OPINION
This appeal arises from an expedited declaratory judgment action instituted by the City of Houston to validate an ordinance raising the City’s water and waste-water service rates. Appellants Bruce R. Hotze and Paul Bettencourt (collectively “Intervenors”) appeal from the district court’s judgment upholding the validity of the City’s ordinance and from the district court’s post-trial orders requiring Interve-nors to post a security bond and dismissing them from the case for failure to post the security bond. In three issues challenging the district court’s security-bond orders, Intervenors assert that the district court erred because (1) the Expedited Declaratory Judgment Act, Tex. Gov’t Code Ann. §§ 1205.001-.152 (West 2000) (“EDJA”), security-bond provisions apply only to proceedings before the district court; (2) the EDJA’s security-bond provisions violate the open courts doctrine of the Texas Constitution; and (3) the evidence is insufficient to support the amount of the bond set by the district court. In three additional issues, Intervenors assert that the district court erred in rendering judgment for the City because the EDJA is unconstitutional, the evidence was insufficient to support the City’s water and wastewater rate increases, and the City passed the rate-increase ordinance without first holding an election required by city charter. Based on our holdings that the EDJA is not unconstitutional and that the district court was required under the EDJA to order Intervenors to post a security bond, we will affirm the district court’s orders setting the security bond and dismissing Intervenors from the case for failure to post the security bond. Because Intervenors failed to post the security bond as required by the EDJA, we lack jurisdiction to consider Intervenors’ substantive claims regarding the validity and legality of the City’s rate increases, and thus we will dismiss the remainder of In-tervenors’ issues for lack of jurisdiction.
FACTUAL AND PROCEDURAL BACKGROUND
In April 2010, after determining that the City’s water and wastewater utility system lacked sufficient operational revenue to pay its projected costs of service for 2011 and to satisfy certain of its previously incurred bond obligations, the City adopted an ordinance increasing and adjusting the utility system’s water and wastewater rates (“2010 ordinance”). Shortly after adopting the 2010 ordinance, the City filed this suit in Travis County, seeking declarations that the City (1) had legally adopted and could implement the 2010 ordinance’s rate increases without voter approval, and (2) could legally adjust the rates in the future as provided by the 2010 ordinance.
The City had filed a pretrial motion with the district court seeking- an order requiring Intervenors to post a security bond to cover any damages or costs that the City might incur due to delay from Intervenors’ continuing opposition in this case. When the district court heard the City’s motion for security bond two weeks after trial, the City presented evidence that it would incur damages ranging from $14 million to $28 million if Intervenors appealed the district court’s judgment, depending on the length of the appeal. The potential damages alleged by the City included its inability to issue new bonds and its costs and expenses resulting from inflation, contract re-bidding, sewage overflows, and purchasing the extra electricity and chemicals required to operate its old equipment. In-tervenors did not challenge the City’s damage evidence, but instead argued that they could not afford to post any bond amount in excess of $100. The district court granted the City’s motion, set the security bond at $1 million, and ordered Interve-nors to post the bond within eleven days or be dismissed from the case. After Inter-venors failed to post the bond, the district court dismissed them from the case. In-tervenors appeal. 2
DISCUSSION
We begin by addressing Intervenors’ constitutional and security-bond issues. In addition to Intervenors’ assertion that the entire EDJA is unconstitutional, they argue that the EDJA’s security-bond provisions violate the Texas Constitution’s open courts doctrine, that the EDJA’s security-bond requirements do not apply to appeals, and that the evidence presented at the hearing on this matter was insufficient to support the amount of the security bond. The City asserts that the EDJA and its security-bond provisions pass constitutional muster, and further, that Inter-venors’ failure to post the ordered security bond deprives this Court of jurisdiction to determine the validity of the City’s water and wastewater rate increases.
Standard of review
In addressing a constitutional challenge to a statute, we begin with the presumption that the statute is constitutional.
Walker v. Gutierrez,
To the extent that resolution of these challenges turns on construction of the EDJA, we review these questions of law de novo.
See State v. Shumake,
We also presume that the Legislature was aware of the background law and acted with reference to it.
See Acker v. Texas Water Comm’n,
The Expedited Declaratory Judgments Act
The Legislature enacted the EDJA to provide issuers of public securities — e.g., the City of Houston — a method of quickly and efficiently adjudicating the validity of public securities and acts affecting those public securities.
See Rio Grande Valley Sugar Growers, Inc. v. Attorney Gen. of Tex.,
(1) Issuers have a flexible time frame and circumstances for bringing an EDJA action, see id. § 1205.025;
(2) Issuers are allowed to provide notice of the action through publication, id. §§ 1205.041-.044;
(3) Courts are empowered to enjoin other related proceedings, id. § 1205.061;
(4) Courts must expedite trials and appeals, id. §§ 1205.065, .068(e), .069;
(5) Final judgment is binding on all interested parties and is an injunction against future attacks, id. § 1205.151; and
(6) Courts can order an opposing party, in a situation where the district court determines that the opposing party’s challenge is not likely to prevail, to post a security bond covering any damages caused by delays, or face dismissal from the action, id. §§ 1205.101-.104.
The EDJA security-bond provisions allow an issuer, at any time before entry of judgment, to file a motion seeking an order that an opposing party or intervenor be dismissed unless they post a bond covering the issuer’s possible damages or costs arising from the opposing party’s participation in the suit.
Id.
§ 1205.101. These damages and costs may include “any damage or cost that may occur because of the delay caused by the continued participation of the opposing party or in-tervenor in the action,” but notably, the security bond is forfeited only if the issuer “finally prevails and obtains substantially the judgment requested in its petition.”
Id.
The district court must issue an order to post such a bond unless the opposing party can show that he has a probable injury and right to recovery sufficient to entitle him to a temporary injunction.
See id.
§ 1205.102;
Buckholts,
Applicability of the security-bond provisions
In this case, Intervenors do not dispute that the City timely filed its motion for a security bond and thus was entitled to a hearing on that issue. See id. § 1205.101(b). Nor do they dispute that the City presented evidence at the hearing that the City would lose money as a result of construction delays in planned capital improvement projects if Intervenors appealed the district court’s judgment. Specifically, one of the City’s witnesses testified that the City would be unable to issue bonds needed to fund future water and wastewater projects — i.e., repairing and upgrading sewer fines and replacing old or outdated equipment — until the 2010 ordinance was finally approved on appeal. Another -witness testified that a six-month delay in these capital improvement projects would cost the City $14 million, and a twelve-month delay would cost $28 million. These damages included increased costs related to re-bidding contracts, inflation, and continued use of outdated equipment. Intervenors did not elicit testimony or present evidence to controvert this evidence or challenge its accuracy. Instead, Hotze testified that he and Bettencourt intended to appeal the district court’s judgment, but that they could only afford to post a bond in the amount of $100 each.
Although Intervenors do not specifically challenge the district court’s authority to order Intervenors to post a bond, we note that once the City requested the security bond, it was mandatory under the EDJA for the district court to require a bond
On appeal, Intervenors assert that the district court’s order requiring a security bond from them was inappropriate because trial had already occurred and the EDJA only requires a bond prior to trial. In other words, Intervenors argue that the EDJA does not require a security bond for an appeal of an EDJA judgment.
3
We disagree. Although issuers must file a motion requesting a security bond prior to entry of final judgment, Tex. Gov’t Code Ann. § 1205.101(a), nothing in the EDJA suggests that the security bond is applicable only before trial. In fact, the bond amount is determined with respect to whether the issuer
“finally
prevails,” which suggests that the bond is intended to be effective through appeal.
See id.
§ 1205.103(b) (emphasis added). Absent indication from the Legislature that the security bond’s application and duration are somehow limited, we decline to read such a limitation into the statute.
See In re Bell,
EDJA’s constitutionality
Intervenors assert that, regardless of whether the district court here correctly followed EDJA procedures for ordering a security bond, the EDJA’s security-bond provisions violate the open courts doctrine of the Texas Constitution.
See
Tex. Const, art. I, § 13 (“All courts shall be open, and every person for an
The supreme court has held that the open courts doctrine
assures that a person bringing a well-established common-law cause of action will not suffer unreasonable or arbitrary denial of access to the courts.... A statute has the effect of denying access to the courts if it unreasonably abridges a plaintiffs right to obtain redress for injuries caused by the wrongful acts of another. Proof of an open courts violation requires two elements: (1) a cognizable, common-law claim that is statutorily restricted, and (2) the restriction is unreasonable or arbitrary when balanced against the statute’s purpose and basis.
Yancy v. United Surgical Partners Int'l, Inc.,
Determining whether a statutory restriction is unreasonable or arbitrary requires us to balance the Legislature’s actual purpose in enacting a law against that law’s interference with the individual’s right of access to the courts.
Id.; LeCroy v. Hanlon,
Since the mere existence of [a suit contesting a bond] is likely to cause damages, it was not an unreasonable or arbitrary action for the legislature to provide that a contestant be required to post bond for the damages accruing solely because of the pendency of the suit, to be paid only if the contestant should be unsuccessful in the suit. We agree with the trial court’s determination that a legislative purpose in enacting the [EDJA] was to stop “the age old practice allowing one disgruntled taxpayer to stop the entire bond issue by simply filing suit.” We find no denial of due process in the legislature’s provision of a bond for damages to stop the abuse.
Buckholts,
Intervenors also challenge the constitutionality of the EDJA’s permissive-venue provision, which allows an issuer to bring an EDJA action “in a district court of Travis County or of the county in which the issuer has its principal office.” See Tex. Gov’t Code Ann. § 1205.022. Specifically, Intervenors argue that this provision violates the Texas Constitution’s separation of powers and open courts doctrines because it allows Travis County district courts to “adjudicate and bind citizens in another County in Texas.” We disagree that the EDJA’s venue provision violates these doctrines.
The separation of powers doctrine,
see
Tex. Const, art. II, § 1, prohibits one branch of state government from exercising power inherently belonging to another branch of state government.
General Servs. Comm’n v. Little-Tex Insulation Co., Inc.,
Intervenors’ related assertion that permissive venue in Travis County violates the open courts doctrine fails as well. As discussed previously, the open courts doctrine “assures that a person bringing a well-established common-law cause of action will not suffer unreasonable or arbitrary denial of access to the courts.”
Yancy,
Intervenors’ remaining constitutional challenges — i.e., that the entire EDJA violates due process and that the EDJA’s notice provision is unconstitution
Bond amount
Having determined that the district court properly granted the City’s motion for security bond and having overruled Intervenors’ constitutional challenges to the EDJA, we next address the district court’s order setting the amount of the bond. We review a district court’s decision on the amount of a bond for an abuse of discretion.
See
Tex. Gov’t Code Ann. § 1205.103(a) (requiring district court to set bond “in amount determined by the court to be sufficient” to cover possible damages);
In re Talco-Bogata Consol. Indep. Sch. Dist. Bond Election,
The EDJA mandates that the district court set the bond amount as follows:
The bond must be in an amount determined by the court to be sufficient to cover any damage or cost, including an anticipated increase in interest rates or in a construction or financing cost, that may occur because of the delay caused by the continued participation of the opposing party or intervenor in the acts if the issuer finally prevails and obtains substantially the judgment requested in its petition.
Tex. Gov’t Code Ann. § 1205.103(b). At the hearing on its motion for security
Intervenors’ failure to post the bond
Intervenors do not dispute that they failed to post the required bond before the eleventh day after the district court issued the order setting the bond amount. Thus, it was mandatory for the district court to dismiss Intervenors from the suit. See id. § 1205.104(a). Further, Intervenors’ failure to post the security bond triggered an EDJA provision that explicitly limits our jurisdiction to consider their remaining issues on appeal:
If an appeal ... is taken and the order of the lower court is affirmed or affirmed as modified, and the required bond is not posted before the 11th day after the date of the entry of the appropriate order, no court has further jurisdiction over any action to the extent it involves an issue that was or could have been raised in the action under this chapter....
Id.
§ 1205.105(c). The phrase “appropriate order” in this provision refers to the order of the district court setting the bond.
Buckholts,
CONCLUSION
Having overruled Intervenors’ constitutional and security-bond issues, we affirm the district court’s order requiring Inter-venors to post a security bond of $1 million to continue as participants in this suit. We likewise affirm the district court’s order dismissing Intervenors from this suit for failure to post the required security bond. We dismiss the remainder of Inter-venors’ appeal for lack of jurisdiction.
Notes
. The Houston Court of Appeals discusses these amendments in detail in
White v. Robinson,
. Intervenors filed three notices of appeal in this case: No. 03-10-423 in response to the district court’s judgment in favor of the City; No. 03-10-433 in response the district court's order requiring a security bond from Interve-nors; and No. 03-10-497 in response to the district court’s order dismissing Intervenors for failure to post the security bond. We granted the parties’ joint motion to consolidate these matters.
. Intervenors cite generally to the supreme court's decision in Buckholts to support their assertion that the bond applies only pretrial, but that case involved a pretrial dismissal for failure to pay the EDJA bond, and accordingly does not inform our decision here. See Buckholts Indep. Sch. Dist. v. Glaser, 632 S.W.2d 146, 147-48 (Tex.1982).
. We also note that the supreme court has held that the denial of an appeal does not violate the Texas Constitution’s open courts provision.
See Sultan v. Mathew,
