With today’s orders list, the Texas Supreme Court granted review in four new cases.

Request for more briefing the home-equity-lending case

Earlier this month, the Court heard oral arguments in Finance Commission Of Texas, et al. v. Valerie Norwood, et al., No. 10-0121, challenging the legality of Texas’s home-equity lending rules.

Today, the Court requested that both sides file briefs about whether or not the Court has jurisdiction to decide the case, specifically:

(1) Do the plaintiffs’ claims present a case or controversy that a declaratory judgment will resolve?

(2) Do the plaintiffs have standing?

The opening briefs are due October 20, 2011, with response briefs due October 31, 2011.

Four new petitions granted

To be argued January 10, 2012

• Mission Consolidated Independent School District v. Gloria Garcia, No. 10-0802

  In a claim for age-discrimination under the Texas Commission on Human Rights Act (TCHRA): (1) can a plaintiff state a claim when the replacement ultimately hired for the job is older, and (2) are the notice requirements of the statute jurisdictional?

• In re M.P.A., No. 10-0859

  This is a juvenile-justice case about expert testimony. The State’s testifying psychologist was later sanctioned by professional board for making false claims that overstated the reliability and acceptance of the test administered to this defendant. The petition asks the Texas Supreme Court to bring the same scrutiny to expert testimony in this context that it brought to civil experts in cases such as Robinson.

To be argued January 11, 2012

• PNS Stores, Inc., d/b/a MacFrugal’s Bargain Closeouts v. Anna E. Rivera as next friend for Rachel Rivera, No. 10-1028

  This is a jurisdictional challenge to a default judgment brought nine years after it was rendered. In the default judgment, the original district court stated certain procedural facts as findings. In this collateral attack, the court of appeals concluded that any defect in service made the original default judgment voidable rather than void, and thus that the challenge was too late. The petition argues that this defect is jurisdictional and can be raised at any time, as well as arguing that the reviewing court should be able to look beyond the recitations in a default judgment. (( The petition also suggests that a prior federal judgment between the parties makes this state judgment “void” and that an alleged ethics violation by counsel for the plaintiff is another basis for collateral attack. ))

• Oncor Electric Delivery Company LLC V. Dallas Area Rapid Transit and Fort Worth Transportation Authority, No. 11-0079

  This is a condemnation case with two twists. The first is that the condemning authority is a private electric company operating under the authorization of the Texas Public Utility Commission. The second is that the landowners here are governmental entities. So, here a private electric company is using state eminent-domain authority to take land owned by two other government entities. The key question is whether these governments, as landowners, can assert immunity against an eminent-domain suit.

Corrected Opinion

In Re Alice M. Puig, No. 10-0460

While denying a motion that it rehear the case, the Court issued a corrected opinion that made some non-substantive corrections.

Severance v. Patterson, No. 09-0387

One of the highest-profile cases last term concerned the Texas Open Beaches Act — asking if the State could claim a “rolling easement” in a beachfront, even as that shoreline shifted inland to privately owned land.

The Court decided in favor of the landowner in November, but in response to the State’s motion for rehearing, ordered a new oral argument in the case. After that argument was held, the State noted that Ms. Severance had since sold her property and moved to dismiss the case as moot. Because this case had been certified to the Texas court by the federal court of appeals for the Fifth Circuit, the Texas court chose to step back and let the Fifth Circuit speak first about that potentially outcome-determinative mootness question.

Now, the Fifth Circuit has spoken. According to the Houston Chronicle, (( I haven’t located an online version of the order itself. )) the Fifth Circuit has decided that the case is not moot because Ms. Severance is still subject to penalties under the Texas Open Beaches Act that might turn on the status of her property.

Once the Texas Supreme Court has received the order, I would expect the case to be reinstated to the regular docket so the Court can give its final answer on the core legal questions.

As always, you can click through the docket numbers to find the underlying opinions, briefs, and other materials.

To be argued September 14, 2011

• Texas Department of Public Safety v. Stephen Joseph Caruana, No. 10-0321

  When a police officer botches the paperwork for a breath test, can the results still be used to revoke someone’s license? Here, the officer who administered a breath test failed to notarize the results. Caruana challenged the use of this document in a license-revocation hearing. The trial court and court of appeals agreed with him that the document could not be used against him.

• Texas Department of Insurance v. American National Insurance Co. and American
  Life Insurance Co. of Texas, No. 10-0374

  The Texas Department of Insurance has authority to regulate insurance but not “reinsurance,” which is commonly used behind the scenes to reallocate slices of risk between insurers. The question here is how to classify a “stop-loss agreement” entered between an insurance company and a company that has chosen to self-insure by directly offering benefits. Under such an agreement, the company would bear the losses up to a certain threshold, before the insurer’s contribution kicks in.

  TDI calls this “insurance.” The insurers selling these policies say it’s more like “reinsurance.” The legal answer may come down to agency deference, as have so many cases in the past year.

To be argued September 15, 2011

• Prairie View A&M University v. Diljit K. Chatha, No. 10-0353

  There is a 180-day statute of limitations for a government employee’s complaint about discriminatory pay. The question presented is whether that runs from from the date of the paycheck embodying that decision or the (earlier) date on which the employee was told about the decision.

• Atmos Energy Corporation, Centerpoint Energy Resources Corp. and Texas Gas Service Co. v. The Cities of Allen, et al., No. 10-0375

  This is a case about the scope of the Railroad Commission’s authority when a city has rejected a utility’s rate schedule.

• El Apple I, Ltd. v. Myriam Olivas, No. 10-0490

  This is a question about calculating attorneys fees in an employment-discrimination case. The petition argues that a detailed lodestar method should be applied, with breakdowns for each specific task. It also argues that appellate fees should not be calculated in advance but should instead be calculated on remand.

  This last question of how to calculate appellate attorneys fees might be of particular interest. The usual rule in Texas is that a final judgment should resolve these uncertainties beforehand. For that reason, trial courts typically calculate a flat fee for each stage of an appeal, based on the opinions offered by the trial attorneys. Given how off some of those estimates for appellate costs later turn out to be, I wouldn’t be surprised if an after-the-fact lodestar resulted in higher appellate fees. The question is whether they can be (or are required to be) calculated that way in Texas procedure.

It turns out, there is only one case on today’s argument calendar. Basith Ghazali M.D. v. Patricia Brown, No. 10-0232 has been removed from the argument calendar pending a possible settlement.

September 13, 2011

Finance Commission of Texas, et al. v. Valerie Norwood, et al., No. 10-0121

I won’t write too much commentary about today’s case because I worked a small amount on it while at OSG. Here is Osler McCarthy’s summary:

Among principal issues in this challenge to regulations promulgated for home-equity lending in Texas are (1) whether deference should be the review standard for agency interpretations when the agencies — the Finance Commission and Credit Union Commission — were given power to interpret the constitutional home-equity provisions; (2) whether the two commissions erred by adopting the Finance Code’s definition of “interest” for interpreting the constitutional provisions; and (3) whether the appeals court erred when it upheld agency rules that allow signing a home-equity loan by power of attorney instead of in specific locations set by the home-equity amendment.

The trial court invalidated seven of nine challenged regulations. On review, the court of appeals held the standard of review should be the deference given to state-agency statutory interpretations. The appeals court affirmed the trial court in part and reversed and rendered judgment in part, holding the commissions’ rules defining interest were contrary to the intent and plain meaning of the constitutional home-equity lending provision.

That summary identifies what makes this a very unusual administrative-law case: Because of the way that home-equity restrictions are hard-coded into the Texas Constitution, these state agencies are being asked to interpret a constitutional provision rather than (as in most other contexts) a statute. Although this is a fairly rare situation, how the Court approaches this may make some important law about agency deference or constitutional interpretation more generally. (Oh, and it will also determine which rules apply to home-equity lending in Texas.)

If you’re thinking of tuning into the live stream of the argument, you’ll see another unusual thing. There are two counsel listed to argue each side, which might give it the feel of a law-school moot court competition:

For petitioners: Evan S. Green and Craig Enoch, Austin

For respondents: Robert Doggett and Nelson Mock, Austin

Allcat Claims Service L.P. and John Weakly v. Susan Combs, No. 11-0589

The Texas Supreme Court has set a fast-track schedule for the challenge to Texas’s business-margins (franchise) tax. The theory of the case is that the tax on certain business partnerships is really an “income tax” in disguise.

[Updated:] I’ve now had a chance to read the Court’s order. It has a wrinkle. The Court wants to hear about the merits of the Bullock Amendment claim (the claim about “income tax”), but it also wants to hear two threshold jurisdictional questions. First, does it have power to hear this case at all — or did the Legislature itself exceed the Constitution by creating this special kind of expedited appeal just for this question? (( Article V, section 3 includes this language: “The Legislature may confer original jurisdiction on the Supreme Court to issue writs of quo warranto and mandamus in such cases as may be specified, except as against the Governor of the State.” The issue is whether that language, by not mentioning original jurisdiction for other kinds of claims (like this one), excludes them from the power granted to the Court. )) Second, even if that jurisdictional grant is constitutional, are the other questions raised in the complaint — which are more everyday tax questions — outside the scope of the statute’s special grant of jurisdiction?

Read a little more

These are some recent requests for full merits briefing from the Texas Supreme Court:

Same-sex divorce

• In re Marriage of J.B. and H.B., No. 11-0024

  I wrote before about the pair of petitions about same-sex divorce in Texas. The Austin case was decided on a procedural ground about whether the AG had properly intervened. The Dallas case reached the core question about whether Texas courts can grant a same-sex divorce, concluding that they cannot. The Dallas case has received this briefing request and appears to be the lead petition on this issue.

Two cases about proving property valuation

• Harris County Appraisal District v. Houston Laureate Ltd., No. 11-0078

  The Harris County case is about the evidence needed to challenge a residential property valuation. The petition for review asks whether the expert can rely on a computer model that selects other sales to compare, without himself looking at the factors that would affect whether each property is comparable. The petition also includes an issue about whether financial incentives involving the expert constituted a disciplinary-rule violation that also should have barred the evidence.

• Lasalle Pipeline, LP v. Donnell Lands, LP, No. 11-0226

  The Lasalle Pipeline case is about the overlap of two subjects near to the heart of eminent-domain lawyers — remainder damages and the rule that the landowner can testify as to valuation. Remainder damages compensate for the reduced value of the land not taken — such as if you have lost road access or have fewer commercial options with a smaller parcel. The petition argues that the evidence here was legally insufficient because, although an owner testified about the total damages, he did not break remainder damages into all the components that would have been required of a testifying expert.

When is specific performance available in a typical home purchase?

• Villareal v. Esau, No. 11-0048

  To get specific performance, the general rule is that the plaintiff has to show his or her own ability to have performed their side of the bargain at the agreed-upon time. This petition comes up in the context of residential real estate, with a buyer who had third-party financing and now wants to force the seller to sell. The seller’s defense, in part, is that the buyer couldn’t have followed through because — at the latest agreed time to close — the seller had not yet cleared the land titles of a stray “wild deed” that was interfering with the buyer’s ability to get financing.

In re Allcat Claims Service, L.P. and John Weakley, No. 11-0589 (Petition)

Late last week, a Texas business (Allcat Claims Service, L.P.) asked the Texas Supreme Court to declare the Texas business-margins tax (or franchise tax) passed in 2006 to be unconstitutional. The State’s response brief is due August 19th.

The case has a very unusual procedural wrinkle — it is an original proceeding with (by statute) a 120-day clock for the Supreme Court to reach a result.

Read more about the case

With today’s orders list, the Texas Supreme Court issued one opinion in a (still) pending case. It did not grant any new petitions for review.

Severance v. Patterson, No. 09-0387 (reh’g pending)

The Texas Supreme Court issued an interesting opinion today, announcing that it was formally abating this case. (( An appeal is commonly abated when the Court is waiting on some event in the outside world before proceeding. An example is when one party to an appeal files for bankruptcy. To accommodate the federal court’s jurisdiction, the Texas appeal is abated until the jurisdictional question can be resolved. Another example is when the parties notify the Court that a settlement negotiation is ongoing that would beenfit from an abatement. )) The opinion invites the Fifth Circuit to answer a question about the mootness of the case to resolve the Texas Supreme Court’s doubts about its own jurisdiction.

The Severance case was a high-profile challenge to the Texas Open Beaches Act, brought by a homeowner whose land was brought within the zone of open beaches by the moving shoreline. The lawsuit was brought in federal court. The Fifth Circuit certified a question about Texas law to the Texas Supreme Court. Last November, the Texas Supreme Court announced a complex decision largely siding with the landowner. The State filed a motion seeking rehearing, supported by many amicus groups. (( My DocketDB system shows 34 amicus filers in this case, and many of their briefs are available. How many is that? It’s the most of any currently active case. For comparison, the case in third place on that list has only 5 amicus filers. )) The Court granted rehearing in Severance and heard arguments in April.

Last month, the Court was notified by the State that Carol Severance had sold the land at the heart of this suit. It requested some briefing from the parties on the question of mootness — and whether it should vacate its opinion. (You can read a little more at Land Use Prof Blog, or you can read the State’s brief on mootness or the Severance brief on mootness.)

Musings about mootness

This mootness argument put the Texas Supreme Court in an unusual position. Because this is just a certified question from the Fifth Circuit, it only has a very limited kind of jurisdiction — to answer legal questions posed to it about a pending federal case. E.g., Lucas v. U.S., 757 S.W.2d 687 (Tex. 1988) (first certified question accepted by the Texas Supreme Court, explaining its jurisdiction to do so).

In one way of thinking about it, the questions that come to the Court as certified questions stand on a different jurisdictional footing than conventional appeals. They are always advisory in the sense that the Texas court cannot resolve the underlying merits of a federal lawsuit. On the other hand, judges still watch out for prudential reasons to limit what they say. Even in Lucas, the Court explained that it was declining to answer one of the federal court’s questions because it was “moot” in light of how it had answered the other question. (( There are different flavors of mootness. The use of the word “moot” in Lucas really seems to be about the prudential doctrine that courts should decline to answer questions not strictly necessary to their decision — in other words, that courts should avoid dicta. In this case, the State is arguing that the Texas court was deprived of jurisdiction to decide any part of the case when the land was sold. ))

If the Texas Supreme Court had been the one to declare the Severance case moot, it could have put the Fifth Circuit in an awkward position. What if the Fifth Circuit disagreed and concluded that, under the federal law governing the case, it was not moot? The Fifth Circuit would then have to answer this contentious question of Texas law without the benefit of the Texas Supreme Court’s guidance. (( Actually, it would be far more convoluted than that because there was an opinion issued. Would the Fifth Circuit look to the November 2010 opinion for guidance when making its Erie guess about Texas law, which asks it to speculate about how the Texas Supreme Court would decide the question? The Texas Supreme Court order granting rehearing did not withdraw the opinion. If a future order did withdraw the opinion, it would no longer be cited by judges — but surely would be the touchstone for commentators or others critical of whatever answer the Fifth Circuit reached. It would be a little cruel to ask the federal judges to cover their eyes to the opinion and still make an Erie guess what the Texas Supreme Court would have done. The Texas Supreme Court’s order today politely avoids that possibility. ))

The Fifth Circuit will get to decide

Today, the Texas Supreme Court decided to let the Fifth Circuit move first. The short per curium opinion does not hint as to the Court’s view about mootness (or the merits of the pending rehearing). Instead, it simply notes the procedural posture and concludes:

The determination whether the federal lawsuit is moot must be made by the Fifth Circuit. We abate our consideration on rehearing of the certified questions pending this mootness determination.

There really isn’t a procedure for a question to be certified in reverse, from the Texas courts to the Fifth Circuit. This per curiam opinion is about as close as you get.

If the Fifth Circuit rules that the federal case is not moot, then the Texas Supreme Court will resolve the pending rehearing motion.