Shirley Neeley, Texas Commissioner of Education The Texas Education Agency Carol Keeton Strayhorn, Texas Comptroller of Public Accounts And the Texas State Board of Education v. West Orange-Cove Consolidated Independent School District Coppell Independent School District La Porte Independent School District Port Neches-Groves Independent School District Dallas Independent School District

Court of Appeals of Texas

Shirley Neeley, Texas Commissioner of Education The Texas Education Agency Carol Keeton Strayhorn, Texas Comptroller of Public Accounts And the Texas State Board of Education v. West Orange-Cove Consolidated Independent School District Coppell Independent School District La Porte Independent School District Port Neches-Groves Independent School District Dallas Independent School District

Court of Appeals of Texas·Decided June 21, 2007·No. 03-06-00460-CV·Published

Opinion

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

NO. 03-06-00460-CV

Shirley Neeley, Texas Commissioner of Education; the Texas Education Agency;

Carol Keeton Strayhorn, Texas Comptroller of Public Accounts; and the Texas State Board of Education, Appellants

v.

West Orange-Cove Consolidated Independent School District; Coppell Independent School District; La Porte Independent School District; Port Neches-Groves Independent School District; Dallas Independent School District, et al., Appellees*

FROM THE DISTRICT COURT OF TRAVIS COUNTY, 250TH JUDICIAL DISTRICT NO. D-1-GV-01-000528, HONORABLE JOHN K. DIETZ, JUDGE PRESIDING

OPINION

The State appellants challenge the award of attorneys’ fees to the school district

appellees (the Districts) in a suit for declaratory and injunctive relief under the Uniform Declaratory

Judgments Act (UDJA) and article VII, § 1 and article VIII, § 1-e of the Texas Constitution.

Four Texas school districts, who were later joined by 43 additional districts

(collectively, the West Orange-Cove Districts), initially brought suit against the State, claiming that

the State’s school-finance system constituted a state property tax prohibited by article VIII, §1-e and

that the system failed to adequately provide for a general diffusion of knowledge as required by

article VII, § 1. Two additional sets of school districts, the Edgewood Districts and the Alvarado

*

The complete list of appellees is attached as Appendix A.

Districts, intervened, also seeking declarations that the system violated article VII, § 1. The trial

court found in favor of the Districts on all but one claim and awarded attorneys’ fees to the Districts.

The State appealed directly to the Texas Supreme Court, which held that the school-

finance system met the standards of article VII, § 1, but that it created a state property tax in violation

of article VIII, § 1-e. The supreme court remanded the case to the trial court to reconsider the

amount of attorneys’ fees to be awarded. On remand, the trial court reinstated the original amount

of attorneys’ fees awarded to the West Orange-Cove Districts and awarded fees to the Edgewood and

Alvarado Districts in a slightly reduced amount.

The State appeals the award of attorneys’ fees to the Districts, claiming that the trial

court abused its discretion in awarding attorneys’ fees because (1) the relief sought by the Districts’

declaratory-judgment claim was identical to that available directly under self-executing

constitutional provisions and (2) the trial court did not properly account for the fact that the State

prevailed in the Texas Supreme Court on all but one of the Districts’ claims.

BACKGROUND

In 2001, the West Orange-Cove Districts, a group that was originally made up of four

Texas school districts but has since grown to a coalition of 47 districts, filed a lawsuit claiming that

the school-finance system’s property tax cap of $1.50 per $100 resulted in a state property tax in

violation of article VIII, § 1-e of the Texas Constitution.1 The trial court dismissed the case, and that

1 Article VIII, § 1-e states, “No State ad valorem taxes shall be levied upon any property within this State.”

dismissal was affirmed by this Court, but the Texas Supreme Court reversed our judgment,

remanding the case to allow the West Orange-Cove Districts to proceed with their claim.

West Orange-Cove Consol. Indep. Sch. Dist. v. Alanis, 107 S.W.3d 558 (Tex. 2003). The original

four plaintiff districts were then joined by 43 additional districts, and the West Orange-Cove

Districts amended their petition to include an adequacy claim, stating that the school-finance system

prevented them from providing a “general diffusion of knowledge,” in violation of article VII, § 1.2

The Edgewood and Alvarado Districts intervened in the case, asserting adequacy claims and also

including efficiency claims, arguing that the school-finance system was inefficient in violation of

article VII, § 1. Each set of districts also sought attorneys’ fees under the UDJA.

The trial court ruled in favor of the West Orange-Cove Districts on their claims for

declaratory relief under article VII, § 1 and article VIII, § 1-e. The trial court also ruled in favor of

the Edgewood and Alvarado Districts on their adequacy claims and their efficiency claims that were

related to facilities funding, but ruled in favor of the State on the Edgewood and Alvarado Districts’

efficiency claims related to maintenance and operations funding. In a separate, bifurcated

proceeding, the trial court awarded attorneys’ fees to each set of Districts under the UDJA.

See Tex. Civ. Prac. & Rem. Code Ann. § 37.009 (West 1997).

2 Article VII, § 1 states, “A general diffusion of knowledge being essential to the preservation of the liberties and rights of the people, it shall be the duty of the Legislature of the State to establish and make suitable provision for the support and maintenance of an efficient system of public free schools.”

The State filed a direct appeal of the trial court’s judgment to the Texas Supreme

Court, but did not challenge the award of attorneys’ fees.3 The supreme court affirmed the trial

court’s article VIII, § 1 ruling, but ruled in favor of the State on the adequacy and efficiency claims.

In light of these rulings, the supreme court remanded the case for reconsideration of the attorneys’

fees award, stating, “[W]e reverse the award of attorney fees and remand the case to the district court

to reconsider what award of attorney fees, if any, is appropriate. We express no opinion on this

issue.” Neeley v. West Orange-Cove Consol. Indep. Sch. Dist., 176 S.W.3d 746, 799 (Tex. 2005).

On remand and after a hearing, the district court reinstated the West Orange-Cove

Districts’ award of $2,657,606.00 in attorneys’ fees. The trial court awarded reduced amounts of

$1,256,395.20 to the Edgewood Districts and $263,912.50 to the Alvarado Districts. Each set of

districts was awarded post-judgment interest and conditional appellate fees.

STANDARD OF REVIEW

A trial court’s judgment in granting or denying attorneys’ fees in a declaratory-

judgment action is reviewed for an abuse of discretion. Oake v. Collin County, 692 S.W.2d 454, 455

(Tex. 1985). The trial court’s judgment will not be reversed unless “the trial court abused its

discretion by awarding fees when there was insufficient evidence that the fees were reasonable and

3 A direct appeal may be taken to the Texas Supreme Court “from an order of a trial court granting or denying an interlocutory or permanent injunction on the ground of the constitutionality of a statute of this state.” Tex. Gov’t Code Ann. § 22.001(c) (West 2004).

necessary, or when the award was inequitable or unjust.” Bocquet v. Herring,

972 S.W.2d 19, 21 (Tex. 1998).

DISCUSSION

The State contends that the Districts are not entitled to attorneys’ fees under the UDJA

because a declaratory judgment may not be used solely as a vehicle to obtain attorneys’ fees. The

State argues that because articles VII and VIII are self-executing constitutional provisions, the

Districts were limited to bringing direct claims under the Constitution and are therefore ineligible for

attorneys’ fees under the UDJA. However, the State did not assert this argument until after the case

had been remanded to the trial court for reconsideration of the attorneys’ fees award. The State did

not argue that the Districts were precluded from an award of attorneys’ fees in its direct

appeal to the supreme court.

A party may not introduce an issue on remand that it failed to raise in previous

appellate proceedings. See Miller v. University Sav. Ass’n, 858 S.W.2d 33, 36 (Tex. App.—Houston

[14th Dist.] 1993, writ denied). Because the State had ample opportunity to contest the award of

attorneys’ fees in the direct appeal, “we will not permit a substantive argument of this nature to now

be raised.” Head Indus. Coatings & Servs., Inc. v. Maryland Ins. Co., 981 S.W.2d 305, 311

(Tex. App.—Texarkana 1998, pet. denied). The State is not exempt from the requirement that issues

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