Volkswagen Group of America, Inc. And Audi of America, Inc. v. John Walker III, in His Official Capacity as Chairman of the Texas Department of Motor Vehicles Board The Honorable Michael J. O'Malley, the Honorable Penny A. Wilkov, in Their Official Capacities as Administrative Law Judges for the State Office ( 2015 )

ACCEPTED
03-15-00285-CV
5828646
THIRD COURT OF APPEALS
AUSTIN, TEXAS
6/25/2015 3:39:16 PM
JEFFREY D. KYLE
CLERK
NO. 03-15-00285-CV
____________________________________________________
FILED IN
3rd COURT OF APPEALS
IN THE THIRD COURT OF APPEALS AUSTIN, TEXAS
AT AUSTIN, TEXAS 6/25/2015 3:39:16 PM
____________________________________________________
JEFFREY D. KYLE
VOLKSWAGEN GROUP OF AMERICA, INC., and AUDI OF AMERICA, Clerk
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 OFFICE OF THE TEXAS ATTORNEY
First Assistant Attorney General GENERAL
ADMINISTRATIVE LAW DIVISION
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
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
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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.
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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
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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.
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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
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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
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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
8
(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
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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
OFFICE OF THE TEXAS ATTORNEY GENERAL
ADMINISTRATIVE LAW DIVISION
P. O. Box 12548
Austin, Texas 78711-2548
Telephone: (512) 475-4020
Facsimile: (512) 320-0167
dennis.mckinney@texasattorneygeneral.gov
Attorneys for Appellee Walker
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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 25th 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
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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
/s/ Dennis M. McKinney
Dennis M. McKinney
Assistant Attorney General
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