency in may proceed under the Code as to the personal property.
the personal property foreclosure proceedings, thus providing If the secured party proceeds as to both real and personal
the Van Brunts with the benefit of the rule. If, as the property in accordance with his rights and remedies in
dissent to this opinion contends, the Tanenbaum rule applies respect to the real property, then the Code default rules
to the real property foreclosure proceedings, the dissent do not apply. The majority concludes, in accordance with
must conclude, as the Hildner court did, that BancTexas's the holdings of other jurisdictions, that when both real and
*130 foreclosure on the personal property satisfied the debt, personal properties secure a debt, section 9.501(d) gives
eliminating any deficiency and requiring cancellation of the secured creditors the option, upon a debtor's default, to
real estate mortgage. The only other rationale available to the proceed against both the real and personal property collateral
dissent is to treat the real property as personal property, a in separate actions, whether concurrently or successively.
remedy prohibited by the terms of the Code, which excludes E.g., Kramer v. Exchange Nat'l Bank of Chicago, 118 Ill.2d
real property as collateral. See §§ 1.201(37), 9.105(a)(3). 277, 113 Ill.Dec. 248, 252, 515 N.E.2d 57, 61 (1987).
We hold that any defect in BancTexas's foreclosure under
the Code has no effect on its rights under the real property However, the flaw in the majority's analysis is that the
mortgage, including its right to seek a deficiency. majority wholly and consistently ignores the statutory
requirement that the secured party must proceed as to both
We vacate this Court's August 15, 1989 judgment to the the real and personal property in accordance with its rights
extent that it precluded BancTexas from seeking a deficiency and remedies under real property law if the secured party
judgment on the March 29, 1985 promissory note. We affirm wishes to avoid application of the Code default provisions as
the portion of the trial court's judgment awarding BancTexas to the personal property. See § 9.501(d). The comment, also
a deficiency judgment on the March 29, 1985 promissory note relied upon by the majority, makes this clear by suggesting
in the amount of $145,549.50, together with accrued interest that the secured party can proceed against the real property
in the amount of $8,837.81. We reverse the portion of the trial in one action and “in a separate action against the personal
court's judgment awarding BancTexas a deficiency judgment property in accordance with his rights and remedies against
for principal or interest amounts due under the other four the real estate.” See § 9.501(d), comment 5.
promissory notes and render judgment that BancTexas take
nothing on those four notes. In all other respects, we affirm The record reflects that when the Van Brunts executed the
the trial court's judgment. $200,000 note, BancTexas chose to secure it only with a
deed of trust against the four-acre tract of land in Collin
County. Subsequently, in November 1985, BancTexas chose
BAKER, Justice, dissenting. to cross-collateralize the $200,000 note with a personal
In the beginning, the majority finds that as both real and property security interest in all of the assets of *131 Labels
personal property secured the $200,000 Van Brunt note, Unlimited. When BancTexas gave notice to the Van Brunts
BancTexas had the option under section 9.501(d) of the Texas of its intention to sell Labels Unlimited's collateral under
Business and Commerce Code 1 to proceed separately as the security agreement, BancTexas chose to include the
to the personal property and later proceed under the Texas $200,000 note as one of the debts involved in the foreclosure
Property Code as to the real property securing the Van Brunt proceeding. BancTexas chose to withdraw the collateral from
indebtedness. In the end, the majority holds that any defect the public sale previously noticed and proceed with a private
in BancTexas's foreclosure under the Code has no effect on sale without further notice to the Van Brunts. The record
its rights under the real estate mortgage, including its right clearly reflects that BancTexas chose to proceed as to the
to seek a deficiency under real property law. In my view, personal property and all of the indebtedness in accordance
the majority lost its way between the beginning and end. with the Code provisions concerning default. There is no
Consequently, I respectfully dissent. indication in the record that BancTexas attempted to sell the
personal property in a manner consistent with a trustee's sale
of real property. In other words, BancTexas clearly did not

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Van Brunt v. BancTexas Quorum, N.A., 804 S.W.2d 117 (1989)
14 UCC Rep.Serv.2d 931

Brunt indebtedness. The unsatisfied balance remained as a
do what it needed to do in order to avoid application of the
deficiency, but because BancTexas failed to give adequate
Code provisions.
notice, Tanenbaum precludes it from asserting a cause of
action for that unsatisfied deficiency. Foreclosing on the real
We held in the original opinion that because BancTexas
property is not the seeking of a deficiency, so such action is
failed to give proper notice of the private sale of the personal
not barred by Tanenbaum.
property, it could not seek a deficiency for the unpaid
balances. See Tanenbaum v. Economics Laboratory, Inc., 628
The Hildner rationale does not require the conclusion that
S.W.2d 769, 772 (Tex.1982). If the protection provided to
the real estate mortgage is canceled, nor does it require
debtors by Tanenbaum is to be meaningful in cases where
the conclusion that the secured creditor is precluded from
a debt is secured by both personal and real property and
posting the real property and foreclosing under its deed
where the secured party has not taken the necessary action
of trust; it only compels the conclusion that after these
to avoid application of the Code provisions on default, the
actions are taken BancTexas is precluded from taking any
Tanenbaum principles must apply to prohibit a creditor from
action against the Van Brunts for any remaining deficiency
seeking a deficiency judgment after the sale of the real
on the note. This result is consistent with Tanenbaum.
property. The majority's holding eviscerates the Tanenbaum
The majority's suggestion to the *132 contrary is based
holding in any case where a debt is secured by both real and
upon their erroneous construction of Tanenbaum. Under
personal property, regardless of whether the secured creditor
the particular facts in Tanenbaum, the Supreme Court held
acted properly to opt out of the Code provisions regarding
that when the creditor took possession of the collateral and
default. In cases where a creditor fails to comply with the
scrapped it without giving notice of such disposition to the
applicable notice requirements of section 9.504, the majority
debtor, the creditor was deemed to have elected to retain
effectively holds that Tanenbaum's prohibition against suing
the collateral in full satisfaction of the indebtedness under
for a deficiency is really not a prohibition if the debt was also
section 9.505 of the Code. See Tanenbaum, 628 S.W.2d at
secured by real property, despite the fact that the creditor has
772; § 9.505(b). Such is not the situation in the case before
not complied with the provisions of section 9.501(d) allowing
us. BancTexas did not destroy the collateral. BancTexas sold
avoidance of the Code default provisions as to the personal
it by private sale without proper notice to the Van Brunts.
property.
Therefore, there is no basis for concluding that BancTexas
effectively elected to retain the collateral in full satisfaction
Contrary to the majority's assertion, I do not read Hildner 2
of the indebtedness in accordance with section 9.505.
to suggest that the failure to notify a debtor of a foreclosure
on personal property under the Code requires cancellation of
BancTexas could have chosen to proceed against all of its
a real estate mortgage taken as additional security. What I
collateral in accordance with its rights and remedies with
do read Hildner to say is that if a secured creditor chooses,
respect to real property, or BancTexas could have chosen to
as BancTexas did here, to proceed under the Code as to
proceed against the personal property collateral in a separate
the entire indebtedness, including debt cross-collateralized
action under the Code provisions and against the real property
by real property, by repossessing and selling the personal
collateral under the Texas Property Code provisions. In my
property, such course of action binds that creditor to any other
view, because of the course of action that BancTexas chose
applicable sections of the Code. See Hildner, 308 N.E.2d at
to take, I would hold that although the defect in BancTexas's
303.
foreclosure under the Code does not affect its right to post
and foreclose the real property and sell it under its deed of
The majority contends that the dissent's position leads to
trust lien, BancTexas is precluded from seeking a deficiency
the conclusion that BancTexas is precluded from foreclosing
of any balance remaining subsequent to such foreclosure.
on its real property lien because the sale of the personal
property would have satisfied all indebtedness. In my
I respectfully dissent.
view, the fact that Tanenbaum prevents BancTexas from
seeking a deficiency due to its failure to give adequate
notice does not mean that BancTexas is precluded from Parallel Citations
foreclosing on its real property lien. The proceeds of the
sale of the personal property did not satisfy all of the Van 14 UCC Rep.Serv.2d 931

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Van Brunt v. BancTexas Quorum, N.A., 804 S.W.2d 117 (1989)
14 UCC Rep.Serv.2d 931

Footnotes
1 All references to “the Code” and to section 9.504 are to the Texas Business and Commerce Code. See TEX.BUS. & COM.CODE
ANN. § 9.504 (Tex.UCC) (Vernon Supp.1989).
1 All textual references to “the Code” are to the Texas Uniform Commercial Code; all citations to “Tex.UCC” are to the Texas Uniform
Commercial Code.
1 Unless otherwise stated, all section and code references are to the Texas Business and Commerce Code. See TEX.BUS. &
COM.CODE ANN. §§ 1.106, 1.201, 9.104, 9.105, 9.501, 9.504, 9.505 (Tex.UCC) (Vernon 1989).
1 All section and Code references are to the Texas Business and Commerce Code Annotated (Vernon Supp.1990).
2 Hildner v. Fox, 17 Ill.App.3d 97, 308 N.E.2d 301 (1974).

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 12
Vondy v. Commissioners Court of Uvalde County, 620 S.W.2d 104 (1981)

The trial court entered judgment denying Vondy relief. The
court of civil appeals vacated the trial court's judgment and
620 S.W.2d 104
dismissed the cause, holding the failure to join Commissioner
Supreme Court of Texas.
Woodrow Head was fundamental error. 601 S.W.2d 808. We
H. T. VONDY, Petitioner, reverse the judgment of the court of civil appeals and remand
v. the cause to the trial court for further proceedings consistent
COMMISSIONERS COURT OF UVALDE with this opinion.
COUNTY, Texas et al., Respondents.
Two issues are presented in this appeal: first, was it
No. B-9727. | July 22, 1981. fundamental error to omit Commissioner Head, individually,
| Rehearing Denied Sept. 16, 1981. as a respondent in Vondy's petition for writ of mandamus;
second, is it the duty of the county commissioners court to set
Duly elected constable sought writ of mandamus against a reasonable salary for its duly elected constables?
commissioners court and four of its five members to compel
them to set a reasonable salary for his office. The District Vondy was elected to the office of constable, Precinct 6,
Court, No. 38, Uvalde County, Woodley, J., entered judgment Uvalde County, Texas on November 4, 1978, and took his
denying petitioner relief, and the Eastland Court of Civil oath of office on January 17, 1979. Vondy appeared before
Appeals, Eleventh Supreme Judicial District, Brown, J., 601 the commissioners court requesting that a salary be set for his
S.W.2d 808, vacated trial court's judgment and dismissed the office. The commissioners other than Head, voted not to set a
cause. Petitioner appealed. The Supreme Court, Spears, J., salary for Vondy. Vondy then petitioned the district court for
held that: (1) it was not fundamental error to omit the fifth a writ of mandamus against the commissioners court and each
commissioner, individually, as a respondent in the petition for of the commissioners, individually, except Head. The trial
writ of mandamus, and (2) county commissioners court had court denied Vondy any relief. The failure of Vondy to name
duty to set a reasonable salary for the constable. Head in his petition was not brought up before the district
court by any type of plea or as a point of error before the court
Reversed and remanded. of civil appeals. The court of civil appeals, on its own motion,
held that Commissioner Head's absence from the mandamus
Greenhill, C.J., and McGee, Denton and Barrow, JJ., petition was fundamental error since he was an indispensable
concurred in result. party to the suit, citing Gaal v. Townsend, 77 Tex. 464, 14
S.W. 365 (1890). The court of civil appeals then dismissed
the cause.
Attorneys and Law Firms
Vondy contends that the commissioners court must fix a
*104 Harry A. Nass, Jr., James M. Parker, San Antonio, for
reasonable salary for him pursuant to Tex.Rev.Civ.Stat.Ann.
petitioner.
art. 3883i, s 1 (Vernon's 1971), which provides:
David R. White, Uvalde, for respondents.
Section 1. That in each county in the
Opinion State of Texas having the population
of less than twenty thousand (20,000)
SPEARS, Justice. inhabitants according to the last
preceding federal census where all
This is an appeal from a mandamus action. Petitioner H. county and district officials are
T. Vondy, the duly elected constable of Precinct 6 in compensated on a salary basis, the
Uvalde County, sought a writ of mandamus against the Commissioners Court shall fix the
Commissioners Court of Uvalde County and four of its five salaries of the officials named in
members, County Judge J. R. White, Commissioners Gene this Act at not more than Six
Isle, Gilbert Torres, and Norment Foley, to compel *105 Thousand, Seven Hundred and Fifty
them to set a reasonable salary for Vondy's office. One Dollars ($6,750) per annum; provided,
commissioner, Woodrow Head, was not named as a party, however, that no salary shall be set at a
but no objection was made to his absence in the trial court.

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Vondy v. Commissioners Court of Uvalde County, 620 S.W.2d 104 (1981)

figure lower than that actually paid on Prior to the enactment of the present rule, the courts drew a
1
the effective date of this Act. distinction between necessary and indispensable parties. 2 In
Petroleum Anchor Equipment, Inc. v. Tyra, 406 S.W.2d 891
Vondy argues that Head was not an indispensable party (Tex.1966), this court interpreted prior Rule 39. We stated
because Head was willing to comply with the statute in this that the language of Rule 39(a), when properly interpreted,
dispute. The commissioners argue that Woodrow Head was constituted the rule's definition of “indispensable” parties
an indispensable party and the failure of Vondy to name Head whose joinder in the trial court is essential to the court's
individually in his petition was fundamental error. jurisdiction. Therefore, if a person were truly indispensable,
it would be fundamental error to proceed in his absence. Id.
Rule 39, Tex.R.Civ.P. governs the joinder of parties to a at 892.
lawsuit. The present rule was completely rewritten in 1970 to
remedy much of the confusion and criticism leveled at prior In 1970, using Federal Rule 19 as its source, this court
Rule 39. See Dorsaneo III, Compulsory Joinder of Parties completely changed Rule 39. Then, in Cooper v. Texas Gulf
in Texas, 14 Hou.L.R. 345, 359 (1977). Present Rule 39 Industries, Inc., 513 S.W.2d 200 (Tex.1974), we reviewed the
provides in part: new rule. There, the spouses acting together bought realty
which was conveyed to both of them. The husband sued the
Rule 39. Joinder of Persons Needed for Just Adjudication grantor to rescind the transaction in 1970. The wife was not a
party to the suit. The husband's suit was later dismissed with
(a) Persons to be Joined if Feasible. A person who is subject
prejudice. Subsequently, in 1971, a suit for similar relief was
to service of process shall be joined as a party in the action brought by the husband and wife jointly. The grantor sought
if (1) in his absence complete relief cannot be accorded summary judgment on the basis of res judicata, asserting that
among those already parties, or (2) he claims an interest both the husband and wife were bound by the prior judgment.
relating to the subject of the action and is so situated that the We held that the judgment of dismissal was res judicata as to
disposition of the action in his absence may (i) as a practical the claims of the husband in the second suit. We pointed out
matter impair or impede his ability to protect that interest that prior to the enactment of new Rule 39, failure to join the
or (ii) leave any of the persons already parties subject to wife would be jurisdictional, but stated: “(T)oday's concern is
a substantial risk of incurring double, multiple, or other less that of the jurisdiction of a court to proceed and is more
inconsistent obligations by reason of his claimed interest. a question of whether the court ought to proceed with those
If he has not been so joined, the court shall order that he who are present.” We then observed: “under the provisions
be made a party. If he should join as a plaintiff but refuses of our present Rule 39 it would be rare indeed if there were
to do so, he may be made a defendant, or, in a proper case, a person whose presence was so indispensable in the sense
an involuntary plaintiff. that his absence deprives the court of jurisdiction to adjudicate
between the parties already joined.”
*106 (b) Determination by Court Whenever Joinder Not
Feasible. If a person as described in subdivision (a)(1)-(2)
[1] To determine whether a party is jurisdictionally
hereof cannot be made a party, the court shall determine
indispensable under Rule 39 the surrounding facts and
whether in equity and good conscience the action should
be dismissed, the absent person being thus regarded as circumstances of each case must be examined. In the
present case, the facts fail to warrant a finding that
indispensable. The factors to be considered by the court
Commissioner Head was truly an indispensable party under
include: first, to what extent a judgment rendered in the
our interpretation of Rule 39 Tex.R.Civ.P. This is not
person's absence might be prejudicial to him or those
a situation where a judgment would adversely affect the
already parties; second, the extent to which, by protective
interests of absent parties who *107 had no opportunity to
provisions in the judgment, by the shaping of relief, or
assert their rights in the trial court. See Provident Tradesmens
other measures, the prejudice can be lessened or avoided;
Bank & Trust Co. v. Patterson, 390 U.S. 102, 110, 126, 88
third, whether a judgment rendered in the person's absence
S.Ct. 733, 746, 19 L.Ed.2d 936 (1968). Here, the interests of
will be adequate; fourth, whether the plaintiff will have an
all the parties could be adjudicated and complete relief given.
adequate remedy if the action is dismissed for non-joinder.
Further, the remaining commissioners would not be subject to
a substantial risk of incurring double, multiple, or otherwise
inconsistent obligations due to the absence of Commissioner

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Vondy v. Commissioners Court of Uvalde County, 620 S.W.2d 104 (1981)

Head. We conclude, therefore, that because Head was not an an independent school district for the election of trustees.
indispensable party to the proceeding, the nonjoinder of Head The county judge was not sued in his individual capacity but
was not fundamental error. rather in his official capacity as county judge. No question
was raised as to the capacity of the county judge until after
The commissioners contend that the rules relating to appeal had been perfected. The court of civil appeals held that
indispensable parties are modified in this case because this is the Texas Rules of Civil Procedure were now controlling and
a mandamus action. They rely on Gaal v. Townsend, supra, disavowed the early case of City of Beaumont v. Stephenson,
which involved an action to procure a writ of mandamus to 95 S.W.2d 1360 (Tex.Civ.App. Beaumont 1936, writ ref'd
compel the county judge to permit the appellant to perform n.r.e.). In Stephenson, the court had held that officers acting
his duties as a county commissioner. The other members of in their personal capacities in refusing to perform a duty are
the commissioners court were not made parties to the suit. necessary parties in those capacities. The Rodriquez court
We stated: “When the performance of a duty is sought to be interpreted Rule 358, Tex.R.Civ.Civ.P., as providing that a
compelled by the writ of mandamus, all persons charged with named public officer in a mandamus suit may be made a party
the performance of that duty must be made parties defendant in his official capacity. 3 Further, since Rule 93 required that
in the writ.” the lack of capacity of a party defendant to be sued must
be raised by verified pleading, defendant's failure to do so
Part of the rationale behind the Gaal v. Townsend decision constituted a waiver under Rule 90. The failure to name the
was that only a majority of the commissioners could permit county judge in his personal capacity was specifically held to
the appellant to perform his duties as a county commissioner. not be fundamental error. Id. at 250.
We stated:
*108 [2] We think the reasoning in Rodriquez is
The other members of the
correct. Mandamus is a legal proceeding and although
(commissioners) court, not being
extraordinary, the Rules of Civil Procedure are applicable.
parties to the writ, could not be
The commissioners court was officially named although
affected by any judgment that might
Commissioner Head was not named individually. The
be rendered, and could not be held
commissioners did not point out any defect in Vondy's
in contempt for refusing to admit
petition relating to the omission of Commissioner Head and
the plaintiff to act as a member,
the capacity in which the commissioners court was sued. The
although this court should in this suit
failure to name Head individually in this mandamus action
declare him entitled to the office, and
was not fundamental error. Gaal v. Townsend, supra, was
command the defendant Townsend to
decided long before the present Rules were enacted and is not
admit him as such. It is clear that a
controlling.
mandamus should not issue to compel
the county judge to do an act which
Consequently, Vondy's failure to join all four county
could only be performed with the
commissioners was not fundamental error. Since the
consent of others.
commissioners court did not raise the point, the court of civil
appeals should not have dismissed the case, but should have
In the present suit three of the four commissioners and considered the merits of Vondy's mandamus action against
the county judge were made parties individually. The the commissioners.
commissioners court itself was also named. Therefore, the
reasoning of Gaal v. Townsend is not applicable in the present We now turn to the question of the duty of the commissioners
situation. court to set a reasonable salary for the position of constable.
The Texas Constitution art. XVI s 61 (amended 1972)
Further, the fact that the commissioners court itself was provides in part as follows:
named in the petition distinguishes this cause from Gaal v.
Townsend under the holding in Rodriquez v. Richmond, 234 In all counties in this State,
S.W.2d 248 (Tex.Civ.App. San Antonio 1950, writ ref'd). the Commissioners Courts shall be
That case involved a mandamus suit brought against the authorized to determine whether
county judge to compel an election for the incorporation of precinct officers shall be compensated

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Vondy v. Commissioners Court of Uvalde County, 620 S.W.2d 104 (1981)

on a fee basis or on a salary basis, with constables on a fee basis, this does not lead to the
the exception that it shall be mandatory conclusion that constables need not now be compensated at
upon the Commissioners Courts, to all. Furthermore, we conclude that the commissioners court
compensate all justices of the peace, must *109 set a reasonable salary. While a reasonable
constables, deputy constables and salary would be a determination for the commissioners court,
precinct law enforcement officers on Vondy is entitled to be compensated by a reasonable salary.
a salary basis beginning January 1, Any other interpretation of the provision would render it
1973; .... (emphasis added) meaningless.

Thus, it is mandatory that the commissioners court We also note, that by failure to pay a salary to Vondy,
compensate constables on a salary basis. the commissioners court could be subject to prosecution
under Tex.Penal Code Ann. s 39.01(a)(3) (Vernon 1974), for
The commissioners court argues that this constitutional failure to perform its duties imposed by law. By this statute,
provision only requires the court to compensate these officials the legislature recognized the necessity that public officials
on a salary basis if they are compensated at all. It reasons perform the duties required of them by law and provided
that if the officials have never been compensated, they need sanctions for their failure to do so when the failure was
not be compensated. The purpose of the amendment was to intentional and to obtain a benefit or harm another.
prohibit the practice of compensating justices on a fee basis.
Wichita County v. Robinson, 155 Tex. 1, 276 S.W.2d 509 [4] [5] This court lacks original mandamus jurisdiction
(1954). Therefore, it asserts that the provision is a mandate over county officials. Cocke v. Smith, 142 Tex. 396, 179
that constables be compensated, if at all, on a salary basis. S.W.2d 958 (1944). Rather, that power is vested in the district
Additionally, it urges that since no other statute mandates a court in the exercise of its general supervisory control over
minimum salary, the commissioners court has discretion to the orders of the commissioners court. Art. V s 8 Tex.Const.;
set no salary at all. Grant v. Ammerman, 437 S.W.2d 547, 550 (Tex.1969); and
Article 1908. While such jurisdiction is not used to substitute
The commissioners court next argues that since Vondy is the discretion of the district court for that of the public official,
also a Class B Security Service Contractor 4 and operates the Weber v. City of Sachse, 591 S.W.2d 559 (Tex.Civ.App.
business for profit, the trial court did not abuse its discretion Dallas 1979, no writ), the performance of a clear statutory
in denying the mandamus. It argues that a person cannot duty which is ministerial and nondiscretionary should be
accept a public office knowing the amount of compensation mandated by the district court. Wichita County v. Griffin,
and then claim more is due, citing Terrell v. King, 118 Tex. 284 S.W.2d 253 (Tex.Civ.App. Ft. Worth 1955, writ ref'd
237, 14 S.W.2d 786, 791 (1929). Vondy replies that this does n.r.e.). Even in matters involving some degree of discretion,
not apply when the amount of compensation is mandated the commissioners court may not act arbitrarily. Avery v.
by law. Broom v. Tyler County Commissioners Court, 560 Midland County, 406 S.W.2d 422, 428 (Tex.1966); Stovall
S.W.2d 435, 437 (Tex.Civ.App. Beaumont 1977, no writ). v. Shivers, 129 Tex. 256, 103 S.W.2d 363, 367 (1937). Here,
Also the commissioners court contends that there was no the district court should have granted the mandamus sought
money budgeted or available with which to pay Vondy at the by Vondy.
time of his request.
There is another compelling reason that mandamus is proper
A final argument made by the commissioners court is that by in this case. This court, as well as the trial court, has
setting no salary, the court has set a salary. In any event, it inherent power to act to protect and preserve the proper
contends that the constitutional provision does not mandate administration of the judicial system. The Texas Constitution
that it set a reasonable salary, which Vondy is requesting. now recognizes this fundamental principle by providing that
the Supreme Court “shall exercise the judicial power of the
[3] We do not find the commissioners courts' arguments State except as otherwise provided in this Constitution.”
persuasive. The constitutional provision clearly mandates Tex.Const. Art. V s 3 (effective September 1, 1981). We
that constables receive a salary. While cases cited by recently discussed and recognized the inherent power to the
the commissioners court point out that the constitutional judicial branch in Eichelberger v. Eichelberger, 582 S.W.2d
provision was amended to stop the practice of paying 395 (Tex.1979). In Eichelberger, we listed examples of the

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Vondy v. Commissioners Court of Uvalde County, 620 S.W.2d 104 (1981)

additional funds necessary to adequately administer the
exercise of inherent power by courts in Texas and other
court of common pleas. In 1857, the Supreme Court of
jurisdictions. 582 S.W.2d at 398 n. 1. Texas courts have
Pennsylvania required the county to compensate a constable
recognized their inherent powers to control their judgments,
for his services because of the benefit derived by the
e. g., Coleman v. Zapp, 105 Tex. 491, 151 S.W. 1040,
county for such services in the preservation of order and
1041 (1912), to punish by contempt, e. g., Ex Parte Barnett,
administration of justice. Lancaster County v. Brinthall, 29
600 S.W.2d 252, 254 (Tex.1980), to summon and compel
Pa. 38, 40 (1857).
the attendance of witnesses, e. g., Burttschell v. Sheppard,
123 Tex. 113, 69 S.W.2d 402, 403 (1934), and to regulate
We hold that the county commissioners of Uvalde County
the admission to the practice of law, e. g., State Bar of
must compensate the county's constables. The judicial system
Texas v. Heard, 603 S.W.2d 829, 831 (Tex.1980); Scott
of this state cannot function properly if those officials who
v. State, 86 Tex. 321, 24 S.W. 789, 790 (1894). In one
are responsible for carrying out certain duties in that process
instance, a Texas court recognized that a district court would
are not properly compensated. Tex.R.Civ.P. 103 allows
have the power to appoint probation personnel and set their
constables to serve process in this state. If these constables
compensation, if that action were necessary for the effective
are not compensated for their services the judicial process
administration of the business of the court. Commissioners
will be impaired because process may not be served. It is the
Court of Lubbock County v. Martin, 471 S.W.2d 100, 110
duty of the commissioners court to provide process servers
(Tex.Civ.App. Amarillo 1971, writ ref'd n.r.e.).
as a necessary part of the proper administration of justice
in this state, and to compensate them adequately. See Pope
Other state courts have often recognized the necessity of this
& McConnico, Practicing Law With the 1981 Texas Rules,
inherent power to compel payment of sums of money if they
32 Baylor L.Rev. 457, 484-86 (1980). Constables, provided
are reasonable and necessary in order to carry out the court's
for in the “Judicial Branch” Article of the Constitution,
mandated responsibilities. This power is necessary for the
Tex.Const. Art. V s 18, additionally serve other functions
judiciary to carry out its functions, independently of the other
necessary to the judicial branch of the state.
branches of government. Carlson v. State ex rel. Stodola,
247 Ind. 631, 220 N.E.2d 532 (1966). This inherent power
Even though the commissioners court is also part of the
is also necessary to protect and preserve the judicial powers
judicial branch of this state, existing under Article V Section
from impairment or destruction. Mowrer v. Rusk, 95 N.M.
1 of the Texas Constitution, this fact does not alter our powers
48, 618 P.2d 886, 892 (1980); Judges for the Third Judicial
to protect and preserve the judiciary by compelling payment
Circuit v. County of Wayne, 386 Mich. 1, 190 N.W.2d 228,
for process servers. The legislative branch of this state has
231 (Mich.1971), cert. denied, 405 U.S. 923, 92 S.Ct. 961,
the duty to provide the judiciary with the funds necessary for
30 L.Ed.2d 794 (1972). See also Annot., 59 A.L.R.3d 569
the judicial branch to function adequately. If this were not
(1974).
so, a legislative body could destroy the judiciary by refusing
to adequately fund the courts. The judiciary must have the
*110 In particular, courts have employed their inherent
authority to prevent any interference with or impairment of
power to hire and require salaries be paid for secretaries,
the administration of justice in this state.
Millholen v. Riley, 211 Cal. 29, 293 P. 69, 71 (1930),
clerks, Smith v. Miller, 153 Colo. 35, 384 P.2d 738, 741
Accordingly, the judgment of the court of civil appeals is
(1963), probation officers, Noble County Council v. State
reversed and the cause is remanded to the district court of
ex rel. Fifer, 234 Ind. 172, 125 N.E.2d 709, 714 (1955),
Uvalde County for further proceedings consistent with this
and assistants, In Re Matter of Court Reorganization Plan of
opinion.
Hudson County, 161 N.J.Super. 483, 391 A.2d 1255, 1259
(1978). In Commonwealth ex rel. Carroll v. Tate, 442 Pa. 45,
274 A.2d 193 (1971), cert. denied, 402 U.S. 974, 91 S.Ct.
1665, 29 L.Ed.2d 138 (1971), the court issued a mandamus GREENHILL, C. J., and McGEE, DENTON and BARROW,
requiring the city council of Philadelphia to appropriate JJ., concur in the result.

Footnotes
1 All statutory references are to Texas Revised Civil Statutes Annotated.

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Vondy v. Commissioners Court of Uvalde County, 620 S.W.2d 104 (1981)

2 Prior Rule 39 provided in part:
Necessary Joinder of Parties.
(a) Necessary joinder. Except as otherwise provided in these rules, persons having a joint interest shall be made parties and be
joined as plaintiffs or defendants. When a person who should join as a plaintiff refuses to do so, he may be made a defendant
or, in proper cases, an involuntary plaintiff.
(b) Effect of failure to join. When persons who ought to be parties if complete relief is to be accorded between those already
parties, have not been made parties and are subject to the jurisdiction of the court, the court shall order them made parties.
The court in its discretion may proceed in the action without making such persons parties, if its jurisdiction over them can be
acquired only by their consent or voluntary appearance; but the judgment rendered therein shall not affect the rights or liabilities
of persons who are not parties.
(c) Names of omitted persons and reasons for non-joinder to be pleaded. In any pleading in which relief is asked, the pleader
shall set forth the names, if known to him, of persons who ought to be parties, if complete relief is to be accorded between those
already parties, but who are not joined, and shall state why they are omitted.
3 Rule 358 Tex.R.Civ.P. provided in part:
(a) When a suit in mandamus or injunction is brought against a person holding a public office, in his official capacity, and after
final trial and judgment in the trial court, and notice of appeal to the Court of Civil Appeals or Supreme Court has been given, if
such person should vacate such office, the suit shall not abate, but his successor may be made a party thereto by a motion showing
such facts. (emphasis added) (This rule was amended in 1976 to eliminate the reference to notice of appeal as an appellate step.)
4 Article 4413(29bb), s 16(b)(2) and s 2(9) defines a security service contractor as “any guard company, alarm systems company,
armored car company, courier company, or guard dog company as defined herein.”

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Vondy v. Commissioners Court of Uvalde County, 714 S.W.2d 417 (1986)

CANTU, Justice.
714 S.W.2d 417
Court of Appeals of Texas, This is an appeal from an order discharging the appellees,
San Antonio. the Commissioners Court of Uvalde County, from a writ
of mandamus on the basis that the writ had been complied
H.T. VONDY, Appellant, with. The appellant, H.T. Vondy, was elected constable for
v. Precinct 6, Uvalde County, Texas on November 4, 1978, and
COMMISSIONERS COURT OF took office on January 17, 1979. Vondy filed an Application
UVALDE COUNTY, Appellees. for Writ of Mandamus in the 38th District Court of Uvalde
County on May 17, 1979, seeking to compel the appellees
No. 04–85–00525–CV. | July 9, to set and pay him a reasonable salary. The application
1986. | Rehearing Denied July 31, 1986. was denied. On appeal the Eastland Court of Appeals
dismissed the cause on jurisdictional grounds. See Vondy v.
Duly elected constable sought writ of mandamus against
Commissioners Court of Uvalde County, 601 S.W.2d 808
Commissioners Court and four of its five members to
(Tex.Civ.App.—Eastland 1980).
compel them to set reasonable salary for his office. The
38th District Court, Uvalde County, Jack Woodley, J.,
The Supreme Court reversed and remanded the cause, and
denied relief and the Eastland Court of Civil Appeals,
instructed the trial court to issue the writ sought by Vondy.
11th Supreme Judicial District, Brown, J., 601 S.W.2d
The Supreme Court determined that the Texas Constitution,
808, vacated trial court's judgment and dismissed the case.
Article XVI, section 61 (Vernon Supp.1986) as amended in
Petitioner appealed. The Supreme Court, 620 S.W.2d 104,
1972, mandates that the Commissioners Court compensate
Spears, J., reversed and remanded. A writ of mandamus
constables on a salary basis and that such salary be reasonable.
was issued ordering Commissioners Court to set reasonable
Vondy v. Commissioners Court of Uvalde County, 620
salary. After Commissioners Court had set salary of $40 per
S.W.2d 104, 108 (Tex.1981) (“Vondy I”). The Supreme
month and requested that they be discharged from any further
Court expressly rejected the appellees' arguments that they
duties under writ, the District Court, Mickey R. Pennington,
had the discretion to set no salary at all, that because no
J., discharged Commissioners Court from the writ and denied
salary was set when Vondy accepted the office he could not
constable's motion for contempt. On appeal, the Court of
now claim one, and that because no money was budgeted or
Appeals, Cantu, J., held that in view of numerous duties
available to pay Vondy there was no requirement to provide
imposed by law upon constable, salary of $40 per month or
compensation for Vondy's services.
equivalent of 20 cents per hour for time spent by constable in
performance of his duties, was unreasonable.
A writ of mandamus was issued by the trial court on
September 17, 1981, ordering the appellees to set a reasonable
Reversed and remanded with instructions.
salary and to extinguish the debt owed Vondy by virtue of his
having held the office of constable. The writ further ordered
Butts, J., dissented and filed an opinion.
the return of the writ by February 1, 1982, stating what was
done in compliance with the writ.
Attorneys and Law Firms
The return was filed on January 27, 1982, wherein
*419 Harry A. Nass, Jr., James M. Parker, San Antonio, for the appellees stated that on December 14, 1981, the
appellant. Commissioners Court met and set a salary of $40.00 per
month. The appellees tendered the sum of $960.00 into the
Lloyd Lochridge, Austin, for appellees. registry of the court, representing payment of $40.00 per
month for the 24 months Vondy was in office. The appellees
Before CADENA, C.J., and BUTTS and CANTU, JJ.
also requested that they be discharged from any further duties
under the writ.

OPINION Vondy objected to the proposed entry of an order discharging
appellees, and filed a motion for contempt against the

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Vondy v. Commissioners Court of Uvalde County, 714 S.W.2d 417 (1986)

appellees. Vondy alleged that he was not afforded the Court does abuse its discretion, the district court has the
opportunity for an evidentiary hearing to establish a record power and authority to abrogate such actions. Bomer v. Ector
concerning the setting of a salary; that a salary of $40.00 per County Commissioners Court, 676 S.W.2d 662 (Tex.App.
month was unreasonable and capricious and in violation of —El Paso 1984, writ ref'd n.r.e.). Thus “this supervisory
the mandate of the Supreme Court and the trial court; and that jurisdiction can be invoked in a direct attack in the district
no interest was allotted for payment to Vondy. court when it is alleged that the Commissioners Court order
is voidable as being arbitrary, capricious, unsupported by
A hearing was held on September 16, 1985, and a final substantial evidence or that the court has acted beyond
judgment signed on October 9, 1985. The trial court its jurisdiction.” Mobil Oil Corp. v. Matagorda County
discharged appellees from the writ, and denied Vondy's Drainage District No. 3, 580 S.W.2d 634, 638 (Tex.Civ.App.
motion for contempt. All relief sought by Vondy was denied —Corpus Christi 1979), rev'd on other grounds, 597 S.W.2d
by the trial court except entitlement to the compensation set 910 (Tex.1980).
by appellees. All costs were assessed against Vondy.
Analyzing Vondy's points of error to determine the substance
Vondy presents four points of error. The first three allege that of the argument rather than the form of the allegations,
“the trial court erred in discharging the appellees from the writ as we are required to do under the liberal briefing rules,
of mandamus by finding as a matter of law” (1) that a salary of TEX.R.CIV.P. 422; Cleaver v. Dresser Industries, 570
$40.00 per *420 month is a reasonable salary for the office S.W.2d 479 (Tex.Civ.App.—Tyler 1978, writ ref'd n.r.e.),
of constable; (2) that Vondy was not entitled to recover any Vondy's argument necessarily complains of the trial court's
expenses of office and (3) that Vondy was not entitled to any failure to find that the Commissioners Court acted arbitrarily
interest on the unpaid salary amounts from and after the date and capriciously in setting Vondy's salary. In arguing that the
such payments were due. trial court erroneously found that what the Commissioners
Court did was reasonable, Vondy necessarily argues that the
Appellees argue that the trial court did not make findings as Commissioners Court's actions were unreasonable and an
alleged by Vondy, and furthermore, that the trial court had no abuse of that court's discretion. Thus the real question before
jurisdiction to make such findings. The appellees also attack us is whether the district court erred in not finding that the
Vondy's points of error as incorrectly failing to assign error Commissioners Court acted arbitrarily and capriciously and
on the part of the trial court, to-wit: in failing to state that the abused its discretion.
trial court erred in not finding that the Commissioners Court
acted arbitrarily and abused its discretion. [2] [3] Additionally, we construe Vondy's objection or
challenge to the appellees' motion for discharge from the
The Texas Constitution, Article V, section 8 provides, in writ of mandamus as a direct attack upon the order of
pertinent part: the Commissioners Court. Therefore, Vondy has properly
invoked the jurisdiction of the district court requiring it
The District Court shall have appellate jurisdiction to exercise its supervisory control over the Commissioners
and general supervisory control over the County Court by reviewing the order of the Commissioners Court.
Commissioners Court, with such exceptions and under However, we note that the district court has no authority to
such regulations as may be prescribed by law ... 1 set the salary of the constable. Rather, the Commissioners
Court must determine what is a reasonable salary. See Vondy
[1] The legislature has not established a method I, supra.
or procedure for invoking the appellate jurisdiction
or supervisory control of the district court over the At the hearing before the trial court, Vondy offered testimony
Commissioners Court by any statutory enactment. Scott v. and evidence concerning what he considered to be a
Graham, 156 Tex. 97, 292 S.W.2d 324 (1956). However, it is reasonable salary. Appellant testified that he *421 worked
clearly established that the supervisory power of the district at least 8 hours a day, 6 days each week performing duties
court can only be invoked when the Commissioners Court as a constable for Precinct 6 during his term of office.
acts beyond its jurisdiction or clearly abuses the discretion Appellant stated that $650.00 would be a reasonable salary;
conferred upon it by law. Yoakum County v. Gaines County, and offered evidence that the two other constables of Uvalde
139 Tex. 442, 163 S.W.2d 393 (1942). If the Commissioners County made $1,001.00 per month and $475.00 per month

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Vondy v. Commissioners Court of Uvalde County, 714 S.W.2d 417 (1986)

respectively, plus expenses. Vondy also presented evidence
of his expenses incurred in performing his duties as constable, It is the duty of every peace officer
including approximately $3,500.00 spent in modifying a car to preserve the peace within his
for patrol purposes. jurisdiction. To effect this purpose,
he shall use all lawful means. He
Four witnesses who were members of the Commissioners shall in every case where he is
Court during the 1978 to 1981 period also testified. authorized by the provisions of this
Each of these witnesses related that they felt “under the Code, interfere without warrant to
circumstances” $40.00 per month was a reasonable salary for prevent or suppress crime. He shall
the constable of Precinct 6. These circumstances included: (1) execute all lawful process issued to
the lack of funds available to pay Vondy; (2) that Vondy knew him by any magistrate or court. He
when he sought and accepted the job that there was no salary; shall give notice to some magistrate
(3) that the Precinct 6 area had adequate law enforcement of all offenses committed within his
protection so there was no need for Vondy's services; and jurisdiction, where he has good reason
(4) that Vondy's concurrent involvement in a private security to believe there has been a violation of
business presented a conflict in interest in having Vondy the penal law. He shall arrest offenders
without warrant in every case where
serve as constable. 2 The major factor in determining the
he is authorized by law, in order
salary was that the Commissioners Court perceived a lack of
that they may be taken before the
need of Vondy's services, since they believed the constable
proper magistrate or court and be tried.
functions were being adequately performed by others. Our
(Emphasis added).
review of the record also indicates that the commissioners
were concerned with the lack of funds to pay Vondy. In fact, Once Vondy was duly elected and qualified to serve as
one of the commissioners, Norment Foley, testified that the constable for Precinct 6, he was obligated to perform these
Commissioners Court set the salary at $40.00 in an attempt to duties prescribed by law. A failure to perform such duties
stall paying a larger salary until funds to do so were available. could subject Vondy to prosecution under the Penal Code. See
TEX.PENAL CODE ANN. § 39.01 (Vernon Supp.1986).
[4] The duties of a precinct constable are set out in
TEX.REV.CIV.STAT.ANN. art. 6885 (Vernon 1960); [5] In view of these numerous duties imposed upon Vondy,
we find that, as a matter of law, $40.00 per month, or the
Each constable shall execute and
equivalent of $.20 per hour for the time spent by Vondy in
return according to law all process,
performance of his duties is unreasonable.
warrants, and precepts to him directed
and delivered by any lawful officer,
*422 [6] The record is replete with evidence that
attend upon all justice courts held in
the Commissioners Court did not deliberate as to what
his precinct and perform all such other
would be a reasonable compensation for Vondy, but rather
duties as may be required of him by
they considered only the need for Vondy's services. The
law.
Commissioners Court cannot attempt to restrict or abolish a
Constables are also peace officers, TEX.CODE constitutionally established office by refusing to reasonably
CRIM.PROC.ANN. art. 2.12 (Vernon Supp.1986); with compensate the holder of such office. The Commissioners
all of the duties imposed on such officers, including; the Court also cannot attempt to abolish or restrict the office of
prevention of threatened injuries and death, TEX.CODE constable by refusing to allow or by preventing the elected
CRIM.PROC.ANN. art. 6.01–6.07 (Vernon Supp.1986); official from performing those duties required of him.
the assisting of magistrates in the performance of their
duties, TEX.CODE CRIM.PROC.ANN. art. 7.01–7.17 The El Paso Court of Appeals in Bomer v. Ector County,
(Vernon Supp.1986); and the execution of arrest warrants, supra, noted that a commissioners court may elect to use other
TEX.CODE CRIM.PROC. art. 15.16 (Vernon Supp.1986). official departments (such as the sheriff's office) to perform
Article 2.13 of the Code of Criminal Procedure also sets out those duties imposed upon constables (such as the service
duties imposed upon constables as peace officers: of process) as determined by an exercise of their discretion.
However, the delegation of such duties does not eliminate

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Vondy v. Commissioners Court of Uvalde County, 714 S.W.2d 417 (1986)

the obligation of a constable to perform such duties where discretion in failing to reimburse Vondy for expenses of office
required by law to do so or if called upon to do so; nor and failing to include interest *423 on the unpaid salary
does it relieve the Commissioners Court from compensating a amounts. The original application for writ of mandamus filed
constable for other services rendered or which he is obligated by Vondy and the writ itself, requested and required only that
to perform. Moreover, the issue of the reasonableness of the appellees set and pay a reasonable salary for the office of
a $20.00 per month salary in Bomer was not before the constable of Precinct 6 of Uvalde County. Therefore, without
appellate court as the appellants in that case testified that they expressing an opinion as to entitlement we simply do not
did not perform their duties as constables. consider these complaints as properly before us on appeal.
Points of error two and three are overruled.
The Uvalde Commissioners Court did not set Vondy's salary
by evaluating the work performed by or required of Vondy, [9] Point of error four complains of the trial court's error in
but considered only those factors previously rejected by the assessing all costs of court against appellant. The opinion of
Supreme Court in Vondy I. Neither did the Commissioners the Supreme Court in Vondy I ordered that the appellees pay
Court exercise its discretion by assigning some of those duties “all costs in this Court and the Court of Civil Appeals.” We
imposed on Vondy to other law enforcement agencies as was find that this order referred only to costs incurred in procuring
done in Bomer. 3 The appellees merely, without any reason or the writ of mandamus. Nevertheless, as the successful party
basis other than that already rejected as improper, set Vondy's before this Court, Vondy is entitled to recover all court costs
salary at $40.00 per month. Such act was clearly arbitrary and associated with seeking compliance with the writ from the
capricious. appellees. Point of error number four is sustained.

[7] Although Vondy attempted to accept the burden of The judgment of the trial court is reversed and the cause is
proving what a reasonable salary was at the district court remanded to the district court with instructions that appellees
hearing, we find that the appellees, because of their request not be discharged from the writ of mandamus until a
for discharge from the writ of mandamus, had the burden reasonable salary is set by the Commissioners Court for the
of proving that the salary that they set was reasonable. This constable of Precinct 6. All costs of this appeal are taxed
was not done. There is no evidence in the record supporting against appellees.
the implied finding that the salary set was reasonable. Thus,
Vondy's first point of error complaining of the trial court's
BUTTS, Justice, dissenting.
error in finding that such salary is reasonable is meritorious
I respectfully dissent. The majority opinion treats this case
and is sustained.
as if the appellate court were reviewing a writ of mandamus
decision by the district court and not merely an appeal from
In sustaining this point of error, we do not attempt to
a supervisory review order. Actually the writ of mandamus
instruct the Commissioners Court as to what would be
action in the district court was in 1981. That case was resolved
a reasonable salary. Such is a determination to be made
by the Supreme Court in Vondy v. The Commissioners Court
by the Commissioners Court after proper consideration of
of Uvalde County, 620 S.W.2d 104 (Tex.1981). The Supreme
relevant factors. Vondy I. See also White v. Commissioners
Court directed the district court to issue the writ of mandamus,
Court of Kimble County, 705 S.W.2d 322 (Tex.App.—
ordering the Commissioners Court to set a reasonable salary
San Antonio 1986, no writ). We note however, that
pursuant to constitutional requirements. The writ was issued.
TEX.REV.CIV.STAT.ANN. art. 3912i §§ 1 & 2 (Vernon
The Commissioners Court did set the constable's salary at
1966) provides that the Commissioners Court shall fix the
$40.00 per month at that time. They filed their return on the
salary of constables in counties with populations of less than
writ showing their compliance.
20,000 at not more than $5,000.00 per annum, or in counties
of 20,000 to 46,000 at a salary of not more than $6,000.00
When the salary was set, the constable filed his motion in
per annum. These maximums may be considered by the
district court objecting to the discharge of the respondents
Commissioners Court in determining what a reasonable
on the 1981 writ, along with his motion for contempt
salary would be. 4 directed against the Commissioners Court. The question
before the district court in its review was whether or not
[8] Points of error two and three complain of the trial the Commissioners Court abused its discretion in setting the
court's failure to find that the Commissioners Court abused its

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Vondy v. Commissioners Court of Uvalde County, 714 S.W.2d 417 (1986)

salary at $40.00 per month. The former constable Vondy had TEX.REV.CIV.STAT.ANN. art. 3912i (Vernon 1966)
the burden to show there was an abuse of discretion. provides in part:

The record contains the findings upon which the Sec. 9. The Commissioners Court shall
Commissioners Court based its salary determination: not be required to fix the salaries in
all precincts at equal amounts, but
1. Before January 17, 1979, there had never been a shall have discretion to determine the
constable, Precinct 6, in Uvalde County, nor was there amount of salaries to be paid each ...
any expressed need for the office. Constable in the several precincts on
an individual basis without regard to
2. There was no money in the budget for the office. the salaries paid in other precincts or
to other officials. In arriving at the
3. The sheriff and police departments provided adequate
compensation to be paid the officials
peace officer protection.
governed by the provisions of this
4. The sheriff's office served all process for the justice of Act the Commissioners Courts shall
the peace offices in the county without difficulty. They consider the financial condition of
continued to do so after the constable of Precinct 6 was their respective counties and the duties
elected. and needs of their officials ...

5. There was no need for the office in Precinct 6 and it was
a financial burden.
Since there was no showing of an abuse of discretion, the
6. Vondy knew there was no salary set for the office when
judgment should be affirmed.
he ran for the position.

The record reflects that Vondy was in office for two years,
that he worked in his own security business fulltime, and that ON APPELLEES' MOTION FOR REHEARING
Precinct 6 is within the city and thus all police protection
is by the Uvalde Police Department. It is obvious that other As noted in our original opinion in this case, at the hearing
officers did the work and that a constable in Precinct 6 was on Vondy's objections to the proposed order discharging the
a redundancy. Commissioners Court, members of the Commissioners Court
testified that $40.00 per month was a reasonable salary “under
Under the circumstances of this case, the Commissioners the circumstances” because: (1) there was lack of funds to
Court of Uvalde County should be permitted to exercise pay Vondy; (2) Vondy knew when he sought and accepted
their sound discretion in setting a reasonable salary based on the job that there was no salary; (3) the Precinct 6 area had
their knowledge of the county's *424 condition and duties adequate law enforcement protection so there was no need for
and needs of its officials. The trial court, after hearing the Vondy's services; and (4) Vondy's concurrent involvement in
evidence agreed this amount was reasonable. There is no basis a private security business presented a conflict of interest in
for this court to hold the amount was unreasonable as a matter having Vondy serve as constable.
of law.
Again we point out that these reasons were expressly
Bomer v. Ector County Commissioners Court, 676 S.W.2d considered and rejected in Vondy I, 620 S.W.2d at 108. In
662 (Tex.App.—El Paso 1984, writ ref'd n.r.e.), decided after Vondy I the Supreme Court stated:
Vondy, supra, presents facts closely analogous to the present
[I]t is mandatory that the commissioners court compensate
case. The constables there sought to have that Commissioners
constables on a salary basis.
Court set a reasonable salary also. The court of appeals
affirmed the trial court's denial of the writ of mandamus. The commissioners court argues that this constitutional
In that case the salary which the petitioners believed was provision only requires the court to compensate these
unreasonable was $20.00 per month. officials on a salary basis if they are compensated at all....
Additionally, it urges that since no other statute mandates

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Vondy v. Commissioners Court of Uvalde County, 714 S.W.2d 417 (1986)

dispute,” presumes that Vondy had the burden of proving at
a minimum salary, the commissioners court has discretion
the hearing what a reasonable salary would be. That in fact
to set no salary at all.
is not where the burden should have been placed. Rather,
The commissioners court next argues that since Vondy is the Commissioners Court, in seeking discharge from the writ
also a Class B Security Service Contractor and operates of mandamus ordering it to set a reasonable salary, had the
the business for profit, the trial court did not abuse its burden of establishing that a reasonable salary had been set
discretion in denying the mandamus. It argues that a before being discharged.
person cannot accept a public office knowing the amount
of compensation and then claim more is due.... Also the Again, since the Commissioners Court considered no
commissioners court contends that there was no money circumstances or factors other than those previously rejected
budgeted or available with which to pay Vondy at the time as unpersuasive in Vondy I, the Commissioners Court has
of his request. failed to meet its burden of entitlement to discharge from the
writ of mandamus.

Moreover, testimony was introduced at the hearing
We do not find the commissioners courts' arguments concerning the salaries paid to other constables in Uvalde
persuasive. The constitutional provision clearly mandates County. These constables, Arthur Harwell Davis, Jr., and
that constables receive a salary.... Furthermore, we Jack Bain Preston, Jr., were paid in excess of $1,000.00 per
conclude that the commissioners court must set a month plus expenses and other benefits. As we noted in our
reasonable salary. While a reasonable salary would be original opinion, TEX.REV.CIV.STAT.ANN. art. 3912i §§
a determination for the commissioners court, Vondy is 1 & 2 (Vernon 1966) provides that the salary of constables
entitled to be compensated by a reasonable salary. in counties with populations the size of Uvalde County are
not to exceed $5,000 or $6,000 per annum. Thus, the other
Clearly, the Supreme Court rejected the same circumstances two constables of Uvalde County would have been making
or factors again considered by the Commissioners Court in more than twice the maximum rate of salary provided by
determining what a reasonable salary would be. Although the statute. Not only do we fail to see how Vondy's salary at
Supreme Court did not hold or say that these circumstances $40.00 per month could be reasonable in light of the other
could *425 not be considered by the Commissioners Court constables being paid in excess of $1,000.00 per month; such
in fixing a reasonable salary for Vondy, in finding the factors also conclusively establishes that the Commissioners Court
to be unpersuasive the court necessarily found that these acted arbitrarily and capriciously in determining Vondy's
factors were alone not an adequate basis for determination of a salary. Furthermore, if the county lacked funds to pay Vondy,
reasonable salary. Therefore, since the Commissioners Court as asserted by the Commissioners Court, we fail to see how
considered no other factors in determining what a reasonable the Commissioners Court could justify payment to the other
salary would be, consideration of those same factors must constables of more than double the statutory maximums.
once again be unpersuasive and irrelevant.
Again, we reiterate that Commissioners Court acted
The appellees' contention in its Motion for Rehearing arbitrarily and capriciously in failing to provide Vondy with
that “uncorroborated” testimony by Vondy concerning the a reasonable salary.
amount of time he spent in performing the duties of constable
“is not only that of a party and interested witness but, as well, The motion for rehearing is denied.
is a pure guess unsupported by any record, totally lacking in
corroboration and which the Commissioners Court could not

Footnotes
1 TEX. CONST. art. V, § 8 was amended on November 5, 1985. The pertinent language of the section, however, was unchanged.
2 All of these reasons were considered and rejected in Vondy I, 620 S.W.2d at 108.
3 We do not necessarily agree with the El Paso Court that a Commissioners Court can, even in an exercise of its discretion, delegate
those duties imposed on constables by the constitution and statutes of Texas to other law enforcement agencies. However, such
question is not before us at this time.

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Vondy v. Commissioners Court of Uvalde County, 714 S.W.2d 417 (1986)

4 The original application for the writ of mandamus alleged that the population of Uvalde County according to the federal census of
1970 was 16,619 persons. The 1980 census determined the population of Uvalde County at 22,441 persons. These figures may be
taken into account in determining the applicable salary for the constable position.

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Withers v. Commissioners' Court of Bandera County, 75 S.W.3d 528 (2002)

“Commissioners' Court”) to accept their petition for a tax
rollback election. The cause was submitted to the trial court
75 S.W.3d 528
on stipulated facts.
Court of Appeals of Texas,
San Antonio.
A petition seeking a tax rollback election was submitted
John H. WITHERS, et al., Appellants, to the Commissioners' Court on December 14, 2000. The
v. petition contained the requisite number of signatures. The
The COMMISSIONERS' COURT petition also contained the printed name of the signatories, the
signatories' addresses, and the signatories' voter registration
OF BANDERA COUNTY, Appellee.
numbers; however, the petition did not include the signatories'
No. 04–01–00322–CV. | Feb. 13, 2002. dates of birth. On or about December 28, 2000, the
| Rehearing Overruled March 19, 2002. Commissioners' Court passed a resolution finding that
the petition was invalid because it did not meet the
Taxpayers filed a petition for writ of mandamus seeking to requirements of section 277.002 of the Texas Election Code.
compel the Commissioners' Court to accept their petition for No supplemental petition was filed. After a hearing, the trial
a tax rollback election. The 216th Judicial District Court, court denied the appellants' request for mandamus relief.
Bandera County, David Peeples, J., denied taxpayers' request
for mandamus relief. Taxpayers appealed. The Court of
Appeals, Hardberger, C.J., held that petition for tax rollback
STANDARD OF REVIEW
election was not invalid.
[1] [2] A writ of mandamus will issue to compel a public
Reversed. official to perform a ministerial act. Anderson v. City of Seven
Points, 806 S.W.2d 791, 793 (Tex.1991); Medina County
Comm'rs Court v. Integrity Group, Inc., 21 S.W.3d 307, 309
Attorneys and Law Firms
(Tex.App.-San Antonio 1999, pet. denied). The appellants
*528 Christopher J. Weber, Law Office of Christopher J. seek to challenge the trial court's denial of their petition for
Weber, San Antonio, for Appellant. writ of mandamus. In denying the petition, the trial court
stated, “I hold that there's not been compliance with the
*529 K.H. Schneider, County Attorney–Bandera County, statute which is mandatory on date of birth.” Therefore, the
Bandera, for Appellee. basis of the trial court's ruling is the trial court's conclusion
that the statutory requirements for a petition seeking a
Sitting: PHIL HARDBERGER, Chief Justice, ALMA L. tax rollback election are mandatory. Matters of statutory
LÓPEZ, Justice, PAUL W. GREEN, Justice. construction are legal questions that we review de novo. City
of Garland v. Dallas Morning News, 22 S.W.3d 351, 357
Opinion
(Tex.2000); Johnson v. City of Fort Worth, 774 S.W.2d 653,
Opinion by PHIL HARDBERGER, Chief Justice. 656 (Tex.1989); Beldon Roofing & Remodeling Co. v. San
Antonio Water System, 898 S.W.2d 351, 353 (Tex.App.-San
The sole issue presented in this appeal is whether a petition for Antonio 1995, writ denied).
a tax rollback election is invalid if it does not include the birth
dates of the signatories. Because the absence of the birth dates
does not render the petition invalid, we reverse the trial court's
DISCUSSION
order. The law should not prevent the voice of the people from
being heard by the application of an empty technicality. [3] The parties do not dispute that section 277.002 of the
Texas Election Code governs the validity of the petition
signatures. Section 277.002 of the Election Code states:
BACKGROUND
(a) For a petition signature to be valid, a petition must:
The appellants filed a petition for writ of mandamus seeking
(1) contain in addition to the signature:
to compel The Commissioners' Court of Bandera County (the

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Withers v. Commissioners' Court of Bandera County, 75 S.W.3d 528 (2002)

reviewing the petition to verify the validity of a particular
(A) the signer's printed name; voter's signature. See TEX. TAX CODE ANN. § 26.081
(Vernon 1992). Therefore, so long as the governing body is
(B) the signer's date of birth and the signer's voter
able to verify the eligibility of the voter even absent all of the
registration number and, if the territory from which
information required by section 277.002, the purpose of the
signatures must be obtained is situated in more than
verification requirement is satisfied. See Reese v. Comm'rs'
one county, the county of registration;
Court of Cherokee County, 861 S.W.2d 281, 283 (Tex.App.-
*530 (C) the signer's residence address; and Tyler 1993, no writ) (noting main factor in determining what
degree of deviation from the Election Code will be allowed
(D) the date of signing; and is whether the deviation will impair the ability to verify
eligibility). The Texas Supreme Court recently followed this
(2) comply with any other applicable requirements logic, holding that signatures on a petition for a place on a
prescribed by law. ballot were not invalid because the signers omitted their city
of residence from their address. In re Bell, 2002 WL 87074,
TEX. ELEC.CODE ANN. § 277.002 (Vernon Supp.2001)
(emphasis added). The signature is the only information 91 S.W.3d 784 (Tex. 2002). 1
that is required to appear on the petition in the signer's
own handwriting. TEX. ELEC.CODE ANN. § 277.002(b) In analyzing earlier cases holding that various omissions
(Vernon Supp.2001). The omission of the state from the invalidated petitions, the Texas Supreme Court noted that the
signer's residence address does not invalidate a signature earlier cases failed to “consider the alleged signature defects
unless the political subdivision from which the signature in relation to the objects ‘sought to be attained’ by the Election
is obtained is situated in more than one state. TEX. Code, one such object being to prevent election fraud.” In re
ELEC.CODE ANN. § 277.002(d) (Vernon Supp.2001). The Bell, 2002 WL 87074, at *2, 91 S.W.3d at ––––. Therefore,
omission of the zip code from the address also does not the Texas Supreme Court considered *531 the precedential
invalidate a signature. Id. value of those cases questionable. Id.

The Commissioners' Court contends that the term “must” in The Texas Supreme Court further noted that the more recent
subsection 277.002(a) should be strictly construed, making decisions recognize that the statutory purpose of the petition
each of the items listed a mandatory requirement. The requirements “is to provide a basis for verifying the voter's
appellants argue that substantial compliance with the petition eligibility (i.e. county residency, qualified voter, etc.) to
requirements set forth in subsection 277.002(a) is sufficient. participate in a particular election.” Id., at *3, at ––––. Those
recent decisions concluded that if the verification purpose is
[4] “It is a cardinal rule of statutory construction that we are served, petition signatures are not invalid if they omit certain
to give effect to the intent of the Legislature.” Fleming Foods information required by the Election Code. Id. The Texas
of Texas, Inc. v. Rylander, 6 S.W.3d 278, 284 (Tex.1999). Supreme Court reasoned that the recent decisions “apply a
Section 311.016 of the Code Construction Act provides that rationale that furthers one of the principal purposes behind
the term “must” creates or recognizes a condition precedent. the Election Code—the prevention of election fraud—and
TEX. GOV'T CODE ANN. § 311.016 (Vernon 1998). This produces a ‘just and reasonable result.’ ” Id. The Texas
construction of the term “must” is to be applied unless the Supreme Court stated, “That rationale does not invalidate a
context in which the word appears necessarily requires a petition signature if the signer provides enough information
different construction or unless a different construction is to allow verification of the signer's voting eligibility for a
expressly provided by statute. Id. Applying this construction particular election.” Id.
of “must” to section 277.002, it would appear that the
requirement that the petition contain the signer's date of In this case, the petition contained the signer's signature,
birth is a condition precedent to the validity of a petition address, and voter registration number, which is enough
signature. See City of Sherman v. Hudman, 996 S.W.2d 904, information to allow verification of the signer's voting
918 (Tex.App.-Dallas 1999, pet. granted, judgm't vacated). eligibility. Accordingly, the petition is not invalid. See id.

However, the appellants assert that the purpose of the
petition content requirements is to enable the governing body

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Withers v. Commissioners' Court of Bandera County, 75 S.W.3d 528 (2002)

invalid. The trial court's order is reversed, and the cause is
CONCLUSION
remanded to the trial court for further proceedings consistent
Because the petition contained enough information to allow with this court's opinion.
verification of the signers' voting eligibility, the petition is not

Footnotes
1 We note that the trial court did not have the benefit of the Texas Supreme Court's decision in reaching its ruling.

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

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§ 1342. National pollutant discharge elimination system, 33 USCA § 1342

United States Code Annotated
Title 33. Navigation and Navigable Waters (Refs & Annos)
Chapter 26. Water Pollution Prevention and Control (Refs & Annos)
Subchapter IV. Permits and Licenses (Refs & Annos)

33 U.S.C.A. § 1342

§ 1342. National pollutant discharge elimination system

Effective: February 7, 2014
Currentness

(a) Permits for discharge of pollutants

(1) Except as provided in sections 1328 and 1344 of this title, the Administrator may, after opportunity for public hearing, issue
a permit for the discharge of any pollutant, or combination of pollutants, notwithstanding section 1311(a) of this title, upon
condition that such discharge will meet either (A) all applicable requirements under sections 1311, 1312, 1316, 1317, 1318, and
1343 of this title, or (B) prior to the taking of necessary implementing actions relating to all such requirements, such conditions
as the Administrator determines are necessary to carry out the provisions of this chapter.

(2) The Administrator shall prescribe conditions for such permits to assure compliance with the requirements of paragraph
(1) of this subsection, including conditions on data and information collection, reporting, and such other requirements as he
deems appropriate.

(3) The permit program of the Administrator under paragraph (1) of this subsection, and permits issued thereunder, shall be
subject to the same terms, conditions, and requirements as apply to a State permit program and permits issued thereunder under
subsection (b) of this section.

(4) All permits for discharges into the navigable waters issued pursuant to section 407 of this title shall be deemed to be permits
issued under this subchapter, and permits issued under this subchapter shall be deemed to be permits issued under section 407
of this title, and shall continue in force and effect for their term unless revoked, modified, or suspended in accordance with
the provisions of this chapter.

(5) No permit for a discharge into the navigable waters shall be issued under section 407 of this title after October 18, 1972. Each
application for a permit under section 407 of this title, pending on October 18, 1972, shall be deemed to be an application for
a permit under this section. The Administrator shall authorize a State, which he determines has the capability of administering
a permit program which will carry out the objective of this chapter to issue permits for discharges into the navigable waters
within the jurisdiction of such State. The Administrator may exercise the authority granted him by the preceding sentence only
during the period which begins on October 18, 1972, and ends either on the ninetieth day after the date of the first promulgation
of guidelines required by section 1314(i)(2) of this title, or the date of approval by the Administrator of a permit program for
such State under subsection (b) of this section, whichever date first occurs, and no such authorization to a State shall extend
beyond the last day of such period. Each such permit shall be subject to such conditions as the Administrator determines are
necessary to carry out the provisions of this chapter. No such permit shall issue if the Administrator objects to such issuance.

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§ 1342. National pollutant discharge elimination system, 33 USCA § 1342

(b) State permit programs

At any time after the promulgation of the guidelines required by subsection (i)(2) of section 1314 of this title, the Governor
of each State desiring to administer its own permit program for discharges into navigable waters within its jurisdiction may
submit to the Administrator a full and complete description of the program it proposes to establish and administer under State
law or under an interstate compact. In addition, such State shall submit a statement from the attorney general (or the attorney for
those State water pollution control agencies which have independent legal counsel), or from the chief legal officer in the case
of an interstate agency, that the laws of such State, or the interstate compact, as the case may be, provide adequate authority
to carry out the described program. The Administrator shall approve each such submitted program unless he determines that
adequate authority does not exist:

(1) To issue permits which--

(A) apply, and insure compliance with, any applicable requirements of sections 1311, 1312, 1316, 1317, and 1343 of this title;

(B) are for fixed terms not exceeding five years; and

(C) can be terminated or modified for cause including, but not limited to, the following:

(i) violation of any condition of the permit;

(ii) obtaining a permit by misrepresentation, or failure to disclose fully all relevant facts;

(iii) change in any condition that requires either a temporary or permanent reduction or elimination of the permitted
discharge;

(D) control the disposal of pollutants into wells;

(2)(A) To issue permits which apply, and insure compliance with, all applicable requirements of section 1318 of this title; or

(B) To inspect, monitor, enter, and require reports to at least the same extent as required in section 1318 of this title;

(3) To insure that the public, and any other State the waters of which may be affected, receive notice of each application for a
permit and to provide an opportunity for public hearing before a ruling on each such application;

(4) To insure that the Administrator receives notice of each application (including a copy thereof) for a permit;

(5) To insure that any State (other than the permitting State), whose waters may be affected by the issuance of a permit may
submit written recommendations to the permitting State (and the Administrator) with respect to any permit application and, if

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§ 1342. National pollutant discharge elimination system, 33 USCA § 1342

any part of such written recommendations are not accepted by the permitting State, that the permitting State will notify such
affected State (and the Administrator) in writing of its failure to so accept such recommendations together with its reasons
for so doing;

(6) To insure that no permit will be issued if, in the judgment of the Secretary of the Army acting through the Chief of Engineers,
after consultation with the Secretary of the department in which the Coast Guard is operating, anchorage and navigation of any
of the navigable waters would be substantially impaired thereby;

(7) To abate violations of the permit or the permit program, including civil and criminal penalties and other ways and means
of enforcement;

(8) To insure that any permit for a discharge from a publicly owned treatment works includes conditions to require the
identification in terms of character and volume of pollutants of any significant source introducing pollutants subject to
pretreatment standards under section 1317(b) of this title into such works and a program to assure compliance with such
pretreatment standards by each such source, in addition to adequate notice to the permitting agency of (A) new introductions
into such works of pollutants from any source which would be a new source as defined in section 1316 of this title if such source
were discharging pollutants, (B) new introductions of pollutants into such works from a source which would be subject to section
1311 of this title if it were discharging such pollutants, or (C) a substantial change in volume or character of pollutants being
introduced into such works by a source introducing pollutants into such works at the time of issuance of the permit. Such notice
shall include information on the quality and quantity of effluent to be introduced into such treatment works and any anticipated
impact of such change in the quantity or quality of effluent to be discharged from such publicly owned treatment works; and

(9) To insure that any industrial user of any publicly owned treatment works will comply with sections 1284(b), 1317, and
1318 of this title.

(c) Suspension of Federal program upon submission of State program; withdrawal of approval of State program; return of State
program to Administrator

(1) Not later than ninety days after the date on which a State has submitted a program (or revision thereof) pursuant to
subsection (b) of this section, the Administrator shall suspend the issuance of permits under subsection (a) of this section as to
those discharges subject to such program unless he determines that the State permit program does not meet the requirements
of subsection (b) of this section or does not conform to the guidelines issued under section 1314(i)(2) of this title. If
the Administrator so determines, he shall notify the State of any revisions or modifications necessary to conform to such
requirements or guidelines.

(2) Any State permit program under this section shall at all times be in accordance with this section and guidelines promulgated
pursuant to section 1314(i)(2) of this title.

(3) Whenever the Administrator determines after public hearing that a State is not administering a program approved under
this section in accordance with requirements of this section, he shall so notify the State and, if appropriate corrective action is
not taken within a reasonable time, not to exceed ninety days, the Administrator shall withdraw approval of such program. The
Administrator shall not withdraw approval of any such program unless he shall first have notified the State, and made public,
in writing, the reasons for such withdrawal.

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§ 1342. National pollutant discharge elimination system, 33 USCA § 1342

(4) Limitations on partial permit program returns and withdrawals

A State may return to the Administrator administration, and the Administrator may withdraw under paragraph (3) of this
subsection approval, of--

(A) a State partial permit program approved under subsection (n)(3) of this section only if the entire permit program being
administered by the State department or agency at the time is returned or withdrawn; and

(B) a State partial permit program approved under subsection (n)(4) of this section only if an entire phased component of the
permit program being administered by the State at the time is returned or withdrawn.

(d) Notification of Administrator

(1) Each State shall transmit to the Administrator a copy of each permit application received by such State and provide notice
to the Administrator of every action related to the consideration of such permit application, including each permit proposed
to be issued by such State.

(2) No permit shall issue (A) if the Administrator within ninety days of the date of his notification under subsection (b)(5)
of this section objects in writing to the issuance of such permit, or (B) if the Administrator within ninety days of the date of
transmittal of the proposed permit by the State objects in writing to the issuance of such permit as being outside the guidelines
and requirements of this chapter. Whenever the Administrator objects to the issuance of a permit under this paragraph such
written objection shall contain a statement of the reasons for such objection and the effluent limitations and conditions which
such permit would include if it were issued by the Administrator.

(3) The Administrator may, as to any permit application, waive paragraph (2) of this subsection.

(4) In any case where, after December 27, 1977, the Administrator, pursuant to paragraph (2) of this subsection, objects to the
issuance of a permit, on request of the State, a public hearing shall be held by the Administrator on such objection. If the State
does not resubmit such permit revised to meet such objection within 30 days after completion of the hearing, or, if no hearing
is requested within 90 days after the date of such objection, the Administrator may issue the permit pursuant to subsection (a)
of this section for such source in accordance with the guidelines and requirements of this chapter.

(e) Waiver of notification requirement

In accordance with guidelines promulgated pursuant to subsection (i)(2) of section 1314 of this title, the Administrator is
authorized to waive the requirements of subsection (d) of this section at the time he approves a program pursuant to subsection
(b) of this section for any category (including any class, type, or size within such category) of point sources within the State
submitting such program.

(f) Point source categories

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§ 1342. National pollutant discharge elimination system, 33 USCA § 1342

The Administrator shall promulgate regulations establishing categories of point sources which he determines shall not be subject
to the requirements of subsection (d) of this section in any State with a program approved pursuant to subsection (b) of this
section. The Administrator may distinguish among classes, types, and sizes within any category of point sources.

(g) Other regulations for safe transportation, handling, carriage, storage, and stowage of pollutants

Any permit issued under this section for the discharge of pollutants into the navigable waters from a vessel or other floating
craft shall be subject to any applicable regulations promulgated by the Secretary of the department in which the Coast Guard is
operating, establishing specifications for safe transportation, handling, carriage, storage, and stowage of pollutants.

(h) Violation of permit conditions; restriction or prohibition upon introduction of pollutant by source not previously utilizing
treatment works

In the event any condition of a permit for discharges from a treatment works (as defined in section 1292 of this title) which is
publicly owned is violated, a State with a program approved under subsection (b) of this section or the Administrator, where no
State program is approved or where the Administrator determines pursuant to section 1319(a) of this title that a State with an
approved program has not commenced appropriate enforcement action with respect to such permit, may proceed in a court of
competent jurisdiction to restrict or prohibit the introduction of any pollutant into such treatment works by a source not utilizing
such treatment works prior to the finding that such condition was violated.

(i) Federal enforcement not limited

Nothing in this section shall be construed to limit the authority of the Administrator to take action pursuant to section 1319
of this title.

(j) Public information

A copy of each permit application and each permit issued under this section shall be available to the public. Such permit
application or permit, or portion thereof, shall further be available on request for the purpose of reproduction.

(k) Compliance with permits

Compliance with a permit issued pursuant to this section shall be deemed compliance, for purposes of sections 1319 and 1365
of this title, with sections 1311, 1312, 1316, 1317, and 1343 of this title, except any standard imposed under section 1317 of
this title for a toxic pollutant injurious to human health. Until December 31, 1974, in any case where a permit for discharge
has been applied for pursuant to this section, but final administrative disposition of such application has not been made, such
discharge shall not be a violation of (1) section 1311, 1316, or 1342 of this title, or (2) section 407 of this title, unless the
Administrator or other plaintiff proves that final administrative disposition of such application has not been made because of the
failure of the applicant to furnish information reasonably required or requested in order to process the application. For the 180-
day period beginning on October 18, 1972, in the case of any point source discharging any pollutant or combination of pollutants
immediately prior to such date which source is not subject to section 407 of this title, the discharge by such source shall not be a
violation of this chapter if such a source applies for a permit for discharge pursuant to this section within such 180-day period.

(l) Limitation on permit requirement

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§ 1342. National pollutant discharge elimination system, 33 USCA § 1342

(1) Agricultural return flows

The Administrator shall not require a permit under this section for discharges composed entirely of return flows from irrigated
agriculture, nor shall the Administrator directly or indirectly, require any State to require such a permit.

(2) Stormwater runoff from oil, gas, and mining operations

The Administrator shall not require a permit under this section, nor shall the Administrator directly or indirectly require any
State to require a permit, for discharges of stormwater runoff from mining operations or oil and gas exploration, production,
processing, or treatment operations or transmission facilities, composed entirely of flows which are from conveyances or
systems of conveyances (including but not limited to pipes, conduits, ditches, and channels) used for collecting and conveying
precipitation runoff and which are not contaminated by contact with, or do not come into contact with, any overburden, raw
material, intermediate products, finished product, byproduct, or waste products located on the site of such operations.

(3) Silvicultural activities

(A) NPDES permit requirements for silvicultural activities

The Administrator shall not require a permit under this section nor directly or indirectly require any State to require a
permit under this section for a discharge from runoff resulting from the conduct of the following silviculture activities
conducted in accordance with standard industry practice: nursery operations, site preparation, reforestation and subsequent
cultural treatment, thinning, prescribed burning, pest and fire control, harvesting operations, surface drainage, or road
construction and maintenance.

(B) Other requirements

Nothing in this paragraph exempts a discharge from silvicultural activity from any permitting requirement under section
1344 of this title, existing permitting requirements under section 1342 of this title, or from any other federal law.

(C) The authorization provided in Section 1 1365(a) of this title does not apply to any non-permitting program established
under 1342(p)(6) 2 of this title for the silviculture activities listed in 1342(l)(3)(A) 3 of this title, or to any other limitations
that might be deemed to apply to the silviculture activities listed in 1342(l)(3)(A) 3 of this title.

(m) Additional pretreatment of conventional pollutants not required

To the extent a treatment works (as defined in section 1292 of this title) which is publicly owned is not meeting the requirements
of a permit issued under this section for such treatment works as a result of inadequate design or operation of such treatment
works, the Administrator, in issuing a permit under this section, shall not require pretreatment by a person introducing
conventional pollutants identified pursuant to section 1314(a)(4) of this title into such treatment works other than pretreatment
required to assure compliance with pretreatment standards under subsection (b)(8) of this section and section 1317(b)(1) of
this title. Nothing in this subsection shall affect the Administrator's authority under sections 1317 and 1319 of this title, affect
State and local authority under sections 1317(b)(4) and 1370 of this title, relieve such treatment works of its obligations to

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§ 1342. National pollutant discharge elimination system, 33 USCA § 1342

meet requirements established under this chapter, or otherwise preclude such works from pursuing whatever feasible options
are available to meet its responsibility to comply with its permit under this section.

(n) Partial permit program

(1) State submission

The Governor of a State may submit under subsection (b) of this section a permit program for a portion of the discharges
into the navigable waters in such State.

(2) Minimum coverage

A partial permit program under this subsection shall cover, at a minimum, administration of a major category of the discharges
into the navigable waters of the State or a major component of the permit program required by subsection (b) of this section.

(3) Approval of major category partial permit programs

The Administrator may approve a partial permit program covering administration of a major category of discharges under
this subsection if--

(A) such program represents a complete permit program and covers all of the discharges under the jurisdiction of a
department or agency of the State; and

(B) the Administrator determines that the partial program represents a significant and identifiable part of the State program
required by subsection (b) of this section.

(4) Approval of major component partial permit programs

The Administrator may approve under this subsection a partial and phased permit program covering administration of a major
component (including discharge categories) of a State permit program required by subsection (b) of this section if--

(A) the Administrator determines that the partial program represents a significant and identifiable part of the State program
required by subsection (b) of this section; and

(B) the State submits, and the Administrator approves, a plan for the State to assume administration by phases of the
remainder of the State program required by subsection (b) of this section by a specified date not more than 5 years
after submission of the partial program under this subsection and agrees to make all reasonable efforts to assume such
administration by such date.

(o) Anti-backsliding

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§ 1342. National pollutant discharge elimination system, 33 USCA § 1342

(1) General prohibition

In the case of effluent limitations established on the basis of subsection (a)(1)(B) of this section, a permit may not be
renewed, reissued, or modified on the basis of effluent guidelines promulgated under section 1314(b) of this title subsequent
to the original issuance of such permit, to contain effluent limitations which are less stringent than the comparable effluent
limitations in the previous permit. In the case of effluent limitations established on the basis of section 1311(b)(1)(C) or
section 1313(d) or (e) of this title, a permit may not be renewed, reissued, or modified to contain effluent limitations which
are less stringent than the comparable effluent limitations in the previous permit except in compliance with section 1313(d)
(4) of this title.

(2) Exceptions

A permit with respect to which paragraph (1) applies may be renewed, reissued, or modified to contain a less stringent effluent
limitation applicable to a pollutant if--

(A) material and substantial alterations or additions to the permitted facility occurred after permit issuance which justify
the application of a less stringent effluent limitation;

(B)(i) information is available which was not available at the time of permit issuance (other than revised regulations,
guidance, or test methods) and which would have justified the application of a less stringent effluent limitation at the time
of permit issuance; or

(ii) the Administrator determines that technical mistakes or mistaken interpretations of law were made in issuing the permit
under subsection (a)(1)(B) of this section;

(C) a less stringent effluent limitation is necessary because of events over which the permittee has no control and for which
there is no reasonably available remedy;

(D) the permittee has received a permit modification under section 1311(c), 1311(g), 1311(h), 1311(i), 1311(k), 1311(n),
or 1326(a) of this title; or

(E) the permittee has installed the treatment facilities required to meet the effluent limitations in the previous permit
and has properly operated and maintained the facilities but has nevertheless been unable to achieve the previous effluent
limitations, in which case the limitations in the reviewed, reissued, or modified permit may reflect the level of pollutant
control actually achieved (but shall not be less stringent than required by effluent guidelines in effect at the time of permit
renewal, reissuance, or modification).

Subparagraph (B) shall not apply to any revised waste load allocations or any alternative grounds for translating water
quality standards into effluent limitations, except where the cumulative effect of such revised allocations results in a
decrease in the amount of pollutants discharged into the concerned waters, and such revised allocations are not the result
of a discharger eliminating or substantially reducing its discharge of pollutants due to complying with the requirements of
this chapter or for reasons otherwise unrelated to water quality.

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§ 1342. National pollutant discharge elimination system, 33 USCA § 1342

(3) Limitations

In no event may a permit with respect to which paragraph (1) applies be renewed, reissued, or modified to contain an effluent
limitation which is less stringent than required by effluent guidelines in effect at the time the permit is renewed, reissued,
or modified. In no event may such a permit to discharge into waters be renewed, reissued, or modified to contain a less
stringent effluent limitation if the implementation of such limitation would result in a violation of a water quality standard
under section 1313 of this title applicable to such waters.

(p) Municipal and industrial stormwater discharges

(1) General rule

Prior to October 1, 1994, the Administrator or the State (in the case of a permit program approved under this section) shall
not require a permit under this section for discharges composed entirely of stormwater.

(2) Exceptions

Paragraph (1) shall not apply with respect to the following stormwater discharges:

(A) A discharge with respect to which a permit has been issued under this section before February 4, 1987.

(B) A discharge associated with industrial activity.

(C) A discharge from a municipal separate storm sewer system serving a population of 250,000 or more.

(D) A discharge from a municipal separate storm sewer system serving a population of 100,000 or more but less than
250,000.

(E) A discharge for which the Administrator or the State, as the case may be, determines that the stormwater discharge
contributes to a violation of a water quality standard or is a significant contributor of pollutants to waters of the United
States.

(3) Permit requirements

(A) Industrial discharges

Permits for discharges associated with industrial activity shall meet all applicable provisions of this section and section
1311 of this title.

(B) Municipal discharge

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§ 1342. National pollutant discharge elimination system, 33 USCA § 1342

Permits for discharges from municipal storm sewers--

(i) may be issued on a system- or jurisdiction-wide basis;

(ii) shall include a requirement to effectively prohibit non-stormwater discharges into the storm sewers; and

(iii) shall require controls to reduce the discharge of pollutants to the maximum extent practicable, including
management practices, control techniques and system, design and engineering methods, and such other provisions as
the Administrator or the State determines appropriate for the control of such pollutants.

(4) Permit application requirements

(A) Industrial and large municipal discharges

Not later than 2 years after February 4, 1987, the Administrator shall establish regulations setting forth the permit
application requirements for stormwater discharges described in paragraphs (2)(B) and (2)(C). Applications for permits
for such discharges shall be filed no later than 3 years after February 4, 1987. Not later than 4 years after February 4, 1987,
the Administrator or the State, as the case may be, shall issue or deny each such permit. Any such permit shall provide for
compliance as expeditiously as practicable, but in no event later than 3 years after the date of issuance of such permit.

(B) Other municipal discharges

Not later than 4 years after February 4, 1987, the Administrator shall establish regulations setting forth the permit
application requirements for stormwater discharges described in paragraph (2)(D). Applications for permits for such
discharges shall be filed no later than 5 years after February 4, 1987. Not later than 6 years after February 4, 1987, the
Administrator or the State, as the case may be, shall issue or deny each such permit. Any such permit shall provide for
compliance as expeditiously as practicable, but in no event later than 3 years after the date of issuance of such permit.

(5) Studies

The Administrator, in consultation with the States, shall conduct a study for the purposes of--

(A) identifying those stormwater discharges or classes of stormwater discharges for which permits are not required pursuant
to paragraphs (1) and (2) of this subsection;

(B) determining, to the maximum extent practicable, the nature and extent of pollutants in such discharges; and

(C) establishing procedures and methods to control stormwater discharges to the extent necessary to mitigate impacts on
water quality.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 10
§ 1342. National pollutant discharge elimination system, 33 USCA § 1342

Not later than October 1, 1988, the Administrator shall submit to Congress a report on the results of the study described
in subparagraphs (A) and (B). Not later than October 1, 1989, the Administrator shall submit to Congress a report on the
results of the study described in subparagraph (C).

(6) Regulations

Not later than October 1, 1993, the Administrator, in consultation with State and local officials, shall issue regulations
(based on the results of the studies conducted under paragraph (5)) which designate stormwater discharges, other than those
discharges described in paragraph (2), to be regulated to protect water quality and shall establish a comprehensive program
to regulate such designated sources. The program shall, at a minimum, (A) establish priorities, (B) establish requirements
for State stormwater management programs, and (C) establish expeditious deadlines. The program may include performance
standards, guidelines, guidance, and management practices and treatment requirements, as appropriate.

(q) Combined sewer overflows

(1) Requirement for permits, orders, and decrees

Each permit, order, or decree issued pursuant to this chapter after December 21, 2000 for a discharge from a municipal
combined storm and sanitary sewer shall conform to the Combined Sewer Overflow Control Policy signed by the
Administrator on April 11, 1994 (in this subsection referred to as the “CSO control policy”).

(2) Water quality and designated use review guidance

Not later than July 31, 2001, and after providing notice and opportunity for public comment, the Administrator shall issue
guidance to facilitate the conduct of water quality and designated use reviews for municipal combined sewer overflow
receiving waters.

(3) Report

Not later than September 1, 2001, the Administrator shall transmit to Congress a report on the progress made by the
Environmental Protection Agency, States, and municipalities in implementing and enforcing the CSO control policy.

(r) Discharges incidental to the normal operation of recreational vessels

No permit shall be required under this chapter by the Administrator (or a State, in the case of a permit program approved under
subsection (b)) for the discharge of any graywater, bilge water, cooling water, weather deck runoff, oil water separator effluent,
or effluent from properly functioning marine engines, or any other discharge that is incidental to the normal operation of a
vessel, if the discharge is from a recreational vessel.

CREDIT(S)
(June 30, 1948, c. 758, Title IV, § 402, as added Pub.L. 92-500, § 2, Oct. 18, 1972, 86 Stat. 880; amended Pub.L. 95-217,
§§ 33(c), 50, 54(c)(1), 65, 66, Dec. 27, 1977, 91 Stat. 1577, 1588, 1591, 1599, 1600; Pub.L. 100-4, Title IV, §§ 401 to 404(a),
(c), formerly (d), 405, Feb. 4, 1987, 101 Stat. 65 to 67, 69; Pub.L. 102-580, Title III, § 364, Oct. 31, 1992, 106 Stat. 4862;
Pub.L. 104-66, Title II, § 2021(e)(2), Dec. 21, 1995, 109 Stat. 727; Pub.L. 106-554, § 1(a)(4) [Div. B, Title I, § 112(a)], Dec.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 11
§ 1342. National pollutant discharge elimination system, 33 USCA § 1342

21, 2000, 114 Stat. 2763, 2763A-224; Pub.L. 110-288, § 2, July 29, 2008, 122 Stat. 2650; Pub.L. 113-79, Title XII, § 12313,
Feb. 7, 2014, 128 Stat. 992.)

Notes of Decisions (220)

Footnotes
1 So in original. Probably should not be capitalized.
2 So in original. Probably should read “section 1342(p)(6)”.
3 So in original. Probably should read “section 1342(l)(3)(A)”.
33 U.S.C.A. § 1342, 33 USCA § 1342
Current through P.L. 113-296 (excluding P.L. 113-235, 113-287, and 113-291) approved 12-19-2014

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 12
§ 1251. Congressional declaration of goals and policy, 33 USCA § 1251

United States Code Annotated
Title 33. Navigation and Navigable Waters (Refs & Annos)
Chapter 26. Water Pollution Prevention and Control (Refs & Annos)
Subchapter I. Research and Related Programs (Refs & Annos)

33 U.S.C.A. § 1251

§ 1251. Congressional declaration of goals and policy

Currentness

(a) Restoration and maintenance of chemical, physical and biological integrity of Nation's waters; national goals for achievement
of objective

The objective of this chapter is to restore and maintain the chemical, physical, and biological integrity of the Nation's waters.
In order to achieve this objective it is hereby declared that, consistent with the provisions of this chapter--

(1) it is the national goal that the discharge of pollutants into the navigable waters be eliminated by 1985;

(2) it is the national goal that wherever attainable, an interim goal of water quality which provides for the protection and
propagation of fish, shellfish, and wildlife and provides for recreation in and on the water be achieved by July 1, 1983;

(3) it is the national policy that the discharge of toxic pollutants in toxic amounts be prohibited;

(4) it is the national policy that Federal financial assistance be provided to construct publicly owned waste treatment works;

(5) it is the national policy that areawide waste treatment management planning processes be developed and implemented
to assure adequate control of sources of pollutants in each State;

(6) it is the national policy that a major research and demonstration effort be made to develop technology necessary to
eliminate the discharge of pollutants into the navigable waters, waters of the contiguous zone, and the oceans; and

(7) it is the national policy that programs for the control of nonpoint sources of pollution be developed and implemented
in an expeditious manner so as to enable the goals of this chapter to be met through the control of both point and nonpoint
sources of pollution.

(b) Congressional recognition, preservation, and protection of primary responsibilities and rights of States

It is the policy of the Congress to recognize, preserve, and protect the primary responsibilities and rights of States to prevent,
reduce, and eliminate pollution, to plan the development and use (including restoration, preservation, and enhancement) of
land and water resources, and to consult with the Administrator in the exercise of his authority under this chapter. It is the
policy of Congress that the States manage the construction grant program under this chapter and implement the permit programs

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
§ 1251. Congressional declaration of goals and policy, 33 USCA § 1251

under sections 1342 and 1344 of this title. It is further the policy of the Congress to support and aid research relating to the
prevention, reduction, and elimination of pollution, and to provide Federal technical services and financial aid to State and
interstate agencies and municipalities in connection with the prevention, reduction, and elimination of pollution.

(c) Congressional policy toward Presidential activities with foreign countries

It is further the policy of Congress that the President, acting through the Secretary of State and such national and international
organizations as he determines appropriate, shall take such action as may be necessary to insure that to the fullest extent possible
all foreign countries shall take meaningful action for the prevention, reduction, and elimination of pollution in their waters and in
international waters and for the achievement of goals regarding the elimination of discharge of pollutants and the improvement
of water quality to at least the same extent as the United States does under its laws.

(d) Administrator of Environmental Protection Agency to administer chapter

Except as otherwise expressly provided in this chapter, the Administrator of the Environmental Protection Agency (hereinafter
in this chapter called “Administrator”) shall administer this chapter.

(e) Public participation in development, revision, and enforcement of any regulation, etc.

Public participation in the development, revision, and enforcement of any regulation, standard, effluent limitation, plan, or
program established by the Administrator or any State under this chapter shall be provided for, encouraged, and assisted by the
Administrator and the States. The Administrator, in cooperation with the States, shall develop and publish regulations specifying
minimum guidelines for public participation in such processes.

(f) Procedures utilized for implementing chapter

It is the national policy that to the maximum extent possible the procedures utilized for implementing this chapter shall encourage
the drastic minimization of paperwork and interagency decision procedures, and the best use of available manpower and funds,
so as to prevent needless duplication and unnecessary delays at all levels of government.

(g) Authority of States over water

It is the policy of Congress that the authority of each State to allocate quantities of water within its jurisdiction shall not be
superseded, abrogated or otherwise impaired by this chapter. It is the further policy of Congress that nothing in this chapter shall
be construed to supersede or abrogate rights to quantities of water which have been established by any State. Federal agencies
shall co-operate with State and local agencies to develop comprehensive solutions to prevent, reduce and eliminate pollution
in concert with programs for managing water resources.

CREDIT(S)
(June 30, 1948, c. 758, Title I, § 101, as added Oct. 18, 1972, Pub.L. 92-500, § 2, 86 Stat. 816; amended Dec. 27, 1977,
Pub.L. 95-217, §§ 5(a), 26(b), 91 Stat. 1567, 1575; Feb. 4, 1987, Pub.L. 100-4, Title III, § 316(b), 101 Stat. 60.)

EXECUTIVE ORDERS

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
§ 1251. Congressional declaration of goals and policy, 33 USCA § 1251

EXECUTIVE ORDER NO. 11548

Ex. Ord. No. 11548, July 20, 1970, 35 F.R. 11677, which related to the delegation of Presidential functions, was superseded by
Ex. Ord. No. 11735, Aug. 3, 1973, 38 F.R. 21243, set out as a note under section 1321 of this title.

EXECUTIVE ORDER NO. 11742

Delegation of Functions to Secretary of State Respecting Negotiation
of International Agreements Relating to Enhancement of Environment

Under and by virtue of the authority vested in me by section 301 of title 3 of the United States Code and as President of the United
States, I hereby authorize and empower the Secretary of State, in coordination with the Council on Environmental Quality,
the Environmental Protection Agency, and other appropriate Federal agencies, to perform, without the approval, ratification,
or other action of the President, the functions vested in the President by Section 7 of the Federal Water Pollution Control Act
Amendments of 1972 (Public Law 92-500; 86 Stat. 898) with respect to international agreements relating to the enhancement
of the environment.

RICHARD NIXON.

Notes of Decisions (119)

33 U.S.C.A. § 1251, 33 USCA § 1251
Current through P.L. 113-296 (excluding P.L. 113-235, 113-287, and 113-291) approved 12-19-2014

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
§ 24.020. Jurisdiction Over Commissioners Court, TX GOVT § 24.020

Vernon's Texas Statutes and Codes Annotated
Government Code (Refs & Annos)
Title 2. Judicial Branch (Refs & Annos)
Subtitle A. Courts
Chapter 24. District Courts
Subchapter A. General Provisions

V.T.C.A., Government Code § 24.020

§ 24.020. Jurisdiction Over Commissioners Court

Currentness

The district court has appellate jurisdiction and general supervisory control over the commissioners court, with the exceptions
and regulations prescribed by law.

Credits
Added by Acts 1987, 70th Leg., ch. 148, § 1.37, eff. Sept. 1, 1987.

Notes of Decisions (47)

V. T. C. A., Government Code § 24.020, TX GOVT § 24.020
Current through the end of the 2013 Third Called Session of the 83rd Legislature

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
§ 245.002. Uniformity of Requirements, TX LOCAL GOVT § 245.002

Vernon's Texas Statutes and Codes Annotated
Local Government Code (Refs & Annos)
Title 7. Regulation of Land Use, Structures, Businesses, and Related Activities
Subtitle C. Regulatory Authority Applying to More than One Type of Local Government
Chapter 245. Issuance of Local Permits (Refs & Annos)

V.T.C.A., Local Government Code § 245.002

§ 245.002. Uniformity of Requirements

Effective: April 27, 2005
Currentness

(a) Each regulatory agency shall consider the approval, disapproval, or conditional approval of an application for a permit
solely on the basis of any orders, regulations, ordinances, rules, expiration dates, or other properly adopted requirements in
effect at the time:

(1) the original application for the permit is filed for review for any purpose, including review for administrative
completeness; or

(2) a plan for development of real property or plat application is filed with a regulatory agency.

(a-1) Rights to which a permit applicant is entitled under this chapter accrue on the filing of an original application or plan for
development or plat application that gives the regulatory agency fair notice of the project and the nature of the permit sought.
An application or plan is considered filed on the date the applicant delivers the application or plan to the regulatory agency or
deposits the application or plan with the United States Postal Service by certified mail addressed to the regulatory agency. A
certified mail receipt obtained by the applicant at the time of deposit is prima facie evidence of the date the application or plan
was deposited with the United States Postal Service.

(b) If a series of permits is required for a project, the orders, regulations, ordinances, rules, expiration dates, or other properly
adopted requirements in effect at the time the original application for the first permit in that series is filed shall be the sole basis
for consideration of all subsequent permits required for the completion of the project. All permits required for the project are
considered to be a single series of permits. Preliminary plans and related subdivision plats, site plans, and all other development
permits for land covered by the preliminary plans or subdivision plats are considered collectively to be one series of permits
for a project.

(c) After an application for a project is filed, a regulatory agency may not shorten the duration of any permit required for the
project.

(d) Notwithstanding any provision of this chapter to the contrary, a permit holder may take advantage of recorded subdivision
plat notes, recorded restrictive covenants required by a regulatory agency, or a change to the laws, rules, regulations, or
ordinances of a regulatory agency that enhance or protect the project, including changes that lengthen the effective life of the
permit after the date the application for the permit was made, without forfeiting any rights under this chapter.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
§ 245.002. Uniformity of Requirements, TX LOCAL GOVT § 245.002

(e) A regulatory agency may provide that a permit application expires on or after the 45th day after the date the application
is filed if:

(1) the applicant fails to provide documents or other information necessary to comply with the agency's technical requirements
relating to the form and content of the permit application;

(2) the agency provides to the applicant not later than the 10th business day after the date the application is filed written
notice of the failure that specifies the necessary documents or other information and the date the application will expire if
the documents or other information is not provided; and

(3) the applicant fails to provide the specified documents or other information within the time provided in the notice.

(f) This chapter does not prohibit a regulatory agency from requiring compliance with technical requirements relating to the
form and content of an application in effect at the time the application was filed even though the application is filed after the
date an applicant accrues rights under Subsection (a-1).

(g) Notwithstanding Section 245.003, the change in law made to Subsection (a) and the addition of Subsections (a-1), (e), and
(f) by S.B. No. 848, Acts of the 79th Legislature, Regular Session, 2005, apply only to a project commenced on or after the
effective date of that Act.

Credits
Added by Acts 1999, 76th Leg., ch. 73, § 2, eff. May 11, 1999. Amended by Acts 2005, 79th Leg., ch. 6, § 2, eff. April 27, 2005.

Notes of Decisions (24)

V. T. C. A., Local Government Code § 245.002, TX LOCAL GOVT § 245.002
Current through the end of the 2013 Third Called Session of the 83rd Legislature

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
§ 81.001. Composition, Presiding Officer, TX LOCAL GOVT § 81.001

Vernon's Texas Statutes and Codes Annotated
Local Government Code (Refs & Annos)
Title 3. Organization of County Government
Subtitle B. Commissioners Court and County Officers
Chapter 81. Commissioners Court (Refs & Annos)
Subchapter A. Organization and Procedure

V.T.C.A., Local Government Code § 81.001

§ 81.001. Composition, Presiding Officer

Currentness

(a) The members of the commissioners court are the county judge and the county commissioners.

(b) If present, the county judge is the presiding officer of the commissioners court.

Credits
Acts 1987, 70th Leg., ch. 149, § 1, eff. Sept. 1, 1987.

Notes of Decisions (12)

V. T. C. A., Local Government Code § 81.001, TX LOCAL GOVT § 81.001
Current through the end of the 2013 Third Called Session of the 83rd Legislature

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© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
§ 134.012. Jurisdiction of Commission Over Surface Coal,..., TX NAT RES § 134.012

Vernon's Texas Statutes and Codes Annotated
Natural Resources Code (Refs & Annos)
Title 4. Mines and Mining (Refs & Annos)
Chapter 134. Texas Surface Coal Mining and Reclamation Act (Refs & Annos)
Subchapter B. Powers and Duties of Commission

V.T.C.A., Natural Resources Code § 134.012

§ 134.012. Jurisdiction of Commission Over Surface Coal, Iron
Ore, and Iron Ore Gravel Mining and Reclamation Operations

Currentness

(a) The commission has exclusive jurisdiction over:

(1) surface coal mining and reclamation operations in this state; and

(2) iron ore and iron ore gravel mining and reclamation operations in this state.

(b) This chapter governs iron ore and iron ore gravel mining and reclamation operations to the extent it can be made applicable.

(c) The jurisdiction conferred by Subsection (a)(2) does not extend to:

(1) a mining or reclamation activity in progress on or before September 1, 1985; or

(2) a mining operation or reclamation activity that is conducted solely on real property owned in fee simple by the person
authorizing the operation or reclamation activity and that is confined to a single, contiguous tract of land, if:

(A) the activity is conducted in an area not larger than 20 acres;

(B) the depth of the mining operation is restricted to 30 inches or less; and

(C) the fee simple owner receives surface damages.

(d) This chapter does not authorize the commission to adjudicate property title or property rights disputes.

Credits
Added by Acts 1995, 74th Leg., ch. 76, § 12.02(a), eff. Sept. 1, 1995.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
§ 134.012. Jurisdiction of Commission Over Surface Coal,..., TX NAT RES § 134.012

V. T. C. A., Natural Resources Code § 134.012, TX NAT RES § 134.012
Current through the end of the 2013 Third Called Session of the 83rd Legislature

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© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
§ 16.312. Purpose, TX WATER § 16.312

Vernon's Texas Statutes and Codes Annotated
Water Code (Refs & Annos)
Title 2. Water Administration (Refs & Annos)
Subtitle C. Water Development
Chapter 16. Provisions Generally Applicable to Water Development (Refs & Annos)
Subchapter I. Flood Insurance (Refs & Annos)

V.T.C.A., Water Code § 16.312

§ 16.312. Purpose

Currentness

The State of Texas recognizes the personal hardships and economic distress caused by flood disasters since it has become
uneconomic for the private insurance industry alone to make flood insurance available to those in need of such protection
on reasonable terms and conditions. Recognizing the burden of the nation's resources, congress enacted the National Flood
Insurance Act of 1968, as amended (42 U.S.C. Sections 4001 through 4127), whereby flood insurance can be made available
through coordinated efforts of the federal government and the private insurance industry, by pooling risks, and the positive
cooperation of state and local government. The purpose of this subchapter is to evidence a positive interest in securing flood
insurance coverage under this federal program and to so procure for those citizens of Texas desiring to participate and in
promoting the public interest by providing appropriate protection against the perils of flood losses and in encouraging sound
land use by minimizing exposure of property to flood losses.

Credits
Added by Acts 1977, 65th Leg., p. 2207, ch. 870, § 1, eff. Sept. 1, 1977.

V. T. C. A., Water Code § 16.312, TX WATER § 16.312
Current through the end of the 2013 Third Called Session of the 83rd Legislature

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© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
§ 26.023. Water Quality Standards, TX WATER § 26.023

Vernon's Texas Statutes and Codes Annotated
Water Code (Refs & Annos)
Title 2. Water Administration (Refs & Annos)
Subtitle D. Water Quality Control
Chapter 26. Water Quality Control (Refs & Annos)
Subchapter B. General Powers and Duties

V.T.C.A., Water Code § 26.023

§ 26.023. Water Quality Standards

Currentness

The commission by rule shall set water quality standards for the water in the state and may amend the standards from time to time.
The commission has the sole and exclusive authority to set water quality standards for all water in the state. The commission
shall consider the existence and effects of nonpoint source pollution, toxic materials, and nutrient loading in developing water
quality standards and related waste load models for water quality. The commission shall develop standards based on all quality
assured data obtained by the commission, including the local watershed and river basin database described by Section 26.0135(c)
(2). In this section, “quality assured data” has the meaning assigned by Section 26.0135(i).

Credits
Added by Acts 1977, 65th Leg., p. 2207, ch. 870, § 1, eff. Sept. 1, 1977. Amended by Acts 1985, 69th Leg., ch. 795, § 1.072,
eff. Sept. 1, 1985; Acts 1991, 72nd Leg., ch. 294, § 3, eff. June 7, 1991; Acts 1997, 75th Leg., ch. 101, § 3, eff. Sept. 1, 1997.

Notes of Decisions (1)

V. T. C. A., Water Code § 26.023, TX WATER § 26.023
Current through the end of the 2013 Third Called Session of the 83rd Legislature

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© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
§ 26.011. In General, TX WATER § 26.011

Vernon's Texas Statutes and Codes Annotated
Water Code (Refs & Annos)
Title 2. Water Administration (Refs & Annos)
Subtitle D. Water Quality Control
Chapter 26. Water Quality Control (Refs & Annos)
Subchapter B. General Powers and Duties

V.T.C.A., Water Code § 26.011

§ 26.011. In General

Currentness

Except as otherwise specifically provided, the commission shall administer the provisions of this chapter and shall establish the
level of quality to be maintained in, and shall control the quality of, the water in this state as provided by this chapter. Waste
discharges or impending waste discharges covered by the provisions of this chapter are subject to reasonable rules or orders
adopted or issued by the commission in the public interest. The commission has the powers and duties specifically prescribed
by this chapter and all other powers necessary or convenient to carry out its responsibilities. This chapter does not apply to
discharges of oil covered under Chapter 40, Natural Resources Code.

Credits
Added by Acts 1977, 65th Leg., p. 2207, ch. 870, § 1, eff. Sept. 1, 1977. Amended by Acts 1985, 69th Leg., ch. 795, § 1.065,
eff. Sept. 1, 1985; Acts 1991, 72nd Leg., ch. 10, § 4, eff. March 28, 1991.

Notes of Decisions (8)

V. T. C. A., Water Code § 26.011, TX WATER § 26.011
Current through the end of the 2013 Third Called Session of the 83rd Legislature

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© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
§ 26.027. Commission May Issue Permits, TX WATER § 26.027

Vernon's Texas Statutes and Codes Annotated
Water Code (Refs & Annos)
Title 2. Water Administration (Refs & Annos)
Subtitle D. Water Quality Control
Chapter 26. Water Quality Control (Refs & Annos)
Subchapter B. General Powers and Duties

V.T.C.A., Water Code § 26.027

§ 26.027. Commission May Issue Permits

Effective: April 1, 2009
Currentness

(a) The commission may issue permits and amendments to permits for the discharge of waste or pollutants into or adjacent
to water in the state. No permit shall be issued authorizing the discharge of any radiological, chemical, or biological warfare
agent or high-level radioactive waste. The commission may refuse to issue a permit when the commission finds that issuance
of the permit would violate the provisions of any state or federal law or rule or regulation promulgated thereunder, or when the
commission finds that issuance of the permit would interfere with the purpose of this chapter.

(b) A person desiring to obtain a permit or to amend a permit shall submit an application to the commission containing
all information reasonably required by the commission. The commission shall, at minimum, require an applicant who is an
individual to provide:

(1) the individual's full legal name and date of birth;

(2) the street address of the individual's place of residence;

(3) the identifying number from the individual's driver's license or personal identification certificate issued by the state or
country in which the individual resides;

(4) the individual's sex; and

(5) any assumed business or professional name of the individual filed under Chapter 71, Business & Commerce Code.

(c) A person may not commence construction of a treatment facility until the commission has issued a permit to authorize the
discharge of waste from the facility, except with the approval of the commission.

(d) The commission may not require under this chapter any permit for the placing of dredged or fill materials into or adjacent
to water in the state for the purpose of constructing, modifying, or maintaining facilities or structures, but this does not change
or limit any authority the commission may have with respect to the control of water quality. The commission may adopt rules
and regulations to govern and control the discharge of dredged or fill materials consistent with the purpose of this chapter.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
§ 26.027. Commission May Issue Permits, TX WATER § 26.027

Credits
Added by Acts 1977, 65th Leg., p. 2207, ch. 870, § 1, eff. Sept. 1, 1977. Amended by Acts 1985, 69th Leg., ch. 795, § 1.074,
eff. Sept. 1, 1985; Acts 1993, 73rd Leg., ch. 152, § 2, eff. Sept. 1, 1993; Acts 2007, 80th Leg., ch. 885, § 2.40, eff. April 1, 2009.

Notes of Decisions (6)

V. T. C. A., Water Code § 26.027, TX WATER § 26.027
Current through the end of the 2013 Third Called Session of the 83rd Legislature

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© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
§ 16.318. Rules, TX WATER § 16.318

Vernon's Texas Statutes and Codes Annotated
Water Code (Refs & Annos)
Title 2. Water Administration (Refs & Annos)
Subtitle C. Water Development
Chapter 16. Provisions Generally Applicable to Water Development (Refs & Annos)
Subchapter I. Flood Insurance (Refs & Annos)

V.T.C.A., Water Code § 16.318

§ 16.318. Rules

Effective: September 1, 2007
Currentness

Political subdivisions which qualify for the National Flood Insurance Program, the Texas Department of Insurance, and
the board may adopt and promulgate reasonable rules which are necessary for the orderly effectuation of the respective
authorizations herein.

Credits
Added by Acts 1977, 65th Leg., p. 2207, ch. 870, § 1, eff. Sept. 1, 1977. Amended by Acts 1985, 69th Leg., ch. 795, § 1.051,
eff. Sept. 1, 1985; Acts 2001, 77th Leg., ch. 258, § 4, eff. Sept. 1, 2001; Acts 2007, 80th Leg., ch. 1323, § 9, eff. Sept. 1, 2007.

V. T. C. A., Water Code § 16.318, TX WATER § 16.318
Current through the end of the 2013 Third Called Session of the 83rd Legislature

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© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
43.2. Types of Judgment, TX R APP Rule 43.2

Vernon's Texas Rules Annotated
Texas Rules of Appellate Procedure
Section Two. Appeals from Trial Court Judgments and Orders (Refs & Annos)
Rule 43. Judgment of the Court of Appeals (Refs & Annos)

TX Rules App.Proc., Rule 43.2

43.2. Types of Judgment

Currentness

The court of appeals may:

(a) affirm the trial court's judgment in whole or in part;

(b) modify the trial court's judgment and affirm it as modified;

(c) reverse the trial court's judgment in whole or in part and render the judgment that the trial court should have rendered;

(d) reverse the trial court's judgment and remand the case for further proceedings;

(e) vacate the trial court's judgment and dismiss the case; or

(f) dismiss the appeal.

Credits
Eff. Sept. 1, 1997.

Notes of Decisions (119)

Rules App. Proc., Rule 43.2, TX R APP Rule 43.2
Current with amendments received through 3/15/2015

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© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
§ 18. Division of counties into precincts; election of..., TX CONST Art. 5, § 18

Vernon's Texas Statutes and Codes Annotated
Constitution of the State of Texas 1876 (Refs & Annos)
Article V. Judicial Department

Vernon's Ann.Texas Const. Art. 5, § 18

§ 18. Division of counties into precincts; election of constable and justice
of the peace; county commissioners and county commissioners' court

Effective: November 20, 2002
Currentness

Sec. 18. (a) Each county in the State with a population of 50,000 or more, according to the most recent federal census, from
time to time, for the convenience of the people, shall be divided into not less than four and not more than eight precincts. Each
county in the State with a population of 18,000 or more but less than 50,000, according to the most recent federal census, from
time to time, for the convenience of the people, shall be divided into not less than two and not more than eight precincts. Each
county in the State with a population of less than 18,000, according to the most recent federal census, from time to time, for the
convenience of the people, shall be designated as a single precinct or, if the Commissioners Court determines that the county
needs more than one precinct, shall be divided into not more than four precincts. Notwithstanding the population requirements
of this subsection, Chambers County and Randall County, from time to time, for the convenience of the people, shall be divided
into not less than two and not more than six precincts. A division or designation under this subsection shall be made by the
Commissioners Court provided for by this Constitution. Except as provided by this section, in each such precinct there shall be
elected one Justice of the Peace and one Constable, each of whom shall hold his office for four years and until his successor
shall be elected and qualified; provided that in a county with a population of less than 150,000, according to the most recent
federal census, in any precinct in which there may be a city of 18,000 or more inhabitants, there shall be elected two Justices of
the Peace, and in a county with a population of 150,000 or more, according to the most recent federal census, each precinct may
contain more than one Justice of the Peace Court. Notwithstanding the population requirements of this subsection, any county
that is divided into four or more precincts on November 2, 1999, shall continue to be divided into not less than four precincts.

(b) Each county shall, in the manner provided for justice of the peace and constable precincts, be divided into four commissioners
precincts in each of which there shall be elected by the qualified voters thereof one County Commissioner, who shall hold his
office for four years and until his successor shall be elected and qualified. The County Commissioners so chosen, with the County
Judge as presiding officer, shall compose the County Commissioners Court, which shall exercise such powers and jurisdiction
over all county business, as is conferred by this Constitution and the laws of the State, or as may be hereafter prescribed.

(c) When the boundaries of justice of the peace and constable precincts are changed, each Justice and Constable in office on
the effective date of the change, or elected to a term of office beginning on or after the effective date of the change, shall serve
in the precinct in which the person resides for the term to which each was elected or appointed, even though the change in
boundaries places the person's residence outside the precinct for which he was elected or appointed, abolishes the precinct for
which he was elected or appointed, or temporarily results in extra Justices or Constables serving in a precinct. When, as a result
of a change of precinct boundaries, a vacancy occurs in the office of Justice of the Peace or Constable, the Commissioners
Court shall fill the vacancy by appointment until the next general election.

(d) When the boundaries of commissioners precincts are changed, each commissioner in office on the effective date of the
change, or elected to a term of office beginning on or after the effective date of the change, shall serve in the precinct to which

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§ 18. Division of counties into precincts; election of..., TX CONST Art. 5, § 18

each was elected or appointed for the entire term to which each was elected or appointed, even though the change in boundaries
places the person's residence outside the precinct for which he was elected or appointed.

(e) The office of Constable is abolished in Mills County, Reagan County, and Roberts County. The powers, duties, and records
of the office are transferred to the County Sheriff.

(f) The Legislature by general law may prescribe the qualifications of constables.

(g) [Deleted].

(h) The commissioners court of a county may declare the office of constable in a precinct dormant if at least seven consecutive
years have passed since the end of the term of the person who was last elected or appointed to the office and during that period
of time no person was elected to fill that office, or during that period a person was elected to that office, but the person failed to
meet the qualifications of that office or failed to assume the duties of that office. If an office of constable is declared dormant,
the office may not be filled by election or appointment and the previous officeholder does not continue to hold the office under
Subsection (a) of this section or Section 17, Article XVI, of this constitution. The records of an office of constable declared
dormant are transferred to the county clerk of the county. The commissioners court may reinstate an office of constable declared
dormant by vote of the commissioners court or by calling an election in the precinct to reinstate the office. The commissioners
court shall call an election to reinstate the office if the commissioners court receives a petition signed by at least 10 percent of
the qualified voters of the precinct. If an election is called under this subsection, the commissioners court shall order the ballot
for the election to be printed to permit voting for or against the proposition: “Reinstating the office of Constable of Precinct No.
______ that was previously declared dormant.” The office of constable is reinstated if a majority of the voters of the precinct
voting on the question at the election approve the reinstatement.

Credits
Amended Nov. 2, 1954; Nov. 8, 1983, eff. Jan. 1, 1984; Nov. 5, 1985, eff. Jan. 1, 1986; Nov. 3, 1987; Nov. 7, 1995; Nov. 4,
1997; Nov. 2, 1999; Nov. 6, 2001, eff. Nov. 26, 2001; Nov. 5, 2002, eff. Nov. 20, 2002.

Notes of Decisions (279)

Vernon's Ann. Texas Const. Art. 5, § 18, TX CONST Art. 5, § 18
Current through the end of the 2013 Third Called Session of the 83rd Legislature

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© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2