TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-21-00136-CV
Texas Health and Human Services Commission; and Cecile Erwin Young, Executive Commissioner of the Texas Health and Human Services Commission, Appellants
v.
Sacred Oak Medical Center LLC, Appellee
FROM THE 250TH DISTRICT COURT OF TRAVIS COUNTY NO. D-1-GN-21-000074, THE HONORABLE LORA J. LIVINGSTON, JUDGE PRESIDING
MEMORANDUM OPINION
The Texas Health and Human Services Commission and its Executive
Commissioner, Cecile Erwin Young, (collectively, the Commission) bring this interlocutory
appeal from the trial court’s order denying the Commission’s plea to the jurisdiction and granting
a temporary injunction in favor of appellee Sacred Oak Medical Center LLC. The temporary
injunction restrained the Commission from enforcing its December 21, 2020 Notice of Violation
(“December 2020 Notice”) denying Sacred Oak’s license-renewal application and ordering the
psychiatric hospital’s immediate closure. The temporary injunction further required the
Commission to take all actions necessary to restore Sacred Oak to the operational status quo that
existed before the Commission’s enforcement of the December 2020 Notice, including
reinstating any state license or certification from the Commission that Sacred Oak held on
December 20, 2020. We affirm the trial court’s order for the reasons stated below. BACKGROUND
The parties entered into an Agreed Order on October 1, 2019, that resolved two
Notices of Violations that the Commission had issued to Sacred Oak on April 18, 2019, and June
5, 2019, and a proposed administrative penalty. The Agreed Order probated the denial of Sacred
Oak’s license-renewal application for a period of twelve months, subject to Sacred Oak’s
compliance with the terms of the Agreed Order, which among other things, required Sacred Oak’s
facility to hire an outside consultant approved by the Commission to create a corrective-action
plan. The plan was to identify specific actions to be taken “to achieve sustained compliance with
all applicable statutes and regulations” and to provide the Commission with monthly reports
detailing Sacred Oak’s progress in implementing the specific actions identified in the plan and
confirming whether Sacred Oak was sustaining compliance with all applicable statutes and
regulations. The Agreed Order allowed the Commission to deny the license renewal at any time
during the probation period if it found Sacred Oak had not made sufficient progress in
implementing the plan and achieving sustained compliance. The Agreed Order further provided
that upon completion of the corrective-action plan, Sacred Oak was to request a survey by the
Commission, and if the Commission did not find that Sacred Oak had “achieved sustained
compliance with all applicable statutes and regulations by the end of the Probation Period, the
Commission may deny the license renewal.” In December 2020, after conducting the required
post-probation survey, the Commission issued a Notice of Violation letter notifying Sacred Oak
that it had identified certain deficient practices, and consequently, that it found that Sacred Oak
had not achieved sustained compliance with all applicable statutes and regulations. The Notice of
Violation also informed Sacred Oak that, based on its finding of failure to achieve sustained
compliance, the Commission was denying Sacred Oak’s license renewal.
2 On January 7, 2021, Sacred Oak sued the Commission, arguing that the
Commission’s December 2020 Notice of Violation failed to find that Sacred Oak did not comply
with applicable statutes and regulations that were the subject of the Notices that led to the Agreed
Order. See Tex. Health & Safety Code § 577.016(f) (establishing that facility in repeated
noncompliance may be scheduled for probation and that “[d]uring the probation period, the
hospital or facility must correct the items that were in noncompliance and report the corrections to
the department for approval”). In its petition, Sacred Oak contends that to the extent the
Commission alleged the occurrence of different violations during the probation period as the basis
for denying its renewal application, Sacred Oak is entitled to a hearing and an opportunity to
demonstrate or achieve compliance before the Commission could deny its renewal application and
order it to close. 1 Id. § 577.016(b).
Sacred Oak seeks judicial review of the December 2020 Notice, asserting that
although it submitted a request for a hearing on the December 2020 Notice, the Commission had
advised it that the request would be refused because the Commission’s decision is final. Id.
§ 577.018. Sacred Oak also seeks a declaratory judgment that the denial of its license renewal and
closure of its hospital are void as ultra vires acts that violate the Texas Health and Safety Code and
Texas Administrative Code because these actions were taken without allowing Sacred Oak to
exhaust its administrative remedies. Finally, it seeks injunctive relief requiring the Commission
1 The parties dispute the construction of certain clauses in the Agreed Order, including a clause in which Sacred Oak “waives the right to a hearing or an appeal regarding the Commission findings, assessment of the proposed administrative penalty and disposition of this case through the Commission’s issuance of an Order,” and another clause stating that “[t]he Commission does not waive the right to enforce this Order or to prosecute any other violations that Respondent may hereafter commit. The Commission shall consider this Order and Respondent’s compliance history in the processing of any other enforcement actions and the imposition of any subsequent penalty.” 3 to withdraw its December 2020 Notice, pending the administrative processes established by Texas
Administrative Code Section 510.83 and Texas Health and Safety Code Section 577.016.
On February 1, 2021, the trial court conducted a hearing on the Commission’s plea
to the jurisdiction and Sacred Oak’s application for temporary injunction. At the hearing, the
Commission informed the court that although Sacred Oak’s application to the Commission for an
appeal of the December 2020 Notice had been docketed with its appellate division, the
Commission intended to argue that Sacred Oak is not entitled to an administrative appeal, based
on the waiver clause in the Agreed Order.
On March 22, 2021, the trial court issued its order denying the plea to the
jurisdiction, granting Sacred Oak’s application for temporary injunction, and granting the
Commission’s motion to quash subpoenas for certain witnesses to appear at the temporary-
injunction hearing. In its order, the trial court made the following findings to support its grant of
the temporary injunction:
Finding that Sacred Oak has demonstrated the likelihood of success on the merits at trial, including that the December 21, 2020 Order . . . may violate Texas Administrative Code § 510.83 by purporting to deny Sacred Oak’s application for renewal of its hospital license without providing prior notice of same, prior opportunity to demonstrate or achieve compliance, and prior opportunity for a hearing; and
Finding that irreparable harm and economic injury will be sustained by Sacred Oak by the continued closure of the hospital and consequent disruption of its business with the enforcement of the [December] Order . . . .
As a result, the trial court ordered that:
[the Commission] is RESTRAINED from enforcing the [December] Order and that [the Commission] shall immediately take all actions within its jurisdiction that are necessary to restore Sacred Oak to the operational status quo that existed prior to
4 [the Commission’s] enforcement of the Order, which shall include reinstating and returning any state license or certification from [the Commission] held and/or possessed by Sacred Oak on December 20, 2020, and thereafter terminated and/or removed as a result of [the Commission’s] efforts to enforce the Order (the “Licenses”, e.g., Psychiatric Hospital License No. 100390, issued to Sacred Oak on May 26, 2017). In the event that a document evidencing any such License was physically destroyed on or after December 21, 2020, [the Commission] shall immediately issue or cause to be issued a new such document to Sacred Oak. [The Commission] is further directed to immediately update its electronic records to reflect that the Licenses are valid and existing, that Sacred Oak’s credentials reflect the status quo that existed on December 20, 2020, and that Sacred Oak can practice/operate in the State of Texas as it was authorized to do so on December 20, 2020[.]
The trial court further ordered that the case is abated pending the outcome of the administrative
hearing docketed at the Commission and exhaustion of administrative remedies, but that “[s]uch
abatement does not affect and will not restrict the Court’s enforcement of this order and the
temporary injunction enjoining [the Commission’s] termination of the license, which shall in any
event remain in place pending a final hearing in this proceeding[.]” The trial court set a final
hearing in the matter for October 11, 2021. The Commission appeals from this order. 2
ANALYSIS
The Commission challenges the trial court’s order in two issues. First, the
Commission asserts that the trial court erred by denying its plea to the jurisdiction because Sacred
Oak waived the right to a hearing or appeal of the denial of its license-renewal application in the
Agreed Order, and the Commission acted within its discretion by denying Sacred Oak’s license-
2 After the appeal was filed, this Court granted Sacred Oak’s emergency motion for a Rule 29.3 temporary order. We ordered that the trial court’s temporary injunction was reinstated and that it remains in effect, pending disposition of the appeal. Texas Health & Human Servs. Comm’n v. Sacred Oak Med. Ctr. LLC, No. 03-21-00136-CV, 2021 WL 2371356, at *2, *7 (Tex. App.— Austin June 9, 2021, order) (per curiam).
5 renewal application. Second, the Commission argues that the trial court abused its discretion by
issuing the temporary injunction because Sacred Oak failed to prove that it met any of the required
elements for issuance of a temporary injunction.
I. Plea to the Jurisdiction
A. Standard of Review
A plea to the jurisdiction is a dilatory plea that challenges the trial court’s subject-
matter jurisdiction without regard to whether the asserted claims have merit. Harris County
v. Sykes, 136 S.W.3d 635, 638 (Tex. 2004). We review the trial court’s ruling on a plea to the
jurisdiction de novo. Texas Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 228
(Tex. 2004).
The burden is on the plaintiff to affirmatively demonstrate the trial court’s
jurisdiction. Heckman v. Williamson County, 369 S.W.3d 137, 150 (Tex. 2012). We begin our
analysis by determining if the plaintiff has “alleged facts that affirmatively demonstrate the court’s
jurisdiction to hear the cause.” Miranda, 133 S.W.3d at 226; see also Houston Belt & Terminal
Ry. Co. v. City of Houston, 487 S.W.3d 154, 160 (Tex. 2016). When making this determination,
we construe the pleadings liberally in the plaintiff’s favor, taking them as true, and looking to the
plaintiff’s intent. Miranda, 133 S.W.3d at 226.
We may also consider evidence that the parties have submitted that is relevant to
the jurisdictional issues, and we must do so when necessary to resolve those jurisdictional issues.
Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 555 (Tex. 2000). A party may present evidence
to negate the existence of a jurisdictional fact alleged in the pleadings, which we would otherwise
presume to be true. See Miranda, 133 S.W.3d at 227. In this case, the relevant evidence presented
6 by the parties includes the various Notices of Violation, the Agreed Order, and the letter docketing
Sacred Oak’s appeal of the December 2020 Notice to the Commission’s Appeals Division.
To the extent the challenge implicates the merits of the plaintiff’s cause of action,
the party asserting the plea has the burden of negating a genuine issue of material fact as to the
jurisdictional fact’s existence, in a manner similar to a traditional summary-judgment motion. See
id. at 227-28. We review the evidence in the light most favorable to the nonmovant to determine
whether a genuine issue of material fact exists. Town of Shady Shores v. Swanson, 590 S.W.3d 544,
550 (Tex. 2019) (citing Miranda, 133 S.W.3d at 221, 227-28). “Our ultimate inquiry is whether
the plaintiff’s pleaded and un-negated facts, taken as true and liberally construed with an eye to
the pleader’s intent, would affirmatively demonstrate a claim or claims within the trial court’s
jurisdiction.” Brantley v. Texas Youth Comm’n, 365 S.W.3d 89, 94 (Tex. App.—Austin 2011,
no pet.).
In its plea to the jurisdiction and on appeal, the Commission argues that the trial
court lacks jurisdiction over Sacred Oak’s claims because Sacred Oak waived its right to appeal
the denial of its license-renewal application, including any right to judicial review, in the Agreed
Order. Alternatively, the Commission argues that even assuming that Sacred Oak is entitled to a
hearing and appeal, despite the alleged waiver in the Agreed Order, it must first exhaust its
administrative remedies in the hearing that it requested, which was docketed by the Commission’s
separate appeals division. In addition, the Commission argues that Sacred Oak failed to plead a
proper ultra vires claim for several reasons, including that the Commission acted within its
discretionary authority when it denied Sacred Oak’s license-renewal application.
7 B. Waiver Language in the Agreed Order
We must construe various provisions of the Agreed Order to determine whether
Sacred Oak waived its right to appeal the Commission’s denial of its license-renewal application.
The Commission argues that in exchange for the execution of the Agreed Order, Sacred Oak
waived its “right to a hearing or appeal regarding the Commission findings . . . and disposition of
this case through the Commission’s issuance of an Order.” Moreover, the Agreed Order provided
for a Commission survey of Sacred Oak after it completed its required corrective-action plan, and
if the Commission did not “find [Sacred Oak has achieved sustained compliance with all
applicable statutes and regulations by the end of the Probation Period, the Commission may deny
the license renewal.” (Emphasis added.) The Commission argues that this plain language makes
clear that Sacred Oak had to achieve compliance with every applicable statute and regulation
during the probationary period, not just the ones that the Commission had previously notified
Sacred Oak that it had violated and that were the impetus for the Agreed Order. Sacred Oak, on
the other hand, points to several other provisions in the Agreed Order that it contends show, when
read in the context of the entire agreement, that it did not intentionally relinquish or abandon its
right to notice and a hearing on any new violations alleged by the Commission to have occurred
during Sacred Oak’s probationary period. See Moayedi v. Interstate 35/Chisam Rd., L.P.,
438 S.W.3d 1, 6-7 (Tex. 2014) (explaining “waiver” is defined as “intentional relinquishment of a
known right or intentional conduct inconsistent with claiming that right” (quoting Sun Expl. &
Prod. Co. v. Benton, 728 S.W.2d 35, 37 (Tex. 1987))).
Courts apply contract principles to ascertain and give effect to the parties’
intentions as expressed in agreed orders. See, e.g., In re Ford Motor Co., 211 S.W.3d 295, 298
(Tex. 2006) (per curiam) (orig. proceeding) (applying contract principles to interpret agreed
8 protective order); Lal v. Harris Methodist Fort Worth, 230 S.W.3d 468, 474 (Tex. App.—Fort
Worth 2007, no pet.) (applying contract principles to construe agreed scheduling order). We
construe an unambiguous agreement (i.e., one that is so worded that it can be given a certain or
definite legal meaning) as a matter of law. Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983)
(citation omitted). “When parties disagree over the meaning of an unambiguous contract, we
determine the parties’ intent by examining the entire agreement.” Moayedi, 438 S.W.3d at 7.
When construing an agreement, the Court’s primary concern “is to ascertain the true intentions of
the parties as expressed in the instrument.” Id. (quoting J.M. Davidson, Inc. v. Webster,
128 S.W.3d 223, 229 (Tex. 2003)). To accomplish this objective, courts must “examine and
consider the entire writing in an effort to harmonize and give effect to all the provisions of the
contract so that none will be rendered meaningless. No single provision taken alone will be given
controlling effect; rather, all the provisions must be considered with reference to the whole
instrument.” Coker, 650 S.W.2d at 393 (citation omitted). We presume that the parties intend
every clause to have some effect. Heritage Res., Inc. v. NationsBank, 939 S.W.2d 118, 121 (Tex.
1996). We construe the Agreed Order with these principles in mind.
The Agreed Order states that the parties entered into it after engaging in informal
conferences to settle the Commission’s allegations that Sacred Oak “engaged in the conduct as
more specifically described in the Commission’s April 18, 2019 and June 5, 2019, Notices of
Violation (Notices) which are adopted and incorporated in this Agreed Order (Order).” The parties
agreed that the Commission had determined that certain enumerated allegations in the Notices
were violations of the Commission’s Rules and that the Commission would withdraw other
allegations and reduce the proposed administrative penalty applied to Sacred Oak. And as
previously mentioned, the Agreed Order established that the Commission would probate the denial
9 of Sacred Oak’s license-renewal application for twelve months, subject to Sacred Oak’s
compliance with certain requirements, including its hiring of a Commission-approved outside
consultant. Sacred Oak was required to ask the consultant to create a corrective-action plan
identifying specific actions to be taken during the probation period “to achieve sustained
compliance with all applicable statutes and regulations.” Sacred Oak was also required to ask the
consultant to provide the Commission with monthly reports detailing Sacred Oak’s progress in
implementing the specific actions identified in the plan and confirming whether Sacred Oak was
“sustaining compliance with all applicable statutes and regulations.” The Agreed Order also
provided that the Commission could deny the license renewal at any time during the twelve-month
probation period, if it found that Sacred Oak had not “made sufficient progress in implementing
the Plan and achieving sustained compliance with all applicable statutes and regulations.” If the
Commission made such a finding during the probation period, it was required to provide Sacred
Oak notice of such finding within thirty days.
While we agree with the Commission that the Agreed Order required Sacred Oak
to “comply with this Order and with all applicable laws, rules, and regulations governing
Psychiatric Hospitals,” in Section VI (titled “Settlement”), paragraph 6, that same provision of the
Order also established that “[f]ailure to comply shall result in additional enforcement action.”
(Emphasis added.) “Enforcement” is defined in the Commission’s Rules as “a process by which
a sanction is proposed, and if warranted, imposed on an applicant or licensee regulated by the
department for failure to comply with statutes, rules and orders applicable to them.” 26 Tex.
Admin. Code § 510.83 (2022) (Tex. Dep’t of Health & Hum. Servs., Enforcement). The
enforcement actions that the Commission may take (denial, suspension, or revocation of a license)
all require the Commission to provide notice of the proposed action that “shall state the alleged
10 facts or conduct to warrant the proposed action, provide an opportunity to demonstrate or achieve
compliance, and shall state that the applicant or license holder has an opportunity for a hearing
before taking the action.” Id. § 510.83(7) (emphasis added); see also Tex. Health & Safety Code
§ 577.016(a), (b) (authorizing Commission to “deny, suspend, or revoke a license” if licensee has
substantially failed to comply with Commission’s rules or certain statutory provisions but
mandating that Commission “must give the applicant or license holder notice of the proposed
action, an opportunity to demonstrate or achieve compliance, and an opportunity for a hearing
before taking the action”). Here, while Sacred Oak engaged in informal settlement conferences to
settle the alleged compliance violations that were documented in the Notices and agreed that the
Commission could deny its license renewal at the end of the probation period without a hearing or
appeal if it found Sacred Oak had failed to achieve substantial compliance, the plain language of
several provisions also limits the scope of the waiver of a hearing or appeal in the Agreed Order
to only those allegations of violations that the Commission had made before the parties entered
into the Agreed Order. The key provisions establish the following:
VII. COMPLETE AGREEMENT
This Order is made pursuant to Government Code, §2001.056(2), and the procedural rules adopted by the Commission. This Order represents the complete settlement of all allegations contained in the Notice.
A. WAIVER OF APPEAL AND AGREEMENT REGARDING SIGNATURE
In exchange for the execution of this Order, Respondent waives the right to a hearing or an appeal regarding the Commission findings, assessment of the proposed administrative penalty and disposition of this case through the Commission’s issuance of an Order. Respondent has no objection to this Order being signed by either the Executive Commissioner or the Commission or her designee.
11 B. NO WAIVER WITH REGARD TO OTHER VIOLATIONS
The Commission does not waive the right to enforce this Order or to prosecute any other violations that Respondent may hereafter commit. The Commission shall consider this Order and Respondent’s compliance history in the processing of any other enforcement actions and the imposition of any subsequent penalty.
C. COMPLETE UNDERSTANDING
The Respondent understands the terms of this settlement agreement, enters into the settlement agreement freely, and agrees to the terms and conditions of this Order.
(Emphases added.)
The Commission argues that the Agreed Order contemplates only two possible
outcomes at the end of Sacred Oak’s probation period—either a finding that Sacred Oak had
achieved sustained compliance with all applicable statutes and regulations, requiring the
Commission to renew its license, or a finding that Sacred Oak had not achieved sustained
compliance with all applicable statutes and regulations, allowing the Commission to deny the
license renewal without a hearing on any compliance violations. 3 However, when read in context
with the waiver and no-waiver-with-regard-to-other-violations provisions found in Section VII,
3 The Commission relies on Section VI.4.g. of the Agreed Order to support this argument:
g. Upon completion of the Plan, the Facility shall request a survey by the Commission.
i. If the Commission finds the Facility has achieved sustained compliance with all applicable statutes and regulations, the Commission shall renew license no. 100390.
ii. If the Commission does not find the Facility has achieved sustained compliance with all applicable statutes and regulations by the end of the Probation Period, the Commission may deny the license renewal.
12 the Agreed Order contemplates a third outcome—that if the Commission finds a failure to achieve
sustained compliance with all applicable statutes and regulations based on allegations of
compliance violations other than those contained in the Notice, i.e., “other violations that [Sacred
Oak] may hereafter commit,” the Commission retained the right to prosecute those new violations
and Sacred Oak retained the right to a hearing on those new violations. To conclude otherwise
would render the waiver and the no-waiver-with-regard-to-other-violations
provisions meaningless. 4
The Commission also argues that the waiver language in Section VII.A. means that
Sacred Oak waived its right to appeal the “disposition of this case through the Commission’s
issuance of an Order.” The Commission focuses on the use of “an” instead of “this” to describe
the “Order,” contending that it could not mean that the Agreed Order is the order that disposes of
the case and thus the order that Sacred Oak waived its right to appeal from. The Commission
asserts that by its own terms the Agreed Order did not dispose of the case because the Agreed
Order probated the denial of Sacred Oak’s license for a year and postponed the Commission’s
decision to the end of that probation period. The Commission argues that therefore the December
2020 Notice of Violation (which it characterizes as the December 2020 “Order”) was not the start
4 The Commission’s proposed construction of the Agreed Order also would render meaningless the provision that would have required the Commission to provide Sacred Oak with notice within thirty days of a finding by the Commission during the probation period, allowing it to deny the license renewal, that Sacred Oak had not made sufficient progress in implementing the consultant’s corrective-action plan and achieving sustained compliance with all applicable statutes and regulations. See 26 Tex. Admin. Code § 510.83(7) (2022) (Tex. Dep’t Health & Hum. Servs., Enforcement) (requiring Commission to send notice of proposed action if it proposes to deny, suspend, or revoke license that “shall state the alleged facts or conduct to warrant the proposed action, provide an opportunity to demonstrate or achieve compliance, and shall state that the applicant or license holder has an opportunity for a hearing before taking the action”). 13 of a new case but was instead the final decision in the case that began with the April 2019 Notice
and that the final decision was “made pursuant to the Agreed Order.”
We do not find this argument persuasive. By its own terms, the Agreed Order
defined itself as “Order,” and references to “Order” in the Agreed Order plainly mean the Agreed
Order itself. The Agreed Order unambiguously settled only the parties’ dispute with regard to the
Commission’s allegations in the April 2019 and June 2019 Notices of Violation (“This Order
represents the complete settlement of all allegations contained in the Notice.”). Accordingly, the
waiver language in Section VII.A. that Sacred Oak waived “its right to a hearing or an appeal
regarding the Commission findings, assessment of the proposed administrative penalty, and
disposition of this case through the Commission’s issuance of an Order,” when read in context,
means that Sacred Oak waived its right to a hearing on or an appeal concerning only those
allegations specifically described in the April 2019 and June 2019 Notices and the case numbers
resolved by the Agreed Order. 5
The Commission further contends that even if we agree with Sacred Oak’s
argument that it was required only to demonstrate sustained compliance with the statutes and
regulations that were the basis for the April 2019 and June 2019 Notices, not with “all applicable
statutes and regulations,” Sacred Oak did not demonstrate sustained compliance with the
5 The Commission also argues that the December 2020 Notice of Violation must be part of the same administrative case because it referenced the three case numbers and docket number from the April 2019 Notice and a fourth case number and a second docket number from the June 2019 Notice, all of which were also referenced in the Agreed Order. The Commission’s choice not to assign a new case number or docket number to the new allegations of compliance violations in the December 2020 Notice is not determinative of whether Sacred Oak waived its right to a hearing or appeal concerning those new allegations. 14 regulations cited in the allegations settled in the Agreed Order. 6 The Commission asserts that the
December 2020 Notice of Violation alleges several of the same regulatory violations that had been
alleged against Sacred Oak in the April 2019 Notice and that therefore the Commission was
entitled to deny Sacred Oak’s license-renewal application without notice or a hearing or appeal.
Although the Commission points to multiple alleged violations of its Rule 510.41
in both the April 2019 Notice and the December 2020 Notice, the alleged violations involve
different subsections of Rule 510.41. Rule 510.41 is a lengthy regulation with subsections (a)-(p)
and governs a wide span of facility services, ranging from regulations related to dietary services
and outpatient services (the bases for the April 2019 allegations) to regulations concerning the
facility’s governing body, medical-record services, and quality assurance (the bases for the
December 2020 allegations), among others. See 26 Tex. Admin. Code § 510.41 (2022) (Tex. Dep’t
of Health & Hum. Servs., Facility Functions & Servs.). Likewise, the Commission’s other
assertion of an overlapping regulation in fact involves different issues based on different
subsections of a different (since repealed) regulation. In April 2019, the Commission alleged that
Sacred Oak had violated Rule 411.471(b), which governs the facility’s completion of a written
treatment plan within twenty-four hours, as to five patients; in December 2020, the Commission
alleged that Sacred Oak had violated Rule 411.471(e), which requires a facility to revise a patient’s
treatment plan as necessary when clinically indicated, as to one patient. See 25 id. § 411.471(b),
(e) (2020) (Tex. Dep’t of State Health Servs., Inpatient Mental Health Treatment & Treatment
Planning), repealed by 46 Tex. Reg. 3253 (2021). The Commission’s allegations in the April 2019
and December 2020 Notices thus involve allegations of different conduct, and contrary to the
6 We note that the Agreed Order does not define what constitutes “sustained compliance” with the applicable statutes and regulations. 15 Commission’s argument, the December 2020 Notice does not contain “several of the same
regulatory violations Sacred Oak had received in the April Notice.”
We agree with Sacred Oak that read as a whole, the Agreed Order’s waiver of its
right to a hearing or appeal only waived its right as to those allegations of compliance violations
that Sacred Oak was notified of in the April 2019 and June 2019 Notices, which were the
allegations settled by the Agreed Order. Nowhere in the Agreed Order did Sacred Oak waive its
right to notice of new allegations of violations that could potentially lead to the denial of its license
renewal. Nor did Sacred Oak waive the accompanying rights to “an opportunity to demonstrate
or achieve compliance, and an opportunity for a hearing” before the Commission took that action
based on new allegations. See Tex. Health & Safety Code § 577.016(b). The only construction of
the Agreed Order that gives effect to all its provisions is this: Sacred Oak waived its right to a
hearing or appeal from a Commission decision to deny its license renewal based on Sacred Oak’s
failure to resolve (i.e., achieve substantial compliance with) those allegations that the Agreed
Order settled, but it did not waive its right to notice of subsequent allegations of violations, an
opportunity to achieve compliance, and an opportunity for hearing or appeal concerning any new
allegations. We conclude that there was no waiver in the Agreed Order that rendered the
Commission’s denial of Sacred Oak’s license renewal final and unappealable, and thus, the
purported waiver did not render the trial court without jurisdiction over Sacred Oak’s suit.
In the alternative, the Commission contends that because its Appeals Division has
docketed Sacred Oak’s requested hearing, Sacred Oak must first exhaust its administrative
16 remedies before seeking relief from the trial court. 7 We disagree. In this case, Sacred Oak does
not seek solely to have the trial court determine the merits of the new allegations made by the
Commission in the December 2020 Notice. Instead, Sacred Oak seeks (and the trial court awarded)
injunctive relief on its ultra vires and constitutional claims, pending the very administrative process
that the Commission says it must first exhaust. In this interlocutory appeal brought by the
Commission, the central question underlying the propriety of the trial court’s order is a pure
question of law—the construction of the unambiguous Agreed Order to determine whether Sacred
Oak has the right to an administrative hearing on the Commission’s new allegations or whether
Sacred Oak waived that right in the Agreed Order. One exception to the exhaustion doctrine is
when a pure question of law is involved. See, e.g., MAG–T, L.P. v. Travis Cent. Appraisal Dist.,
161 S.W.3d 617, 634 (Tex. App.—Austin 2005, pet. denied) (citing Grounds v. Tolar Indep. Sch.
Dist., 707 S.W.2d 889, 892 (Tex. 1986) (concluding that determination of teacher’s statutory rights
related to term contracts, which might include application of school district’s probationary policy,
was not pure question of law), abrogated on other grounds by Dubai Petrol. Co. v. Kazi, 12 S.W.3d
71 (Tex. 2000)). Thus, under these circumstances, where the Court’s construction of the parties’
Agreed Order resolves the legal issue of whether Sacred Oak is entitled to its requested
administrative remedies, we conclude that it was not required to first exhaust those
administrative remedies.
7 The Commission notes that despite the ministerial docketing of Sacred Oak’s request for an appeal by its Appeals Division, it does not concede that Sacred Oak has any right to an administrative hearing and that agency rules contemplate that it may still seek dismissal of the appeal for lack of jurisdiction. 17 C. Sacred Oak’s Ultra Vires Claim
We next consider the Commission’s contention that the trial court erred in denying
its plea to the jurisdiction because Sacred Oak failed to properly plead an ultra vires claim against
the Commissioner. Sovereign immunity does not bar claims alleging that a government officer
acted ultra vires, or without legal authority, in carrying out her duties. Houston Belt, 487 S.W.3d
at 157-58. As an initial matter, the Commission urges that Sacred Oak has failed to adequately
allege any ultra vires acts by the Commissioner, who is the only individual state official named as
a party. See City of El Paso v. Heinrich, 284 S.W.3d 366, 372-73 (Tex. 2009) (establishing that
ultra vires suits must be brought against state actors in their official capacity for acts outside their
legal authority or for failure to perform purely ministerial acts). We disagree. Liberally construing
Sacred Oak’s petition, as we must, we conclude that it provides fair notice to the Commission and
to the Commissioner, who was sued in her official capacity, that Sacred Oak contends that the
Commissioner acted outside her statutory authority by directing an associate commissioner to issue
the December 2020 Notice denying Sacred Oak’s license renewal and closing its facility without
providing it with prior notice of the new allegations and an opportunity to take corrective action
and to have a hearing on the allegations. See Tex. Health & Safety Code § 577.016(a), (b); see
also 26 Tex. Admin. Code § 510.83(7). Given our prior conclusion that Sacred Oak did not waive
its right to a hearing or an appeal of new allegations, we determine that Sacred Oak has properly
pleaded that the Commissioner acted outside her legal authority.
The Commission also asserts that Sacred Oak failed to properly plead its ultra vires
claim because its claim seeks retrospective rather than prospective relief. The Commission urges
that Sacred Oak essentially seeks a repeal of the Commission’s past action by seeking a declaratory
judgment that the denial of Sacred Oak’s license renewal and its closure are void ultra vires acts.
18 However, as Sacred Oak points out, the relief it seeks from those void acts is relief compelling
legal compliance going forward; it seeks the declaratory judgment as a basis for injunctive relief
requiring the Commission to withdraw its December 2020 Notice pending the administrative
proceedings required by the statute and the Commission’s rules. Chambers-Liberty Cntys.
Navigation Dist. v. State, 575 S.W.3d 339, 348 (Tex. 2019) (“‘[U]ltra vires claims’ must be
brought against government officials in their official capacity and may seek only prospective
injunctive remedies.”). We conclude that Sacred Oak’s claim properly seeks only prospective
injunctive relief allowing it to operate going forward while it engages in the
administrative proceedings.
In addition, the Commission contends that Sacred Oak has improperly pleaded an
ultra vires claim against the Commission. However, Sacred Oak’s claims for injunctive relief are
also based on its constitutional claim that the Commission’s actions violated Article 1, Section 19
of the Texas Constitution. The Commission does not address Sacred Oak’s due-course-of-law
claim, and it is well settled that “‘suits for injunctive relief’ may be maintained against
governmental entities to remedy violations of the Texas Constitution.” City of Elsa v. M.A.L.,
226 S.W.3d 390, 392 (Tex. 2007) (per curiam) (quoting City of Beaumont v. Bouillion, 896 S.W.2d
143, 149 (Tex.1995)). Thus, the trial court did not err by refusing to dismiss Sacred Oak’s claim
for injunctive relief on this basis.
We conclude that the trial court correctly denied the Commission’s plea to the
jurisdiction because Sacred Oak did not waive its right to a hearing on the newly alleged violations
that were the bases for the denial of its license renewal in the December 2020 Notice, it was not
required to exhaust its administrative remedies before bringing suit to enforce its right to
19 administrative remedies, and it properly pleaded an ultra vires claim against the Commissioner
and a constitutional claim against the Commission. We overrule the Commission’s first issue.
II. Temporary Injunction
“A temporary injunction is an extraordinary remedy that does not issue as a matter
of right.” Butnaru v. Ford Motor Co., 84 S.W.3d 198, 204 (Tex. 2002) (citing Walling v. Metcalfe,
863 S.W.2d 56, 57 (Tex. 1993)). The purpose of a temporary injunction is to preserve the status
quo of the litigation’s subject matter pending trial on the merits. Id. To obtain relief, the party
applying for a temporary injunction “must plead and prove three specific elements: (1) a cause of
action against the defendant; (2) a probable right to the relief sought; and (3) a probable, imminent,
and irreparable injury in the interim.” Abbott v. Anti-Defamation League Austin, Sw. & Texoma
Regions, 610 S.W.3d 911, 916 (Tex. 2020) (quoting Butnaru, 84 S.W.3d at 204).
The decision to grant a temporary injunction lies in the sound discretion of the trial
court and is subject to reversal only for a clear abuse of that discretion. Butnaru, 84 S.W.3d at
204. A trial court abuses its discretion when it acts unreasonably or in an arbitrary manner or
without reference to any guiding rules and principles. Id. at 211. When reviewing a temporary-
injunction order, we view the evidence in the light most favorable to the order, indulging every
reasonable inference in its favor, and “determine whether the order was so arbitrary that it exceeds
the bounds of reasonable discretion.” Fox v. Tropical Warehouses, Inc., 121 S.W.3d 853, 857
(Tex. App.—Fort Worth 2003, no pet.). “The trial court does not abuse its discretion if some
evidence reasonably supports the trial court’s decision.” Butnaru, 84 S.W.3d at 211.
On appeal, the Commission asserts that the trial court abused its discretion by
granting Sacred Oak’s requested injunction because Sacred Oak failed to establish all three of the
20 required elements. First, the Commission contends Sacred Oak could not establish a valid cause
of action because the trial court lacked subject-matter jurisdiction over Sacred Oak’s claims as
discussed above. The Commission argues that Sacred Oak’s claim for judicial review is waived,
or alternatively, not ripe because Sacred Oak has not exhausted its administrative remedies, and
that its ultra vires claim either fails outright or is improperly pleaded. We have already disposed
of these arguments and concluded that the trial court correctly decided that it had jurisdiction over
Sacred Oak’s claims, and thus, we conclude here that the trial court correctly concluded that Sacred
Oak has a cause of action against the Commission.
The Commission’s second argument depends on its first. It argues that because
there is no cause of action, Sacred Oak cannot show a probable right to the relief sought. As with
the first element, we have concluded that the trial court has jurisdiction to consider Sacred Oak’s
claim that it is entitled to an administrative hearing and (if necessary) an appeal on the new
allegations in the December 2020 Notice that the Commission relied on as the basis for the license
denial and facility closure. We also concluded that its ultra vires claim against the Commissioner
and its constitutional claim against the Commission were properly pleaded. Accordingly, the
Commission has not shown how trial court abused its discretion by finding that Sacred Oak
demonstrated the likelihood of success on the merits at trial, including that the December 2020
Notice “may violate Texas Administrative Code § 510.83 by purporting to deny Sacred Oak’s
application for renewal of its hospital license without providing prior notice of same, prior
opportunity to demonstrate or achieve compliance, and prior opportunity for a hearing.”
Finally, as to the third element—a probable, imminent, and irreparable injury—the
Commission argues that Sacred Oak failed to meet its burden to show irreparable harm because it
did not put on evidence of financial harm at the hearing. However, the Commission stipulated in
21 the trial court that the closure of Sacred Oak’s facility would cause it irreparable harm and
economic injury without the temporary injunction. Thus, the trial court did not abuse its discretion
by “[f]inding that irreparable harm and economic injury will be sustained by Sacred Oak by the
continued closure of the hospital and consequent disruption of its business with the enforcement
of the [December 2020 Notice].”
Having rejected the Commission’s arguments, we conclude that the trial court did
not abuse its discretion by imposing a temporary injunction to prevent the Commission from
enforcing the December 2020 Notice and requiring it to restore Sacred Oak to the operational
status quo that existed before the date of the Notice. 8 We overrule the Commission’s second issue.
8 Sacred Oak also seeks a permanent injunction allowing it to stay open pending the administrative processes provided by statute and rule. And, as previously noted, the Commission’s Appeals Division docketed Sacred Oak’s requested administrative hearing cause number after suit was filed. Under these circumstances, where we have determined that Sacred Oak was not required to exhaust its administrative remedies before seeking relief from the trial court on the pure legal question of construction of the unambiguous Agreed Order to determine whether it has the right to an administrative hearing on the Commission’s new allegations, the trial court did not abuse its discretion by abating the case pending the outcome of the administrative cause and exhaustion of administrative remedies. Cf. Subaru of Am., Inc. v. David McDavid Nissan, Inc., 84 S.W.3d 212, 221-22 (Tex. 2002) (explaining distinction between primary and exclusive jurisdiction but explaining circumstances exist under both doctrines that make it appropriate for trial court to abate proceedings to allow agency to have opportunity to act on matter).
22 CONCLUSION
We affirm the trial court’s order denying the Commission’s plea to the jurisdiction
and granting Sacred Oak’s temporary injunction. 9
__________________________________________ Gisela D. Triana, Justice
Before Chief Justice Byrne, Justices Triana and Kelly
Affirmed
Filed: June 23, 2022
9 The Commission has filed a motion to dismiss this appeal suggesting that the controversy has become moot because Sacred Oak’s license has expired. The Commission asserts that it had administratively continued the initial May 31, 2019 license expiration date, pursuant to Texas Government Code Section 2001.054(b), and that it then further extended the license expiration date to November 30, 2021, after we issued our order reinstating the temporary injunction. However, Government Code Section 2001.054(d) establishes that (1) a license remains valid unless the denial of a renewal application becomes final and (2) “[t]he term or duration of a license described in Subsection (a) is tolled during the period the license is subjected to judicial review.” We have determined that the Commission’s denial of Sacred Oak’s license is not final; thus, the term of the license is tolled while the case is pending. Consequently, we deny the motion to dismiss. 23