Posted by Rich Phillips, Melissa Davis, Stephanie Dooley Nelson, and Connor Bourland
In its order list issued on Friday, May 3, the Texas Supreme Court issued opinions in 7 argued cases. The Court did not grant any new petitions for review. With about 2 months left before the summer recess, the Court has 24 argued cases that it has not yet decided. If the Court continues its practice from the last few years, we expect that these opinions will all be issued before the end of June.
Unsurprisingly, the bulk of those 24 pending cases were argued in the last four months. But there are still two undecided cases from the October sitting, one from November, and two from December.
The opinions issued were:
No. 16-0874, Sorrell v. Estate of Benjamin Hardy Carlton, III — In this case, the Supreme Court interpreted a statute that allows a property owner to redeem property sold at a tax sale by tendering payment within a statutory deadline after the deed from the tax sale is recorded. To redeem, the property owner must tender: (i) the amount paid at the tax sale; (ii) the deed recording fee; (iii) the amount the purchaser paid in taxes, penalties, fees, and costs; and (iv) a redemption premium. Here, the landowner attempted to redeem by tendering payment for the amounts it could determine and offering to pay additional costs if the purchaser provided the information related to those costs. Thus, before the redemption deadline, the landowner had tendered about 88% of the amount owed and had offered to pay the rest.
In an opinion by Chief Justice Hecht, the Supreme Court first held that substantial compliance with the redemption statute is sufficient to redeem the property. In so holding, the Court distinguished the statute at issue here from the statute at issue in BankDirect Capital Finance, LLC v. Plasma Fab, LLC, 519 S.W.3d 76 (Tex. 2017). The Court reasoned that in BankDirect, the statute was clear, short, and focused on a single deadline, while the redemption statute is "exceedingly complex" and not focused solely on the redemption deadline. The Court also noted that since at least 1909, intermediate appellate courts had held that substantial compliance with the redemption statute was sufficient and the Legislature had not amended the statute to eliminate the possibility of substantial compliance. The Court then considered whether the landowner here had substantially complied with the statute. The Court held that because substantial compliance is a mixed question of law and fact, it is subject to review for abuse of discretion. For factual issues, the reviewing court defers to the trial court's findings as long as there is some evidence to support them. The reviewing court then determines whether the trial court properly applied the law to the facts. The Court reiterated that while "substantial compliance" lacks a comprehensive definition, it generally means "compliance with its essential requirements," Considering the totality of the circumstances, including that the landowner had paid all amounts it knew and had promised to promptly pay the rest, the Court concluded that the landowner had substantially complied with the statute.
No. 17-0345, Mosley v. Texas Health & Human Services Commission — The Court considered two issues in this case involving the Texas Administrative Procedures Act: (1) whether an appellant seeking judicial review of an administrative order must file a motion for rehearing with the administrative-law judge unless another statute plainly provides otherwise; and (2) whether an agency’s misrepresentation of the proper procedures to seek judicial review of an adverse order can violate the appellant’s due-process rights.
The administrative order at issue involved the Department of Aging and Disability Services’ (DADS’) Employee Misconduct Registry. The Texas Department of Family and Protective Services is tasked with investigating reports of “abuse, neglect, or exploitation of an elderly person or person with a disability.” Tex. Hum. Res. Code § 48.001. When it discovers any “reportable conduct,” the Department notifies the DADS, and DADS then adds the information to the Registry. Id. § 48.403. The Registry lists employees of DADS-licensed facilities who have been found to have committed “reportable conduct.” Being included on the Registry is effectively career ending.
After Mosley was investigated for an incident involving her care of a group-home resident, the Department confirmed a finding of “reportable conduct” and recommended Mosley’s name be added to the Registry. Mosley requested a hearing, which the Department delegated to the Health and Human Services Commission. The ALJ sustained the Department’s finding and sent Mosley a notice that its determination would become final “unless [she] timely petition[ed] for review.” The notice then explained the process for petitioning for review. That notice, however, quoted a regulation that was inconsistent with the law and failed to explain that filing a motion for rehearing was a prerequisite to seeking judicial review.
Relying on the notice, Mosley sought judicial review in the trial court without first filing a motion for rehearing. The Agencies filed a plea to the jurisdiction, arguing that the trial court lacked subject-matter jurisdiction because of Mosley’s failure to file a motion for rehearing. The Agencies conceded that the notice they sent Mosley was incorrect, but they contended that Mosley was charged with knowledge of the APA. The trial court overruled the Agencies’ jurisdictional pleas but found that substantial evidence supported the ALJ’s orders. Mosley appealed that ruling, and the Agencies cross-appealed the trial court’s jurisdictional ruling. The court of appeals reversed the trial court’s judgment on the jurisdictional issue and therefore did not consider the merits of Mosley’s appeal.
The Texas Supreme Court reversed. In a unanimous opinion by Justice Brown, the Court concluded that the APA requires an appellant to file a motion for rehearing with the administrative-law judge as a jurisdictional prerequisite to seeking judicial review of an administrative order. The Court then addressed whether the ALJ’s letter violated Mosley’s due-process rights. The Agencies contended that Mosley should have ignored the inaccurate instructions in the notice and followed the APA’s motion-for-rehearing process. The Court rejected the Agencies’ argument and held that the Agencies effectively misrepresented the steps Mosley needed to take to protect her interests and thereby prevented Mosley from filing a motion for rehearing. Because this violated Mosley’s due-course-of-law rights, the Court remanded the case to the Health and Human Services Commission to allow Mosley an opportunity to file her motion for rehearing.
No. 17-0603, In the Interest of A.L.M.-F. — This parental-termination case involves procedures related to associate judges. Texas law allows judges to refer cases to associate judges for a variety of matters, including trial on the merits. The referral is not binding on the parties, and if either party objects, the referring court will conduct a bench trial or preside at a jury trial. But absent an objection, the associate judge will determine the merits in either a bench or jury trial, subject to the parties’ post-trial right to a “de novo hearing” before the referring court within thirty days.
Here, the issue was whether a party who waives the right to a jury trial before the associate judge is entitled to a jury trial at the “de novo hearing” stage before the referring court under section 201.015 of the Family Code. The Department of Family and Protective Services filed a petition to terminate a mother’s parental rights to her five children. The trial court referred the case to an associate judge for adjudication on the merits. The parties did not object to the referral, and they waived their right to a jury trial. After a bench trial, the associate judge found sufficient grounds to terminate the mother’s parental rights and that termination was in the best interests of the children. After receiving the associate judge’s report, the mother demanded a jury trial and requested a de novo hearing before the referring court. The referring court denied the mother’s request for a jury and instead held a de novo hearing in which the transcripts and exhibits from the associate-judge proceedings were admitted into evidence, but no live witnesses were called to testify. After the hearing, the referring court terminated the mother’s parental rights. The court of appeals affirmed.
In the Texas Supreme Court, the mother contended the Family Code guarantees that parties can demand at least one jury trial at any stage of the trial-court proceedings, and the trial court therefore erred in failing to grant her first-time jury demand at the de novo hearing stage. The Department countered that the Family Code permits, but does not require, a referring court to grant a first-time jury trial in a de novo proceeding.
In a unanimous opinion by Justice Guzman, the Texas Supreme Court agreed with the Department. The Family Code affords the right to a jury trial on demand before the referring court or the associate judge. Here, the mother elected to have a bench trial before the associate judge and gave up her right to a jury trial. The Court concluded that the Family Code does not confer a right to demand a jury trial in a de novo hearing following a bench trial before an associate judge, although the referring court has discretion to grant a first-time jury trial at that stage of the proceedings.
No. 17-0713, Garcia v. City of Willis — This appeal arises from a putative class-action challenge to the City of Willis's red-light camera system and the state statutes allowing their use. The Court addressed whether (1) the plaintiff (Garcia) had standing to bring his prospective claims for declaratory and injunctive relief regarding the constitutionality of the statutes and ordinances authorizing the red-light cameras; (2) whether Garcia’s retrospective claim for reimbursement of his fine was barred by governmental immunity; and (3) whether Garcia was required to exhaust administrative remedies before bringing his constitutional takings claim in district court. In response to Garcia's petition, the City filed a plea to the jurisdiction, raising governmental immunity and failure to exhaust administrative remedies defenses (among others). The trial court denied the plea, but the Beaumont Court of Appeals reversed, finding that Garcia was required to exhaust his administrative remedies for his prospective claims and that his retrospective claim for reimbursement was barred by governmental immunity.
In an opinion by Justice Brown, the Supreme Court affirmed, albeit under a different rationale. The State of Texas, appearing as amicus curiae, argued that Garcia lacked standing to bring his claims for prospective relief and that Garcia’s reimbursement claim could not overcome governmental immunity because he did not pay his fine under duress. The Court agreed. Because Garcia had already paid his fine, he had no concrete or particularized stake in the validity of the future application of the ordinance and statutes. Had Garcia alleged that he planned to continue violating the ordinance or had he failed to pay his fine, the Court noted, he would have a concrete and particularized injury sufficient to sustain his claims for prospective relief. Without such an injury, his interest was indistinguishable from that of a member of the general public. The Court, therefore, dismissed his prospective claims for lack of standing. As to Garcia’s claim for reimbursement, the Court found that Garcia’s claim could not overcome the City’s governmental immunity. While there is an exception to immunity for claims of reimbursement where the plaintiff is forced to pay an allegedly unlawful tax, fee, or penalty involuntarily or under duress, the Court found that Garcia voluntarily paid his fine and could not later claim that he paid it under duress. Finally, the Court addressed whether Garcia was required to exhaust his administrative remedies before bringing a constitutional-takings claim in district court. The Court decided not to address whether the red-light-camera statutory scheme generally requires a plaintiff to exhaust his administrative remedies. Instead, the Court found that Garcia was required to avail himself of any statutory remedy that could moot his takings claim. The Court noted that while an administrative hearing may not have resolved all of Garcia’s claims, it is possible that such a hearing might have resulted in Garcia’s fine being waived, which would have mooted his takings claim. Because an administrative hearing may have obviated the need for a takings suit, Garcia was required to exhaust his administrative remedies and his claims were dismissed.
No. 17-0925, Endeavor Energy Resources, L.P. v. Cuevas — In this case, the Court was again asked to address the scope of Texas Civil Practice and Remedies Code chapter 95, which applies to claims for damages caused by negligence that “arises from the condition or use of an improvement” to the property, and limits the property owner’s liability to situations in which the owner had actual knowledge of the danger or condition that caused the injury. The issue in the case is whether Chapter 95.applies to a negligent-hiring claim against a property owner. Endeavor hired Big Dog Drilling to drill a well. Cuevas, a Big Dog employee, died because of injuries sustained while working on the property. Cuevas’s survivors filed a variety of negligence and premises-liability claims, including a negligent-hiring claim. The trial court held that Chapter 95 barred each claim because Endeavor did not have actual knowledge of any dangerous condition on the worksite. The Eastland Court of Appeals reversed as to the negligent-hiring claim, reasoning that Chapter 95 did not apply because the negligent act occurred prior to, as opposed to contemporaneously with, the injury, meaning the negligence did not arise from the use of an improvement to the property. In a unanimous opinion by Justice Boyd, the Supreme Court reversed. The Court noted that a negligent-hiring claim requires two negligent acts: negligent hiring of the employee and a subsequent negligent act by the employee. Where a claim requires proof of two separate negligent acts, the Court found, it is sufficient that only one of the negligent acts involves contemporaneous use of an improvement on the property. Where that is the case, the claim arises from the use of the improvement, “regardless of when the other negligent act occurred or whether it involved the use of an improvement.” Therefore, Chapter 95 applied and Cuevas’s negligent-hiring claim was barred by law.
No. 17-1003, Brazos Electric Power Cooperative, Inc. v. Texas Commission on Environmental Quality — In a unanimous opinion for the Court, Justice Lehrmann held that the TCEQ had no discretion to deny an ad valorem tax exemption for Brazos Electric’s heat recovery steam generators (HRSGs). HRSG increase the efficiency of electric power plants by capturing waste heat and using it to produce additional electricity, thus reducing the amount of pollution produced per unit of electricity. Texas Tax Code section 11.31 provides a proportional property tax exemption for property that is used wholly or partly for pollution control. This tax exemption is administered by the TCEQ. In 2007, the Legislature added a list of specific types of pollution-control property (the “k-list”), including HRSGs, and created an expedited TCEQ review process for property on the list. When Brazos Electric applied for exemptions for HRSGs at two of its Texas power plants, the TCEQ concluded that the economic benefits of the HRSGs outweighed their environmental use and denied any exemption. The trial court and El Paso Court of Appeals affirmed, but the Supreme Court reversed, concluding that the k-list reflected the Legislature’s determination that HRSGs are used wholly or partly for pollution control, such that they were necessarily exempt in whole or in part, and the TCEQ had no discretion to conclude otherwise. In a footnote, the Supreme Court also rejected the El Paso Court of Appeals’ conclusion that, although this case was transferred from Austin to El Paso, it was not bound by an earlier decision of the Austin Court of Appeals (discussed below) because a motion for rehearing was pending in that case. (In the interest of full disclosure, Thompson & Knight represented the petitioner in this case and Thompson & Knight lawyer Melissa Davis argued the case in the Supreme Court.)
No. 18-0128, Texas Commission on Environmental Quality v. Brazos Valley Energy, LLC — This case presents the same question presented in Brazos Electric, but the Austin Court of Appeals reached the opposite conclusion as the El Paso Court of Appeals. Thus, in light of the reasoning in Brazos Electric, the Supreme Court (in a short unanimous opinion by Justice Lehrmann) affirmed the court of appeals' decision in this case.
