in Re George Green and Garlan Green

ACCEPTED

03-14-00725-CV

4240941

THIRD COURT OF APPEALS

AUSTIN, TEXAS

2/22/2015 3:49:29 PM

JEFFREY D. KYLE

CLERK

No. 03-14-00725-CV

FILED IN

3rd COURT OF APPEALS

AUSTIN, TEXAS

2/23/2015 12:00:00 AM

In the Third Court of Appeals JEFFREY D. KYLE

Clerk

Austin, Texas

GEORGE GREEN AND GARLAN GREEN (DECEASED),

Appellants

v.

PORT OF CALL HOMEOWNERS ASSOCIATION

Appellee

APPEAL FROM CAUSE NO. 18314

RD

33 JUDICIAL DISTRICT COURT OF LLANO COUNTY, TEXAS

HON. ALLAN GARRETT, PRESIDING

APPELLANTS’ RESPONSE TO APPLELLEE’S MOTION TO DISMISS

AND REQUEST FOR ADDITIONAL TIME TO SUPPLEMENT

RESPONSE IN ORDER TO COMPLETE THE RECORD

David Junkin

State Bar No. 11058020

Law Office of David Junkin

P.O. Box 2910

Wimberley, Texas 78676

512/847-8600

512/847-8604 (fax)

david@junkinlawoffice.com

Attorney for Appellants

TABLE OF CONTENTS

Index of Authorities ...................................................................................... ii

Brief Statement of the Case ..........................................................................1

Request for Additional Time to Supplement This Response .....................3

Issue Presented

DID THE TRIAL COURT’S VACATING THE

SECOND ORDER (THE ORDER ON WHICH THE

APPEAL IS BASED) CONFER ON IT THE

JURISDICTION TO ENTER THE “DISCOVERY

ORDER” (A NEW ORDER COVERING THE SAME

SUBJECT MATTER) AND MOOT THIS APPEAL? ........................3

Summary of the Response .............................................................................4

Argument ........................................................................................................4

Prayer ............................................................................................................. 8

Certificate of Service .....................................................................................9

Appendix

Appellee’s Request for Clerk’s Record and Reporter’s Record ... Tab 1

Second Order (order on which the appeal is based) ...................... Tab 2

Vacating Order .............................................................................. Tab 3

“Discovery Order” ......................................................................... Tab 4

Cases .............................................................................................. Tab 5

Rules .............................................................................................. Tab 6

i

INDEX OF AUTHORITIES

Case Law Page(s)

Ahmed v. Shimi Ventures, LP,

99 S.W.3d 682 (Tex. App.—Houston [1st Dist.] 2003, no pet.) ............. 5

Burton v. Cravey,

759 S.W.2d 160 (Tex. App.—Houston [1st Dist.] 1988, no writ) ............ 7

Episcopal Diocese of Fort Worth v. Episcopal Church,

422 S.W.3d 646 (Tex. 2013), cert. denied, 135 S.Ct. 431 (2014)........... 6

Parsons v. Galveston County Employees Credit Union,

576 S.W.2d 99 (Tex. Civ. App.—Houston [1st Dist.] 1987, no writ) ...... 4

Qwest Communications Corp. v. AT&T Corp.,

24 S.W.3d 334 (Tex. 2000). .................................................................... 6

Reeves v. City of Dallas,

68 S.W.3d 58 (Tex. App.—Dallas 2001, pet. denied) .......................... 4, 5

Tanguy v. Laux,

259 S.W.3d 851 (Tex. App.—Houston [1st Dist.] 1988, no pet). ........... 5

Texas Health and Human Services Commission v Advocates for

Patient Access, Inc.,

399 S.W.3d 615 (Tex. App.—Austin 2013, no pet.) .......................... 5, 6

Texas Workers’ Compensation Commission v. Garcia,

817 S.W.2d 60 (Tex. 1991) ..................................................................... 6

Rules

Tex. R. App. P. 29 ............................................................................................. 4

ii

TO THE HONORABLE THIRD COURT OF APPEALS:

Appellants, George Green and Garlan Green (now deceased) file this

response to the Appellee’s Motion to Dismiss Appellant’s Appeal Because of

Mootness and respectfully request additional time to respond as follows:

BRIEF STATEMENT OF THE CASE

1. The nature of this case is described in more detail in the

Appellants’ Brief previously filed with this Court. Appellants brought claims

against Port of Call Homeowners Association (“POC”) and individual members

of its board of directors in connection with the mismanagement of POC funds.

The primary issue in the underlying suit that is also at issue in this interlocutory

appeal, is the Appellants’ access to the books and records of POC.

2. The suit was filed on February 5, 2013. CR 8. In connection with

discovery issues, both parties filed Motions to Compel. CR 89 and CR 100. A

hearing was held on those motions on August 14, 2014. The Trial Court

summarized its findings (RR, Vol. 2, page 52, line 9 - page 62, line 11) and an

Order was entered (the “Initial Order”). CR 131. The Initial Order was an

attempt by the Court to fashion a compromise between the broad rights of

access to POC’s records under the Texas Property Code (and the POC

governing documents) and the discovery obligations imposed on litigants, by

Appellants’ Response to Motion to Dismiss - Page 1

ordering the automatic production of POC records every forty-five (45) days.

No objection was made to the Initial Order by any party.

3. POC subsequently served Defendants’ Motion to Enforce

Protective Order. CR 153. The motion was generally based on letter requests

for records and information made by Appellants after the Initial Order. A non-

evidentiary was conducted. After the hearing, POC filed Defendants’

Supplemental Motion to Enforce Protective Order. CR 169.

4. On October 21, 2014, the Trial Court entered an Order Granting

Motion for Enforcement (the “Second Order”) which modified the Initial Order

“nunc pro tunc” and imposed injunctive relief against Appellants relating to

communications of any kind between Appellants and Appellees to include, but

is not limited to, requesting documents pursuant to document production

requirements under the Texas Property Code and the Texas Business

Organizations Code and POC governing documents. CR 175. It is the Second

Order that formed the basis of the Appellants’ interlocutory appeal.

5. On January 30, 2015, after Appellants had already filed their brief

in this Court, the Trial Court entered another Order vacating the Second Order,

without prejudice to Appellees seeking the relief granted in the Second Order

(the “Vacating Order”). Supp. CR 4. However, on the same day, the Trial

Court entered a “Discovery Order” 1 again purporting to prohibit oral or written

1

The Court changed the caption from “Amended Order” to “Discovery Order.” Supp. CR 5.

Appellants’ Response to Motion to Dismiss - Page 2

requests for documents by Appellants except through counsel and which also

vacated the Second Order. Supp. CR 5 - 6.

REQUEST FOR ADDITONAL TIME TO RESPOND

6. The Appellants respectfully request that the Court extend the time

for them to respond to the Motion to Dismiss until a reasonable time after the

Supplemental Reporter’s Record is filed. The Order Appellees claim moots this

interlocutory appeal was signed by the Court on January 30, 2015. On or about

February 6, 2015, the Appellees requested that the reporter’s record be

supplemented with the transcript from the January 30, 2015 hearing and the

Clerk’s Record be supplemented with the two (2) orders issued that day. See

Exhibit A which is incorporated by reference. The Supplemental Clerk’s Record

was filed with the Court on February 10, 2015. The Supplemental Reporter’s

Record has not been filed. That record contains statements from Appellees’

counsel reflecting the injunctive nature and purpose of the “Discovery Order.”

7. Accordingly, Appellants respectfully request the opportunity to

supplement this response when the Supplemental Reporter’s Record is filed.

Subject to this request for additional time to supplement this response, the

Appellants respond to Appellees’ Motion to Dismiss.

ISSUE PRESENTED

A. Did the Trial Court’s vacating the Second Order confer on it the

jurisdiction to enter the “Discovery Order” and moot this appeal?

Appellants’ Response to Motion to Dismiss - Page 3

SUMMARY OF THE RESPONSE

8. The Vacating Order did not moot the appeal, because, while the

Trial Court could vacate the Second Order, it lost jurisdiction to modify the

injunction by way of the Discovery Order issued the same day. The Trial Court

did not have jurisdiction to issue the “Discovery Order” and oust this Court of

jurisdiction by vacating the order on appeal and issuing a new one purporting to

cover the same subject matter. Tex. R. App. P. 29.5.

ARGUMENT

9. The appeal of a temporary injunction terminates the jurisdiction of

the trial court as to the merits of a temporary injunction. See e.g., Reeves v. City

of Dallas, 68 S.W.3d 58, 60 (Tex. App.—Dallas 2001, pet. denied), citing

Parsons v. Galveston County Employees Credit Union, 576 S.W.2d 99, 100 (Tex.

Civ. App.—Houston [1st. Dist.] 1978, no writ) (“An amended temporary

injunction entered after an appeal has been perfected will be stricken.”). While an

interlocutory appeal is pending, the trial court retains jurisdiction to dissolve or

vacate the order appealed and to proceed to trial on the merits. “But a trial court

cannot make any order which ‘interferes with or impairs the jurisdiction of the

appellate court or the effectiveness or any relief sought or that may be granted on

appeal’ while the interlocutory appeal is pending.” Tex. R. App. P. 29.5; Reeves,

68 S.W.3d at 60.

Appellants’ Response to Motion to Dismiss - Page 4

10. In Reeves, the trial court entered a temporary injunction in February,

but in March vacated the February injunction, but entered a new order that

granted basically the same relief, and in April entered another order allowing a

payout of the bond. The Court held:

we conclude that March injunction, except for the first paragraph, and the

April order are determinations of the merits of the temporary injunction

while the February injunction was pending on appeal. Thus we conclude

that March injunction, except the first paragraph that vacated the February

injunction, and the April order were issued without authority and must be

stricken. Additionally, we conclude the March injunction, again except for

the first paragraph, and the April order interferes with or impairs our

jurisdiction and the effectiveness of any relief sought from, or that may

have been granted, by this Court.

Reeves, 68 S.W.3d at 60; see also Texas Health and Human Services Commission

v. Advocates for Patient Access, Inc., 399 S.W.3d 615 (Tex. App.—Austin 2013,

no pet.) (“In accordance with TRAP 29.5, the trial court had authority to modify

or amend the May injunction order to (1) grant identical substantive relief, (2)

grant additional substantive relief, and (3) bring the injunction into compliance

with Civil Procedure Rules 683 and 684 as long as those actions did not interfere

with or impair this Court’s jurisdiction or the effectiveness of the relief HHSC

seeks on appeal from the May injunction order.”); see also Tanguy v. Laux, 259

S.W.3d 851, 855 (Tex. App.—Houston [1st Dist.] 2008, no pet.) (concerning a

dissolved order replaced with new order that concerned exactly the same subject

matter), citing, Ahmed v. Shimi Ventures, LP, 99 S.W.3d 682, 689-90 (Tex.

App.—Houston [1st Dist.] 2003, no pet.) (modified temporary injunction order).

Appellants’ Response to Motion to Dismiss - Page 5

A trial court should not be allowed to frustrate a party’s right to appellate review.

Texas Health and Human Services Commission, 399 S.W.3d at 624.

11. The Vacating Order (Supp. CR 4) and “Discovery Order” (Supp. CR

5) vacated the order that is the basis of this appeal. Without more, the Appellants

agree the Trial Court had jurisdiction to vacate the Second Order and that the

appeal would be moot. However, the same day and in connection with the same

hearing, the Court signed a second order styled as a “Discovery Order.” Supp.

CR. 5. As noted above, the caption of the Order was changed from “Amended

Order” to Discovery Order, but in determining whether there is jurisdiction over

the interlocutory appeal, it is the actual substance of the trial court’s ruling, not the

title of the order that decides the issue. See Episcopal Diocese of Fort Worth v.

Episcopal Church, 422 S.W.3d 646, 649-50 (Tex. 2013) (“The effect of the trial

court’s order . . . is what determines this Court’s direct appeal jurisdiction.”), cert.

denied, 135 S.Ct. 435 (2014), citing, Texas Workers’ Compensation Commission

v. Garcia, 817 S.W.2d 60, 61-62 (Tex. 1991); Qwest Communications Corp. v.

AT&T Corp., 24 S.W.3d 334, 336 (Tex. 2000) (“We hold that, in character and

function, the trial court’s order grants a temporary injunction . . . .”).

12. The third paragraph of the Discovery Order again purports to

prohibit any oral or written request for documents by Appellants. Supp. CR 5.

This covers the same subject matter as the injunctive relief granted by the Second

Order. The Supplemental Reporter’s record is expected to confirm the Trial

Appellants’ Response to Motion to Dismiss - Page 6

Court initially intended to delete at least the third paragraph of the Discovery

Order, but was asked by Appellees’ counsel to leave it in to prohibit the conduct

alleged to have given rise to the Second Order – the order purportedly vacated.

13. Further, to the extent that the “Discovery Order” is being used to

prevent the Appellants from requesting documents under the Texas Property

Code, Texas Business Organizations Code (or, for example, the POC bylaws)

then the “Discovery Order” is an improperly broad preemptive injunctive order

extending beyond discovery requests and requiring Appellants to only exercise

their statutory and contractual rights through counsel. See generally, Burton v.

Cravey, 759 S.W.2d 160, 162 (Tex. App.—Houston [1st Dist.] 1988, no writ)

(“Again, we note that appellants are attempting to engraft notions borrowed from

Texas discovery practice onto a statutory right to inspect. Article 1396-2.23

contains no limitations on the members right to inspect as long as the books and

records are those of the non-profit corporation and the inspection is for “any

proper purpose.”).

14. The Vacating Order did not moot the appeal, because the Trial Court

issued an order the same day effectively granting injunctive relief that was also

part of the injunctive relief granted in the Second Order. The Trial Court did not

have jurisdiction to issue the “Discovery Order” and cannot oust this Court of

Appellants’ Response to Motion to Dismiss - Page 7

jurisdiction by vacating the order on appeal and issuing a new one purporting to

cover the same subject matter – even though arguably narrower in scope.2

PRAYER

Appellants move that the Appellees’ Motion to Dismiss be denied and

that Appellants be awarded all such other and further relief, including general

relief, to which they might be entitled.

Respectfully submitted,

Law Office of David Junkin

_______________________

David Junkin

State Bar No. 11058020

P.O. Box 2910

Wimberley, Texas 78676

512/847-8600

512/847-8604 (fax)

david@junkinlawoffice.com

Attorney for Appellants

George and Garlan Green

2

While the “Discovery Order” purports to allow communication (just no requests for “documents”) it arguably

then includes a prohibition on requests for information if the information would be provided in documentary

form. For example, the Discovery Order purports to prohibit Appellants from obtaining a simple accounting

from POC for Appellants’ payments to POC unless the request is made through counsel.

Appellants’ Response to Motion to Dismiss - Page 8

CERTIFICATE OF SERVICE

I hereby certify that a copy of this response brief was served on the

following counsel of record and in the manner indicated on February 22, 2015.

VIA FAX OR AND/OR ESERVE

Brantley Ross Pringle, Jr.

Heidi Coughlin

Wright & Greenhill, PC

221 West 6th Street, Suite 1800

Austin, TX 78701

VIA FAX AND/OR ESERVE

L. Hayes Fuller, III

Naman, Howell, Smith, & Lee, PLLC

P.O. Box 1470

Waco, TX 76703-1470

___________________________

David Junkin

Appellants’ Response to Motion to Dismiss - Page 9

175

176

4

5

6

Page 682 Page 685

99 S.W.3d 682 (Tex.App.—Houston [1st Dist.] 2003) Beltway incorporated in October 2000 and is the

managing general partner of Shimi, which was formed

Mohammed Atique AHMED, Appellant, [1] the same month. Shortly after Shimi's formation, Shimi

purchased the assets, goodwill, and books of business of

v. the Houston offices of Amco Insurance Agencies, Inc.

("Amco").

SHIMI VENTURES, L.P. and Beltway Insurance

Agency, Inc., Appellees. The undisputed evidence shows that, through the

date of the temporary injunction hearing, Beltway had

No. 01-02-00914-CV.

never been licensed as an insurance agency by the Texas

Department of Insurance, even though Beltway's petition

Court of Appeals of Texas, First District, Houston.

admitted that, since the purchase of Amco's business,

January 31, 2003. Beltway had been "in the business of selling Texas

personal automobile liability insurance." In contrast,

Page 683 Ahmed--originally the president, board member,

employee, and shareholder of Beltway and also a limited

[Copyrighted Material Omitted] partner in Shimi--had been a licensed, limited lines agent

since 1999. There was testimony that Beltway had

Page 684 wanted Ahmed to get an insurance license in Beltway's

name and that Ahmed could have obtained that license in

John H. Thomisee Jr., Houston, for Appellant.

as few as six weeks.

John H. Sklar, Houston, for Appellee.

Starting sometime in late 2000, Ahmed began

entering into producer agreements in his own name with

Panel consists of Justices TAFT, KEYES, and

insurers or their agents with whom Beltway did business.

HIGLEY.

Ahmed received commission checks pursuant to these

OPINION agreements. Through July 23, 2002, when he left

Beltway, Ahmed endorsed his commission checks earned

TIM TAFT, Justice. under any of these producer agreements to Beltway and

deposited them in Beltway's account.

Appellant, Mohammed Atique Ahmed, takes this

interlocutory appeal from the granting of a temporary Ahmed signed one such producer agreement in early

injunction. See TEX. CIV. PRAC. & REM.CODE 2002 with Logic Underwriters, Inc. ("Logic"), an

ANN.§ 51.014(a)(4) (Vernon Supp.2003). We determine insurance agency with which Beltway did business. As

(1) whether the trial court could enter, and whether we with his other producer agreements, Ahmed signed the

may review in this interlocutory appeal, a modified agreement in his own name, not expressly as agent of

temporary injunction order that was entered after Ahmed Beltway. Logic generally issued commission checks

had appealed the original temporary injunction order; (2) either in Ahmed's name or jointly in his and Beltway's

whether we must vacate the injunction in part because it name, showing Beltway's address under the payee line.

requires some acts violating the Insurance Code; and (3) [3] However, Logic mailed these checks to the addresses

whether the trial court abused its discretion in of Ahmed's personal stores, not to Beltway's address.

determining that appellees, Beltway Insurance Agency, Following the usual procedure, Ahmed endorsed the

Inc. ("Beltway") and Shimi Ventures, L.P. ("Shimi"), Logic commission checks to Beltway.

carried their burden of showing a probable right of

recovery and irreparable injury. We modify the On July 23, 2002, Beltway's shareholders and board

temporary injunction order in part, to vacate certain of its members met and removed Ahmed as a board member,

provisions, and affirm it as so modified. president, and employee of Beltway. The board removed

Ahmed because he had not obtained the licenses required

Background for Beltway to act as a limited lines agency. According to

Beltway and Shimi's evidence, Ahmed promised at that

The following background facts come from evidence meeting not to interfere with Beltway's operations or

presented at the temporary injunction hearing and from relations with insurers after his removal. Nonetheless,

two affidavits, which the trial court considered without Ahmed thereafter instructed Logic to issue commission

objection, that were attached to Beltway and Shimi's checks solely in his name and to send them to him.

petition. [2]

This dispute concerns who is entitled to the

commission checks issued after Ahmed's removal for conduct business and shall deliver such proceeds to

insurance policies that Ahmed wrote before his removal. [Shimi and Beltway's] counsel....

In a nutshell, the parties dispute the capacity in which

Ahmed acted under the producer IT IS FURTHER ORDERED that Mohammed

Atique Ahmed shall deliver to [Shimi and Beltway's]

Page 686 counsel a photocopy of each commission check that has

been deposited to accounts under his control for

agreements and, thus, the ownership of his commissions. commissions earned on policies written through July 23,

Ahmed testified that he entered into the producer 2002 from Logic Underwriters, Inc. or paid by any

agreements on his own behalf, not as Beltway's agent; insurer with whom [Shimi] or [Beltway] conduct

that the commissions earned pursuant to his producer business and shall deliver such photocopies to [Shimi and

agreements were his alone; and that the commission Beltway's] counsel....

checks that he endorsed to Beltway were loans, although

he admitted that no loan documents existed. Beltway and Page 687

Shimi presented evidence that Ahmed acted as Beltway's

agent under the producer agreements through July 23, IT IS FURTHER ORDERED that Mohammed

2002; that Ahmed knew that the commissions he earned Atique Ahmed shall endorse and make payable to the

on policies written before that date belonged to Beltway; order of [Beltway] all checks from Logic Underwriters,

and that no loan existed. Inc. or paid by any insurer with whom [Shimi] or

[Beltway] conduct business for commissions earned on

Shimi and Beltway sued Ahmed for fraud and policies written through July 23, 2002 and shall deliver

conversion, seeking a temporary restraining order within forty-eight (48) hours after his receipt of all such

("TRO") and temporary and permanent injunctions and checks to [Shimi and Beltway's] counsel.

damages. [4] The ancillary judge granted an ex parte

TRO that restrained Ahmed, his wife, and those acting IT IS FURTHER ORDERED that [Shimi and

for or with them from "directly or indirectly removing, Beltway] and Mohammed Atique Ahmed shall photocopy

transferring, wiring, spending, investing, secreting, or ... each commission check that comes into their respective

disposing" of funds belonging to Beltway and Shimi, possession for commissions earned on policies written

whether from Logic or otherwise. The TRO also through July 23, 2002 from Logic Underwriters, Inc. or

restrained the same people from contacting any insurers any other insurer with whom [Shimi] or [Beltway]

with whom Beltway and Shimi conducted business. conduct business and shall make such photocopies

available to opposing counsel upon request.

Ahmed answered, seeking to dissolve the TRO,

counter-claiming for contract breach and conversion, and IT IS FURTHER ORDERED that Mohammed

seeking a TRO and temporary and permanent injunctions Atique Ahmed, his family members, agents, servants,

against Beltway and Shimi. On August 19, 2002, the trial employees, attorneys and all other persons or entities in

court held an evidentiary hearing on the applications for active concert or participation with him are enjoined from

temporary injunction. The trial court orally granted directly or indirectly contacting Logic Underwriters, Inc.

Beltway and Shimi's application and denied Ahmed's. [5] or any insurer with whom [Shimi] or [Beltway] conduct

On August 23 2002, the trial court signed a temporary business for any purpose related to insurance policies

injunction order, which provided in pertinent part as written or commissions earned on insurance policies

follows: written through July 23, 2002 and claiming that they

represent the interests of [Shimi and Beltway].

IT IS THEREFORE ORDERED that Mohammed

Atique Ahmed and all persons acting on behalf of or in (Emphasis added.)

concert with him, and all persons with actual notice of

this Order, are temporarily enjoined from directly or Ahmed appealed the temporary injunction order

indirectly removing, transferring, wiring, spending, three days later. He then left the country, reportedly to

investing, secreting, or in any manner whatsoever visit a sick family member. In September 2002, Beltway

disposing of the commissions from Logic Underwriters, and Shimi moved to modify the temporary injunction

Inc. or the commissions paid by any insurer, or any other order because Ahmed had allegedly failed to remit the

funds that belong to [Shimi] or [Beltway]. commissions that he had already deposited (about

$47,000), to endorse further commission checks to

IT IS FURTHER ORDERED that Mohammed Beltway, and to provide Beltway and Shimi with copies

Atique Ahmed shall remit to [Beltway] the proceeds from of further commission checks. Beltway and Shimi

all commission checks that have been deposited to claimed that Ahmed had not returned to the country.

accounts under his control for commissions earned on After holding a non-evidentiary hearing on the

policies written through July 23, 2002 modification motion, the trial court entered a modified

(approx.$47,325.00) from Logic Underwriters, Inc. or temporary injunction order, which was substantively

paid by any insurer with whom [Shimi] or [Beltway] similar to the first order except that it lowered Shimi and

Beltway's bond and also ordered all insurers doing

business with Shimi or Beltway to reissue any on a party's motion or on the appellate court's own

commission checks issued to Ahmed or Ahmed and initiative, the appellate court may review the following:

Beltway jointly since August 2002, making them payable (1) a further appealable interlocutory order concerning

solely to Beltway, and to make all future commissions the same subject matter; and (2) any interlocutory order

checks on policies written through July 23, 2002 payable that interferes with or impairs the effectiveness of the

solely to Beltway. relief sought or that may be granted on appeal.

Effect of Temporary Injunction's Modification TEX.R.APP. P. 29.6(a) (emphasis added).

After Perfection of Appeal

The modified temporary injunction order clearly

While this interlocutory appeal was pending, and "concern[s] the same subject matter" as the earlier order

after Ahmed had filed his brief, the trial court entered an that was appealed. See TEX.R.APP. P. 29.6(a)(1).

order modifying the appealed temporary injunction order. Therefore, we may review the modified order in this

Citing Rule of Appellate Procedure 29.6, Ahmed has interlocutory appeal as long as it is itself an "appealable

moved this Court to review the modified temporary interlocutory order." [8] See id.

injunction order in this appeal. See TEX.R.APP. P. 29.6.

Generally, we have jurisdiction to hear an appeal

The second temporary injunction order was entitled from an interlocutory order only if a statute explicitly

"order modifying temporary injunction," not "amended makes the order appealable. SeeStary v. DeBord, 967

order," and it did not expressly vacate the first order. S.W.2d 352, 352-53 (Tex.1998). "A person may appeal

However, other than adding a provision applicable to from an interlocutory order of a district court ... that: ...

insurers, reducing Beltway and Shimi's bond, and grants or refuses a temporary injunction or grants or

changing some compliance dates, the modified order was overrules a motion to dissolve a temporary injunction as

identical to the first order. Moreover, the modified order provided by Chapter 65." [9] TEX. CIV. PRAC. &

concerned exactly what the earlier order had, and it did REM.CODE ANN. § 51.014(a)(4) (Vernon Supp.2003).

not incorporate by reference any terms from the first

order or state that it merely supplemented the first We must strictly construe section 51.014's grant of

order--that is, the second order was a complete temporary interlocutory jurisdiction because the Legislature

injunction in itself concerning exactly the same subject intended it to be a narrow exception to the general rule

matter. The modified order thus implicitly that only final judgments are appealable. SeeBally Total

Fitness Corp. v. Jackson, 53 S.W.3d 352, 355

Page 688 (Tex.2001); Baylor Coll. of Med. v. Tate, 77 S.W.3d 467,

469-70 (Tex.App.-Houston [1st Dist.] 2002, no writ). An

superseded the earlier order. [6] Cf.Anderson v. Teco order modifying a temporary injunction order is not

Pipeline Co., 985 S.W.2d 559, 562 (Tex.App.-San exactly an order that "grants or refuses a temporary

Antonio 1998, pet. denied) (holding that later judgment, injunction

styled "amended final judgment," implicitly vacated

earlier judgment, styled "final judgment"). Page 689

Neither party questions whether we may consider or grants or overrules a motion to dissolve a temporary

the modified order in an interlocutory appeal from the injunction." See TEX. CIV. PRAC. & REM.CODE ANN.

superseded order, or whether the modified order is void § 51.014(a)(4). Nonetheless, this Court has construed

in whole or in part, or whether the interlocutory appeal is section 51.014(a)(4) to grant interlocutory review of an

somehow moot because it was taken from a order modifying a temporary injunction, given the

now-superseded injunction order. We note, however, that similarity of that order to the orders listed in section

these questions concern either our own jurisdiction over 51.014(a)(4). SeeToby Martin Oilfield Trucking, Inc. v.

this appeal, which we must consider even if the parties do Martin, 640 S.W.2d 352, 354-55 (Tex.App.-Houston [1st

not, [7] or the trial court's jurisdiction to modify its Dist.] 1982, no writ). [10] Allowing an interlocutory

injunction, which will affect which order we review, a appeal of such an order is especially appropriate when, as

matter we must decide anyway to review Ahmed's issues. here, the modified order implicitly vacates and then

Accordingly, we examine the effect of the modified replaces the original one: that situation is very much like

order. a dissolution, followed by a granting, over both of which

rulings section 51.014(a)(4) expressly allows an

A. Our Jurisdiction Over the Modified interlocutory appeal. See TEX. CIV. PRAC. &

Temporary Injunction Order REM.CODE ANN. § 51.014(a)(4).

Rule of Appellate Procedure 29.6 governs our Consistent with Martin, we hold that we have

jurisdiction to review, in an interlocutory appeal, a trial jurisdiction to review an order modifying a temporary

court order entered after the appeal's perfection: injunction by interlocutory appeal. SeeMartin, 640

S.W.2d at 354-55; see alsoCurrie v. Int'l Telecharge,

While an appeal from an interlocutory order is pending, Inc., 722 S.W.2d 471, 472-73 (Tex.App.-Dallas 1986, no

writ). Accordingly, we further hold that we have injunction order.

jurisdiction to review the modified temporary injunction

order in this interlocutory appeal from the There is case law that appears to be contrary, but

now-superseded temporary injunction order. See because of amendments to the applicable rules, it does

TEX.R.APP. P. 29.6(a)(1). not control. For example, at common law, before the

Supreme Court adopted the predecessor to these rules,

We grant Ahmed's motion to review the modified some courts had held that the interlocutory appeal of an

temporary injunction order. See id. order deprived the trial court of jurisdiction over the

subject matter of the appealed order, so that all

B. The Trial Court's Jurisdiction to Enter the subsequent trial court orders on the same subject were

Modified Temporary Injunction Order void. SeeParsons v. Galveston County Employees Credit

Union, 576 S.W.2d 99, 100 (Tex.Civ.App.-Houston [1st

That does not end our inquiry. Our holding that we Dist.] 1978, order granting stay) (in vacating amended

may review the modified temporary injunction order in order entered after interlocutory appeal taken, holding,

this interlocutory appeal is not the same as holding that "The perfection of an appeal from an order granting a

the modified order itself is valid. temporary injunction terminates the jurisdiction of the

trial court insofar as the temporary injunction is

The modified order is valid if the trial court had

concerned."). [12] Under the pre-rules common law, the

jurisdiction to enter it during the interlocutory appeal.

modified temporary injunction order here would have

Rule of Appellate Procedure 29.5 sets out the trial court's

been void, and only the original temporary injunction

jurisdiction after an interlocutory appeal is filed. See

order would have remained in effect. SeeHumble

TEX.R.APP. P. 29.5. Rule 29.5 provides that, during the

Exploration Co. v. Fairway Land Co., 641 S.W.2d 934,

pendency of an interlocutory appeal, the trial court retains

940 (Tex.App.-Dallas 1982, writ ref'd n r.e.) (considering

subject-matter jurisdiction of the case and may make

merits of original receivership order on interlocutory

"further orders, including one dissolving the order

appeal, while vacating order modifying receivership after

appealed from, and if permitted by law, may proceed

appeal for lack of jurisdiction in trial court).

with a trial on the merits." Id. [11] The rule expressly

prohibits the trial court from making an order that is But the Supreme Court's adoption of Rule of Civil

inconsistent with any temporary orders of the appellate Procedure 385b in 1983, and its adoption of substantively

court or that "interferes with or impairs" the appellate similar Rule of Appellate Procedure 43(d) in 1986,

court's jurisdiction or the effectiveness of the relief that a changed that common law rule. See TEX.R. CIV. P.

party 385b(d), Order of the Supreme Court, Adopting Rules of

Civil Procedure (Dec. 5, 1983, eff.Apr.1, 1984), TEXAS

Page 690

CASES, 661-62 S.W.2d XXIX, XCIII (West 1984),

seeks or that the appellate court may grant. TEX.R.APP. superseded by TEX.R.APP. P. 43(d), Order of the

P. 29.5(a), (b). Supreme Court and the

We have already held that we have interlocutory Page 691

jurisdiction to review the modified order under statute

Texas Court of Criminal Appeals, Promulgating New

and rule; therefore, the fact that the modified order

Rules of Appellate Procedure (Apr. 10, 1986, eff. Sept. 1,

implicitly supplanted the earlier, appealed order does not

1986, superseded eff. Sept. 1, 1997), TEXAS CASES,

in itself interfere with our interlocutory jurisdiction in

707-08 S.W.2d XXIX, LV (West 1986). Former rules

violation of rule 29.5. Additionally, to the extent that the

385b(d) and 43(d) provided that the trial court retained

modified order's content does not materially differ from

jurisdiction to "issue further orders, including dissolution

that of the superseded order, the modified order neither

of the order appealed from," but expressly prohibited

prevents our review of Ahmed's issues nor affects the

orders "granting substantially the same relief as that

relief that he requests or that we could grant him. Finally,

granted by the order appealed from," those contrary to

we note that the modified temporary injunction order's

temporary appellate orders, or those interfering with or

additional provisions do not adversely affect the relief

impairing the effectiveness of relief on appeal. See id.

that Ahmed requests or that we could grant him.

Under either former rule 385b(d) or former rule 43(d), the

Compare, e.g.,McAllen Med. Ctr., Inc. v. Cortez, 66

modified order would have been void for granting

S.W.3d 227, 238 (Tex.2001) (holding that severance

substantially the same relief as the original order, and we

order, entered after defendant appealed class-action

would have reviewed only the original temporary

certification, violated rule 29.5(b) because it severed out

injunction order. SeeSt. Louis S.W. Ry. Co. v. Voluntary

what had been the class-action claims against appealing

Purchasing Groups, Inc., 929 S.W.2d 25, 33

defendant and because, although appellant could have

(Tex.App.-Texarkana 1996, no writ); Cobb v. Thurmond,

intervened in severed suit, deadline for appealing

899 S.W.2d 18, 19 (Tex.App.-San Antonio 1995, writ

class-certification order in that suit had already expired).

denied); Hopper v. Safeguard Bus. Sys., Inc., 787 S.W.2d

Therefore, under the plain language of rule 29.5, the trial

court had jurisdiction to enter the modified temporary

624, 626-27 (Tex.App.-San Antonio 1990, no writ). and its prompt administration as is equitable relief. Id.

Once again, however, the Supreme Court Whether to grant a temporary injunction lies within

substantively amended the rules in 1997 by adopting rule the trial court's sound discretion. Tel. Equip. Network, 80

29.5, quoted above. See Order of the Supreme Court and S.W.3d at 607. We will thus not reverse the trial court's

the Texas Court of Criminal Appeals, Final Approval of order unless the trial court's action was "so arbitrary that

Revisions to the Texas Rules of Appellate Procedure it exceeded the bounds of reasonable discretion." Id. One

(Aug. 15, 1997, eff.Sept.1, 1997), TEXAS CASES, way that a trial court abuses its discretion is to apply the

948-49 S.W.2d LXI, C (West 1997). Importantly, the law erroneously to undisputed facts. Id. A trial court also

revision omitted the prohibition against entering an order abuses its discretion when it issues an injunction that

granting substantially the same relief as that granted by orders an illegal act, even when done in the name of

the appealed order--which change was made, according preserving the status quo. SeeRegistered Nurse Care

to the comments, because the former prohibition was too Home, 965 S.W.2d at 708 (vacating temporary injunction

broad. See TEX.R.APP. P. 29.5 & cmt. Therefore, the order granted in favor of plaintiffs/appellees because trial

case law interpreting the "substantially similar" court abused discretion by issuing injunction that

prohibition of former rules 43(d) and 385b(d) is not preserved status quo by allowing plaintiffs to continue

binding under rule 29.5. Neither is the pre-rules common operating facilities under conditions violating law); see

law prohibition against any further orders viable under alsoDeNoie v. Bd. of Regents of Univ. of Tex. Sys., 609

rule 29.5. [13] S.W.2d 601, 603 (Tex.Civ.App.-Austin 1980, no writ)

("Status quo can never be a course of conduct which is a

We hold that the trial court had jurisdiction to enter prima facie violation of law."). We view the evidence in

the modified temporary injunction order. See the light most favorable to the trial court's order,

TEX.R.APP. P. 29.6. We also hold that we may review indulging every reasonable inference in its favor.

that modified order in this interlocutory appeal. See Amalgamated Acme Affiliates, Inc. v. Minton, 33 S.W.3d

TEX.R.APP. P. 29.5. 387, 392 (Tex.App.-Austin 2000, no pet.); Tel. Equip.

Network, 80 S.W.3d at 607.

Page 692

B. Violation of Law

The Merits of the Modified Temporary

Injunction Order 1. Whether the Modified Temporary Injunction

Order Requires Acts Violating Statute

A. Standard of Review and Burden of Proof

In issue four, Ahmed argues that the modified

A temporary injunction's purpose is to preserve the temporary injunction order is void to the extent that it

status quo of the litigation's subject matter pending trial. compels him and third parties to violate the Insurance

Butnaru v. Ford Motor Co., 84 S.W.3d 198, 204 Code.

(Tex.2002). We may not review the merits of the

applicant's case in an interlocutory appeal from a The Insurance Code prohibits an insurer or

temporary injunction order. Tel. Equip. Network, Inc. v. insurance agent engaged in the business of insurance in

TA/Westchase Place, Ltd., 80 S.W.3d 601, 607 Texas from "pay[ing], directly or indirectly, ... any

(Tex.App.-Houston [1st Dist.] 2002, no pet.). commission or other valuable consideration to ... any

person for services performed by that person as an

To obtain a temporary injunction, an applicant must insurance agent in this state" unless the person holds an

plead and prove (1) a cause of action against the insurance license.

defendant, (2) a probable right to the relief sought, and

(3) a probable, imminent, and irreparable injury in the Page 693

interim. Butnaru, 84 S.W.3d at 204. In establishing a

probable right to the relief sought, the applicant need not TEX. INS.CODE ANN. art. 21.01-2, § 2A(b) (Vernon

establish that it will prevail at trial. SeeCity of Supp.2003). [14] The Insurance Code also prohibits "any

Friendswood v. Registered Nurse Care Home, 965 person to act, as an agent or otherwise, in soliciting or

S.W.2d 705, 707 (Tex.App.-Houston [1st Dist.] 1998, no receiving applications for insurance of any kind

pet.). To establish an irreparable injury, the injured whatever" in Texas and from "in any manner" aiding "in

applicant must show that it "cannot be adequately the transaction of the business of any insurance

compensated in damages or ... the damages cannot be company" without "first procuring a license or certificate

measured by any certain pecuniary standard." Butnaru, of authority...." TEX. INS.CODE ANN. art. 21.01, § 2

84 S.W.3d at 204. That is, the applicant must establish (Vernon Supp.2003). [15] The Code defines an "agent" as

that there is no adequate remedy at law for damages.

SeeSurko Enters., Inc. v. Borg-Warner Acceptance Corp., [a]ny person who solicits insurance on behalf of any

782 S.W.2d 223, 225 (Tex.App.-Houston [1st Dist.] insurance company, ... or who takes or transmits other

1989, no writ). An adequate remedy at law is one that is than for himself any application for insurance or any

as complete, practical, and efficient to the ends of justice policy of insurance to or from such company, ... or who

shall receive or deliver a policy of insurance of any such injunction the amount of revenues that would have

company, or who shall ... receive, or collect, or transmit flowed to Beltway had Ahmed obtained Beltway's

any premium of insurance, ... or do or perform any other license. That is, the protected funds represent the

act or thing in the making or consummating of any damages that Beltway and Shimi hope to collect under

contract of insurance for or with any such insurance their fraud claim. However, that theory of the injunction's

company other than for himself, ... whether any of such purpose has nothing to do with the fact that the

acts shall be done at the instance or request, or by the mechanism that the injunction uses to carry out that

employment of such insurance company, or of, or by, any purpose requires licensed agents and insurers to pay

broker or other person.... commissions directly to an unlicensed corporation

performing insurance services, contrary to the law.

TEX. INS.CODE ANN. art. 21.02, § (a) (Vernon

Supp.2003). [16] Accordingly, we must vacate those portions of the

modified temporary injunction order that require Ahmed's

The quoted prohibitions apply to persons licensed commissions to be paid, directly or indirectly, to

as, among other things, property and casualty insurance Beltway. SeeRegistered Nurse Care Home, 965 S.W.2d

agents. See TEX. INS.CODE ANN. art. 21.01,§ 3(16) at 708. We thus sustain issue four. [19]

(Vernon Supp.2003). The undisputed evidence showed

that Ahmed was at all pertinent times such an agent, Page 695

specifically, a licensed limited lines agent for automobile

insurance. 2. Whether Beltway and Shimi Showed a

Probable Right of Recovery

The Insurance Code defines "person" for purposes of

the above-quoted statutes to include corporations and In issue one, Ahmed argues that Beltway and Shimi

partnerships. See TEX. INS.CODE ANN. art. 21.07, § did not establish a probable right of recovery on their

1A(8) (Vernon Supp.2003). [17] The Code further conversion or fraud claims because those claims were

allegedly based on Ahmed's payment of commissions to

Page 694 them, an act that we have held would violate the

Insurance Code. With respect to the fraud claim, Ahmed

defines a "corporation" to be "a legal entity that is also argues that there was no evidence that he

organized under the business corporations laws or limited misrepresented anything.

liability company laws of this state, another state, or a

territory of the United States and that has as one of its Courts have long refused to enforce contracts that

purposes the authority to act as an insurance agent." TEX. called for paying or sharing insurance commissions in

INS.CODE ANN. art. 21.07,§ 1A(3) (Vernon violation of the Insurance Code provisions discussed

Supp.2003). It was undisputed that Beltway was a Texas above. SeeBenefits Admin. Corp. v. Rearick, 705 S.W.2d

corporation and that, through the time of the temporary 234, 235-36 (Tex.App.-Texarkana 1986, no writ);

injunction hearing, Beltway was not a licensed insurance Perkins v. Lambert, 325 S.W.2d 436, 440

agency. Therefore, the statutes prohibiting (Tex.Civ.App.-Austin 1959, writ dism'd); Stone v.

commission-sharing and insurance solicitation applied to Sterling Mut. Life Ins. Co., 127 S.W.2d 345, 347-48

Beltway to the extent that it wrote insurance policies or (Tex.Civ.App.-Galveston 1939, no writ); Employers Cas.

otherwise acted as an insurance agent, which Beltway Co. v. Mitchell, Gartner & Walton, 84 S.W.2d 862, 864

admitted here and below that it did. (Tex.Civ.App.-Fort Worth 1935, no writ); see alsoIns.

Co. of N. Am. v. Morris, 981 S.W.2d 667, 681-82

The modified temporary injunction order requires (Tex.1998); Tidelands Life Ins. Co. v. Armstrong, 414

Ahmed, a licensed insurance agent, to remit his S.W.2d 196, 198 (Tex.Civ.App.-Austin 1967, no writ).

commissions and to endorse his commission checks to Ahmed relies on this line of cases. However, Ahmed

Beltway, a corporation that is not a licensed insurance overlooks that at least one cause of action that Beltway

agency. The order also requires third-party insurers or and Shimi pled--that for fraud--does not seek to enforce

their managing agents to make commission payments an agreement to share commissions. To the contrary, as

directly to Beltway, which again is unlicensed. The Beltway and Shimi explain on appeal, that cause of action

Insurance Code clearly prohibits such actions. The assumes that Beltway could not legally share Ahmed's

modified temporary injunction order thus requires illegal commissions. Instead, the cause of action relies on their

acts, even if the trial court merely intended to keep the allegation that Ahmed did not obtain Beltway's license

status quo by ordering them. [18] SeeRegistered Nurse after having been charged with doing so specifically so

Care Home, 965 S.W.2d at 708. that he could keep the commissions from Beltway,

allegedly contrary to the parties' arrangement. [20] That

Beltway and Shimi do not argue that an unlicensed theory of recovery is not based on enforcement of an

corporation performing insurance agent services can illegal arrangement to share commissions.

legally share a licensed agent's commissions. Rather, they

respond that they never contracted to share Ahmed's Fraud requires " 'a material misrepresentation, which

commissions, but sought merely to preserve by the

was false, and which was either known to be false when as Beltway's officer and employee for the purpose of

made or was asserted without knowledge of its truth, obtaining Beltway's license. This means that Beltway

which was intended to be acted upon, which was relied (through its corporate representative, Ahmed) was itself

upon, and which caused injury.' " Formosa Plastics Corp. taking responsibility for getting its own license before

USA v. Presidio Engs. & Contractors, Inc., 960 S.W.2d allowing Ahmed (as its employee) to earn commissions.

41, 47-48 (Tex.1998) (quoting Sears, Roebuck & Co. v. The fact that Ahmed never got that license might show

Meadows, 877 S.W.2d 281, 282 (Tex.1994)). Ahmed that Ahmed failed his corporate principal, but it does not

relies on Armstrong v. Tidelands Life Insurance Co. to necessarily demonstrate that Beltway was not entitled to

argue that no reliance existed as a matter of law. 466 rely on him as its own corporate officer. Therefore,

S.W.2d 407 (Tex.Civ.App.-Corpus Christi 1971, no writ). Armstrong does not as a matter of law defeat the reliance

The Armstrong court considered, among other things, needed for Beltway and Shimi's fraud claim.

summary judgments in favor of the defendant insurer on

the contract-breach and fraud claims of an insurance Ahmed also argues that the trial court abused its

agent. Seeid. at 408. The agent based his fraud claim on discretion because there was no evidence that Ahmed had

the insurer's having misrepresented that it would obtain misrepresented anything. However, there was evidence

the proper license for him to act as an agent. See id. The that Ahmed had been charged with obtaining a license for

damages that the agent sought were the commissions that Beltway and that he could have done so in as few as six

he would have received had the weeks, but that he did not. The law prevented unlicensed

Beltway from sharing Ahmed's commissions, yet

Page 696 Beltway still collected commissions. Additionally,

Beltway did not remove Ahmed for failure to obtain

insurer obtained the license. Seeid. at 409. After holding Beltway's license until mid-2002, close to two years after

that the contract between the agent and the insurer was he earned his first commissions. Viewed in the required

void and unenforceable because the agent was not light, these facts raise reasonable inferences that Ahmed

properly licensed, the Armstrong court affirmed the hid his failure to get the license and that Beltway relied

summary judgment rendered on the fraud claim. See id. on that misrepresentation.

The court noted that the statute placed the responsibility

on the agent to obtain the license before acting as an Accordingly, we hold that the trial court did not

insurance agent. See id. Based on this statutory abuse its discretion if it concluded that Beltway and

requirement, the Armstrong court held that the agent Shimi showed a probable right of recovery on at least

could not rely on the insurer's promise to get a license for their fraud cause of action.

him. Seeid. at 409-10, 411.

We overrule issue one. [21]

We distinguish Armstrong for two reasons. First, in

Armstrong, it was the insurance agent who performed the Page 697

services requiring a license, yet he relied on another

entity first to obtain that license for him. Put another way, C. Irreparable Injury

one party took responsibility for obtaining the insurance

In issue two, Ahmed argues that Beltway and Shimi

agent's license, while the other party took responsibility

presented no evidence that injury was imminent or

for acting as the insurance agent. Under that arrangement,

irreparable or that Beltway and Shimi had no adequate

the individual began acting as an insurance agent without

legal remedy absent the temporary injunction.

having first confirmed that the insurer, a separate entity,

had gotten the license that was a prerequisite to the

The modified temporary injunction order recited that

individual's acting. Here, in contrast, viewed in the

Ahmed's possession of commission checks would

appropriate light and indulging all reasonable inferences

irreparably harm Beltway and Shimi by making them

in Beltway and Shimi's favor, one party (Ahmed) took

experience "an immediate, and if not addressed, ongoing,

responsibility both for obtaining the license, which the

shortfall in operating revenues resulting in disruption of

evidence shows might have been done quickly, and for

business operations, including the inability to provide

earning the disputed commissions. Ahmed determined

insurance services to its customers." The order also

both when Beltway would be licensed and when he

recited that Beltway and Shimi had no adequate remedy

would start earning commissions on Beltway's behalf.

at law to compensate them for these damages.

The individual in Armstrong could not rely on another to

obtain his license before acting as an agent, which We hold that evidence supported the trial court's

arrangement might (and did) end up violating the statute; determination on both grounds. Regarding irreparable

in contrast, nothing prevented Ahmed from procuring a harm, Ahmed testified that, through July 23, 2002--that

license for his corporation before acting as an agent. is, for over 20 months--he had deposited all his

commission checks into Beltway's account. Ahmed

Second, the individual in Armstrong relied on a

testified that he had loaned these sums to Beltway to pay

separate entity to obtain his license. In contrast, viewed in

for Beltway's operating expenses: "I was trying to keep

the right light, Ahmed, as Beltway's president, was acting

the money [sic] afloat. Without my loaning this money,

the company would have gone under and the investment ---------

my partners would have [sic] made would have

physically vanished. " (Emphasis added.) The temporary Notes:

injunction hearing was held only 29 days after Ahmed

had left Beltway and stopped depositing commissions [1] Mohammed Atique Ahmed and his wife, Farheen

into Beltway's account. Given Ahmed's own testimony Ahmed, were both defendants below. However, only

that Beltway had depended on these sums for survival for Mohammed Atique Ahmed filed a notice of interlocutory

almost two years, the trial court could reasonably have appeal, and appellees state in their brief that they

inferred that Beltway's needs had not changed nonsuited Farheen Ahmed during the pendency of this

substantially in 29 days. interlocutory appeal.

Moreover, there was evidence from which the trial [2] Ahmed argues that we may not consider the affidavits

court could reasonably have concluded that Beltway and because they are not evidence and because the parties did

Shimi had no adequate remedy at law. Ahmed admitted not agree to treat them as evidence. Ahmed is correct

that, although he considered the commissions that he had that, absent the parties' agreement, affidavits attached to

earned since the beginning to be his personal property, he pleadings and not admitted into evidence do not

had not paid any income taxes on them to date. Ahmed's constitute evidence. SeeMillwrights Local Union No.

counterclaim alleged that the amount of commissions he 2484 v. Rust Eng'g Co., 433 S.W.2d 683, 685-86

had loaned to Beltway was $1,500,000 over the 22 (Tex.1968) (holding that, absent parties' agreement, proof

months preceding the suit's filing; he also testified that, at required for temporary injunction cannot be made by

least at the time of the hearing, his commissions were affidavit attached to injunction application); Letson v.

about $300,000 a year. One could thus reasonably infer Barnes, 979 S.W.2d 414, 417, 418-19

that, under Ahmed's theory of the case, he could have (Tex.App.-Amarillo 1998, pet. denied) (same). However,

potential, outstanding tax liability on a substantial we disagree with Ahmed that we may not consider these

income. Additionally, Ahmed testified that he no longer affidavits under the circumstances present here. Here, the

had errors and omissions coverage for himself trial court announced during the hearing that it could base

individually, from which one could reasonably infer its decision on the exhibits and testimony from the

possible personal liability if Ahmed were sued. Finally, hearing and also on "affidavits filed with the petition" and

two days after the original temporary injunction hearing, on "evidence [sic] provided in [Ahmed's] answer." No

Ahmed went to Pakistan. The next day, Ahmed's counsel one objected to this stated procedure. The trial court was

filed a motion to extend the temporary injunction's the fact finder; therefore, its declaring during the

deadlines, which motion attached a family member's evidentiary hearing that it could consider the affidavits

affidavit estimating that Ahmed would return from was tantamount to its having--rightly or

Pakistan in three weeks. However, as of the date of the wrongly--admitted those affidavits into evidence.

injunction-modification hearing held about two months Ahmed's counsel, who now argues that the affidavits did

later--and as was clear from counsels' discussion at that not constitute evidence, implicitly acquiesced in this

second hearing--Ahmed had not yet returned from procedure below when, after the trial court's quoted

Pakistan. The trial court thus knew of Ahmed's continued statement, he questioned his own client based on the

absence when it signed the modified temporary affidavits attached to Beltway and Shimi's petition.

injunction order. That order carried forth the same Cf.Millwrights, 433 S.W.2d at 686 (holding that parties

inadequate-remedy recital that had appeared in the may agree to allow temporary injunction proof by

original order. affidavit). In any event, Ahmed cannot now complain

about the trial court's having considered these affidavits

Based on this evidence, we hold that the trial court when, after having been advised that the trial court would

did not abuse its discretion in concluding that Beltway do so, Ahmed did not complain below. See TEX.R.APP.

and Shimi would suffer irreparable harm and had no P. 33.1(a)(1); cf.Tigua Gen. Hosp., Inc. v. Feuerberg, 645

adequate remedy at law. S.W.2d 575, 576 (Tex.App.-El Paso 1982, no writ)

(treating affidavits as sufficient temporary injunction

We overrule issue two. proof, despite lack of parties' agreement to do so below,

when opposing party did not complain of deficiency of

Page 698 affidavits on appeal).

Conclusion [3] There were some exceptions. In June 2002, at

Ahmed's request while he was out of town, Logic issued

We modify the modified temporary injunction order commission checks jointly to Ahmed and a company

by vacating those portions of that order that require called BW Insurance Agency, Inc. ("BWI"). BWI was

Ahmed to relinquish or to sign over commissions to formed by Beltway's board of directors in March 2002.

Beltway or that require licensed insurers or their agents to BWI had obtained assumed-name certificates to do

pay commissions directly to Beltway. We affirm the business as "Beltway Insurance" and was actually

modified temporary injunction order as so modified. operating Beltway's stores by the time of the temporary

injunction hearing. It appears to be for these reasons, Exploration Co. v. Fairway Land Co., 641 S.W.2d 934,

among others, that Ahmed requested that Logic issue the 936, 940 (Tex.App.-Dallas 1982, writ ref'd n.r.e.); Holst

commission checks for June in his absence to BWI, rather v. Newsletters, Inc., 578 S.W.2d 420, 421

than to Beltway. (Tex.Civ.App.-Houston [1st Dist.] 1979, writ ref'd n r.e.);

Caldwell v. Meyers, 446 S.W.2d 709, 710

[4] Beltway and Shimi also pled conspiracy between (Tex.Civ.App.-Austin, orig.proceeding); City of Corpus

Ahmed and his wife, Farheen Ahmed. However, during Christi v. Lone Star Fish & Oyster Co., 335 S.W.2d 621,

the appeal, Beltway and Shimi non-suited Ahmed's wife 622 (Tex.Civ.App.-San Antonio 1960, no writ); Hyatt v.

without prejudice, and they admit in their brief that the Mercury Life & Health Co., 202 S.W.2d 325, 327

non-suit vitiates their conspiracy claim. (Tex.Civ.App.-San Antonio 1947, orig. proceeding).

[5] Ahmed does not complain on appeal of the denial of [13] Only one case is to the contrary. In Reeves v. City of

his temporary injunction application. Dallas, after a temporary injunction order had been

appealed, the trial court entered a second temporary

[6] We note that, even if the modified temporary injunction order (1) that expressly vacated the first

injunction order had not supplanted the original order in injunction order and (2) that granted essentially the same

its entirety, our disposition would have been the same for relief as had the first. Seeid., 68 S.W.3d 58, 60

the reasons discussed below. (Tex.App.-Dallas 2001, pet. denied). Relying on rule

29.5's express grant of jurisdiction to dissolve an

[7] SeeBrown v. Herman, 852 S.W.2d 91, 93

appealed temporary injunction, the Reeves court first held

(Tex.App.-Austin 1993, orig. proceeding) (holding that

that the trial court had jurisdiction to enter the second

court of potential jurisdiction has jurisdiction to

temporary injunction order to the extent that the second

determine its jurisdiction).

order vacated the first order, further holding that the

[8] For reasons discussed further below, only subsection vacating of the first order rendered the appeal from the

(a)(1) of rule 29.6 concerns us here. first order moot. See id. With this holding we do not

necessarily disagree. The Reeves court also held that the

[9] TEX. CIV. PRAC. & REM.CODE ANN. §§ remainder of the second temporary injunction

65.001-.045 (Vernon 1997 & Supp.2003) (concerning order--which apparently added a trial date that the first

injunctions). order did not have (see TEX.R. CIV. P. 683, requiring

temporary injunction order to set trial date)--interfered

[10] AccordBarrier v. Little, No. 01-98-01361-CV, slip with its appellate jurisdiction and the relief that it could

op. at 2, 1999 WL 439011 (Tex.App.-Houston [1st Dist.] grant and so violated rule 29.5(b). SeeReeves, 68 S.W.3d

June 17, 1999, no pet.) (not designated for publication) at 60. Neither do we disagree with this holding, and we

(quoting Martin ); Currie v. Int'l Telecharge, Inc., 722 distinguish Reeves on this basis. However, the Reeves

S.W.2d 471, 472-73 (Tex.App.-Dallas 1986, no writ) court alternatively held that the trial court had no

(relying on Martin ); seeArrechea v. Plantowsky, 705 jurisdiction to enter the second temporary injunction

S.W.2d 186, 187, 188-89 (Tex.App.-Houston [14th Dist.] order to the extent that it did anything but vacate the first

1985, no writ) (without discussing jurisdictional issue, order. See id. In this holding, the Reeves court relied

reviewing by interlocutory appeal order modifying solely on pre-rules authority--now superseded by

temporary injunction); Pierce Mortuary Colls., Inc. v. rule--that the trial court loses jurisdiction completely over

Bjerke, 841 S.W.2d 878, 880 (Tex.App.-Dallas 1992, writ the merits of the injunction order once interlocutory

denied) (in dicta, explaining why Currie's holding was appeal is perfected. See id. Because this holding of the

correct for orders modifying temporary injunctions, but Reeves court is based on superseded law, we respectfully

did not apply to amended class certification order that disagree with it.

expanded class). But seeLudewig v. Houston Pipeline

Co., 737 S.W.2d 15, 16 (Tex.App.-Corpus Christi 1987, [14] The parties began their business arrangement before

no writ) (holding that order amending temporary article 21.01-2, section 2A(b)'s effective date of

injunction order was not appealable). September 1, 2001. See Act of May 18, 2001, 77th Leg.,

R.S., ch. 703, §§ 1.04, 10.01, 2001 Tex. Gen. Laws 1348,

[11] The trial court issued both temporary injunction 1354, 1401 (now codified at TEX. INS.CODE ANN. art.

orders before rule 29.5 was modified effective January 1, 21.01-2, § 2A(b) (Vernon Supp.2003)). However, article

2003. See Order of the Supreme Court, Final Approval of 21.01-2A(b) merely recodified prior law (1) that was in

Amendments to the Texas Rules of Appellate Procedure, effect at all times pertinent to this case and (2) that

Misc. Docket No. 02-9237 (Dec. 23, 2002, eff.Jan.1, contained a prohibition not materially different in any

2003). Because the 2003 amendment does not affect the way pertinent to this appeal from the prohibition in the

disposition of this appeal, however, we quote the current current law. See Act of May 25, 1979, 66th Leg., R.S.,

version of the rule. See id. ch. 404, § 1, 1979 Tex. Gen. Laws 884, 885 (eff. June 6,

1979) (first adding this prohibition to Insurance Code,

[12] AccordBoynton v. Brown, 164 S.W. 897, 897 prohibiting commission payment to unlicensed "person or

(Tex.Civ.App.-San Antonio 1914, writ ref'd); Humble corporation" for insurance-agent services), amended by

Act of May 23, 1997, 75th Leg., R.S., ch. 596, § 1, 1997 which Beltway and Shimi would be entitled on final trial

Tex. Gen. Laws 2083, 2083-84,recodified at current code and (2) granted more relief than that for which Beltway

section by Act of May 18, 2001, 77th Leg., R.S., ch. 703, and Shimi pled. Because our holding on issue four does

§§ 1.04, 1.09, 10.01, 2001 Tex. Gen. Laws 1348, 1354, not require vacating the entire modified temporary

1357-58, 1401 (now codified at TEX. INS.CODE ANN. injunction order, our holding does not moot Ahmed's

art. 21.01-2, § 2A(b) (Vernon Supp.2003)). Accordingly, issue one (whether Beltway and Shimi showed a probable

for simplicity's sake, we refer only to current statute. right of recovery on their two claims), his issue two

(whether Beltway and Shimi proved a probable,

[15] Again, because the 2001 amendment to this statute imminent, and irreparable injury), or his issue five

did not change the preexisting law in any way material to (whether the trial court abused its discretion by allegedly

this appeal, we refer only to the current statute. See (Act relying on a finding of breach of fiduciary duty in

of 1951, 52nd Leg., R.S., ch. 491, 1951 Tex. Gen. Laws granting the temporary injunction).

868, 1061, title heading added by Act of April 23, 1999,

76th Leg., R.S., ch. 101, § 2, 1999 Tex. Gen. Laws 486, [20] This theory of Beltway and Shimi's fraud cause of

534, amended by Act of May 18, 2001, 77th Leg., R.S., action was not precisely the theory that they pled below.

ch. 703, § 1.01, 2001 Tex. Gen. Laws 1348, 1349) (now Rather, their petition alleged that Ahmed had committed

codified at TEX. INS.CODE ANN. art. 21.01, § 2 fraud by allegedly falsely claiming that he would not

(Vernon Supp.2003)). interfere with Beltway's business after his removal.

However, the fraud theory on which Beltway and Shimi

[16] The definition of an agent was substantively similar rely on appeal was supported by the temporary-injunction

at all times pertinent to this appeal. See Act of 1951, 52nd evidence, when viewed in the light most favorable to the

Leg., R.S., ch. 491, 1951 Tex. Gen. Laws 868, 1061-62, ruling, and Ahmed has not claimed surprise at the

amended by Act of May 13, 1985, 69th Leg., R.S., ch. assertion of this theory on appeal.

203, § 1, 1985 Tex. Gen. Laws 790, 790, amended by Act

of May 18, 2001, 77th Leg., R.S., ch. 703, § 1.07, 2001 [21] Our holding on issue one moots Ahmed's issue

Tex. Gen. Laws 1348, 1357 (now codified at TEX. five--whether the trial court abused its discretion by

INS.CODE ANN. art. 21.02, § (a) (Vernon Supp.2003)). allegedly relying on a finding of breach of fiduciary duty

in granting the temporary injunction: even if the trial

[17] At all times pertinent to this appeal, persons and court erred in finding this, a claim for fraud does not

corporations both were prohibited from sharing require a breach of fiduciary duty.

commissions and acting as an agent without a license. See

Act of May 26, 1977, 65th Leg., R.S., ch. 579, § 2, 1977 ---------

Tex. Gen. Laws 1421, 1421-22 (adopting "person or

corporation" language), amended by Act of May 25,

1979, 66th Leg., R.S., ch. 404, § 1, 1979 Tex. Gen. Laws

884, 884-85, amended by Act of May 23, 1997, 75th

Leg., R.S., ch. 596, § 1, 1997 Tex. Gen. Laws 2083,

2083-84, amended by Act of May 18, 2001, 77th Leg.,

ch. 703, § 1.09, 2001 Tex. Gen. Laws 1357, 1357-58

(now codified at TEX. INS.CODE ANN. art. 21.07, §

1A(8) (Vernon Supp.2003)).

[18] Sometime in the summer of 2002, BWI (not

Beltway) obtained the license and registrations needed to

act as a limited lines agency. Although BWI was actually

operating Beltway's stores by the time of the temporary

injunction hearing, the undisputed evidence showed that

BWI and Beltway were separate corporate entities and

that BWI was not Beltway's corporate successor.

Moreover, the modified temporary injunction order did

not order Ahmed's commissions paid to BWI, but to

Beltway. BWI's relationship with Beltway, and the fact

that BWI was licensed, are thus immaterial to our holding

under issue four.

[19] Our holding on this issue obviates the need to reach

Ahmed's issue three, which argues that the trial court

exceeded its jurisdiction in issuing the temporary

injunction because the order to turn over and endorse all

commission checks to Beltway (1) granted all the relief to

Page 160 challenged by point of error and is therefore binding on

appeal. Wade v. Anderson, 602 S.W.2d 347, 349

759 S.W.2d 160 (Tex.App. —Houston [1 Dist.] 1988) (Tex.Civ.App.--Beaumont 1980, writ ref'd n.r.e.). The

court ordered the production of "all of Lou W. Burton's

Lou W. BURTON and Galleria Diplomat Association, records and files in any way related to his representation"

Inc., Appellants, of the Association.

v. In their first of three points of error, appellants

contend that the trial court erred in ordering the

Jeffrey M. CRAVEY, et al., Appellees.

production of Burton's records because the application

and proof fail to establish a cause of action or a probable

No. 01-88-00270-CV.

right and a probable injury.

Court of Appeals of Texas, First District, Houston

Appellants mischaracterize the nature of the trial

August 18, 1988 court proceedings. For example, they argue that appellees

have other adequate remedies under Tex.R.Civ.P. 167,

Rehearing Denied Sept. 8, 1988. 168 and 737 to pursue inspection. This assertion ignores

the fact that a writ of mandamus is the proper remedy to

Wade B. Reese, Houston, for appellants. enforce the right of inspection. See 20 R. Hamilton,

Texas Business Organizations § 801 (1973). Appellees

Lou W. Burton, Houston, pro se. did not have to establish an independent cause of action;

they merely had to establish their statutory right to

John K. Grubb, Houston, for appellees.

inspect.

Before SAM BASS, DUGGAN and LEVY, JJ.

Tex.Prop.Code Ann. § 81.209 (Vernon 1984)

provides the following for condominium records:

OPINION

(a) The administrator or board of administration of a

DUGGAN, Justice.

condominium regime or a person appointed by the

This appeal involves the right to inspect records and bylaws of the regime shall keep a detailed written

books of a condominium association. Appellees, a group account of the receipts and expenditures related to the

of dissident owners, filed a petition for writs of building and its administration that specifies the expenses

mandamus and injunction because of the appellant incurred by the regime.

Galleria Diplomat Association's board of directors'

(b) The accounts and supporting vouchers of a

refusal to allow the inspection of records. In a corrected

condominium regime shall be made available to the

order dated March 2, 1988, the trial court granted the writ

apartment owners for examination on working days at

of

convenient, established, and publicly announced hours.

Page 161

(c) The books and records of a condominium regime must

mandamus, ordering the Association to maintain its comply with good accounting procedures and must be

books and records at its offices and make these records audited at least once each year by an auditor who is not

available for inspection and copying. The trial court also associated with the condominium regime.

enjoined appellants from interfering with appellees' right

(Emphasis added.)

to inspect these books and records. The court further

ordered the delay of the annual election by the

The Texas Non-Profit Corporation Act,

Association's members.

Tex.Rev.Civ.Stat.Ann. art. 1396-2.23 (Vernon 1980),

additionally provides:

All of the points of error attack the ordered

production of records in the possession of appellant

A. Each corporation shall keep correct and complete

Burton, the attorney for the appellant Association. The

books and records of account and shall keep minutes of

trial court entered a finding of fact that the Association's

the proceedings of its members, board of directors, and

Board of Directors hired Burton "to handle numerous

committees having any authority of the board of directors

matters for the Association and that records of Lou W.

and shall keep at its registered office or principal office in

Burton relating to Association matters are part of the

this State a record of the names and addresses of its

books and records of the Galleria Diplomat Townhomes

members entitled to vote.

Homeowner's Association, Inc. a/k/a the Galleria

Diplomat Association, Inc." This finding of fact is not B. All books and records of a corporation may be

inspected by any member, or his agent or attorney, for the Law of Private Corporations § 2253.1 (1987). The

any proper purpose at any reasonable time. trial court, however, sustained appellees' objections to

appellants' attempted inquiries about ulterior or vindictive

(Emphasis added.) motives for the inspection of records. Appellants do not

complain about the exclusion of this testimony.

In their application for writ of mandamus, appellees

were attempting to enforce their statutory rights as Appellants' second point of error is overruled.

condominium apartment owners to inspect the "accounts

and supporting vouchers of a condominium regime" Appellants contend in their third point of error that

under Property Code § 81.209, and as corporation the trial court erred in granting the production order

members to inspect "all books and records" of a because it requires the inspection of privileged

non-profit corporation under article 1396-2.23. The trial documents.

court did not err in ordering the production of Burton's

records. Again, we note that appellants are attempting to

engraft notions borrowed from Texas discovery practice

Appellants' first point of error is overruled. onto a statutory right to inspect. Article 1396-2.23

contains no limitations on the member's right to inspect

Page 162 as long as the books and records are those of the

non-profit corporation and the inspection is for "any

Appellants contend in their second point of error that proper purpose." The trial court found that Burton's

the trial court erred in ordering production of the records records and files relating to the Association were part of

and files of the attorney for the condominium association the Association's books and records, and appellants have

because the order is overly broad, unduly burdensome, not contended that the intended inspection is for an

and requires the production of irrelevant information. improper purpose. The only limitation under article

1396-2.23 is "proper purpose." Appellants have failed to

Appellees sought the production of records that they

prove that the purpose of the inspection was improper.

were statutorily entitled to inspect. Appellants'

complaints about the order appear to be an attempt to Moreover, if the attorney-client privilege did apply,

engraft discovery notions upon the appellees' statutory we would hold that the trial court did not abuse its

right of inspection, which is independent of any right of discretion in ordering the inspection of Burton's records.

discovery in litigation. See San Antonio Models, Inc. v. The attorney-client privilege is not absolute; appellants'

Peeples, 686 S.W.2d 666 (Tex.App.--San Antonio 1985, interest in the nondisclosure of communications protected

orig. proceeding). The right to inspect under article by the privilege would have to be balanced against the

1396-2.23 encompasses "all books and records." The trial inspection rights of the members of the non-profit

court found that Burton's files and records relating to the corporation. See In re LTV Securities Litigation, 89

Association were the "books and records" of the F.R.D. 595, 609-611 (N.D.Tex.1981). Under the facts of

Association. This finding is not challenged on appeal. this case, the trial court did not abuse its discretion in

This right of condominium owners to inspect the books ordering the inspection of Burton's records.

and records, like the comparable right to inspect granted

shareholders in corporations, is limited by the Appellants' third point of error is overruled.

requirement that the inspection be for any "proper

purpose." See R. Hamilton, Texas Business The judgment is affirmed.

Organizations § 804 (1973); see also Annotation, What

Corporate Documents Are Subject to Shareholder's Right

to Inspection 88 A.L.R.3d 663 (1978).

Once the trial court found that Burton's files and

records relating to the Association were part of the books

and records of the Association, appellees were entitled to

inspect them for any "proper purpose." Appellants,

however, do not contend that the intended inspection is

for an improper purpose. There was testimony by

appellees that they were concerned about the

"substantial" and "inordinate" fees paid to Burton by the

Association. Although the parties have presented no cases

squarely on point, it would appear that it was the

appellant Association's burden of proof to establish the

absence of proper purpose. Uvalde Rock Asphalt Co. v.

Loughridge, 425 S.W.2d 818 (Tex.1968); Moore v. Rock

Creek Oil Corp., 59 S.W.2d 815 (Tex.Comm'n App.1933,

holding approved); see also, 5A Fletcher, Cyclopedia of

Page 646 OPINION

422 S.W.3d 646 (Tex. 2013) Page 647

THE EPISCOPAL DIOCESE OF FORT WORTH, Phil Johnson, Justice.

ET AL, PETITIONERS,

This direct appeal involves the same principal issue

v. we addressed in Masterson v. Diocese of Northwest

Texas, __ S.W.3d __, (Tex. 2013): what methodology is

THE EPISCOPAL CHURCH, ET AL., to be used when Texas courts decide which faction is

RESPONDENTS entitled to a religious organization's property following a

split or schism? In Masterson we held that the

No. 11-0265 methodology referred to as " neutral principles of law"

must be used. But, in this case the trial court granted

Supreme Court of Texas

summary judgment on the basis of the " deference" or "

August 30, 2013 identity" methodology, and the record does not warrant

rendition of judgment to either party based on neutral

Argued October 16, 2012. principles of law.

Released for Publication March 21, 2014. We reverse and remand to the trial court for further

proceedings.

ON DIRECT APPEAL FROM THE 141ST

DISTRICT COURT, TARRANT COUNTY, TEXAS. I. Background

Amicus Curiae for Liberty Institute: Kelly J. The Episcopal Church (TEC) is a religious

Shackelford, Liberty Legal Institute, Plano, TX. organization founded in 1789. It has three structural tiers.

The first and highest is the General Convention. The

Eprhaim Radner, Pro se. General Convention consists of representatives from each

diocese and most of TEC's bishops. It adopts and amends

For The Episcopal Diocese of Fort Worth, TEC's constitution and canons. The second tier is

Appellant: J. Shelby Sharpe, Sharpe & Rector, Fort comprised of regional, geographically defined dioceses.

Worth, TX; Kendall M. Gray, Andrews Kurth LLP, Dioceses are governed by their own conventions. Each

Houston, TX; R. David Weaver, The Weaver Law Firm diocese's convention adopts and amends its own

PC, Arlington, TX; Scott A. Brister, Andrews Kurth LLP, constitution and canons, but must accede to

Austin, TX.

Page 648

For Local Episcopal Congregations, Appellee:

Frank Gilstrap, Frank Hill, Hill Gilstrap, P.C., Arlington, TEC's constitution and canons. The third tier is

TX. comprised of local congregations. Local congregations

are classified as parishes, missions, or congregations. In

For Local Episcopal Parties, Appellee: Jonathan order to be accepted into union with TEC, missions and

D.F. Nelson, Jonathan D. F. Nelson PC, Arlington, TX; congregations must subscribe to and accede to the

Kathleen Wells, Taylor Olson Adkins Sralla & Elam constitutions and canons of both TEC and the Diocese in

LLP, Fort Worth, TX; Thomas S. Leatherbury, William which they are located.

D. Sims Jr., Vinson & Elkins LLP, Dallas, TX.

In 1982 the Episcopal Diocese of Fort Worth (the

For The Episcopal Church, Appellee: David Beers, Diocese or Fort Worth Diocese) was formed after the

Mary Kostel, Goodwin Proctor LLP, Washington, DC; Episcopal Diocese of Dallas voted to divide into two

Sandra Cockran Liser, Naman Howell Smith & Lee parts. The Fort Worth Diocese was organized " pursuant

PLLC, Fort Worth, TX. to the Constitution and Canons of the Episcopal Church"

and its convention adopted a constitution and canons. The

JUSTICE JOHNSON delivered the opinion of the Diocese's constitution provided that all property acquired

Court, in which JUSTICE HECHT, JUSTICE GREEN, for the Church and the Diocese " shall be vested in [the]

and JUSTICE GUZMAN joined, and in Parts I, II, III, Corporation of the Episcopal Diocese of Fort Worth."

and IV-A of which CHIEF JUSTICE JEFFERSON The canons of the Diocese provided that management of

joined. JUSTICE WILLETT filed a dissenting opinion, in the affairs of the corporation " shall be conducted and

which JUSTICE LEHRMANN, JUSTICE BOYD, and administered by a Board of Trustees of five (5) elected

JUSTICE DEVINE joined. members, all of whom are either Lay persons in good

standing of a parish or mission in the Diocese, or

members of the Clergy canonically resident in the significant disagreement between the parties was whether

Diocese." The Bishop of the Diocese was designated to the " deference" (also sometimes referred to as the "

serve as chair of the board of the corporation. After identity" ) or " neutral principles of law" methodology

adopting its constitution and canons the Diocese was should be applied to resolve the property issue. TEC

admitted into union with TEC at TEC's December 1982 contended that pursuant to this Court's decision in Brown

General Convention. v. Clark , 102 Tex. 323, 116 S.W. 360 (Tex. 1909), the

deference methodology has been applied in Texas for

In February 1983, the Fort Worth Diocese filed over a century and should continue to be applied. Under

articles of incorporation for the Fort Worth Corporation. that methodology, it argued, TEC was entitled to

That same year the Dallas and Fort Worth Dioceses filed summary judgment because it recognized Bishops Gulick

suit in Dallas County and obtained a judgment and Ohls, the leaders elected at the 2009 convention, and

transferring part of the Dallas Diocese's real and personal the appointees of the Bishops as the true and continuing

property to the Fort Worth Diocese. The 1984 judgment Episcopal Diocese. TEC also contended that even if the

vested legal title of the transferred property in the Fort neutral principles methodology were applied, it would be

Worth Corporation, except for certain assets for which entitled to summary judgment. The Diocese, on the other

the presiding Bishop of the Dallas Diocese and his hand, contended that in Brown this Court effectively

successors in office had been designated as trustee. The applied the neutral principles methodology without

judgment transferred the latter assets to the Bishop of the specifically calling it by that name, and Texas courts

Fort Worth Diocese and his successor in office as trustee. have continued to substantively apply that methodology

to resolve property issues arising when churches split.

Doctrinal controversy arose within TEC, leading the Under the neutral principles methodology, the Diocese

Fort Worth Corporation to file amendments to its articles argued, it was entitled to summary judgment affirming its

of incorporation in 2006 to, in part, remove all references right to the property. The Diocese also maintained that

to TEC. The corporate bylaws were similarly amended. even if the deference methodology were applied, it would

The 2007 and 2008 conventions of the Fort Worth still be entitled to summary judgment.[3]

Diocese voted to withdraw from TEC, enter into

membership with the Anglican Province of the Southern The trial court agreed with TEC that deference

Cone, and adopt amendments to the Diocese's principles should apply, applied them, and granted

constitution removing references to TEC.[1] summary judgment for TEC. The Diocese sought direct

appeal to this Court and we noted probable jurisdiction.

Page 649 We had previously granted the petition for review in

Masterson, and we heard oral arguments for both cases

TEC responded. It accepted the renunciation of Jack

on the same day.

Iker, Bishop of the Fort Worth Diocese, and TEC's

Presiding Bishop removed Iker from all positions of II. Jurisdiction

authority within TEC. In February 2009, TEC's Presiding

Bishop convened a " special meeting of Convention" for The Government Code provides that " [a]n appeal

members of the Fort Worth Diocese who remained loyal may be taken directly to the supreme court from an order

to TEC. Those present at the meeting elected Edwin of a trial court granting or denying an interlocutory or

Gulick as Provisional Bishop of the Diocese and Chair of permanent injunction on the ground of the

the Board of Trustees for the Fort Worth Corporation. constitutionality of a statute of this state." Tex. Gov't

The 2009 Convention also voted to reverse the Code § 22.001(c). The trial court granted summary

constitutional amendments adopted at the 2007 and 2008 judgment and issued injunctions ordering the defendants

Conventions and declared all relevant offices of the to surrender all Diocesan property and control of the

Diocese to be vacant. Bishop Gulick then appointed Diocesan Corporation to the Episcopal Diocese of Fort

replacements to the offices declared vacant, including the Worth, and ordering the defendants to desist from

offices of the Trustees of the Corporation. TEC holding themselves out as leaders of the Diocese. While

recognized the persons elected at the 2009 Convention as the trial court order did not

the duly constituted leadership of the Diocese.

Page 650

TEC, Rev. C. Wallis Ohls, who succeeded Bishop

Gulick as Provisional Bishop of the Episcopal Diocese of explicitly address the constitutionality of a statute, " [t]he

Fort Worth, and clergy and lay individuals loyal to TEC effect of the trial court's order . . . is what determines this

(collectively, TEC) filed suit against The Episcopal Court's direct appeal jurisdiction." Tex. Workers'

Diocese of Fort Worth, the Fort Worth Corporation, Compensation Comm'n v. Garcia, 817 S.W.2d 60, 61

Bishop Iker, the 2006 trustees of the corporation, and (Tex. 1991).

former TEC members (collectively, the Diocese), seeking

title to and possession of the property held in the name of In its motion for summary judgment TEC argued, in

the Diocese and the Fort Worth Corporation.[2] Both part, that the actions of the Board of Trustees in

TEC and the Diocese moved for summary judgment. A amending the Fort Worth Corporation's articles of

incorporation were void because the actions went beyond of our decision in

the authority of the corporation, which was created and

existed as an entity subordinate to a Diocese of TEC. Page 651

TEC argued that " [t]he secular act of incorporation does

not alter the relationship between a hierarchical church Brown v. Clark, 102 Tex. 323, 116 S.W. 360 (Tex. 1909),

and one of its subordinate units" and that finding and that Texas courts should utilize that methodology in

otherwise " would risk First Amendment implications." determining which faction of a religious organization is

The Diocese, on the other hand, argued that the case was entitled to the property when the organization splits. __

governed by the Texas Non-Profit Corporation Act[4] S.W.3d at __, We also concluded that even though both

and the Texas Uniform Unincorporated Nonprofit the deference and neutral principles methodologies are

Association Act[5]; under those statutes a corporation constitutionally permissible, Texas courts should use only

may amend its articles of incorporation and bylaws; and the neutral principles methodology in order to avoid

TEC had no power to limit or disregard amendments to confusion in deciding this type of controversy. Id.

the Corporation's articles and bylaws.

IV. Application

In its summary judgment order the trial court cited

A. Summary Judgment--Deference

cases it said recognized " that a local faction of a

hierarchical church may not avoid the local church's

Based on our decision in Masterson, we hold that

obligations to the larger church by amending corporate

the trial court erred by granting summary judgment to

documents or otherwise invoking nonprofit corporations

TEC on the basis of deference principles. __ S.W.3d at

law." The trial court substantively ruled that because the

__.

First Amendment to the United States Constitution

deprived it of jurisdiction to apply Texas nonprofit B. Summary Judgment--Neutral Principles

corporation statutes, applying them to determine the

parties' rights would violate Constitutional provisions. TEC asserts that application of neutral principles

The court's injunction requiring defendants to surrender may violate free-exercise protections if, for example, the

control of the Fort Worth Corporation to the Episcopal Diocese is permitted to void its commitments to church

Diocese of Fort Worth was based on that determination. laws because the specific formalities of Texas law

The effect of the trial court's order and injunction was a governing trusts were not followed or if they are applied

ruling that the Non-Profit Corporation Act would violate retroactively. See Jones, 443 U.S. at 606 (noting that the

the First Amendment if it were applied in this case. case did not " involve a claim that retroactive application

Accordingly, we have jurisdiction to address the merits of of a neutral-principles approach infringes free exercise

the appeal. rights" ). But TEC recognizes that whether application of

the neutral principles approach is unconstitutional

III. " Deference" and " Neutral Principles" depends on how it is applied. See id. at 606 (" It remains

to be determined whether the Georgia neutral-principles

In Masterson we addressed the deference and

analysis was constitutionally applied on the facts of this

neutral principles methodologies for deciding property

case." ). Because neutral principles have yet to be applied

issues when religious organizations split. __ S.W.3d at

in this case, we cannot determine the constitutionality of

__. Without repeating that discussion in full, suffice it to

their application. Further, TEC does not argue that

say that generally courts applying the deference approach

application of procedural matters such as summary

to church property disputes utilize neutral principles of

judgment procedures and burdens of proof are

law to determine where the religious organization has

unconstitutional. Thus, we address the arguments of the

placed authority to make decisions about church

parties regarding who is entitled to summary judgment

property. See Jones v. Wolf, 443 U.S. 595, 603-04, 99

pursuant to neutral principles and conclude that neither

S.Ct. 3020, 61 L.Ed.2d 775 (1979). Once a court has

TEC nor the Diocese is. See Gilbert Tex. Constr., L.P. v.

made this determination, it defers to and enforces the

Underwriters at Lloyd's London , 327 S.W.3d 118, 124

decision of the religious authority if the dispute has been

(Tex. 2010) (noting that when both parties move for

decided within that authority structure. Id. But courts

summary judgment and the trial court grants one motion

applying the neutral principles methodology defer to

and denies the other, appellate courts consider the

religious entities' decisions on ecclesiastical and church

summary-judgment evidence, determine all questions

polity issues such as who may be members of the entities

presented, and render the judgment the trial court should

and whether to remove a bishop or pastor, while they

have rendered).

decide non-ecclesiastical issues such as property

ownership and whether trusts exist based on the same Under the neutral principles methodology,

neutral principles of secular law that apply to other ownership of disputed property is to be determined by

entities. See Serbian E. Orthodox Diocese v. considering evidence such as deeds to the properties,

Milivojevich, 426 U.S. 696, 708-09, 96 S.Ct. 2372, 49 terms of the local church charter (including articles of

L.Ed.2d 151 (1976). We concluded in Masterson that the incorporation and bylaws, if any), and relevant provisions

neutral principles methodology was the substantive basis of governing documents of the general church. E.g.,

Jones, 443 U.S. at 602-03; see Presbyterian Church v. E. required by the corporate bylaws to be lay persons in "

Heights, 225 Ga. 259, 167 S.E.2d 658, 659-60 (Ga. good standing," the Diocese rules require them to be

1969). TEC points out that deeds to the properties loyal Episcopalians, and the bylaws provide that trustees

involved were not part of the summary judgment record do not serve once they become disqualified. Those

when the trial court ruled. Thus, TEC argues, if we do not determinations, TEC argues, were made by Bishops

sustain the summary judgment in its favor, we should Gulick and Ohls and the 2009 convention, and courts

remand the case so the trial court may consider the record must defer to those determinations because they are

on the basis of neutral principles and the four factors ecclesiastical decisions.

referenced in Jones : (1) governing documents of the

general church, (2) governing documents of the local While we agree that determination of who is or can

church entities, (3) deeds, and (4) state statutes governing be a member in good standing of TEC or a diocese is an

church property. See Jones, 443 U.S. at 602-03. We agree ecclesiastical decision, the decisions by Bishops Gulick

that the case must be remanded for further proceedings and Ohls and the 2009 convention do not necessarily

under neutral principles. determine whether the earlier actions of the corporate

trustees were invalid under Texas law. The corporation

Although deeds to the numerous properties was incorporated pursuant to Texas corporation law and

involved were not before the trial court when it granted that law dictates how the corporation can be operated,

summary judgment, the Diocese asserts that there is no including determining the terms of office of corporate

dispute directors, the circumstances under which articles and

bylaws can be amended, and the effect of the

Page 652 amendments. See Tex. Bus. Org. Code § § 22.001-.409.

We conclude that this record fails to show that, as a

about its holding title to and having control of the matter of law, the trustees had been disqualified from

properties. But TEC disagrees with that position. And serving as corporate trustees at the relevant times. Nor

absent agreement or conclusive proof of title to the does the record conclusively show whether the 2009

individual properties and the capacities in which the titles appointments to the corporation board by Bishop Ohl

were taken, fact questions exist under neutral principles were valid or invalid under Texas law, or whether, under

of law, at a minimum, about who holds title to each Texas law, the actions taken by the trustees appointed

property and in what capacity.[6] Accordingly, we cannot

render judgment on the basis of neutral principles. Page 653

C. Remand by Bishop Ohl in 2009 were valid or invalid.

Because the trial court must apply neutral principles Third, the Diocese argues that TEC has no trust

on remand, for its guidance we address certain arguments interest in the property. TEC Canon I.7.4, also known as

made by the parties relating to that methodology. See the Dennis Canon, provides:

Edinburg Hosp. Auth. v. Trevino , 941 S.W.2d 76, 81

(Tex. 1997) (" Although resolution of this issue is not All real and personal property held by or for the benefit

essential to our disposition of this case, we address it to of any Parish, Mission or Congregation is held in trust for

provide the trial court with guidance in the retrial . . . ." ). this Church and the Diocese thereof in which such Parish,

Mission or Congregation is located. The existence of this

We first note that on remand the trial court is not trust, however, shall in no way limit the power and

limited to considering only the four factors listed in Jones authority of the Parish, Mission or Congregation

. As we said in Masterson, Jones did not purport to otherwise existing over such property so long as the

establish a federal common law of neutral principles to be particular Parish, Mission or Congregation remains a part

applied in this type of case. __ S.W.3d at __. Rather, the of, and subject this Church and its Constitution and

elements listed in Jones are illustrative. If it were Canons.

otherwise and courts were limited to applying some, but

not all, of a state's neutral principles of law in resolving The Diocese asserts that this canon does not create a

non-ecclesiastical questions, religious entities would not trust under Texas law, but that even if it does, it was

receive equal treatment with secular entities. We do not revocable and the Diocese revoked it when the Diocesan

believe the Supreme Court intended to say or imply that canons were amended to state:

should be the case.

Property held by the Corporation for the use of a Parish,

Next we address the Diocese's argument that under Mission or Diocesan School belongs beneficially to such

neutral principles courts do not defer to TEC's decisions Parish, Mission or Diocesan School only. No adverse

about non-ecclesiastical matters such as the identity of claim to such beneficial interest by the Corporation, by

the trustees of the Fort Worth Corporation. The Diocese the Diocese, or by The Episcopal Church of the United

argues that under the Non-Profit Corporation Act the States of America is acknowledged, but rather is

trustees are the 2006 trustees who are named as expressly denied.

defendants in this suit. TEC responds that the trustees are

TEC counters that the Dennis Canon creates a trust an injunction " on the ground of the constitutionality of a

because the corporation acceded to it and the Diocese statute of this state." [1]

could not have adopted a canon revoking the trust. TEC

also asserts that the statutes applicable to charitable trusts Today's direct appeal is directly unappealable. The

apply, but if they do not, a resulting trust or other trust trial court's order nowhere mentions any constitution or

may be applied here because the history, organization, statute, much less the constitutionality of a statute.

and governing documents of the Church, the Diocese, and Indeed, the trial court stated verbally that it was not

the parish support implication of a trust. The Diocese pivoting on the constitutionality of state law. This dispute

responds to TEC's arguments by referencing Texas undoubtedly has a First Amendment overlay, but for a

statutory law requiring a trust to be in writing and direct appeal, constitutionality must exist not just in the

providing that trusts are revocable unless they are ether, but in the order.

expressly made irrevocable. See Tex. Prop. Code §

112.004, .051. These issues were not addressed by the As the trial court did not determine " the

trial court because it granted summary judgment based on constitutionality of a statute of this state," its injunction

deference principles. Upon remand the parties will have could hardly be issued " on the ground of the

the opportunity to develop the record as necessary and constitutionality of a statute of this state." Accordingly,

present these arguments for the trial court to consider in we lack jurisdiction. As I have underscored before (albeit,

determining the rights of the parties according to neutral like today, in a dissent):

principles of law. But regarding the trial court's

Ultimately, it falls to us, the courts, to police our own

consideration of the issue, we note that in Masterson we

jurisdiction. It is a responsibility rooted in renunciation, a

addressed the Dennis Canon and Texas law. There we

refusal to exert power over disputes not properly before

said that even assuming a trust was created as to parish

us. Rare is a government official who disclaims power,

property by the Dennis Canon and the bylaws and actions

but liberties are often secured best by studied inaction

of a parish nonprofit corporation holding title to the

rather than hurried action.[2]

property, the Dennis Canon " simply does not contain

language making the trust expressly irrevocable...Even if The merits in this case are unquestionably

the Canon could be read to imply the trust was important--and thankfully they are resolved today in a

irrevocable, that is not good enough under Texas law. companion case[3]--but here the Court can only reach

[Texas Property Code § 112.051] requires express terms them by overreaching. We have no jurisdiction to decide

making it irrevocable." Masterson, __ S.W.3d at __. this case as a direct appeal. I would dismiss for want of

jurisdiction, and because the Court does otherwise, I

Finally, as to the argument that application of

respectfully dissent.

neutral principles may pose constitutional questions if

they are retroactively applied, we note that over a century

I. Background

ago in Brown v. Clark, 102 Tex. 323, 116 S.W. 360 (Tex.

1909), our analysis and holding substantively reflected The trial court in this case issued two injunctions,

the neutral principles methodology. requiring the defendants (now styling themselves as the

Episcopal Diocese of Fort Worth):

V. Conclusion

1. " to surrender all Diocesan property, as well as control

We reverse the judgment of the trial court and of the Diocesan Corporation" to the Episcopal Church

remand the case to that court for further proceedings and other plaintiffs; and 2. " to desist from holding

consistent with this opinion. themselves out as leaders of the Diocese."

DISSENT The court's reasons for granting the injunctions are

laid out in paragraphs one through three of its order:

Page 654

1. The Episcopal Church (the " Church" ) is a hierarchical

Justice Willett, joined by Justice Lehrmann, Justice

church as a matter of law, and since its formation in 1983

Boyd and Justice Devine, dissenting.

the Episcopal Diocese of Fort Worth (the " Diocese" ) has

Until 1940, when Texans amended their been a constituent part of the Church. Because the

constitution, the Supreme Court of Texas lacked any Church is hierarchical, the Court follows Texas precedent

authority to decide direct appeals (i.e., appeals that governing hierarchical church property disputes, which

leapfrog the court of appeals and pass directly to this holds that in the event of a dispute among its members, a

Court). Four years later, the Legislature first exercised its constituent part of a hierarchical church consists of those

new power to permit direct appeals, and in the sixty-nine individuals remaining loyal to the hierarchical church

years since, this Court has exercised that jurisdiction body. Under the

sparingly, only forty-three times. The reason is simply

Page 655

stated: Our direct-appeal jurisdiction is exceedingly

narrow and only proper if the trial court granted or denied

law articulated by Texas courts, those are the individuals II. Discussion

who remain entitled to the use and control of the church

property. A. History of Direct Appellate Jurisdiction

2. As a further result of the principles set out by the A 1940 constitutional amendment gave the

Supreme Court in Brown and applied in Texas to Legislature power to grant direct appeals to this Court.[7]

hierarchical church property disputes since 1909, the Not until 1944, though, did the Legislature do so.[8] The

Court also declares that, because The Episcopal Church is original conferral allowed direct appeals from injunctions

hierarchical, all property held by or for the Diocese may based on two grounds,

be used only for the mission of the Church, subject to the

Church's Constitution and canons. Page 656

3. Applying those same cases and their recognition that a either (1) the constitutionality or unconstitutionality of a

local faction of a hierarchical church may not avoid the state statute, or (2) the validity or invalidity of certain

local church's obligations to the larger church by state administrative orders.[9] Today, the statutory grant

amending corporate documents or otherwise invoking of direct-appeal jurisdiction covers just one situation: "

nonprofit corporations law, the Court further declares that [A]n order of a trial court granting or denying an

the changes made by the Defendants to the articles and interlocutory or permanent injunction on the ground of

bylaws of the Diocesan Corporation are ultra vires and the constitutionality of a statute of this state." [10]

void.

I have found only forty-three cases where we have

(citations omitted). exercised direct-appeal jurisdiction. That is, while such

jurisdiction has existed for nearly seventy years, we have

There are no findings of fact or conclusions of law exercised it stintingly. In twenty-four of the forty-three

attached. The order does not mention the United States cases, our opinion made clear that the trial court either

Constitution, the Texas Constitution, or any particular made a direct holding about a statute's constitutionality or

state statute. The only possible allusion to a statute is to " issued declaratory relief that a statute was or was not

nonprofit corporations law," which the trial court found constitutional.[11] In eleven other cases, the trial court's

the defendants could not " invok[e]" to " avoid [their] order clearly must have been based on constitutional

obligations to the larger church." The trial court's legal grounds, either because the opinion implies that only

support for this conclusion was a string citation to a constitutional issues were raised to the trial court[12] or

number of cases, not a citation to any constitutional because the trial court granted an injunction enforcing a

provision. statute over constitutional objection, thus implicitly

upholding the statute against

What is more, the defendants asked the trial court to

amend the order to specify that the court had held a Page 657

statute unconstitutional. The court declined to do so,

orally stating that its ruling was based not on constitutional attack.[13] In two other cases, we

constitutionality, but rather on its application of Brown v. summarily stated that the trial court granted or denied the

Clark [4]: injunction on the ground of a statute's

constitutionality.[14] But in at least six direct-appeal

I still can't just craft something to make it go to the cases, we did not make it clear why we thought the trial

Supreme Court. I mean, it -- my understanding was that court's injunction was based on constitutional

the -- the trust laws that you were talking about don't grounds.[15] These cases address jurisdiction rather

apply in this situation because of Brown, not because cursorily, and only one of the opinions garnered a dissent

they're not constitutional. on the jurisdictional issue,[16] to which the majority

opinion declined to respond.[17]

Our decision in Brown relied heavily on Watson v.

Jones .[5] Watson, in turn, " appl[ied] not the But in the vast majority of cases where we have

Constitution but a 'broad and sound view of the relations exercised direct-appeal jurisdiction, it has been

of church and state under our system of laws.'" [6] abundantly clear that the trial court issued or denied an

injunction on the ground of a statute's constitutionality.

Nonetheless, the defendants filed a direct appeal.

We noted probable jurisdiction and heard oral argument. We have also issued at least eleven opinions in

But jurisdictional defects do not heal with age, no matter which we dismissed attempted direct appeals for want of

how novel, pressing, or consequential the issues at stake jurisdiction because the statutory test was not met.[18]

or how many judicial and party resources have been We have variously explained that our direct-appeal

expended. The most fundamental restraint on judicial jurisdiction " is a limited one," [19] that we have been "

power is jurisdiction--our very authority to decide cases strict in applying" or have " strictly applied" direct-appeal

in the first place--and if we lack it, we lack it. jurisdictional requirements,[20] and that " [w]e have

strictly construed our direct appeal jurisdiction." [21]

Therefore, we have held that to meet the jurisdictional case was decided two years before the United States

prerequisites, a trial court must actually " pass upon the Supreme Court clarified in Jones v. Wolf that the "

constitutionality of [a] statute," [22] " determin[e]" a deference" rule is not mandated by the First

statute's constitutionality,[23] or " base its decision" on Amendment.[37]

constitutional grounds.[24] Indeed, " [i]t is not enough

that a question of the constitutionality of a statute may A diaphanous hint that a statute was viewed through

have been raised in order for our direct appeal a constitutional prism is not enough to justify exercising

jurisdiction to attach in injunction cases; in addition the our " limited" [38] and " strictly construed" [39]

trial court must have made a holding on the question direct-appeal

based on the grounds of the constitutionality or

unconstitutionality of the statute." [25] Page 659

Page 658 jurisdiction. And here, the trial judge orally eschewed

such a ruling, making it doubly clear that its order was

A close examination of the eleven cases where we not based on constitutional grounds. In light of Jones

dismissed for want of jurisdiction reveals strict adherence (that the deference approach is not constitutionally

to the Legislature's restricted framework. For example, required) and the trial court's comments (that it was

we held " no jurisdiction" where the trial court made the holding the statutes inapplicable but not

injunction decision based on res judicata[26] or where the unconstitutional), it seems an impressive stretch to

trial court was directed to do so by a writ of prohibition transform the trial court's citation to an ambiguous pre-

by the court of civil appeals.[27] That is, because the trial Jones case into a constitutional holding striking down

court did not decide the merits of the constitutional issue, state law.

we lacked direct-appeal jurisdiction.[28] Similarly, we

held that we did not have such jurisdiction where the trial Perhaps the order's silence and the judge's

court denied an injunction because the plaintiffs lacked " disavowal are beside the point if unconstitutionality was

the necessary justiciable interest" to sue.[29] We even the inescapable basis for the trial court's ruling, as the

held that we lacked jurisdiction over a direct appeal of a majority concludes. Indeed, the defendants contend the

temporary injunction involving a " serious question" of order makes no sense unless it turned on a constitutional

the constitutionality of a statute, because the real purpose holding. As the defendants interpret the order, the trial

of the temporary injunction was merely to preserve the court effectively held certain statutes unconstitutional if

status quo, and the trial court did not make any holdings applied to local churches of hierarchical religions. In their

finally determining the constitutional issue.[30] Statement of Jurisdiction, the defendants argue that a

court can only reject statutes like this on " constitutional

B. Application grounds." This assertion rests on the faulty premise that

any time a court deems a statute inapplicable, it's because

Given our long, consistent history of cautiously and the statute would be unconstitutional if applied. Not true.

narrowly construing our direct-appeal jurisdiction, the

outcome of this case seems essentially predetermined: A court can refuse to apply a statute for various

We lack jurisdiction. The Legislature allows parties to non-constitutional reasons. For example, if a statute

skip the court of appeals in one extraordinarily limited purports to change long-standing common law, a court

circumstance: where the trial court's injunction turned " closely examines whether the Legislature truly intended

on the ground of the constitutionality of a [state] statute." to supplant the settled rule.[40] The trial court in this case

[31] The crux and rationale of the trial court's order is may have applied (or misapplied) this kind of analysis,

dispositive. Here, the trial court did not " pass upon the finding that pertinent statutes did not indicate legislative

constitutionality of a statute," [32] " determin[e]" a intent to abandon the common-law deference principle

statute's constitutionality,[33] or " base its decision" on that we declared in Brown . Perhaps the trial court looked

constitutional grounds.[34] While the constitutional at a century of legislative inaction after Brown and took it

issues may have been raised in the trial court, that alone as legislative acquiescence. There are other

is " not enough." [35] non-constitutional reasons to deem a statute ineffective,

like the absurdity doctrine.[41] So even if a trial court

At most, the trial court's order only vaguely alludes implicitly invalidates a statute or finds it inapplicable, its

to nonprofit-related statutes, and there is certainly no reason for doing so is not necessarily because the

indication in the order that the trial court was making a Constitution demands it.

constitutional determination. The trial court order refers

generally to nonprofit law and says the defendants cannot Thus, it cannot be true that by following Brown v.

rely on this law to escape the deference principle, Clark, the trial court implicitly held that any statute that

providing a string citation as support. But only one of the might apply under neutral principles is necessarily

cases in the string citation even refers to constitutional unconstitutional if applied to a church-property dispute in

principles, and that case does not hold that only the a hierarchical setting. This argument is foreclosed by

deference approach is constitutional.[36] Moreover, that Jones v. Wolf . If states are free, consistent with the First

Amendment, to choose either approach, then choosing declare laws unconstitutional--is a genuinely stunning

the deference test cannot equate to an implicit holding one, and one that judges exercise with surpassing

that applying statutes relevant under neutral principles trepidation. Given the stakes, it is difficult to imagine a

would be unconstitutional. Nobody can argue that Texas judge striking down a legislative enactment stealthily,

courts are required to adopt neutral principles-- Jones using gauzy language that requires reading between the

precludes that argument. lines. This judge certainly didn't believe he had declared

anything unconstitutional, and he said as much--on the

Tellingly, the defendants do not attempt to record and unequivocally.

analogize this case to any other in which the Court has

exercised direct-appeal jurisdiction. None is comparable. Today marks the second time this Court has

No constitutional question was presented (or decided) in stretched our direct-appeal jurisdiction beyond its

the trial court, and none is presented (or decided) statutory bounds.[44] The objective in both cases has

here.[42] apparently been to let the Court fast-forward to the merits

of an important case. But an issue's importance and our

Page 660 commendable desire to resolve it swiftly does not give us

license to enlarge our jurisdictional powers by fiat. In

Undoubtedly, we have already noted probable language that could have been written with today's case

jurisdiction, heard argument on the merits, and committed in mind, Chief Justice Phillips wrote in dissent over a

substantial judicial resources to resolving the issues--to decade ago:

say nothing of the effort and cost expended by the parties.

But to assert jurisdiction simply because it would be Dismissing a case on jurisdictional grounds may be

inconvenient to do otherwise betrays the deeply rooted frustrating to judges

constitutional principle that our jurisdiction is conferred

ultimately from the People, directly through our Page 661

Constitution and indirectly through our elected

representatives. and litigants alike, particularly when issues of statewide

import are involved . . . . However, the Legislature has

Dismissing this case for want of jurisdiction would chosen to make direct appeal an uncommon remedy,

be sure to furrow brows, but there is no more principled available only in rare and specific situations. Regardless

reason to dismiss a case than to decide, even belatedly, of the day's exigencies, our highest and only duty is to

that you lack the power to decide. Besides, and this is respect the appropriate limits of our power . . . . I fear that

some consolation, the core merits issue our Court has allowed a hard case to make bad law

presented--deciding which legal test should govern today.[45]

church-property disputes--is squarely resolved in today's

companion case,[43] so a dismissal here would not The Court may come to rue its decision to assert

unduly delay authoritative resolution or work any direct-appeal jurisdiction in this case. Our rules seem to

irreparable harm. mandate our exercise of such jurisdiction in cases where

a permanent injunction is based on the constitutionality

III. Conclusion of a statute (because our rules make direct-appeal

jurisdiction discretionary only in temporary injunction

Our characterizations of direct-appeal jurisdiction, cases).[46] Therefore, in addition to encroaching on the

something we have " strictly construed," are not Legislature's constitutional prerogative to define our

ambiguous: direct-appeal jurisdiction, the Court's decision may

perversely require this Court to immediately hear all

o " rare" direct appeals of permanent injunctions that even vaguely

implicate a statute's constitutionality.

o " restricted"

I would dismiss this case for want of jurisdiction,

o " very limited"

and because the Court does otherwise, I respectfully

In light of this consistent clarity, the Court's dissent.

exercise of jurisdiction has an unfortunate ipse dixit

---------

quality to it. The statutory test for direct-appeal

jurisdiction is whether the trial court made its decision " Notes:

on the ground of the constitutionality of a [state] statute."

A statute, for example, must be invalidated, not just [1]Three parishes in the Diocese did not agree with the

implicated. Direct-appeal jurisdiction is a rare (as it actions and withdrew from the Diocese. The Fort Worth

should be) short-circuiting of the usual rules, and I Corporation transferred property used by the withdrawing

respectfully take exception to broadening the exception. parishes to them.

The power of judicial review--the authority to [2]The defendants sought mandamus in the court of

appeals regarding whether the attorneys for TEC had v. Del Rio , 67 S.W.3d 85, 98 n.4 (Tex. 2001) (Phillips,

authority to file suit on behalf of the Corporation and the C.J., dissenting) (" Since 1981, the Court's appellate

Diocese. See In re Salazar, 315 S.W.3d 279 (Tex. jurisdiction has extended to all civil cases 'as . . . provided

App.--Fort Worth 2010, orig. proceeding). The court of . . . by law,' Tex. Const. art. V, § 3, so that the Legislature

appeals conditionally granted mandamus relief, holding could now provide for direct appeals without a specific

they did not. Id. at 285-86. constitutional grant of authority." ). Accordingly, the

Legislature has now provided for direct appeal from

[3]The Diocese also asserts that we should dismiss certain trial court rulings that involve Public Utility

certain tort claims TEC brought against individual Commission financing orders. Tex. Util. Code §

defendants. The Diocese moved for summary judgment 39.303(f).

to dismiss these claims and argues that if we conclude the

trial court erred in determining who was entitled to the [11] See Neeley v. West Orange-Cove Consol. Indep. Sch.

property at issue, we should render the judgment the trial Dist., 176 S.W.3d 746, 753-54 (Tex. 2005); State v.

court should have rendered and dismiss the tort claims. Hodges, 92 S.W.3d 489, 493 (Tex. 2002); FM Props.

Because of our disposition of the issue regarding who is Operating Co. v. City of Austin , 22 S.W.3d 868, 872

entitled to the property, we do not address those claims. (Tex. 2000); Owens Corning v. Carter, 997 S.W.2d 560,

567-68 (Tex. 1999); Maple Run at Austin Mun. Util. Dist.

[4]Tex. Rev. Civ. Stat. arts. 1396-1.01 to 1396-11.02 v. Monaghan, 931 S.W.2d 941, 945 (Tex. 1996); Barshop

v. Medina Cnty. Underground Water Conservation Dist.,

[5]Tex. Rev. Civ. Stat. art. 1396-70.01 925 S.W.2d 618, 623, 625 (Tex. 1996); Edgewood Indep.

Sch. Dist. v. Meno , 917 S.W.2d 717, 727 (Tex. 1995);

[6]Deeds filed after the trial court granted summary

Richards v. League of United Latin Am. Citizens , 868

judgment were dated both before and after the 1984

S.W.2d 306, 308 (Tex. 1993); Tex. Ass'n of Bus. v. Tex.

judgment transferring properties from the Dallas Diocese.

Air Control Bd., 852 S.W.2d 440, 442 (Tex. 1993);

The deeds dated after the judgment reflect various

Orange Cnty. v. Ware, 819 S.W.2d 472, 473 (Tex. 1991);

grantees. Some properties were deeded to the Fort Worth

O'Quinn v. State Bar of Tex., 763 S.W.2d 397, 398 (Tex.

Corporation or local entities, while others were deeded in

1988); LeCroy v. Hanlon , 713 S.W.2d 335, 336 (Tex.

trust to the Corporation, local entities, or various other

1986); Wilson v. Galveston Cnty. Cent. Appraisal Dist .,

persons and entities.

713 S.W.2d 98, 99 (Tex. 1986); Spring Branch Indep.

[1]Tex. Gov't Code § 22.001(c). Sch. Dist. v. Stamos , 695 S.W.2d 556, 558 (Tex. 1985);

Shaw v. Phillips Crane & Rigging of San Antonio, Inc .,

[2] In re Allcat Claims Serv., L.P., 356 S.W.3d 455, 474 636 S.W.2d 186, 187 (Tex. 1982); Gibson Distrib. Co. v.

(Tex. 2011) (Willett, J., concurring in part and dissenting Downtown Dev. Ass'n of El Paso, Inc., 572 S.W.2d 334,

in part). 334 (Tex. 1978); Tex. Antiquities Comm. v. Dallas Cnty.

Cmty. Coll. Dist ., 554 S.W.2d 924, 925-27 (Tex. 1977)

[3] Masterson v. Diocese of N.W. Tex., __ S.W.3d __, (plurality opinion); Smith v. Craddick , 471 S.W.2d 375,

(Tex. 2013). 375-76 (Tex. 1971); State v. Scott, 460 S.W.2d 103, 105

(Tex. 1970); State v. Spartan's Indus., Inc ., 447 S.W.2d

[4]102 Tex. 323, 116 S.W. 360 (Tex. 1909). 407, 409 (Tex. 1969); Jordan v. State Bd. of Ins., 160

Tex. 506, 334 S.W.2d 278, 278-80 (Tex. 1960); Smith v.

[5]80 U.S. 679, 20 L.Ed. 666 (1871). Decker, 158 Tex. 416, 312 S.W.2d 632, 633 (Tex. 1958);

Rodriguez v. Gonzales , 148 Tex. 537, 227 S.W.2d 791,

[6] Hosanna-Tabor Evangelical Lutheran Church & Sch.

792-93 (Tex. 1950); Dodgen v. Depuglio, 146 Tex. 538,

v. E.E.O.C., __ U.S. __, 132 S.Ct. 694, 704, 181 L.Ed.2d

209 S.W.2d 588, 591-92 (Tex. 1948).

650 (2012) (quoting Watson, 80 U.S. at 727).

[12] See Conlen Grain & Mercantile, Inc. v. Tex. Grain

[7] See R.R. Comm'n of Tex. v. Shell Oil Co., 146 Tex.

Sorghum Producers Bd., 519 S.W.2d 620, 621-22 (Tex.

286, 206 S.W.2d 235, 238 (Tex. 1947).

1975); Robinson v. Hill, 507 S.W.2d 521, 523 (Tex.

1974); Itz v. Penick , 493 S.W.2d 506, 508 (Tex. 1973);

[8] Id.

Smith v. Davis, 426 S.W.2d 827, 829 (Tex. 1968);

[9] Id. Shepherd v. San Jacinto Junior Coll. Dist ., 363 S.W.2d

742, 742-43 (Tex. 1962); King v. Carlton Indep. School

[10]Tex. Gov't Code § 22.001(c). The Constitution still Dist., 156 Tex. 365, 295 S.W.2d 408, 409 (Tex. 1956);

allows the Legislature to provide for direct appeal from Dallas Cnty. Water Control & Improvement Dist. No. 3 v.

injunctions based on the validity of administrative orders, City of Dallas, 149 Tex. 362, 233 S.W.2d 291, 292 (Tex.

however. Tex. Const. art. V, § 3-b. But the express 1950).

constitutional grant of direct-appeal jurisdiction in Article

5, Section 3-b of the Constitution is arguably now [13] See Gibson Prods. Co. v. State, 545 S.W.2d 128, 129

unnecessary given the broadened wording of the general (Tex. 1976); Dancetown, U.S.A., Inc. v. State, 439

jurisdictional provision in Article 5, Section 3. See Perry S.W.2d 333, 334 (Tex. 1969); Schlichting v. Tex. State

Bd. of Med. Exam'rs , 158 Tex. 279, 310 S.W.2d 557, [30] Mitchell, 515 S.W.2d at 103-04.

558-59 (Tex. 1958); H. Rouw Co. v. Tex. Citrus Comm'n,

151 Tex. 182, 247 S.W.2d 231, 231-32 (Tex. 1952). [31]Tex. Gov't Code § 22.001(c).

[14] See State v. Project Principle, Inc., 724 S.W.2d 387, [32] Corona, 274 S.W.2d at 541-42.

389 (Tex. 1987); Duncan v. Gabler , 147 Tex. 229, 215

S.W.2d 155, 156-57 (Tex. 1948). [33] King, 341 S.W.2d at 425; Bryson, 297 S.W.2d at

119.

[15] See Del Rio, 67 S.W.3d 85 (majority opinion); Tex.

Boll Weevil Eradication Found., Inc. v. Lewellen, 952 [34] Holmes, 339 S.W.2d at 663-64.

S.W.2d 454 (Tex. 1997); Carrollton-Farmers Branch

[35] Mitchell, 515 S.W.2d at 103.

Indep. Sch. Dist. v. Edgewood Indep. Sch. Dist., 826

S.W.2d 489 (Tex. 1992); Ass'n of Tex. Prof'l Educators v. [36] See Presbytery of the Covenant v. First Presbyterian

Kirby, 788 S.W.2d 827 (Tex. 1990); Parker v. Nobles , Church of Paris, Inc., 552 S.W.2d 865, 870-71

496 S.W.2d 921 (Tex. 1973); Dobard v. State, 149 Tex. (Tex.Civ.App.--Texarkana 1977, no writ).

332, 233 S.W.2d 435 (Tex. 1950).

[37]443 U.S. 595, 605, 99 S.Ct. 3020, 61 L.Ed.2d 775

[16] Del Rio, 67 S.W.3d at 98-100 (Phillips, C.J., (1979).

dissenting).

[38] Gardner, 333 S.W.2d at 588.

[17] Id. at 89, 95 (majority opinion).

[39] Garcia, 817 S.W.2d at 61.

[18] See Tex. Workers' Comp. Comm'n v. Garcia , 817

S.W.2d 60 (Tex. 1991); Querner Truck Lines, Inc. v. [40] See Energy Serv. Co. of Bowie v. Superior Snubbing

State, 652 S.W.2d 367, 368 (Tex. 1983); Mitchell v. Servs., Inc., 236 S.W.3d 190, 194 (Tex. 2007) (" Of

Purolator Sec., Inc., 515 S.W.2d 101 (Tex. 1974); course, statutes can modify common law rules, but before

Holmes v. Steger , 161 Tex. 242, 339 S.W.2d 663 (Tex. we construe one to do so, we must look carefully to be

1960); Standard Sec. Serv. Corp. v. King, 161 Tex. 448, sure that was what the Legislature intended." ).

341 S.W.2d 423 (Tex. 1960); Gardner v. R.R. Comm'n of

Tex., 160 Tex. 467, 333 S.W.2d 585 (Tex. 1960); Bryson [41] See, e.g., TGS-NOPEC Geophysical Co. v. Combs ,

v. High Plains Underground Water Conservation Dist. 340 S.W.3d 432, 439 (Tex.

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