Case Information

*0 FILED IN 3rd COURT OF APPEALS AUSTIN, TEXAS 6/25/2015 3:39:16 PM JEFFREY D. KYLE Clerk NO. 03-15-00285-CV THIRD COURT OF APPEALS 6/25/2015 3:39:16 PM JEFFREY D. KYLE AUSTIN, TEXAS 03-15-00285-CV *1 ACCEPTED ^[5828646] CLERK ____________________________________________________ IN THE THIRD COURT OF APPEALS AT AUSTIN, TEXAS ____________________________________________________ VOLKSWAGEN GROUP OF AMERICA, INC., and AUDI OF AMERICA,

INC.,

Appellants ,

v.

JOHN WALKER III, in his Official Capacity as Chairman of the Texas

Department of Motor Vehicles Board, and the HONORABLE MICHAEL J.

O’MALLEY, and the HONORABLE PENNY A. WILKOV, in their Official

Capacities as Administrative Judges for the State Office of Administrative

Hearings,

Appellees . ____________________________________________________ On Appeal from the 353rd District Court, Travis County, Texas ___________________________________________________ JOHN WALKER, III’S RESPONSE TO APPELLANT’S REQUEST FOR

EMERGENCY RELIEF ____________________________________________________ KEN PAXTON DENNIS M. MCKINNEY

Attorney General of Texas Assistant Attorney General

State Bar No. 13719300 CHARLES E. ROY O FFICE OF THE T EXAS A TTORNEY

First Assistant Attorney General G ENERAL

A DMINISTRATIVE L AW D IVISION JAMES E. DAVIS P.O. Box 12548

Deputy Attorney General for Austin, Texas 78711-2548

Civil Litigation Telephone: (512) 475-4020

Facsimile: (512) 320-0167 DAVID A. TALBOT, JR. dennis.mckinney@texasattorneygeneral.

Chief, Administrative Law Division gov

Attorneys for John Walker III *2 TO THE HONORABLE JUSTICES OF THE COURT:

I. On June 15, 2015, Appellant Volkswagen Group of America, Inc., and Audi of America, Inc., (“Audi”) filed its Verified Motion for Temporary

Relief to Protect the Court’s Jurisdiction. In said Motion, Appellant seeks,

pursuant to the Texas Rules of Appellate Procedure 29.3 and 43.6, to have

certain State Office of Administrative Hearings (“SOAH”) proceedings and

potential further Texas Department of Motor Vehicles (“TxDMV”) Board

action based upon those SOAH proceedings enjoined so as to protect the

jurisdiction of this Court. Appellee John Walker, III, files this response in

opposition to the granting of the relief requested in Appellant’s Motion.

Granting of temporary relief under Rule 29.3 is improper in this matter because that particular provision of the Rules of Appellate Procedure applies

to interlocutory appeals only. Tex. R. App. P. 29.3. This case involves the

appeal of final judgments dismissing the case in its entirety, therefore Rule

29.3 is inapplicable. Likewise, Rule 43.6 speaks to orders relating to final

judgments of the Court, not interlocutory injunctive orders such as the one

sought here. Tex. Rule App. P. 43.6.

While Texas Government Code section 22.221 gives an appellate court authority to issue writs to enforce its jurisdiction, no injunction should issue

if the party seeking it has an adequate appellate remedy. In re Prudential Ins.

Co. of Am. , 148 S.W.3d 124, 135-36 (Tex. 2004). An appellate remedy is

adequate even though it may involve delay and more expense than obtaining

the temporary relief Audi seeks. In re Masonite Corp. , 997 S.W.2d 194 (Tex.

1999). As explained below, Audi has adequate appellate remedies that will

not be negated by the actions sought to be enjoined, therefore injunctive relief

is improper.

II. The temporary relief sought by Audi amounts to nothing more than a reheated attempt to obtain the injunctive relief denied by the trial court. At

the trial court level, Audi sought temporary restraining orders seeking to

enjoin all further actions in the administrative process pending the outcome of

its suit alleging ultra vires acts by the Appellees. That relief was denied. Audi

then sought a temporary injunction of the administrative process but the trial

court granted Appellants’ pleas to the jurisdiction and dismissed the case.

That dismissal led to this appeal. Audi filed its Notice of Appeal on or about

May 8, 2015, yet did not seek injunctive relief until some five weeks later.

Nothing has transpired since the filing of the Notice of Appeal that created

any exigent circumstances for Audi that might necessitate such relief at this

time.

This Court has the inherent power to grant injunctive relief to preserve its jurisdiction. Tex. Gov’t Code § 22.221 (West 2004); Becker v. Becker ,

639 S.W.2d 23, 24 (Tex. App.—Houston [1st Dist.] 1982, no writ). However,

the Court should not exercise such discretionary power just because Audi

requests it. For example, the Court does not have the jurisdiction to issue

orders merely to preserve the status quo or to prevent loss or damage to a party

pending the outcome of the appeal. In re Gruebel, 153 S.W.3d 686 (Tex.

App.—Tyler 2005, no pet.); EMW Mfg. Co. v. Lemons , 724 S.W.2d 425, 426

(Tex. App.—Fort Worth 1987, no writ). Audi alleges that its claims may be

mooted by actions of the Appellees before this appeal is resolved but in reality

that is mere speculation and a bit unrealistic. If the administrative process is

allowed to move forward then SOAH must issue its Proposal for Decision and

TxDMV must take action on it. See Smith v. Abbott , 311 S.W.3d 62, 69 (Tex.

App.—Austin 2010, pet. denied). (It should be noted that Audi may very well

prevail at the administrative level if that process is allowed to proceed in due

course.) Once the Board issues its final order, if adverse to Audi, a motion

for rehearing will be filed. If that motion is denied Audi has its right to seek

judicial review of TxDMV’s actions. See Tex. Gov’t Code § 2001.174. Any

order of the district court affirming the action of the TXDMV is appealable to

this Court. See Smith, 311 S.W.3d at 71. Audi clearly has an adequate

appellate remedy so that injunctive relief is inappropriate.

This appeal challenges the granting of pleas to the jurisdiction filed by Appellees. It is only tangentially related to the actions being taken by SOAH

and TxDMV. Any temporary relief requested of this Court should be related

to the subject matter of this appeal. Pendleton Green & Assocs. v. Anchor Sav.

Bank , 520 S.W.2d 579, 582 (Tex. App.—Corpus Christi 1975, no writ).

Nothing that might happen in the administrative process will in any way affect

the jurisdiction of this Court to rule on whether the trial court erred in granting

Appellees’ pleas to the jurisdiction. The most favorable final relief Audi can

obtain from this Court is an order remanding the case to the district court.

Audi cannot seek to have its allegations concerning whether Appellees

committed ultra vires acts adjudicated in this proceeding. See Madison v.

Martinez , 42 S.W.2d 84, 86 (Tex. Civ. App.—Dallas 1931, writ ref’d). This

Court should not be expected to weigh in on the validity of Audi’s allegations

beyond that necessary to determine whether the trial court erred in granting

the pleas to the jurisdiction. Whether or not the Appellees acted incorrectly

at the administrative level should be left to be decided in a suit for judicial

review after a final order of the board is issued.

III. Further, the granting of temporary relief as requested by Audi in this case is inappropriate because Audi has its legal remedy in the form of judicial

review at the district and appellate court levels after the TxDMV takes action

on any Proposal for Decision issued by SOAH. Audi seeks an order of the

Court enjoining that legal remedy. The existence of this legal remedy makes

injunctive relief by this Court improper. See Madison , 42 S.W.2d at 86. This

Court only has authority to grant injunctive relief if it can be shown that the

subject matter of the appeal will be destroyed absent such injunction.

Pendleton , 520 S.W.2d at 582. Injunction is not proper merely to preserve the

status quo pending appeal. Becker , 639 S.W.2d at 24. The existence of the

legal remedy of judicial review of an agency order provides Audi with a right

of appeal, ultimately to this Court if it desires, and vitiates Audi’s request for

temporary relief from this Court. The dispute will not be mooted by any

actions that might be taken by the Appellees. A case is moot when a court’s

actions will no longer affect the rights of the parties. In re Smith , No. 10-03-

390-CV, 2004 WL254079 (Tex. App.—Waco Feb. 11, 2004, no pet.). In that

case the Court stated that temporary relief was not appropriate because any

action taken during the pendency of the appeal could be reversed on appeal.

Here, Audi will still be able to pursue its appeal of the granting of the

jurisdictional appeals in this case. Additionally, Audi will also have the right

to seek judicial review of any final order issued by TxDMV. Tex. Gov’t Code

§ 2001.174. Audi can pursue every claim it makes in this suit after the

TxDMV issues its final order and should not be attempting to enjoin that

process. See Smith , 311 S.W.3d at 71.

IV. Audi’s suit is based in part on allegations that Walker acted ultra vires in ordering the matter remanded to SOAH for the taking of additional

evidence and the SOAH Defendants’ reopening the matter after it was

remanded by TxDMV. However, it is clear that Walker and the SOAH

Defendants did not act ultra vires , therefore, they are protected by the doctrine

of sovereign immunity and were properly dismissed by the trial court. Coastal

Habitat Alliance v. Pub. Util. Comm’n , 294 S.W.3d 276 (Tex. App.—Austin

2009, no pet.). Ultra vires acts must either involve actions that exceed that

state official’s authority or involve a refusal to perform a purely ministerial

act. City of El Paso v. Heinrich, 284 S.W.3d 366, 372 (Tex. 2009). Suit for

ultra vires acts will not lie when an official is required to exercise his or her

discretion in the performance of his or her duties. See id . Here, all of Audi’s

claims for declaratory relief are premised on alleged ultra vires acts involving

the Board’s decision to remand the administrative case to SOAH for

consideration of additional evidence. Audi claims that the Board has

exceeded its authority by remanding the matter to SOAH for further evidence.

Clearly, the actions of Walker and the Board in the administrative process did

not exceed their statutory authority in as much as TxDMV is granted exclusive

jurisdiction over all aspects of the distribution and sale of motor vehicles in

the State of Texas, including original jurisdiction to determine its own

jurisdiction. Tex. Occ. Code § 2301.151 (West 2012). TxDMV is further

vested with authority to regulate the sales of dealerships and

dealership/manufacturer disputes. Tex. Occ. Code §§ 2301.359, .360, .458.

See also Buddy Gregg Motor Homes, Inc. v. Motor Vehicle Bd. of the Tex.

Dep’t of Transp. , 156 S.W.3d 91 (Tex. App.—Austin 2004, pet. denied). In

all disputes between manufacturers and dealers wishing to sell their

dealerships, the Legislature has given the Board the unambiguous authority to

rule on all issues. Tex. Occ. Code §§ 2301.359, .360, .458. The Board’s

remand order in this case cannot be ultra vires since it relates directly to the

dispute over the sale of the Audi dealerships in question. An action is ultra

vires only when an agency issues an order completely outside its statutory

jurisdiction or “without any authority whatsoever.” Friends of Canyon Lake,

Inc. v. Guadalupe-Blanco River Auth. , 96 S.W.3d 519 (Tex. App.—Austin

2002, pet. denied), Pennhurst State Sch. & Hosp. v. Halderman , 465 U.S. 89

(1984). Mistakes or errors in procedure in the exercise of the Board’s

authority do not render the Board’s action ultra vires . Friends of Canyon

Lake , 96 S.W.3d at 528; Coastal Habitat Alliance, 294 S.W.3d at 285. Even

assuming arguendo that the Board made a mistake in issuing such order, it

had clear statutory jurisdiction to rule on the dispute. Tex. Occ. Code

§§ 2301.359, .360, .458. It is not ultra vires for an agency to incorrectly

interpret the law. Coastal Habitat Alliance , 294 S.W.3d at 285; N. Alamo

Water Supply Corp. v. Tex. Dep’t of Health , 839 S.W.2d 455, 458-59 (Tex.

App.—Austin 1992, writ denied). Further, rulings in the administrative

process necessarily involve the exercise of statutory discretion by the agency

officials, so the ultra vires exception to the doctrine of sovereign immunity is

not implicated. See Coastal Habitat Alliance , 294 S.W.3d at 285.

Any mistakes in procedure at the administrative level can be rectified in a suit for judicial review. Audi seeks to enjoin the administrative process

(its legal remedy) before there is a final order by TxDMV. This action is

inappropriate because the trial court cannot obtain jurisdiction until Audi has

exhausted its administrative remedies and those remedies are not exhausted

until a final agency order is issued. See Lindsay v. Sterling , 690 S.W.2d 560

(Tex. 1985). Accordingly, the trial court properly dismissed Walker from the

suit for lack of subject matter jurisdiction and there is no basis for the issuance

of the temporary relief requested.

CONCLUSION AND PRAYER For the foregoing reasons, Appellee Walker respectfully requests that this Court deny Audi’s Motion for Temporary Relief, and such other and

further relief to which Appellee may be entitled.

Respectfully submitted, KEN PAXTON

Attorney General of Texas CHARLES E. ROY First Assistant Attorney General JAMES E. DAVIS Deputy Attorney General for Civil Litigation DAVID A. TALBOT, JR.

Division Chief, Administrative Law Division

/s/ Dennis M. McKinney Dennis M. McKinney Assistant Attorney General State Bar No. 13719300 O FFICE OF THE T EXAS A TTORNEY G ENERAL A DMINISTRATIVE L AW D IVISION P. O. Box 12548

Austin, Texas 78711-2548 Telephone: (512) 475-4020 Facsimile: (512) 320-0167 dennis.mckinney@texasattorneygeneral.gov Attorneys for Appellee Walker *11 CERTIFICATE OF COMPLIANCE I hereby certify compliance with Texas Rules of Appellate Procedure 9 and that there are 1,932 words in this document. Microsoft Word was used to

prepare this filing and calculate the number of words in it.

/s/ Dennis M. McKinney Dennis M. McKinney Assistant Attorney General CERTIFICATE OF SERVICE I hereby certify that, in compliance with Rule 9.5 of the Texas Rules of Appellate Procedure, a true and correct copy of the above and foregoing

document has been served on the following on this the 25 th day of June, 2015:

Shawn Stephens

James P. Sullivan

1100 Louisiana Suite 4000

Houston, Texas 77002

Sstephens@kslaw.com

jsullivan@kslaw.com

Fax 713-751-3290

Attorneys for Appellants

Billy M. Donley

Mark E. Smith

811 Main Street, Suite 1100

Houston, Texas 77002-6111

bdonley@bakerlaw.com

mesmith@bakerlaw.com

Fax 713-751-1717

Attorney for Appellants

Kimberly Fuchs

Assistant Attorney General

Texas Attorney General’s Office

P.O. Box 12548

Austin, Texas 78711

kimberley.fuchs@texasattorneygeneral.gov

Attorney for Defendants the Honorable Michael J. O’Malley and the

Honorable Penny A. Wilkov, in their Official Capacities as Administrative

Law Judges for the State Office of Administrative Hearings

J. Bruce Bennett

Cardwell, Hart & Bennett

807 Brazos Suite 1001

Austin, Texas 78701

jjb.chblaw@abcglobal.net

Fax 512-322-0808

William R. Crocker

807 Brazos Suite 1014

Austin, Texas 78701

crockerlaw@earthlink.net

Fax 512-474-2540

Attorneys for Appellees

Ricardo M. Weitz, et al

is Leichter

/s/ Dennis M. McKinney Dennis M. McKinney Assistant Attorney General