Meador-Brady Management Corporation, D/B/A Pasadena Honda and David R. Hubbard, D/B/A Galveston Honda v. Texas Motor Vehicle Commission by and Through Its Executive Director, Mr. Russell Harding & Gulf Coast Sports, Inc. D/B/A International House of Wheels

• Court: Court of Appeals of Texas
• Decided: July 1, 1992
• Docket: 03-91-00075-CV
• Status: Published

Opinion

IN THE COURT OF APPEALS, THIRD DISTRICT OF TEXAS,

AT AUSTIN



NO. 3-91-075-CV

MEADOR-BRADY MANAGEMENT CORPORATION D/B/A PASADENA HONDA AND DAVID R. HUBBARD D/B/A GALVESTON HONDA,

APPELLANTS

vs.

THE TEXAS MOTOR VEHICLE COMMISSION AND GULF COAST SPORTS, INC. D/B/A INTERNATIONAL HOUSE OF WHEELS,

APPELLEES

SUIT FOR JUDICIAL REVIEW PURSUANT TO TEXAS MOTOR VEHICLE COMMISSION CODE

PER CURIAM

Appellants Meador-Brady Management Corporation d/b/a Pasadena Honda and David R. Hubbard d/b/a Galveston Honda ("Meador-Brady") seek judicial review of a final order of appellee Texas Motor Vehicle Commission. Texas Motor Vehicle Commission Code, Tex. Rev. Civ. Stat. Ann. art. 4413(36), § 7.01(a) (Supp. 1992). ⁽¹⁾ By its order, the Commission granted the application of appellee Gulf Coast Sports, Inc., d/b/a International House of Wheels ("Gulf Coast Sports") for a license to sell motorcycles in League City, Texas. See Code §§ 4.01-.06 (1976 & Supp. 1992). We will affirm the order of the Commission.

In its first point of error, Meador-Brady asserts that the Commission had no jurisdiction to grant the motion for rehearing of Gulf Coast Sports because the motion was untimely. On September 13, 1990, the Commission voted to deny the license application. On October 2, 1990, the agency sent a final, written order, dated September 13, 1990, to the parties. Twenty days later, on October 3, 1990, Gulf Coast Sports filed its motion for rehearing. The Commission granted the motion and, on December 6, 1990, issued an order granting the license application.

At the time of this proceeding, the Code allowed a party to file a motion for rehearing "[w]ithin 15 days after the date of rendition of any final order or decision." 1989 Tex. Gen Laws, ch. 1130, § 16, at 4661 (Code § 3.08(h), since amended). ⁽²⁾ Meador-Brady argues that September 13, 1990, was the "date of rendition" and, therefore, the motion for rehearing was untimely. Gulf Coast Sports responds that the relevant date is September 28, 1990, the date on which the final order was "executed."

In Commercial Life Insurance Co. v. Texas State Board of Insurance, 774 S.W.2d 650 (Tex. 1989), the supreme court addressed a similar question arising under the Administrative Procedure and Texas Register Act ("APTRA"), Tex. Rev. Civ. Stat. Ann. art. 6252-13a (Supp. 1992). At that time, APTRA required a party to file a motion for rehearing "within 15 days after the date of rendition of a final decision or order." 1975 Tex. Gen. Laws, ch. 61, § 16(e), at 145 (APTRA § 16(e), since amended). The agency issued a final order on January 29, 1985, but did not notify the insurance company of the action. Commercial Life filed its motion for rehearing on February 15, 1985, seventeen days later. Commercial Life Ins., 774 S.W.2d at 651.

The supreme court determined that § 16(e) must be read with APTRA § 16(b) that requires an agency promptly to notify parties of its decisions or orders.

In the absence of such notice, the legislature could not have intended section 16(e) to preclude the parties' right to appeal. Thus, the time period for filing a motion for rehearing does not commence until the agency complies with its statutory duty to notify the parties of the order or decision.

Commercial Life Ins., 774 S.W.2d at 652 (emphasis added); APTRA § 16(b) (Supp. 1992). We conclude that the court's reasoning applies in the instant cause.

The provisions of APTRA apply to Commission proceedings to the extent that such provisions do not conflict with the provisions of the Code. Code § 3.09 (Supp. 1992). Accordingly, § 16(b) required the Commission promptly to notify Gulf Coast Sports or its attorney of record of the Commission's decision. Commercial Life Ins., 774 S.W.2d at 652. We must read § 3.08(h) in conjunction with § 16(b). The relevant date, therefore, is the date the Commission notified the parties of its order. Id.

The copy of the final order, included in the record filed in this Court, shows that a copy was mailed to the parties on October 2, 1990. "A party or attorney of record notified by mail of a final decision or order as required by this section shall be presumed to have been notified on the date such notice is mailed." APTRA § 16(b) (Supp. 1992). Accordingly, the "date of rendition" was October 2, 1990, and Gulf Coast Sports timely filed its motion for rehearing. We overrule the first point of error.

In its second point of error, Meador-Brady contends that the order is void because the vote to grant the license was by less than a "majority of a quorum." At the time of this proceeding, the Commission consisted of six persons. 1987 Tex. Gen Laws, ch. 357, § 3, at 1783 (Code § 2.02, since amended). A quorum of four members was present at the vote on the Gulf Coast Sports license application. Code § 2.08(a) (Supp. 1992); see Texas State Bd. of Dental Examiners v. Silagi, 766 S.W.2d 280, 284 (Tex. App. 1989, writ denied).

The Commission must adopt final orders by a "majority vote of a quorum." Code § 3.08(g) (Supp. 1992) (emphasis added). Here, two commissioners voted in favor of the license application; one voted to deny it; and the fourth member, the chairman, did not vote. Meador Brady asserts that this vote does not meet the requirement of § 3.08(g) because the favorable vote was not more than one-half of the quorum. The Commission and Gulf Coast Sports respond that "majority vote" requires a majority vote of those present and voting and, therefore, two favorable votes were sufficient.

Where the legislature has committed a matter to an administrative agency, it must act on the matter as a body and not by individual members acting separately. Webster v. Texas Pac. Motor Transp., 166 S.W.2d 75, 76-77 (Tex. 1942); Houston & N. Tex. Motor Freight Lines v. Johnson, 166 S.W.2d 78, 79 (Tex. 1942). Generally, if a quorum is present, an action by a majority of the quorum binds the agency. Webster, 166 S.W.2d at 77; Kermit Indep. Sch. Dist. No. 5 v. State ex rel. Wink Indep. Sch. Dist. No. 1, 208 S.W.2d 717, 721 (Tex. Civ. App. 1948, no writ) (statute requiring that questions shall be decided by "majority vote" requires merely a majority of the quorum); see Federal Trade Comm'n v. Flotill Products, Inc., 389 U.S. 179, 183 (1967); Ho Chong Tsao v. Immigration & Naturalization Serv., 538 F.2d 667, 669 (5th Cir. 1976), cert. denied, 430 U.S. 906 (1977). ⁽³⁾

We disagree with the suggestion of Gulf Coast Sports that, because a quorum was present, the Commission may act on the basis of only two favorable votes. See generally Black's Law Dictionary 955 (rev. 6th ed. 1990) ("majority vote" defined as vote by more than half the voters for matter on the ballot). Here, the phrase "of a quorum" establishes the larger group of which the majority vote is necessary. We conclude that § 3.08 restates the general rule that, in the absence of special restrictions, a quorum can act and a majority of that quorum bind the agency.

Next, we must consider the effect, if any, of the one abstention from the vote. Assuming that an abstention should not impede agency action, courts have generally considered the abstention as acquiescence in the course of action favored by the majority actually voting. See Dry Creek Valley Ass'n v. Board of Supervisors, 135 Cal. Rptr. 726, 728-29 (Cal. Ct. App. 1977); City of Haven v. Gregg, 766 P.2d 143, 146 (Kan. 1988); Northwestern Bell Tel. Co. v. Board of Comm'rs, 211 N.W.2d 399, 404 (N.D. 1973); see generally J.R. Kemper, Annotation, Abstention from Voting of Member of Municipal Council Present at Session as Affecting Requisite Voting Majority, 63 A.L.R.3d 1072 (1975). We do not find any authority that precludes application of the principle in the instant cause. Furthermore, the agency record supports the agreement of the nonvoting member with the two votes to grant the license application. An actual vote to deny the application would have resulted in a tie vote, effectively denying the license application. We overrule point of error two.

In its third point of error, Meador-Brady argues that the Commission's order is invalid because it does not expressly adopt and incorporate the findings of fact and conclusions of law set out in the proposal for decision. A final order of the Commission must set forth the findings of fact and conclusions of law on which the order is based. Code § 3.07 (Supp. 1992); See Texas Health Facilities Comm'n v. Charter Medical-Dallas, Inc., 665 S.W.2d 446, 450 (Tex. 1984); Gage v. Railroad Comm'n, 582 S.W.2d 410, 414 (Tex. 1979).

An agency may satisfy this requirement by adopting, in its final order, the findings and conclusions that the hearing examiner sets out in the proposal for decision. See Imperial Am. Resources Fund, Inc. v. Railroad Comm'n, 557 S.W.2d 280, 285 (Tex. 1977); Auto Convoy Co. v. Railroad Comm'n, 507 S.W.2d 718, 720 (Tex. 1974); Morgan Drive Away, Inc. v. Railroad Comm'n, 498 S.W.2d 147, 150 (Tex. 1973); Butler v. State Bd. of Educ., 581 S.W.2d 751, 755 (Tex. Civ. App. 1979, writ ref'd n.r.e.). But see Railroad Comm'n of Texas v. Palmer, 586 S.W.2d 934, 935 (Tex. Civ. App. 1979, no writ) (in dicta, court described failure to set out findings and conclusions in order as a defect). The order here states:

The [Commission], having duly considered the Proposal for Decision . . . , including the findings of fact, conclusions and recommendations contained therein; . . . does hereby enter its Final Order in this proceeding as follows:

IT IS ORDERED:

1. That the recommendation of the Hearing Examiner as contained in the Proposal for Decision filed in this proceeding, be and it hereby is adopted by the Commission; and

2. That the application of [Gulf Coast Sports] for a New Motor Vehicle Dealer's License for a Honda dealership . . . be and is hereby granted.

Meador-Brady contends that the order adopts only the section of the proposal for decision entitled "RECOMMENDED ACTION" and not the forty-six findings and four conclusions immediately preceding that section.

Although the language of the order could have been more specific, we conclude that the order satisfies § 3.07. The section, "RECOMMENDED ACTION," reads, "Based on the foregoing findings of fact and conclusions, it is the recommendation of the Hearing Examiner" that the Commission approve the license application of Gulf Coast Sports and deny the protest of Meador-Brady. The recommendation rests on the findings and conclusions; therefore, the Commission order may reasonably be read to adopt those findings and conclusions.

Meador-Brady additionally suggests that this Court may not adequately review the order because it is unclear which of the proposed findings and conclusions are included. In adopting the recommendation, the Commission adopted each of the forty-six findings and four conclusions. We do not agree that the Commission's failure to repeat the findings and conclusions in its order has prejudiced Meador-Brady. See APTRA § 16(a) (Supp. 1992); Musick v. Railroad Comm'n, 747 S.W.2d 892, 897-98 (Tex. App. 1988, writ denied). We overrule point of error three.

In its fifth point of error, Meador-Brady asserts that the Commission's final order is invalid because it does not expressly rule on the proposed findings of fact that Meador-Brady submitted. In its motion for rehearing of December 19, 1990, Meador-Brady submitted proposed findings of fact and conclusions of law and requested that the Commission expressly rule on each finding, pursuant to APTRA § 16(b). The Commission overruled the motion for rehearing in an order dated January 11, 1991.

Section 16(b) provides, "If, in accordance with agency rules, a party submitted proposed findings of fact, the decision shall include a ruling on each proposed finding." APTRA § 16(b) (Supp. 1992) (emphasis added). Neither the Code nor the agency's rules provide for the filing of proposed findings. See Tex. Motor Vehicle Comm'n, 16 Tex. Admin. Code §§ 101.60-.62 (1988 & Supp. 1991). Accordingly, the Commission was not required to rule expressly on each of the proposed findings. See State Banking Bd. v. Valley Nat'l Bank, 604 S.W.2d 415, 419 (Tex. Civ. App. 1980, writ ref'd n.r.e.) (agency not required to state facts upon which it did not rely). We overrule point of error five.

In its fourth point of error, Meador-Brady asserts that the Commission's final order is not supported by substantial evidence and is arbitrary and capricious. APTRA § 19(e)(5),(6) (Supp. 1992). Meador-Brady does not challenge specific findings or conclusions or argue that the underlying facts do not support the Commission's conclusions. We understand the complaint to be that the order itself was arbitrary and capricious because "there is not a scintilla of evidence in the record to support the Commission's December 6, 1990, order."

This Court presumes that the Commission's order is supported by substantial evidence; Meador-Brady has the burden to overcome the presumption. City of San Antonio v. Texas Water Comm'n, 407 S.W.2d 752, 758 (Tex. 1966); Continental Cars, Inc. v. Texas Motor Vehicle Comm'n, 697 S.W.2d 438, 443 (Tex. App. 1985, writ ref'd n.r.e.). APTRA authorizes a reviewing court to test an agency's findings, inferences, conclusions, and decisions to determine whether they are reasonably supported by substantial evidence in view of the reliable and probative evidence in the record as a whole. APTRA § 19(e)(5) (Supp. 1992). Although substantial evidence is more than a mere scintilla, the evidence in the record may preponderate against the decision of the agency and nevertheless amount to substantial evidence. The true test is not whether the agency reached the correct conclusion but whether some reasonable basis exists in the record for the agency's action. Charter Medical-Dallas, Inc., 665 S.W.2d at 452. We will sustain the agency's action if the evidence is such that reasonable minds could have reached the conclusion that the agency must have reached in order to justify its action. Id.; Suburban Util. Corp. v. Public Util. Comm'n, 652 S.W.2d 358, 364 (Tex. 1983).

In determining whether the Commission acted arbitrarily or capriciously, this Court must determine whether the agency based its order on a consideration of all relevant factors and whether there is a rational connection between the facts and the agency's decision. This Court may not substitute its decision for that of the Commission. Public Util. Comm'n v. South Plains Elec. Coop., 635 S.W.2d 954, 957 (Tex. App. 1982, writ ref'd n.r.e.); Starr County v. Starr Indus. Servs., Inc., 584 S.W.2d 352, 355-56 (Tex. Civ. App. 1979, writ ref'd n.r.e.); see Charter Medical-Dallas, Inc., 665 S.W.2d at 453-54.

Pursuant to Code § 4.06(c), Gulf Coast Sports had the burden to establish good cause for the establishment of the motorcycle dealership. ⁽⁴⁾ In determining good cause, the Commission was to consider: (1) whether the manufacturer of the same line-make of motor vehicle was adequately represented as to sales and service, (2) whether the protesting dealers representing the same line-make of motor vehicle were in substantial compliance with their franchise agreements, (3) the desirability of a competitive marketplace, (4) any harm to the protesting dealers, and (5) the public interest. Tex. Rev. Civ. Stat. Ann. art. 4413(36), § 4.06(c) (Supp. 1992).

Our review of the record of the agency hearing shows that the evidence as to each of the above elements conflicts. The Commission was, of course, the judge of the weight to be accorded the evidence presented. Gerst v. Guardian Sav. & Loan Ass'n, 434 S.W.2d 113, 116 (Tex. 1968); Southern Union Gas Co. v. Railroad Comm'n, 692 S.W.2d 137, 141-42 (Tex. App. 1985, writ ref'd n.r.e.); see Silagi, 766 S.W.2d at 284. We conclude that there is substantial evidence, that is, some reasonable basis, to support the agency order granting the license application and that the order is not arbitrary and capricious. See Charter Medical-Dallas, Inc., 665 S.W.2d at 452-53; Suburban Util. Corp., 652 S.W.2d at 364; Starr County, 584 S.W.2d at 355-56. We overrule point of error four.

The order of the Texas Motor Vehicle Commission is affirmed.

[Before Chief Justice Carroll, Justices Jones and Kidd]

Order of Texas Motor Vehicle Commission Affirmed

Filed: July 1, 1992

[Publish]

1.   Section 7.01(a) provides that any party to a Commission proceeding who is affected by a final order of the Commission is entitled to judicial review of the order, under the substantial evidence rule, in a district court of Travis County "or in the Court of Appeals for the Third Court of Appeals District." A party may remove a proceeding filed in district court to the court of appeals upon notice of removal at any time before trial. Texas Motor Vehicle Commission Code, Tex. Rev. Civ. Stat. Ann. art 4413(36), § 7.01(a) (Supp. 1992). Gulf Coast Sports removed the proceeding from the district court to this Court.

The provisions of § 7.01 give this Court original jurisdiction in a matter traditionally brought in the trial court. See Tex. Const. art. V, § 6 (courts of appeals to have "such other jurisdiction, original and appellate, as may be prescribed by law). The statute provides that, once filed in this Court, the Texas Rules of Appellate Procedure are to govern the proceeding. Here, the parties and the Court have managed, on an ad hoc basis, to avoid procedural and factual disputes that could have derailed disposition of the cause. See Code § 7.02(d) (remand to trial court if evidence to be taken outside the agency record). Such potential disputes suggest that an appellate court is an unwieldy forum for initial judicial review of an administrative action.

2.   As of June 16, 1991, a party must seek rehearing in accordance with the Administrative Procedure and Texas Register Act ("APTRA"), Tex. Rev. Civ. Stat. Ann. 6252-13a (Supp. 1992). Code § 3.08(h) (Supp. 1992). Section 16(e) of APTRA requires a party to file a motion for rehearing "within 20 days after the date the party or his attorney is notified of the final decision or order." APTRA § 16(e) (Supp. 1992).

3.   Neither the Commission nor Gulf Coast Sports asserts that the resignation of a Board member reduced the Commission to five members, thereby reducing the number necessary for a quorum. See Nalle v. City of Austin, 93 S.W.141, 145 (Tex. Civ. App. 1906, writ ref'd); City of Alamo Heights v. Gerety, 264 S.W.2d 778, 780 (Tex. Civ. App. 1954, writ ref'd n.r.e.).

4.   Meador-Brady claims, in effect, that the Commission erred in granting the application "as if it were a relocation rather than a new point." Regardless whether the proceeding concerned a new dealership or relocation of an existing dealership, Gulf Coast Sports had the same burden of proof. Code §§ 4.02(d), .06(c).