Leo Graves D/B/A Graves Tire Service v. Texas Commission on Environmental Quality

Opinion

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

NO. 03-22-00400-CV

Leo Graves d/b/a Graves Tire Service, Appellant

v.

Texas Commission on Environmental Quality, Appellee

FROM THE 200TH DISTRICT COURT OF TRAVIS COUNTY, NO. D-1-GN-21-003968, THE HONORABLE MARIA CANTÚ HEXSEL, JUDGE PRESIDING

MEMORANDUM OPINION

Appellant Leo Graves d/b/a Graves Tire Service appeals from the district court’s

denial of a petition for bill of review seeking to overturn a final judgment entered against Graves

in an environmental enforcement action brought by appellee, the Texas Commission on

Environmental Quality (TCEQ, or Commission). Because we hold that Graves failed to exercise

due diligence in pursuing his available legal remedies and also failed to establish a meritorious

defense to the underlying judgment, we affirm the denial of the petition.

BACKGROUND

This case originated more than a decade ago, when a TCEQ investigation

conducted on May 23, 2012, determined that Graves had violated certain environmental

regulations at his tire service facility in Carthage, Texas. Specifically, the investigation

concluded that Graves had failed to comply with manifesting requirements applicable to persons 1 who transport used or scrap tires for storage or disposal, which are intended to ensure that such

tires are transported to a storage site or disposal facility that is properly registered or

permitted, respectively, with the TCEQ. See 30 Tex. Admin. Code § 328.58(d) (1999) (Texas

Comm’n on Envt’l Quality, Manifest System). Additionally, the investigation concluded that

Graves had failed to prevent the unauthorized disposal of used oil at the facility, resulting in

unsafe levels of soil contamination observed in samples taken from four locations on the

property. See id. § 324.4(1) (Texas Comm’n on Envt’l Quality, Federal Rule Adoption by

Reference); 40 C.F.R. § 279.22(d) (related to used-oil storage).

On December 27, 2012, TCEQ’s Executive Director filed a petition

recommending that the Commission enter an enforcement order against Graves assessing an

administrative penalty of $4,000 and requiring that certain actions be taken within 30 days of the

order, including the removal of the contaminated soil to an authorized disposal facility and the

development and implementation of procedures to ensure the proper completion and return of

manifests for scrap tires transported from the facility in the future.

On January 17, 2013, Graves filed an answer requesting a hearing and, on

February 22, 2013, the matter was referred to the State Office of Administrative Hearings

(SOAH). A preliminary hearing was held on June 20, 2013, and although timely noticed, Graves

did not appear or request a reset. On July 8, 2013, the Administrative Law Judge issued a

conditional remand order providing that, unless Graves filed a reset request before July 22, the

matter would be dismissed from the SOAH docket and remanded to the Executive Director to

pursue entry of a default order by the Commission. Graves failed to request a reset within the

time provided by the order, and the Commission issued a default order on October 23, 2013, in

the form and substance sought by the Executive Director. See Texas Comm’n on Envt’l Quality,

2 In The Matter of an Enforcement Action Concerning Leo Graves d/b/a Graves Tire Service,

Docket No. 2012-1480-MLM-E (Oct. 23, 2013) (default order). The order, which became

effective on November 21, 2013, required that Graves, within 45 days, submit written

certification of compliance “accompanied by detailed supporting documentation, including

photographs, receipts, and/or other records” notarized by a State of Texas Notary Public.

By May 22, 2014, Graves had neither remitted any portion of the assessed penalty

nor submitted the required certification of compliance, and a subsequent TCEQ investigation of

the facility on that date determined that the site remained out of compliance with the default

order and identified additional violations as well. As to compliance with the order, Graves’s

office staff was allegedly unable to provide the investigator with documentation of proper

removal of the contaminated soil as required by the order. 1 As to additional violations, the

investigator allegedly observed an unsegregated pile of approximately 16,000 scrap tires kept

outside on the property, which put the facility in violation of registration requirements applicable

to sites at which more than 500 scrap tires are kept outside. See 30 Tex. Admin. Code §§ 328.55

(Texas Comm’n on Envt’l Quality, Registration Requirements), .59 (Texas Comm’n on Envt’l

Quality, Storage of Used or Scrap Tires or Tire Pieces). Additionally, Graves’s staff allegedly

could not provide the investigator with statutorily required documentation of mandatory

bi-weekly vector monitoring and control measures intended to control mosquitos and other

disease vectors at scrap tire storage sites. Id. §§ 328.60 (Texas Comm’n on Envt’l Quality, Scrap

Tire Storage Site Registration), .61(e) (Texas Comm’n on Envt’l Quality, Design Requirements

for Scrap Tire Storage Site), .62(b)(6) (Texas Comm’n on Envt’l Quality, Scrap Tire Storage

1 Later, on June 4, Graves would allegedly tell the investigator that he had personally moved the contaminated soil to another location on the property.

3 Site Record Keeping), .63(d)(3) (Texas Comm’n on Envt’l Quality, Scrap Tire

Facility Requirements).

On September 11, 2015, and January 26, 2016, TCEQ conducted further

compliance investigations at the facility and concluded that the violations persisted: Graves

continued to store approximately 16,000 scrap tires at the unregistered site; he still was not

conducting vector controls for the tires; and he still had not removed the contaminated soil from

the property. Also on those dates, TCEQ investigated another property Graves owned, the Leo

Graves RV Park, also located in Carthage, Texas. During those investigations, investigators

allegedly observed three piles of partially buried scrap tires totaling more than 500 in violation of

above-mentioned registration requirements. Id. § 328.55 (Texas Comm’n on Envt’l Quality,

Registration Requirements).

On April 26, 2016, the State of Texas, through the Office of the Attorney General

(OAG) and on behalf of the TCEQ, filed a petition and application for injunctive relief in Travis

County district court seeking to enjoin Graves from further storage or disposal of municipal solid

waste at either the tire service facility or the RV park and to require that he remove all tires from

the RV park, remove all tires in excess of 500 from the tire facility, and begin performing and

documenting vector control measures on any remaining tires stored outside at the tire facility.

The petition also sought to require that Graves remove the oil-contaminated soil from the tire

facility and sought administrative penalties, attorney’s fees, and pre-judgment interest.

Graves timely filed a pro se answer and general denial, but there was little

movement in the litigation while TCEQ enforcement activities continued. For example, during a

site visit on July 14, 2016, the TCEQ investigator noted that most of the scrap tires observed

during previous investigations had been removed from the tire service facility, and Graves was

4 able to provide the investigator with manifests. During a subsequent visit on May 10, 2018,

however, the investigator observed 2,000 scrap tires at the site, when Graves still lacked

authorization to have more than 500 scrap tires on the premises. Still later, on April 24, 2020,

during another follow-up visit to the still-unregistered site, the investigator observed three

separate piles of unsegregated scrap tires outside containing approximately 10,000 tires.

Meanwhile, in the enforcement suit, the parties entered into an agreed scheduling

order setting the case for trial during or after the week of August 3, 2020. In accordance with the

time frame set forth in that order, on February 24, 2020, the State served requests for admission

on Graves to which he apparently never responded.

On June 10, 2020, the State filed a motion for summary judgment on all claims.

Graves did not file a response but appeared telephonically at the July 15 hearing on the motion

and requested additional time in which to respond. The trial court granted Graves’ request,

giving him until September 15 to respond, after which the State would have until September 28

to reply, and the court would consider the motion on submission. Graves filed his response on

September 30, 2020, just hours after the trial court entered final judgment granting the

State’s motion. In addition to the requested injunctive relief, the trial court entered judgment for

the State for statutory civil penalties, administrative penalties, and attorney’s fees and court

costs totaling $174,250. Notice of the judgment was provided to Graves by email on

September 30, 2020, and by personal service on October 13, 2020. Previously unrepresented,

Graves retained counsel and timely filed a motion for new trial on October 30, 2020, but no

further action was taken on the motion, and it was overruled by operation of law.

Graves did not appeal the summary judgment but, on August 13, 2021,

represented by new counsel, Graves filed the petition for bill of review that is the subject of the

5 present appeal, in which he sought to have the latter judgment overturned. TCEQ timely

answered and, on October 27, 2021, filed an amended answer and plea to the jurisdiction seeking

dismissal of the bill of review on the alternative grounds that Graves lacked standing to bring the

bill due to his failure to appeal the complained-of judgment and that, in any case, the bill

should be denied on the merits. Following a hearing on November 12, 2021, the trial court took

the matter under advisement and, on June 23, 2022, issued an order granting TCEQ’s plea to

the jurisdiction and, in the alternative, denying the bill of review on the merits. The parties

did not request, and the trial court did not enter, findings of fact or conclusions of law. This

appeal followed.

DISCUSSION

Graves raises two issues on appeal—that the trial court erred in failing to apply

the elements or follow the procedural framework applicable to bills of review and that the trial

court erred in failing to grant the bill of review.

A bill of review is an equitable proceeding to set aside a judgment that is no

longer appealable or subject to a motion for new trial. See Baker v. Goldsmith, 582 S.W.2d 404,

406 (Tex. 1979); Schwartz v. Jefferson, 520 S.W.2d 881, 889 (Tex. 1975). A bill of review is

proper where a party has exercised due diligence to prosecute all adequate legal remedies

against the judgment it seeks to set aside, and at the time the bill of review is filed, no adequate

legal remedy remains available because, through no fault of the petitioner, fraud, accident, or

official mistake precluded presentation of a meritorious claim. Wembley Inv. Co. v. Herrera,

11 S.W.3d 924, 927 (Tex. 1999). To obtain relief by a bill of review, the petitioner must plead

and prove three elements: (1) a meritorious ground for appeal; (2) which the petitioner was

6 prevented from making through fraud, accident, or a wrongful act of the opposing party

or official mistake; (3) unmixed with any fault or negligence by the petitioner. See Caldwell

v. Barnes, 154 S.W.3d 93, 96 (Tex. 2004); Zeigler v. Zeigler, No. 02-10-00146-CV,

2011 WL 2989003, at *2 (Tex. App.—Fort Worth July 21, 2011, no pet.) (mem. op.). “A

petitioner must additionally demonstrate that [they] exercised due diligence to assert all adequate

legal remedies before filing a bill of review, and the petitioner is not entitled to a bill of review

when [they] failed to invoke the right of appeal or some other legal remedy when it was available

unless an adequate explanation is advanced for bypassing the legal remedy.” Bialaszewski

v. Bialaszewski, 557 S.W.3d 88, 91 (Tex. App.—Austin 2017, no pet.) (citation omitted). The

grounds upon which a bill of review can be obtained are narrow because the procedure conflicts

with the fundamental policy that judgments must become final at some point. Alexander

v. Hagedorn, 226 S.W.2d 996, 998 (Tex. 1950); see Crouch v. McGaw, 138 S.W.2d 94, 96 (Tex.

1940) (noting that bill of review requires “something more than injustice”).

We review the grant or denial of a bill of review under an abuse-of-discretion

standard, indulging every presumption in favor of the trial court’s ruling. Moore v. Brown,

408 S.W.3d 423, 432 (Tex. App.—Austin 2013, pet. denied). The trial court abuses its

discretion if it rules in an unreasonable or arbitrary manner, or without reference to any guiding

rules or principles. See Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241–42 (Tex.

1985); Morris v. O’Neal, 464 S.W.3d 801, 806 (Tex. App.—Houston [14th Dist.] 2015, no pet.).

Where, as here, there are no findings of fact or conclusions of law in the record, we will “affirm

the trial court’s judgment on any legal theory supported by the evidence.” Narvaez

v. Maldonado, 127 S.W.3d 313, 319 (Tex. App.—Austin 2004, no pet.) (citing Worford

v. Stamper, 801 S.W.2d 108, 109 (Tex. 1990) (per curiam)).

7 As noted above, a bill-of-review petitioner must exercise due diligence in

pursuing all appropriate legal remedies against the former judgment. See Wembley, 11 S.W.3d at

927. If reasonable legal remedies were available and disregarded, relief by bill of review is

generally unavailable. See id. The required due diligence is separate and distinct from the

bill-of-review elements. Perdue v. Patten Corp., 142 S.W.3d 596, 606 (Tex. App.—Austin

2004, no pet.). A petitioner’s due diligence in pursuing available legal remedies is

evaluated under the objective standard of care that “prudent and careful [persons] would

ordinarily use in their own cases of equal importance.” Headifen v. Harker, No. 03-16-00028-CV,

2017 WL 3902623, at *2 (Tex. App.—Austin Aug. 30, 2017, pet. denied) (mem. op.) (quoting

In re A.L.H.C., 49 S.W.3d 911, 916 (Tex. App.—Dallas 2001, pet. denied)).

The Texas Supreme Court has established that where a defendant fails to avail

itself of an appeal, the defendant is not entitled to relief by bill of review. French v. Brown,

424 S.W.2d 893, 895 (Tex. 1967). In French, the bill-of-review petitioner, aggrieved by the

underlying summary judgment, timely filed a motion for new trial but failed to appeal from

denial of that motion after it was overruled by operation of law. Id. at 894. The French court

held that, because the bill-of-review petitioner had “permitted the judgment to become final by

his failure to invoke the right of appeal” and there was “no showing of diligence,” there was

insufficient cause for relief by bill of review. Id. at 895.

Similarly, in Narvaez v. Maldonado, the trial court entered a default decree of

divorce that ordered Narvaez to pay child support, and Narvaez filed a motion for new trial that

was subsequently overruled by operation of law. 127 S.W.3d at 316. Though evidence did not

show whether the motion was timely, this Court held that Narvaez had not exercised due

diligence in exhausting his legal remedies because he had not appealed the judgment after the

8 motion was overruled by operation of law or pursued a restricted appeal. Id. at 321; see also

Headifen, 2017 WL 3902623, at *2 (denying bill of review where petitioner had filed motion for

new trial but had failed to appeal from complained-of judgment after motion was overruled by

operation of law).

Graves is in substantially the same position as were the bill-of-review petitioners

in French, Narvaez, and Headifen. After entry of the complained-of summary judgment on

September 30, 2020, Graves timely filed a motion for new trial on October 30, 2020. Our rules

provide that, “[i]n the event an original or amended motion for new trial . . . is not determined by

written order signed within seventy-five days after the judgment was signed, it shall be

considered overruled by operation of law on expiration of that period.” Tex. R. Civ. P. 329b(c).

Moreover, where a party timely files a motion for new trial, notice of appeal must be filed within

90 days after the judgment was signed. Tex. R. App. P. 26.1(a)(1). Accordingly, Graves’s

motion was overruled by operation of law on December 15, 2020, and Graves had until

December 29 to appeal. No appeal was filed in that time period, and he therefore failed to show

the requisite diligence required under French and related authorities.

Rather than dispute the foregoing facts, Graves in his first issue on appeal instead

complains that the trial court departed from the procedural framework set forth in Baker.

Moreover, Graves contends that TCEQ’s plea to the jurisdiction was not properly noticed and, in

any case, could not properly be considered by the trial court at the time of the November 12

hearing. In its response, TCEQ contends that in setting and noticing the hearing, Graves failed to

designate it a “Baker hearing” and that it was in reality a full hearing on the merits.

Alternatively, TCEQ argues that even if the hearing were a Baker hearing, the trial court could

9 consider the issues raised in TCEQ’s plea because they concerned threshold issues—including

jurisdiction—that must be determined before reaching the merits.

Graves cites Beck v. Beck for the proposition that, in “conducting the pre-trial

hearing authorized by Baker v. Goldsmith, the only relevant inquiry is whether the petitioner has

presented prima facie proof of a meritorious defense.” 771 S.W.2d 141, 142 (Tex. 1989).

Moreover, TCEQ cites no authority, and this Court is aware of none, for the argument that

Graves’s failure to appeal the complained-of judgment deprived him of standing and thus ousted

the trial court of subject-matter jurisdiction. However, as this Court has held, the due-diligence

requirement set forth in French and elsewhere “is distinct from the three bill of review elements;

complainants must allege and prove that they exercised due diligence in pursuing all

adequate legal remedies to the challenged judgment or show good cause for failing to exhaust

those remedies in order to be entitled to seek bill of review relief.” Perdue, 142 S.W.3d at 606

(emphasis in original); see also Rizk v. Mayad, 603 S.W.2d 773, 775 (Tex. 1980) (“One with an

available appeal who fails to pursue that remedy is not entitled to seek relief by way of a bill of

review”). Thus, regardless of whether the diligence requirement is jurisdictional, TCEQ is

correct that the trial court could properly consider it as a threshold issue.

The latter authorities are not inconsistent with the above-quoted language in Beck.

In Beck, the trial court denied a petition for bill of review on the ground that the petitioner had

failed to make a prima facie showing of a meritorious defense but, rather than address that first

element, this Court instead affirmed on the ground that the petitioner’s sworn pleadings, as a

matter of law, established her negligence, thus seeming to reach the third element on which no

record had been developed in the trial court. 771 S.W.2d at 141. The supreme court reversed,

holding that, in that procedural posture, this Court’s decision “erroneously converted the pre-trial

10 hearing authorized by Baker . . . into a summary judgment proceeding on all elements of [the

petitioner’s] bill of review.” Id. That is not the case here. In this case, we neither pass upon the

question of whether Graves was negligent, nor reach any issue that the trial court did not.

Rather, we merely apply the exhaustion requirement set forth in French and other authorities.

This case is also distinguishable from Beck because, unlike the petitioner in that

case, Graves had an opportunity to “demonstrate that [he] exercised due diligence to assert all

adequate legal remedies before filing a bill of review” or provide “an adequate explanation . . .

for bypassing the legal remedy.” Bialaszewski, 557 S.W.3d at 91. Review of the record

discloses no serious attempt to make that showing, beyond a general assertion that then-in-effect

social-distancing practices in response to the COVID-19 pandemic frustrated Graves’s attempt to

retain appellate counsel. As TCEQ points out in its brief, at least one other Texas court of

appeals has declined to accept a bill-of-review petitioner’s bare invocation of the pandemic and

the resulting difficulty in locating counsel as an adequate explanation for the failure to perfect an

appeal in this scenario, and we likewise decline to do so today. See Castleman v. Internet

Money Ltd., No. 07-20-00312-CV, 2021 WL 2306266, at *3 (Tex. App.—Amarillo June 4, 2021,

no pet.).

As to the question of whether that requirement is jurisdictional, as TCEQ urges,

we need not and therefore must not reach that question today. Because we may “affirm the trial

court’s judgment on any legal theory supported by the evidence,” Worford, 801 S.W.2d at 109,

and because facts supporting the trial court’s conclusion that Graves lacked standing would with

equal force support denial of the petition for failure to exhaust legal remedies, we affirm that

denial without deciding whether it was on jurisdictional grounds. We overrule Graves’s first

issue on appeal.

11 In his second issue, Graves contends that the trial court erred in denying his

petition because he made out a prima facie showing of a meritorious defense. We disagree.

“A bill of review petitioner must allege, with particularity, sworn facts sufficient

to constitute a meritorious claim or defense in the original suit and, as a pretrial matter, present

prima facie proof to support the contention.” Martin-de-Nicolas v. Jones, No. 03-18-00778-CV,

2020 WL 1966311, at *3 (Tex. App.—Austin Apr. 24, 2020, pet. denied) (mem. op.) (citing

Caldwell, 154 S.W.3d at 97). “A prima facie meritorious defense is made out when it is

determined that the [bill-of-review petitioner’s] defense is not barred as a matter of law and that

he will be entitled to judgment on retrial if no evidence to the contrary is offered.” Baker,

582 S.W.2d at 408–09. Whether a petitioner has made out a prima facie meritorious defense is a

question of law. Id. at 409. “Prima facie proof may be comprised of documents, answers to

interrogatories, admissions, and affidavits on file along with such other evidence that the trial

court may receive in its discretion.” Id. For that purpose, “factual questions arising out of

factual disputes are resolved in favor of the complainant.” Id. “If the court determines that a

prima facie meritorious defense has not been made out, the proceeding terminates and the trial

court shall dismiss the case.” Id.

Reviewing Graves’s evidence de novo and presuming it is true, we conclude that

Graves would not be entitled to judgment on retrial if no contrary evidence were offered. His

testimony and documentary evidence were either wholly conclusory, thus lacking the requisite

“particularity,” or else failed to negate the factual bases for the judgment. For example, Graves

in his brief complains of the trial court’s failure to credit his “denial of [TCEQ’s] claim in its

traditional motion [for] summary judgment that he caused, suffered, allowed, or permitted a

violation of the environmental statutes, rules, or orders of the TCEQ,” but such language simply

12 states a legal conclusion—that no violation occurred—rather than asserting any specific facts

purporting to negate or rebut allegations of a violation.

During the hearing, Graves testified to facts that would not constitute a defense to

the violations alleged in TCEQ’s motion for summary judgment. For example, as to the

oil-related violations, TCEQ had alleged that soil samples collected from the tire site “confirmed

a Total Petroleum Hydrocarbon level of 92,100 mg/kg,” indicative of oil contamination. The

Commission further alleged that, during a May 22, 2014, follow-up inspection, Graves’s staff

was unable to provide documentation specifically required by the October 23, 2013, default

order, such failure itself constituting a violation of Section 7.101 of the Texas Water Code. Tex.

Water Code § 7.101. Rather than refute these allegations, Graves in his testimony instead

attempted to recast the allegations as de minimis, testifying that the contamination resulted from

a five-gallon bucket of used motor oil from his vehicles that had spilled without his knowledge,

and that the unnamed persons he called to request cleanup and removal to an authorized disposal

site advised him that it was an insufficient quantity to warrant removal:

I had a bucket of oil, a five-gallon bucket of oil. I had changed my oil in my vehicles, and it was in the back of the shop. There came a big rain . . . . Why it happened at that particular time, I don’t know, but the water had spilled into the bucket and ran the oil over the bucket and spilled out on the ground. . . . And it was about a five feet area where the oil had spilled out of the bucket. . . . So I wanted to do the right thing. I called the guys out to pick the oil up, to clean the oil and the soil and to pick it up. They came out there. They didn’t see there’s enough to really fine me or to have charged me to pick the dirt up. So I took the dirt with my shovel and put it over to the side to make sure, so if they would come up against me, I had dirt to show what minor oil and dirt that I had exposed that they accused me of so I won’t be in violation. I’ve got proof. It stayed there three or four years.

13 Far from establishing prima facie proof of a meritorious defense, the foregoing testimony rather

constitutes an admission of facts made the basis of TCEQ’s motion.

Similarly, with respect to the tire-related violations, Graves’s hearing exhibits

included manifests showing the removal of tires from the facility on various dates, but neither the

exhibits, nor Graves’s testimony, refute TCEQ’s evidence of observed violations during date

ranges specified in the motion for summary judgment. For example, TCEQ had alleged that

there were more than 500 used or scrap tires stored outside on the ground at service

facility between May 22, 2014, and September 11, 2015, and again betw6een May 10, 2018, to

April 24, 2020, with each day of the continuing violation constituting a separate violation under

Section 7.102 of the Texas Water Code. Tex. Water Code § 7.102. Graves’s testimony and

exhibits tend to show that tires were removed from the facility at various times but do not suffice

to establish that the tires were not present on the dates certain that TCEQ personnel observed and

documented the violations.

Again, with respect to disease vectors, Graves testified that he conducted control

measures “[f]or mosquito, not for rats,” and that he sprayed the tires “two or three times a year,”

but kept no record of such measures “because I didn’t think it was a big major problem.” The

code provisions Graves is alleged to have violated, however, require that stockpiles of used or

scrap tires be monitored for vector control, that “appropriate vector control measures shall be

applied when needed, but in no event less than once every two weeks,” and that such measures

be recorded in a “daily log.” 30 Tex. Admin. Code §§ 328.62(b)(6), .63(d)(3).

In summary, evidence adduced at the bill-of-review hearing would support the

conclusion that Graves failed to make out a prima facie showing of a meritorious defense

because, even absent contrary evidence, Graves’s evidence would not entitle him to judgment on

14 retrial. Because we “affirm the trial court’s judgment on any legal theory supported by the

evidence,” Narvaez, 127 S.W.3d at 319, we affirm the denial of the bill of review on the ground

that Graves failed to present prima facie proof of a meritorious defense.

CONCLUSION

Having overruled Graves’s appellate issues, we affirm the district

court’s judgment.

__________________________________________ Edward Smith, Justice

Before Chief Justice Byrne, Justices Triana and Smith

Affirmed

Filed: August 20, 2024