Pelt v. State Board of Insurance

802 S.W.2d 822, 1990 WL 208079

• Court: Court of Appeals of Texas
• Decided: January 9, 1991
• Docket: 3-89-065-CV
• Status: Published

Opinions

ABOUSSIE, Justice.

This appeal arises from a district court order rendered in connection with an administrative proceeding pending before the Texas Commissioner of Insurance. Appel-lee served a subpoena duces tecum on the president of a non-party bank directing him to appear and produce documents at a hearing involving appellants. Appellants then filed a motion in the district court seeking to quash the subpoena. Tex.Rev.Civ.Stat. Ann. art. 342-705, § 3 (Supp.1991). After a hearing, the court overruled appellants’ motion, and they now seek to appeal the trial court’s order denying the motion to quash. At the outset, we must determine whether the order challenged is a final judgment reviewable by appeal. All of the parties apparently consider it so, although no one directs us to the basis authorizing an appeal. We conclude, however, that the order is not subject to appeal and dismiss the appeal for want of jurisdiction.

Appellants are the respondents in an administrative proceeding pending before the Commissioner of Insurance in which the agency is considering possible disciplinary action against them. Appellants received notice that the Insurance Board had requested issuance of a subpoena and subpoena duces tecum to Harold Blake, President of Redbird Bank of Dallas, pursuant to the Administrative Procedure and Texas Register Act (APTRA), Tex.Rev.Civ.Stat. Ann. art. 6252-13a, § 14(c) (Supp.1991). In response to the request, the Insurance Commissioner issued the subpoena, and Blake was ordered to appear at a disciplinary hearing March 13, 1989, and to produce the following documents:

Monthly transaction statements, or any kind or type of summary of transactions evidencing deposits, withdrawals, wire transfers from the demand deposit accounts, savings accounts, and trust accounts; and records evidencing certificates of deposits, letters of credit, or indebtedness for accounts in the name of Aztec, Aztec General Agency, Aztec Surplus Lines Agency, Aztec Insurance Agency or American Surety Company, John Henry Pelt or John Kyle Pelt from October of 1986 through and including January 1989.

Neither Blake nor the bank challenged or resisted the subpoena, and they are not parties to this appeal.

Pursuant to art. 342-705, § 3 of the Texas Banking Code, appellants filed in the district court a pleading entitled Motion to Quash Subpoena Duces Tecum challenging the authority of the State Board of Insurance to obtain disclosure of the requested bank records. The original motion was not verified as required, but a verified amended motion was filed before the date ordered for production. In turn, appellee filed a response to the motion and an application to enforce the subpoena. After a hearing, the district court signed an order stating only that, “the Court considered [appellants’ ] Motion to Quash ..., and the Court is of the opinion that said motion should be denied.” Appellants seek to appeal this order. The trial court did not order any party, the bank or Blake to take any action and did not compel discovery or production. Indeed, the trial court did not rule upon appellee’s request for enforcement, except by implication, although the result was to leave the subpoena in effect.

We are required to determine this Court’s jurisdiction to decide the appeal, even when the issue is not raised by a party. Zoning Bd. of Adjustment v. Graham & Assoc., Inc., 664 S.W.2d 480, 433 (Tex.App.1983, no writ); City of Beaumont v. West, 484 S.W.2d 789, 791 (Tex.Civ.App.1972, writ ref’d n.r.e.); Gibbs v. Melton, 354 S.W.2d 426, 428 (Tex.Civ.App.1962, no writ); Newton v. Barnes, 150 S.W.2d 72 (Tex.Civ.App.1941, writ ref’d). This Court has jurisdiction over “all cases of which the district courts or county courts have original or appellate jurisdic-tion_” Tex. Const.Ann. art. V, § 6 (Supp.1991). A necessary prerequisite to invoking the jurisdiction of the court of appeals is that, in the absence of a statute to the contrary, the appeal must be from a final, appealable judgment. Hinde v. Hinde, 701 S.W.2d 637, 639 (Tex.1985); North East Indep. School Dist. v. Aldridge, 400 S.W.2d 893 (Tex.1966); Tingley v. Northwestern Nat’l Ins. Co., 712 S.W.2d 649, 650 (Tex.App.1986, no writ); Tex.Civ.Prac. & Rem.Code Ann. § 51.012 (1986). Thus, we have no jurisdiction over an appeal from a trial court’s interlocutory ruling unless such order is specifically made appealable by statute. Cherokee Water Co. v. Ross, 698 S.W.2d 363, 365 (Tex.1985); Henderson v. Shell Oil Co., 143 Tex. 142, 182 S.W.2d 994, 995 (1944); Grant v. Austin Bridge Const. Co., 725 S.W.2d 366, 368 (Tex.App.1987, no writ). See Tex.Civ.Prac. & Rem.Code Ann. § 51.014 (Supp.1991).

An appellant should be accorded a reasonable and liberal interpretation of the rules and requirements of appellate review. Salvaggio v. Brazos County Water Control & Improvement Dist. No. 1, 598 S.W.2d 227, 229 (Tex.1980). Notwithstanding the rule favoring appealability, however, we are unable to conclude that this appeal is from a final judgment subject to appeal at this time. In essence, the appeal is from an order relating to a discovery dispute between the board and appellants. Trial courts routinely rule upon discovery matters during the course of litigation. Indeed, a court may entertain an action filed for the sole purpose of obtaining discovery or preserving evidence. See Tex.R.Civ.P. Ann. 166b, 167, 187, 215a, 621a, 737 (1976 & 1990 Supp.). A discovery order generally is interlocutory in nature and not immediately appealable as a final judgment. If the information sought to be divulged is not discoverable, the order can be set aside on writ of mandamus. McElroy, 26 Texas Practice, Civil Pre-Trial Procedure, § 1528 (1985). In one context, courts have described discovery orders as follows:

There are two types of discovery. One is made in aid of a pending suit and is sometimes referred to as a pure bill of discovery. Such an order is interlocutory in nature and is not appealable. The other type is in aid of a final judgment. It is a separate suit and is often referred to as a suit in the nature of a bill of discovery. This type of order is itself a final judgment and is appealable.

South Falls Corp. v. Davenport, 368 S.W.2d 695, 696-97 (Tex.Civ.App.1963, no writ) (and citations therein.)

APTRA § 14(c) grants administrative agencies authority to issue subpoenas to require attendance of witnesses and production of information. Section 14(n) provides that, in the event of failure to comply, the agency or party requesting discovery may bring suit to enforce the agency subpoena in district court. Failure to obey the trial court’s enforcement order is punishable by contempt.

The Insurance Code grants the commissioner and board statewide subpoena power to compel attendance of witnesses and production of information. Tex.Ins. Code Ann. 1.19-l(a) (Supp.1991). In the event of disobedience, the commissioner or board may invoke the aid of a district court, and the court may issue an order requiring obedience to the subpoena and compelling production in accordance therewith. Failure to obey the court’s order is punishable by contempt. Tex.Ins.Code Ann. 1.19-l(c) (Supp.1991).

Under article 342-705, § 1 of the Banking Code, a financial institution cannot be required to produce a customer’s records, except as therein provided, although it is not forbidden from doing so voluntarily. Nicewander, Financial Record Privacy—What Are and What Should Be the Rights of the Customer of a Depository Institution, 16 St. Mary’s L.J. 601, 603 (1985). Section 3 provides that a depositor who seeks to resist that production may file in a district court a verified motion to quash the subpoena or seek a protective order. Tex.Rev.Civ.Stat. Ann. art. 342-705, § 3 (Supp.1991).

None of the above statutes expressly provide for a right of appeal from the district court order therein contemplated. Pursuant to these and other statutes, the district court regularly is called upon to rule upon discovery disputes before the many state administrative agencies, in light of the fact that an agency’s interlocutory discovery orders generally are not appeal-able. APTRA § 19(a); Hamilton & Jewett, The Administrative Procedure and Texas Register Act: Contested Cases and Judicial Review, 54 Texas L.Rev. 285, 303 (1976). While a proceeding filed for this purpose in district court is an original action and not an appeal from an agency order, relief from the trial court is sought with respect to an agency’s discovery ruling in connection with a matter ongoing in the agency.

It has long been held that a discovery order is interlocutory in nature and therefore non-appealable, in the absence of express statutory authority, until after final judgment may be rendered on the merits of the primary dispute. Office Employees Int’l Union v. Southwestern Drug Corp., 391 S.W.2d 404, 407 (Tex.1965); Southern Bag & Burlap Co. v. Boyd, 120 Tex. 418, 38 S.W.2d 565, 569 (1931); Texas Wheat Growers’ Ass’n v. Gough, 70 S.W.2d 818, 819 (Tex.Civ.App.1934, writ ref’d).

As a general rule, then, orders relating to discovery in aid of a pending or contemplated cause, even when filed in a separate action, are considered interlocutory and are not appealable except in connection with appeal upon final disposition of the main cause on the merits. Equitable Trust Co. v. Jackson, 101 S.W.2d 552, 553 (Tex.1937); Warford v. Childers, 642 S.W.2d 63, 65 (Tex.App.1982, no writ); Itz v. Kunz, 511 S.W.2d 77 (Tex.Civ.App. 1974, writ ref’d n.r.e.). This is in contrast to a postjudgment action on behalf of a judgment creditor seeking to discover assets; the information sought is an end in itself, and the order is final and appealable. Dallas Joint Stock Land Bk. v. Rawlins, 129 S.W.2d 485, 487 (Tex.Civ.App.1939, no writ) (opinion cited with approval in Dallas Joint Stock Land Bank v. State, 135 Tex. 25, 137 S.W.2d 993 (1940)).

Thus, if the trial court overruled a motion to quash a subpoena in connection with pending litigation, the order would not be a final judgment subject to separate appeal. We could only review the matter by appeal after final judgment on the merits. The question here is whether a trial court’s ruling resolving a discovery dispute between adverse parties before an agency can be classified as a final, rather than an interlocutory, judgment. We hold that it is not.

The fact that the underlying matter is ongoing in an administrative agency rather than in a trial court does not transform the district court’s order overruling the motion to quash into an appealable judgment. Although the relief sought from the district court may have been ruled upon, we cannot say that this ruling was a final, appealable judgment. Instead, it clearly was incident to a discovery dispute, albeit in an administrative proceeding. While appellants ultimately may obtain appellate review of the trial court’s discovery order in the event the matter is further litigated, finally concluded and appealed, they are not now entitled to review the order by appeal. We note that the bank and its president did not bring this action and are not parties to this appeal. Here, the agency sought to obtain appellants’ bank records, and the district court dispute in effect is between adverse parties — the agency seeking discovery and the appellants resisting the same. This is distinguishable from the situation where a court entertains an action in equity against a disinterested party for the limited purpose of discovering the names of persons against whom an action may be maintainable. Such an action is an end in itself, and an order requiring the party to produce the names is in effect a mandatory injunction that is appealable. Dallas Joint Stock Land Bank, 137 S.W.2d at 996; Rawlins, 129 S.W.2d at 486.

Similarly, a Rule 187 proceeding to perpetuate testimony is deemed brought in aid of and ancillary to an anticipated suit. Thus, an order granting the right to take depositions pursuant to this rule is not equivalent to a mandatory injunction but instead is interlocutory and, in the absence of express authority, not appealable. Dallas Joint Stock Land Bank, therefore, does not apply, the trial court order is not final and appealable, and an appeal must be dismissed. Office Employees Int’l Union Local 277 v. Southwestern Drug Corp., 391 S.W.2d 404, 407 (Tex.1965); Henderson v. Shell, 182 S.W.2d at 994.

As this Court recognized in Pub. Util. Comm’n v. Houston Lighting & Power Co., 778 S.W.2d 195, 197-98 (Tex.App.1989, no writ), with respect to the agency’s discovery ruling there in dispute, “[notwithstanding equitable relief, the law provides no means to facilitate the review of an interlocutory discovery ruling” governing parties appearing before the Commission. We held, therefore, that temporary injunc-tive relief was available in the declaratory judgment proceeding which had been filed for the purpose of determining whether the information the agency had ordered produced was protected by the attorney-client privilege. Otherwise, the party resisting discovery had no adequate remedy at law because the order was not appealable until “judicial review of the entire case now pending” before the agency.

We agree that the matter before us is similar to a Rule 737 bill of discovery. As a general rule, a bill of discovery is a proceeding brought by a party against an adversary party, for the purpose of discovering information within the knowledge or possession of the adversary, to be used either offensively or defensively in a pending or contemplated action. Rawlins, 129 S.W.2d at 486-87; Equitable Trust Co., 101 S.W.2d at 553; Tex.R.Civ.P.Ann. 737 (1967). Such a discovery action can be brought in a pending cause or in a separate action but, in either event, the discovery sought is incident to and in aid of a pending or contemplated suit and is not an end in itself. Rawlins, 129 S.W.2d at 486.

An order requiring an adversary to answer or produce information in aid of a pending case is necessarily interlocutory and not immediately appealable in the absence of statutory authority to the contrary but is reviewable on appeal of the final judgment in the pending cause. Rawlins, 129 S.W.2d at 486; Equitable Trust Co., 101 S.W.2d at 553; Texas Wheat Growers, 70 S.W.2d at 820. Likewise, a discovery order in aid of a contemplated suit necessarily becomes part of that main suit, if and when filed, and thereafter is reviewable after final judgment in the suit in aid of which the discovery was sought. Rawlins, 129 S.W.2d at 487. The order granting or denying relief is clearly interlocutory from which no appeal can be taken. If the trial court has abused its discretion, mandamus will lie to correct the error. Texas Wheat Growers, 70 S.W.2d at 819-20.

On the other hand, a bill of discovery can be brought against a person or entity unrelated to the primary dispute, but having information needed by a litigant, for the sole purpose of obtaining the names of persons against whom a cause of action is maintainable and is contemplated. The trial court in the exercise of its equity power can order that information produced and, as to that defendant, its discovery order is final and subject to an immediate, separate appeal. Rawlins, 129 S.W.2d at 486. As concerns that defendant from whom the information is sought, the order is not deemed incidental to the contemplated suit but instead is in the nature of a mandatory injunction. Dallas Joint Stock Land Bank, 137 S.W.2d at 996. Similarly, a discovery suit brought after final judgment by a judgment creditor for the purpose of discovering assets belonging to the judgment debtor upon which to levy in order to enforce the judgment is not incidental to any other proceeding and is final and appealable. In either instance, the discovery sought is an end in itself and not merely incident to either a pending or contemplated suit. 487; Rule 621a. Rawlins, 129 S.W.2d at

It is well-settled that where an action is created by statute, the statutory provisions are mandatory and exclusive and must be complied with in all respects or the action is not maintainable due to lack of jurisdiction. Grounds v. Tolar Indep. School Dist., 707 S.W.2d 889, 891 (Tex.1986). Subject-matter jurisdiction is established by operation of law through the constitutional and statutory provisions that enumerate the types of cases that a court may entertain. Federal Underwriters Exch. v. Pugh, 141 Tex. 589, 174 S.W.2d 598, 600 (1943); Ex parte Bowers, 671 S.W.2d 931, 935 (Tex.App.1984, orig. proceeding). No right of appeal from the district court’s order is provided by the applicable statutes or rules.

Application of the rule, however, does not leave a party without any means of immediate relief. As earlier noted, mandamus may issue to correct a clear abuse of discretion or the violation of a duty imposed by law when there is no adequate remedy at law. Street v. Second Court of Appeals, 715 S.W.2d 638, 639 (Tex.1986). If a party can show that the trial court abused its discretion and that the party has no adequate remedy by appeal, the party may seek relief by petition for writ of mandamus. Jampole v. Touchy, 673 S.W.2d 569, 572 (Tex.1984). Mandamus is available to remedy an abuse of discretion in granting or denying discovery. Sutherland v. Moore, 716 S.W.2d 119, 120 (Tex.App.1986, no writ). If the trial court improperly overrules a motion to quash that it was required to sustain, or otherwise directs production of undiscoverable information, mandamus will issue to correct the error and set aside the order. Commercial Travelers Life Ins. Co. v. Spears, 484 S.W.2d 577, 578 (Tex.1972); Russell v. Young, 452 S.W.2d 434 (Tex.1970). Thus, while an aggrieved party may not be entitled to appeal, he may be entitled to seek relief from the trial court’s order by other means.¹ See PUC v. HLP, 778 S.W.2d at 197; Biernat v. Powell, 757 S.W.2d 115, 117 (Tex.App.1988, orig. proceeding). See also Morris v. Hoerster, 368 S.W.2d 639 (Tex.Civ.App.), writ ref’d n.r.e., 370 S.W.2d 451 (Tex.1963), cert. denied, 376 U.S. 919, 84 S.Ct. 676, 11 L.Ed.2d 614 (1964). Otherwise, the trial court’s discretionary ruling on discovery should stand undisturbed as it would during the course of litigation.² We render no opinion on whether mandamus would issue here.

Appellee argues on the merits that the State Board of Insurance is a “court of competent jurisdiction” within the meaning of art. 342-705. Without deciding the issue, the argument points out that an administrative proceeding is pending and serves to emphasize that the trial court’s order can only be interlocutory in nature.

We are aware that other courts have decided appeals from district court orders under similar circumstances. See Sinclair v. Savings & Loan Comm’r, 696 S.W.2d 142 (Tex.App.1985, writ ref’d n.r.e.); Jones v. Latham, 671 S.W.2d 612 (Tex.App.1984, writ ref’d n.r.e.). We are unaware, however, of a ease in which the issue of jurisdiction has been considered.

Because we are without jurisdiction, we will dismiss the appeal.

POWERS, J., concurs.

1 . We note also that a party might obtain review of the order after being adjudged in contempt because in a habeas corpus proceeding a party may obtain review of the underlying discovery order violated. Ex parte Butler, 522 S.W.2d 196 (Tex.1975).

2 . The alternative arguably would result in a flood of appeals from district court rulings rendered in aid and enforcement of discovery matters before agencies.