H. Tebbs, Inc. v. Silver Eagle Distributors, Inc.

797 S.W.2d 80, 1990 Tex. App. LEXIS 1400, 1990 WL 79081

• Court: Court of Appeals of Texas
• Decided: June 13, 1990
• Docket: 3-88-217-CV
• Status: Published

Opinions

GAMMAGE, Justice.

H. Tebbs, Inc. and Coors Distributing Company (“Tebbs/Coors”) appeal from an agreed order of the district court entered into by the Alcoholic Beverage Commission (“Commission”) and Silver Eagle Distributors, Inc. (“Silver Eagle”). The agreed order enjoins W.S. McBeath, Commission administrator, from holding hearings and allowing further discovery in proceedings before the Commission concerning the contested renewal of licenses and permits of Southwest Distributing Co., Inc. (“Southwest”), corporate predecessor in interest to Silver Eagle. We will reverse the district court’s judgment and remand the cause to the district court with instructions to dissolve the injunction and dismiss the cause.

Tebbs/Coors bring three points of error, arguing that the district court erred: (1) in striking their petition in intervention, (2) in enjoining a pending administrative proceeding before Silver Eagle had exhausted its administrative remedies, and (3) in enjoining the Commission from correcting a violation of its own rules.

THE ADMINISTRATIVE PROCEEDINGS

In August 1987, the Commission initiated a contested case proceeding involving Southwest’s licenses and permits. Notices of hearing were issued, and Tebbs/Coors filed petitions in intervention which were granted. Before the hearing, the Commission and Southwest entered into an agreed order (“Commission’s agreed order”), under which Southwest restructured itself into Silver Eagle and the Commission issued new licenses and permits to Silver Eagle. Tebbs/Coors filed a motion for rehearing which was granted.

THE DISTRICT COURT PROCEEDINGS Silver Eagle then sought a declaration of its rights in the district court under the Alcoholic Beverage Code, Tex.Alco.Bev. Code Ann. (1978 & Supp.1990); the Administrative Procedure and Texas Register Act (“APTRA”), Tex.Rev.Civ.Stat.Ann. art. 6252-13a (Supp.1990); and the Commission’s agreed order and sought temporary and permanent injunctions to enjoin further proceedings before the Commission. Tebbs/Coors filed a petition in intervention in the district court. After hearing, the district court struck the petition in intervention and granted the temporary injunction. The court subsequently signed an agreed order (“court’s agreed order”), dissolving the temporary injunction and permanently enjoining McBeath from holding hearings and from allowing discovery, based on the court’s conclusion that “the Commission acted within its authority in entering its April 28, 1988, Agreed Order with Silver Eagle, and lacked the authority to hold a rehearing.” It is from the court’s agreed order that Tebbs/Coors appeal.

SILVER EAGLE’S CROSS-POINTS

We will first address Silver Eagle’s cross-points, some of which relate to the jurisdiction of this Court. Whether these points are properly denominated “cross-points” or “contentions,” as they are termed in Silver Eagle’s brief, they are properly before this Court in the absence of perfection of an independent appeal by Silver Eagle because all four points relate to defense of the trial court’s order or bear upon matters presented in the appeal, Donwerth v. Preston II Chrysler-Dodge, Inc., 775 S.W.2d 634, 641 (Tex.1989) (Ray, J., concurring).¹

Silver Eagle’s four cross-points are: (1) Tebbs/Coors lack standing to appeal any aspect of the court’s agreed order, (2) Tebbs/Coors present arguments and evidence outside the permissible scope of this Court’s appellate review of the permanent injunction, (3) entry of the final agreed judgment mooted the points of error and relief requested by Tebbs/Coors, and (4) Tebbs/Coors have failed to prove any reversible error.

THE COURT’S AGREED ORDER

Central to all cross-points is Silver Eagle’s contention that the court’s agreed order constituted an agreed judgment and is therefore not subject to attack absent an allegation of fraud or mistake. Tebbs/Coors argue the court’s agreed order is a nullity without the consent of all parties if the trial court erred in striking their petition in intervention.

While it is true that an agreed judgment is not subject to attack absent an allegation of fraud or mistake, Hill v. Hill, 599 S.W.2d 691 (Tex.Civ.App.1980, no writ), it is also generally true that an agreed judgment can be rendered only if all parties agree. Hensley v. Salinas, 583 S.W.2d 617 (Tex.1979). Silver Eagle argues that even if the district court had permitted intervention by Tebbs/Coors, the intervention- would not affect the validity of this agreed order.

The validity of judgments made on the basis of agreements between some of the parties without the consent of intervenors was addressed by the United States Supreme Court in Firefighters v. Cleveland, 478 U.S. 501, 528-529, 106 S.Ct. 3063, 3078-3079, 92 L.Ed.2d 405 (1986):

It has never been supposed that one party — whether an original party, a party that was joined later, or an intervenor— could preclude other parties from settling their own disputes and thereby withdrawing from litigation.... Of course, parties who choose to resolve litigation through settlement may not dispose of the claims of a third party, and a fortiori may not impose duties or obligations on a third party, without that party’s agreement. A court’s approval of a consent decree between some of the parties therefore cannot dispose of the valid claims of noncon-senting intervenors.

(Emphasis added.) See also Travelers Insurance Co. v. Williams, 603 S.W.2d 258 (Tex.Civ.App.1980, no writ) (treating inter-venors as parties whose consent was necessary to the agreed judgment).

The court’s agreed order disposed of Tebbs/Coors’ claim for a rehearing before the Commission by enjoining the Commission from holding further hearings and from allowing further discovery on the docketed case. As we explain below, in our discussion of Tebbs/Coors’ first point of error, we conclude: (1) the district court erred in striking the petition in intervention and (2) Tebbs/Coors’ claim for rehearing was valid. Consequently, the court’s agreed order disposing of that claim must be reversed. Because Silver Eagle’s first cross-point is based solely upon its contention that the court’s agreed order is not subject to attack by Tebbs/Coors, it is overruled.

Silver Eagle’s second cross-point is also overruled. Silver Eagle argues that, because Tebbs/Coors were not parties to the permanent injunction, their only possible basis for relief is that the district court erred in striking their petition in intervention. As previously stated, if the trial court erred in striking the petition in intervention, the court’s agreed order could not dispose of Tebbs/Coors’ valid claims without their consent. Firefighters, 478 U.S. at 528-529, 106 S.Ct. at 3078-3079.

Silver Eagle further argues that Tebbs/Coors’ other points of error are improperly directed to the district court’s issuance of the temporary injunction rather than the final agreed order. We disagree. By points of error two and three, Tebbs/Coors argue the district court erred in enjoining a pending administrative proceeding before Silver Eagle had exhausted its administrative remedies and in enjoining the Commission from correcting a violation of its own rules. Both of these points relate to the district court’s final order permanently enjoining the Commission from holding hearings and from allowing discovery to proceed.

We also overrule the third cross-point in which Silver Eagle argues that Tebbs/Coors’ points of error and relief requested have been mooted by entry of the court’s final agreed judgment. We have already addressed that part of Silver Eagle’s mootness argument relating to an agreed judgment being immune from attack.

Silver Eagle further argues, however, that because Southwest withdrew its application for renewal licenses and permits by virtue of the settlement agreement reached with the Commission, the issues on which Tebbs/Coors requested a rehearing were moot. We find this argument without merit because Southwest’s surrender of its pri- or licenses and permits and the Commission’s issuance of Silver Eagle’s new licenses and permits occurred only as a result of the Commission’s agreed order, the validity of which was challenged in, and was the basis for, the motion for rehearing granted by the Commission. The new licenses and permits resulting from the Commission’s agreed order are no barrier to our review of the court’s order enjoining the Commission from rehearing the contested case from which those same licenses and permits resulted.

For the reasons stated below, we also overrule Silver Eagle’s fourth cross-point of error.

TEBBS/COORS’ POINTS OF ERROR INTERVENTION

We now address Tebbs/Coors’ points of error. In their first point of error, Tebbs/Coors argue the district court erred in striking their petition in intervention. The rule regarding right of intervention is:

The intervenor’s interest must be such that if the original action had never been commenced, and he had first brought it as the sole plaintiff, he would have been entitled to recover in his own name to the extent at least of a part of the relief sought; or, if the action had first been brought against him as the defendant, he would have been able to defeat the recovery, in part at least. His interest may be either legal or equitable.

King v. Olds, 71 Tex. 729, 12 S.W. 65, 65-66 (Tex.1888); University Sav. v. Intercontinental Consol., 751 S.W.2d 657 (Tex.App.1988, no writ).

A trial court has broad discretion in determining whether an intervention should be stricken. Its exercise, however, is subject to review for abuse of discretion. It is an abuse of discretion to strike an intervention “if the intervenor meets the test stated above, [the] intervention will not greatly complicate the case by the excessive multiplication of issues, and to effectively protect the intervenor’s interest intervention is almost essential.” Inter-Continental Corp. v. Moody, 411 S.W.2d 578, 589 (Tex.Civ.App.1966, writ ref’d n.r. e.).

The petition’s sufficiency is tested “by its allegations of fact on which the right to intervene depends.” Mulcahy v. Houston Steel Drum Co., 402 S.W.2d 817 (Tex.Civ. App.1966, no writ). Tebbs/Coors’ petition incorporated by reference its motion for rehearing filed with the Commission. In that motion, Tebbs/Coors allege (1) the Commission erred in entering its agreed order because the agreed order and agreed findings of fact are invalid under several provisions of APTRA, the Alcoholic Beverage Code, and the Texas Administrative Code (“TAC”) (16 Tex.Admin.Code §§ 31.1 —37.45 (West, Oct. 19, 1988)); (2) “the Administrator and the County Judges ... have had a fraud perpetrated upon them which culminated in the action expressed in the Order”; and (3) Tebbs/Coors were deprived of due process of law under the Texas and United States Constitutions.

Because Silver Eagle sued in district court to enjoin the Commission from conducting the rehearing granted by the Commission, it is necessary to first determine what right, if any, Tebbs/Coors had to such a rehearing before their right to intervention in district court can be determined.

LAW GOVERNING THE ADMINISTRATIVE PROCEEDINGS

The court’s agreed order states that the permanent injunction was granted based on the trial court’s conclusion that the Commission acted within its authority in entering its agreed order and acted outside its authority in granting a rehearing. Under the governing statutes we conclude, to the contrary, that the Commission acted in excess of its authority in entering its agreed order and acted within its authority in granting the motion for a rehearing.

Tebbs/Coors argue the Commission’s agreed order is invalid on the grounds that (1) no hearing was held as required under APTRA § 13(a) and 16 TAC § 37.45(b) and, (2) all parties did not agree to and sign the order as required under APTRA § 13(e) and 16 TAC § 37.6. Although we believe no hearing was statutorily required, we conclude the agreement is invalid, absent Tebbs/Coors’ consent.

Although APTRA generally provides for uniform practice and procedure for state agencies, § 18(a) provides that “[w]hen the grant, denial, or renewal of a license is required to be preceded by notice and opportunity for hearing, the provisions of this Act concerning contested cases apply.” We read this as requiring compliance with the contested case provisions of AP-TRA §§ 13-19 only if some other law, statute, or rule requires that agency licensing action be preceded by notice and opportunity for hearing. See McCalla, “The Administrative Procedure and Texas Register Act,” 28 Baylor L.Rev. 445, 460 (1976).

The Alcoholic Beverage Code governs exclusively “the manufacture, sale, distribution, transportation, and possession of alcoholic beverages,” Alcoholic Beverage Code, § 1.06. Under § 11.46, “[t]he commission or administrator may refuse to issue an original or renewal permit with or without a hearing....” Consequently, Tebbs/Coors had no absolute right to a hearing under either the Alcoholic Beverage Code or APTRA. Provisions of the Alcoholic Beverage Code or TAC relating to hearings are relevant only if the Commission or administrator holds hearings. In this case, the Commission had issued notices of hearing; Tebbs/Coors had filed petitions in intervention; Southwest had filed a motion to strike intervention; the Commission had granted the petitions in intervention; both sides had filed trial briefs; and Tebbs/Coors had filed a request for discovery when the Commission and Southwest entered into their agreed order without the participation of Tebbs/Coors.

Section 5.31 of the Alcoholic Beverage Code authorizes the Commission to “prescribe and publish rules necessary to carry out the provisions of this code.” Such rules appear at 16 TAC §§ 31.1 — 37.45. Under § 37.6:

No stipulation or agreement between the parties, their attorneys, or representatives, with regard to any matter involved in any contested case shall be enforced unless it shall have been reduced to writing and signed by the parties or their authorized representatives, or unless it shall have been dictated into the record by them during the course of a hearing, or incorporated in an order bearing their written approval. This section does not limit a party’s ability to waive, modify or stipulate any right or privilege afforded by these rules, unless precluded by law. No stipulation or agreement shall be enforced unless signed by the attorney of record, if any, for each party to the stipulation or agreement.

(Emphasis added.)

Section 37.1 defines “party” as “[t]he agency or a person who has appeared in a contested case or has filed timely notice of interest to appear, and who has not been dismissed or excluded by the administrator or hearing officer.” “Person” is defined as “[a]ny individual, partnership, corporation, association, governmental subdivision, or public or private organization of any character other than the agency.” Id.

Tebbs/Coors “filed timely notice of interest to appear” by filing petitions in intervention. They were not “dismissed or excluded by the administrator or hearing officer” — the hearing examiner granted the petitions in intervention over Silver Eagle’s motion to strike the petitions. In its order granting Tebbs/Coors’ motion for rehearing, the Commission stated: “Under the Rules of this Commission and the provisions of the Administrative Procedure and Texas Register Act it is my determination that the Intervenors are ‘parties’ as that word is defined in the Administrative Procedure and Texas Register Act.”

The Commission specifically found Tebbs/Coors to be parties under 16 TAC § 37.10 which states: “Any Party in interest may appear in any proceeding before the agency_” Nevertheless, negotiations occurred between the Commission and Silver Eagle from which Tebbs/Coors were excluded.

Silver Eagle and the Commission then entered into their agreed order without the agreement and signature of Tebbs/Coors, parties under 16 TAC § 37.1. Accordingly, under 16 TAC § 37.6, “the agreement shall not be enforced.”

The district court concluded the Commission did not have the authority to grant a rehearing after the entry of the agreed order. The TAC, however, prescribes the number of days after the date of rendition of a final decision or order within which a motion for rehearing must be filed as well as the number of days within which the administrator must act on the motion. 16 TAC § 37.44. Clearly, the Commission acted within its authority in granting the timely motion for rehearing.

In light of Tebbs/Coors’ “party” status, negotiations between the Commission and Silver Eagle from which Tebbs/Coors were excluded, the entry of an agreed order between the Commission and Silver Eagle without Tebbs/Coors’ consent, and the Commission’s granting of Tebbs/Coors’ motion for rehearing, we conclude that, absent the Commission’s granting the rehearing, Tebbs/Coors could have sought, in their own right, injunctive relief to challenge the Commission’s action in excess of its authority. This right provides the basis for Tebbs/Coors’ intervention in the trial court. King, 12 S.W. at 65-66.

This case was not brought to district court as a judicial review of an agency action; rather, Silver Eagle went to district court seeking an injunction to restrain the Commission from further administrative proceedings instead of waiting for those proceedings to become final and then seeking judicial review of the final administrative decision. Silver Eagle purportedly did so under the exception to the exhaustion of administrative remedies doctrine that applies when an agency acts in excess of its statutory authority. P.U.C. of Texas v. Pedernales Elec. Co-Op., 678 S.W.2d 214, 219-220 (Tex.App.1984, writ ref'd n.r.e.). Tebbs/Coors’ right to intervention in such a case is established under the King test discussed above.

ABUSE OF DISCRETION '

The question remains whether the district court abused its discretion in striking Tebbs/Coors’ petition in intervention. Intervention would bring no new issues before the district court; the very issue disposed of in the court’s order was Tebbs/Coors’ right to the rehearing granted by the Commission. Tebbs/Coors’ intervention was necessary to protect their interest in that right. Striking the petition in intervention was an abuse of the trial court’s discretion. Inter-Continental Corp., 411 S.W.2d at 589. Tebbs/Coors’ first point of error is sustained.

EXHAUSTION OF ADMINISTRATIVE REMEDIES

In their second point of error, Tebbs/Coors argue the district court erred in enjoining a pending administrative proceeding before Silver Eagle exhausted its administrative remedies. Silver Eagle’s argument that the Commission’s unauthorized action in granting the motion for rehearing invoked an exception to the exhaustion requirement is without merit in light of our determination that the Commission acted within its authority. In the absence of such an exception, Silver Eagle is required to exhaust its administrative remedies before invoking judicial intervention in an on-going administrative proceeding. Texas State Bd. of Examiners in Optometry v. Carp, 162 Tex. 1, 343 S.W.2d 242 (1961). Point of error two is sustained.

THE COMMISSION’S CORRECTION OF ITS ERRORS

Tebbs/Coors’ third point of error, that the district court erred in enjoining the Commission from correcting a violation of its own rules, is sustained for the reasons stated above. The judgment of the district court is reversed, and the cause is remanded to that court with instructions to dissolve the permanent injunction and dismiss the cause.

1 . We note the Supreme Court in Donwerth disapproved "the broad-sweeping interpretation the lower courts have sometimes given these phrases, ... 'affect the interest of the appellant’ or 'bear upon matters presented by the appeal'" in limiting the appellee’s right to assert cross-points; Donwerth, 775 S.W.2d at 641, and reaffirmed a broader rule to be applied, as here, in the absence of appellant’s limitation of appeal under Tex.R.App.P.Ann. 40(a)(4) (Supp.1989). That broader rule provides: "Unless an appellant limits his appeal pursuant to Texas Rule of Appellate Procedure 40(a)(4), an appellee may complain by cross-point in his brief in the court of appeals, without perfecting an independent appeal, of any error in the trial court as between appellant and appellee.” Id. at 639. Because Silver Eagle is not complaining of a trial court error, we believe the proper basis for its right to bring such cross-points is the "longstanding principle of appellate law that is unaffected by rule 40(a)(4) [that the appellee may bring cross-points which affect the interest of the appellant or bear upon matters presented by the appeal].” Id. at 641.