G.E. Corp v. Bray (Tex.App.- Austin, Aug. 16, 2007)

General Motors Corporation v. Brett Bray, in his Official Capacity as Director of the Motor Vehicle Division of the Texas Department of Transportation; Charles E. Elliott and Eaton Motor Company, Inc, No. (Tex.app.- Austin, Aug. 16, 2007)(Opinion by Justice Henson)( (Before Chief Justice Law, Justices Puryear and Henson)
Appeal from 261st District Court of Travis County

Holding: Panel of Third Court of Appeals holds that the Division erroneously construed section 2301.359 of the Texas Occupations Code, reverses the portions of the trial court's order that upheld Conclusions of Law 2 and 4 in their entirety, Conclusions of Law 3 and 5 to the extent that they find that GM violated the occupations code, and Findings of Fact 102, 107, 110, 111, 175, and 180. Case is remanded to the Division to determine whether GM unreasonably denied the transfer application in violation of the occupations code, using the court of appeals' construction of section 2301.359. The Division is also instructed to consider to what extent this dispute has been rendered moot by Elliott's GM-approved sale of the dealership to a third party. The trial court's order is affirmed in all other respects.

FROM THE DISTRICT COURT OF TRAVIS COUNTY, 261ST JUDICIAL DISTRICT
NO. D-1-GN-06-001227, HONORABLE W. JEANNE MEURER, JUDGE PRESIDING

OPINION BY JUSTICE DIANE HENSON

General Motors appeals the trial court's order affirming a final order issued by the Motor Vehicle Division of the Texas Department of Transportation. The Division's final order finds that GM unreasonably denied the request of Eaton Motor Company, Inc. to transfer its Buick, Pontiac, and GMC franchises to Charles E. Elliott, who was a Chevrolet franchise holder, in violation of the occupations code. See Tex. Occ. Code Ann. §§ 2301.359, .360, .458 (West 2004). The final order also finds that Elliott is qualified to be a Buick, Pontiac, and GMC dealer, which forces GM to accept the transfer. See id. § 2301.360(c). In nine points of error, GM challenges 96 of the 175 findings of fact and four of the five conclusions of law.

Because the Division's interpretation of section 2301.359 of the occupations code contradicts the plain language of the statute, we will reverse portions of the trial court's order and remand certain issues to the Division for further proceedings. We will affirm the remainder of the trial court's order.

BACKGROUND (1)

For more than 37 years, Hays H. Mills owned and operated a Pontiac, Buick, and GMC dealership in Athens, Texas, known as Eaton Motor Company. Mills, who was 79 years old and in ill health at the time of the administrative hearing, had agreed to transfer his dealership to Charles Elliott, who owned and operated Elliott Chevrolet. Elliott had operated the Chevrolet dealership in Athens since 1985, and throughout the years, Elliott and Mills had been fierce competitors in the Athens market.

Athens, a town with a population around 11,000, is the county seat of Henderson County in rural northeastern Texas. It is approximately 65 miles from Dallas and approximately 35 miles from Tyler. A significant percentage of Athens's residents commute to Dallas and Tyler to work. Beginning in late 2002, Athens suffered an economic downturn because of the loss of two of the city's major employers.

In late 2003, an employee in GM's Dealer Network and Development Division approached Mills and suggested that he sell his dealership to Elliott because GM's long-term plan for Athens was for it to be a one-GM-dealer town where all GM products would be sold under one roof. GM's Zone Manager made the same recommendation to Elliott, urging him to buy the Eaton dealership. GM's Regional Manager for Sales told Mills that if Mills did not procure a buyer before his dealership operations ceased, the consequences would be devastating: his heirs might lose around half the value of the dealership.

As a result of the discussions that both Mills and Elliott had with GM, Mills and Elliott entered into negotiations that resulted in the execution of an asset and stock purchase agreement in which Elliott agreed to purchase all the stock of Eaton Motor Company, the dealership building, parts, tools, equipment, and "blue sky" for $1,400,000. This agreement was made contingent on GM's approval of the transfer of the franchises.

On November 24, 2003, Mills applied online for approval by GM to transfer his dealership to Elliott. GM rejected the application on January 5, 2004. One month later, Mills reapplied to GM by certified mail as required by the occupations code. Id. § 2301.359(b)(2). GM again rejected the application. In rejecting the application, GM focused on Elliott's failure to achieve satisfactory retail-sales-index (RSI) and consumer-satisfaction-index scores. (2)
The GM policies regarding dealership transfers that were in effect at the time of Mills's application are contained in Dealer Bulletin GM 01-17, which was distributed to all GM dealers. According to the bulletin, a proposed GM dealer should be a person who "[h]as a successful record as a merchandiser of automotive products and services, or has otherwise demonstrated the ability to successfully manage a dealership."

In addition, the bulletin contains requirements for a "Multiple Dealer Operator," which applied to Elliott because a Multiple Dealer Operator is defined by the bulletin as "a person who has, or is applying to have, an ownership interest in more than one GM dealership and who is named, or is applying to be named, as Dealer Operator in more than one GM dealership." (Emphases added.) One of the requirements for a Multiple Dealer Operator is that "[e]ach GM dealership where a [Multiple Dealer Operator] candidate is Dealer Operator or has any ownership interest must have attained a year-end Retail Sales Index of 100 or higher for all such dealership operations." The bulletin also provides an exception for dealers with RSI scores of at least 85 who either have a "positive sustaining trend" in their RSI scores or provide a business plan describing how they will increase their RSI scores to 100 within two years.

In essence, RSI scores measure dealers' ability to realize their sales opportunities as calculated by GM. A dealer's RSI score is the percentage of his expected sales that he actually makes. Calculating this score involves several steps. First, GM assigns each of its dealers an area of primary responsibility by assigning each census tract to the dealer that is closest to the "centroid" of the tract as calculated by a computer (unless a geographical feature bars access to the dealership by a substantial number of the residents of the census tract). Second, GM formulates a sales expectation for the area of primary responsibility by applying its Texas market share for each type of vehicle (e.g., light-duty trucks or luxury sedans) to the number of vehicles of each type (of any make) registered by consumers in the area of primary responsibility. Third, GM calculates the RSI score by expressing the dealer's sales anywhere in the country as a percentage of expected sales for the area of primary responsibility. An RSI score of 100 is "average," meaning that the GM dealer reached the same level of sales for its market as the composite of all GM dealers did in the Texas market. (3)
Elliott's year-end RSI scores were problematic in that he did not attain a score of 100. Elliott's score for 2003 was 48.7, and his scores for 2002, 2001, and 2000 were 65.7, 74.0, and 66.04, respectively.

In response to GM's rejection of the transfer application, Mills filed a protest with the Division in April 2004, and Elliott moved to intervene. See id. § 2301.360(a) ("A dealer whose application is rejected under Section 2301.359 may file a protest with the board. A protest filed under this section is a contested case."). (4) Mills and Elliott asked the Division to find that GM unreasonably denied the transfer application in violation of the occupations code and that Elliott was qualified to be a Pontiac, Buick, and GMC dealer in Athens. See id. § 2301.360(b) ("In a protest under this section, the board must determine whether the prospective transferee is qualified. The burden is on the manufacturer or distributor to prove that the prospective transferee is not qualified.").

At the protest hearing, the primary dispute between the parties concerned the extent to which RSI scores are affected by market forces that dealers are unable to control and the extent to
which RSI scores accurately measure dealer effort and ability.

Mills and Elliott attempted to show that Elliott's low RSI scores were caused by external market forces that Elliott had no control over. Their expert testified that there are many more Athens residents who commute to Tyler and Dallas for work than there are residents of other cities who commute to Athens for work. The expert testified that Dallas and Tyler are both higher than Athens in the "hierarchy of cities," that those cities therefore have Chevrolet dealers with larger and more varied selections than Elliott Chevrolet, and that people are more likely to buy vehicles from dealers with larger inventories, especially if the dealerships are in or on the way to the cities in which those people work. The expert thus claimed that Elliott was losing sales to Chevrolet dealers in Tyler and Dallas through no fault of his own.

GM attempted to show that Elliott's RSI scores were the result of his poor performance as a dealer. Its expert testified that the RSI formula takes account of many of the market forces identified by Mills and Elliott. The expert also pointed to specific Chevrolet dealerships that operated under what the expert considered similar conditions to Elliott Chevrolet that had attained RSI scores over 100.

This debate was germane to the two issues in the case before the agency--whether Elliott is qualified and whether GM unreasonably denied the transfer application. According to the occupations code, the key issue for the Division to determine in a protest action is "whether the prospective transferee is qualified." Id. But because Mills and Elliott requested a finding that GM violated the occupations code along with its protest action, considerable time was spent in the administrative hearing on whether GM unreasonably denied the transfer application in violation of section 2301.359 of the occupations code. That section provides,

A manufacturer or distributor may not unreasonably withhold approval of an application [for transfer of a dealership]. It is unreasonable for a manufacturer or distributor to reject a prospective transferee who is of good moral character and who meets the written, reasonable, and uniformly applied standards or qualifications, if any, of the manufacturer and distributor relating to the prospective transferee's business experience and financial qualifications.
Id. § 2301.359(e).

The Division interprets this statute as providing that a manufacturer may only reasonably deny a transfer application on the basis of the applicant's unacceptable moral character or the applicant's failure to meet written, reasonable, and uniformly applied standards relating to the prospective transferee's business experience or financial qualifications.

Based on this interpretation, the Division held that GM unreasonably denied the transfer application in violation of section 2301.359 by using unwritten standards. The Division held that the dealer bulletin's requirement that a prospective transferee who is a current GM dealer "must have attained a year-end Retail Sales Index of 100" for each GM dealership did not provide notice to dealers that their applications would be rejected if they had not attained year-end RSI scores of 100 or higher. The Division also held that GM violated the statute because the fact that it reviews RSI scores for the previous three years was unwritten. Further, the Division found that GM assigns unwritten weights to certain criteria enumerated in the dealer bulletin. (5)

The Division also found that Elliott is qualified, which forced GM to accept the transfer. See id. § 2301.360(c) ("If the board's order is that the prospective transferee is qualified, the dealer's franchise is amended to reflect the change in franchisee, and the manufacturer or distributor shall accept the transfer for all purposes.").

GM sought judicial review of the Division's decision in district court. See id. § 2301.751(a), (c) (West 2004) ("A party to a proceeding affected by a final order, rule, or decision or other final action of the board or director under this chapter . . . may seek judicial review of the action," which is conducted "in the manner provided by Chapter 2001, Government Code."). The district court affirmed the Division's final order in all respects.

GM appeals to this Court, arguing that the Division incorrectly interpreted section 2301.359 and challenging almost all the findings of fact, as well as the Division's conclusions that GM violated the statute and that Elliott is qualified.

DISCUSSION

Standard of Review

Our analysis will be conducted under the following standard of review:

[A] court may not substitute its judgment for the judgment of the state agency on the weight of the evidence on questions committed to agency discretion but:
(1) may affirm the agency decision in whole or in part; and
(2) shall reverse or remand the case for further proceedings if substantial rights of the appellant have been prejudiced because the administrative findings, inferences, conclusions, or decisions are:
(A) in violation of a constitutional or statutory provision;
(B) in excess of the agency's statutory authority;
(C) made through unlawful procedure;
(D) affected by other error of law;
(E) not reasonably supported by substantial evidence considering the reliable and probative evidence in the record as a whole; or
(F) arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion.
Tex. Gov't Code Ann. § 2001.174 (West 2000).

Substantial-evidence review is a limited standard of review requiring only more than a mere scintilla to support an agency's determination. Montgomery Indep. Sch. Dist. v. Davis, 34 S.W.3d 559, 566 (Tex. 2000) (citing Railroad Comm'n of Tex. v. Torch Operating Co., 912 S.W.2d 790, 792-93 (Tex. 1995)). More than a scintilla of evidence to support a finding exists if the evidence would allow reasonable and fair-minded people to differ in their conclusions concerning the finding. Haggar Clothing Co. v. Hernandez, 164 S.W.3d 386, 388 (Tex. 2005) (quoting Burroughs Wellcome Co. v. Crye, 907 S.W.2d 497, 499 (Tex. 1995)). Whether substantial evidence supports an administrative finding is a question of law. Davis, 34 S.W.3d at 556.

An agency decision is arbitrary when its final order denies parties due process of law or fails to demonstrate a connection between the agency decision and the factors that are made relevant to that decision by the applicable statutes and regulations. Occidental Permian Ltd. v. Railroad Comm'n of Tex., 47 S.W.3d 801, 806 (Tex. App.--Austin 2001, no pet.). A court reviewing a decision for arbitrariness should consider all relevant factors and may not substitute its judgment for that of the agency. Id. An agency abuses its discretion if it acts without reference to guiding rules or principles. See City of Amarillo v. Railroad Comm'n of Tex., 894 S.W.2d 491, 495 (Tex. App.--Austin 1995, writ denied).

Statutory-Construction Points

In points of error one, two, five, and six, GM argues that the Division incorrectly interpreted section 2301.359 of the occupations code as providing that a manufacturer may only reasonably deny a transfer application based on the applicant's unacceptable moral character or the applicant's failure to meet the manufacturer's written, reasonable, and uniformly applied standards relating to business experience or financial qualifications. The interpretation of section 2301.359 is a question of first impression. GM also challenges 88 findings of fact and four conclusions of law that are allegedly tainted by the statutory-construction error.
Construction of Section 2301.359

The parties have two disparate interpretations of section 2301.359 of the occupations code. The dispute centers on the relationship between the two sentences in subsection (e). The first sentence of subsection (e) provides that a manufacturer "may not unreasonably withhold approval" of a transfer application. Tex. Occ. Code Ann. § 2301.359(e). The second sentence states that "[i]t is unreasonable for a manufacturer or distributor to reject a prospective transferee who is of good moral character and who meets the written, reasonable, and uniformly applied standards or qualifications, if any, of the manufacturer or distributor relating to the prospective transferee's business experience and financial qualifications." Id.

The Division believes that the second sentence, which explicitly refers only to an unreasonable denial, sets out all the ways that a manufacturer may reasonably reject a transfer applicant. The Division urges that a manufacturer may only reasonably deny a transfer based on the moral character of the applicant or the applicant's failure to meet the manufacturer's written, reasonable, and uniformly applied standards or qualifications relating to the applicant's business experience or financial qualifications. The Division addresses the "if any" language in the second sentence by claiming that a manufacturer without written, reasonable, and uniformly applied standards relating to business experience or financial qualifications may not reasonably reject any applicant of good moral character.

GM, on the other hand, argues that the second sentence simply describes one situation in which a manufacturer's rejection of a transfer applicant would be unreasonable per se. It urges that the "if any" language reflects the legislature's understanding that not all manufacturers and distributors have written, reasonable, and uniformly applied standards for transfer applicants relating to business experience and financial qualifications.

In determining the meaning of a statute, we are guided by certain well-settled principles of statutory construction. First and foremost, we must follow the plain language of the statute. Hunter Indus. Facilities v. Texas Natural Res. Conservation Comm'n, 910 S.W.2d 96, 102 (Tex. App.--Austin 1995, writ denied). If a statute is clear and unambiguous, it should be given its commonly understood meaning without resort to extrinsic aids of statutory construction. Id. If a statute is ambiguous, however, extrinsic aids, such as the interpretation of the agency charged with the statute's enforcement, may be used to determine legislative intent. Id.
Further, we must presume that every word in the statute is "intended to be effective," see Tex. Gov't Code Ann. § 311.021(2) (West 2005), yet we must also recognize what language is not included in the statute. The second sentence of the statute does not explicitly address situations where a transfer application is denied because the applicant (1) does not have good moral character, (2) does not meet standards relating to business experience or financial qualifications that are not written, reasonable, or uniformly applied, (3) does not meet written, reasonable, and uniformly applied standards that do not relate to business experience or financial qualifications, or even (4) does not meet written, reasonable, and uniformly applied standards that relate to business experience or financial qualifications. Because the second sentence leaves many situations unaddressed, we cannot accept the Division's argument that it is intended to be comprehensive.

Here, the plain and unambiguous language of section 2301.359 contradicts the Division's interpretation. We agree with GM that the legislature's "if any" language recognizes that manufacturers may not have written, reasonable, and uniformly applied standards relating to business experience and financial qualifications. Moreover, nothing in the statute requires manufacturers to have such standards in order to reasonably deny a transfer applicant with good moral character.

While we agree with GM's primary interpretation of the statute, we reject its assertion that the second sentence simply provides a bright-line test for one specific factual situation. While it does do that, the second sentence also provides guidance concerning the interpretation of the comprehensive standard set out in the first sentence--reasonableness. Thus, a manufacturer who rejects a transfer applicant because of the applicant's unacceptable moral character has a better argument with respect to the reasonableness of its denial than does a manufacturer who rejects an applicant based on unwritten, unreasonable, and disparately applied standards that do not relate to business experience or financial qualifications.

Because of the general principle that courts may not reweigh evidence and substitute their judgment for that of administrative agencies, courts should generally remand to agencies when they find errors of law. See Texas Dep't of Transp. v. T. Brown Constructors, Inc., 947 S.W.2d 655, 659-60 (Tex. App.--Austin 1997, pet. denied). Determinations of reasonableness are usually questions for fact-finders. Adam Dante Corp. v. Sharpe, 483 S.W.2d 452, 456 (Tex. 1972); Southwest Guar. Trust Co. v. Providence Trust Co., 970 S.W.2d 777, 783 (Tex. App.--Austin 1998, pet. denied). Accordingly, we reverse the portions of the trial court's order that affirm the Division's conclusions that GM unreasonably denied the transfer application and remand the case to the Division for it to determine whether GM unreasonably denied the transfer application using the construction of the statute that we have set forth above. (6)
While our remand obviates the need to address many of the findings of fact that GM challenges because those findings appear to have been tainted by the statutory-construction error, some of the challenged findings still merit discussion.

Challenged Findings of Fact

Clearly, our holding with respect to the construction of section 2301.359 requires us to sustain GM's challenges to the following "findings of fact," which actually contain legal conclusions, because they are affected by an error of law that prejudiced GM's substantial rights:
102. Use of such unidentified factors and judgment comprise unwritten standards, which make them a material violation of Code § 2301.359(e).
. . . .
107. GM's assignment of the weight assessed to each factor on a transfer application is an unwritten criterion, which makes the standard a material violation of Code § 2301.359(e).
. . . .
111. Basing a denial upon unwritten standards and qualifications is a material violation of Code § 2301.359(e).
As explained above, basing a denial of a transfer application on unwritten standards is not a per se violation of section 2301.359, although the Division may consider whether the standards were written as one factor in analyzing whether the denial was reasonable.
We also sustain GM's challenges to the following findings of fact because they are unsupported by any record evidence and prejudiced GM's substantial rights:
110. Because GM based its denial on unwritten standards and qualifications, the applicant and prospective transferee lacked fair notice of the qualifications and standards that the manufacturer would apply to the pending transfer.
. . . .
175. GM based its decision to reject Eaton's dealership transfer application on unwritten standards and qualifications relating to business experience.
GM's requirement that "[e]ach GM dealership where a [Multiple Dealer Operator] candidate is Dealer Operator or has any ownership interest must have attained a year-end Retail Sales Index of 100 or higher for all such dealership operations" was clearly written into its dealer bulletin in the section concerning Multiple Dealer Operators. The use of the word "must" gave fair notice that prospective transferees who had not met this level of sales effectiveness would be denied. Although the Division found that GM's policy of reviewing a dealer's RSI scores for the previous three years was unwritten, this policy did not affect Elliott--whether GM reviewed only the current year, one prior year, three prior years, or all the years that Elliott owned the dealership, Elliott would have fallen far short of the requirement that his RSI scores be at or above 100.

The Division also found that GM placed unwritten weights on certain factors. However, this weighting process was never applied to Elliott. GM's Dealer Organization Manager for the South Central Region, William Siegrist, testified at the administrative hearing that prospective transferees who are multiple dealer operators must meet minimum requirements in four areas--sales effectiveness, customer satisfaction, profitability, and capitalization--and that a dealer who did not meet the minimum requirement in any of the four areas would be rejected unless an exception applied. Siegrist also testified that if a dealer met the minimum standards in each of the four areas, he would also have to meet a composite minimum in which sales effectiveness is weighted 50%, customer satisfaction is weighted 30%, and profitability and capitalization are each weighted 10%. The weighting process was never applied to Elliott because he did not meet the minimum requirement for sales effectiveness and did not qualify for an exception.

The Division also found that GM used unwritten standards because the dealer bulletin states that GM will use its "business judgment" in evaluating transfer applications and because the bulletin asserts that it is impossible to catalogue every relevant factor and make a comprehensive list. However, all the testimony indicated that no "business judgment" was used in evaluating Elliott because he fell far short of the RSI requirement and did not qualify for an exception. Thus, GM did not base its denial of the transfer application on unwritten standards. The requirement that a prospective transferee "must" have RSI scores over 100 was clearly written into the dealer bulletin, and all the evidence adduced at the administrative hearing indicated that this was the sole basis on which GM relied to deny the transfer application.
We reject GM's challenges to the following findings of fact as without merit because the findings are supported by substantial evidence, as described in more detail below: 12, 13, 14, 15, 18, 19, 20, 37, 38, 41, 42, 43, 44, 55, 60, 61, 62, 63, 64, 66, 67, 68, 69, 99, 100, 101, 104, 109, 113, 116, 117, 118, 119, 120, 121, 122, 123, 125, 126, 127, 128, 129, 130, 131, 133, 134, 135, 136, 137, 139, 140, 141, 142, 143, 146, 147, 148, 149, 150, 152, 153, 154, 156, 157, 158, 159, 160, 161, 162, 163, 164, 165, 166, and 167.

The following findings of fact are supported by Mills's undisputed testimony: (7)
12. It was GM's long-term goal to change the channeling strategy in Athens in an effort to eliminate the intra-brand competition between Chevrolet, GMC, Pontiac and Buick.
13. GM would put all products in one dealership with the new channeling strategy.
14. During his visit to the Eaton dealership in late 2003, Mr. Bufstetter told Mr. Mills that the ideal situation would be for Mr. Elliott, the owner of the Chevrolet franchise in Athens, to buy Mr. Mills' Pontiac/Buick/GMC dealership.
. . . .
18. GM rejected the request for Scott Mills to become the successor operator.
19. Scott Mills was involved in a serious motorcycle accident in 1999, which left him blind.
20. Larry Hice, GM Regional Manager for Sales, told Mr. Mills that if his dealership operations ceased without selling it, then his wife and son might lose at least half of the value of his business.

The following findings are supported by Elliott's undisputed testimony: (8)
15. Tom Craig, the former GM Zone Manager for Athens, urged Mr. Elliott to buy the Eaton dealership.
. . . .
120. The Athens Ford dealer went out of business because he over built his dealership and sold vehicles too cheaply in order to achieve volume.
. . . .
123. Most Dodge and Ford vehicles are less expensive than comparable Chevrolet vehicles.
. . . .
125. Since 2002, Athens lost several of its major employers and approximately 1,200 of its highest paying jobs due to a downturn in the local economy.
. . . .
141. Elliott Chevrolet maintains an inventory of 90 to 130 Chevrolet vehicles.
. . . .
146. GMAC requires the dealer's inventory to be consistent with capitalization.
147. Even if a dealer wanted to maintain a higher inventory, GMAC will not allow the dealer to go above his travel rate.
. . . .
149. Elliott Chevrolet's reputation for quality service is well known.
150. GM representatives often send vehicles that other dealers have been unable to repair to Elliott Chevrolet for service.
. . . .
157. The transfer of Elliott Chevrolet from GM's Tyler Zone to the Dallas Zone caused a competitive hardship.
158. GM does not advertise the Chevrolet brand in the Athens [area of primary responsibility] but does do brand advertising in the Dallas [area of primary responsibility].
159. Once Elliott was transferred into the Dallas Zone, Dallas co-op advertising required Elliott to be charged a $400 fee per unit purchased from GM.
160. This left Elliott Chevrolet with a $400 competitive disadvantage in price to his local competitors in the Tyler Zone who do not pay this co-op fee.
161. Elliott Chevrolet withdrew from the Dallas co-op advertising and purchased six billboards at a 50% increase in previous advertising expenditures.
162. Elliott Chevrolet has undertaken substantial efforts to improve its sales performance by focusing advertising expenditures specifically on the Athens market.
163. Mr. Elliott took finance course work at the University of Texas but he did not earn a degree.
164. Financial circumstances caused Mr. Elliott to withdraw from college.
165. Mr. Elliott worked for thirteen years in the used car business in Brownsborough, Texas where he owned three used retail car operations.
166. In 1985, Mr. Elliott purchased Godwin Chevrolet in Athens, Texas.
167. Mr. Elliott subsequently changed the dealership name to Elliott Chevrolet and he has been the dealer operator of a profitable Chevrolet dealership for approximately 20 years.
The following finding is supported by the undisputed testimony of Elliott's wife Alicea, who helped him run Elliott Chevrolet:
121. In an effort to improve sales, Elliott Chevrolet has reduced profitability on new vehicles by operating the new vehicle department in the red.
The following findings are supported by the undisputed testimony of William Siegrist, GM's Dealer Organization Manager for the South Central Region: (9)
37. The committee [that made the decision concerning the transfer application] also discussed other considerations, such as the dealer network plan, line-make alignment, and Elliot [sic] Chevrolet's declining trend in sales performance over the last few years.
38. The action committee was made aware of the long-term plan to make Athens, Texas a one GM dealer town, which Elliott's purchase of the Eaton dealership would accomplish.
. . . .
41. Some of GM's employees who were making recommendations about the approval or denial of the transfer application were unfamiliar with Athens, Texas and Elliott Chevrolet.
42. Keith Best was a new zone manager for Dallas and the surrounding areas.
43. Larry Hice, GM Regional Manager, knew little about the Athens market and Elliott's dealership, yet made a recommendation to deny the transfer application.
44. The action committee did not solicit a recommendation from Tom Craig, the former zone manager who was familiar with the Athens, Texas market and who first recommended the sale of Eaton's dealership to Elliott to accomplish GM's channeling strategy.
. . . .
104. GM assigns weight to each of these factors on a transfer application based on an unwritten policy with RSI accounting for 50%, CSI 30%, capital 10% and profitability 10%.
. . . .
113. The GM action committee was unaware of the economic downturn because they relied upon Mr. Best, who was new to Athens, and Mr. Hice, who is unfamiliar with Athens, to issue recommendations about Elliott Chevrolet's market.
. . . .
140. Travel rate is the volume of new vehicle sales that a dealer makes within any particular period of time.
. . . .
148. No operational analysis of the dealership was performed by the manufacturer to verify its assumption that Elliott Chevrolet's sales performance decline was based on an operational problem.

The following findings are supported by (and often taken directly from) GM's dealer bulletin, which was entered into evidence at the administrative hearing:
55. GM's qualifications and standards as to business experience for a dealer transfer applicant are set forth in the Dealer Bulletin GM 01-17 Section I. B. "Personal Background and Experience," and apply to all proposed ownership changes.
. . . .
60. GM's [sic] evaluates a dealer transfer application by considering and weighing many factors, which are not all identified in the bulletin.
61. GM varies the weight and importance of these factors depending upon many issues, which include but are not limited to, the size and expense structure of the dealership opportunity under review.
62. GM also evaluates a dealer transfer application by recognizing that the manufacturer does not anticipate every issue that may arise in connection with the review of proposed changes, and factors other than those contained in the bulletin may have a substantial impact on the outcome of GM's review of a proposal.
63. GM has no precise formula or abstract calculation that is used to make all determinations, and the application of business judgment is essential to GM.
64. GM requires the following for the business experience and educational background of all dealer applicants: (1) competent in business; (2) effective manager; (3) caring attitude toward customers; (4) successful record as a merchandiser of automotive products and services, or has otherwise demonstrated the ability to successfully manage a dealership.
. . . .
66. GM failed to meet its burden of proof to establish by credible evidence that Mr. Elliott lacks the business experience and educational background required by GM in its Dealer Bulletin GM 01-17 Section I. B.[ (10)]
67. Sales performance standards are not required under GM's background and experience standards.
68. GM does consider prompt and effective sales and service and effective sales performance as an "other consideration" for a dealer transfer application.
69. GM's written standards for the business experience of all dealer candidates do not specifically address a particular level of sales performance.
. . . .
99. GM uses unidentified factors that are not contained in GM's written standards that have a substantial impact on its decisions regarding dealer transfer applications.
100. GM uses unidentified business judgment that is not contained in GM's written standards to make its decisions regarding dealer transfer applications.
101. Business judgment is subjective and will vary from person to person and application to application.
. . . .
109. The manufacturer's three year review for sales data to calculate the dealer's RSI is an unwritten standard and qualification.
The following findings are supported by the testimony of Mills and Elliott's expert, Ernest Harry Manuel, Jr.:
116. The hierarchy of cities is a concept that recognizes that there are major hub cities, such as Dallas and Houston, which allow economies of scale to increase specialization in products and services.
117. The hierarchy also includes regional hub cities like Tyler, Texas, which does not have as many specialized products and services as Dallas, but it has more than Athens, Texas.
118. Major hub cities and regional hub cities bring in shoppers from the smaller towns and rural areas.
119. Elliott Chevrolet is in direct competition with dealers in Tyler and Dallas where inventory and prices are better than in Athens because of the size of the markets.
. . . .
122. Elliott Chevrolet cannot operate its new vehicle business at a loss for long or the dealership may also go out of business.
. . . .
126. Athens residents have accelerated their long-standing tendency to commute to work in nearby towns and cities such as Mabank, Tyler, and Dallas.
127. The term commutation is a general word for commuting, which means patterns of journeys from home to work.
128. Out-commutation is a pattern where there is a high level of commutation out of a county as compared to into a county.
129. Almost half of the employed population of Henderson County residents work in another county.
130. Approximately 13,000 people are leaving Henderson County to commute to work and approximately 3,000 are commuting into Henderson County for work.
131. Residents of Henderson County commute most frequently to Dallas County and Smith County for employment.
. . . .
133. Elliott's sales volume is hindered when Henderson County natives commute to other counties for employment and pass by other competing dealerships that have larger inventories due to their market size.
134. The economic conditions in Athens have declined since 1999 making it increasingly difficult for the Elliott dealership to maintain sales performance standards.
135. Employment in Henderson County has declined and there has been an increase in workers commuting out of the county leaving plenty of opportunity to shop in neighboring cities and towns.
136. A $15,000 - $65,000 median annual income range is too vast to reasonably draw a conclusion that any particular percentage of Athens residents can afford a new Chevrolet.
137. It is unreasonable to conclude that a family with a median household income of $15,000 is in the market for a new Chevrolet vehicle.
. . . .
139. A dealer must maintain an inventory that is commensurate with the dealer's travel rate.
. . . .
142. Eaton maintains an inventory of 35 vehicles for all three lines, Buick, GMC and Pontiac.
143. King Chevrolet, 35 miles away in Tyler, Texas, maintains an inventory up to five or six times larger than Elliott Chevrolet.
. . . .
152. A large market dealer generally sells higher volume than a small market dealer and so the large market dealer then tends to earn allocation of short supply, high demand vehicles, faster than the small market dealer.
153. If the small market dealer doesn't get the product while it is still in high demand, then he's at a competitive disadvantage to others who obtain the product more quickly and in higher volume.
The following findings are supported by the testimony of GM's expert, Sharif Farhat:
154. GM's market share has declined from approximately 60% in the 1960's to approximately 27% in 2004.
. . . .
156. GM's decline in market share contributes to a dealer's sales performance.
Qualification Issue

We now turn to GM's arguments concerning the Division's finding that Elliott is qualified. See Tex. Occ. Code Ann. § 2301.360(b) ("In a protest under this section, the board must determine whether the prospective transferee is qualified. The burden is on the manufacturer or distributor to prove that the prospective transferee is not qualified."). The Division found that Elliott is qualified, reasoning that GM failed to meet its burden to prove that Elliott is not qualified. GM argues that it did meet its burden.

We hold that the conclusion is supported by substantial evidence and is not arbitrary, capricious, or an abuse of discretion. The inquiry by the Division concerning whether a dealer is qualified is different than the inquiry by a manufacturer concerning whether a prospective transferee is acceptable to it. Under section 2301.359, GM is given the power to reject any prospective transferee whom it determines is "not acceptable," limited only by the requirement that it "not unreasonably withhold approval." Id. § 2301.359(d), (e). Each manufacturer may have standards that are appropriate to advance its business interests--GM, Ford, and Toyota are not likely to have identical business plans.

But if a dealer whose application is rejected files a protest, the Division becomes the decisionmaker that must decide whether the dealer is "qualified." Id. § 2301.360(b). The Division is charged with enforcement of chapter 2301, id. § 2301.101, whose purposes include "exercise of the state's police power to ensure a sound system of distributing and selling motor vehicles," which "vitally affects the general economy of the state and the public interest and welfare of its citizens." Id. § 2301.001. The question whether GM unreasonably withheld approval of a transfer applicant that it found "not acceptable," see id. § 2301.359(e), is a different question than whether to uphold the Division's finding, made in the context of concern for the public interest and the welfare of Texas citizens, that a dealer is qualified. (11) See id. §§ 2301.001, .360(b).

The Division's conclusion that Elliott is qualified is supported by the following facts: Elliott worked in the used-car business for 13 years; Elliott has run his Chevrolet dealership profitably for 20 years; Elliott Chevrolet is well known for having a superior service department; Elliott Chevrolet has been taking steps to increase its sales effectiveness; and Elliott took finance
courses at the University of Texas.

We reject GM's challenge to Finding of Fact 168, which states, "GM failed to establish its burden of proof to show that Mr. Elliott is not qualified by his business experience to be a Pontiac/Buick/GMC dealer." We also reject GM's challenges to the following conclusions of law to the extent that they conclude that GM failed to meet its burden of proof with respect to Elliott's being qualified:
3. Respondent, General Motors Corporation, failed to establish that the prospective transferee, Charles E. Elliott, was not qualified, in violation of Code §§ 2301.359 and 2301.360.
. . . .
5. General Motors Corporation failed to establish its burden of proof to show that Charles E. Elliott was not qualified as to moral character, business experience and financial qualifications, in violation of Code §§ 2301.359 and 2301.360.

To the extent that these conclusions confuse the inquiry whether Elliott is qualified with the inquiry whether GM unreasonably denied the transfer application and find that GM violated section 2301.359, we sustain GM's challenges. We have remanded that issue to the Division for further consideration under the construction of section 2301.359 that we have announced. To the extent that the Division found that GM violated section 2301.360 by failing to meet the burden of proof assigned by that section, we also sustain GM's challenges. A statute assigning a burden of proof is not violated by a party who tries but fails to meet that burden. Just as a litigant in a trial court who files a summary-judgment motion does not violate the rules of civil procedure if the trial judge decides that the party is not entitled to judgment as a matter of law, GM did not violate section 2301.360 by failing to meet the burden of proof assigned by that section.

Substantial-Evidence Points

In points of error three, seven, eight, and nine, (12) GM challenges eight findings of fact not challenged under the statutory-construction points, arguing that they are not supported by substantial evidence and that five of them are irrelevant to the conclusions of law.
We sustain GM's challenge to Finding of Fact 180, which states, "The potential harm to the public is great due to GM's unlawful rejection of Eaton's dealer transfer application." We have reversed the finding that GM violated the occupations code and remanded this issue for further proceedings.

We hold that Finding of Fact 179, which states, "Code § 2301.801(a) allows for a penalty amount not to exceed $10,000 for each violation, with each day of violation considered as a separate violation," is supported by substantial evidence. Finding 179 is simply a correct statement of the law. Although it is irrelevant to the final order's conclusions of law because the Division rejected the recommended civil penalty, GM's substantial rights were not prejudiced.
We also hold that Finding of Fact 181, which states, "The motoring public of the Athens, Texas area relies upon the Eaton dealership for sales and service," is supported by substantial evidence. We hold that Finding of Fact 182, which states, "Preventing Eaton from transferring its dealership in accordance with state law may leave the motoring public without a Pontiac/Buick/GMC dealer in the Athens, Texas area for sales and service," is also supported by substantial evidence.

We hold that the following three findings of fact are not supported by substantial evidence but did not prejudice GM's substantial rights:

94. Only 50% of current Texas Chevrolet dealers are eligible candidates for a dealership transfer.
. . . .
170. GM's process for calculating the RSI keeps 50% of all current Texas Chevrolet dealers with an RSI of below 100.
171. GM's process for calculating the RSI makes 50% of all current Texas Chevrolet dealers ineligible for the appointment of a dealership transfer and keeps them out of compliance with their dealer agreement.
Finding 170 is not supported by substantial evidence because all the evidence on this issue indicated that approximately 50% of dealers will always have RSI scores below 100. GM's substantial rights were not prejudiced by this minor deviation. Findings 94 and 171 are not supported by substantial evidence for the same reason and also because no evidence was introduced concerning how many dealers who have RSI scores under 100 would qualify for GM's exception to this requirement. GM's substantial rights were not prejudiced because 50% is still a reasonably accurate estimate.
We hold that Finding of Fact 183, which states, "The absence of a Pontiac/Buick/GMC dealer in the Athens, Texas area would cause economic damage to the public," even if not supported by substantial evidence, did not prejudice GM's substantial rights. No civil penalty was assessed on this basis against GM.

CONCLUSION

We hold that the Division erroneously construed section 2301.359 of the occupations code. We reverse the portions of the trial court's order that upheld Conclusions of Law 2 and 4 in their entirety, Conclusions of Law 3 and 5 to the extent that they find that GM violated the occupations code, and Findings of Fact 102, 107, 110, 111, 175, and 180. We remand the case to the Division for a determination concerning whether GM unreasonably denied the transfer application in violation of the occupations code using the construction of section 2301.359 that we have announced. The Division should also consider to what extent this dispute has been rendered moot by Elliott's GM-approved sale of the dealership to a third party. We affirm the trial court's order in all other respects.
__________________________________________
Diane Henson, Justice

Before Chief Justice Law, Justices Puryear and Henson
Affirmed in part; Reversed and Remanded in part
Filed: August 16, 2007

1. The following recitation of facts comes from the testimony and documentary evidence introduced at the administrative hearing.
2. During the administrative proceeding, GM withdrew Elliott's consumer-satisfaction-index scores as a basis for denial because Elliott's scores increased to a level satisfactory to GM after the rejection. Thus, GM relied only on Elliott's RSI scores as the basis for its denial in the administrative proceeding, in the trial court, and in this Court.
3. A simplified example may be helpful: Imagine a market in which there are two types of vehicles, cars and trucks; GM's Texas market share for cars is 20%; its Texas market share for trucks is 25%; 1,000 cars are registered in the area of primary responsibility; and 3,200 trucks are registered in the area of primary responsibility. In this situation, the sales expectation for the GM dealer assigned to the area of primary responsibility is 1,000 vehicles--200 cars and 800 trucks. If the GM dealer sells 1,500 vehicles that are registered anywhere in the country, his RSI score is 150; if he sells 1,000 vehicles, his score is 100; if he sells 500 vehicles, his score is 50.
4. A reference to "the board" that is not related to the adoption of rules is taken as a reference to the director of the Division. See Tex. Occ. Code Ann. §§ 2301.002(9), (10), (12), .005(a) (West 2006).
5. The administrative law judge recommended assessing a civil penalty against GM, but that recommendation was not followed in the final order.
6. During oral argument, the parties revealed for the first time that Elliott has sold the dealership in question to a third party who was approved by GM. Obviously, the Division's decision to make further rulings may depend on the parties' contentions concerning mootness, an issue that has not been briefed in this Court.
7. Many of these findings are also supported by additional evidence.
8. Many of these findings are also supported by additional evidence.
9. Many of these findings are also supported by additional evidence.
10. The contents of this section of the bulletin are supported by the bulletin. The fact that GM failed to show that Elliott did not meet the standards in this section of the bulletin is supported by other evidence, including the testimony of Elliott and GM employees.
11. In the context of reviewing whether a manufacturer has shown good cause to terminate a dealer's franchise, the Division takes factors into account that manufacturers may not, such as "injury or benefit to the public" and "whether warranties are being honored by the dealer." Tex. Occ. Code Ann. § 2301.455 (West 2004). Similar considerations may guide the Division's analysis concerning whether prospective transferees are qualified, but manufacturers do not necessarily act unreasonably by ignoring factors that are important to the Division.
12. Point of error four is inadequately briefed--there is only a one-sentence heading. See Tex. R. App. P. 38.1(h). We thus decline to address it. See Batto v. Gafford, 119 S.W.3d 346, 350 (Tex. App.--Waco 2003, no pet.).

Sanchez v. Texas State Board of Medical Examiners (Tex.App.-Austin, Jun. 27, 2007)

Sanchez MD vs. Texas State Board of Medical Examiners (Tex.App.-Austin, June 27, 2007)(Pemberton)(license revocation, discipline)

AFFIRMED: Opinion by Justice Bob Pemberton
Before Justices Puryear, Pemberton and Henson

Armando Sanchez, M.D. v. Texas State Board of Medical Examiners and Donald W. Patrick, M.D.
Appeal from 261st District Court of Travis County

FROM THE DISTRICT COURT OF TRAVIS COUNTY, 261ST JUDICIAL DISTRICT
NO. GN400982, HONORABLE LORA J. LIVINGSTON, JUDGE PRESIDING

OPINION BY JUSTICE PEMBERTON

Appellant Armando Sanchez, M.D., appeals the district court's final judgment affirming the order of the Texas State Board of Medical Examiners (1) revoking Sanchez's medical license and imposing an administrative penalty and costs. This disciplinary action was predicated upon fact findings that Sanchez had solicited the murder of a former patient. In six issues on appeal, Sanchez contends that the administrative law judge committed evidentiary and procedural errors in finding that Sanchez had solicited the former patient's murder; that substantial evidence did not support those fact findings; that such findings, if proper, were not legally sufficient support for the statutory ground under which discipline was imposed; and that the Board erred in making certain changes to the administrative law judge's proposal for decision.

We will affirm the district court's judgment.

BACKGROUND

Prior to the disciplinary proceedings from which this appeal arose, Sanchez held a license to practice medicine issued by the Board. Sanchez practiced industrial medicine, involving workers' compensation claims. He had practiced in the Houston area since 1987.

In connection with a worker's compensation claim, Dr. Sanchez had assessed one of his patients, M.G., with an 8% impairment rating. In a subsequent independent medical examination, M.G. was assessed only 4% impairment. The Texas Workers Compensation Commission adopted the 4% recommendation, which had the effect of reducing the amount of M.G.'s benefits. M.G., for whatever reason, was angered at Dr. Sanchez. Sanchez testified that M.G. came to his office and threatened to kill Sanchez, his family, his staff, and his staff's families. Later, at an evening social gathering at a house Sanchez owned, M.G. appeared unexpectedly at the front door at a late hour--it was unknown how M.G. learned of the gathering or that Sanchez would be there--again threatened Sanchez and his family, stated that he knew where Sanchez lived, and mentioned descriptive details of Sanchez's home and family. Sanchez deduced that M.G. had been stalking him and his family.

A friend of Sanchez who was also present at the gathering, Tony Sappington, a chiropractor with some martial arts experience, initially voiced eagerness, before others restrained him, to "whip his [M.G.'s] butt and throw him in the backyard," and (at least figuratively) "bury him." (We note this remark because it is relevant to some disputed facts we discuss below). Later that evening, Sappington, perceiving that Sanchez feared for his and his family's safety, loaned Sanchez a shotgun and suggested that he seek advice from some of the police officers who were among their patients. Sappington offered to introduce Sanchez to Houston Police Department officer Glen Hill, who was married to Sappington's cousin and had immediate family who were his frequent patients.

Sappington arranged for Officer Hill to meet with Sanchez at Sappington's office on Friday, October 6, 2000. Exactly what transpired at this meeting is disputed. Hill, Sappington, and Sanchez each testified at the disciplinary hearing. All agreed that Hill showed up in police uniform; that Sappington introduced Sanchez to Hill and left at some point thereafter to attend to patients; that Sanchez explained his problems with M.G.; and that Hill made notes of the information, explained the process for filing a complaint, and assured him that HPD would get to work on the matter. It is also undisputed that at some point, Sanchez, who originally was from Mexico, mentioned that he had a brother who was a Federale--an officer in the Mexican federal police force--and made a remark to the effect that in Mexico, one could pay a Federale to "take care" of the likes of M.G., and alluded to drinking beer on M.G.'s grave.

Officer Hill recounted that Sanchez made this remark while the pair was alone, in response to Hill's explanation of the procedures for filing a police report and other lawful means of obtaining protection from M.G. According to Hill, Sanchez "said he didn't want anything like that done, that he had a brother who was a Federale in Mexico and that if this was in Mexico that that night he would be drinking a beer on top of the patient's grave." This confused Hill, so he asked Sanchez what the doctor wanted him to do, and Sanchez responded by suggesting that Hill could get a gun, held his hand up as if pointing a gun, and said "boom, boom, boom." Hill interpreted Sanchez's remarks to mean that he wanted M.G. killed. Hill claimed that he was "shocked, surprised," and began looking around the room for a camera, wondering if he was being "set up." He told Sanchez that he "had to think about it," and left the meeting. Hill testified that there was no doubt in his mind that he was being asked to kill M.G.

Sanchez and Sappington, by contrast, each testified that Sanchez made the Federale remark while Sappington was still present, following an exchange in which mention was made of Sappington's initial remarks about beating up M.G. and burying him in the backyard. Hill allegedly responded to the effect that "you don't bury them . . . [y]ou always burn them." Sappington characterized all of these remarks as in jest. Sanchez, on the other hand, recalled that Hill made an additional comment, which Sanchez found "pretty disturbing," to the effect that this was why burned, abandoned cars were sometimes found on freeways with bodies inside, so there wouldn't be "a trace of it." According to Sanchez, Hill then stated, "[W]ell, we're not going to kill anyone," which Sanchez interpreted as Hill "kind of impl[ying] some kind of maybe." To this, Sanchez claims that he responded to the effect that if he wanted M.G. killed, he would call his brother the Federale, that Federales "are basically assassins," and that he was sure that his brother would "even be drinking beer on top of [M.G.'s] grave." Sanchez denied pointing his finger like a gun and making the "boom, boom, boom" remark.

Dr. Sanchez added that when he raised the idea of his contacting a local constable to make a report, Officer Hill dismissed the idea, suggesting that at most, M.G. would get arrested, get out on bail, kill Dr. Sanchez, and flee to Mexico. According to Sanchez, Hill assured him that he would "take care of" the problem because he was Sappington's friend, and would call Sanchez later. Sanchez professed that "[o]bviously, my impression was that he [Hill] was going to help me out in some way [but] I didn't know what he meant." Sanchez further testified that Hill told him not to divulge anything to Sappington, and it is undisputed that both men left the office without talking to Sappington.

Hill immediately reported his perception of the conversation to his superiors at the Houston Police Department. They decided that Hill should investigate the matter, and he was given an unmarked patrol car equipped with microphones and transmitting equipment for recording conversations. Arrangements were also made to record telephone calls between Hill and Sanchez. Between October 6 and 9, 2000, HPD recorded seven telephone and in-person conversations between Dr. Sanchez and Officer Hill. Over objection, what purported to be copies of the recorded conversations were admitted into evidence, as well as transcriptions of those recordings.

It is undisputed that during this period, Dr. Sanchez met with Officer Hill several times in his unmarked patrol car in various Houston restaurant parking lots, that Sanchez agreed to pay Hill for purposes including buying an unregistered gun, and that Sanchez actually delivered $8,000 to Hill. However, Hill and Sanchez offer differing interpretations of their meetings and conversations. Hill understood that Sanchez was hiring him to kill M.G. Sanchez insisted that he was hiring Hill to resolve the M.G. problem through some unspecified means that he vaguely understood as possibly including having M.G. arrested and deported, intimidated, or bought off--but that never included killing him. In fact, it is undisputed that Sanchez never used a term such as "kill" or "murder" to describe the act he intended Hill to commit, though there was evidence that Hill did so repeatedly and without correction, clarification, or question from Sanchez.

During the afternoon of October 6, Officer Hill called Dr. Sanchez, according to Hill, and informed him that he was "interested in doing what he had asked me to do and we needed to talk about it." Hill stated that, without a doubt, Sanchez commented that he thought Hill needed to get a gun. The pair agreed to meet later that day at a local restaurant and it is undisputed that, at the appointed time and place, Sanchez got into Hill's unmarked car. Hill testified that the pair discussed the need not to divulge their dealings to Sappington or other third parties. According to Hill, Sanchez indicated that he and Sappington were planning to ride motorcycles and go out that evening and would be "visible," which Hill interpreted as the construction of an alibi. Hill also claimed that Sanchez urged him to commit the act that evening. Hill recounted that he offered a price of $20,000, "half before the act and then half after," explaining that he would need money to obtain an unregistered gun, and Sanchez ultimately resolved to pay that amount. Hill added that the pair discussed when Sanchez could get the cash from his bank and whether Sanchez would want proof of the act before his second payment. Hill emphasized that Sanchez assured him that he was "sure, 100 percent sure" that he wanted the act done.

Sanchez testified that Hill called him later that evening "[b]asically to follow up" on their earlier meeting. Hill did not testify regarding any such conversation, and it was not among those that were recorded. Sanchez recounted that Hill stated: "Something in relation that he's probably going to have a--use a different gun to have to use. He needed some money because he wanted to maybe give some money to the guy to get away from my life. He also--it is hard for me to remember exactly what it was, but from what I can recall, something along the lines of he may have to . . . need to pay some friends or whatever to--I didn't go into particulars with him--to be able to intimidate the gentleman, maybe call Immigration Department. I don't know. I don't know. I don't know exactly what he meant, but that's what he said."

The following morning, Officer Hill called Dr. Sanchez. According to Hill, he informed Sanchez that he was unable to commit the act the previous night because of the weather, and inquired whether Sanchez still wanted him to go forward. It is undisputed that the pair agreed to meet again, and did meet again in Hill's car at the same location as the previous day. Hill testified that Sanchez agreed to get $8,000 from his bank that day so Hill could buy a gun. Hill added that during this conversation, he explicitly mentioned "killing" M.G. at least three times and that Sanchez never interrupted him to say that he didn't want M.G. killed or that Hill had misunderstood him. Sanchez, on the other hand, admitted that Hill had asked him for money but testified that "I think he was going to get some stuff, including a gun to intimidate [M.G.]"
After the meeting, Sanchez admits, "I went to the bank and . . . got the money," and reunited with Hill in the parking lot of a different restaurant. It is undisputed that Sanchez gave Hill the money; Hill recalled receiving "a big wad of US currency in $100 bills." Hill testified that he asked Sanchez whether he was "sure," and Sanchez responded, "One-way ticket." Hill asked, "One-way ticket? For me?" Sanchez, according to Hill, responded, "No. For your gun." Hill claimed he then asked Sanchez whether he wanted Hill to kill M.G., to which Sanchez reiterated, "One-way ticket." Sanchez, Hill added, assured Hill that he was "very sure," and sure "100 percent," as Sanchez didn't have a choice and would not be able to forgive himself if M.G. harmed his children. Hill also asserted that he invited Sanchez to call his pager if Sanchez changed his mind about having M.G. killed, to which Sanchez responded, "No, no, go on. . . . Move forward as fast as you can." Sanchez later acknowledged alluding to a "one-way ticket," but insisted that he understood the remark to refer to a bus ticket to transport M.G. back to Mexico.

On Monday, October 9, Hill called Sanchez and arranged another meeting later that day at the same restaurant parking lot as their last meeting. Hill testified that at this meeting he told Sanchez that his problem had been taken care of the previous evening and that Hill just needed "to get a little more money from him." Sanchez, according to Hill, inquired whether Hill had a picture, but did not insist on seeing one. Hill added that Sanchez explained that he could not get the remainder of the money that day because the banks were closed for Columbus Day, but could do so the following day.

After Sanchez departed the meeting, he was arrested by HPD personnel and subsequently charged with solicitation of capital murder. However, prosecutors later offered, and Sanchez accepted, a plea bargain whereby he pleaded nolo contendere to the charge of solicitation of capital murder and the district court entered an order of deferred adjudication, sentencing Sanchez to ten years' community supervision, a $5,000 fine, forfeiture of the $8,000 that he paid Officer Hill, and 500 hours of community service. (2)

PROCEDURAL HISTORY

Subsequently, the Board docketed a formal disciplinary complaint against Dr. Sanchez. The Board alleged two grounds upon which it sought to impose discipline: (1) Sanchez's being "convicted" of a felony, see Act of May 13, 1999, 76th Leg., R.S., ch. 388, § 1, 1999 Tex. Gen. Laws 1431, 1517 (amended 2003) (current version at Tex. Occ. Code Ann. § 164.051(a)(2)(A) (West 2004)); and (2) Sanchez's committing the "prohibited practice" of "unprofessional conduct that is likely to deceive or defraud the public, as provided by Section 164.053, or injure the public." See Tex. Occ. Code Ann. §§ 164.051(a)(1) (West 2004), .052(a)(5) (West Supp. 2006). The complaint was referred to the State Office of Administrative Hearings, and a hearing was held before an administrative law judge (ALJ) in June 2003.
Based on the evidence summarized above, as well as the tapes and transcripts of Officer Hill's conversations with Dr. Sanchez, the ALJ made the following findings of fact that are relevant to this appeal:
7. During this [initial October 6, 2000] meeting between Dr. Sanchez and Officer Hill, Dr. Sanchez indicated to Officer Hill that he wanted M.G. killed. Officer Hill told Dr. Sanchez that he had to think about his request and would contact Dr. Sanchez later.
. . . .
10. Officer Hill's testimony and the tape recorded conversations between Dr. Sanchez and Officer Hill establish by a preponderance of the evidence that Dr. Sanchez solicited Officer Hill to kill M.G.
11. Dr. Sanchez agreed to pay Officer Hill $20,000 to kill M.G. On October 7, 2000, Dr. Sanchez paid Officer Hill $8,000 cash as a partial payment of the agreed price. Dr. Sanchez agreed to pay Officer Hill the balance of $12,000 after M.G. was killed.
12. Dr. Sanchez solicited Officer Hill to murder M.G.

The ALJ concluded that Dr. Sanchez's order of deferred adjudication was not a "conviction" that could support discipline under the then-applicable version of section 164.051(a)(2)(A). The ALJ also rejected the Board's argument that the evidence supported a conclusion that Dr. Sanchez "commit[ed] unprofessional or dishonorable conduct that is likely to deceive or defraud the public, as provided by Section 164.053 . . . ." See id. § 164.052(a)(5). The ALJ observed that section 164.053 defines "unprofessional or dishonorable conduct likely to deceive or defraud the public" to include, in relevant part, commission of "an act that violates any state or federal law if the act is connected with the physician's practice of medicine," but provides that "[p]roof of the commission of [such] act while in the practice of medicine or under the guise of the practice of medicine is sufficient for the board's action." Id. § 164.053(a)(1), (b) (West 2004) (emphases added). The ALJ reasoned that this statutory structure required the Board to establish not only that Sanchez's acts were "connected with" his practice of medicine, but were undertaken "while in the practice of medicine or under the guise of practicing medicine." Reasoning that the evidence did not establish this disciplinary ground as the Board had construed it, the ALJ declined to make findings and conclusions to support that ground. However, in its conclusion of law 5, the ALJ stated that "Dr. Sanchez's solicitation of murder of M.G. did not occur while Dr. Sanchez was engaged in the practice of medicine, as that term is defined in Tex. Occ. Code § 151.002(a)(13)." (3)

However, the ALJ did conclude that the Board could discipline Dr. Sanchez for "unprofessional or dishonorable conduct likely to . . . injure the public." See id. §§ 164.051(a)(1), .052(a)(5) (emphasis added). The ALJ reasoned that unlike "unreasonable or dishonorable conduct likely to deceive or defraud the public," a category of acts explicitly limited by section 164.053 and its requirement that criminal acts be "connected with the physician's practice of medicine," "unreasonable or dishonorable conduct likely to . . . injure the public" is subject to no such limitation. In this connection, the ALJ made finding of fact 18 that "Dr. Sanchez's conduct was likely to result in the death of M.G. and, thus, was likely to injure the public," and the following conclusions of law:
3. Based on Finding of Fact No. 12, Dr. Sanchez committed unprofessional and dishonorable conduct that was likely to injure the public, in violation of Tex. Occ. Code § 164.052(a)(5).
4. Tex. Occ. Code § 164.051 and 164.52(a)(5) authorize the Board to discipline Dr. Sanchez for his unprofessional and dishonorable conduct that was likely to injure the public.
In its final order, the Board adopted all of the proposed findings of fact and conclusions of law except for conclusion of law 5 ("Dr. Sanchez's solicitation of murder of M.G. did not occur while Dr. Sanchez was engaged in the practice of medicine, as that term is defined in Tex. Occ. Code § 151.002(a)(13)"), and conclusions of law 9, 10, and 11, in which the ALJ stated that the Board "should" revoke Dr. Sanchez's medical license, impose a $5,000 administrative penalty, and impose a $1,480.35 fee to cover the cost of the transcript. Regarding its decision to delete conclusion of law 5, the Board stated:

(1) the Complaint in this matter did not allege and the Board Staff did not attempt to prove that Dr. Sanchez's solicitation of murder occurred while Dr. Sanchez was actually engaged in the practice of medicine. That was never an issue in this case. Therefore, this Conclusion is not an issue that should be determined by the Board.
(2) this Conclusion of Law is not necessary to support the Conclusion of Law No. 3, stating that Dr. Sanchez committed unprofessional and dishonorable conduct that was likely to injure the public. That Conclusion of Law is sufficient to impose on this Board the duty to take disciplinary action against Dr. Sanchez.
(3) this Conclusion could be interpreted as adopting the ALJ's reasoning, as stated on page 28 and 29 of the Proposal for Decision, that Section 164.053(a)(1) of the Act requires not only a showing that the improper conduct could be "connected with the physician's medical practice," as required by the statute, but also that the act must occur "in the practice of medicine or under the guise of the practice of medicine." The Board declines to adopt this reasoning as the policy of the Board.

Since it is unnecessary for the Board to make such a Conclusion of Law in this matter, the Board has determined that this Conclusion of Law should be deleted from the Final Order.
See Tex. Gov't Code Ann. § 2001.058(e) (West 2000).

The Board adopted all of the ALJ's recommendations for sanctions stated in conclusions of law 9, 10, and 11, but formally deleted these conclusions because they were, in the Board's view, "in actuality recommendations . . . rather than conclusions of law." (4)
Sanchez sought judicial review of the Board's order in district court. After a hearing on the merits, the district court rendered a final judgment affirming the Board's final order. This appeal followed.

DISCUSSION

The six issues that Dr. Sanchez brings on appeal can be divided into essentially two groups. In his first set of issues, Sanchez complains of legal error in connection with the Board's four findings of fact that he solicited M.G.'s murder. Specifically, he urges that the ALJ abused its discretion in admitting copies and transcripts of the HPD recordings of his conversations with Officer Hill, that the ALJ erred in applying a preponderance-of-the-evidence rather than a higher burden of proof, and that the findings are not supported by substantial evidence. (5)
Dr. Sanchez's second set of issues challenges whether the findings of fact that he solicited M.G.'s murder can, as a matter of law, support the disciplinary ground that he "commit[ted] unprofessional or dishonorable conduct that is likely to . . . injure the public" under section 164.052(a)(5) without additional findings or conclusions that those acts were committed within or "under the cloak of" the practice of medicine. (6) Related to this question, Sanchez complains that the Board improperly omitted the ALJ's conclusion of law 5. (7)

Admission of the recordings and transcripts

We first address Dr. Sanchez's assertion that the ALJ abused its discretion in admitting copies of the HPD tape recordings of his conversations with Officer Hill and transcriptions of those recordings, and that such admission was harmful. Although he states this argument in terms of the "best evidence" rule, (8) Sanchez's ultimate complaint is that the Board failed to lay a sufficient foundation that either the original or duplicate audiotapes were authentic. See Tex. R. Evid. 901.

We review administrative rulings regarding the admissibility of evidence under the same abuse-of-discretion standard that we apply to trial courts. Austin Chevrolet, Inc. v. Motor Vehicle Bd., 212 S.W.3d 425, 432 (Tex. App.--Austin 2006, pet. denied); City of Amarillo v. Railroad Comm'n, 894 S.W.2d 491, 495 (Tex. App.--Austin 1995, writ denied). The 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)); Sheshunoff v. Sheshunoff, 172 S.W.3d 686, 701 (Tex. App.--Austin 2005, pet. denied).

Under rule 901, the requirement of authentication "is satisfied by evidence sufficient to support a finding that the matter in question is what its proponent claims." Tex. R. Evid. 901(a). (9) Such evidence may include testimony by a witness with knowledge that a matter is what it is claimed to be and identification of a voice by opinion based on hearing the voice under circumstances connecting it with the alleged speaker. Id. 901(b)(1), (5). Further, the predicate for admissibility under rule 901 may be proven by circumstantial evidence. See Wallace v. State, 782 S.W.2d 854, 856-57 n.6 (Tex. Crim. App. 1989).

The ALJ admitted the tapes in the belief that Officer Hill had testified that the tapes and transcript were accurate representations of his conversations with Dr. Sanchez. The record is not a model of clarity in that regard. Officer Hill was never directly asked whether the tapes themselves accurately reflected his conversations with Dr. Sanchez. Nonetheless, his testimony is susceptible to the interpretation that the transcriptions accurately reflected the conversations. In turn, Hill testified that the transcriptions accurately reflected the content of the tapes, with the exception of minor details that did not alter the meaning of their content. He added that the duplicate tapes were accurate copies of the originals and that he recognized his voice and that of Dr. Sanchez on the tapes. Officer Hill also explained how his patrol car and telephone had been equipped with microphones that transmitted to recording devices and that he had worn a recording device during his conversations with Dr. Sanchez. Further, during his testimony regarding the conversations, Hill continually referenced the fact that they had been taped. We conclude that the ALJ did not abuse its discretion in concluding that the original and duplicate audiotapes, as well as the transcriptions, were accurate representations of Officer Hill's conversations with Dr. Sanchez. We overrule Sanchez's fifth issue.

Burden of proof

We next address Sanchez's claim that, because his alleged conduct was a criminal offense, the Board should have been held to a higher burden of proof than "preponderance of the evidence." Sanchez insists that the Board should have been required to prove its allegations by "clear and convincing evidence" or "beyond a reasonable doubt." Sanchez additionally argues that because medical disciplinary proceedings are "penal in nature," due process requires a higher standard of proof than a "mere preponderance of the evidence."

This Court has previously observed that "agency license-revocation proceedings are civil in nature," and "that in civil cases 'no doctrine is more firmly established than that issues of fact are resolved by a preponderance of the evidence.'" Granek v. Texas State Bd. of Med. Exam'rs, 172 S.W.3d 761, 777 (Tex. App.--Austin 2005, no pet.) (quoting Pretzer v. Motor Vehicle Bd., 125 S.W.3d 23, 38-39 (Tex. App.--Austin 2003), aff'd in part and rev'd in part, 138 S.W.3d 908 (Tex. 2004)). In Granek, we squarely rejected the contention that due process requires a higher burden of proof in license revocation proceedings, and noted that "Texas applies the clear and convincing standard in civil cases only in 'extraordinary circumstances,' such as civil commitment hearings and involuntary termination of parental rights." Id. We continue to regard this analysis as persuasive. Nor does Sanchez suggest any reason why, in a licensing proceeding, an allegation of conduct constituting a criminal offense should, for that reason alone, be subject to a higher standard of proof than an allegation of non-criminal conduct. Cf. Heiligmann v. Ross, 16 S.W. 931, 931 (Tex. 1891) ("There is no force in the position that because the facts of the case may involve a criminal act there should be a greater or more certain degree of proof than is required in other civil actions."); see also State v. Gray, 175 S.W.2d 224, 225 (Tex. 1943) (in civil forfeiture proceeding, issue of whether property owner had committed offense of "exhibiting slot machines for the purpose of gaming . . . had to be determined only from a preponderance of the evidence, not beyond a reasonable doubt.").

Sanchez also relies upon our characterization of the Board's licensing proceedings as "civil" to argue that the ALJ abused its discretion in admitting evidence of Sanchez's nolo contendere plea in violation of article 27.02 of the code of criminal procedure. Article 27.02 provides that a plea of nolo contendere "may not be used against the defendant as an admission in any civil suit based upon or growing out of the act upon which the criminal prosecution is based." Tex. Code Crim. Proc. Ann. art. 27.02(5) (West 2007). The ALJ agreed, holding that Sanchez's plea was inadmissible as an admission of guilt, although the order of deferred adjudication was admissible on other grounds. We accordingly assume that the ALJ did not rely on the plea as evidence of Sanchez's guilt. See Herford v. State, 139 S.W.3d 733, 735 & n.7 (Tex. App.--Fort Worth 2004, no pet.). We overrule Sanchez's third issue.

Substantial evidence

Dr. Sanchez next asserts that the Board's fact findings--7, 10, 11, and 12--supporting its legal conclusions regarding disciplinary grounds are not supported by substantial evidence. (10)
The APA authorizes courts to "test the agency's findings, inferences, conclusions, and decisions to determine whether they are reasonably supported by substantial evidence considering the reliable and probative evidence in the record as a whole." Texas Dep't of Pub. Safety v. Latimer, 939 S.W.2d 240, 244 (Tex. App.--Austin 1997, no pet.) (citing Texas Health Facilities Comm'n v. Charter Med.-Dallas, Inc., 665 S.W.2d 446, 452 (Tex. 1984)). We are to presume that the agency decision is supported by substantial evidence, and Sanchez has the burden of overcoming that presumption. Granek, 172 S.W.3d at 778 (citing Charter, 665 S.W.2d at 452). We may not substitute our judgment for that of the agency, and may consider only the record on which the agency based its decision. Id. We consider only the reliable and probative evidence in this record. See Tex. Gov't Code Ann. § 2001.174(2)(E) (West 2004).

The crux of a substantial evidence analysis is whether the agency's factual findings are reasonable "in light of the evidence from which they were purportedly inferred." Granek, 172 S.W.3d at 778 (citing John E. Powers, Agency Adjudications 163 (1990)). Substantial evidence does not mean a large or considerable amount of evidence, but rather such relevant evidence as a reasonable mind might accept as adequate to support a conclusion of fact. Hinkley v. Texas State Bd. of Med. Exam'rs, 140 S.W.3d 737, 743 (Tex. App.--Austin 2004, pet. denied). The evidence in the record may actually preponderate against the agency's decision and nevertheless amount to substantial evidence. Latimer, 939 S.W.3d at 244. The agency determines the meaning, weight, and credibility to assign conflicting evidence, Texas State Bd. of Med. Exam'rs v. Scheffey, 949 S.W.2d 431, 437 (Tex. App.--Austin 1997, pet. denied), and we may not set aside an agency decision because testimony was conflicting or disputed or because it did not compel the agency's decision. Firemen's & Policemen's Civil Serv. Comm'n v. Brinkmeyer, 662 S.W.2d 953, 956 (Tex. 1996). We are ultimately concerned with the reasonableness of the agency's order, not its correctness. See id.

A court reviewing an agency action "shall reverse and remand the cause to the agency when substantial rights of the appellant have been prejudiced by an agency's findings that are not reasonably supported by substantial evidence considering the reliable evidence in the record as a whole." Hinkley, 140 S.W.3d at 743; see Tex. Gov't Code Ann. § 2001.174(2)(E). A trial court's ultimate determination whether substantial evidence supports an agency's order is a question of law, which we review de novo. Texas Dep't of Pub. Safety v. Jackson, 76 S.W.3d 103, 106 (Tex. App.--Houston [14th Dist.] 2002, no pet.).

We have previously summarized the reliable and probative evidence in the record. Several key facts tending to support the ALJ's findings were undisputed: Dr. Sanchez and Officer Hill met several times under circumstances that could reasonably be considered suspicious, Sanchez avoided informing Sappington about his dealings with Hill even though Sappington and Hill were good friends, Sanchez paid Hill $8,000, and this payment was for purposes that included Hill's purchase of a gun.

Hill also testified unequivocally that after he explained legal procedures for addressing M.G.'s threats, Sanchez told him that "he didn't want anything like that done," told Hill "perhaps he could get a gun," and said, "boom, boom, boom," while holding his hand up as if he was holding a gun. During subsequent meetings, Hill testified, Sanchez discussed the need for Hill to purchase an unregistered gun and told him that the act needed to be done on a particular night when Sanchez would be "visible" with his friends. At their final meeting, Hill recounted that Sanchez asked if there was a picture to confirm that the act had been done and agreed to pay Hill more money for completing the act. Hill also testified that he repeatedly used the term "kill" to describe the act he was planning to commit on M.G. and that Sanchez never suggested there had been a misunderstanding.

Although Sanchez offered controverting evidence, the ALJ could reasonably have concluded that Hill's version of the conversations was more plausible. Sanchez's account begs the questions, for example, why he would pay for Hill to purchase an unlicensed gun and to ensure such secrecy if their objective was to have M.G. arrested, deported, or intimidated, and why he would want a photo, except to see the body. In any event, we must resolve evidentiary ambiguities in favor of the administrative order with a finding of substantial evidence to support the ALJ's decision. Railroad Comm'n v. Torch Operating Co., 912 S.W.2d 790, 792 (Tex. 1995).

We conclude that substantial evidence supports the challenged findings. We overrule Sanchez's second issue.

Are the fact findings sufficient to support the Board's disciplinary grounds?

Dr. Sanchez asserts that fact findings 7, 10, 11, and 12 cannot, as a matter of statutory construction, support the Board's conclusion that he "committed unprofessional or dishonorable conduct that is likely to . . . injure the public" under section 164.052(a)(5) without additional findings or conclusions establishing that his acts were "related to professional dereliction in the practice of medicine or conduct under the cloak of medical treatment."

Statutory construction presents questions of law that we review de novo. Bragg v. Edwards Aquifer Auth., 71 S.W.3d 729, 734 (Tex. 2002); Edwards Aquifer Auth. v. Chemical Lime, Ltd., 212 S.W.3d 683, 697 (Tex. App.--Austin 2006, pet. filed). In construing a statute, our objective is to determine and give effect to the legislature's intent. Texas Dep't of Protective & Regulatory Servs. v. Mega Child Care, Inc., 145 S.W.3d 170, 176 (Tex. 2004); see also Tex. Gov't Code Ann. § 312.005 (West 2005). We ascertain that intent "first and foremost" from the statute's language as written. Lexington Ins. Co. v. Strayhorn, 209 S.W.3d 83, 85 (Tex. 2006). We must consider the statute as a whole, not individual provisions in isolation, and we should not give one provision a meaning out of harmony or inconsistent with other provisions, even though it might be susceptible to such a construction standing alone. Texas Dep't of Transp. v. Needham, 82 S.W.3d 314, 318 (Tex. 2002); Fitzgerald v. Advanced Spine Fixation Sys., Inc., 996 S.W.2d 864, 866 (Tex. 1999).

The Medical Practice Act establishes the Board as an agency of the executive branch "with the power to regulate the practice of medicine." Tex. Occ. Code Ann. § 152.001 (West Supp. 2006). "Practicing medicine" is defined as "the diagnosis, treatment, or offer to treat a mental or physical disease or disorder or a physical deformity or injury by any system or method, or the attempt to effect cures of those conditions, by a person who (A) publicly professes to be a physician or surgeon; or (B) directly or indirectly charges money or other compensation for those services." Id. § 151.002(a)(13) (West Supp. 2006). The Board is empowered to adopt rules and bylaws as necessary to "regulate the practice of medicine in this state" and "enforce this subtitle." Id. § 153.001 (West 2004). It is also empowered to refuse to admit prospective licensees to its examination, to refuse to issue licenses, and "to take disciplinary action against a person" based on grounds enumerated in section 164.051 of the occupations code. See id. § 164.051(a). Some of these grounds are certain acts committed within the practice of medicine. See id. § 164.051(a)(6) ("fails to practice medicine in an acceptable professional manner consistent with public health and welfare."), (7) (peer review or hospital disciplinary action when Board finds that action was based on "unprofessional conduct or professional incompetence that was likely to harm the public"), (8) ("is subject to repeated or recurring meritorious health care liability claims that in the board's opinion evidence professional incompetence likely to injure the public"). Other grounds, however, concern traits of fitness or character that may impact--directly or indirectly--the person's ability to practice medicine. See id. § 164.051(a)(2) (conviction of felony or misdemeanor involving moral turpitude), (4) ("is unable to practice medicine with reasonable skill and safety to patients because of (A) illness; (B) drunkenness; (C) excessive use of drugs, narcotics, chemicals, or another substance; or (D) a mental or physical condition"), (5) ("is found by a court judgment to be of unsound mind").

Section 164.051 also includes among the grounds for denial or disciplinary action the commission of "an act prohibited under Section 164.052." See id. § 164.051(a)(1). Section 164.052 enumerates several "prohibited practices" by "[a] physician or an applicant for a license." See id. § 164.052(a). Many of these grounds involve deception in taking a medical examination, obtaining a license, or in the representing or holding forth of the licensing status of oneself or one's affiliates. See id. § 164.052(a)(1)-(3), (6)-(15), (17). However, "prohibited practices" also include "us[ing] alcohol or drugs in an intemperate manner that, in the board's opinion, could endanger a patient's life," id. § 164.052(4), and "committ[ing] unprofessional or dishonorable conduct that is likely to deceive or defraud the public, as provided by Section 164.053, or injure the public." Id. § 164.052(5). They also include performing or procuring, or aiding or abetting the procurement of a "criminal abortion," or attempting such acts. Id. § 164.052(16).
Section 164.053, in turn, defines "unprofessional or dishonorable conduct likely to deceive or defraud the public" "[f]or purposes of Section 164.052(a)(5)." Id. § 164.053(a). The definition "includes conduct in which a physician . . . commits an act that violates any state or federal law if the act is connected with the physician's practice of medicine." Id. § 164.053(a)(1). As the Board observes, the plain language of section 164.052(a)(5) incorporates the limitations and definitions of section 164.053 only with regard to "unprofessional or dishonorable conduct that is likely to deceive or defraud the public." Id. § 164.052(a)(5) ("committ[ing] unprofessional or dishonorable conduct that is likely to deceive or defraud the public, as provided by Section 164.053, or injure the public."). Conversely, section 164.053 defines only "unprofessional or dishonorable conduct likely to deceive or defraud the public" under section 164.052(a)(5). Id. § 164.053 (emphasis added). Neither provision purports to limit "unprofessional or dishonorable conduct likely to . . . injure the public." Thus, read in isolation, nothing in either section 164.052(a)(5) or section 164.053 would prevent "an act that violates any state . . . law" that is not "connected with the physician's practice of medicine" from constituting "unprofessional or dishonorable conduct likely to . . . injure the public." See id. §§ 164.052(a)(5), .053(a)(1).
Dr. Sanchez, however, points out that section 164.052 refers to "prohibited practices" and that the term "practice" or "practices" throughout the Medical Practice Act refers to the practice of medicine. See id. §§ 151.001 (subtitle may by cited as "the Medical Practice Act"), .002(12) (defining "physician" as "person licensed to practice medicine in this state."), .002(13) (defining "practicing medicine"); 164.052(a) ("physician or license applicant commits a prohibited practice if . . . .") (emphases added). From this statutory context, Sanchez urges us to infer legislative intent that the "prohibited practice" of "unprofessional or dishonorable conduct that is likely to . . . injure the public" refers solely to acts or conduct committed within or under the guise of his practice of medicine.

Dr. Sanchez also emphasizes that the legislature specifically enumerated certain types of criminal violations that could serve as bases for Board discipline--and that these do not include his violation. As previously noted, section 164.053 includes violations of state and federal law "if the act is connected with the physician's practice of medicine" among the acts constituting "unprofessional or dishonorable conduct likely to deceive or defraud the public" under section 164.052(a)(5). Sanchez also observes that section 164.051, at relevant times, included as a disciplinary ground only convictions for felonies and misdemeanors involving moral turpitude, and did not encompass his order of deferred adjudication. Act of May 13, 1999, 76th Leg., R.S., ch. 388, § 1, 1999 Tex. Gen. Laws 1431, 1517 (amended 2003) (current version at Tex. Occ. Code Ann. § 164.051(a)(2) (West 2004)). (11) Sanchez contends that by specifying only these types of criminal violations that could be a basis for Board discipline, the legislature manifested intent to preclude the use of other criminal violations as a basis for discipline, and that this specific intent must control our construction of section 164.052(a)(5)'s more general "unprofessional or dishonorable conduct that is likely to . . . injure the public."

We disagree with Dr. Sanchez's construction of "unprofessional or dishonorable conduct that is likely to . . . injure the public" under section 164.052(a)(5). Under the provision's plain language, the act of soliciting murder is one "likely to . . . injure the public," and Sanchez does not challenge the Board's fact finding that conduct likely to result in the death of M.G. is "likely to injure the public." Nor is there any serious dispute that such an act is "dishonorable" under any ordinary meaning of that term, if not also "unprofessional." (12)

We also conclude that the Medical Practice Act, construed as a whole, does not manifest legislative intent to strictly limit section 164.052's "prohibited practices" solely to acts or conduct committed within or in the guise of medical practice. To the contrary, section 164.052 reflects a broader intent to prevent unqualified or otherwise unfit individuals from practicing medicine. Many of the "prohibited practices" concern fraud or misconduct by license applicants in obtaining a license, see Tex. Occ. Code Ann. § 164.052(a)(1)-(3), (8), (11), (12); misrepresentation of a person's licensing status or medical credentials, id. § 164.052(a)(9), (10), (13)-(15), (17); and false or misleading advertising. Id. § 164.052(a)(6), (7). Other "prohibited practices" include using alcohol or drugs in an "intemperate manner that, in the board's opinion, could endanger a patient's life." Id. § 164.052(a)(4). These "prohibited practices," while obviously concerned with preventing unqualified or unfit persons from actually harming individual patients, also reflect a broader legislative intent to ensure public trust and confidence that it is safe to seek care from Texas physicians. These dual concerns are also reflected in the other disciplinary grounds enumerated in section 164.051. See id. § 164.051(2) (conviction of felony or crime involving moral turpitude), (4) (illness, drunkenness, excessive drug use, or "a mental or physical condition" rendering person "unable to practice medicine with reasonable skill and safety"), (5) ("found by a court judgment to be of unsound mind"). (13)

The Board acted consistently with this legislative intent in concluding that Sanchez's solicitation of M.G.'s murder is "unprofessional or dishonorable conduct that is likely to . . . injure the public." Even if not directly related to his practice of medicine, Sanchez's acts serve to undermine public trust and confidence in the safety of Texas medicine, if not manifesting behaviors that would actually endanger patients. Although we can foresee cases where the Board conceivably could "stretch" the application of section 164.052(a)(5) beyond its permissible bounds, as Sanchez contends occurred here, a physician's solicitation of capital murder is not one of them. (14)

Finally, we are not persuaded by Dr. Sanchez's contention that the legislature's specific inclusion of certain types of criminal violations as Board disciplinary grounds evidences intent to limit the scope of other, independent disciplinary grounds--such as unprofessional or dishonorable conduct likely to injure the public--where such conduct also constitutes a criminal violation. Sanchez's logic would imply that the legislature's inclusion of excessive drunkenness and drug usage as both a section 164.051 disciplinary ground and a section 164.052(a) "prohibited practice" are limited to that which results in a criminal conviction. See Tex. Occ. Code Ann. §§ 164.051(a)(1), (4), .052(a)(4).

We hold that the Board's fact finding that Dr. Sanchez solicited M.G.'s murder is sufficient as a matter of law to support its conclusion of law 3, "Based on Finding of Fact No. 12, Dr. Sanchez committed unprofessional and dishonorable conduct that was likely to injure the public, in violation of Tex. Occ. Code § 164.052(a)(5)." This conclusion, in turn, supports the Board's conclusion of law 4, "Tex. Occ. Code § 164.051 and 164.52(a)(5) authorize the Board to discipline Dr. Sanchez for his unprofessional and dishonorable conduct that was likely to injure the public."

We overrule Dr. Sanchez's first and sixth issues.

The Board's modification of the ALJ's PFD

Sanchez also claims that the Board violated the APA in deleting the ALJ's conclusion of law 5, which, as previously discussed, stated that "Dr. Sanchez's solicitation of murder of M.G. did not occur while Dr. Sanchez was engaged in the practice of medicine, as the term is defined in Tex. Occ. Code 151.002(a)(13)." An agency may modify an ALJ's order or change an ALJ's finding of fact or conclusion of law only if the agency determines that: (1) the ALJ improperly applied or interpreted the law, agency rules or policies, or prior administrative decisions; (2) the ALJ based his decision on a prior administrative decision that is incorrect; or (3) a finding of fact contains a technical error requiring correction. Tex. Gov't Code Ann. § 2001.058(e). The agency is required to explain with particularity its specific reason and legal basis for each change made. Granek, 172 S.W.3d at 780-81. The agency must "articulate a rational connection between an underlying agency policy and the altered finding of fact or conclusion of law." Levy v. Texas State Bd. of Med. Exam'rs, 966 S.W.2d 813, 815 (Tex. App.--Austin 1998, no pet.).
Our disposition of Sanchez's first and sixth issues also defeats his contention here. As earlier noted, the Board explained that conclusion of law 5 was unnecessary to support the disciplinary ground on which the Board had ultimately relied--that Dr. Sanchez had committed unprofessional and dishonorable conduct that was likely to injure the public--and did not accurately reflect agency policy. We agree that, in light of the Board's other findings and conclusions, conclusion of law 5 was unnecessary. It was within the Board's discretion to delete it, and it did so in compliance with section 2001.058(e). See Pierce v. Texas Racing Comm'n, 212 S.W.3d 745, 753 (Tex. App.--Austin 2006, pet. filed); F. Scott McCown & Monica Leo, When Can an Agency Change the Findings or Conclusions of an Administrative Law Judge?, 50 Baylor L. Rev. 65, 86 (1998) (15); see also Tex. R. App. P. 44.1. We overrule Sanchez's fourth issue.

CONCLUSION

Having overruled Dr. Sanchez's issues on appeal, we affirm the judgment of the district court.
____________________________________
Bob Pemberton, Justice
Before Justices Puryear, Pemberton and Henson
Affirmed
Filed: June 27, 2007

1. Appellee Donald W. Patrick, M.D., is the Executive Director of the Board.
2. The court also ordered Dr. Sanchez not to have any contact with M.G.
3. That provision defines "practicing medicine" as "the diagnosis, treatment, or offer to treat a mental or physical disease or disorder or a physical deformity or injury by any system or method, or the attempt to effect cures of those conditions, . . ." Tex. Occ. Code Ann. § 151.002(a)(13) (West Supp. 2006).
4. The Board emphasized that it "is charged with the duty and has the sole authority to make the final decision in this matter, and that includes the decision as to the appropriate sanctions."
5. Sanchez's fifth, third, and second issues, respectively.
6. On this basis, Sanchez's first issue challenges the Board's conclusion that he violated section 164.052(a)(5) of the occupations code. Similarly, Sanchez urges in his sixth issue that the Board acted arbitrarily and capriciously and abused its discretion by failing to "consider the requirement that the alleged act be within the practice of medicine," and thus "did not consider the factors that were relevant to its decision and considered irrelevant factors." An agency decision may be found arbitrary and capricious if it is based on legally irrelevant factors or if legally relevant factors were not considered. City of El Paso v. Public Util. Comm'n, 883 S.W.2d 179, 184 (Tex. 1994); Centerpoint Energy Houston Elec., LLC v. Public Util. Comm'n, 212 S.W.3d 389, 400 (Tex. App.--Austin 2006, pet. abated).
7. His fourth issue.
8. See Tex. R. Evid. 1002, 1003.
9. Sanchez complains that the Board failed to introduce evidence meeting the seven-part predicate for the admission of recordings stated in Cummings v. Jess Edwards, Inc., 445 S.W.2d 767 (Tex. Civ. App.--Corpus Christi 1969, writ ref'd n.r.e.): (1) a showing that the recording device was capable of taking testimony; (2) a showing that the operator of the device was competent; (3) establishment of the authenticity of the correctness of the recording; (4) a showing that changes, additions, or deletions have not been made; (5) a showing of the manner of the preservation of the recording; (6) identification of the speakers; and (7) a showing that the testimony elicited was voluntarily made without any kind of inducement. Id. at 773. However, the Edwards criteria did not survive the adoption of rule 901 of the rules of evidence. Angleton v. State, 971 S.W.2d 65, 69 (Tex. Crim. App. 1998).
10. Restated here for the reader's convenience:
7. During this [initial October 6, 2000] meeting between Dr. Sanchez and Officer Hill, Dr. Sanchez indicated to Officer Hill that he wanted M.G. killed. Officer Hill told Dr. Sanchez that he had to think about his request and would contact Dr. Sanchez later.
. . . .
10. Officer Hill's testimony and the tape recorded conversations between Dr. Sanchez and Officer Hill establish by a preponderance of the evidence that Dr. Sanchez solicited Officer Hill to kill M.G.
11. Dr. Sanchez agreed to pay Officer Hill $20,000 to kill M.G. On October 7, 2000, Dr. Sanchez paid Officer Hill $8,000 cash as a partial payment of the agreed price. Dr. Sanchez agreed to pay Officer Hill the balance of $12,000 after M.G. was killed.
12. Dr. Sanchez solicited Officer Hill to murder M.G.
11. As noted previously, this provision was subsequently amended to include being "convicted of, or is placed on deferred adjudication, community supervision or deferred disposition for a felony or misdemeanor involving moral turpitude." Act of May 23, 2003, 78th Leg., R.S., ch. 202, § 31, 2003 Tex. Gen. Laws 841, 841 (emphasis added).
We also note that the Board adopted a rule in 2003--after Sanchez's alleged conduct was committed--providing that unprofessional and dishonorable conduct that is likely to deceive, defraud, or injure the public within the meaning of the Act includes the commission of a felony, whether or not there is a complaint, indictment, or conviction. 28 Tex. Reg. 10496 (2003) (codified at 22 Tex. Admin. Code § 190.8(2)(S)(i) (2006)) (proposed Sept. 5, 2003). The rule does not require that the commission of the felony be connected to the practice of medicine.
12. Before the ALJ, Sanchez argued that the term "unprofessional" denoted that the act must be connected to the practice of medicine. Sanchez does not advance this view on appeal.
13. We also note that section 164.057 requires the Board to suspend a physician's license on proof that the physician has been initially convicted of a felony. Tex. Occ. Code Ann. § 164.057 (West 2004). Likewise, section 164.058 provides that, "[r]egardless of the offense," the Board shall suspend the license of a physician serving a prison term in a state or federal penitentiary during the term of incarceration. Id. § 164.058 (West 2004).
14. We express no opinion regarding the application of section 164.052(a)(5) beyond the facts presented here.
15. See also Smith v. Montemayor, No. 03-02-00466-CV, 2003 Tex. App. LEXIS 5099, at *26-27 (Tex. App.--Austin June 19, 2003, no pet.) (mem. op.).