Tex. Educ. Agency v. Hous. Indep. Sch. Dist.

609 S.W.3d 569

The TEXAS EDUCATION AGENCY; Mike Morath, Commissioner of Education in his Official Capacity; and Doris Delaney, in her Official Capacity, Appellants

v.HOUSTON INDEPENDENT SCHOOL DISTRICT, Appellee

NO. 03-20-00025-CV

Court of Appeals of Texas, Austin.

Publication Ordered April 24, 2020

Philip A. Lionberger, Kyle Highful, Cynthia Akatugba, Office of the Attorney General, P. O. Box 12548, Austin, TX 78711, Emily Ardolino, General Litigation Division, Esteban S.M. Soto, Office of the Attorney General, P. O. Box 12548, Capitol Station, Austin, TX 78711, for Appellants.

David J. Campbell, Benjamin Castillo, Kevin O'Hanlon, O'Hanlon, Demerath & Castillo, 808 West Ave., Austin, TX 78701, for Appellee.

Before Chief Justice Rose, Justices Baker and Triana

ORDER

PER CURIAM

Appellants, the Texas Education Agency (TEA or Agency); Mike Morath, Commissioner of Education in his official capacity; and Doris Delaney, in her official capacity, have appealed from the trial court's January 8, 2019 order granting appellee Houston Independent School District's motion for a temporary injunction and implicitly denying appellants' plea to the jurisdiction. In its order, the trial court enjoined the Commissioner from appointing a board of managers to oversee the District's operations and from imposing any sanctions or interventions on the District based on the TEA's Special Accreditation Investigation. It also enjoined Delaney, whom the Commissioner had appointed as a conservator to the District in 2016, "from acting outside her lawful authority to ensure and oversee district-level support to low-performing campuses and the implementation of the updated targeted improvement plan on those campuses." The trial court further denied the Commissioner the right to supersede the temporary injunction while appellants' interlocutory appeal is pending. The trial court found that the $200 previously deposited by the District with the Travis County District Clerk "constitutes sufficient security, in lieu of bond, for any foreseeable harm or compensable damages" that may result from the granting of the temporary injunction. See Tex. R. App. P. 24.2(a)(3). Appellants have filed a Rule 24.4 motion challenging the trial court's decision to allow the District to file a counter-supersedeas bond. See id. R. 24.4 (allowing party to seek review of trial court's ruling on amount and type of security). In response, in addition to opposing appellants' Rule 24.4 motion, the District has moved this Court to grant temporary orders under Rule 29.3 requiring the appellants to abide by the trial court's temporary injunction for the duration of the interlocutory appeal. See id. R. 29.3. For the reasons discussed below, we will grant both motions.

LEGAL FRAMEWORK

Unless the law or the Texas Rules of Appellate Procedure provide otherwise, a judgment debtor is entitled to supersede a judgment or an interlocutory order and thus defer its enforcement while pursuing an appeal. See Tex. R. App. P. 24.1 ; id. R. 29.1(b); id. R. 29.2; see also Miga v. Jensen , 299 S.W.3d 98, 100 (Tex. 2009). The purpose of supersedeas is to preserve the status quo of the matters in litigation as they existed before the issuance of the judgment from which an appeal is taken. See, e.g., Smith v. Texas Farmers Ins. , 82 S.W.3d 580, 585 (Tex. App.—San Antonio 2002, pet. denied). In the context of injunctions, however, status quo means "the last, actual, peaceable, non-contested status which preceded the pending controversy." Universal Health Servs., Inc. v. Thompson , 24 S.W.3d 570, 576-77 (Tex. App.—Austin 2000, no pet.) (quoting Transport Co. v. Robertson Transports, Inc. , 152 Tex. 551, 261 S.W.2d 549, 553-54 (1953) ).

We review a trial court's ruling on supersedeas for an abuse of discretion. See Tex. R. App. P. 29.2 (establishing standard of review for trial court's refusal to permit appellant to supersede interlocutory order); see also id. R. 24.4(a). A trial court abuses its discretion when it acts in an arbitrary or unreasonable manner without reference to guiding rules or principles.

Samlowski v. Wooten , 332 S.W.3d 404, 410 (Tex. 2011). But it has no discretion when determining what the law is or applying the law to facts. Walker v. Packer , 827 S.W.2d 833, 840 (Tex. 1992) (orig. proceeding).

Rule 24.2(a)(3) governs the supersedeas issue in this interlocutory appeal because the temporary injunction is an order "for something other than money or an interest in property." See Tex. R. App. P. 24.2(a)(3) ; id. R. 29.2 (establishing that trial court may permit interlocutory order to be superseded pending appeal in accordance with Rule 24); see also id. R. 29.1(b) (establishing that if appellant is entitled to supersede order without security by filing notice of appeal, perfecting appeal from interlocutory order suspends challenged order). Rule 24.2(a)(3) establishes that the trial court must set the amount and type of security that the "judgment debtor" (here, the appellants) must post in an amount that will adequately protect the "judgment creditor" (here, the District) against loss or damage that the appeal might cause.¹ However, in this case, the trial court applied another part of Rule 24.2(a)(3) that allows the court to decline to permit the judgment to be superseded if the District (as judgment creditor) posts security in an amount and type ordered by the court to secure appellants "against any loss or damage caused by the relief granted," i.e., the temporary injunction, if an appellate court determines, on final disposition, that the temporary injunction was improper. See id. R. 24.2(a)(3). This discretionary security to prevent supersedeas is often referred to as "counter-supersedeas" security.

ANALYSIS

The TEA and the Commissioner (referred to collectively as "the Commissioner," unless there is a need to refer to the movants separately) have moved to vacate the trial court's counter-supersedeas order.² See Tex. R. App. P. 24.4(a) ; see also id. R. 29.2. The Commissioner argues that the trial court abused its discretion by allowing the District to post counter-supersedeas security because a provision that was added to Rule 24.2(a)(3) in 2018 establishes that the trial court must permit the State, a department of the State, or the head of a department of the State, to supersede a judgment, except in a matter arising from a contested case in an administrative enforcement action. In response, the District contends (1) that this lawsuit arises from a contested case in an administrative enforcement action and (2) that the provision relied upon by the Commissioner violates the Texas Constitution's separation-of-powers clause, see Tex. Const. art. II, § 1. In the alternative, it requests that this Court order that the trial court's temporary injunction remain in effect during the pendency of the appeal, pursuant to our power under Rule 29.3 to "make any temporary orders necessary to preserve the parties' rights until disposition of the appeal." See id. R. 29.3.

Before addressing the parties' arguments regarding the application of Rule 24.2(a)(3) and Rule 29.3 in this case, we provide some historical context for the evolution of Rule 24.2(a)(3). The State and its departments have been exempt from filing a bond to appeal an adverse judgment since 1838. In re State Bd. for Educator Certification , 452 S.W.3d 802, 804 (Tex. 2014) (orig. proceeding) ; see also Tex. Civ. Prac. & Rem. Code § 6.001 (exempting certain governmental entities from bond requirement). Until 1984, "the State's right to suspend a final judgment during appeal was close to absolute" because until then the only prerequisite for suspending any final judgment (including judgments other than judgments for recovery of money or property) was filing a supersedeas bond. In re State Bd. for Educator Certification , 411 S.W.3d 576, 577 (Tex. App.—Austin 2013, orig. proceeding) (Jones, C.J., concurring). Because the State was exempt from the requirement of filing a supersedeas bond, the State's filing of a notice of appeal would automatically suspend any judgment. Id.

In 1984, the applicable rule, which later became Rule 24.2(a)(3), was amended to allow the trial court discretion to decide whether to allow a supersedeas bond when the judgment does not involve money, property, or foreclosure. Id. Between 1984 and 2014, the question of whether a trial court had discretion to deny supersedeas to a State entity entitled to automatic supersedeas remained unsettled. See id. at 577-79 (concluding that existing caselaw and language of appellate rules supported existence of some trial-court discretion to deny or undo suspension of final "other judgements" in cases involving exempt governmental entities). The Texas Supreme Court subsequently resolved this question by holding that Rule 24.2(a)(3) gave trial courts discretion to deny State appellants the right to supersede a non-money, non-property judgment if the appellee posts sufficient counter-supersedeas security. See In re State Bd. for Educator Certification , 452 S.W.3d at 803, 808-09 (expressing concern that "the State's position—boundless entitlement to supersede adverse non-money judgments—would vest unchecked power in the executive branch, at considerable expense to the judicial branch, not to mention the wider public we both serve").

In 2017, the 85th Texas Legislature passed House Bill 2776, directing the Texas Supreme Court as follows:

The supreme court shall adopt rules to provide that the right of an appellant under Section 6.001(b)(1), (2), or (3), Civil Practice and Remedies Code, to supersede a judgment or order on appeal is not subject to being counter-superseded under Rule 24.2(a)(3), Texas Rules of Appellate Procedure, or any other rule. Counter-supersedeas shall remain available to parties in a lawsuit concerning a matter that was the basis of a contested case in an administrative enforcement action.

Tex. Gov't Code § 22.004(i). The Texas Supreme Court subsequently...