AFFIRMED: Opinion by Justice Pemberton (Before Justices Patterson, Pemberton and Waldrop)
03-06-00242-CV
Hazel Ray, Individually and Executrix of the Estate of Dock L. Dire; Teaneah Jackson, as Next Friend of T. D., a Minor; and Attorney Don R. Caggins, Sr. v. T. D., a Minor
Appeal from 146th District Court of Bell County
FROM THE DISTRICT COURT OF BELL COUNTY, 146TH JUDICIAL DISTRICT
NO. 189,057-B, HONORABLE RICK MORRIS, JUDGE PRESIDING
M E M O R A N D U M O P I N I O N
This appeal involves a dispute over an attorney's claim for fees from the proceeds of a minor settlement. Finding in part that the minor's attorney had no enforceable agreement entitling him to fees from the settlement proceeds, the district court denied the attorney any recovery. The attorney, Don R. Caggins, Sr., brings a single issue asserting that the district court abused its discretion in so ruling. On this record, we cannot conclude that the district court abused its discretion. We will affirm the judgment.
BACKGROUND
In October 2000, Dock L. Dire was killed in an automobile-motorcycle collision with Carroll C. Johnson. At the time of his death, Dire had a minor daughter, T.D. Appellant Teaneah Jackson is T.D.'s mother, while appellant Hazel Ray is Dire's surviving mother and executrix of his estate. Jackson and Ray are residents of Shelby County, Tennessee. Shortly after Dire's death, a guardianship proceeding was filed in the probate court of Shelby County and, on or about January 30, 2001, Ms. Jackson was appointed and qualified as guardian of T.D.'s estate.
In October 2001, Ray, individually and as executrix of Dire's estate, and Jackson, as T.D.'s next friend, filed a "friendly" wrongful death action against Johnson in the district court of Bell County. The action was intended to obtain the court's approval of a settlement wherein Johnson's automobile insurance carrier, State Farm, had agreed to pay the $100,000 limit of Johnson's policy, to be apportioned among the plaintiffs, in exchange for a release. Caggins represented all three plaintiffs. The district court appointed a guardian ad litem, Neale Potts, to represent T.D.'s interests. Various complications delayed efforts to finalize the settlement, including a lien asserted by the federal government for medical care provided to Dire, events in the Tennessee guardianship proceeding, and Caggins's claim for attorney's fees. Eventually, State Farm, on Johnson's behalf, agreed to interplead the $100,000 policy limits, deposit the amount into the court's registry, and bring in the federal government as a third-party defendant.
The parties eventually resolved the lien issue, leaving Caggins's attorney's-fee claim as the sole sticking point in finalizing the settlement and dispensing the funds. (1) On March 21, 2005, Caggins filed a motion for court approval of attorney's fees "in the amount of 33 1/3 of the recovery." Caggins represented that he "has been the sole attorney to prosecute this cause on behalf of all Plaintiffs . . . since November 2000" and that he "has prosecuted the claim whereby policy limits has been tendered by Defendants."
Potts, the guardian ad litem, filed a report with the court in which he objected to Caggins's request:
I have not been able to reach an agreement with Mr. Caggins as to the amount of his fee. It appears to me that this case required very little work by Mr. Caggins to obtain the insurance company's agreement to tender the policy limit. Although on December 23, 2004, I requested that Mr. Caggins furnish me with a copy of his file and a listing or estimation of the time he spent obtaining the settlement, he has declined to do so.
The determination of the amount of attorney's fee[s] due Mr. Caggins is further complicated by the fact that he has represented to [] me throughout this case . . . that he was employed by Teaneah Jackson, the mother of [T.D.], to represent the interests of the child based upon a 40% contingency fee contract. It appears that the only contract executed by Teaneah Jackson is a handwritten letter signed by her, a copy of which is attached hereto. I am not even sure that writing constitutes a contract for legal services. . . .
. . . .
It appears to me that Mr. Caggins may also have various conflicts of interest in representing the various parties in this case. In requesting this Court to allow a fee based upon the percentage of the recovery where no contingency fee contract exists, I believe that Mr. Caggins is taking a position that is adverse to his client, [T.D.]
Mr. Caggins is also representing Hazel Ray, the mother of Dock L. Dire. . . . The three clients of Mr. Caggins have conflicting claims to the $100,000 settlement proceeds, particularly where the damages suffered by [T.D.] as a result of the death of her father far exceed the amount of the settlement proceeds.
. . . .
To Mr. Caggins's credit he has obtained a reduction in the medical lien from $44,353.15 to $29,065.42, resulting in a savings of $15,287.73.
It is my recommendation to the Court that Mr. Caggins's fee should not exceed $12,500.
Potts attached to his report a copy of the Jackson "handwritten letter." It states:
I'm mother of [T.D.] I herein imply [sic] attorney Don Caggins to represent the interests of my daughter [T.D.] for the death of her father Dock L. Dire.
Thanks,
Ms. Teaneah T. Jackson.
The document then listed Jackson's address and contact information and concluded with, "Any questions please feel free to call." The document was not dated, was not signed by Caggins, and did not mention fees or a fee agreement.
Potts also attached a document entitled "Power of Attorney" that was purportedly executed by Caggins and Hazel Ray. The instrument appointed Caggins "as my true and lawful attorney" and provided that he would receive "33 1/3 percent of any collection on settlement before" filing suit and 40 percent "after suit is filed," after deduction for expenses.
Potts asserted in his report that Caggins had not complied with the statutory requirements governing contingent-fee agreements, see Tex. Gov't Code Ann. § 82.065 (West 2005), and that Caggins had violated the disciplinary rules of professional conduct. See Tex. Disciplinary R. Prof'l Conduct 1.04(d) (relating to contingent-fee contracts), 1.06(b) (relating to conflicts of interest), reprinted in Tex. Gov't Code Ann., tit. 2, subtit. G app. A (West 2005). Potts also argued that by seeking recovery of attorney's fees out of T.D.'s settlement proceeds, Caggins had breached his fiduciary duty to T.D. and that fee forfeiture was an appropriate remedy for such a breach. See Burrow v. Arce, 997 S.W.2d 229, 237-38 (Tex. 1999).
Potts also noted correspondence to the effect that USAA, Dire's automobile insurer, had agreed to pay the $300,000 policy limits on Dire's uninsured/underinsured motorist coverage, and that Caggins was claiming he was due a fee of $100,000 in that action, but that the case had not yet been filed.
Caggins filed a one-page response to the ad litem's report in which he stated, "There does not exist nor have their [sic] ever existed a conflict of interest between any of my clients." Caggins also expressed surprise at Potts's position that he was entitled to only a $12,500 fee, claiming that he had understood Potts to have already agreed to a $25,000 fee, only $8,333.33 short of the $33,333.33 Caggins had claimed.
A hearing was held on April 1, 2005. The only evidence presented, in addition to Potts's ad litem report, was a December 29, 2004 letter from Potts, introduced by Caggins, in which the ad litem had suggested a distribution of the settlement proceeds whereby Caggins would receive $25,000 in attorney's fees. Potts explained that he had written this letter based on Caggins's representations throughout the litigation that he actually had an enforceable 40% contingent-fee agreement. According to Potts, he did not ascertain the true nature of Caggins's agreements until later, "probably two weeks prior to the date of my report."
Potts explained generally that his recommendation of a $12,500 fee--"if the court is going to allow a fee"--was "based upon the reduction of the government lien and . . . some work by Mr. Caggins in obtaining the settlement." Potts added, however, that he had been "unable to obtain a copy of Mr. Caggins's file to review and . . . a listing of his time in this case . . .and it's been difficult for me to come to an--even a recommendation for fees."
During the hearing, the district court expressed reservations that Caggins had an enforceable fee agreement, but added that "before I gut a lawyer on his entire fee, I'm going to take this matter under advisement and look at it very carefully." Two weeks after the hearing, the district court advised the parties by letter that it had "determined that Mr. Caggins is not entitled to any attorney's fees out of the settlement proceeds."
Subsequently, USAA filed a plea in intervention to interplead the $300,000 limits of Dire's
underinsured motorist coverage. The district court later granted the intervention.
In September, the district court signed a judgment approving the settlement between the plaintiffs and Johnson, dividing most of the $100,000 settlement proceeds among the plaintiffs, releasing Johnson, but reserving the disputed amount of Caggins's attorney's-fee claim. The court ordered $53,333 deposited in the court's registry for the benefit of T.D. pending further orders of the court or to be held until T.D.'s eighteenth birthday. The amount apparently included (1) $20,000, the amount of a structured-settlement for T.D.'s benefit; and (2) $33,333, the amount of Caggins's attorney's-fee claim against the settlement proceeds.
Potts filed a motion to withdraw all funds held in the court's registry and forward them to the registry of the Tennessee probate court. Caggins objected to the withdrawal of all of the funds, arguing that the district court had not rendered a judgment regarding his entitlement to attorney's fees from the $300,000 tendered to the court by USAA. (2)
A hearing was held on January 13, 2006. On that date, for the first time, Caggins presented two typewritten documents, each titled "Contingent Fee Contract," one of which was between himself and Hazel Ray, while the other was between himself and Jackson, as T.D.'s next friend. Both contracts were dated January 6, 2006, but purported to relate back to the commencement of Caggins's representation on November 16, 2000. The contracts provided for 33 1/3 percent of any gross recovery before any court action is filed, 40 percent of any gross recovery after the action is filed, but before commencement of trial, 45 percent of any gross recovery after commencement of trial, and 50 percent of any gross recovery after the filing of any appeal by any party. Caggins introduced these documents into evidence and asserted that they rendered moot any dispute regarding the enforceability of his earlier purported fee agreements. Caggins acknowledged that the two contracts were signed on January 6 and that he did not know whether Jackson had obtained authorization from the Tennessee probate court to execute her contract on T.D.'s behalf. Potts, on T.D.'s behalf, urged that these instruments were unenforceable, violated ethics rules, and breached Caggins's fiduciary duty to T.D.
Caggins also presented some brief testimony touching on the legal services he had provided to T.D. and the other plaintiffs. The following is his entire testimony regarding that matter:
. . . I represented not only the minor in this matter, but the estate of the daughter and also the surviving mother who is Hazel Ray. So, not only did I represent the minor, but I also represented the estate and Ms. Hazel Ray.
. . . .
The record will reflect that all of the work for the Plaintiff has been performed by me or my law firm, all of the investigative work. I made four trips to Memphis, Tennessee. I made approximately 13 trips from Houston to Bell County, the--the only attorney that represented the interest of the minor, the interest of the estate, or the interest of the surviving mother has been myself.
. . . The maximum amount of recovery has been recovered from the available funds and policies in this matter.
. . . .
I performed all of the work, Judge.
Johnson's counsel also stipulated on the record that Caggins had been the only attorney representing the plaintiffs' personal injury claims and that he had worked with no other attorney or other person acting on the plaintiffs' behalf. (3)
On cross-examination, Potts elicited Caggins's admission that Potts had asked for a copy of Caggins's files, a time sheet, or a compilation of the number of hours Caggins had spent on the case so Potts could determine how much work Caggins had put into the case. Caggins acknowledged that he had not provided that information.
At the hearing's conclusion, the district court invited additional briefing on the attorney's-fee issue. It ultimately rendered final judgment that Caggins was "not entitled to receive any attorney's fees from the settlement proceeds on deposit in the Registry of this Court." The district court further ordered that all funds in excess of the $133,333.33 claimed as attorney's fees (the $33,333.33 Caggins claimed from the State Farm proceeds plus the $100,000 he claimed from the USAA proceeds) be transferred to the probate court in Shelby County, Tennessee and that the $133,333.33 claimed as attorney's fees be placed in an interest-bearing account in the district court's registry pending further order of the district court. The district court entered the following pertinent findings of fact based on the evidence presented at the two hearings:
6. . . . . No evidence has been presented to this Court that the Probate Court in Shelby County, Tennessee has authorized Teaneah Jackson to enter into a contract with Attorney Caggins for the representation of the minor, [T.D.]
. . . .
9. On April 1, 2005, . . . the court received evidence and heard argument with regard to whether or not attorney's fees could be collected or charged as they related to the funds distributed to the minor plaintiff. . . [Caggins] represented to the court that he was the attorney for the minor plaintiff. . . . In support of his motion [for attorney's fees], Mr. Caggins offered the following evidence:
a. A handwritten unverified document purportedly signed by Teaneah Jackson [quoted, attached, and incorporated].
b. A document entitled "Power of Attorney" purportedly executed by Hazel Matthew Ray . . . .[attached and incorporated].
c. In response to Mr. Caggins's motion, the ad litem, Mr. Potts, offered his report which was accepted as evidence and testimony and is included herein [attached].
At hearings before the court on April 1, 2005 and January 13, 2006, Mr. Caggins declined to allow his case file to be examined by the attorney ad litem, declined to furnish a time sheet showing the time spent on the case and declined to give an estimate of the number of hours spent in representation of the case.
The parties were notified by the Court in a letter dated April 14, 2005 that the Court had determined that Mr. Caggins was not entitled to any attorney's fees from the settlement [letter attached and incorporated].
. . . .
13. No sufficient evidence has been presented to this court to support a legally binding claim for the recovery of attorney's fees of and from the proceeds to be distributed to the minor plaintiff, [T.D.]
14. Attorney Don R. Caggins, Sr., is claiming that he is entitled to a percentage of the amounts to be distributed to the Minor Plaintiff, [T.D.] and is not seeking compensation for his hourly work based on an hourly rate.
15. No legally enforceable written agreement has been presented to the Court or offered as evidence to support a claim for a contingency fee or percentage recovery for attorney's fees out of the funds to be distributed to the Minor Plaintiff, [T.D.]
. . . .
19. There is an inherent conflict of interest when an attorney represents multiple parties asserting claims against the same settlement proceeds if the damages suffered by the parties exceeds the amount of the settlement proceeds.
20. There is no evidence that each affected or potentially affected client consented to representation by Attorney Don R. Caggins, Sr., after full disclosure of the existence, nature, implications, and possible adverse consequences of the common representation of the Plaintiffs and the advantages involved, if any.
21. . . . . The [January 6, 2006] Contract [attached and incorporated] was obtained after Mr. Caggins had received notice from this Court in its letter of April 14, 2005 that he was not entitled to any attorney's fees in this case from the settlement proceeds of the minor, [T.D.]
The district court also made the following conclusions of law:
2. The court finds that the evidence presented in support of Attorney Caggins's motion is insufficient to establish a legal right to recover attorney's fees with regards to the funds distributed to the minor, [T.D.], herein.
3. The court finds that there is no legally enforceable contract for attorney's fees between Attorney Caggins and the minor plaintiff, [T.D.]
4. The court finds that no one with legal capacity to retain an attorney on behalf of the minor Plaintiff, [T.D.], ever entered into a proper contract protecting her interest prior to settlement of the claims approved by this Court.
5. The court finds that the evidence presented by the attorney ad litem, Neale Potts, is sufficient to support a finding that a conflict of interest [existed] between the parties purportedly represented by Don R. Caggins, Sr. and that no evidence indicating a full disclosure of said conflict has ever been presented to this Court or the alleged clients of Don R. Caggins, Sr. Specifically, rule 1.06 of the Texas Disciplinary Rules of Professional Conduct precludes Attorney Caggins's effort to seek attorney's fees with regard to the funds agreed to be distributed to the minor plaintiff [T.D.]
6. Attorney Don R. Caggins, Sr. has breached his fiduciary duty to his client by attempting to establish that he is entitled to a contingent attorney's fee through the execution of the Contingent Fee Contract dated January 6, 2006 after being previously advised that he was not entitled to a contingent attorney's fee in the Court's letter of April 14, 2005.
7. The settlements and Judgments herein are approved and are in the best interest of the Minor, [T.D.]
8. It is in the best interest of the Minor, [T.D.], that no attorney's fees be awarded to Attorney Don R. Caggins, Sr., herein.
This appeal followed.
DISCUSSION
In his single issue, Caggins argues that the district court abused its discretion by "denying plaintiffs' counsel recovery of attorney's fees though plaintiffs' counsel represented all plaintiffs in this cause of action," in allowing "recovery to all plaintiffs without compensation to plaintiffs' counsel," and by "fail[ing] to exercise its discretion in and determined an equitable distribution of attorney's fees as reasonable and necessary payment . . . for counsel's representation of the minor child and remaining plaintiffs." As best we can discern, Caggins asserts on appeal three theories as to why the district court abused its discretion in refusing to award him attorney's fees: (1) Caggins had an enforceable attorney's-fee agreement (i.e., he challenges the sufficiency of the evidence supporting the district court's findings to the contrary) (4); (2) Potts, the ad litem, was barred by quasi-estoppel from challenging the enforceability of these agreements; and (3) quantum meruit. (5) Caggins prays that he "is entitled to recover reasonable and necessary attorney's fees which are customary to the facts, to-wit, 33 1/3% of the proceeds of the recovery now held in the registry of the district clerk of Bell County, Texas."
Standard of review
Generally, we review a trial court's decision to either grant or deny recovery of attorney's fees under an abuse of discretion standard. EMC Mortg. Corp. v. Davis, 167 S.W.3d 406, 418 (Tex. App.--Austin 2005, pet. denied). The ultimate test for abuse of discretion is whether the ruling was unreasonable or arbitrary or made "without reference to any guiding rules or principles." Cire v. Cummings, 134 S.W.3d 835, 839 (Tex. 2004) (citing Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241 (Tex. 1985)). When reviewing a trial court's decision under this standard, we must view the evidence in the light most favorable to the trial court's ruling and indulge every presumption in its favor. Aquaduct, L.L.C. v. McElhenie, 116 S.W.3d 438, 444 (Tex App.--Houston [14th Dist.] 2003, no pet.); Phillips & Akers, P.C. v. Cornwell, 927 S.W.2d 276, 279 (Tex. App.--Houston [1st Dist.] 1996, no writ). Legal- and factual-sufficiency issues may be subsumed within this inquiry. Specifically, we may consider both whether the trial court had sufficient information (i.e., sufficient evidence) upon which to exercise its discretion and, if so, whether the trial court abused the exercise of its discretion based on that information. See Cordova v. Sw. Bell Yellow Pages, Inc., 148 S.W.3d 441, 445-46 (Tex. App.--El Paso 2004, no pet.). Where, as here, the trial court made findings of fact and conclusions of law, the evidentiary-sufficiency component of the inquiry is focused on those findings. See Tex. R. Civ. P. 299. (6)
Contract
For a contingent-fee contract to be enforceable, it must satisfy section 82.065 of the government code:
(a) A contingent fee contract for legal services must be in writing and signed by the attorney and client.
(b) A contingent fee contract for legal services is voidable by the client if it is procured as a result of conduct violating the laws of this state or the Disciplinary Rules of the State Bar of Texas regarding barratry by attorneys or other persons.
Tex. Gov't Code Ann. § 82.065. A contingent-fee contract must also satisfy the requirements of rule 1.04(d) of the disciplinary rules of professional conduct:
A contingent fee agreement shall be in writing and shall state the method by which the fee is to be determined. If there is to be a differentiation in the percentage or percentages that shall accrue to the lawyer in the event of settlement, trial or appeal, the percentage for each shall be stated. The agreement shall state the litigation and other expenses to be deducted from the recovery, and whether such expenses are to be deducted before or after the contingent fee is calculated.
Tex. Disciplinary R. Prof'l Conduct 1.04(d).
The district court found that there was no evidence the Tennessee probate court had authorized Jackson, T.D.'s guardian since January 2001, to execute a contract with Caggins on T.D.'s behalf. Furthermore, the "handwritten unverified document purportedly signed by Teaneah Jackson," mentions nothing about attorney's fees. And, although the "Power of Attorney" purportedly executed by Hazel Ray does mention attorney's fees, it does not reflect that Ray executed the document other than in her own behalf. On the face of each document, neither is an enforceable contract entitling Caggins to attorney's fees from the settlement proceeds paid to T.D.
As for the January 6, 2006 contract, the district court found that at the time of execution, Caggins had a conflict of interest with T.D. arising from their competing claims to the finite settlement proceeds and that Caggins had failed to comply with the disciplinary rules in obtaining his client's consent after disclosure. The district court further found that Caggins previously had been notified by letter "that the Court had determinated that Mr. Caggins was not entitled to any attorney's fees from the settlement proceeds" and concluded that Caggins breached his fiduciary duty to his client by procuring the January 6, 2006 contract "after being previously advised that he was not entitled to a contingent attorney's fee." These findings and conclusions, which Caggins does not explicitly challenge, support the district court's finding that the instrument was unenforceable.
The evidence is legally and factually sufficient to support the district court's findings that Caggins had no enforceable agreement entitling him to attorney's fees from the minor settlement proceeds. The district court did not abuse its discretion in refusing to award Caggins attorney's fees from the settlement proceeds based on those findings.
Equitable theories
On appeal, Caggins attempts to raise quasi-estoppel as a counter-defense barring Potts's right to raise, on T.D.'s behalf, defenses to enforcement of Caggins's purported fee agreements. Quasi-estoppel precludes a party from asserting, to another's detriment, a right inconsistent with a position he has previously taken. See Enochs v. Brown, 872 S.W.2d 312, 317 (Tex. App.--Austin 1994, no writ). The doctrine applies when it would be unconscionable to allow a person to maintain a position inconsistent with one in which he accepted a benefit. Id. Caggins did not raise quasi-estoppel in the district court, however, nor did he seek findings of fact and conclusions of law regarding that theory. As the party with the burden of proving quasi-estoppel, Caggins's failure to seek findings and conclusions regarding that theory waives it. See Intec Systems, Inc. v. Lowrey, 230 S.W.3d 913, 918-19 (Tex. App.--Dallas 2007, no pet.).
Caggins also claims that he is entitled to attorney's fees under quantum meruit. To recover under quantum meruit, a claimant must prove that: (1) valuable services were rendered; (2) for the person sought to be charged; (3) the services were accepted, used, and enjoyed by the person sought to be charged; and (4) the acceptance, use, and enjoyment was under such circumstances as reasonably notified the person sought to be charged that the claimant, in performing such services, was expecting to be paid by the person sought to be charged. See Enochs, 872 S.W.2d at 321. Although we cannot find in the record that Caggins ever explicitly invoked "quantum meruit" in the district court, Caggins did raise arguments and present proof going to the substance of such a theory. He testified (and Johnson's attorney concurred) that he had been the plaintiffs' sole attorney during the prosecution of their claim; that he had performed some unspecified work in connection with State Farm and USAA's agreements to pay policy limits; that the ad litem, Potts, credited him with the federal government's $15,287.73 reduction in its medical lien and had recommended a $12,500 fee for that work and other efforts in connection with the State Farm payment (although Potts did not elaborate on the bases for these conclusions, and acknowledged that Caggins had refused to provide him an objective measure of the value of Caggins's services); and that Caggins had made several trips from Houston to Memphis and Bell County. The district court, further, made two findings to the effect that Caggins had failed to meet his burden of proving the reasonable value of his services to T.D.: Caggins (1) "declined to allow his case file to be examined by the attorney ad litem, declined to furnish a time sheet showing the time spent on the case and declined to give an estimate of the number of hours spent in representation of the case," and (2) "is claiming that he is entitled to a percentage of the amounts to be distributed to the Minor Plaintiff . . . and is not seeking compensation for his hourly work based on an hourly rate." In the absence of any attempt by Caggins to quantify the value of any legal services he provided T.D. beyond his bare reliance on a claimed contingent-fee percentage, (7) the district court did not abuse its discretion in refusing to award Caggins attorney's fees under quantum meruit. See Hoover Slovacek L.L.P. v. Walton, 206 S.W.3d 557, 565-66 (Tex. 2006) (holding that law firm "no longer has a claim for quantum meruit" arising from services provided under a contingent-fee contract where it had failed to present evidence of the reasonable value of those services); cf. Arthur Andersen & Co. v. Perry Equip. Corp., 945 S.W.2d 812, 818-19 (Tex. 1997) (bare contingent-fee percentage is insufficient evidence of reasonable and necessary attorney's fees).
CONCLUSION
We overrule Caggins's issue on appeal and affirm the judgment of the district court.
__________________________________________
Bob Pemberton, Justice
Before Justices Patterson, Pemberton and Waldrop
Affirmed
Filed: February 7, 2008
1. The record reflects that Caggins also asserted a similar attorney's-fee claim in the Tennessee guardianship proceeding. The Tennessee court held that the district court here had sole jurisdiction to adjudicate Caggins's entitlement to fees from the settlement proceeds.
2. Caggins also filed a motion to modify the judgment to clarify that the district court had denied his request for fees from the State Farm policy proceeds and that the $53,333.33 in the court's registry "are pending further Order of the Court and the outcome of the Court's denial of any attorney's fee to plaintiff's counsel . . . asserted as 1/3 interest ($33,333.33) of the $100,000 settlement or they will be held until [T.D.'s] 18th birthday."
3. Specifically, Johnson's counsel stated:
[F]rom the outset the claim was presented on behalf of the named Plaintiffs by attorney Don R. Caggins. I worked with no other attorney throughout the process and worked with no other person on behalf of the Plaintiffs in terms of handling and settling their personal injury claims. The only person who's claimed to have represented them in that capacity has been Don R. Caggins.
4. Caggins argues that he "was cloaked in authorization for representation of the appellants in the prosecution of their claims as evidenced by the contracts initially entered into in November of 2000 and the contract executed in an effort to relate back to the original . . ." and that "the refusal of the court to allow payment of any kind under any agreement is an abuse of discretion." He elsewhere asserts that "Jackson . . . acted on behalf of the child and authorized counsel to represent her in recovery of damages, offers her telephone number . . . address . . . and invited that any (one) with questions please feel free to call," and that Ray "had boldly included . . . the specific amount of 33 1/3% of any collection before suit is filed and 40% stated after." We will construe these assertions as a challenge to the district court's underlying findings that Caggins had no enforceable contract for fees and its exercise of discretion to deny fees in light of those findings.
5. Caggins states that the settlement "was based on the work product of appellent's [sic] counsel" and that "[t]he court's exercise of its discretion could have allowed some determination of actual contract by analysis or quantum meruit in attempting to prevent appellant[']s total lockout of payment of fees and the unjust enrichment of all plaintiffs."
6. Caggins asserts in his brief that "the court in its Findings of Facts and Conclusions of Law declared that they were entered without grounds and solely within the discretion of the court. (C.R.- 153-155)." The citation references one of the proposed findings of fact and conclusions of law that Caggins filed--"The denial of plaintiff's counsel's attorney's fees is made within the Court's discretion and without stated grounds." The district court did not adopt or make any such finding.
7. Nor does Caggins contend that he has conclusively proven the other elements of quantum meruit. See Tex. R. Civ. P. 297 (where trial court has made findings regarding one or more elements of a claim or defense, omitted unrequested elements, when supported by the evidence, are presumed in support of the judgment).
Showing posts with label attorney's fees. Show all posts
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Saturday, February 16, 2008
Friday, September 14, 2007
Default divorce decree provisions must be supported by evidence
In order to grant divorce by default, trial court must still receive sufficient evidence to substantiate the allegations in the petition; i.e. prove-up is required. A default judgment in a divorce suit is subject to attack for insufficient evidence on appeal. In this restricted appeal, the Austin Court of Appeals finds error on the face of the record and concludes that the judgment should be reversed for lack of evidence on the value of the community property. Award of child support for disabled child is also reversed because no evidence on the relevant factors was presented at the final hearing, and because the amount ordered might have been affected by the property division. Finally, the court reversed the award of attorneys fees, for the same reason.
Magdalena Rodriguez Wolk v. Robert E. Wolk, No. 03-06-00595-CV (Tex.App.- Austin, Sep. Mar. 12, 2007)(Opinion by Justice Patterson)(default divorce)(Before Justices Patterson, Pemberton and Waldrop)
03-06-00595-CV
Magdalena Rodriguez Wolk v. Robert E. Wolk--Appeal from 261st District Court of Travis County
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 261ST JUDICIAL DISTRICT
NO. D-1-FM-05-006965, HONORABLE LORA J. LIVINGSTON, JUDGE PRESIDING
M E M O R A N D U M O P I N I O N
This is an appeal from a default judgment granting a final divorce decree. In four issues, appellant Magdalena Rodriguez Wolk contends that (i) she meets the requirements of a restricted appeal; (ii) there is no evidence in the record to support the trial court's setting of the amount of child support; (iii) there is no evidence in the record to support the trial court's division of the marital estate; and (iv) there is no evidence to support the trial court's assessment of attorney's fees and court costs. For the reasons that follow, we affirm the decree in part, and reverse and remand as to the issues raised by appellant.
PROCEDURAL AND FACTUAL BACKGROUND
On October 20, 2005, appellee Robert Wolk filed for divorce from appellant. Appellant did not answer or otherwise appear. A brief hearing was held on April 5, 2006. The record shows that Mr. Wolk was the only witness to testify. He testified that he and appellant have a nineteen-year-old child with Down syndrome, that appellant has always been the primary caretaker for the child, and that appellant had taken care of the child for many years. He presented evidence of his income and asked the court to award appellant child support in the amount of $632 per month. Mr. Wolk testified that he had paid at least $700 to $1,500 per month for the last fifteen years in mortgage payments for the home where appellant and their child reside and asked the court not to grant retroactive child support. Mr. Wolk also testified that he paid $408 per month to provide health insurance for the child.
With regard to the division of property, Mr. Wolk testified that he was asking the trial court to award each of the parties "any and all personal effects in their possession" and "any cash, bank accounts, retirement accounts in their possession . . . in their name"; to require each party "to keep and pay any and all debts in their name"; and to divest Mr. Wolk of his interest in the community homestead and award it to appellant with appellant being responsible for "the mortgage and all other matters relating to the property." He testified to the location and legal description of the community homestead and stated that it was the only real estate that he and appellant both owned, but he did not provide testimony on the property's value or the outstanding debt on the property. The trial court signed a default divorce decree granting the relief sought on the same day as the hearing. The decree specified that each party was responsible for his or her own attorney's fees, expenses and costs, and that court costs were to be borne by the party that incurred them. On October 4, 2006, appellant filed a notice of appeal.
ANALYSIS
In her first issue, appellant argues that she is entitled to a restricted appeal. A party filing a restricted appeal must demonstrate he filed the appeal within six months of the date the judgment was rendered; he was a party to the suit; he did not participate at the hearing that resulted in the judgment complained of or file any post-judgment motions or appeals; and error is apparent on the face of the record. Tex. R. App. P. 26.1(c), 30; Alexander v. Lynda's Boutique, 134 S.W.3d 845, 848 (Tex. 2004). The "face of the record" consists of all the papers on file in the appeal, including the reporter's record. Vazquez v. Vazquez, ___ S.W.3d ___, No. 14-05-01257-CV, 2007 Tex. App. LEXIS 4713, at *4 (Tex. App.--Houston [14th Dist.] June 19, 2007, no pet.); see also Norman Commc'ns v. Texas Eastman Co., 955 S.W.2d 269, 270 (Tex. 1997).
Mr. Wolk concedes that appellant has established the first three requirements of a restricted appeal and that only the fourth requirement, error on the face of the record, is at issue. In her second, third and fourth issues, appellant argues that error is apparent on the face of the record as to the trial court's determinations regarding the division of the marital estate, the amount of child support, and the allocation of attorney's fees and court costs. As to the trial court's determinations on these issues, we agree that error is apparent on the face of the record.
Standard of Review
"In a suit for divorce, the petition may not be taken as confessed if the respondent does not file an answer." Tex. Fam. Code Ann. § 6.701 (West 2006). When a respondent in a divorce case fails to answer, the petitioner must still present proof to support the material allegations in the petition. Vazquez, 2007 Tex. App. LEXIS 4713, at *5-6; see also Barry v. Barry, 193 S.W.3d 72, 75 (Tex. App.--Houston [1st Dist.] 2006, no pet.). Because appellant failed to answer or appear, Mr. Wolk was required to present proof at trial to support the material allegations in his petition.
Most appealable issues in family law cases are subject to evaluation under the abuse of discretion standard, including the division of property and the assessment of child support. Sandone v. Miller-Sandone, 116 S.W.3d 204, 205 (Tex. App.--El Paso 2003, no pet.). The test for abuse of discretion is whether the court acted without reference to any guiding principles and rules. Id. at 206. A default judgment of divorce also is subject to an evidentiary attack on appeal. Vazquez, 2007 Tex. App. LEXIS 4713, at *6. When sufficiency review overlaps the abuse of discretion standard, the inquiry on appeal is two-fold: did the trial court have sufficient information upon which to exercise its discretion and did the trial court err in its application of its discretion. Sandone, 116 S.W.3d at 206. Evidentiary sufficiency review comes into play as to the first question. Id. (1)
Division of Marital Estate
In her third issue, appellant contends that the trial court erred in its division of the marital estate. The trial court awarded the community homestead to appellant, but ordered her to pay the "balance due, including principal, interest, tax, and insurance escrow, on the promissory note executed by [Mr. Wolk and appellant] on the [homestead]." The trial court also awarded all personal effects, cash, bank accounts and retirement accounts to the party in possession and ordered both parties to pay "any and all debt" in his or her name.
The Texas Family Code provides that "[i]n a decree of divorce or annulment, the court shall order a division of the estate of the parties in a manner that the court deems just and right, having due regard for the rights of each party and any children of the marriage." Tex. Fam. Code Ann. § 7.001 (West 2006). Courts have broad discretion in suits for divorce when dividing the property; but the division must be "just and right." Sandone, 116 S.W.3d at 207.
This case is similar to O'Neal v. O'Neal, 69 S.W.3d 347 (Tex. App.--Eastland 2002, no pet.), also a restricted appeal of a default divorce judgment. In O'Neal, the petitioner was the only witness at the hearing and provided scant testimony. Id. at 348-50. The trial court divided the community property, including real property, cash, bank accounts, retirement accounts, IRA accounts, stocks, bonds and securities between the parties, without evidence of the value of the property. Id. at 348-50. The court of appeals concluded that the trial court had abused its discretion in the division of the estate based on lack of evidence. Id. at 350.
The El Paso court of appeals reached the same conclusion in another case involving a restricted appeal of a default divorce decree. Sandone, 116 S.W.3d at 205. The court reversed the trial court's division of property because there was no evidence of the value of the assets or the amount of the liabilities. Id. at 207-08. Stating that "[w]ithout the ability to determine the size of the community pie, we can make no determination that the slices awarded to each spouse were just and right," the court held "a division of community property cannot be upheld where the record is absolutely devoid of any testimony concerning the value of the property divided by the court." Id. at 205, 207-08; see also Wilson v. Wilson, 132 S.W.3d 533, 538 (Tex. App.--Houston [1st Dist.] 2004, no pet.) (reversing property division due to the "dearth of evidence identifying, describing, and valuing the community estate").
Similarly, this record lacks evidence identifying, describing, and valuing the community estate. Although Mr. Wolk testified as to the location and legal description of the community homestead, and stated that he had made mortgage payments on the home of at least $700 to $1,500 per month for fifteen years, no other evidence was presented as to the value of the property or the outstanding debt on the property. Likewise, no evidence was presented to identify, describe, or value the other assets and liabilities divided in the decree. Instead, Mr. Wolk merely asked that the court allow each party to "keep any cash, bank accounts, retirement accounts in their possession . . . in their name" and that "each party be able to keep and pay any and all debts in their name." Accordingly, we conclude error is apparent on the face of the record and that the trial court abused its discretion in the division of the marital estate based on the lack of evidence. See Sandone, 116 S.W.3d at 208. We sustain appellant's third issue.
Amount of Child Support
In her second issue, appellant contends the trial court erred in its determination of the amount of child support. The trial court applied the child support guidelines, based upon evidence of Mr. Wolk's income, and awarded appellant $632 per month in child support. See Tex. Fam. Code Ann. § 154.130 (West 2002). Because we have remanded the division of the community estate to the trial court, we also remand the determination of child support as such an award may be "materially influenced" by the property division, and we should not substitute our discretion for that of the trial court. See Vazquez, 2007 Tex. App. LEXIS 4713, at *12; see also Wilson, 132 S.W.3d at 539.
The Texas Family Code also specifies four factors that a court "shall determine and give special consideration to" when setting the amount of child support for a disabled child after his eighteenth birthday. Tex. Fam. Code Ann. § 154.306 (West 2002). The factors are:
(1) any existing or future needs of the adult child directly related to the adult child's mental or physical disability and the substantial care and personal supervision directly required by or related to that disability;
(2) whether the parent pays for or will pay for the care or supervision of the adult child or provides or will provide substantial care or personal supervision of the adult child;
(3) the financial resources available to both parents for the support, care, and supervision of the adult child; and
(4) any other financial resources or other resources or programs available for the support, care, and supervision of the adult child. Id.
Though evidence was presented that the child has Down syndrome, that appellant has always been the primary caretaker, and that she has been taking care of the child for years, there was no evidence showing the child's current or future medical needs relating to his disability, the substantial care and supervision required relating to the child's disability, whether appellant pays or will pay for the care or supervision of the child or will provide substantial care, or financial or other resources or programs available for the support and care of the child. We conclude that on the face of the record, the trial court did not have sufficient information "to determine and give special consideration" to the statutorily required factors. See id.; see also Sandone, 116 S.W.3d at 208. We sustain appellant's second issue.
Attorney's fees and court costs
In her fourth issue, appellant contends the trial court erred in its assessment of attorney's fees and court costs. The trial court ordered in the divorce decree that each party was responsible for his or her own attorney's fees, expenses and costs, and that court costs were to be borne by the party that incurred the costs. A court may apportion attorney's fees in a divorce action as part of a just and right division of the property. Sandone, 116 S.W.3d at 208. Mr. Wolk, however, did not present any evidence of incurred attorney's fees. Because we have reversed and remanded the division of the marital estate, and because no evidence was presented on the amount of incurred attorney's fees, we sustain appellant's fourth issue and remand the assessment of fees and costs for further consideration by the trial court in connection with the other remanded issues. See Barry, 193 S.W.3d at 76.
CONCLUSION
We affirm the trial court decree in part, and having sustained appellant's issues, reverse and remand for a new trial on the issues raised by appellant.
__________________________________________
Jan P. Patterson, Justice
Before Justices Patterson, Pemberton and Waldrop
Affirmed in part; Reversed and Remanded in part
Filed: September 12, 2007
1. Because we conclude that the trial court did not have sufficient information to exercise its discretion in the division of the marital estate, the assessment of child support, or the award of attorney's fees, we only address the first inquiry as to each issue appellant raises.
Magdalena Rodriguez Wolk v. Robert E. Wolk, No. 03-06-00595-CV (Tex.App.- Austin, Sep. Mar. 12, 2007)(Opinion by Justice Patterson)(default divorce)(Before Justices Patterson, Pemberton and Waldrop)
03-06-00595-CV
Magdalena Rodriguez Wolk v. Robert E. Wolk--Appeal from 261st District Court of Travis County
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 261ST JUDICIAL DISTRICT
NO. D-1-FM-05-006965, HONORABLE LORA J. LIVINGSTON, JUDGE PRESIDING
M E M O R A N D U M O P I N I O N
This is an appeal from a default judgment granting a final divorce decree. In four issues, appellant Magdalena Rodriguez Wolk contends that (i) she meets the requirements of a restricted appeal; (ii) there is no evidence in the record to support the trial court's setting of the amount of child support; (iii) there is no evidence in the record to support the trial court's division of the marital estate; and (iv) there is no evidence to support the trial court's assessment of attorney's fees and court costs. For the reasons that follow, we affirm the decree in part, and reverse and remand as to the issues raised by appellant.
PROCEDURAL AND FACTUAL BACKGROUND
On October 20, 2005, appellee Robert Wolk filed for divorce from appellant. Appellant did not answer or otherwise appear. A brief hearing was held on April 5, 2006. The record shows that Mr. Wolk was the only witness to testify. He testified that he and appellant have a nineteen-year-old child with Down syndrome, that appellant has always been the primary caretaker for the child, and that appellant had taken care of the child for many years. He presented evidence of his income and asked the court to award appellant child support in the amount of $632 per month. Mr. Wolk testified that he had paid at least $700 to $1,500 per month for the last fifteen years in mortgage payments for the home where appellant and their child reside and asked the court not to grant retroactive child support. Mr. Wolk also testified that he paid $408 per month to provide health insurance for the child.
With regard to the division of property, Mr. Wolk testified that he was asking the trial court to award each of the parties "any and all personal effects in their possession" and "any cash, bank accounts, retirement accounts in their possession . . . in their name"; to require each party "to keep and pay any and all debts in their name"; and to divest Mr. Wolk of his interest in the community homestead and award it to appellant with appellant being responsible for "the mortgage and all other matters relating to the property." He testified to the location and legal description of the community homestead and stated that it was the only real estate that he and appellant both owned, but he did not provide testimony on the property's value or the outstanding debt on the property. The trial court signed a default divorce decree granting the relief sought on the same day as the hearing. The decree specified that each party was responsible for his or her own attorney's fees, expenses and costs, and that court costs were to be borne by the party that incurred them. On October 4, 2006, appellant filed a notice of appeal.
ANALYSIS
In her first issue, appellant argues that she is entitled to a restricted appeal. A party filing a restricted appeal must demonstrate he filed the appeal within six months of the date the judgment was rendered; he was a party to the suit; he did not participate at the hearing that resulted in the judgment complained of or file any post-judgment motions or appeals; and error is apparent on the face of the record. Tex. R. App. P. 26.1(c), 30; Alexander v. Lynda's Boutique, 134 S.W.3d 845, 848 (Tex. 2004). The "face of the record" consists of all the papers on file in the appeal, including the reporter's record. Vazquez v. Vazquez, ___ S.W.3d ___, No. 14-05-01257-CV, 2007 Tex. App. LEXIS 4713, at *4 (Tex. App.--Houston [14th Dist.] June 19, 2007, no pet.); see also Norman Commc'ns v. Texas Eastman Co., 955 S.W.2d 269, 270 (Tex. 1997).
Mr. Wolk concedes that appellant has established the first three requirements of a restricted appeal and that only the fourth requirement, error on the face of the record, is at issue. In her second, third and fourth issues, appellant argues that error is apparent on the face of the record as to the trial court's determinations regarding the division of the marital estate, the amount of child support, and the allocation of attorney's fees and court costs. As to the trial court's determinations on these issues, we agree that error is apparent on the face of the record.
Standard of Review
"In a suit for divorce, the petition may not be taken as confessed if the respondent does not file an answer." Tex. Fam. Code Ann. § 6.701 (West 2006). When a respondent in a divorce case fails to answer, the petitioner must still present proof to support the material allegations in the petition. Vazquez, 2007 Tex. App. LEXIS 4713, at *5-6; see also Barry v. Barry, 193 S.W.3d 72, 75 (Tex. App.--Houston [1st Dist.] 2006, no pet.). Because appellant failed to answer or appear, Mr. Wolk was required to present proof at trial to support the material allegations in his petition.
Most appealable issues in family law cases are subject to evaluation under the abuse of discretion standard, including the division of property and the assessment of child support. Sandone v. Miller-Sandone, 116 S.W.3d 204, 205 (Tex. App.--El Paso 2003, no pet.). The test for abuse of discretion is whether the court acted without reference to any guiding principles and rules. Id. at 206. A default judgment of divorce also is subject to an evidentiary attack on appeal. Vazquez, 2007 Tex. App. LEXIS 4713, at *6. When sufficiency review overlaps the abuse of discretion standard, the inquiry on appeal is two-fold: did the trial court have sufficient information upon which to exercise its discretion and did the trial court err in its application of its discretion. Sandone, 116 S.W.3d at 206. Evidentiary sufficiency review comes into play as to the first question. Id. (1)
Division of Marital Estate
In her third issue, appellant contends that the trial court erred in its division of the marital estate. The trial court awarded the community homestead to appellant, but ordered her to pay the "balance due, including principal, interest, tax, and insurance escrow, on the promissory note executed by [Mr. Wolk and appellant] on the [homestead]." The trial court also awarded all personal effects, cash, bank accounts and retirement accounts to the party in possession and ordered both parties to pay "any and all debt" in his or her name.
The Texas Family Code provides that "[i]n a decree of divorce or annulment, the court shall order a division of the estate of the parties in a manner that the court deems just and right, having due regard for the rights of each party and any children of the marriage." Tex. Fam. Code Ann. § 7.001 (West 2006). Courts have broad discretion in suits for divorce when dividing the property; but the division must be "just and right." Sandone, 116 S.W.3d at 207.
This case is similar to O'Neal v. O'Neal, 69 S.W.3d 347 (Tex. App.--Eastland 2002, no pet.), also a restricted appeal of a default divorce judgment. In O'Neal, the petitioner was the only witness at the hearing and provided scant testimony. Id. at 348-50. The trial court divided the community property, including real property, cash, bank accounts, retirement accounts, IRA accounts, stocks, bonds and securities between the parties, without evidence of the value of the property. Id. at 348-50. The court of appeals concluded that the trial court had abused its discretion in the division of the estate based on lack of evidence. Id. at 350.
The El Paso court of appeals reached the same conclusion in another case involving a restricted appeal of a default divorce decree. Sandone, 116 S.W.3d at 205. The court reversed the trial court's division of property because there was no evidence of the value of the assets or the amount of the liabilities. Id. at 207-08. Stating that "[w]ithout the ability to determine the size of the community pie, we can make no determination that the slices awarded to each spouse were just and right," the court held "a division of community property cannot be upheld where the record is absolutely devoid of any testimony concerning the value of the property divided by the court." Id. at 205, 207-08; see also Wilson v. Wilson, 132 S.W.3d 533, 538 (Tex. App.--Houston [1st Dist.] 2004, no pet.) (reversing property division due to the "dearth of evidence identifying, describing, and valuing the community estate").
Similarly, this record lacks evidence identifying, describing, and valuing the community estate. Although Mr. Wolk testified as to the location and legal description of the community homestead, and stated that he had made mortgage payments on the home of at least $700 to $1,500 per month for fifteen years, no other evidence was presented as to the value of the property or the outstanding debt on the property. Likewise, no evidence was presented to identify, describe, or value the other assets and liabilities divided in the decree. Instead, Mr. Wolk merely asked that the court allow each party to "keep any cash, bank accounts, retirement accounts in their possession . . . in their name" and that "each party be able to keep and pay any and all debts in their name." Accordingly, we conclude error is apparent on the face of the record and that the trial court abused its discretion in the division of the marital estate based on the lack of evidence. See Sandone, 116 S.W.3d at 208. We sustain appellant's third issue.
Amount of Child Support
In her second issue, appellant contends the trial court erred in its determination of the amount of child support. The trial court applied the child support guidelines, based upon evidence of Mr. Wolk's income, and awarded appellant $632 per month in child support. See Tex. Fam. Code Ann. § 154.130 (West 2002). Because we have remanded the division of the community estate to the trial court, we also remand the determination of child support as such an award may be "materially influenced" by the property division, and we should not substitute our discretion for that of the trial court. See Vazquez, 2007 Tex. App. LEXIS 4713, at *12; see also Wilson, 132 S.W.3d at 539.
The Texas Family Code also specifies four factors that a court "shall determine and give special consideration to" when setting the amount of child support for a disabled child after his eighteenth birthday. Tex. Fam. Code Ann. § 154.306 (West 2002). The factors are:
(1) any existing or future needs of the adult child directly related to the adult child's mental or physical disability and the substantial care and personal supervision directly required by or related to that disability;
(2) whether the parent pays for or will pay for the care or supervision of the adult child or provides or will provide substantial care or personal supervision of the adult child;
(3) the financial resources available to both parents for the support, care, and supervision of the adult child; and
(4) any other financial resources or other resources or programs available for the support, care, and supervision of the adult child. Id.
Though evidence was presented that the child has Down syndrome, that appellant has always been the primary caretaker, and that she has been taking care of the child for years, there was no evidence showing the child's current or future medical needs relating to his disability, the substantial care and supervision required relating to the child's disability, whether appellant pays or will pay for the care or supervision of the child or will provide substantial care, or financial or other resources or programs available for the support and care of the child. We conclude that on the face of the record, the trial court did not have sufficient information "to determine and give special consideration" to the statutorily required factors. See id.; see also Sandone, 116 S.W.3d at 208. We sustain appellant's second issue.
Attorney's fees and court costs
In her fourth issue, appellant contends the trial court erred in its assessment of attorney's fees and court costs. The trial court ordered in the divorce decree that each party was responsible for his or her own attorney's fees, expenses and costs, and that court costs were to be borne by the party that incurred the costs. A court may apportion attorney's fees in a divorce action as part of a just and right division of the property. Sandone, 116 S.W.3d at 208. Mr. Wolk, however, did not present any evidence of incurred attorney's fees. Because we have reversed and remanded the division of the marital estate, and because no evidence was presented on the amount of incurred attorney's fees, we sustain appellant's fourth issue and remand the assessment of fees and costs for further consideration by the trial court in connection with the other remanded issues. See Barry, 193 S.W.3d at 76.
CONCLUSION
We affirm the trial court decree in part, and having sustained appellant's issues, reverse and remand for a new trial on the issues raised by appellant.
__________________________________________
Jan P. Patterson, Justice
Before Justices Patterson, Pemberton and Waldrop
Affirmed in part; Reversed and Remanded in part
Filed: September 12, 2007
1. Because we conclude that the trial court did not have sufficient information to exercise its discretion in the division of the marital estate, the assessment of child support, or the award of attorney's fees, we only address the first inquiry as to each issue appellant raises.
Wednesday, August 1, 2007
Greater New Braunfels Home Builders Ass'n v. City of New Braunfels (Tex.App.- Austin, Aug. 1, 2007)
Greater New Braunfels Home Builders Association, David Pfeuffer, Oakwood Estates Development Co., and Larry Koehler vs. City of New Braunfels, No. 03-06-00241-CV, (Tex.App.-Austin, August 1, 2007)(Opinion by Justice Henson)(Before Chief Justice Law, Justices Puryear and Henson)
Appeal from 274th District Court of Comal County - Affirmed
FROM THE DISTRICT COURT OF COMAL COUNTY, 274TH JUDICIAL DISTRICT
NO. C2005-0987C, HONORABLE WELDON KIRK, JUDGE PRESIDING
OPINION BY JUSTICE DIANE HENSON
The Greater New Braunfels Home Builders Association, David Pfeuffer, Oakwood Estates Development Co., and Larry Koehler (collectively, the Developers) appeal a judgment rendered in favor of the City of New Braunfels in a declaratory-judgment action filed by the Developers. The Developers sought (1) declarations to invalidate certain portions of three successive ordinances adopted by the City that imposed fees for stormwater development and connection on all new development and (2) a permanent injunction against the City's enforcement of those portions of the ordinances.
The Developers argued that the City failed to follow the statutory requirements of subchapter C of chapter 402 of the Texas Local Government Code when imposing the fees and that the fees are illegal drainage charges, illegal impact fees, and unreasonably discriminatory. After a trial on the merits, the trial court ruled in favor of the City, finding that because the stormwater connection fee "is not intended for use to off-set capital improvements," it is neither an impact fee under chapter 395 of the local government code nor a drainage charge under chapter 402 of the local government code.
The trial court found that the City's adoption of the ordinance imposing the "stormwater connection fee" was authorized under the City's police power as a home-rule municipality. The trial court also found that the complaint concerning the earlier ordinance that imposed a "stormwater development fee" is moot because that ordinance was superseded by the later ordinance imposing the "stormwater connection fee." Because we find that the stormwater connection fee and the stormwater development fee are drainage charges under chapter 402, that the issue concerning the earlier ordinance is not moot, and that the City failed to follow the statutory requirements imposed by that chapter, including publishing notices, holding hearings, assessing the charges against all property owners within the service area, and exempting lots on which no structure exists, we will reverse the trial court's judgment and render judgment declaring that the complained-of portions of the City's ordinances are invalid. We will remand the case for the trial court to reconsider the Developers' request for an award of attorneys' fees.
BACKGROUND
This case presents the issue of what restrictions, if any, apply to a home-rule municipality once it adopts subchapter C of chapter 402 of the local government code in imposing drainage-related development fees.
The Statutory Scheme
Before reaching the merits of the Developers' issues, it is helpful to understand the history and structure of subchapter C. Subchapter C was enacted in 1987 and is known as the "Municipal Drainage Utility Systems Act." Tex. Loc. Gov't Code Ann. § 402.041 (West 2005). The legislature found that authority was needed to "permit municipalities to establish a municipal drainage utility system within the established service area; . . . provide rules for the use, operation, and financing of the system; . . . [and] prescribe bases on which a municipal drainage utility system may be funded and fees in support of the system may be assessed, levied, and collected." Id. § 402.042(a)(1), (2), (5) (West 2005) (emphasis added). Section 402.043 provides that this subchapter applies to "any municipality." Id. § 402.043 (West 2005).
Section 402.045 provides that the governing body of a municipality may adopt subchapter C through an ordinance that declares the drainage of the municipality to be a public utility. Id. § 402.045(a) (West 2005). Subchapter C places express limitations on the charges that a city can levy to finance the drainage system. Section 402.045 provides that a municipality "will establish a schedule of drainage charges against all real property in the proposed service area." Id. § 402.045(b)(1) (West 2005). Section 402.045 also requires that a municipality hold a public hearing before levying drainage charges and that notice be published three times before the hearing. Id. § 402.045(c), (d). Section 402.047 identifies the factors on which "the governing body must base its calculations" in setting the charges. Id. § 402.047(b) (West 2005).
Subchapter C defines a "drainage charge" to include "the levy imposed to recover the cost of the service of the municipality in furnishing drainage for any benefitted property." Id. § 402.044(4)(A) (West 2005). "Cost of service" is broadly defined to include the prorated cost of "the acquisition, construction, repair, and maintenance of structures, equipment, and facilities used in draining the benefitted property; . . . all machinery, equipment, furniture, and facilities necessary or incident to the provision and operation of draining the benefitted property; . . . [and] the administrative costs of a drainage utility system." Id. § 402.044(2)(B), (D), (G). "Drainage charge" is also defined to include not just a charge levied to recoup the cost of service, but also a charge to pay for capital improvements--the "funding of future drainage system construction." Id. § 402.044(4)(B).
Section 402.053 provides that certain types of property "shall be exempt from the provisions of any rules or ordinances adopted by a municipality pursuant to this Act," including "a subdivided lot, until a structure has been built on the lot and a certificate of occupancy has been issued by the municipality in which the property is located." Id. § 402.053(c)(3) (West 2005).
The City's Adoption of Subchapter C
Pursuant to the statutory scheme described above, in 2000, the City adopted Ordinance Number 2000-48, which provides,
[T]he City Council hereby adopts Texas Local Government code Chapter 402, Subchapter C (entitled "Municipal Drainage Utility Systems"); declares the drainage of the city to be a public utility, to be known as the City of New Braunfels Drainage Utility; and dedicates to the drainage utility all city owned property, real and personal, facilities, materials and supplies constituting the city's drainage system . . . .Cf. id. § 402.045(a) ("[T]he governing body of the municipality, by a majority vote of its entire membership, may adopt this subchapter by an ordinance that declares the adoption and that declares the drainage of the municipality to be a public utility."). The 2000 ordinance did not set a schedule of drainage charges, and the City did not levy any drainage charges between 2000 and 2005. During that time, the City paid the costs associated with its drainage system using ad valorem property taxes.
In May 2005, the City adopted Ordinance Number 2005-43, which declares that the City adopts subchapter C of chapter 402 of the local government code and that the City's drainage facilities are a public utility. The ordinance states that "the City of New Braunfels, Texas, desires to adopt a drainage development fee consistent with the requirements of Local Government Code Chapter 402."
Under the May 2005 ordinance, an owner of a new development located within 3,000 feet of the City's drainage system must pay a "stormwater development fee," which must be "collected prior to recording a plat in the map and plat records of the County, or prior to a final inspection of a multi-family or non-residential building permit." (1) The ordinance directs that all revenue from the stormwater development fee be placed into a "drainage utility fund," which "shall be used for the purpose of paying the cost of the study, engineering, and design of a stormwater program, and for constructing drainage facilities, and paying the cost of operation, administration, and maintenance of the drainage system of the city."
Pursuant to the May 2005 ordinance, appellant Larry Koehler paid a $1,250 stormwater development fee in order to be able to file the plat for certain residential property that he owned. Koehler testified that he paid the fee involuntarily in order to avoid substantial tax penalties.
On September 15, 2005, the Developers filed a declaratory-judgment action challenging the validity of the May 2005 ordinance. On October 24, 2005, the City adopted Ordinance Number 2005-76, which expressly superseded the May 2005 ordinance. The October 2005 ordinance, like the 2000 ordinance and the May 2005 ordinance, declares that the City adopts subchapter C of chapter 402 of the local government code and that the City's drainage facilities are a public utility. The October 2005 ordinance uses definitions for its terms that are taken verbatim from subchapter C.
The October 2005 ordinance forces an owner of a new development located within 3,000 feet of the City's drainage system to pay a "stormwater connection fee," rather than the "stormwater development fee" imposed by the May 2005 ordinance. (2) The stormwater connection fee--like its predecessor, the stormwater development fee--must be "collected prior to recording a plat in the map and plat records of the County, or prior to a final inspection of a multi-family or non-residential building permit."
The October 2005 ordinance provides that all revenue from the stormwater connection fee must be paid into the "stormwater connection fee fund," which "shall be used solely for the purpose of paying the cost of the operation, administration and maintenance of the utility drainage system and the cost of operation, repair, and maintenance of publicly owned right-of-ways and easements whether natural or artificial which convey stormwater to the utility drainage system."
On October 26, 2005, the Developers filed an amended petition challenging the validity of the October 2005 ordinance. On November 28, 2005, the City adopted Ordinance Number 2005-85. The only purpose of the November 2005 ordinance was to change the amount of the stormwater connection fee for certain types of development. (3) On December 2, 2005, the Developers filed their second amended petition challenging the stormwater connection fee imposed by the October 2005 ordinance, as amended by the November 2005 ordinance.
The City acknowledged that its May 2005 ordinance, its October 2005 ordinance, and its November 2005 ordinance did not meet the requirements of subchapter C--the City did not publish the required notices or hold the required hearings before adopting the October 2005 ordinance or the November 2005 ordinance, did not assess the fee on all property owners within the service area, and failed to exempt subdivided lots on which no structure has been built.
A trial on the merits was held on December 13, 2005. That day, the trial court announced its ruling denying the Developers' requests for declaratory and injunctive relief. A final judgment to that effect was signed on January 26, 2006. The trial court signed findings of fact and conclusions of law on March 9, 2006. This appeal followed.
STANDARD OF REVIEW
All the parties agree that because this case turns on issues of statutory construction, appellate review is de novo. City of San Antonio v. City of Boerne, 111 S.W.3d 22, 25 (Tex. 2003).
DISCUSSION
The Developers raise three issues on appeal--claims that the fees imposed are invalid, that appellant Larry Koehler involuntarily paid a fee, and that the case should be remanded for a reconsideration of their request for attorneys' fees. (4)
Validity of the Fees
The crux of the Developers' arguments concerning the validity of the fees is that the fees imposed by the City are invalid because the City chose to adopt subchapter C but failed to comply with the subchapter's requirements for setting drainage fees.
In essence, the Developers argue that the City, having chosen to adopt subchapter C, is bound by all its restrictions and may not pick and choose the provisions with which it wishes to comply. During oral argument, the City conceded that if the fees in question were imposed under the authority of subchapter C, then the City was required to abide by all of subchapter C's provisions. The City undoubtedly conceded this issue because the law is clear--when a home-rule municipality chooses to take advantage of a statutory scheme when it is not required to do so, it is subject to the restrictions imposed by that statutory scheme. City of Carrollton v. Texas Comm'n on Envtl. Quality, 170 S.W.3d 204, 212 (Tex. App.--Austin 2005, no pet.); see also Wilson v. Andrews, 10 S.W.3d 663, 668 (Tex. 1999); Hancock v. Rouse, 437 S.W.2d 1, 3 (Tex. Civ. App.--Houston [1st Dist.] 1969, no writ). (5) Here, the City chose to adopt subchapter C, although it was not required to do so. Thus, it is bound by all the restrictions contained within that subchapter, including those for setting drainage charges.
Therefore, the principal question for this Court to decide is whether the fees imposed under the ordinances in question are in fact "drainage charges" under the subchapter. The Developers contend that the stormwater development fee and the stormwater connection fee levied by the City fall squarely within the definition of "drainage charges" set forth in subchapter C. The City, on the other hand, urges that subchapter C and its restrictions on drainage charges are inapplicable to the fees that were imposed pursuant to the May 2005 and October 2005 ordinances. Instead, the City contends that the fees were imposed pursuant to the City's police power as a home-rule municipality. (6) We agree with the Developers.
Is the October 2005 Ordinance's Stormwater Connection Fee a Drainage Charge Under Subchapter C?
The trial court found that the stormwater connection fee is not a drainage charge under the subchapter because it "is not intended for use to off-set capital improvements." However, subchapter C's definition of "drainage charge" is not limited to fees intended for use to offset capital improvements. Instead, "drainage charge" is defined to include "the levy imposed to recover the cost of the service of the municipality in furnishing drainage for any benefitted property." Tex. Loc. Gov't Code Ann. § 402.044(4)(A). "Cost of service," in turn, is defined to include "the prorated cost of the acquisition, construction, repair, and maintenance of structures, equipment, and facilities used in draining the benefitted property; . . . the prorated cost of all machinery, equipment, furniture, and facilities necessary or incident to the provision and operation of draining the benefitted property; . . . [and] the administrative costs of a drainage utility system." Id. § 402.044(2)(B), (D), (G) (emphases added). The City's stormwater connection fee, which is to be paid into a fund that "shall be used solely for the purpose of paying the cost of the operation, administration and maintenance of the utility drainage system and the cost of operation, repair, and maintenance of publicly owned right-of-ways and easements whether natural or artificial which convey stormwater to the utility drainage system" (emphases added), clearly comes within subchapter C's definition of "drainage charge."
The City argues that the stormwater connection fee--which clearly fits within subchapter C's definition of "drainage charge" and was imposed through an ordinance that (1) expressly adopts subchapter C; (2) states that "[t]he city may use any remedy stated in Section 402.050, Delinquent Charges, of the Texas Local Government Code"; and (3) takes the definitions of many terms, including "benefitted property," "cost of service," "drainage," "drainage system," and "facilities," directly from subchapter C--is not imposed under the authority of subchapter C, but rather under the City's independent authority as a home-rule municipality. We refuse to accept this argument, and we hold that the stormwater connection fee is a drainage charge under subchapter C of chapter 402 of the Texas Local Government Code.
Is the May 2005 Ordinance's Stormwater Development Fee a Drainage Charge?
The trial court found that the Developers' complaint concerning the May 2005 ordinance is moot because that ordinance was expressly superseded by the October 2005 ordinance. However, appellant Larry Koehler paid a $1,250 stormwater development fee pursuant to the May 2005 ordinance and claims that he did so involuntarily. Thus, although the May 2005 ordinance has been superseded, there exists a live controversy between the Developers and the City concerning the validity of the May 2005 ordinance at the time it was in effect. See Allstate Ins. Co. v. Hallman, 159 S.W.3d 640, 642 (Tex. 2005) ("A case becomes moot if a controversy ceases to exist or the parties lack a legally cognizable interest in the outcome."). Therefore, we will address the merits of the Developers' arguments concerning the May 2005 ordinance.
We hold that the May 2005 ordinance's stormwater development fee is also a drainage charge under subchapter C for two reasons.
First, the stormwater development fee was imposed by the May 2005 ordinance, which expressly adopted subchapter C and provides that, like the stormwater connection fee, the stormwater development fee shall be used, in part, for "paying the cost of operation, administration, and maintenance of the drainage system of the city." We have explained above why such use makes the fee a drainage charge.
Second, the May 2005 ordinance, unlike the October 2005 ordinance, provides that the stormwater development fee will also be used "for the purpose of paying the cost of the study, engineering, and design of a stormwater program, and for constructing drainage facilities." These uses of the fee are also consistent with its being a drainage charge. Subchapter C defines "cost of service" to include "the prorated cost of the acquisition, construction, repair, and maintenance of structures, equipment, and facilities used in draining the benefitted property" and "the prorated cost of architectural, engineering, legal, and related services, plans and specifications, studies, surveys, estimates of cost and of revenue, and all other expenses necessary or incident to planning, providing, or determining the feasibility and practicability of structures, equipment, and facilities used in draining the benefitted property." Tex. Loc. Gov't Code Ann. § 402.044(2)(B), (C) (emphases added). Therefore, the stormwater development fee comes within subchapter C's definition of a drainage charge.
Did the City Fail to Abide by Subchapter C's Requirements?
Because the City adopted subchapter C and imposed drainage charges under that subchapter, it was bound by the requirements of that subchapter. The City admits that it failed to comply with many of subchapter C's requirements. The City did not publish the notices or hold the hearings required by section 402.045 before adopting either the October 2005 ordinance or the November 2005 ordinance. See id. § 402.045(c), (d). None of the ordinances assesses the drainage charge against all property owners within the drainage utility's service area, as required by section 402.045. See id. § 402.045(b)(1). The drainage charge imposed under all the ordinances complained of is assessed against residential lots before a plat is recorded and any development is allowed, in violation of section 402.053, which exempts from all charges under the subchapter "a subdivided lot, until a structure has been built on the lot and a certificate of occupancy has been issued by the municipality in which the property is located." Id. § 402.053(c)(3).
Because the City failed to comply with subchapter C's mandatory provisions when imposing the drainage charges, we sustain the Developers' first issue, (7) reverse the trial court's judgment, and render judgment that the portions of the May 2005 ordinance, the October 2005 ordinance, and the November 2005 ordinance imposing the stormwater development fee and the stormwater connection fee are invalid. See Bolton v. Sparks, 362 S.W.2d 946, 950 (Tex. 1962) ("Municipal ordinances must conform to the limitations imposed by the superior statutes, and only where the ordinance is consistent with them, and each of them, will it be enforced.").
Involuntary Payment
In their second issue, the Developers request that this Court render judgment that appellant Larry Koehler involuntarily paid a stormwater development fee of $1,250 pursuant to the May 2005 ordinance. We decline to address this issue because it was not presented to the trial court. Although the Developers presented evidence suggesting that Koehler paid the fee involuntarily, they did not request a declaration in any pleading to that effect from the trial court.
The trial court's conclusions of law do mention the voluntary-payment rule, but only to state the tautology that "the payment of the Stormwater Development Fee on a voluntary basis does not create liability against the City of New Braunfels under the voluntary payment rule." Based on a review of the pleadings, the Developers limited their requested relief to declaratory and injunctive relief and an award of attorneys' fees. There was no claim for damages as a result of payments made in the past. Nor is there any record that the issue was tried by agreement. Thus, the conclusion pertains to no relevant issue.
The trial court did not expressly conclude that Koehler made his $1,250 payment voluntarily, nor did the trial court so rule by implication because the Developers did not request a declaration to that effect. Generally, a claim must have been asserted in the trial court in order to be raised on appeal. Dreyer v. Greene, 871 S.W.2d 697, 698 (Tex. 1993). Accordingly, we decline to address the issue. See id.
Attorneys' Fees
In their third issue, the Developers argue that this Court should remand the case for the trial court to reconsider their request for an award of attorneys' fees. The Uniform Declaratory Judgments Act provides that a court may award court costs and reasonable and necessary attorneys' fees as long as the award is "equitable and just." Tex. Civ. Prac. & Rem. Code Ann. § 37.009 (West 1997). A court may even award costs and fees to a party who did not prevail. Barshop v. Medina County Underground Water Conservation Dist., 925 S.W.2d 618, 637 (Tex. 1996); Scottsdale Ins. Co. v. Travis, 68 S.W.3d 72, 77 (Tex. App.--Dallas 2001, pet. denied). In light of our disposition of the Developers' first issue, in which we rendered judgment granting them declaratory relief that the trial court had denied, the trial court may wish to reconsider the Developers' request for an award of attorneys' fees. We therefore sustain the Developers' third issue, reverse the trial court's ruling regarding attorney's fees, and remand the issue to the trial court for further consideration. See Neeley v. West Orange-Cove Consol. Indep. Sch. Dist., 176 S.W.3d 746, 799 (Tex. 2006); Barshop, 925 S.W.2d at 637-38; Travis, 68 S.W.3d at 77.
CONCLUSION
Because the City imposed drainage charges under subchapter C of chapter 402 of the Texas Local Government Code without complying with the requirements of that subchapter, we reverse the trial court's judgment and render judgment that the portions of the May 2005 ordinance, the October 2005 ordinance, and the November 2005 ordinance imposing the stormwater development fee and the stormwater connection fee are invalid. Because of this disposition, we remand the case to the district court to reconsider the Developers' request for an award of attorneys' fees.
_____________________________________
Diane Henson, Justice
Before Chief Justice Law, Justices Puryear and Henson
Reversed and Rendered in part; Reversed and Remanded in part
Filed: August 1, 2007
1. The fee set by the May 2005 ordinance is $1,250 per lot for one-family and two-family residential development, $1,600 per acre for other residential development, $2,600 per acre for nonresidential development with less than 65% impervious cover, and $3,000 per acre for nonresidential development with 65% or more impervious cover.
2. The October 2005 ordinance reduced the amount of the fee for one-family and two-family residential development from $1,250 per lot to $600 per lot. Fee amounts for other types of development were unchanged from the May 2005 ordinance imposing the stormwater development fee.
3. The November 2005 ordinance changed the amount of the fee for all development other than one-family and two-family residential development to $.14 per square foot of impervious cover. The ordinance left the fee amount for one-family and two-family residential development unchanged.
4. The list of "Issues Presented" on page two of the Developers' brief does not correspond to the numbered sections in the "Argument" portion of the brief. See Tex. R. App. P. 38.1(e) (providing that an "Issues Presented" page should include a concise statement of "all issues or points presented for review"). To avoid confusion, the three "issues" that we refer to in this opinion correspond to the numbered sections of the "Argument" portion of the Developers' brief.
5. In City of Carrollton, the City argued that because it was a home-rule city that was not required to have a certificate of convenience and necessity to provide water and sewer service, it could revoke the certificate without following the notice and hearing procedures required by the water code. City of Carrollton v. Texas Comm'n on Envtl. Quality, 170 S.W.3d 204, 206 (Tex. App.--Austin 2005, no pet.). This Court disagreed, holding that "once it determines to seek a certificate, nothing exempts a municipality from the various procedures specified for the issuance and discontinuance of a certificate." Id. at 212.
In Wilson, the Texas Supreme Court held that Lubbock, a home-rule city that chose to adopt the Civil Service Act to govern its fire and police employees--although it was not required to do so and could opt out--"must adhere to the Act's post-adoption amendments." Wilson v. Andrews, 10 S.W.3d 663, 668 (Tex. 1999). Similarly, in Hancock, the court of appeals held, "The Charter of the [home-rule] City of Bellaire provides that all of the powers granted to cities by Arts. 1011a to 1011j, inclusive, Texas Rev.Civ.Statutes, 1925, are adopted and 'made a part of' the charter. Necessarily the charter also includes the restrictions of the legislative power of the city found in those articles." Hancock v. Rouse, 437 S.W.2d 1, 3 (Tex. Civ. App.--Houston [1st Dist.] 1969, no writ).
6. This argument presents us with the age-old challenge of determining whether something that looks like a duck, quacks like a duck, and walks like a duck is nevertheless a chicken.
7. The Developers also argue in their first issue, in the alternative, that the fees imposed by the City are invalid even without reference to the City's adoption of subchapter C. They urge that subchapter C "creates a comprehensive regulatory scheme" that provides the exclusive methods by which any municipality may finance a drainage utility. The Developers contend that this comprehensive scheme implicitly restricts home-rule municipalities with "unmistakable clarity," prohibiting them from financing drainage utilities through methods that do not comply with the subchapter. The City responds to this argument by asserting that subchapter C does not preempt or limit the authority of a home-rule municipality to levy charges to finance its drainage system. We need not address this issue because of our disposition of the Developers' alternative argument.
Appeal from 274th District Court of Comal County - Affirmed
FROM THE DISTRICT COURT OF COMAL COUNTY, 274TH JUDICIAL DISTRICT
NO. C2005-0987C, HONORABLE WELDON KIRK, JUDGE PRESIDING
OPINION BY JUSTICE DIANE HENSON
The Greater New Braunfels Home Builders Association, David Pfeuffer, Oakwood Estates Development Co., and Larry Koehler (collectively, the Developers) appeal a judgment rendered in favor of the City of New Braunfels in a declaratory-judgment action filed by the Developers. The Developers sought (1) declarations to invalidate certain portions of three successive ordinances adopted by the City that imposed fees for stormwater development and connection on all new development and (2) a permanent injunction against the City's enforcement of those portions of the ordinances.
The Developers argued that the City failed to follow the statutory requirements of subchapter C of chapter 402 of the Texas Local Government Code when imposing the fees and that the fees are illegal drainage charges, illegal impact fees, and unreasonably discriminatory. After a trial on the merits, the trial court ruled in favor of the City, finding that because the stormwater connection fee "is not intended for use to off-set capital improvements," it is neither an impact fee under chapter 395 of the local government code nor a drainage charge under chapter 402 of the local government code.
The trial court found that the City's adoption of the ordinance imposing the "stormwater connection fee" was authorized under the City's police power as a home-rule municipality. The trial court also found that the complaint concerning the earlier ordinance that imposed a "stormwater development fee" is moot because that ordinance was superseded by the later ordinance imposing the "stormwater connection fee." Because we find that the stormwater connection fee and the stormwater development fee are drainage charges under chapter 402, that the issue concerning the earlier ordinance is not moot, and that the City failed to follow the statutory requirements imposed by that chapter, including publishing notices, holding hearings, assessing the charges against all property owners within the service area, and exempting lots on which no structure exists, we will reverse the trial court's judgment and render judgment declaring that the complained-of portions of the City's ordinances are invalid. We will remand the case for the trial court to reconsider the Developers' request for an award of attorneys' fees.
BACKGROUND
This case presents the issue of what restrictions, if any, apply to a home-rule municipality once it adopts subchapter C of chapter 402 of the local government code in imposing drainage-related development fees.
The Statutory Scheme
Before reaching the merits of the Developers' issues, it is helpful to understand the history and structure of subchapter C. Subchapter C was enacted in 1987 and is known as the "Municipal Drainage Utility Systems Act." Tex. Loc. Gov't Code Ann. § 402.041 (West 2005). The legislature found that authority was needed to "permit municipalities to establish a municipal drainage utility system within the established service area; . . . provide rules for the use, operation, and financing of the system; . . . [and] prescribe bases on which a municipal drainage utility system may be funded and fees in support of the system may be assessed, levied, and collected." Id. § 402.042(a)(1), (2), (5) (West 2005) (emphasis added). Section 402.043 provides that this subchapter applies to "any municipality." Id. § 402.043 (West 2005).
Section 402.045 provides that the governing body of a municipality may adopt subchapter C through an ordinance that declares the drainage of the municipality to be a public utility. Id. § 402.045(a) (West 2005). Subchapter C places express limitations on the charges that a city can levy to finance the drainage system. Section 402.045 provides that a municipality "will establish a schedule of drainage charges against all real property in the proposed service area." Id. § 402.045(b)(1) (West 2005). Section 402.045 also requires that a municipality hold a public hearing before levying drainage charges and that notice be published three times before the hearing. Id. § 402.045(c), (d). Section 402.047 identifies the factors on which "the governing body must base its calculations" in setting the charges. Id. § 402.047(b) (West 2005).
Subchapter C defines a "drainage charge" to include "the levy imposed to recover the cost of the service of the municipality in furnishing drainage for any benefitted property." Id. § 402.044(4)(A) (West 2005). "Cost of service" is broadly defined to include the prorated cost of "the acquisition, construction, repair, and maintenance of structures, equipment, and facilities used in draining the benefitted property; . . . all machinery, equipment, furniture, and facilities necessary or incident to the provision and operation of draining the benefitted property; . . . [and] the administrative costs of a drainage utility system." Id. § 402.044(2)(B), (D), (G). "Drainage charge" is also defined to include not just a charge levied to recoup the cost of service, but also a charge to pay for capital improvements--the "funding of future drainage system construction." Id. § 402.044(4)(B).
Section 402.053 provides that certain types of property "shall be exempt from the provisions of any rules or ordinances adopted by a municipality pursuant to this Act," including "a subdivided lot, until a structure has been built on the lot and a certificate of occupancy has been issued by the municipality in which the property is located." Id. § 402.053(c)(3) (West 2005).
The City's Adoption of Subchapter C
Pursuant to the statutory scheme described above, in 2000, the City adopted Ordinance Number 2000-48, which provides,
[T]he City Council hereby adopts Texas Local Government code Chapter 402, Subchapter C (entitled "Municipal Drainage Utility Systems"); declares the drainage of the city to be a public utility, to be known as the City of New Braunfels Drainage Utility; and dedicates to the drainage utility all city owned property, real and personal, facilities, materials and supplies constituting the city's drainage system . . . .Cf. id. § 402.045(a) ("[T]he governing body of the municipality, by a majority vote of its entire membership, may adopt this subchapter by an ordinance that declares the adoption and that declares the drainage of the municipality to be a public utility."). The 2000 ordinance did not set a schedule of drainage charges, and the City did not levy any drainage charges between 2000 and 2005. During that time, the City paid the costs associated with its drainage system using ad valorem property taxes.
In May 2005, the City adopted Ordinance Number 2005-43, which declares that the City adopts subchapter C of chapter 402 of the local government code and that the City's drainage facilities are a public utility. The ordinance states that "the City of New Braunfels, Texas, desires to adopt a drainage development fee consistent with the requirements of Local Government Code Chapter 402."
Under the May 2005 ordinance, an owner of a new development located within 3,000 feet of the City's drainage system must pay a "stormwater development fee," which must be "collected prior to recording a plat in the map and plat records of the County, or prior to a final inspection of a multi-family or non-residential building permit." (1) The ordinance directs that all revenue from the stormwater development fee be placed into a "drainage utility fund," which "shall be used for the purpose of paying the cost of the study, engineering, and design of a stormwater program, and for constructing drainage facilities, and paying the cost of operation, administration, and maintenance of the drainage system of the city."
Pursuant to the May 2005 ordinance, appellant Larry Koehler paid a $1,250 stormwater development fee in order to be able to file the plat for certain residential property that he owned. Koehler testified that he paid the fee involuntarily in order to avoid substantial tax penalties.
On September 15, 2005, the Developers filed a declaratory-judgment action challenging the validity of the May 2005 ordinance. On October 24, 2005, the City adopted Ordinance Number 2005-76, which expressly superseded the May 2005 ordinance. The October 2005 ordinance, like the 2000 ordinance and the May 2005 ordinance, declares that the City adopts subchapter C of chapter 402 of the local government code and that the City's drainage facilities are a public utility. The October 2005 ordinance uses definitions for its terms that are taken verbatim from subchapter C.
The October 2005 ordinance forces an owner of a new development located within 3,000 feet of the City's drainage system to pay a "stormwater connection fee," rather than the "stormwater development fee" imposed by the May 2005 ordinance. (2) The stormwater connection fee--like its predecessor, the stormwater development fee--must be "collected prior to recording a plat in the map and plat records of the County, or prior to a final inspection of a multi-family or non-residential building permit."
The October 2005 ordinance provides that all revenue from the stormwater connection fee must be paid into the "stormwater connection fee fund," which "shall be used solely for the purpose of paying the cost of the operation, administration and maintenance of the utility drainage system and the cost of operation, repair, and maintenance of publicly owned right-of-ways and easements whether natural or artificial which convey stormwater to the utility drainage system."
On October 26, 2005, the Developers filed an amended petition challenging the validity of the October 2005 ordinance. On November 28, 2005, the City adopted Ordinance Number 2005-85. The only purpose of the November 2005 ordinance was to change the amount of the stormwater connection fee for certain types of development. (3) On December 2, 2005, the Developers filed their second amended petition challenging the stormwater connection fee imposed by the October 2005 ordinance, as amended by the November 2005 ordinance.
The City acknowledged that its May 2005 ordinance, its October 2005 ordinance, and its November 2005 ordinance did not meet the requirements of subchapter C--the City did not publish the required notices or hold the required hearings before adopting the October 2005 ordinance or the November 2005 ordinance, did not assess the fee on all property owners within the service area, and failed to exempt subdivided lots on which no structure has been built.
A trial on the merits was held on December 13, 2005. That day, the trial court announced its ruling denying the Developers' requests for declaratory and injunctive relief. A final judgment to that effect was signed on January 26, 2006. The trial court signed findings of fact and conclusions of law on March 9, 2006. This appeal followed.
STANDARD OF REVIEW
All the parties agree that because this case turns on issues of statutory construction, appellate review is de novo. City of San Antonio v. City of Boerne, 111 S.W.3d 22, 25 (Tex. 2003).
DISCUSSION
The Developers raise three issues on appeal--claims that the fees imposed are invalid, that appellant Larry Koehler involuntarily paid a fee, and that the case should be remanded for a reconsideration of their request for attorneys' fees. (4)
Validity of the Fees
The crux of the Developers' arguments concerning the validity of the fees is that the fees imposed by the City are invalid because the City chose to adopt subchapter C but failed to comply with the subchapter's requirements for setting drainage fees.
In essence, the Developers argue that the City, having chosen to adopt subchapter C, is bound by all its restrictions and may not pick and choose the provisions with which it wishes to comply. During oral argument, the City conceded that if the fees in question were imposed under the authority of subchapter C, then the City was required to abide by all of subchapter C's provisions. The City undoubtedly conceded this issue because the law is clear--when a home-rule municipality chooses to take advantage of a statutory scheme when it is not required to do so, it is subject to the restrictions imposed by that statutory scheme. City of Carrollton v. Texas Comm'n on Envtl. Quality, 170 S.W.3d 204, 212 (Tex. App.--Austin 2005, no pet.); see also Wilson v. Andrews, 10 S.W.3d 663, 668 (Tex. 1999); Hancock v. Rouse, 437 S.W.2d 1, 3 (Tex. Civ. App.--Houston [1st Dist.] 1969, no writ). (5) Here, the City chose to adopt subchapter C, although it was not required to do so. Thus, it is bound by all the restrictions contained within that subchapter, including those for setting drainage charges.
Therefore, the principal question for this Court to decide is whether the fees imposed under the ordinances in question are in fact "drainage charges" under the subchapter. The Developers contend that the stormwater development fee and the stormwater connection fee levied by the City fall squarely within the definition of "drainage charges" set forth in subchapter C. The City, on the other hand, urges that subchapter C and its restrictions on drainage charges are inapplicable to the fees that were imposed pursuant to the May 2005 and October 2005 ordinances. Instead, the City contends that the fees were imposed pursuant to the City's police power as a home-rule municipality. (6) We agree with the Developers.
Is the October 2005 Ordinance's Stormwater Connection Fee a Drainage Charge Under Subchapter C?
The trial court found that the stormwater connection fee is not a drainage charge under the subchapter because it "is not intended for use to off-set capital improvements." However, subchapter C's definition of "drainage charge" is not limited to fees intended for use to offset capital improvements. Instead, "drainage charge" is defined to include "the levy imposed to recover the cost of the service of the municipality in furnishing drainage for any benefitted property." Tex. Loc. Gov't Code Ann. § 402.044(4)(A). "Cost of service," in turn, is defined to include "the prorated cost of the acquisition, construction, repair, and maintenance of structures, equipment, and facilities used in draining the benefitted property; . . . the prorated cost of all machinery, equipment, furniture, and facilities necessary or incident to the provision and operation of draining the benefitted property; . . . [and] the administrative costs of a drainage utility system." Id. § 402.044(2)(B), (D), (G) (emphases added). The City's stormwater connection fee, which is to be paid into a fund that "shall be used solely for the purpose of paying the cost of the operation, administration and maintenance of the utility drainage system and the cost of operation, repair, and maintenance of publicly owned right-of-ways and easements whether natural or artificial which convey stormwater to the utility drainage system" (emphases added), clearly comes within subchapter C's definition of "drainage charge."
The City argues that the stormwater connection fee--which clearly fits within subchapter C's definition of "drainage charge" and was imposed through an ordinance that (1) expressly adopts subchapter C; (2) states that "[t]he city may use any remedy stated in Section 402.050, Delinquent Charges, of the Texas Local Government Code"; and (3) takes the definitions of many terms, including "benefitted property," "cost of service," "drainage," "drainage system," and "facilities," directly from subchapter C--is not imposed under the authority of subchapter C, but rather under the City's independent authority as a home-rule municipality. We refuse to accept this argument, and we hold that the stormwater connection fee is a drainage charge under subchapter C of chapter 402 of the Texas Local Government Code.
Is the May 2005 Ordinance's Stormwater Development Fee a Drainage Charge?
The trial court found that the Developers' complaint concerning the May 2005 ordinance is moot because that ordinance was expressly superseded by the October 2005 ordinance. However, appellant Larry Koehler paid a $1,250 stormwater development fee pursuant to the May 2005 ordinance and claims that he did so involuntarily. Thus, although the May 2005 ordinance has been superseded, there exists a live controversy between the Developers and the City concerning the validity of the May 2005 ordinance at the time it was in effect. See Allstate Ins. Co. v. Hallman, 159 S.W.3d 640, 642 (Tex. 2005) ("A case becomes moot if a controversy ceases to exist or the parties lack a legally cognizable interest in the outcome."). Therefore, we will address the merits of the Developers' arguments concerning the May 2005 ordinance.
We hold that the May 2005 ordinance's stormwater development fee is also a drainage charge under subchapter C for two reasons.
First, the stormwater development fee was imposed by the May 2005 ordinance, which expressly adopted subchapter C and provides that, like the stormwater connection fee, the stormwater development fee shall be used, in part, for "paying the cost of operation, administration, and maintenance of the drainage system of the city." We have explained above why such use makes the fee a drainage charge.
Second, the May 2005 ordinance, unlike the October 2005 ordinance, provides that the stormwater development fee will also be used "for the purpose of paying the cost of the study, engineering, and design of a stormwater program, and for constructing drainage facilities." These uses of the fee are also consistent with its being a drainage charge. Subchapter C defines "cost of service" to include "the prorated cost of the acquisition, construction, repair, and maintenance of structures, equipment, and facilities used in draining the benefitted property" and "the prorated cost of architectural, engineering, legal, and related services, plans and specifications, studies, surveys, estimates of cost and of revenue, and all other expenses necessary or incident to planning, providing, or determining the feasibility and practicability of structures, equipment, and facilities used in draining the benefitted property." Tex. Loc. Gov't Code Ann. § 402.044(2)(B), (C) (emphases added). Therefore, the stormwater development fee comes within subchapter C's definition of a drainage charge.
Did the City Fail to Abide by Subchapter C's Requirements?
Because the City adopted subchapter C and imposed drainage charges under that subchapter, it was bound by the requirements of that subchapter. The City admits that it failed to comply with many of subchapter C's requirements. The City did not publish the notices or hold the hearings required by section 402.045 before adopting either the October 2005 ordinance or the November 2005 ordinance. See id. § 402.045(c), (d). None of the ordinances assesses the drainage charge against all property owners within the drainage utility's service area, as required by section 402.045. See id. § 402.045(b)(1). The drainage charge imposed under all the ordinances complained of is assessed against residential lots before a plat is recorded and any development is allowed, in violation of section 402.053, which exempts from all charges under the subchapter "a subdivided lot, until a structure has been built on the lot and a certificate of occupancy has been issued by the municipality in which the property is located." Id. § 402.053(c)(3).
Because the City failed to comply with subchapter C's mandatory provisions when imposing the drainage charges, we sustain the Developers' first issue, (7) reverse the trial court's judgment, and render judgment that the portions of the May 2005 ordinance, the October 2005 ordinance, and the November 2005 ordinance imposing the stormwater development fee and the stormwater connection fee are invalid. See Bolton v. Sparks, 362 S.W.2d 946, 950 (Tex. 1962) ("Municipal ordinances must conform to the limitations imposed by the superior statutes, and only where the ordinance is consistent with them, and each of them, will it be enforced.").
Involuntary Payment
In their second issue, the Developers request that this Court render judgment that appellant Larry Koehler involuntarily paid a stormwater development fee of $1,250 pursuant to the May 2005 ordinance. We decline to address this issue because it was not presented to the trial court. Although the Developers presented evidence suggesting that Koehler paid the fee involuntarily, they did not request a declaration in any pleading to that effect from the trial court.
The trial court's conclusions of law do mention the voluntary-payment rule, but only to state the tautology that "the payment of the Stormwater Development Fee on a voluntary basis does not create liability against the City of New Braunfels under the voluntary payment rule." Based on a review of the pleadings, the Developers limited their requested relief to declaratory and injunctive relief and an award of attorneys' fees. There was no claim for damages as a result of payments made in the past. Nor is there any record that the issue was tried by agreement. Thus, the conclusion pertains to no relevant issue.
The trial court did not expressly conclude that Koehler made his $1,250 payment voluntarily, nor did the trial court so rule by implication because the Developers did not request a declaration to that effect. Generally, a claim must have been asserted in the trial court in order to be raised on appeal. Dreyer v. Greene, 871 S.W.2d 697, 698 (Tex. 1993). Accordingly, we decline to address the issue. See id.
Attorneys' Fees
In their third issue, the Developers argue that this Court should remand the case for the trial court to reconsider their request for an award of attorneys' fees. The Uniform Declaratory Judgments Act provides that a court may award court costs and reasonable and necessary attorneys' fees as long as the award is "equitable and just." Tex. Civ. Prac. & Rem. Code Ann. § 37.009 (West 1997). A court may even award costs and fees to a party who did not prevail. Barshop v. Medina County Underground Water Conservation Dist., 925 S.W.2d 618, 637 (Tex. 1996); Scottsdale Ins. Co. v. Travis, 68 S.W.3d 72, 77 (Tex. App.--Dallas 2001, pet. denied). In light of our disposition of the Developers' first issue, in which we rendered judgment granting them declaratory relief that the trial court had denied, the trial court may wish to reconsider the Developers' request for an award of attorneys' fees. We therefore sustain the Developers' third issue, reverse the trial court's ruling regarding attorney's fees, and remand the issue to the trial court for further consideration. See Neeley v. West Orange-Cove Consol. Indep. Sch. Dist., 176 S.W.3d 746, 799 (Tex. 2006); Barshop, 925 S.W.2d at 637-38; Travis, 68 S.W.3d at 77.
CONCLUSION
Because the City imposed drainage charges under subchapter C of chapter 402 of the Texas Local Government Code without complying with the requirements of that subchapter, we reverse the trial court's judgment and render judgment that the portions of the May 2005 ordinance, the October 2005 ordinance, and the November 2005 ordinance imposing the stormwater development fee and the stormwater connection fee are invalid. Because of this disposition, we remand the case to the district court to reconsider the Developers' request for an award of attorneys' fees.
_____________________________________
Diane Henson, Justice
Before Chief Justice Law, Justices Puryear and Henson
Reversed and Rendered in part; Reversed and Remanded in part
Filed: August 1, 2007
1. The fee set by the May 2005 ordinance is $1,250 per lot for one-family and two-family residential development, $1,600 per acre for other residential development, $2,600 per acre for nonresidential development with less than 65% impervious cover, and $3,000 per acre for nonresidential development with 65% or more impervious cover.
2. The October 2005 ordinance reduced the amount of the fee for one-family and two-family residential development from $1,250 per lot to $600 per lot. Fee amounts for other types of development were unchanged from the May 2005 ordinance imposing the stormwater development fee.
3. The November 2005 ordinance changed the amount of the fee for all development other than one-family and two-family residential development to $.14 per square foot of impervious cover. The ordinance left the fee amount for one-family and two-family residential development unchanged.
4. The list of "Issues Presented" on page two of the Developers' brief does not correspond to the numbered sections in the "Argument" portion of the brief. See Tex. R. App. P. 38.1(e) (providing that an "Issues Presented" page should include a concise statement of "all issues or points presented for review"). To avoid confusion, the three "issues" that we refer to in this opinion correspond to the numbered sections of the "Argument" portion of the Developers' brief.
5. In City of Carrollton, the City argued that because it was a home-rule city that was not required to have a certificate of convenience and necessity to provide water and sewer service, it could revoke the certificate without following the notice and hearing procedures required by the water code. City of Carrollton v. Texas Comm'n on Envtl. Quality, 170 S.W.3d 204, 206 (Tex. App.--Austin 2005, no pet.). This Court disagreed, holding that "once it determines to seek a certificate, nothing exempts a municipality from the various procedures specified for the issuance and discontinuance of a certificate." Id. at 212.
In Wilson, the Texas Supreme Court held that Lubbock, a home-rule city that chose to adopt the Civil Service Act to govern its fire and police employees--although it was not required to do so and could opt out--"must adhere to the Act's post-adoption amendments." Wilson v. Andrews, 10 S.W.3d 663, 668 (Tex. 1999). Similarly, in Hancock, the court of appeals held, "The Charter of the [home-rule] City of Bellaire provides that all of the powers granted to cities by Arts. 1011a to 1011j, inclusive, Texas Rev.Civ.Statutes, 1925, are adopted and 'made a part of' the charter. Necessarily the charter also includes the restrictions of the legislative power of the city found in those articles." Hancock v. Rouse, 437 S.W.2d 1, 3 (Tex. Civ. App.--Houston [1st Dist.] 1969, no writ).
6. This argument presents us with the age-old challenge of determining whether something that looks like a duck, quacks like a duck, and walks like a duck is nevertheless a chicken.
7. The Developers also argue in their first issue, in the alternative, that the fees imposed by the City are invalid even without reference to the City's adoption of subchapter C. They urge that subchapter C "creates a comprehensive regulatory scheme" that provides the exclusive methods by which any municipality may finance a drainage utility. The Developers contend that this comprehensive scheme implicitly restricts home-rule municipalities with "unmistakable clarity," prohibiting them from financing drainage utilities through methods that do not comply with the subchapter. The City responds to this argument by asserting that subchapter C does not preempt or limit the authority of a home-rule municipality to levy charges to finance its drainage system. We need not address this issue because of our disposition of the Developers' alternative argument.
Wednesday, June 27, 2007
Neeley v. West Orange-Cove Consolidated I.S.D. (Tex.App.- Austin, Jun. 21, 2007)
Shirley Neeley vs. West-Orange-Cove Consolidated Indep. Sch. Dist. (Tex.App.- Austin, June 21, 2007)(Henson)(ISD)(award of attorney's fees affirmed)
AFFIRMED: Opinion by Justice Henson
Before Chief Justice Law, Justices Puryear and Henson
03-06-00460-CV
Shirley Neeley, Texas Commissioner of Education; The Texas Education Agency; Carol Keeton Strayhorn, Texas Comptroller of Public Accounts; and The Texas State Board of Education v. West Orange-Cove Consolidated Independent School District; Coppell Independent School District; La Porte Independent School District; Port Neches-Groves Independent School District; Dallas Independent School District, et al.
Appeal from 250th District Court of Travis County
NO. 03-06-00460-CV
Shirley Neeley, Texas Commissioner of Education; the Texas Education Agency; Carol Keeton Strayhorn, Texas Comptroller of Public Accounts; and
the Texas State Board of Education, Appellants
v.
West Orange-Cove Consolidated Independent School District; Coppell Independent School District; La Porte Independent School District; Port Neches-Groves Independent School District; Dallas Independent School District, et al., Appellees (1)
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 250TH JUDICIAL DISTRICT
NO. D-1-GV-01-000528, HONORABLE JOHN K. DIETZ, JUDGE PRESIDING
OPINION BY JUSTICE HENSON
The State appellants challenge the award of attorneys' fees to the school district appellees (the Districts) in a suit for declaratory and injunctive relief under the Uniform Declaratory Judgments Act (UDJA) and article VII, § 1 and article VIII, § 1-e of the Texas Constitution.
Four Texas school districts, who were later joined by 43 additional districts (collectively, the West Orange-Cove Districts), initially brought suit against the State, claiming that the State's school-finance system constituted a state property tax prohibited by article VIII, §1-e and that the system failed to adequately provide for a general diffusion of knowledge as required by article VII, § 1. Two additional sets of school districts, the Edgewood Districts and the Alvarado Districts, intervened, also seeking declarations that the system violated article VII, § 1. The trial court found in favor of the Districts on all but one claim and awarded attorneys' fees to the Districts.
The State appealed directly to the Texas Supreme Court, which held that the school-finance system met the standards of article VII, § 1, but that it created a state property tax in violation of article VIII, § 1-e. The supreme court remanded the case to the trial court to reconsider the amount of attorneys' fees to be awarded. On remand, the trial court reinstated the original amount of attorneys' fees awarded to the West Orange-Cove Districts and awarded fees to the Edgewood and Alvarado Districts in a slightly reduced amount.
The State appeals the award of attorneys' fees to the Districts, claiming that the trial court abused its discretion in awarding attorneys' fees because (1) the relief sought by the Districts' declaratory-judgment claim was identical to that available directly under self-executing constitutional provisions and (2) the trial court did not properly account for the fact that the State prevailed in the Texas Supreme Court on all but one of the Districts' claims.
BACKGROUND
In 2001, the West Orange-Cove Districts, a group that was originally made up of four Texas school districts but has since grown to a coalition of 47 districts, filed a lawsuit claiming that the school-finance system's property tax cap of $1.50 per $100 resulted in a state property tax in violation of article VIII, § 1-e of the Texas Constitution. (2) The trial court dismissed the case, and that dismissal was affirmed by this Court, but the Texas Supreme Court reversed our judgment, remanding the case to allow the West Orange-Cove Districts to proceed with their claim. West Orange-Cove Consol. Indep. Sch. Dist. v. Alanis, 107 S.W.3d 558 (Tex. 2003). The original four plaintiff districts were then joined by 43 additional districts, and the West Orange-Cove Districts amended their petition to include an adequacy claim, stating that the school-finance system prevented them from providing a "general diffusion of knowledge," in violation of article VII, § 1. (3) The Edgewood and Alvarado Districts intervened in the case, asserting adequacy claims and also including efficiency claims, arguing that the school-finance system was inefficient in violation of article VII, § 1. Each set of districts also sought attorneys' fees under the UDJA.
The trial court ruled in favor of the West Orange-Cove Districts on their claims for declaratory relief under article VII, § 1 and article VIII, § 1-e. The trial court also ruled in favor of the Edgewood and Alvarado Districts on their adequacy claims and their efficiency claims that were related to facilities funding, but ruled in favor of the State on the Edgewood and Alvarado Districts' efficiency claims related to maintenance and operations funding. In a separate, bifurcated proceeding, the trial court awarded attorneys' fees to each set of Districts under the UDJA. See Tex. Civ. Prac. & Rem. Code Ann. § 37.009 (West 1997).
The State filed a direct appeal of the trial court's judgment to the Texas Supreme Court, but did not challenge the award of attorneys' fees. (4) The supreme court affirmed the trial court's article VIII, § 1 ruling, but ruled in favor of the State on the adequacy and efficiency claims. In light of these rulings, the supreme court remanded the case for reconsideration of the attorneys' fees award, stating, "[W]e reverse the award of attorney fees and remand the case to the district court to reconsider what award of attorney fees, if any, is appropriate. We express no opinion on this issue." Neeley v. West Orange-Cove Consol. Indep. Sch. Dist., 176 S.W.3d 746, 799 (Tex. 2005).
On remand and after a hearing, the district court reinstated the West Orange-Cove Districts' award of $2,657,606.00 in attorneys' fees. The trial court awarded reduced amounts of $1,256,395.20 to the Edgewood Districts and $263,912.50 to the Alvarado Districts. Each set of districts was awarded post-judgment interest and conditional appellate fees.
STANDARD OF REVIEW
A trial court's judgment in granting or denying attorneys' fees in a declaratory-judgment action is reviewed for an abuse of discretion. Oake v. Collin County, 692 S.W.2d 454, 455 (Tex. 1985). The trial court's judgment will not be reversed unless "the trial court abused its discretion by awarding fees when there was insufficient evidence that the fees were reasonable and necessary, or when the award was inequitable or unjust." Bocquet v. Herring, 972 S.W.2d 19, 21 (Tex. 1998).
DISCUSSION
The State contends that the Districts are not entitled to attorneys' fees under the UDJA because a declaratory judgment may not be used solely as a vehicle to obtain attorneys' fees. The State argues that because articles VII and VIII are self-executing constitutional provisions, the Districts were limited to bringing direct claims under the Constitution and are therefore ineligible for attorneys' fees under the UDJA. However, the State did not assert this argument until after the case had been remanded to the trial court for reconsideration of the attorneys' fees award. The State did not argue that the Districts were precluded from an award of attorneys' fees in its direct appeal to the supreme court.
A party may not introduce an issue on remand that it failed to raise in previous appellate proceedings. See Miller v. University Sav. Ass'n, 858 S.W.2d 33, 36 (Tex. App.--Houston [14th Dist.] 1993, writ denied). Because the State had ample opportunity to contest the award of attorneys' fees in the direct appeal, "we will not permit a substantive argument of this nature to now be raised." Head Indus. Coatings & Servs., Inc. v. Maryland Ins. Co., 981 S.W.2d 305, 311 (Tex. App.--Texarkana 1998, pet. denied). The State is not exempt from the requirement that issues must be raised in appellate proceedings prior to remand. See Nations v. State, 944 S.W.2d 795, 799 (Tex. App.--Austin 1997, pet. ref'd) (holding that State waived argument about reliability of expert's testimony when issue was first raised on remand).
The State argues that the propriety of the award of attorneys' fees was not within the direct-appeal jurisdiction of the Texas Supreme Court and that therefore the State's failure to assert the issue on direct appeal did not constitute a waiver. The Texas Supreme Court, however, may exercise jurisdiction over arguments ancillary to an issue over which it has direct-appeal jurisdiction. Edgewood Indep. Sch. Dist. v. Meno, 917 S.W.2d 717, 749 n.39 (Tex. 1995). When the supreme court has "appellate jurisdiction of any issue, it acquires 'extended jurisdiction' of all other questions of law properly preserved and presented." Id. (quoting City of Corpus Christi v. Public Util. Comm'n, 572 S.W.2d 290, 294 (Tex. 1978)). As a result, the State could have properly raised its argument that the Districts could not seek attorneys' fees under the UDJA on direct appeal to the Texas Supreme Court. Because the State failed to do so, the issue is waived and we need not reach the merits of whether the Districts' use of the UDJA was appropriate.
While the State has waived its argument that attorneys' fees should not be awarded to the Districts, we may review the trial court's award of attorneys' fees to ensure that the award is equitable and just. Bocquet, 972 S.W.2d at 21. A trial court's judgment regarding the award of attorneys' fees "will not be reversed on appeal absent a clear showing that [the trial court] abused [its] discretion." Oake, 692 S.W.2d at 455.
The record reflects that each set of Districts made significant contributions in what turned out to be a highly complex lawsuit that required large amounts of statistical and demographic data. The contributions of each set of Districts were essential to the litigation as a whole, including the claim that ultimately prevailed. Furthermore, as the trial court noted in the April 11, 2006 hearing on attorneys' fees, "[i]f it weren't for this case . . . I'm not sure the State leaders in the legislative branch would be as active as they are at problem-solving these dire problems. And to that extent, the litigation is absolutely necessary and indispensable." We hold that the award of attorneys' fees to each of the Districts was equitable and just, in light of the fact that the Districts were required to pursue extensive and costly litigation in order to remedy a school-finance problem with statewide implications.
The State argues that the trial court abused its discretion in awarding attorneys' fees to parties that did not prevail on their claims. However, "the award of attorneys' fees in declaratory judgment actions is clearly within the trial court's discretion and is not dependent on a finding that a party 'substantially prevailed.'" Barshop v. Medina County Underwater Conservation Dist., 925 S.W.2d 618, 637 (Tex. 1996). As a result, we hold that the trial court did not abuse its discretion by awarding attorneys' fees to nonprevailing parties.
The State also contends that if attorneys' fees are awarded to the Districts, such awards should be offset by the State's fees related to claims in which the State prevailed. The State has not provided this Court with any authority for using such a method of calculating the amount of attorneys' fees to be awarded. The trial court is free to consider the relative success of the parties when determining the amount of the Districts' attorneys' fees. Mercier v. Southwestern Bell Yellow Pages, Inc., 214 S.W.3d 770, 776 (Tex. App.--Corpus Christi 2007, no pet.). There is no evidence suggesting that the trial court did not make such a consideration in determining the amount of attorneys' fees to award on remand. Furthermore, as noted above, whether or not a party prevails on its claim is not determinative in the decision to award attorneys' fees for declaratory-judgment actions. See Barshop, 925 S.W.2d at 637. As a result, we hold that the State's argument for offsetting the award of attorneys' fees is without merit.
CONCLUSION
Because the State waived its argument regarding the propriety of the attorneys' fees awarded by not asserting it on direct appeal to the Texas Supreme Court and because the awards were equitable and just, the trial court's judgment awarding attorneys' fees is affirmed.
________________________________________________
Diane Henson, Justice
Before Chief Justice Law, Justices Puryear and Henson
Affirmed
Filed: June 21, 2007
Appendix A
The complete list of appellees is as follows:
West Orange-Cove Consolidated Independent School District; Coppell Independent School District; La Porte Independent School District; Port Neches-Groves Independent School District; Dallas Independent School District; Austin Independent School District; Houston Independent School District; Alamo Heights Independent School District; Allen Independent School District; Argyle Independent School District; Beckville Independent School District; Carrollton-Farmers Branch Independent School District; Carthage Independent School District; College Station Independent School District; Cypress-Fairbanks Independent School District; Darrouzet Independent School District; Deer Park Independent School District; Fairfield Independent School District; Graford Independent School District; Grapevine-Colleyville Independent School District; Hallsville Independent School District; Highland Park Independent School District; Humble Independent School District; Katy Independent School District; Kaufman Independent School District; Lake Travis Independent School District; Lewisville Independent School District; Lubbock Independent School District; Marble Falls Independent School District; McCamey Independent School District; Miami Independent School District; Northeast Independent School District; Northside Independent School District; Northwest Independent School District; Palo Pinto Independent School District; Pearland Independent School District; Plano Independent School District; Pringle-Morse Consolidated Independent School District; Richardson Independent School District; Round Rock Independent School District; Round Top-Carmine Independent School District; Spring Branch Independent School District; Spring Independent School District; Stafford Municipal Independent School District; Sweeny Independent School District; Terrell Independent School District; Texas City Independent School District; Abbott Independent School District; Academy Consolidated Independent School District; Aldine Independent School District; Alpine Independent School District; Alvarado Independent School District; Amarillo Independent School District; Anna Independent School District; Anthony Independent School District; Aspermont Independent School District; Athens Independent School District; Aubrey Independent School District; Avalon Independent School District; Avery Independent School District; Axtell Independent School District; Balmorhea Independent School District; Bangs Independent School District; Beeville Independent School District; Bells Independent School District; Belton Independent School District; Big Sandy Independent School District; Blanket Independent School District; Blooming Grove Independent School District; Boles Independent School District; Boling Independent School District; Bonham Independent School District; Booker Independent School District; Borger Independent School District; Bowie Independent School District; Brock Independent School District; Brownfield Independent School District; Bruceville-Eddy Independent School District; Bryson Independent School District; Buckholts Independent School District; Burkburnett Independent School District; Burkeville Independent School District; Cameron Independent School District; Campbell Independent School District; Canton Independent School District; Canutillo Independent School District; Canyon Independent School District; Central Heights Independent School District; Central Independent School District; Chapel Hill Independent School District; Childress Independent School District; China Spring Independent School District; Chireno Independent School District; Cisco Independent School District; City View Independent School District; Cleburne Independent School District; Clint Independent School District; Coleman Independent School District; Collinsville Independent School District; Commerce Independent School District; Community Independent School District; Como-Pickton Independent School District; Connally Independent School District; Cooper Independent School District; Copperas Cove Independent School District; Corpus Christi Independent School District; Cotton Center Independent School District; Covington Independent School District; Crandall Independent School District; Crawford Independent School District; Crosby Independent School District; Dalhart Independent School District; Desoto Independent School District; Detroit Independent School District; Diboll Independent School District; Dickinson Independent School District; Dilley Independent School District; Dime Box Independent School District; Dimmitt Independent School District; Dodd City Independent School District; Douglass Independent School District; Driscoll Independent School District; Early Independent School District; Ector Independent School District; El Paso Independent School District; Electra Independent School District; Elkhart Independent School District; Elysian Fields Independent School District; Ennis Independent School District; Era Consolidated Independent School District; Etoile Independent School District; Everman Independent School District; Falls City Independent School District; Fannindel Independent School District; Ferris Independent School District; Forney Independent School District; Fort Davis Independent School District; Fort Worth Independent School District; Frost Independent School District; Gainesville Independent School District; Ganado Independent School District; Garrison Independent School District; Gilmer Independent School District; Godley Independent School District; Grandview Independent School District; Gregory-Portland Independent School District; Gunter Independent School District; Hale Center Independent School District; Hamlin Independent School District; Harleton Independent School District; Hart Independent School District; Haskell Consolidated Independent School District; Hawley Independent School District; Hearne Independent School District; Hemphill Independent School District; Hereford Independent School District; Hico Independent School District; Hidalgo Independent School District; High Island Independent School District; Holland Independent School District; Honey Grove Independent School District; Hubbard Independent School District; Hudson Independent School District; Huffman Independent School District; Huntington Independent School District; Hutto Independent School District; Itasca Independent School District; Jacksboro Independent School District; Jasper Independent School District; Joaquin Independent School District; Karnes City Independent School District; Kermit Independent School District; Kirbyville Independent School District; Knox City-O'Brien Consolidated Independent School District; Kountze Independent School District; Kress Independent School District; Krum Independent School District; La Joya Independent School District; La Pryor Independent School District; Lake Worth Independent School District; Lamesa Independent School District; Lasara Independent School District; Latexo Independent School District; Leverett's Chapel Independent School District; Linden-Kildare Consolidated Independent School District; Lingleville Independent School District; Lipan Independent School District; Lockhart Independent School District; Lorena Independent School District; Louise Independent School District; Lyford Independent School District; Lytle Independent School District; Mabank Independent School District; Magnolia Independent School District; Martinsville Independent School District; McGregor Independent School District; Meadow Independent School District; Megargel Independent School District; Mercedes Independent School District; Meridian Independent School District; Merkel Independent School District; Mesquite Independent School District; Mildred Independent School District; Millsap Independent School District; Mission Consolidated Independent School District; Montague Independent School District; Morton Independent School District; Motley County Independent School District; Muenster Independent School District; Nederland Independent School District; New Boston Independent School District; New Castle Independent School District; New Home Independent School District; New Summerfield Independent School District; Newton Independent School District; Nocona Independent School District; Nueces Canyon Consolidated Independent School District; Olfen Independent School District; Olton Independent School District; Orange Grove Independent School District; Paint Creek Independent School District; Pampa Independent School District; Panhandle Independent School District; Paradise Independent School District; Paris Independent School District; Perrin-Whitt Consolidated Independent School District; Petersburg Independent School District; Pflugerville Independent School District; Poteet Independent School District; Pottsboro Independent School District; Prairiland Independent School District; Premont Independent School District; Presidio Independent School District; Princeton Independent School District; Quanah Independent School District; Ranger Independent School District; Redwater Independent School District; Ricardo Independent School District; Rice Consolidated Independent School District; Rice Independent School District; Rio Vista Independent School District; Rivercrest Independent School District; Robinson Independent School District; Robstown Independent School District; Roby Consolidated Independent School District; Rochester County Line Independent School District; Rocksprings Independent School District; Rogers Independent School District; Roosevelt Independent School District; Rosebud-Lott Independent School District; Rusk Independent School District; Sam Rayburn Independent School District; Samnorwood Independent School District; San Augustine Independent School District; San Perlita Independent School District; Sands Consolidated Independent School District; Sanford Independent School District; Santa Anna Independent School District; Santa Fe Independent School District; Santa Maria Independent School District; Seagraves Independent School District; Seguin Independent School District; Seymour Independent School District; Shallowater Independent School District; Shelbyville Independent School District; Shepard Independent School District; Shiner Independent School District; Sierra Blanca Independent School District; Sinton Independent School District; Slaton Independent School District; Smyer Independent School District; Socorro Independent School District; Southside Independent School District; Splendora Independent School District; Springtown Independent School District; Spur Independent School District; Stamford Independent School District; Sulphur Bluff Independent School District; Sulphur Springs Independent School District; Sunray Independent School District; Tahoka Independent School District; Taylor Independent School District; Tenaha Independent School District; Texline Independent School District; Thorndale Independent School District; Throckmorton Independent School District; Timpson Independent School District; Tolar Independent School District; Tornillo Independent School District; Trenton Independent School District; Trinidad Independent School District; Troup Independent School District; Troy Independent School District; Tulia Independent School District; Uvalde Consolidated Independent School District; Valley View Independent School District; Van Alstyne Independent School District; Van Independent School District; Venus Independent School District; Vernon Independent School District; Warren Independent School District; Weatherford Independent School District; Wellman-Union Independent School District; Wells Independent School District; West Hardin County Consolidated Independent School District; White Oak Independent School District; Whitesboro Independent School District; Edgewood Independent School District; Ysleta Independent School District; Laredo Independent School District; San Elizario Independent School District; Socorro Independent School District; South San Antonio Independent School District; La Vega Independent School District; Kenedy Independent School District; Harlandale Independent School District; Brownsville Independent School District; Pharr-Sun Juan-Alamo Independent School District; Sharyland Independent School District; Monte Alto Independent School District; Edcouch-Elsa Independent School District; Los Fresnos Independent School District; Harlingen Independent School District; Jim Hogg County Independent School District; La Feria Independent School District; Roma Independent School District; San Benito Independent School District; United Independent School District; and Raymondville Independent School District.
1. The complete list of appellees is attached as Appendix A.
2. Article VIII, § 1-e states, "No State ad valorem taxes shall be levied upon any property within this State."
3. Article VII, § 1 states, "A general diffusion of knowledge being essential to the preservation of the liberties and rights of the people, it shall be the duty of the Legislature of the State to establish and make suitable provision for the support and maintenance of an efficient system of public free schools."
4. A direct appeal may be taken to the Texas Supreme Court"from an order of a trial court granting or denying an interlocutory or permanent injunction on the ground of the constitutionality of a statute of this state." Tex. Gov't Code Ann. § 22.001(c) (West 2004).
AFFIRMED: Opinion by Justice Henson
Before Chief Justice Law, Justices Puryear and Henson
03-06-00460-CV
Shirley Neeley, Texas Commissioner of Education; The Texas Education Agency; Carol Keeton Strayhorn, Texas Comptroller of Public Accounts; and The Texas State Board of Education v. West Orange-Cove Consolidated Independent School District; Coppell Independent School District; La Porte Independent School District; Port Neches-Groves Independent School District; Dallas Independent School District, et al.
Appeal from 250th District Court of Travis County
NO. 03-06-00460-CV
Shirley Neeley, Texas Commissioner of Education; the Texas Education Agency; Carol Keeton Strayhorn, Texas Comptroller of Public Accounts; and
the Texas State Board of Education, Appellants
v.
West Orange-Cove Consolidated Independent School District; Coppell Independent School District; La Porte Independent School District; Port Neches-Groves Independent School District; Dallas Independent School District, et al., Appellees (1)
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 250TH JUDICIAL DISTRICT
NO. D-1-GV-01-000528, HONORABLE JOHN K. DIETZ, JUDGE PRESIDING
OPINION BY JUSTICE HENSON
The State appellants challenge the award of attorneys' fees to the school district appellees (the Districts) in a suit for declaratory and injunctive relief under the Uniform Declaratory Judgments Act (UDJA) and article VII, § 1 and article VIII, § 1-e of the Texas Constitution.
Four Texas school districts, who were later joined by 43 additional districts (collectively, the West Orange-Cove Districts), initially brought suit against the State, claiming that the State's school-finance system constituted a state property tax prohibited by article VIII, §1-e and that the system failed to adequately provide for a general diffusion of knowledge as required by article VII, § 1. Two additional sets of school districts, the Edgewood Districts and the Alvarado Districts, intervened, also seeking declarations that the system violated article VII, § 1. The trial court found in favor of the Districts on all but one claim and awarded attorneys' fees to the Districts.
The State appealed directly to the Texas Supreme Court, which held that the school-finance system met the standards of article VII, § 1, but that it created a state property tax in violation of article VIII, § 1-e. The supreme court remanded the case to the trial court to reconsider the amount of attorneys' fees to be awarded. On remand, the trial court reinstated the original amount of attorneys' fees awarded to the West Orange-Cove Districts and awarded fees to the Edgewood and Alvarado Districts in a slightly reduced amount.
The State appeals the award of attorneys' fees to the Districts, claiming that the trial court abused its discretion in awarding attorneys' fees because (1) the relief sought by the Districts' declaratory-judgment claim was identical to that available directly under self-executing constitutional provisions and (2) the trial court did not properly account for the fact that the State prevailed in the Texas Supreme Court on all but one of the Districts' claims.
BACKGROUND
In 2001, the West Orange-Cove Districts, a group that was originally made up of four Texas school districts but has since grown to a coalition of 47 districts, filed a lawsuit claiming that the school-finance system's property tax cap of $1.50 per $100 resulted in a state property tax in violation of article VIII, § 1-e of the Texas Constitution. (2) The trial court dismissed the case, and that dismissal was affirmed by this Court, but the Texas Supreme Court reversed our judgment, remanding the case to allow the West Orange-Cove Districts to proceed with their claim. West Orange-Cove Consol. Indep. Sch. Dist. v. Alanis, 107 S.W.3d 558 (Tex. 2003). The original four plaintiff districts were then joined by 43 additional districts, and the West Orange-Cove Districts amended their petition to include an adequacy claim, stating that the school-finance system prevented them from providing a "general diffusion of knowledge," in violation of article VII, § 1. (3) The Edgewood and Alvarado Districts intervened in the case, asserting adequacy claims and also including efficiency claims, arguing that the school-finance system was inefficient in violation of article VII, § 1. Each set of districts also sought attorneys' fees under the UDJA.
The trial court ruled in favor of the West Orange-Cove Districts on their claims for declaratory relief under article VII, § 1 and article VIII, § 1-e. The trial court also ruled in favor of the Edgewood and Alvarado Districts on their adequacy claims and their efficiency claims that were related to facilities funding, but ruled in favor of the State on the Edgewood and Alvarado Districts' efficiency claims related to maintenance and operations funding. In a separate, bifurcated proceeding, the trial court awarded attorneys' fees to each set of Districts under the UDJA. See Tex. Civ. Prac. & Rem. Code Ann. § 37.009 (West 1997).
The State filed a direct appeal of the trial court's judgment to the Texas Supreme Court, but did not challenge the award of attorneys' fees. (4) The supreme court affirmed the trial court's article VIII, § 1 ruling, but ruled in favor of the State on the adequacy and efficiency claims. In light of these rulings, the supreme court remanded the case for reconsideration of the attorneys' fees award, stating, "[W]e reverse the award of attorney fees and remand the case to the district court to reconsider what award of attorney fees, if any, is appropriate. We express no opinion on this issue." Neeley v. West Orange-Cove Consol. Indep. Sch. Dist., 176 S.W.3d 746, 799 (Tex. 2005).
On remand and after a hearing, the district court reinstated the West Orange-Cove Districts' award of $2,657,606.00 in attorneys' fees. The trial court awarded reduced amounts of $1,256,395.20 to the Edgewood Districts and $263,912.50 to the Alvarado Districts. Each set of districts was awarded post-judgment interest and conditional appellate fees.
STANDARD OF REVIEW
A trial court's judgment in granting or denying attorneys' fees in a declaratory-judgment action is reviewed for an abuse of discretion. Oake v. Collin County, 692 S.W.2d 454, 455 (Tex. 1985). The trial court's judgment will not be reversed unless "the trial court abused its discretion by awarding fees when there was insufficient evidence that the fees were reasonable and necessary, or when the award was inequitable or unjust." Bocquet v. Herring, 972 S.W.2d 19, 21 (Tex. 1998).
DISCUSSION
The State contends that the Districts are not entitled to attorneys' fees under the UDJA because a declaratory judgment may not be used solely as a vehicle to obtain attorneys' fees. The State argues that because articles VII and VIII are self-executing constitutional provisions, the Districts were limited to bringing direct claims under the Constitution and are therefore ineligible for attorneys' fees under the UDJA. However, the State did not assert this argument until after the case had been remanded to the trial court for reconsideration of the attorneys' fees award. The State did not argue that the Districts were precluded from an award of attorneys' fees in its direct appeal to the supreme court.
A party may not introduce an issue on remand that it failed to raise in previous appellate proceedings. See Miller v. University Sav. Ass'n, 858 S.W.2d 33, 36 (Tex. App.--Houston [14th Dist.] 1993, writ denied). Because the State had ample opportunity to contest the award of attorneys' fees in the direct appeal, "we will not permit a substantive argument of this nature to now be raised." Head Indus. Coatings & Servs., Inc. v. Maryland Ins. Co., 981 S.W.2d 305, 311 (Tex. App.--Texarkana 1998, pet. denied). The State is not exempt from the requirement that issues must be raised in appellate proceedings prior to remand. See Nations v. State, 944 S.W.2d 795, 799 (Tex. App.--Austin 1997, pet. ref'd) (holding that State waived argument about reliability of expert's testimony when issue was first raised on remand).
The State argues that the propriety of the award of attorneys' fees was not within the direct-appeal jurisdiction of the Texas Supreme Court and that therefore the State's failure to assert the issue on direct appeal did not constitute a waiver. The Texas Supreme Court, however, may exercise jurisdiction over arguments ancillary to an issue over which it has direct-appeal jurisdiction. Edgewood Indep. Sch. Dist. v. Meno, 917 S.W.2d 717, 749 n.39 (Tex. 1995). When the supreme court has "appellate jurisdiction of any issue, it acquires 'extended jurisdiction' of all other questions of law properly preserved and presented." Id. (quoting City of Corpus Christi v. Public Util. Comm'n, 572 S.W.2d 290, 294 (Tex. 1978)). As a result, the State could have properly raised its argument that the Districts could not seek attorneys' fees under the UDJA on direct appeal to the Texas Supreme Court. Because the State failed to do so, the issue is waived and we need not reach the merits of whether the Districts' use of the UDJA was appropriate.
While the State has waived its argument that attorneys' fees should not be awarded to the Districts, we may review the trial court's award of attorneys' fees to ensure that the award is equitable and just. Bocquet, 972 S.W.2d at 21. A trial court's judgment regarding the award of attorneys' fees "will not be reversed on appeal absent a clear showing that [the trial court] abused [its] discretion." Oake, 692 S.W.2d at 455.
The record reflects that each set of Districts made significant contributions in what turned out to be a highly complex lawsuit that required large amounts of statistical and demographic data. The contributions of each set of Districts were essential to the litigation as a whole, including the claim that ultimately prevailed. Furthermore, as the trial court noted in the April 11, 2006 hearing on attorneys' fees, "[i]f it weren't for this case . . . I'm not sure the State leaders in the legislative branch would be as active as they are at problem-solving these dire problems. And to that extent, the litigation is absolutely necessary and indispensable." We hold that the award of attorneys' fees to each of the Districts was equitable and just, in light of the fact that the Districts were required to pursue extensive and costly litigation in order to remedy a school-finance problem with statewide implications.
The State argues that the trial court abused its discretion in awarding attorneys' fees to parties that did not prevail on their claims. However, "the award of attorneys' fees in declaratory judgment actions is clearly within the trial court's discretion and is not dependent on a finding that a party 'substantially prevailed.'" Barshop v. Medina County Underwater Conservation Dist., 925 S.W.2d 618, 637 (Tex. 1996). As a result, we hold that the trial court did not abuse its discretion by awarding attorneys' fees to nonprevailing parties.
The State also contends that if attorneys' fees are awarded to the Districts, such awards should be offset by the State's fees related to claims in which the State prevailed. The State has not provided this Court with any authority for using such a method of calculating the amount of attorneys' fees to be awarded. The trial court is free to consider the relative success of the parties when determining the amount of the Districts' attorneys' fees. Mercier v. Southwestern Bell Yellow Pages, Inc., 214 S.W.3d 770, 776 (Tex. App.--Corpus Christi 2007, no pet.). There is no evidence suggesting that the trial court did not make such a consideration in determining the amount of attorneys' fees to award on remand. Furthermore, as noted above, whether or not a party prevails on its claim is not determinative in the decision to award attorneys' fees for declaratory-judgment actions. See Barshop, 925 S.W.2d at 637. As a result, we hold that the State's argument for offsetting the award of attorneys' fees is without merit.
CONCLUSION
Because the State waived its argument regarding the propriety of the attorneys' fees awarded by not asserting it on direct appeal to the Texas Supreme Court and because the awards were equitable and just, the trial court's judgment awarding attorneys' fees is affirmed.
________________________________________________
Diane Henson, Justice
Before Chief Justice Law, Justices Puryear and Henson
Affirmed
Filed: June 21, 2007
Appendix A
The complete list of appellees is as follows:
West Orange-Cove Consolidated Independent School District; Coppell Independent School District; La Porte Independent School District; Port Neches-Groves Independent School District; Dallas Independent School District; Austin Independent School District; Houston Independent School District; Alamo Heights Independent School District; Allen Independent School District; Argyle Independent School District; Beckville Independent School District; Carrollton-Farmers Branch Independent School District; Carthage Independent School District; College Station Independent School District; Cypress-Fairbanks Independent School District; Darrouzet Independent School District; Deer Park Independent School District; Fairfield Independent School District; Graford Independent School District; Grapevine-Colleyville Independent School District; Hallsville Independent School District; Highland Park Independent School District; Humble Independent School District; Katy Independent School District; Kaufman Independent School District; Lake Travis Independent School District; Lewisville Independent School District; Lubbock Independent School District; Marble Falls Independent School District; McCamey Independent School District; Miami Independent School District; Northeast Independent School District; Northside Independent School District; Northwest Independent School District; Palo Pinto Independent School District; Pearland Independent School District; Plano Independent School District; Pringle-Morse Consolidated Independent School District; Richardson Independent School District; Round Rock Independent School District; Round Top-Carmine Independent School District; Spring Branch Independent School District; Spring Independent School District; Stafford Municipal Independent School District; Sweeny Independent School District; Terrell Independent School District; Texas City Independent School District; Abbott Independent School District; Academy Consolidated Independent School District; Aldine Independent School District; Alpine Independent School District; Alvarado Independent School District; Amarillo Independent School District; Anna Independent School District; Anthony Independent School District; Aspermont Independent School District; Athens Independent School District; Aubrey Independent School District; Avalon Independent School District; Avery Independent School District; Axtell Independent School District; Balmorhea Independent School District; Bangs Independent School District; Beeville Independent School District; Bells Independent School District; Belton Independent School District; Big Sandy Independent School District; Blanket Independent School District; Blooming Grove Independent School District; Boles Independent School District; Boling Independent School District; Bonham Independent School District; Booker Independent School District; Borger Independent School District; Bowie Independent School District; Brock Independent School District; Brownfield Independent School District; Bruceville-Eddy Independent School District; Bryson Independent School District; Buckholts Independent School District; Burkburnett Independent School District; Burkeville Independent School District; Cameron Independent School District; Campbell Independent School District; Canton Independent School District; Canutillo Independent School District; Canyon Independent School District; Central Heights Independent School District; Central Independent School District; Chapel Hill Independent School District; Childress Independent School District; China Spring Independent School District; Chireno Independent School District; Cisco Independent School District; City View Independent School District; Cleburne Independent School District; Clint Independent School District; Coleman Independent School District; Collinsville Independent School District; Commerce Independent School District; Community Independent School District; Como-Pickton Independent School District; Connally Independent School District; Cooper Independent School District; Copperas Cove Independent School District; Corpus Christi Independent School District; Cotton Center Independent School District; Covington Independent School District; Crandall Independent School District; Crawford Independent School District; Crosby Independent School District; Dalhart Independent School District; Desoto Independent School District; Detroit Independent School District; Diboll Independent School District; Dickinson Independent School District; Dilley Independent School District; Dime Box Independent School District; Dimmitt Independent School District; Dodd City Independent School District; Douglass Independent School District; Driscoll Independent School District; Early Independent School District; Ector Independent School District; El Paso Independent School District; Electra Independent School District; Elkhart Independent School District; Elysian Fields Independent School District; Ennis Independent School District; Era Consolidated Independent School District; Etoile Independent School District; Everman Independent School District; Falls City Independent School District; Fannindel Independent School District; Ferris Independent School District; Forney Independent School District; Fort Davis Independent School District; Fort Worth Independent School District; Frost Independent School District; Gainesville Independent School District; Ganado Independent School District; Garrison Independent School District; Gilmer Independent School District; Godley Independent School District; Grandview Independent School District; Gregory-Portland Independent School District; Gunter Independent School District; Hale Center Independent School District; Hamlin Independent School District; Harleton Independent School District; Hart Independent School District; Haskell Consolidated Independent School District; Hawley Independent School District; Hearne Independent School District; Hemphill Independent School District; Hereford Independent School District; Hico Independent School District; Hidalgo Independent School District; High Island Independent School District; Holland Independent School District; Honey Grove Independent School District; Hubbard Independent School District; Hudson Independent School District; Huffman Independent School District; Huntington Independent School District; Hutto Independent School District; Itasca Independent School District; Jacksboro Independent School District; Jasper Independent School District; Joaquin Independent School District; Karnes City Independent School District; Kermit Independent School District; Kirbyville Independent School District; Knox City-O'Brien Consolidated Independent School District; Kountze Independent School District; Kress Independent School District; Krum Independent School District; La Joya Independent School District; La Pryor Independent School District; Lake Worth Independent School District; Lamesa Independent School District; Lasara Independent School District; Latexo Independent School District; Leverett's Chapel Independent School District; Linden-Kildare Consolidated Independent School District; Lingleville Independent School District; Lipan Independent School District; Lockhart Independent School District; Lorena Independent School District; Louise Independent School District; Lyford Independent School District; Lytle Independent School District; Mabank Independent School District; Magnolia Independent School District; Martinsville Independent School District; McGregor Independent School District; Meadow Independent School District; Megargel Independent School District; Mercedes Independent School District; Meridian Independent School District; Merkel Independent School District; Mesquite Independent School District; Mildred Independent School District; Millsap Independent School District; Mission Consolidated Independent School District; Montague Independent School District; Morton Independent School District; Motley County Independent School District; Muenster Independent School District; Nederland Independent School District; New Boston Independent School District; New Castle Independent School District; New Home Independent School District; New Summerfield Independent School District; Newton Independent School District; Nocona Independent School District; Nueces Canyon Consolidated Independent School District; Olfen Independent School District; Olton Independent School District; Orange Grove Independent School District; Paint Creek Independent School District; Pampa Independent School District; Panhandle Independent School District; Paradise Independent School District; Paris Independent School District; Perrin-Whitt Consolidated Independent School District; Petersburg Independent School District; Pflugerville Independent School District; Poteet Independent School District; Pottsboro Independent School District; Prairiland Independent School District; Premont Independent School District; Presidio Independent School District; Princeton Independent School District; Quanah Independent School District; Ranger Independent School District; Redwater Independent School District; Ricardo Independent School District; Rice Consolidated Independent School District; Rice Independent School District; Rio Vista Independent School District; Rivercrest Independent School District; Robinson Independent School District; Robstown Independent School District; Roby Consolidated Independent School District; Rochester County Line Independent School District; Rocksprings Independent School District; Rogers Independent School District; Roosevelt Independent School District; Rosebud-Lott Independent School District; Rusk Independent School District; Sam Rayburn Independent School District; Samnorwood Independent School District; San Augustine Independent School District; San Perlita Independent School District; Sands Consolidated Independent School District; Sanford Independent School District; Santa Anna Independent School District; Santa Fe Independent School District; Santa Maria Independent School District; Seagraves Independent School District; Seguin Independent School District; Seymour Independent School District; Shallowater Independent School District; Shelbyville Independent School District; Shepard Independent School District; Shiner Independent School District; Sierra Blanca Independent School District; Sinton Independent School District; Slaton Independent School District; Smyer Independent School District; Socorro Independent School District; Southside Independent School District; Splendora Independent School District; Springtown Independent School District; Spur Independent School District; Stamford Independent School District; Sulphur Bluff Independent School District; Sulphur Springs Independent School District; Sunray Independent School District; Tahoka Independent School District; Taylor Independent School District; Tenaha Independent School District; Texline Independent School District; Thorndale Independent School District; Throckmorton Independent School District; Timpson Independent School District; Tolar Independent School District; Tornillo Independent School District; Trenton Independent School District; Trinidad Independent School District; Troup Independent School District; Troy Independent School District; Tulia Independent School District; Uvalde Consolidated Independent School District; Valley View Independent School District; Van Alstyne Independent School District; Van Independent School District; Venus Independent School District; Vernon Independent School District; Warren Independent School District; Weatherford Independent School District; Wellman-Union Independent School District; Wells Independent School District; West Hardin County Consolidated Independent School District; White Oak Independent School District; Whitesboro Independent School District; Edgewood Independent School District; Ysleta Independent School District; Laredo Independent School District; San Elizario Independent School District; Socorro Independent School District; South San Antonio Independent School District; La Vega Independent School District; Kenedy Independent School District; Harlandale Independent School District; Brownsville Independent School District; Pharr-Sun Juan-Alamo Independent School District; Sharyland Independent School District; Monte Alto Independent School District; Edcouch-Elsa Independent School District; Los Fresnos Independent School District; Harlingen Independent School District; Jim Hogg County Independent School District; La Feria Independent School District; Roma Independent School District; San Benito Independent School District; United Independent School District; and Raymondville Independent School District.
1. The complete list of appellees is attached as Appendix A.
2. Article VIII, § 1-e states, "No State ad valorem taxes shall be levied upon any property within this State."
3. Article VII, § 1 states, "A general diffusion of knowledge being essential to the preservation of the liberties and rights of the people, it shall be the duty of the Legislature of the State to establish and make suitable provision for the support and maintenance of an efficient system of public free schools."
4. A direct appeal may be taken to the Texas Supreme Court"from an order of a trial court granting or denying an interlocutory or permanent injunction on the ground of the constitutionality of a statute of this state." Tex. Gov't Code Ann. § 22.001(c) (West 2004).
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