State Bar of Texas Administrative and Public Law Section
Featured Article - July 1997
|
|
State Bar of Texas Administrative and Public Law SectionFeatured Article - July 1997 |
|
|
CASE LAW UPDATE: RECENT SIGNIFICANT DECISIONSDownload a WordPerfect version of this document (135K)DUFFY DOYLE CRANE and MARNIE A. MCCORMICK
|
|
|
PREFACEThis paper is intended to summarize the significant cases in the area of administrative law decided during the past year. We have excluded cases that do not add substantively to administrative jurisprudence. We attempt to summarize the highlights of each decision and do not purport to report on every detail critical to each decision.Please note that this paper was created in our individual capacities and not as representatives of the Third Court of Appeals. Any comically erroneous interpretations or commentaries found within these summaries are wholly our own. We are solely responsible for the content of this paper. Any disclaimers not herein expressly proclaimed are implied. Conditions may vary in some states. --Duffy and Marnie |
|
|
ALPHABETICAL LISTING OF CASESAll Star Sheet Metal & Roofing, Inc. v. Texas Dep't of Ins.935 S.W.2d 186 (Tex. App.--Austin Nov. 20, 1996, no writ) The Workers' Compensation Insurance Facility provided insurance for All Star's employees and contracted with Wausau Insurance Company to service the policy. In 1991, Wausau informed All Star that its premiums for the next year would dramatically increase. Fearing the increase would put them out of business, All Star discharged all of its employees and invited them to return the following Monday. On Monday, when the employees returned, All Star rehired them and gave each employee the opportunity to waive workers' compensation coverage as provided for under the Labor Code. (An employee may waive the coverage afforded by workers' compensation statutes and retain his or her common law causes of action provided the employee notify the employer not later than the fifth day after beginning employment). All but one employee waived coverage within five days. In 1992, Wausau informed All Star that its premiums for 1992-93 would be calculated to include the employees who had purportedly "waived" coverage. All Star complained without success to the Facility's Governing Committee, then initiated a contested-case proceeding before the Commissioner of Insurance. The Commissioner upheld Wausau's decision finding the waivers were not genuine and that All Star's premiums should be calculated accordingly. The trial court upheld the Commissioner's decision. The court of appeals held that the Commissioner's findings of fact
reasonably supported his conclusions of law and the underlying body of
evidence reasonably supported his findings of fact. The underlying
record included conflicting testimony from thirteen All Star employees
as to whether the President of All Star intended the discharges to be
real and whether the employees in fact believed the discharges to be
real. The meaning, weight, and credibility assigned various parts of
the evidence were matters for the Commissioner, not the appellate
court, to determine. The court of appeals accordingly affirmed the
Commissioner's determination.
Ben Robinson filed suit in district court attacking a Workers' Compensation Commission order that designated the company as an extra-hazardous employer. The company sought a declaration that the program under which such designations are made was unconstitutional. The Commission contended the company could not properly maintain a declaratory judgment action because the APA provided the exclusive method for attacking an agency order. The district court agreed. The court of appeals reversed the district court, recognizing that
a declaratory judgment action attacking an agency order does not lie
when a statute provides a method for attacking that order because
parties are not entitled to redundant remedies. The court reasoned,
however, that because the company's action was directed at the
constitutional validity not of the order but of the of the entire
program, the relief the company sought was distinct from the remedy
provided by the APA. The company was, therefore, entitled to bring
the declaratory judgment action.
Best & Company, a provider of continuing education classes,
sought the Board's approval to become a provider of continuing
education classes for plumbers. The Board denied the request. Best
sought in district court a declaration that the Board denied Best due
process of law by failing to conduct a contested-case hearing on the
request. The district court ruled that Best was not entitled to an
adjudicative hearing, and Best appealed. The court of appeals
affirmed, holding first that the APA, although applicable to Board
proceedings, did not entitle Best to a hearing because the approval
Best sought was not a matter "to be determined by [the Board] after an
opportunity for an adjudicative hearing." The court declined to
decide the precise meaning of the phrase in the APA, but concluded
Best's request did not fall within the meaning of the phrase because
(1) no statutory or constitutional provision required a hearing, (2)
the Board had never conducted a hearing on the issue before, and (3)
the Board was not exercising a judicial or quasi-judicial function.
The court also addressed the merits of the constitutional claim and
held Best did not have a protected property interest in the status of
being a continuing education provider.
Bohannan filed suit challenging a Board policy on the grounds that the Board exceeded its statutory authority by implementing the policy and that the Board's adoption of the policy was procedurally defective. The trial court dismissed his suit as frivolous. Bohannan appealed. The court of appeals held Bohannan could not challenge the validity or applicability of the Board's policy under 2001.038 of the APA because another section of the APA provides that the APA does not apply to a rule of internal procedure of the Board. The court also held that Bohannan could not sidestep the prohibition by casting his challenge to the policy as a suit for declaratory judgment. Bohannan also contended that the Board failed to comply with the notice provisions of the Open Meetings Act when it implemented its policy. The court of appeals held that Bohannan's pleadings, which did not explicitly mention the Open Meetings Act, were not sufficient to put the trial court on notice that he intended to raise such a claim and, therefore, it could not be raised for the first time on appeal. The court further noted that generally an agency must comply with the notice provisions of the APA and not the Open Meetings Act when promulgating a rule. Bohannan further complained that the district court's dismissal
could not be upheld on the basis of sovereign immunity. According to
Bohannan, dismissal on this basis was improper because a suit alleging
that a board has acted outside its authority is not a "suit against
the state" precluded by immunity. The court of appeals concluded that
the Board's actions did not exceed the scope of its statutory
authority and were therefore protected by sovereign immunity. The
court of appeals affirmed the district court's dismissal of Bohannan's
cause despite a determination that his cause was not frivolous because
the dismissal was also supported on sovereign immunity grounds.
Caspary challenged the District's assessment of ad valorem taxes. The District held a hearing on the proposed assessment scheme at which Caspary appeared and lodged his objections. The District adopted the proposed scheme and overruled Caspary's objections. The District failed to notify Caspary that his objections were overruled. Consequently, Caspary did not file a motion for rehearing with the District. Caspary brought suit in trial court challenging the validity of the District's assessment scheme. The trial court granted the District's plea to the jurisdiction, ruling Caspary failed to exhaust his administrative remedies before filing suit in the trial court. Caspary appealed, alleging the District failed to provide mail or personal notice as required by the APA. Caspary argued the APA was made applicable to the District's hearings by the Local Government Code, which states that "hearings" conducted by municipal management districts are to be in accordance with the APA. The court of appeals affirmed the trial court's dismissal on the ground that the notice provisions of the APA were not applicable to the District's hearing. In attempting to harmonize the Local Government Code and the APA, the court determined the District's hearing did not constitute a "contested-case" because it was not a proceeding in which the legal rights, duties, or privileges of a party are determined by a state agency "after an opportunity for adjudicative hearing." The court stated that the APA distinguishes between a "hearing" and a "contested-case." and therefore, the notice provisions of the APA cannot be applicable to a statute that provides merely for a hearing. Therefore, the District was not required to provide Caspary notice that his objections were overruled and a final decision issued. The court of appeals held the trial court properly granted the District's plea to the jurisdiction. The court also noted that its refusal to apply the notice
provisions of the APA to the District's hearing did not render the
Local Government Code provision requiring the hearings be held in
accordance with the APA meaningless. According to the court, other
provisions of the APA "seamlessly apply" to the Local Government Code
and the court cites as an example the APA provision governing
continuances.
Central Power & Light Company participated in an administrative proceeding before the Comptroller in an effort to obtain a partial tax refund of previously paid franchise taxes. After the Comptroller denied the refund, the light company sought judicial review of the agency order, alleging among other things that the taxing statute was unconstitutional. Despite that the light company had not raised the constitutional issue in its motion for rehearing before the agency, the trial court overruled the Comptroller's plea to the jurisdiction and decided the merits of the dispute. On appeal, the court of appeals affirmed the district court's decision. The court further held the district court erred by failing to sustain the Comptroller's plea. In a per curiam opinion denying an application for writ of error,
the supreme court disapproved of the court of appeals' analysis of the
jurisdictional issue. The supreme court acknowledged that generally
the grounds of error contained in a motion for rehearing before an
agency are the only grounds that may be raised in an administrative
appeal. The court, however, recognized the exception that it is not
necessary to raise the issue of the constitutionality of a statute
before an agency because an agency is powerless to decide that issue.
Church was arrested for driving while intoxicated and refused to submit to a breath test to determine his blood alcohol content. Accordingly, an administrative license revocation hearing was held at which the ALJ found the DPS failed to prove by a preponderance of the evidence that Church was operating a motor vehicle. The ALJ, therefore, denied the State's petition to suspend Church's license. After being adjudicated guilty of driving while intoxicated in a subsequent criminal proceeding, Church sought habeas corpus relief contending the ALJ's findings collaterally estopped the State from seeking another determination of the issue decided by the ALJ. The district court denied the relief. The court of appeals affirmed, holding the statute authorizing the
suspension hearing neither requires nor empowers the ALJ to decide the
ultimate issue of whether Church was actually operating a motor
vehicle while intoxicated. The "fact" forming the basis of Church's
collateral estoppel argument was beyond the ALJ's authority to decide.
Therefore, the court held the ALJ's findings did not collaterally
estop the State from pursuing a subsequent DWI prosecution.
The City of Lancaster sought judicial review of a TNRCC order in district court; the district court affirmed the agency's order. The City requested findings of fact and conclusions of law. The City, believing the request for findings of fact had extended the appellate timetable, filed a motion to extend the time to file a notice of appeal ninety-eight days after the judgment was signed. The court of appeals dismissed the cause, holding the perfecting
instruments were due thirty days after the judgment was signed and
that the motion for extension of time was therefore untimely. The
court reasoned that the request for findings of fact was inappropriate
and did not extend the appellate timetable because the district court
in an administrative appeal is generally limited to addressing
questions of law and because there was no indication the court
received or considered new evidence outside the administrative record.
The City's Housing Standards Commission ordered Corbin to secure the house he was constructing and clean up the property. Corbin did not comply with the order nor did he appeal to the Commission. The City brought an action in district court, seeking to enforce the order. Corbin counterclaimed under U.S.C. 1983, alleging due process and equal protection violations. After a jury trial, the trial court entered judgment for Corbin. The City appealed. The court of appeals reversed the district court. The court of
appeals found Corbin's failure to appeal to the Commission resulted in
a final order. The court refused to make a determination reserved to
the Commission's Board of Appeals. The court noted that exhaustion of
state administrative remedies is not always a prerequisite to an
action under 1983. However, in absence of a 1983 claim, those
remedial efforts must be taken before appealing to district court.
The court of appeals found that, because Corbin failed as a matter of
law to prove his 1983 claims, Corbin was required to exhaust his
administrative remedies before suing in district court.
The City of Odessa terminated Barton's employment with the City. The City's personnel manual stated that Barton could only be terminated for "just cause" and that he had a right to two administrative hearings if he chose to avail himself of them. Barton asked for the hearings, but walked out of the second hearing before it was over. He then sued in district court, seeking judicial review of the City's decision and alleging breach of contract. The district court ruled in Barton's favor after a jury trial and the City appealed. The court of appeals affirmed the district court's judgment,
holding (1) Barton had not failed to exhaust his administrative
remedies by leaving the second hearing because his departure did not
relieve the City of its burden of proof and (2) that Barton was
entitled to have his contract claim submitted to the jury because he
had a right to bring his contract claim outside the context of an
administrative appeal. The court's opinion is somewhat confusing in
its discussion of the district court's scope of review. While the
court's opinion assumes the city's actions are subject to substantial
evidence review, the court goes on the hold the district court did not
err in refusing to conduct such a review because the City did not
issue a "formal" decision after conducting the hearings.
The City of Stephenville applied for a permit from the former Texas Water Commission to construct a reservoir. The Texas Parks and Wildlife Department and area landowners contested the application before the agency. The agency overruled a motion for rehearing without holding a public meeting and ultimately decided to allow the City to construct the reservoir. The Department and landowners sought judicial review in district court. There the landowners and Department presented evidence of procedural irregularities that occurred during the administrative proceeding. The district court ruled that the administrative proceedings were tainted by improper procedure and that the City had violated the Open Meetings Act by affirmatively ruling on the motion for rehearing without holding a public meeting. The court remanded the case to the agency with instructions that the City be required to reapply for the permit and start the process anew. The City appealed and the court of appeals held the evidence was both legally and factually sufficient to support the district court's determination on (1) the issues involving procedural irregularities and (2) the landowners' and Department's contention that the commissioners violated the Open Meetings Act. The court further held the district court's order was not improper
for ordering the agency to begin administrative proceedings anew. The
court reasoned the district court's order did not violate the rule
that courts may not usurp an agency's authority by exercising
discretion committed to the agency, because courts and not agencies
are empowered to decide when substantial rights of parties have been
injured in administrative proceedings. Because the district court's
order did not concern the merits of the permit application, but the
fairness of the decision process, the court of appeals upheld the
order.
An inmate at a state prison requested access to his "central file" pursuant to the Open Records Act. The file was not located in the prison facility. The official responsible for processing open records requests responded that the records were available for inspection but that the records would not be transported to the prison for inspection. The inmate sued in district court, alleging the Open Records Act imposes a duty on the official to transport them to the prison for the inmate's inspection. The inmate also argued the official violated the Act by failing to request an attorney general's decision within ten days of receiving the request. The district court granted summary judgment in favor of the official. The inmate appealed, and the court of appeals affirmed the
district court's judgment. The court reasoned the provision in the
Act requiring the official to give a person requesting records "all
comfort and facility" for inspecting the records does not impose a
duty to transport the records to the requestor or to make them
available outside the governmental entity's offices. The court
further reasoned the requirement that the official request an attorney
general's decision is triggered only when the official denies access
to the records or asserts an exception under the Act.
Escajeda sued Cigna in a dispute over a settlement agreement that arose out of her workers' compensation claim. Escajeda sued in district court, alleging breach of contract, violation of the Texas Insurance Code and the Texas Deceptive Trade Practices Act, and breach of the duty of good faith and fair dealing. The district court rendered summary judgment for Cigna. Escajeda appealed. The court of appeals evaluated each of the several arguments
alleged in the summary judgment motion. The court held: (1) the Texas
Workers' Compensation Act provides the exclusive means for recovery of
damages related to lost compensation benefits caused by
misrepresentations or deceptive trade practices; (2) the district
court had no jurisdiction over the breach of contract claim concerning
payment of medical expenses because Escajeda had not first exhausted
her administrative remedies on those claims; and (3) the exhaustion
doctrine did not apply to Escajeda's attempts to recover damages
unrelated to lost compensation benefits. The court of appeals
affirmed the summary judgment in part, modified it in part, and
reversed and remanded it in part.
Jones retired from active service at age 48 but continued to contribute to the Fireman's Relief and Retirement Fund until he reached age 55. Upon turning 55, Jones applied for retirement benefits. The Board of Trustees of the Fund granted him benefits based on his years of service up to age 48. Jones appealed to the Commission, claiming he was entitled to benefits based on the number of years he contributed to the Fund. The Commission upheld the Board's decision. Jones appealed and the district court reversed the Commission's decision. The Commission appealed, contending that the case should be dismissed for lack of subject matter jurisdiction and, in the alternative that the district court's decision should be reversed. The court of appeals concluded Jones was authorized to bring a suit for judicial review despite that nothing in the controlling statute independently authorized judicial review; the section formerly authorizing judicial review was removed in a 1989 amendment to the statute. The court of appeals found that in this particular case the savings clause in the 1989 act continued in effect the law authorizing judicial review. Accordingly, the court overruled the Commission's motion to dismiss the cause. The Commission also contended on appeal that a fireman's retirement benefits should be calculated based on the years he or she actively served and not on the number of years he or she contributed to the Fund. The court of appeals disagreed, holding that the language of the statute allowing a fireman to continue contributing to the Fund expressly stated a fireman was entitled to all pension benefits that would have accrued to him as a full-time employee. Thus, a fireman is entitled to receive a pension calculated on the basis of the monthly pension amount times the number of years he or she contributed to the Fund. In reaching its decision, the court overruled the Commission's
contention that the district court violated the separation of powers
doctrine by interpreting the statute instead of simply determining the
agency erred in its interpretation of the statute and remanding the
cause to the agency. The court of appeals noted that while an
agency's interpretation of a statute it is authorized to administer is
entitled to "serious consideration," such an interpretation is a legal
determination and does not bind the courts.
The purchaser of a vehicle complained to the Texas Department of Transportation that the vehicle was defective and that the seller, Ford Motor Company, had failed to uphold its warranty on the vehicle. TxDOT determined in an administrative proceeding that: (1) the vehicle was defective; (2) Ford had been given adequate opportunity to fix the vehicle but had not in fact fixed the defects; and (3) Ford should pay a certain sum to compensate the purchaser. Ford appealed and the purchaser counterclaimed under the DTPA and for breach of contract and warranty. The district court affirmed the agency's order but dismissed the purchaser's counterclaims for lack of jurisdiction. Ford appealed. The court of appeals affirmed the agency's order after conducting
a review of the order on "substantial evidence" and "arbitrary or
capricious" grounds. The court further held the district court erred
in dismissing the counterclaims because there is no jurisdictional bar
to joining an administrative appeal with other independent causes of
action. The court noted, however, there may be other impediments to
combining an administrative appeal with other causes of action, such
as the impossibility of simultaneously applying different standards of
review to the determination of the issues. The court pointed out that
severance of the counterclaims would have been appropriate.
After a hearing, a local school board decided not to renew Gilder's contract of employment pursuant to the Term Contract Nonrenewal Act (TCNA). On the superintendent's recommendation, the local school board issued Gilder a "notice of proposed nonrenewal" and, in response, Gilder timely requested a hearing before the board. Prior to the hearing, the board granted Gilder's request for a recusal hearing. At the recusal hearing, Gilder offered no evidence and refused to testify. Then, during an evidentiary hearing on the merits of the recommendation that her contract not be renewed, Gilder again chose not to offer any evidence on her own behalf and not to refute any evidence presented by the superintendent. The board voted unanimously to adopt the recommendation that Gilder's contract not be renewed. Gilder appealed to the Commissioner, alleging the board's decision was arbitrary, capricious, unlawful, and not supported by substantial evidence. Gilder then sought a hearing before the Commissioner, seeking to admit additional evidence. Gilder claimed the evidence was material, relevant, and not unduly repetitious, but did not allege any specifics regarding the evidence. The Commissioner denied the request and, after reviewing the record from the local board, upheld the local board's determination not to renew Gilder's contract. Gilder sought judicial review and the district court upheld the Commissioner's order. Gilder appealed, contending she was entitled to present additional evidence in a hearing before the Commissioner without first having to show good cause. The court of appeals first determined that the TCNA dictates a substantial evidence scope of review and does not require the Commissioner to conduct a new evidentiary hearing in every appeal from a local school board's decision not to renew a teacher contract. This avoids a policy that would otherwise undermine local decision-making in matters of teacher employment. The legislature has clearly expressed a preference that such decisions be left to local control. For these reasons and others, the court of appeals held an appealing party under this statute must show "good cause" for the need to present evidence to the Commissioner. The court of appeals accordingly affirmed the trial court judgment. Justice Jones dissented, contending precedent and history dictate that the Commissioner utilize a substantial-evidence-de-novo scope of review. This standard would require the Commissioner to review not just the local school board record, but any additional relevant evidence presented by the parties. Justice Jones would hold, therefore, the Commissioner erred by failing to allow Gilder to present additional evidence in her appeal to the Commissioner. The majority criticize the substantial- evidence-de-novo standard
of review. The majority indicate that this standard historically has
been applied only in appeals from an agency to a district court and
not, as here, in an intra-agency appeal.
Not yet released for publication The PUC issued a final order that purported to reserve for later determination a question presented before the Commission during a rate-making proceeding ("final order #1"). GSU initiated a subsequent proceeding before the Commission and obtained a final determination of the reserved question ("final order #2"). GSU also appealed final order #1. The district court and the court of appeals concluded the Commission did not err in issuing final order #1. The supreme court reversed, holding: (1) the Commission did not have the statutory authority to bifurcate its decision of the single rate-making issue into separate proceedings; and (2) GSU was prejudiced by the Commission's error. The court reversed the Commission's decision and remanded it to the agency for further proceedings under the original docket number. This case is connected to the supreme court's decision in
Coalition of Cities for Affordable Utility Rates v. Public Utility
Commission, 798 S.W.2d 560 (Tex. 1990), cert. denied,
499 U.S. 983 (1991), in which the supreme court reviewed final order
#2. The court held GSU was barred by the doctrines of res judicata
and collateral estoppel from relitigating the reserved issue in a
separate proceeding.
Drever designated an agent in Houston to conduct its business with taxing authorities. On Drever's behalf, the agent protested the Harris County Appraisal District's appraisal of Drever's property. The appraisal review board sent a copy of its decision to Drever rather than the agent. The appraisal review board's failure to send the notice to the agent caused the agent to miss the deadline for appealing the administrative decision to the trial court. Nevertheless, the agent filed suit in district court and the court entertained the merits of the agent's protest. On appeal, the appraisal district argued the district court lacked
jurisdiction over the protest because the agent had not filed the
appeal within the deadline. The court of appeals held that Drever's
designation of its agent was valid and service upon Drever was not
imputed to the agent. The court concluded that the appellate
timetable was not triggered by the delivery of the notice to Drever,
and that the district court therefore had jurisdiction over the
protest.
The Department of Insurance decided an administrative proceeding against Hernandez, who then filed a motion for rehearing. Because the Department did not expressly rule on the motion for rehearing, the motion was eventually overruled by operation of law. The Department notified Hernandez that the motion had been overruled by operation of law approximately six weeks after the date it was overruled. Hernandez filed a suit for judicial review in district court when she received the notice. The agency argued the district court lacked jurisdiction because Hernandez had not filed her lawsuit within the 30- day time period specified in the APA. The district court agreed and dismissed the lawsuit. The court of appeals affirmed the dismissal, holding that the
agency had no duty to notify Hernandez that the motion had been
overruled by operation of law and, therefore, her failure to file her
appeal timely deprived the district court of jurisdiction over the
case.
Hicks was a teacher for Lamar Consolidated I.S.D. When the school decided not to renew his contract, Hicks sued in district court. Hicks alleged the school violated his constitutional rights by terminating his contract out of personal dislike and in retaliation for his protesting earlier negative employment action taken against him. The district court dismissed the cause for want of jurisdiction. The court of appeals affirmed the dismissal based on Hicks's
failure to exhaust his administrative remedies. The court expressly
held that school employees who bring their federal constitutional,
federal statutory, or state constitutional claims in the context of an
employment dispute in state court must have first exhausted all state
administrative remedies unless such claims involve only questions of
law. In so holding, the court interpreted Texas Education Agency
v. Cypress-Fairbanks I.S.D., 830 S.W.2d 88 (Tex. 1992), as
supporting its decision, despite language in
Cypress-Fairbanks that seems to support the opposite
conclusion. The court further concluded that Hicks's claims were
mixed questions of law and fact because they required the court to
determine why in fact the school fired him. The court refused to
entertain Hicks's allegation that other exceptions to the exhaustion
doctrine authorized his suit in district court because the court
determined Hicks failed to plead those exceptions properly in his
petition before the district court.
The attorney general issued an opinion determining that the Harris County District Attorney's "closed files" were subject to disclosure under the Open Records Act. The district attorney filed suit in district court, seeking a declaration that the files were categorically excepted from disclosure under the Act. The district court and court of appeals held the files were subject to disclosure. The supreme court reversed, holding the files were excepted from
disclosure. The court specifically held: (1) the district attorney's
office is not part of the "judiciary" and is a governmental body
subject to the requirements of the Act and (2) the "law enforcement"
exception in the Act specifically excepted the district attorney's
closed files from disclosure. In so holding, the court disagreed with
the attorney general's argument that the exception applied only to
pending files, the disclosure of which would "unduly interfere with
law enforcement."
The owner of an aerial spraying service sought judicial review of an agency order (1) determining he had violated the agency's standards by exposing motorists to pesticide and (2) assessing a $15 penalty because he had made a "false statement" by inadvertently writing a wrong date in his business records. The trial court upheld the agency's order, and the court of appeals held there was substantial evidence supporting the agency's determination regarding the misapplication of the pesticide. The court of appeals further held it was unnecessary to address the challenge to the $15 penalty because the penalty was too small to justify reversing the agency's decision even if error existed. The case is notable for its discussion of the proper method of
framing challenges to findings of fact and conclusions of law.
Justice Powers reiterates in the opinion that parties may challenge
findings of "basic" or "underlying" fact by arguing the evidence does
not reasonably support them, or in other words that they are not
supported by substantial evidence. He also discusses challenges to
conclusions of law or ultimate decisions, and intimates parties may
properly challenge those by arguing they constitute errors of law,
rather than arguing they are not supported by substantial evidence.
Not yet released for publication Two employees of the City of Marlin were accused of discriminating against another employee on the basis of race. On April 16, 1993, the City met in executive session to discuss the grievance. The notice of that meeting referenced only the grievance and did not suggest that the terms of the two employees' employment would be discussed. Following the closed session, the City voted in open session to suspend the two employees without pay. On April 19, the City posted another notice that it would meet on April 22 to discuss further action on the suspensions. On April 21, the employees sued the City. The City in turn posted another notice that it would hold an emergency closed meeting on April 22 to discuss the lawsuit. After the emergency closed meeting, the City voted in open session to amend the previous suspension to suspension with pay. The City then voted to terminate the two employees. The employees subsequently argued in district court that the City had violated the Open Meetings Act by: (1) failing to identify properly an emergency in the notice of the emergency meeting; and (2) failing to notice properly the employment action proposed at the April 16 meeting. After reviewing, in camera, a tape of the emergency meeting, the district court granted summary judgment in favor of the City. The employees appealed, contending they had established as a matter of law that the City violated the Act. The employees further contended the district court erred in considering the tape of the emergency meeting without allowing the employees to examine it as well. The court of appeals held: (1) the City gave adequate notice of
the nature of the emergency by stating it would meet to obtain legal
advice about the employees's lawsuit; (2) so long as the discussion
"related to" the lawsuit, the City was allowed to discuss pending
charges against the employees at an emergency closed meeting because
the unexpected lawsuit involved those charges and those charges were
on the agenda for a meeting to be held the following day; (3) the
notice of the April 16 meeting was inadequate because it did not
notify the employees that action involving the terms of their
employment was contemplated; however, no harm resulted from the defect
because the suspension was amended to one "with pay" at the next
meeting; and (4) the district court properly examined the tape of the
emergency meeting in camera in deciding whether the City's
discussion at the emergency meeting was confidential pursuant to the
attorney-client privilege. The court accordingly affirmed the
district court's judgment.
McMullen, a state employee, and his son were covered by an
insurance policy administered by the ERS. McMullen sought health
insurance reimbursement for "vision therapy treatments" his son
received. The insurance company denied the benefits, contending the
benefits fell under an exclusion for "orthoptics or visual training;"
the ERS upheld the insurance company's decision in an administrative
proceeding. The district court affirmed the agency's decision, as did
the court of appeals, which held (1) the agency's interpretation of
the exclusion in the state group insurance policy was reasonable and
(2) the district court did not err in failing to file findings of fact
and conclusions of law because the district court did not receive any
evidence outside the administrative record. In deferring to the
agency's interpretation of the contract clause, the court of appeals
noted the agency was authorized by statute to administer the state
employee insurance contract.
The Board found Mednick violated one of its standards of professional conduct and notified Mednick of its decision. Mednick sought judicial review of the Board's order 20 days after the Board sent the notice. The Board argued the district court did not have jurisdiction over the appeal because it had not been filed within the Accountancy Act's 15-day deadline. The district court agreed, but the court of appeals reversed. The court of appeals held the APA's 20- day deadline applied,
rather than the Accountancy Act's 15-day deadline, because the APA
establishes minimum standards of uniform practice and procedure for
state agencies and because the Accountancy Act fully incorporates the
APA.
Munoz was a teacher for Mercedes I.S.D. The school decided not to renew her contract after she took a medical leave of absence. The school did not notify her of its decision within the notice period provided for in the contract. Munoz sued in district court, alleging breach of contract. The district court awarded her damages. The school appealed, alleging the district court did not have
jurisdiction over the cause because Munoz had failed to exhaust her
administrative remedies. The court of appeals agreed and reversed the
district court's award. The court reasoned that although a party is
not required to exhaust administrative remedies when pure issues of
law are involved, this case did not fit the exception because a fact
issue existed as to whether Munoz had actually been terminated.
Montgomery, an employee of the State comptroller's office, submitted a claim to Blue Cross, the insurer selected to administer the insurance plan provided by the Employees Retirement System of Texas. Blue Cross recommended only partial payment of the claim. In response to Montgomery's request to reconsider the claim, Blue Cross denied the claim and requested Montgomery refund the partial payment she already received. Montgomery brought extra-contractual bad faith claims against Blue Cross in district court. While that suit was pending, Montgomery requested that ERS consider these extra-contractual claims in an administrative proceeding. ERS denied the request for a hearing. Montgomery appealed the denial to an ALJ who upheld the denial. Montgomery then sought judicial review of the denial. The two suits were consolidated at the trial court. The trial court dismissed the judicial review portion of the consolidated proceeding for procedural defects. Blue Cross additionally sought summary judgment, contending the remaining portion of the consolidated proceeding was barred by res judicata. The trial court granted the motion for summary judgment. Montgomery contended on appeal that the trial court erred in
granting summary judgment because res judicata did not bar her
extra-contractual claims brought only in district court. The court of
appeals reversed the trial court's order. The court held ERS did not
have authority or jurisdiction to adjudicate the extra-contractual
claims. Because ERS could not have determined the claims, the
district court lacked subject-matter jurisdiction over the
administrative appeal. Res judicata does not bar a claim if the court
rendering judgment in the initial suit lacked subject-matter
jurisdiction over the claim. The court of appeals clarified its
decision in Testoni v. Blue Cross and Blue Shield of Texas,
Inc., expressly holding that an insured, like Montgomery, is not
required to file extra-contractual claims at the agency level.
The State Board of Insurance adopted two administrative rules regarding the grounds upon which insurers may reject applicants for insurance. A group of insurers challenged the rules, arguing the agency had not substantially complied with the APA's rulemaking provisions. The district court and the court of appeals ruled in favor of the Board. The supreme court reversed, holding the agency did not state a "reasoned justification" for either rule. In so holding, the supreme court reiterated the general policies underlying the "reasoned justification" requirement and then discussed the deficiencies in the agency's stated justification for the rules. This case is notable for its creation of a seemingly more stringent "reasoned justification" requirement than has previously been applied in rulemaking cases. Chief Justice Phillips and Justices Spector and Gonzales
dissented. They criticized the majority's heightened standard,
reasoning that the legislature in enacting the requirement did not
intend to require an agency to justify every clause of every rule, but
instead intended to require an agency to justify every rule as a
whole.
Not yet released for publication Nussbaum owned a building in the City of Dallas; the city's Urban Rehabilitation Board held a hearing and then ordered the building demolished. Nussbaum sued the city in district court, seeking to enjoin the demolition. The district court rendered judgment for the city based on the fact that Nussbaum failed to provide the court with the administrative record from the underlying proceedings. Nussbaum appealed, contending the city bore the burden of having the administrative record admitted before the district court. The court of appeals affirmed the district court's judgment,
holding the APA did not apply in this case because the Local
Government Code set out the appropriate procedure by which to attack
the city's action. According to that statute, Nussbaum bore the
burden of having the record admitted. Having no record establishing
error, the court presumed the administrative order was valid.
Planet appealed a decision of the Texas Workers' Compensation Commission to the district court. The Commission argued the appeal should be dismissed because the claimant did not file a copy of his petition with the Commission at the same time he filed it with the district court, as required by statute. The district court agreed and dismissed the appeal. The court of appeals held the Texas Labor Code did not require for
jurisdictional purposes the simultaneous filing of a copy of
the petition with the Commission. The court did recognize, however,
that the statute required the claimant to file a copy with the
Commission within 40 days of the Commission's decision in order to
confer jurisdiction on the district court.
In order to maintain an action for employment discrimination under
the Labor Code, a complaining party must file a complaint with the
Texas Commission on Human Rights. The court of appeals held, however,
that the filing requirement is met when the party files a complaint
with the Equal Employment Opportunity Commission and the EEOC
transmits the complaint to TCHR within the limitations period.
Producers Assistance Corp., an employer, had a workers' compensation insurance policy with Wausau, the servicing company for the former TWCC Assigned Risk Pool. Wausau denied a claim and Producers did not seek administrative review of the decision. Two years later, Producers sued Wausau in district court, asserting various common law causes of action as well as violations of the Insurance Code and the DTPA. The district court dismissed the lawsuit based on Producers' failure to exhaust its administrative remedies. The court of appeals affirmed the dismissal, holding Producers was
required to attempt to resolve all matters within the TWCC's
jurisdiction at the administrative level before bringing the
contractual and extra-contractual claims in district court.
The Board of Medical Examiners revoked Ramirez's license. Ramirez petitioned for reinstatement of his license. In response, the Board held a hearing to reconsider Ramirez's application for reinstatement and ultimately rejected his application. During this hearing and in its decision-making process, the Board failed to follow the procedures mandated by the APA for "contested cases." Ramirez appealed to the district court, which affirmed the Board's actions. On appeal, Ramirez contended the Board was required to follow the procedures governing contested cases in conducting his reinstatement proceeding. The Board, on the other hand, contended it was not required to follow such procedures because the proceeding was not a contested case within the meaning of the APA. The court of appeals agreed with Ramirez and reversed the district court. A contested case is defined by the APA 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 adjudicative
hearing. The court found the term "adjudicative hearing" to mean "a
hearing at which the decision-making agency hears evidence and based
on that evidence and acting in a judicial or quasi-judicial capacity,
determines the rights, duties or privileges of parties before it."
The court inferred from the provisions of the Medical Practice Act
governing all disciplinary actions that the legislature intended the
Board to provide an evidentiary hearing on each application for
reinstatement and that the Board would be acting in a judicial or
quasi-judicial capacity after an adjudicative hearing. Thus, the
court concluded the filing of an application for reinstatement under
the Medical Practices Act initiates a contested case within the
meaning of the APA and accordingly requires the Board to follow the
procedures required by the APA in such cases.
Rodriguez, an employee who was terminated from his job at a
grocery store, appealed the Commission's determination that he had
been fired for misconduct and was not eligible for unemployment
compensation. The district court concluded the agency's factual
determinations were supported by substantial evidence and the court of
appeals agreed. This case is minimally notable for its discussion of
the standard of review of Texas Employment Commission decisions, which
is "de novo" with a "substantial evidence" component.
A group of citizens who opposed the City of Austin's proposal to purchase land in the Barton Springs Watershed sued the city in district court, alleging the city had violated the Open Meetings Act by providing defective notice of its proposed action. The district court ruled the citizens did not have standing under the Open Meetings Act to challenge the city's action. Upon the citizens' petition for writ of mandamus, the court of
appeals opined that the citizens did in fact have standing to sue
under the Open Meetings Act. The court noted that the standing
provision in the Open Meetings Act is to be interpreted broadly. The
court also reasoned that, even if the Act required a citizen
challenging government action to have a particular connection to the
challenged action, the citizens in this case did have such a
connection. Some of the citizens lived in areas affected by the
watershed and all were concerned with preserving the environmental and
recreational quality of the watershed.
In a contested-case adjudication, the Department terminated Sensitive Care's status as a Medicaid provider. Sensitive Care sought judicial review in district court. The trial court conducted a substantial evidence review and affirmed the Department's decision. Sensitive Care appealed, contending the body of evidence did not support the Department's findings of fact and that the findings of fact did not support the conclusions of law. The court of appeals noted it is a general rule of administrative
law that a reviewing court must uphold an agency decision on any legal
basis shown in the record, even though the agency may have stated an
erroneous reason for its decision. The court of appeals also noted,
however, that a reviewing court must measure the sufficiency of the
agency's order by what the order says and cannot engage in judicial
speculation regarding how the agency reasoned in reaching its final
decision. Thus, a reviewing court is forbidden to uphold an agency's
final decision based on one conclusion of law when the agency
expressly bases its decision upon a different conclusion of law stated
in its final order. In the present case, the agency's decision was
expressly based on two specific conclusions of law and one of those
conclusions was legally erroneous. Based on the above reasoning, the
court of appeals reversed the Department's decision and remanded the
case to the agency for further proceedings.
The Board of Dental Examiners revoked Simmons's license in an administrative proceeding. As required by the applicable statute, Simmons filed a suit for judicial review within 30 days from the date the Board sent him notice of the revocation. At that time, however, the Board had not overruled his motion for rehearing. According to the APA, the Board had 45 days to rule on the motion before it would be overruled by operation of law. Realizing the suit for judicial review was not maintainable until the motion for rehearing had been overruled, Simmons asked the district court to stay the judicial proceedings until the motion had been overruled. After the motion was overruled by operation of law, Simmons asked the district court to re-assert its jurisdiction over the case. The court refused and dismissed the suit. The court of appeals affirmed the dismissal based on Lindsay v. Sterling, 690 S.W.2d 560 (Tex. 1985). The supreme court reversed and remanded for a trial, holding
Lindsay was distinguishable for the following reason: In
Lindsay, the licensee filed his suit for judicial review
before the motion for rehearing had been overruled but argued the
applicable agency statute necessitated that action because it required
an appeal to be filed within 30 days of the date the agency action was
"final." The court held the agency action was not "final" until the
motion had been overruled; therefore, the appeal filed before the
motion was overruled was premature and did not invoke the jurisdiction
of the district court. In the present case, the enabling statute
requires a licensee to file an appeal within 30 days of the date the
revocation notice is sent, not 30 days within the date it
becomes final. Therefore, had Simmons waited until the
motion had been overruled by operation of law, he would have missed
the 30-day deadline for seeking judicial review. Because the
applicable statutes required Simmons to file what would otherwise have
been a premature appeal, and because Simmons made every attempt to
comply with both the APA and the enabling statute, the district court
erred in refusing to assert jurisdiction over the case once the motion
for rehearing was overruled by operation of law.
On June 2, 1992, DeMoranville filed an employment discrimination claim with the Texas Commission on Human Rights, alleging her employer discriminated against her on April 1, 1992, when she was fired after taking slightly less than a year of medical leave. Texas law requires that a complaint of unlawful employment practices under the Labor Code be filed with the EEOC or the Texas Commission on Human Rights within 180 days after the alleged unlawful employment practice occurred. This requirement is mandatory and jurisdictional. The court of appeals found the action taken against DeMoranville
on April 1, 1992, was merely an effect of past discrimination. The
real basis for DeMoranville's complaint was the treatment she received
before taking her leave of absence. The court held it lacked
jurisdiction because DeMoranville failed to file her complaint with
the Commission within 180 days of the discriminatory behavior about
which she was complaining.
Not yet released for publication A student attempted to appeal to the Commissioner of Education a
disciplinary action taken against the student by the school. The
court of appeals held the Education Code, which excepts student
disciplinary actions from the right to appeal to the Commissioner and
from judicial review in district court, did not violate the "open
courts" provision of the Texas Constitution. The court reasoned there
was no violation because there is no common-law cause of action for
judicial review of an administrative agency's action and the Education
Code did not take away Sutton's common-law right to challenge directly
the district's action.
After being arrested for driving while intoxicated and refusing to take a breath test, Jones became the subject of an administrative driver's license suspension proceeding. The ALJ ordered Jones's license suspended and Jones appealed to the county court at law, which reversed the ALJ's order. The DPS appealed the county court's decision to the court of
appeals, which held the evidence established that the officer had
probable cause to arrest Jones for driving while intoxicated. The
court further held the evidence before the ALJ did not establish that
probable cause had been determined in a prior criminal proceeding,
and, therefore, the parties were not collaterally estopped from
seeking a determination of the probable cause issue in the
administrative proceeding. The court did not reach the issue of
whether a party can ever be collaterally estopped from litigating the
probable cause issue once the issue has been adjudicated in a prior
criminal proceeding.
Latimer, who refused a blood test after being accused of driving while intoxicated, appealed an administrative decision suspending his driver's license to the county court at law. Based on the administrative record, the county court reversed the suspension. The DPS appealed, alleging the county court erred in reversing the administrative decision because the administrative record had not formally been admitted in evidence. The court of appeals held the record was constructively admitted
in evidence, noting that the statement of facts revealed that both the
parties and the court had referred to the record at the county court
proceedings and neither party objected to the county court's reliance
on the record. The court of appeals further held the administrative
order was supported by substantial evidence and accordingly reversed
the county court's judgment.
Lavender refused to submit to a breath test after being arrested for driving while intoxicated. Lavender appealed an administrative revocation of his driver's license to the county court. He did not have the administrative record admitted in evidence before the county court. The county court reversed the administrative order and the DPS appealed. On appeal, Lavender argued: (1) the DPS did not have the right to
appeal the county court's judgment; and (2) the applicable statute
authorized the DPS to appeal only questions of law. The court of
appeals reversed the county court, holding: (1) the APA conferred a
right to judicial review on the DPS; (2) the DPS was not limited to
appealing only questions of law because appeals under the APA are to
be "prosecuted in the manner provided for civil actions generally;"
and (3) because Lavender failed to have the administrative record
admitted in evidence before the county court, the court of appeals was
compelled to presume the administrative decision was valid.
A nursing home appealed an agency decision terminating the nursing
home's Medicaid certification. The nursing home failed to have the
administrative record admitted in evidence before the district court.
The court of appeals, citing Nueces Canyon Consol. Indep. Sch.
Dist. v. Central Educ. Agency, 917 S.W.2d 773, 775-76 (Tex.
1996), held that, although a party may transmit the administrative
record to the court of appeals in the transcript rather than the
statement of facts, the party must first have had the record admitted
in evidence before the trial court before the court of appeals may
review it. This opinion provides a good summary of previous caselaw
applicable to this issue.
The Department amended the administrative rules applicable to the state vendor drug program. The Department stated in the Texas Register that its amendments were based on a rider to the General Appropriations Act that expressed legislative desire that the vendor drug rules be amended. The Association sought to enjoin enforcement of the new rules. After a lengthy discussion of the complicated facts, the district court ruled the rules were invalid because (1) the rider was unconstitutional, (2) the Department did not "candidly" comply with the APA provision requiring an agency to state the probable economic costs to persons required to comply with a proposed rule, (3) the Department failed to give a "reasoned justification" for the new rules (citing National Association of Independent Insurers v. Texas Department of Insurance), and (4) the Department exceeded its rulemaking authority in adopting the rules. In deciding the "reasoned justification" issue, the court
conducted a two-step analysis. First, the court examined whether the
order adopting the rules contained the elements required by the APA.
Next, the court determined whether the Department's justification was
adequately reasoned under the circumstances. In deciding whether the
Department had exceeded its rulemaking authority, the court examined
whether the rules harmonized with the general objectives of the
agency's enabling statute.
The TEC determined in an administrative proceeding that the Fund
owed a terminated employee severance pay based on a written contract
between the Fund and the employee. The Fund appealed to the district
court, which upheld the TEC's determination of the contract issue.
The court of appeals utilized a substantial evidence scope of review
in affirming the district court's judgment.
In a per curiam opinion, the supreme court denied Gonzalez's
application for writ of error. The court noted that in denying the
application, the court neither approved nor disapproved of the court
of appeals's determination that substantial evidence de novo
is the proper standard of review to be utilized by district courts in
reviewing school board actions regarding student expulsions.
Walker, an injured employee, sought judicial review of a TWCC appeals panel decision, contending the agency erred in deciding several factual and legal issues. Among other things, Walker specifically argued the agency erred in refusing to address his constitutional challenge to a statute. Walker filed his suit between 30 and 40 days after the appeals panel rendered its decision, and the insurance company argued the district court did not have jurisdiction because Walker failed to file the lawsuit within the 30-day deadline prescribed by the APA. Walker rejoined that the APA did not control; he argued the Labor Code's 40-day deadline controlled and that his suit was therefore timely filed. The supreme court held the Labor Code deadline controlled because
it corresponded to claims involving issues of compensability or
eligibility and Walker's claims fell into that category. The court
further held the district court had jurisdiction over the
constitutional claims, despite that the agency had not ruled on them.
The court reasoned that otherwise no forum would be available to
Walker to address the constitutionality of the statute in the context
of the administrative appeal. The court cited Texas Workers'
Compensation Commission v. Garcia, 893 S.W.2d 504 (Tex. 1995) for
support.
Washington was a school employee whose employment was allegedly terminated. The school did not send Washington notice of the administrative remedies available to her upon termination. Washington sued in district court. The opinion does not state the basis for her cause of action. The district court dismissed Washington's lawsuit based on her failure to exhaust administrative remedies available to her through the Commissioner of Education. The court of appeals affirmed the dismissal, holding that a person
who alleges that a school district wrongfully terminated his or her
employment contract must first apply to the school authorities for
relief. The court explained that although cases involving pure
questions of law need not be brought before the agency first,
termination cases necessarily involve questions of fact to be
determined at the agency level first. The court further held that the
school's failure to notify Washington of the availability of
administrative remedies could not excuse Washington's failure to
exhaust them, and therefore, the district court lacked jurisdiction
over the cause.
The school district sought judicial review of an administrative decision by the Commissioner of Education ordering the District to reinstate a teacher whose contract was terminated by the local school board for engaging in immoral conduct. The district court affirmed the Commissioner's decision. The District appealed, contending the Commissioner exceeded his authority by conducting a de novo review of the teacher's appeal. The Commissioner did not dispute that he exercised his own discretion and judgment in assessing the weight and credibility of the documentary evidence and determining that the teacher merely demonstrated bad judgment and did not, as the local school board determined, conduct himself immorally. The court of appeals held that, while the Education Code does not specify a manner or scope of review, the legislature clearly intended the Commissioner to conduct a substantial evidence review only. Under a de novo standard of review, the Commissioner would effectively be making the employment decision rather than the local boards. It is clear from a review of the education statutes that local management and control of public schools is a primary and longstanding legislative policy. Furthermore, the court noted that it would be unreasonable to conclude the legislature intended local school boards to conduct expensive trial-type proceedings that would be rendered redundant and meaningless each time a teacher brought a de novo appeal before the Commissioner. Therefore, the court of appeals held that by redetermining the credibility of the witnesses and the weight that should be given their testimony in this case, and by substituting his judgment for that of the local school board, the Commissioner exceeded his statutory authority. Additionally, the court of appeals held the Commissioner erred in raising a procedural irregularity point sua sponte, when the teacher failed to raise the point before the local school board or in his petition for review. |
|
|
ADDENDUM TO CASE LAW UPDATE: RECENT SIGNIFICANT DECISIONS
Eckmann v. Des Rosiers |
|
|
Copyright © 1996-1998 State Bar of Texas Administrative and Public Law Section, All Rights Reserved.
|