                                                                    ACCEPTED
                                                                04-15-00097-CV
                                                    FOURTH COURT OF APPEALS
                                                         SAN ANTONIO, TEXAS
                                                          12/29/2015 8:55:56 PM
                                                                 KEITH HOTTLE
                                                                         CLERK

                 NO. 04-15-00097-CV

                                                FILED IN
                                         4th COURT OF APPEALS
           IN THE COURT OF APPEALS        SAN ANTONIO, TEXAS
  FOR THE FOURTH JUDICIAL DISTRICT    OF 12/29/2015
                                         TEXAS 8:55:56 PM
                AT SAN ANTONIO               KEITH E. HOTTLE
                                                  Clerk



                 BRIAN McENERY,

                     Appellant,

                         v.

CITY OF SAN ANTONIO AND CHIEF CHARLES N. HOOD,

                     Appellees.


  ON APPEAL FROM THE 285th JUDICIAL DISTRICT COURT
 BEXAR COUNTY, TEXAS, TRIAL COURT NO. 2011-CI-06603
THE HONORABLE JUDGE CATHLEEN STRYKER PRESIDING


    APPELLANT BRIAN McENERY’S REPLY BRIEF

                  RONALD B. PRINCE
                  State Bar No. 16329300
                  ron@princecontreras.com
                  FLOYD STEVEN CONTRERAS
                  State Bar No. 24075339
                  floyd@princecontreras.com
                  PRINCE CONTRERAS PLLC
                  417 San Pedro Avenue
                  San Antonio, Texas 78212
                  Tel: (210) 227-7821
                  Fax: (210) 225-4469
                  info@princecontreras.com
                  ATTORNEYS FOR APPELLANT
                         TABLE OF CONTENTS

                                                                          Page

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

Reply Argument & Authorities ………………………………………………….... 1

    I.     Appellant Brian McEnery did not waive any issues raised on
           Appeal …………………………………………………….………… 1

    II.    The court below erred if the court below rejected Appellant Brian
           McEnery’s challenges to the award of Arbitrator Leroy Bartman...… 4

    II.A Challenge based on absence of feedback …………………………… 4

    II.B Challenge based on Tex. Loc. Gov. Code Chapter 143 …………….. 7

    II.B.1 Challenge requires application of Tex. Loc. Gov. Code Chapter 174.. 7

    II.B.2 Challenge not barred by res judicata or collateral estoppel ……….… 9

    II.C Challenge based on failure of the tactical exercise …………………. 13

    II.D Challenge based on deficiencies in decision and award ……………. 16

    III.   Appellant Brian McEnery’s appeal is not moot ………………..…… 18

    IV.    Appellant Brian McEnery timely filed his notice of appeal …….….. 21

    IV.A Request for Findings of Fact and Conclusions of Law was proper..... 22

    IV.B Motion for New Trial was proper ………………………………...… 24

Prayer ……...………………………………………………………………......… 28

Certificate of Compliance …..……………………………………………………. 29

Certificate of Service ………..…………………………………………………… 30


                                      i
                     INDEX OF AUTHORITIES

Cases

Amstadt v. United States Brass Corp.,
919 S.W.2d 644
(Tex. 1996) ……………………………………………………………….….. 10, 12

Barr v. Resolution Trust Corp.,
837 S.W.2d 627
(Tex. 1992) ………………………………………………………………………. 10

City of San Antonio v. Bullock,
34 S.W.3d 650
(Tex. App.—San Antonio 2000, pet. denied) ………………………………….. 9, 20

Eagle Properties, Ltd. v. Scharbauer,
807 S.W.2d 714
(Tex. 1990) ……………………………………………………………...…… 10, 12

Harrison v. City of San Antonio,
695 S.W.2d 271
(Tex. App.—San Antonio 1985, no writ) …………………………………...……. 8

Kopplow Dev., Inc. v. City of San Antonio,
399 S.W.3d 532
(Tex. 2013) ………………………………………………………………........ 2, 17

Moreno v. State,
No. 04-15-00085-CR
(Tex. App.—San Antonio April 15, 2015, no pet.)
(mem. op., not designated for publication) …………………...……………... 25 n. 2

Old Republic Ins. v. Scott,
846 S.W.2d 832
(Tex. 1993) ………………………………………………………………...…….. 27

Public Utility Commission of Texas v. Gulf States Utilities Company,
809 S.W.2d 201
(Tex. 1991) …………………………………………………………………….… 15
                                  ii
Swain v. State,
319 S.W.3d 878
(Tex. App. – Fort Worth 2010, no pet.) (per curiam) ………………..……… 25 n. 2

Tex. Dep’t of Pub. Safety v. Fecci,
989 S.W.2d 135
(Tex. App.—San Antonio 1999, pet. denied) ………………………. 21, 25, 26, 27

Thomley v. Southwood-Driftwood Apts., Ltd.,
961 S.W.2d 6
(Tex. App.—Amarillo 1996, order) …………………………………...…………. 27

Rules and Statutes

Tex. Loc. Gov. Code Chapter 143 ……………………………..………. i, 7, 8, 9, 13

Tex. Loc. Gov. Code §143.001 ……………………………………………………. 8

Tex. Loc. Gov. Code §143.032 …………………………………………….……… 7

Tex. Loc. Gov. Code §143.033 ……………………………………………………. 7

Tex. Loc. Gov. Code §143.034 …………………………………………………..... 7

Tex. Loc. Gov. Code §143.034(a) ………………………………………...…. 4, 5, 7

Tex. Loc. Gov. Code Chapter 174 ………………………………………….… i, 7, 9

Tex. Loc. Gov. Code §174.006 ………………………………………...……….. 7, 9

Texas Rule of Appellate Procedure 6.3 ……………………………...………….. 30

Texas Rule of Appellate Procedure 9.4(i)(1) ………………………………….… 29

Texas Rule of Appellate Procedure 9.4(i)(3) ……………………………………. 29

Texas Rule of Appellate Procedure 9.5 …………………………………………. 30

Texas Rule of Appellate Procedure 26.1(a) …………………………………….... 21


                                  iii
Texas Rule of Appellate Procedure 26.1(a)(1) …………………………...………. 27

Texas Rule of Appellate Procedure 26.1(a)(4) …………………………………… 24

Texas Rule of Appellate Procedure 33.1 ……………………………………...….. 24

Texas Rule of Appellate Procedure 49.1 ……………………………….………… 26

Tex. R. Civ. P. 2 ………………………………………………………………….. 26

Tex. R. Civ. P. 45(b) ……………………………………………………..……. 2, 17

Tex. R. Civ. P. 47(a) …………………………………………………………… 2, 17

Tex. R. Civ. P. 166a(c) ………………………………………………………….... 23

Tex. R. Civ. P. 166a(i) …………………………………………………………… 23

Tex. R. Civ. P. 296 ……………………………………………………………….. 23

Tex. R. Civ. P. 329b …………………………………………………………. 24, 26




                               iv
                    REPLY ARGUMENT & AUTHORITIES

I. Appellant Brian McEnery did not waive any issues raised on Appeal

      Appellees assert that Appellant did not raise the issues concerning absence of

feedback and his failure of the tactical exercise timely before the arbitrator by not

specifically including those issues in his grievance. See Appellees’ Brief at 25.

      However, Appellant grieved that he failed the assessment center and could not

determine why he failed the assessment center. V R.R. at 236-237. These statements

alone presented in his grievance satisfied the provisions of Article 32, Section 8,

Paragraph B of the CBA requiring that Appellant “state in particular and with

specifics” his objection to the assessment center process and its result. V R.R. at 227.

      Appellant could not be any more specific in his grievance because, as the

grievance states, Appellant could not determine why he failed, or which component

of the assessment center examination he failed, at the time of filing his grievance. V

R.R. at 235-237. In addition, Appellant could not determine why he failed because

he did not receive feedback. See V R.R. at 109 (95:2-5) and 114-116 (114:2 –

122:22).

      Appellant did not realize that feedback was given in previous assessment

centers prior to 2009—the only other assessment center examination to which he

had knowledge—until the arbitration and the testimony of Dr. Booth. See Id. At the

arbitration, Appellant made the absence of feedback a component of his larger


                                           1
objection to the assessment center process concerning his inability to determine why

he failed. See V R.R. at 140 (219:12 – 220:24).

      In addition, Appellant at the time of his grievance did not realize that he failed

the tactical exercise of the assessment center examination—he did not have that

information yet. See Appellant’s Brief at 4; V R.R. at 80 (285:1-12); V R.R. at 235-

237. Nevertheless, Appellant had that information at the arbitration, and Appellant

specifically challenged his failure of the tactical exercise at the arbitration. V R.R.

at 72-78 (255:13 – 278:25).

      As concerns the court below, Appellant in his Second Amended Petition did

complain about the fact that he failed the assessment center examination and did not

receive feedback. I C.R. at 34-45 (paragraphs 14 and 44). It is not apparent whether

Appellees contend that Appellant was subject to a higher pleading standard in the

court below as Appellant satisfied the requirements of notice pleading in his Second

Amended Petition. Tex. R. Civ. P. 45(b) and 47(a); Kopplow Dev., Inc. v. City of

San Antonio, 399 S.W.3d 532, 536 (Tex. 2013).

      Similarly, Appellant asserted his challenge to the decision of the Arbitrator

based on his failure of the tactical exercise and the absence of feedback when

responding to the motion for summary judgment brought by Appellees. II C.R. at

329-346. Appellant filed his response to the motion for summary judgment on




                                           2
August 11, 2014, over a month before the beginning of the trial on September 22,

2014. II C.R. at 3-4.

       Consequently, Appellant did not waive the issues concerning his failure of the

tactical exercise and the absence of feedback.

       In a footnote, Appellees indicate that Appellant could not make a challenge

based on Article 9 of the CBA and the “Maintenance of Standards” without using

the grievance procedure outlined in Article 30 of the CBA. See Appellees’ Brief at

25. However, Appellees neglected to recall that Article 32, Section 8 of the CBA

provides the only mechanism to challenge the assessment center process. V R.R. at

227.

       If Appellant is correct that feedback is a standard maintained under Article 9

of the CBA concerning the assessment center process, then Article 32, Section 8

provided the only method for Appellant to raise the feedback issue as those

provisions precluded Appellant from raising that issue under any other portion of the

CBA.

       Appellant requests that the Court determine that feedback is a standard under

the ambit of Article 9 of the CBA, and determine that Appellant did raise that

standard properly before the arbitrator under the procedure of Article 32, Section 8

of the CBA.




                                          3
II. The court below erred if the court below rejected Appellant Brian
McEnery’s challenges to the award of Arbitrator Leroy Bartman

II.A Challenge based on absence of feedback

       Appellees appear to utilize a straw man argument in arguing that the decision

of the Arbitrator cannot be disturbed based on lack of feedback, characterizing

feedback as “trivial” and coupling feedback with other “trivial complaints.”

Appellees’ Brief at 29.

       However, Tex. Loc. Gov. Code §143.034(a) provides for feedback in the form

of “the person's promotional examination and answers, the examination grading, and

the source material for the examination.” Consequently, feedback in this form, or

any other form, concerning a promotional examination is rather important, not

trivial.

       Appellant requested the information delineated in Tex. Loc. Gov. Code

§143.034(a) in his grievance, but at the arbitration, Dr. Booth testified that there are

no “correct answers” to the assessment center. V R.R. at 235-237; V R.R. at 99

(54:12-23).

       Although Appellant disputes the premise that no correct answers existed for

the assessment center examination, assuming the premise was correct, another

mechanism existed to determine the performance of those taking the assessment

center examination in the form of a different kind of feedback than that provided by



                                           4
Tex. Loc. Gov. Code §143.034(a): direct feedback from the assessors. V R.R. at 114-

116 (114:2 – 122:22).

      As an important component of the assessment center process, though not

specifically mentioned in the CBA, the past practice of providing feedback was a

standard, privilege, or working condition enjoyed by Fire Fighters as a result of the

assessors providing feedback to candidates at each assessment center prior to 2010.

V R.R. at 116 (121:17-25). Because the existence of feedback persisted at the time

of the effective date of the CBA on October 1, 2009, feedback also became a

standard, privilege, or working condition under Article 9 of the CBA. Id.; V R.R. at

157 and 171; see also V R.R. at 458 (2009 assessment center occurred on or about

March 2009).

      Appellees contend that, even if feedback was provided, the feedback would

“come after the test… and… could have no impact on… placement on the

promotional exam.” Appellees’ Brief at 30. Therefore, Appellees contend that

evidence concerning feedback would not show whether “the test itself was faulty or

flawed.” Id.

      However, the assessment center dispute resolution procedure does not limit

itself to the “test” itself, but rather lends itself to challenges concerning the entire

assessment center process. V R.R. at 227 (Article 32, Section 8, Paragraph A of the




                                           5
CBA). The process necessarily included the grading process conducted after the

conclusion of the test.

      Consequently, Appellant, as specified in his grievance, could not determine

why he failed, in part, because he did not receive the feedback required under Article

9 of the CBA. By not receiving feedback, Appellant could not thoroughly challenge

the grading of his performance on the assessment center because he did not know

exactly why he failed.

      Had Appellant had feedback, Appellant would have had the opportunity to

thoroughly challenge the grading of his performance on the assessment center such

that a different promotional eligibility list might generate from a finding by the

arbitrator that the assessment center process was faulty or flawed because of the

grading itself. Without such feedback, Appellant lost this opportunity, which was

reason enough for the Arbitrator to determine that the assessment center process was

faulty or flawed.

      Appellees are incorrect when they state that Appellant “failed to frame any

issue for the [A]rbitrator regarding whether lack of feedback prevented him from

grieving his failure of the tactical exam.” Appellees’ Brief at 31. Appellant did frame

this issue for the arbitrator, and Appellant specified in his grievance that, because he

could not determine why he failed, he was “unable to fully grieve” his failure. V

R.R. at 140 (219:12 – 220:24); V R.R. at 236.


                                           6
      Appellant requests that the Court determine that the evidence presented at the

arbitration does not reasonably support the decision of the Arbitrator because the

decision of the Arbitrator failed to take into account the evidence concerning the

absence of feedback, in violation of Article 9 of the CBA, and the inability of

Appellant to fully grieve his failure of the assessment center because of the lack of

feedback.

II.B Challenge based on Tex. Loc. Gov. Code Chapter 143

II.B.1 Challenge requires application of Tex. Loc. Gov. Code Chapter 174

      Appellees indicate that the CBA expressly preempted the application of Tex.

Loc. Gov. Code Chapter 143, citing Tex. Loc. Gov. Code §174.006 and Article 37

of the CBA. See Appellees’ Brief at 33-34. However, Appellees neglect to address

how the CBA makes no provision regarding the process of grading the assessment

center examination and access by those taking the assessment center to that grading

process. See Appellant’s Brief at 41.

      On the contrary, Tex. Loc. Gov. Code §143.032, 143.033, and 143.034 make

provisions for the grading process of a promotional examination and access to that

grading process. These provisions coincide with the notion of “transparency” argued

by Appellant to exist within the requirements of Tex. Loc. Gov. Code Chapter 143.

In other words, access to the grading process, as delineated especially in Tex. Loc.

Gov. Code §143.034(a), provides a mechanism to achieve a goal of Tex. Loc. Gov.


                                         7
Code §143.001: “to secure efficient fire and police departments composed of capable

personnel who are free from political influence.”

      The Arbitrator himself pointed out how the provisions concerning the

assessment center in Article 32 of the CBA are silent as to access to the assessment

center grading process. V R.R. at 154. Without express provision concerning access

to the grading process contrary to Tex. Loc. Gov. Code Chapter 143 in the CBA,

then the provisions regarding access to the promotional examination grading process

from Tex. Loc. Gov. Code Chapter 143 applied in this case. See Harrison v. City of

San Antonio, 695 S.W.2d 271, 277 (Tex. App.—San Antonio 1985, no writ).

      If, however, Appellees are correct that the CBA expressly preempted the

application of Tex. Loc. Gov. Code Chapter 143, then the question arises as to what

governed the process for grading, and what governed access to the grading process

by those that took the assessment center.

      If that is the case, Appellant asserts that past practice controls under Article 9

of the CBA, specifically the past practice of providing feedback to the candidates of

the assessment center examination. See Appellant’s Brief at 19-29.

      Absent control by Tex. Loc. Gov. Code Chapter 143 or the CBA under the

doctrine of past practice, then nothing governs the grading process and access to the

grading process because the provisions concerning the assessment center under

Article 32 of the CBA do not address those issues. This cannot be the case because


                                            8
Tex. Loc. Gov. Code Chapter 174 makes express provision for the application of

either Tex. Loc. Gov. Code Chapter 143 or the CBA, with the latter controlling only

if it provides express provision to the contrary of the former. Tex. Loc. Gov. Code

§174.006; City of San Antonio v. Bullock, 34 S.W.3d 650, 653 (Tex. App.—San

Antonio 2000, pet. denied). In other words, one or the other must control.

      Appellant requests that the Court determine that the challenge raised by

Appellant concerning the application of Tex. Loc. Gov. Code Chapter 143, Tex. Loc.

Gov. Code Chapter 174, and the CBA as regards the grading process shows how the

decision of the Arbitrator was not supported by the record made at the arbitration

because the assessment center process was flawed and contrary to the requirements

of Tex. Loc. Gov. Chapter 143 by not providing a grading process and access to that

grading process in accordance with the provisions of the statute, or if expressly

preempted, then contrary to the past practice of providing feedback under Article 9

of the CBA, which did not occur in the 2010 assessment center.

II.B.2 Challenge not barred by res judicata or collateral estoppel

      Appellees discuss the doctrines of res judicata and collateral estoppel in their

briefing regarding Appellant’s challenge to the assessment center based on Tex. Loc.

Gov. Code Chapter 143, alleging that the decision in federal district court made by

the Honorable Judge Fred Biery concerning the 2009 assessment center barred

Appellant’s challenge in this action. See Appellees’ Brief at 38-41.


                                          9
      However, these doctrines do not apply because the issues raised by Appellant

concerning the 2010 assessment center could not have been raised in the litigation

decided by Judge Biery. Furthermore, the decision of the Arbitrator on August 2,

2010, came before the decision of Judge Biery on September 28, 2011, making the

doctrines inapplicable to this case. See IV R.R. at 65:15 – 67:15 (discussion in

argument concerning timing of decisions).

      The standard for invoking res judicata, or claim preclusion, involves a

showing that the instant action is based on the same claims that were raised or could

have been raised in the first action. Amstadt v. United States Brass Corp., 919

S.W.2d 644, 652 (Tex. 1996).

      The standard for invoking collateral estoppel, or issue preclusion, involves a

showing that the facts sought to be litigated in the instant action were fully and fairly

litigated in the prior action. Eagle Properties, Ltd. v. Scharbauer, 807 S.W.2d 714,

721 (Tex. 1990).

      The claims and issues raised by Appellant concerning the 2010 assessment

center could not have been raised in the action brought in federal district court

because the claims and issues did not exist until long after the 2009 assessment

center, making the two assessment centers different transactions for the purposes of

res judicata and collateral estoppel. See Barr v. Resolution Trust Corp., 837 S.W.2d

627, 631 (Tex. 1992) (discussing transactional approach to claim preclusion); see


                                           10
also IV R.R. 70:14 – 72:10 (argument specifying how transactional approach

prohibits application of claim preclusion to this case).

      In this action, Appellant challenged the assessment center process that

occurred from May 12-14, 2010, while the action before Judge Biery concerned the

assessment center that occurred on March 17-20, 2009. V R.R. at 92 (27:22-24); V

R.R. at 235; V R.R. at 458. In addition, the assessment center that forms the basis of

this action was procedurally different than the assessment center that formed the

basis of the action before Judge Biery, including the very exercises that comprised

each assessment center. See V R.R. at 405 (in basket, tactical exercise, and oral

presentation); V R.R. at 468 (in basket, oral presentation, and oral resume).

      In addition, the assessment center that forms the basis of this action raised

different issues than that in the action before Judge Biery, including the issues that

Appellant failed the assessment center and could not determine why he failed at the

time of his 2010 grievance. See V R.R. at 235-237; V R.R. at 455-468. In fact, the

decision of Judge Biery only addressed the procedure for the assessment center test

itself and not the procedure for the grading of the assessment center and access to

that grading process, which are issues raised by Appellant here concerning the 2010

assessment center. See V R.R. 235-237; V R.R. 496-497.

      Notwithstanding the differences in the 2009 and 2010 assessment centers

themselves, the CBAs in effect during the respective time periods of the two


                                          11
assessment centers were different. The CBA, and the provisions related to

assessment centers within it, serving as the basis of this action concerning the 2010

assessment center became effective on October 1, 2009, well after the 2009

assessment center took place, making the provisions of the former CBA effective

prior to October 1, 2009, applicable to the 2009 assessment center. See V R.R. at

157; V R.R. at 502 (CBA in effect for 2009 assessment center).

      Because the assessment centers in this suit and in the action before Judge

Biery were procedurally different, because the issues raised by each assessment

center were different, and because the CBAs controlling during the respective time

periods were different, Appellees cannot invoke claim preclusion and issue

preclusion. Appellant could not have brought a claim related to the 2010 assessment

center in this action in the previous action before Judge Biery. In addition, the issues

sought to be litigated in this action, initially before Arbitrator Leroy Bartman, could

not have been fully and fairly litigated in the action before Judge Biery because of

the differences between the 2009 assessment center and the 2010 assessment center.

See Amstadt, 919 S.W.2d at 652; Eagle Properties, 807 S.W.2d at 714.

      Because Appellees cannot meet the requirements for invoking claim

preclusion and issue preclusion, Appellant requests that the Court determine that

these affirmative defenses raised by Appellees did not bar Appellant from raising




                                          12
his challenges concerning Tex. Loc. Gov. Code Chapter 143 as applied to the 2010

assessment center.

II.C Challenge based on failure of the tactical exercise

      Appellees assert that Appellant ignored the provisions of Article 32, Section

4, Paragraph B.5 of the CBA concerning Appellant’s ability to grieve or arbitrate his

failure of the assessment center examination, including his failure of the tactical

exercise. See Appellees’ Brief at 42.

      However, Appellant directly addressed those provisions, indicating that they

do not prohibit grieving or arbitrating his failure of the assessment center

examination, but they rather prohibit the use of the grievance procedure outlined in

Article 30 of the CBA concerning the result of the assessment center. See

Appellants’ Brief at 43. Consequently, the assessment center grievance procedure in

Article 32, Section 8 of the CBA was the only mechanism by which Appellant could

grieve or arbitrate his failure of the assessment center examination. Id.

      More pointedly, the assessment center promotional dispute resolution

procedure specifically states that a Fire Fighter can make an objection in a grievance

to the results of the examination process under Article 32, Section 8, Paragraph B.

V. R.R. at 227 (“grievance must state… Fire Fighter’s objection to said process

and/or results”) (emphasis added).




                                          13
      It serves well to note that another provision of the CBA bolsters the position

of Appellant concerning his ability to grieve and arbitrate his failure of the

assessment center examination. Article 32, Section 4, Paragraph D provides, in part:

      The District Chief eligibility list shall be valid for a period of one (1) year
      from the day after the date of the written examination unless exhausted,
      notwithstanding any pending disputes, appeals or litigation concerning an
      applicant’s score or right to promotion.

      V R.R. at 227 (emphasis added).

      The foregoing provisions indicate the possibility of a dispute concerning the

score of an applicant, and because Article 32, Section 8 of the CBA provides the sole

mechanism to dispute the assessment center process, Article 32, Section 8 of the

CBA also authorized a grievance concerning the score of Appellant on the

assessment center. See V R.R. at 227.

      Appellant requests that the Court determine that the CBA authorized

Appellant to grieve his failure of the assessment center examination. See V R.R. at

235-237; see also V R.R. at 227 (Article 32, Section 8, Paragraph B of the CBA).

      In addressing the failure of Appellant to pass the assessment center

examination, Appellees cite evidence in the arbitration record concerning comments

made by the assessors regarding the presentation made by Appellant for the tactical

exercise. See Appellees’ Brief at 43; V R.R. at 313-316. However, the comments

cited, including comments about “eye contact,” perhaps may be reasons to give

Appellant a relatively low score on the tactical exercise, but those comments alone
                                         14
should not and cannot justify failing Appellant. See IV R.R. at 78:12-22 (argument

concerning lack of eye contact).

       In addition, Appellees misquote the particular note of an assessor by placing

the comments in the wrong order, perhaps in an attempt to make the comments seem

more egregious. See Appellees’ Brief at 43; V R.R. at 313. Nevertheless, the

misquoting illustrates a problem in relying on the notes generated by the assessors

without more: the notes can be misinterpreted. See Appellant’s Brief at 34.

      Consequently, the notes themselves, as well as the grading sheets, do not

substantiate the failure of Appellant on the tactical exercise because they do not

mean anything absent direct feedback from the assessors as to their import, making

any such evidence “conclusory.” See Id.

      Appellees dispute the use of the case cited by Appellant concerning

“conclusory” evidence for purposes of substantial evidence review in this case:

Public Utility Commission of Texas v. Gulf States Utilities Company, 809 S.W.2d

201, 211-212 (Tex. 1991). However, Appellees agree that the Texas Supreme Court

in that case determined that more than conclusory testimony was necessary to

resolve a complicated issue. See Appellees’ Brief at 45.

      Appellant disagrees with Appellees that the issue of his failure of the tactical

exercise of the assessment center is not a complicated one. If it was not complicated,

then Dr. Booth, the creator of the assessment center, would not have testified at the


                                          15
arbitration that there was no way to determine why Appellant failed the tactical

exercise absent direct feedback to Appellant. V R.R. at 114 (116:7-20). Therefore,

more than just the notes from the assessors, and the grading sheets, were necessary

for the Arbitrator to uphold the failure of Appellant of the tactical exercise.

      Appellant requests that the Court determine that there is no reasonable basis

to support the decision of the Arbitrator to permit a failing score on the tactical

exercise for Appellant. See Appellant’s Brief at 29-36.

II.D Challenge based on deficiencies in decision and award

      Appellees assert that Appellant waived for review the issues raised in the last

section of his brief. Appellees’ Brief at 47-48; see Appellant’s Brief at 37-44.

      However, as noted for a similar issue in section I above, Appellant did not

waive the issues raised in the last section of his brief.

      Notably, Appellant raised these issues in his response to the motion for

summary judgment brought by Appellees in the court below over a month before the

beginning of trial. II C.R. at 329-346 (see, e.g. paragraph 44); II C.R. at 3-4.

      In addition, Appellant in his Second Amended Petition did indicate as a cause

of action a request for the court below to require the arbitrator to withdraw his

decision to the extent it was capricious or not supported in whole or in part by the

evidence presented at the arbitration. I C.R. at 34-45 (paragraph 57). The additional

allegations in the Second Amended Petition concerning the fact that Appellant failed


                                           16
the assessment center examination and did not receive feedback allude to the issues

raised at trial concerning whether the Arbitrator did not decide all of the issues

presented to him. Id. (paragraphs 14 and 44). Again, Appellant met his burden of

notice pleading. Tex. R. Civ. P. 45(b) and 47(a); Kopplow, 399 S.W.3d at 536.

      Consequently, Appellant did not waive the issues raised concerning the

apparent failure of the Arbitrator to decide all issues presented at the arbitration by

Appellant, including why Appellant failed the assessment center, whether the

assessment center process made adequate provision to determine why he failed, and

whether the lack of feedback violated the CBA and prohibited Appellant from being

able to grieve thoroughly his failure of the assessment center examination because

he could not determine why he failed. Each of these issues was properly before the

arbitrator. See V R.R. at 235-237; V R.R. at 140 (219:12 – 220:24).

      As for the challenge based on lack of due process, Appellant does not make a

constitutional challenge to any part of these proceedings. However, Appellant does

make a “due process” challenge as that term describes the process available through

the assessment center dispute resolution procedure to determine disputes concerning

the assessment center process, including the result of the assessment center. See

Appellants’ Brief at 42-44.

      Notably, the decision of the Arbitrator does not specify whether the Arbitrator

considered all issues presented to him, including Appellant raising the issue of his


                                          17
failing the assessment center. As specified in section II.C above, Appellant could

and did appeal the result of the assessment center under Article 32, Section 8 of the

CBA. Without any indication from the Arbitrator that he considered the grievance

made by Appellant concerning the result of the assessment center, it is not clear

whether the Arbitrator afforded the process provided by the CBA in allowing

Appellant to challenge the result of the assessment center.

      Appellant requests that the Court determine that the Arbitrator acted

capriciously by not determining all issues and problems presented to him, failing to

provide Appellant with the opportunity, and “due process,” to challenge the

assessment center under the CBA. See Appellant’s Brief at 44.

III. Appellant Brian McEnery’s appeal is not moot

      Appellant in his grievance requested that the results of the assessment center

be set aside and a new assessment center be conducted. V R.R. at 237. Appellant at

the arbitration also requested that the Arbitrator make him a district chief, or in the

alternative, set aside the results of the 2010 assessment center. V R.R. at 141 (223:22

– 224:14). In addition, Appellant requested alternatively that the Arbitrator promote

everyone who took the 2010 assessment center or change Appellant’s scores to

reflect a much higher score on the tactical exercise. V R.R. at 142 (225: 11-22).

      However, Appellees mischaracterize the relief requested by Appellant

because their characterization does not take into account that any relief requested by


                                          18
Appellant was necessarily limited to the 2010 promotional examination to district

chief and any relief the Arbitrator could provide concerning promotion to district

chief in 2010.

       Appellees do not address how Appellant was promoted in 2011 based on a

completely different assessment center examination unrelated to the 2010

promotional examination and unrelated to the grievance made by Appellant in 2010.

See III R.R. at 15:5-14; 37:24 – 38:6.1

       In other words, because Appellant failed the assessment center in 2010,

Appellant could only be promoted off a promotional eligibility list generated after

the promotional eligibility list at issue in Appellant’s grievance and at the arbitration

for 2010 expired. See V R.R. at 226-227 (Article 32, Section 4, Paragraph D of the

CBA) (quoted supra); see also V R.R. at 226 (Article 32, Section 4, Paragraph B.5

of the CBA) (“Failure of an applicant to obtain a passing score on the assessment

center shall disqualify the applicant from further consideration for one (1) year from

the date the written examination was administered…”).

       Absent relief from the Arbitrator, the court below, or this Court, Appellant

could not and cannot be promoted to district chief in connection with the assessment

center that took place in 2010 and the promotional eligibility list generated from it.



1
 The record reflects incorrect month of August of 2011 when Appellant was actually promoted
in October of 2011.
                                             19
      Should the Court overturn the decision of the court below, in effect

determining that the 2010 assessment process was flawed, and remand this case to

determine the relief necessary to afford Appellant, then it is possible for Appellant

to have a much earlier promotion date to district chief stemming from a different

assessment center examination for 2010 leading to a different 2010 promotional

eligibility list for the vacancies available at the time of the 2010 district chief

promotional examination, should such relief be provided. Cf. Bullock, 34 S.W.3d at

652, 654 (discussing duration and expiration of promotional eligibility lists to fill

vacancies in the rank of captain in the San Antonio Fire Department).

      Consequently, this appeal is not moot because there continues to exist a

justiciable controversy as to whether the 2010 assessment center process was flawed,

and the effect a flawed assessment center had on Appellant’s opportunity for

placement on a promotional eligibility list in 2010 from a properly conducted

assessment center. Appellant, then, continues to have an interest in the outcome of

this case as any relief afforded to Appellant may result in a different promotional

date for Appellant much earlier than October of 2011.

      Appellant requests that the Court determine that his appeal is not moot and

determine his appeal on its merits.




                                         20
IV. Appellant Brian McEnery timely filed his notice of appeal

      On April 27, 2015, Appellees filed their motion to dismiss appeal for lack of

jurisdiction in this Court, asserting that Appellant’s request for findings of fact and

conclusions of law and Appellant’s motion for new trial were nullities and did not

extend the time for Appellant to file his notice of appeal.

      On May 4, 2015, the Honorable Chief Justice Sandee Bryan Marion signed an

order denying the motion to dismiss appeal for lack of jurisdiction, citing Tex. Dep’t

of Pub. Safety v. Fecci, 989 S.W.2d 135, 137-138 (Tex. App.—San Antonio 1999,

pet. denied).

      Appellees in their brief assert the same arguments they made in their motion

to dismiss appeal for lack of jurisdiction that Justice Marion denied, and Appellees

now request that this panel of the Court do what Justice Marion did not and dismiss

this appeal.

      Appellant requests that the Court adhere to the decision made by Justice

Marion and find that Appellant timely filed his notice of appeal because his request

for findings of fact and conclusions of law and his motion for new trial were proper

and did extend the deadline to file his notice of appeal. See Texas Rule of Appellate

Procedure 26.1(a).




                                          21
IV.A Request for Findings of Fact and Conclusions of Law was proper

          Appellees are incorrect in asserting that the standard of review in the court

below of the arbitration decision was merely substantial evidence standard of review

as described in the cases cited by them.

          Rather, the standard of review of the arbitration decision provided by the CBA

states:

          The decision and award of the arbitrator or “neutral” must be upheld, unless
          the Fire Fighter/grievant can establish by clear and convincing evidence said
          award was not supported in whole or in part by substantial evidence and/or
          that the award of the arbitrator of “neutral” was capricious.

          V R.R. at 228 (Article 32, Section 8, Paragraph G.1).

          None of the cases cited by Appellees directly address the specific standard of

review provided by the CBA of a decision by an Arbitrator, and none of the cases

address the propriety of a request for findings of fact and conclusions of law on

review of a decision by an Arbitrator.

          Appellees in making their argument that findings of fact and conclusions of

law are not appropriate in this case cite to cases discussing substantial evidence

review of administrative and other proceedings, none of which include review of an

arbitration decision with the specific contractually created standard of review as in

this case. Furthermore, none of the cases cited by Appellees address the unique

“clear and convincing evidence” burden included in Article 32, Section 8, Paragraph

G.1 of the CBA, delineated above.
                                            22
      Consequently, the review process created by the CBA contains an evidentiary

burden distinguishable from each case cited by Appellees, and that burden

necessarily required the court below to admit relevant evidence and make fact

findings based on that evidence.

      In that regard, Appellees filed traditional and no evidence motions for

summary judgment in the court below, which the court below denied. I C.R. at 53;

II C.R. at 636-637.

      Tex. R. Civ. P. 166a(c) and 166a(i) required the court below to grant summary

judgment if there was “no genuine issue as to any material fact and the moving party

is entitled to judgment as a matter of law” or if there was “no evidence of one or

more essential elements of a claim or defense.”

      Because the court below denied the motions, the court below determined from

the points raised in the motions and response and the evidence presented that a

genuine issue of material fact did exist and that there was some evidence to support

the elements of the claims brought by Appellant raised in the motions. See Tex. R.

Civ. P. 166a(c) and 166a(i).

      Consequently, the court below at the trial stage of these proceedings needed

to make findings of fact and conclusions of law concerning the issues of material

fact and the evidence presented for the claims of Appellant that justified denial of

the motions for summary judgment. See Tex. R. Civ. P. 296.


                                        23
      For the foregoing reasons, the request for findings of fact and conclusions of

law made by Appellant to the court below was proper, and the proper request

extended the time to file the notice of appeal accordingly. Texas Rule of Appellate

Procedure 26.1(a)(4).

      Appellant requests that the Court determine that it has jurisdiction over this

appeal.

IV.B Motion for New Trial was proper

      Appellant disagrees with Appellees that the court below did not hold a trial in

this case because of the process by which the parties had to follow to hold a trial

before the court below provided by the Texas Rules of Civil Procedure and the Bexar

County Civil District Court Rules. See II C.R. at 3 (Order Setting Non-Jury Trial on

Jury Trial Docket).

      In addition, the Final Judgment made by the court below contains the language

“this cause came on for trial,” and Appellees filed no motion to modify, correct, or

reform the Final Judgment to assert that the court below did not conduct a trial,

waiving any error to the contents of the Final Judgment including that a trial

occurred. III C.R. at 112; see Tex. R. Civ. P. 329b; Texas Rule of Appellate

Procedure 33.1.




                                         24
       Notwithstanding whether the court below actually conducted a trial or merely

acted in an appellate capacity as Appellees contend, Appellant followed the Texas

Rules of Civil Procedure in making his motion for new trial.

       Specifically, Appellant made a timely motion for new trial by filing his motion

within thirty (30) days of the court below signing the Final Judgment. III C.R. at

117.

       As this Court held in Fecci:

       The Texas Rules of Appellate Procedure govern procedure in appellate courts.
       Rule 3.1(b) defines an appellate court as the courts of appeals, the Court of
       Criminal Appeals, and the Supreme Court. Consequently, even though the
       county court at law may have been acting in an appellate or reviewing
       capacity, the Texas Rules of Appellate Procedure are not applicable. The
       Texas Rules of Civil Procedure control procedure in the county courts.

       989 S.W.2d at 137-138 (emphasis added).

       Although Appellees acknowledge the holding of this Court in Fecci,

Appellees misrepresent the holding of this Court in their argument.2




2
  Appellees also cite Swain v. State, 319 S.W.3d 878, 878-879 (Tex. App. – Fort Worth 2010, no
pet.) (per curiam) as an analogous circumstance to this one. However, the holding in Swain applies
in the very specific circumstances presented in that case—the filing of a motion for new trial in a
county court on an appeal of a municipal court conviction. This Court limited the application of
Swain to those specific circumstances in Moreno v. State, stating, “A motion for new trial filed
after an appeal from a municipal court of record to a county court does not extend the deadline to
file the notice of appeal.” No. 04-15-00085-CR at *2 (Tex. App.—San Antonio April 15, 2015, no
pet.) (mem. op., not designated for publication) (emphasis added). Consequently, Swain does not
apply and does not provide a useful analogy for the Court as this case does not involve an appeal
of a conviction from a municipal court of record.
                                                25
      The appellant in Fecci filed a “Motion for New Trial/Motion for Rehearing,”

making the very motion at issue in that case a motion for new trial and not merely a

motion for rehearing as Appellees indicated. Fecci, 989 S.W.2d at 138.

      Although Texas Rule of Appellate Procedure 49.1 provides for a motion for

rehearing, the Texas Rules of Civil Procedure do not specifically provide for a

motion for rehearing, making such a motion inapplicable in the court below. Id. at

138; see Tex. R. Civ. P. 2 (“These rules shall govern the procedure in the justice,

county, and district courts of the State of Texas in all actions of a civil nature…”)

(emphasis added).

      Nevertheless, this Court in Fecci indicated that the purpose of a motion for

new trial in the trial court “to give the trial judge an opportunity to cure any errors

by granting a new trial” is similar to the purpose of a motion for rehearing in the

appellate court to provide “an opportunity to correct any errors on issues already

presented and decided.” 989 S.W.2d at 138.

       This Court further indicated that the “Motion for New Trial/Motion for

Rehearing” brought by the appellant in Fecci “was, for purposes of filing deadlines,

a post-judgment motion” in compliance with Tex. R. Civ. P. 329b. Id.

      Similarly, the motion for new trial brought by Appellant in this case complied

with the requirements of Tex. R. Civ. P. 329b as a post-judgment motion. See III

C.R. at 117.


                                          26
      Because Appellant made a proper post-judgment motion in accordance with

the Texas Rules of Civil Procedure, the Texas Rules of Appellate Procedure then

bind this Court “when determining timetables applicable to this [C]ourt” in

connection with any proper post-judgment motions. Fecci, 989 S.W.3d at 138.

      Under Texas Rule of Appellate Procedure 26.1(a)(1), the motion for new trial

brought by Appellant extended the time to file a notice of appeal from thirty (30) to

ninety (90) days. Id.; see also Old Republic Ins. v. Scott, 846 S.W.2d 832, 833 (Tex.

1993) (“The filing of a motion for new trial in order to extend the appellate timetable

is a matter of right...”); cf. Thomley v. Southwood-Driftwood Apts., Ltd., 961 S.W.2d

6, 8 (Tex. App.—Amarillo 1996, order) (Motion for new trial after granting a motion

for summary judgment extended appellate timetable even though the granting of a

summary judgment “is not a ‘trial’”.).

      As Appellant filed his notice of appeal within ninety (90) days of the signing

of the Final Judgment, this Court has jurisdiction over this case. III C.R. at 121;

Fecci, 989 S.W.2d at 138; Texas Rule of Appellate Procedure 26.1(a)(1).

      Because the motion for new trial by Appellant was proper and rightly

extended the time for Appellant to file his notice of appeal, Appellant requests that

the Court determine that the Court has jurisdiction over this appeal.




                                          27
                                     PRAYER

      WHEREFORE, PREMISES CONSIDERED, Appellant Brian McEnery

respectfully requests that the Court grant the relief requested in his initial brief,

including:

      1)     finding that the court below erred by confirming the award of Arbitrator

             Leroy Bartman;

      2)     reversing the judgment made by the court below confirming the

             decision and award of Arbitrator Leroy Bartman;

      3)     rendering judgment vacating the decision and award of Arbitrator

             Leroy Bartman; and

      4)     remanding this case to the court below, or in the alternative, to

             Arbitrator Leroy Bartman, with further instructions to conduct

             proceedings to determine the relief to be awarded to Appellant.

      Appellant further prays for such other relief to which he may be entitled.




                                         28
                                 Respectfully submitted,

                                 PRINCE CONTRERAS PLLC
                                 417 San Pedro Avenue
                                 San Antonio, Texas 78212
                                 Tel: (210) 227-7821
                                 Fax: (210) 225-4469
                                 info@princecontreras.com
                                 ATTORNEYS FOR APPELLANT

                                 _/s/ Floyd Steven Contreras__________________
                                 RONALD B. PRINCE
                                 State Bar No. 16329300
                                 ron@princecontreras.com
                                 FLOYD STEVEN CONTRERAS
                                 State Bar No. 24075339
                                 floyd@princecontreras.com


                      CERTIFICATE OF COMPLIANCE

      As required by Texas Rule of Appellate Procedure 9.4(i)(3), the undersigned

counsel for Appellant Brian McEnery certifies that the number of words in this

document, excluding those properly excluded under Texas Rule of Appellate

Procedure 9.4(i)(1), is 6,474.

                                 _/s/ Floyd Steven Contreras___________________
                                 RONALD B. PRINCE
                                 FLOYD STEVEN CONTRERAS




                                         29
                         CERTIFICATE OF SERVICE

      As required by Texas Rules of Appellate Procedure 6.3 and 9.5, I certify that

on the 29th day of December, 2015, a true and correct copy of the foregoing

Appellant Brian McEnery’s Reply Brief was served on the following counsel of

record electronically through the electronic filing manager:

      Ms. Jacqueline M. Stroh
      THE LAW OFFICE OF JACQUELINE M. STROH, P.C.
      10101 Reunion Place, Suite 600
      San Antonio, Texas 78216
      Tel: (210) 477-7416
      Fax: (210) 477-7466
      jackie@strohappellate.com           Attorney for Appellees
      Ms. Deborah Lynne Klein
      OFFICE OF THE CITY ATTORNEY, LITIGATION DIVISION
      Frost Bank Tower
      100 West Houston Street, 18th Floor
      San Antonio, Texas 78205
      Tel: (210) 207-8919 and (210) 207-2015
      Fax: (210) 207-4357
      deborah.klein@sanantonio.gov           Attorney for Appellees
      Mr. Mark Kosanovich
      FITPATRICK & KOSANOVICH, P.C.
      P.O. Box 831121
      San Antonio, Texas 78283-1121
      Tel: (210) 207-7259
      Fax: (210) 207-8997
      mark.kosanovich@sanantonio.gov                      Attorney for Appellees
      Mr. Ricky J. Poole
      LAW OFFICES OF RICKY J. POOLE
      The Forum Building
      8000 IH-10 West, Suite 600
      San Antonio, Texas 78230
      Tel: (210) 525-7988
      Fax: (210) 525-7987
      rpoole@alamocityattorney.com                        Attorney for Intervenor

                                       _/s/ Floyd Steven Contreras_____________
                                       RONALD B. PRINCE
                                       FLOYD STEVEN CONTRERAS

                                         30
919 S.W.2d 644 (Tex. 1996), 94-0008, Amstadt v. United State Brass Corp.
Page 644
919 S.W.2d 644 (Tex. 1996)
Robert and Toni AMSTADT et al., Petitioners,
v.
UNITED STATES BRASS CORPORATION, Respondent.
UNITED STATES BRASS CORPORATION et al., Petitioners,
v.
Emery H. and Susan KOCHIE et al., Respondents.
UNITED STATES BRASS CORPORATION, Shell Oil Company d/b/a Shell Chemical
Company, and Hoechst Celanese Corporation, Petitioners,
v.
Nabeel ANDRAUS et al., Respondents.
Nos. 94-0008, 94-0023 & 94-0123.
Supreme Court of Texas.
March 7, 1996
     Argued Feb. 21, 1995.
      Rehearing Overruled May 10, 1996.
Page 645
[Copyrighted Material Omitted]
Page 646
     Appealed from Houston Court of Appeals, First Judicial District, Sam Bass, Justice.
     George M. Fleming, Mark A. Hovenkamp, James R. Moriarty, Michael O'Brien, Houston, for
petitioners.
     Kurt T. Nelson, Loreta H. Rea, Mark R. Zeidman, Houston, William Powers, Jr., Austin, for
respondents.
     Kevin H. Dubose, Michael Samford, Houston, Marc Kasowitz, Daniel R. Benson, Susan M.
Lee, New York City, Kurt T. Nelson, Loreta H. Rea, Houston, for petitioners.
     Michael O'Brien, James R. Moriarty, George M. Fleming, Mark A. Hovenkamp, Houston, for
respondents.
     Michael Samford, Kevin H. Dubose, Houston, Marc Kasowitz, Daniel R. Benson, Susan M.
Lee, Peter T. Shapiro, Hector Torres, New York City, Robert D. Daniel, Jerry L. Mitchell, Jr.,
Marjorie C. Bell, Daniel A. Hyde, D. Ferguson McNeil, Mary Lou Strange, Jack W. Tucker, Jr.,
Stephanie K. Crain, Marie R. Yeates, Houston, Robbi B. Hull, Austin, Kurt T. Nelson, Loreta H.
Rea, Houston, for petitioners.
     James R. Moriarty, Mark A. Hovenkamp, Michael O'Brien, George M. Fleming, Houston, for
respondent.
     CORNYN, Justice, delivered the opinion of the Court, in which PHILLIPS, Chief Justice, and
HECHT, ENOCH, BAKER and ABBOTT, Justices, join.
     In these three cases, homeowners have sued the manufacturers of a polybutylene plumbing
system for negligence and violations of the Deceptive Trade Practices-Consumer Protection Act.
TEX.BUS. & COM.CODE § § 17.41-17.63 (DTPA).
Page 647
The common issue is whether the Legislature intended that upstream suppliers of raw materials
and component parts be liable under the DTPA when none of their misrepresentations reached
the consumers. This precise issue, which to our knowledge has never before been raised in the
twenty-three-year history of the DTPA, animates the appeals in Barrett v. United States Brass
Corp., Knowlton/Kochie v. United States Brass Corp., and United States Brass Corp. v. Andraus.
In Knowlton/Kochie we also consider a res judicata issue; in Barrett, a comparative liability issue.
      We hold that, although the homeowners who obtained a jury finding of negligence may
recover on that theory, no homeowner may recover from Celanese, Shell, or U.S. Brass under the
DTPA because these manufacturers' alleged DTPA violations did not occur in connection with the
homeowners' purchase of their homes. We accordingly reverse the judgments of the courts of
appeals with regard to DTPA liability in all three causes. We remand Andraus and Kochie to the
trial courts for rendition of judgment in favor of those homeowners who received favorable jury
findings on their negligence claims. We reverse the court of appeals' judgment in Knowlton on res
judicata grounds and render judgment that the Knowlton households take nothing, and reverse
and remand Barrett to the trial court to resolve the comparative liability issue in accordance with
this opinion.
      I. FACTS
      U.S. Brass, Shell, and Celanese v. Andraus
      In Andraus, the owners of approximately 95 homes in the Fairmont Park West subdivision in
La Porte, Texas, sued General Homes Corporation (the developer and homebuilder), U.S. Brass,
Shell Oil Company, and Hoechst Celanese Corporation after experiencing problems with their
plumbing. U.S. Brass designed and manufactured the plumbing system.
      The plumbing system used flexible plastic pipes made of polybutylene resin connected by
fittings made of a plastic compound called Celcon. The pipes and fittings were joined together by a
copper or aluminum crimp ring placed around the outside of the pipe at the point where the pipe
and fitting were connected. The ring, fitting, and pipe were then compressed using a large wrench-
like tool designed by U.S. Brass. The pressure from the crimp ring deformed the pipe and fitting,
creating a water-tight seal.
      Celanese manufactured Celcon and supplied Celcon pellets to U.S. Brass to be molded into
fittings. Celanese promoted the use of Celcon in plumbing applications to U.S. Brass and other
manufacturers, and knew that U.S. Brass used Celcon to make the fittings. Shell produced the
polybutylene resin and provided it in raw form to U.S. Brass. U.S. Brass formed the resin into the
pipe used in the plumbing system.
      In the early 1980s, U.S. Brass and Shell promoted the plumbing system to municipal officials
in La Porte in order to obtain building code approval of the system for residential use. U.S. Brass
and Shell also marketed the system to homebuilders, including General Homes. General Homes
installed U.S. Brass' plumbing system in homes it built in 1980, 1981, and 1982.
      In 1982, some of these systems began to fail. Cracks developed in the Celcon fittings that
eventually caused leaks. At trial, the parties vigorously disputed what caused the fittings to fail.
Some of the experts testified that degradation of the Celcon from exposure to the households'
chlorinated water caused the cracks in the fittings. Others testified that inadequate design,
defective manufacture, and improper installation, or a combination of these problems along with
chemical degradation created excessive stress, which caused the fittings to crack.
      The homeowners [1] sued General Homes, U.S. Brass, Shell, Celanese, and Vanguard
Page 648
Plastics, Inc. (a competitor of U.S. Brass, later dismissed from the suit). General Homes is not a
party to this appeal. The homeowners alleged that the plumbing system's failure caused property
damage and mental anguish. They sought damages based on negligence, fraud, and violations of
the DTPA.
      A jury found that U.S. Brass, Shell, and Celanese had made misrepresentations under the
DTPA and were negligent. The jury also found that U.S. Brass had acted unconscionably and was
grossly negligent. The trial court ruled that the statute of limitations barred the negligence claims of
fifty-six households, and rendered a take-nothing judgment against five households for unspecified
reasons. Three households elected to recover on the negligence findings, and the trial court
rendered judgment accordingly. The trial court also rendered judgment for the eighty-six
households that elected recovery under the DTPA.
      Celanese, Shell, and U.S. Brass appealed. The court of appeals reversed the trial court's
judgment in part and affirmed it in part. 1993 WL 313208. Specifically, the court of appeals
affirmed DTPA liability because it concluded that "there was a link between the representations
made and the use of the plumbing system in the plaintiffs' homes, which ultimately caused
damage." Id. at * 17.
Knowlton v. U.S. Brass, Shell, and Celanese; Kochie v. U.S. Brass.
      In Knowlton/Kochie, homeowners sued General Homes, Buckner Boulevard Plumbing
Company (a plumbing contractor), Celanese, Shell, U.S. Brass, and Vanguard. They asserted
claims for negligence, strict liability, and misrepresentation and unconscionability under the DTPA
based on the defendants' representations about the characteristics of the plumbing systems to
homebuilders. They claimed that absent such representations, General Homes would not have
installed the defective systems.
      Celanese, Shell, U.S. Brass, and General Homes moved for summary judgment based on res
judicata and the statute of limitations. The trial court granted the motion with respect to five
households, led by the Knowltons, without specifying the grounds. The Knowlton households had
bought their homes from people who had previously sued and recovered damages caused by the
plumbing systems.
      The remaining households, led by the Kochies, dismissed their claims against General
Homes, Buckner, Celanese, and Shell, and proceeded to trial against U.S. Brass and Vanguard.
After closing argument but before the jury returned a verdict, they also settled with Vanguard. The
jury returned a verdict in favor of sixty-nine households. Forty-eight households elected recovery
under the DTPA and twenty-one elected recovery for negligence. The trial court rendered
judgment accordingly against U.S. Brass.
      U.S. Brass appealed, complaining that the Kochie homeowners were not consumers under
the DTPA. The court of appeals rejected that complaint. 864 S.W.2d 585, 592-93. The Knowlton
homeowners also appealed. The court of appeals reversed the summary judgment rendered
against them, holding that neither res judicata nor the statute of limitations barred their actions. Id.
at 605-06.
Barrett v. U.S. Brass
      In Barrett, several hundred homeowners sued nine companies, including U.S. Brass, alleging
negligence, strict liability, and violations of the DTPA. The trial court put thirty-six homeowners to
trial as a test group. The group settled with all defendants except U.S. Brass.
      The trial proceeded against U.S. Brass. The trial court directed a verdict against nine
households because U.S. Brass' products were not used in their homes. These nine did not
appeal. The jury found in favor of twenty-three households for negligence and DTPA violations,
but found against four
Page 649
households. The trial court rendered judgment against the four latter households, who were also
unsuccessful at the court of appeals. The twenty-three households that obtained favorable jury
findings elected to recover under the DTPA. The trial court, however, granted U.S. Brass' motion
to disregard the jury's answers under the DTPA and rendered judgment based solely on
negligence.
      The court of appeals reversed the judgment in part, holding that all the homeowners were
consumers under the DTPA, but that only seven of the twenty-three homeowners had produced
sufficient evidence that U.S. Brass' misrepresentations were a producing cause of their injuries.
864 S.W.2d 606. The court also held that there was no evidence of producing cause with regard to
the sixteen other households. Id.
II. DTPA
A.
      The DTPA grants consumers a cause of action for false, misleading, or deceptive acts or
practices. TEX.BUS. & COM.CODE § 17.50(a)(1); Riverside Nat'l Bank v. Lewis, 603 S.W.2d 169,
173 (Tex.1980). The DTPA defines a "consumer" as "an individual ... who seeks or acquires by
purchase or lease, any goods or services." TEX.BUS. & COM.CODE § 17.45(4). Privity of contract
with a defendant is not required for the plaintiff to be a consumer. E.g., Home Sav. Ass'n v.
Guerra, 733 S.W.2d 134, 136 (Tex.1987); Kennedy v. Sale, 689 S.W.2d 890, 892-93 (Tex.1985);
Flenniken v. Longview Bank & Trust Co., 661 S.W.2d 705, 707 (Tex.1983); Cameron v. Terrell &
Garrett, Inc., 618 S.W.2d 535, 540-41 (Tex.1981). A consumer must, in order to prevail on a DTPA
claim, also establish that each defendant violated a specific provision of the Act, and that the
violation was a producing cause of the claimant's injury. TEX.BUS. & COM.CODE § 17.50(a);
Doe v. Boys Clubs of Greater Dallas, Inc., 907 S.W.2d 472, 478 (Tex.1995).
      The manufacturers argue that DTPA liability, while not limited to those in contractual privity
with the consumer, cannot extend to all entities in the chain of production or distribution when
none of those entities' alleged misrepresentations ever reached the consumer. The homeowners,
on the other hand, argue that a misrepresentation by any entity in the chain of distribution that is
the cause-in-fact of actual damages entitles them to recover under the DTPA. We do not agree
with the homeowners' contention. To accept the homeowners' argument would extend DTPA
liability to upstream manufacturers or suppliers to an extent not intended by the Legislature when it
enacted the DTPA.
      The purpose of the DTPA is to "protect consumers against false, misleading, and deceptive
business practices, unconscionable actions, and breaches of warranty and to provide efficient and
economical procedures to secure such protection." TEX.BUS. & COM.CODE § 17.44. As we have
explained, that purpose is, in part, to encourage consumers to litigate claims that would not
otherwise be economically feasible and to deter the conduct the DTPA forbids. See Smith v.
Baldwin, 611 S.W.2d 611, 616 (Tex.1980); Pennington v. Singleton, 606 S.W.2d 682, 690
(Tex.1980); Woods v. Littleton, 554 S.W.2d 662, 670 (Tex.1977); see also Montford et al., 1989
Texas DTPA Reform: Closing the DTPA Loophole in the 1987 Tort Reform Laws and the Ongoing
Quest for Fairer DTPA Laws, 21 ST. MARY'S L.J. 525, 576 (1990).
      Although the DTPA was designed to supplement common-law causes of action, we are not
persuaded that the Legislature intended the DTPA to reach upstream manufacturers and suppliers
when their misrepresentations are not communicated to the consumer. Despite its broad,
overlapping prohibitions, we must keep in mind why the Legislature created this simple,
nontechnical cause of action: to protect consumers in consumer transactions. Consistent with that
intent, we hold that the defendant's deceptive conduct must occur in connection with a consumer
transaction, as we explain below.
      In Cameron v. Terrell & Garrett, Inc., we said: "The Act is designed to protect consumers from
any deceptive trade practices made in connection with the purchase or lease of any goods or
services." 618 S.W.2d 535, 541 (Tex.1981) (emphasis added). The
Page 650
in-connection-with requirement imposes a limitation on liability that is consistent with the
underlying purposes of the DTPA. Without this limitation, we would merely substitute the
defendant's introduction of a particular product into the stream of commerce for the conduct that
was found to have violated the DTPA. We find no authority for shifting the focus of a DTPA claim
from whether the defendant committed a deceptive act to whether a product that was sold caused
an injury.
      Requiring a connection between the plaintiffs, their transactions, and the defendants' conduct
enunciates a limitation we have alluded to, but not fully articulated, in prior cases. See, e.g.,
Qantel Business Sys., Inc. v. Custom Controls Co., 761 S.W.2d 302, 305 (Tex.1988) (noting that
deceptive conduct may be actionable under the DTPA if it is "inextricably intertwined" with a
consumer transaction) (quoting Knight v. International Harvester Credit Corp., 627 S.W.2d 382
(Tex.1982); Birchfield v. Texarkana Memorial Hosp., 747 S.W.2d 361, 368 (Tex.1987) (stating that
a plaintiff establishes standing to sue under the DTPA in terms of her relationship to a transaction);
Guerra, 733 S.W.2d at 136 (stating that a defendant creditor "must be shown to have some
connection either with the actual sales transaction or with a deceptive act related to" it) (emphasis
added); Flenniken, 661 S.W.2d at 707 (holding that a bank may be subject to DTPA liability
because its actions occurred "in the context of " the consumer's purchase of a home) (emphasis
added); Knight v. International Harvester Credit Corp., 627 S.W.2d 382, 388-89 (Tex.1982)
(concluding that a consumer had a DTPA claim for the defendant's deceptive acts "connected
with" a sale); Cameron, 618 S.W.2d at 541 (ruling that the DTPA protects "consumers from any
deceptive trade practice made in connection with the purchase or lease of any goods or services")
(emphasis added); see also Southwestern Bell Tel. Co. v. Boyce Iron Works, Inc., 726 S.W.2d
182, 187 (Tex.App.--Austin 1987) (holding that "neither the telephone company's representations
asserted in the agency hearing nor its course of conduct were the producing cause of Boyce's
actual damages" given the absence of "proof that any representation or any course of conduct by
the telephone company influenced Boyce's purchase of the alarm company's protective services"),
rev'd on other grounds, 747 S.W.2d 785 (Tex.1988); Taylor v. Burk, 722 S.W.2d 226, 229
(Tex.App.--Amarillo 1986, writ ref'd n.r.e.) (affirming the trial court's judgment notwithstanding the
verdict in favor of Burk on a DTPA claim because Taylor presented no evidence that Burk "was
connected with the real estate transaction between Taylor and the Millers"). While our words have
varied, the concept has been consistent: the defendant's deceptive trade act or practice is not
actionable under the DTPA unless it was committed in connection with the plaintiff's transaction in
goods or services.
      In the three cases before us today, the homeowners purchased homes equipped with
polybutylene plumbing systems. These systems are goods, and they form the basis of the
homeowners' complaints. The homeowners are therefore consumers under the DTPA. TEX.BUS.
& COM.CODE § 17.45(4). To determine whether the defendants may be liable under the DTPA,
we must examine whether their conduct occurred in connection with the plaintiffs' purchase of their
homes.
B. Celanese
      Celanese manufactured the polybutylene compound, Celcon, and supplied Celcon pellets to
U.S. Brass for its use in molding the plumbing system fittings. Celanese promoted the use of
Celcon in plumbing applications to U.S. Brass and other manufacturers, and knew that U.S. Brass
used Celcon to make fittings for its plumbing systems. Celanese did not control U.S. Brass'
selection of raw materials, did not design the parts or tools, and did not instruct or train the
homebuilders' plumbers. Celanese told U.S. Brass that it should mold prototype components from
Celcon and subject them to the most severe anticipated end-use conditions. Celanese also
informed U.S. Brass of Celcon's potential limitations in high-chlorine conditions. Celanese's
marketing efforts were limited to promoting its material to the manufacturers of the plumbing
systems. It did not market the systems to homebuilders or building code officials, or market the
finished
Page 651
homes to the consumers. The manufacturers of the plumbing systems and the building code
officials, and to a lesser degree the homebuilders, were intermediaries capable of assessing the
suitability of Celcon for use in the systems.
      None of these facts supports the conclusion that Celanese's misrepresentations were made in
connection with the plaintiffs' purchase of their homes. Celanese exercised little or no control over
the manufacture and installation of the finished plumbing systems, much less the manufacture and
sale of the homes. Celanese had no influence over the terms of the sales to the homeowners. At
most, Celanese enjoyed the benefit of selling a raw material to a downstream manufacturer.
      We hold that, under these circumstances, Celanese's conduct did not occur in connection with
the plaintiffs' purchase of their homes; consequently, that conduct cannot support DTPA liability.
Therefore, we reverse the court of appeals' judgment in Andraus permitting recovery under the
DTPA against Celanese. (Celanese had no judgment rendered against it in either
Knowlton/Kochie or Barrett.)
C. Shell
      Shell produced the polybutylene resin from which U.S. Brass manufactured the pipes used in
the plumbing system. As with Celanese, Shell did not control U.S. Brass' selection of raw
materials, did not design the parts or tools, and did not instruct or train the homebuilders'
plumbers. However, Shell played a substantial role in marketing U.S. Brass' entire system for new
homes in the early 1980s. It undertook a marketing campaign and directly contacted homebuilders
to promote the system and increase the market for polybutylene resin. Several homebuilders
testified that they learned about U.S. Brass' plumbing system from Shell at trade shows and from
Shell salespeople who visited them. The record contains some evidence that La Porte building
officials would not have approved the plumbing system for residential use absent Shell's
representations about its quality, reliability, and longevity. Finally, there is some evidence that the
homebuilders installed the systems in reliance on the same representations.
      As was the case with Celanese, these facts do not support the conclusion that Shell's
misrepresentations were made in connection with the relevant consumer transactions, the
purchase of the homes. Shell had no control over the manufacture or installation of the plumbing
systems, or of the homes ultimately purchased by the consumers. Shell had no influence over the
terms of the consumers' purchases. Although Shell actively promoted use of the plumbing
systems in residential homes, there is no evidence that the information provided to homebuilders
or building code officials was intended to be or actually was passed on to consumers. Importantly,
Shell's marketing efforts were not incorporated into the efforts to market homes to the plaintiffs in
this case. Also, any information provided by Shell was subject to independent evaluation by
building code officials and by homebuilders.
      We therefore conclude that Shell's conduct was not sufficiently connected with the plaintiffs'
purchase of their homes to support DTPA liability. We therefore render judgment in Andraus that
plaintiffs take nothing from Shell on their DTPA claims. (No judgment was rendered against Shell
in Knowlton/Kochie or Barrett.)
D. U.S. Brass
      U.S. Brass designed and manufactured the plumbing system at issue. It selected the raw
materials, designed and manufactured the parts and tools, and trained the homebuilders'
plumbers. In the late 1970s and early 1980s, U.S. Brass sought approval of the system for
residential use from building code officials. Together with Shell it conducted a sales campaign
aimed at the new home market and targeted individual builders. U.S. Brass represented to
builders that the polybutylene plumbing system was durable and would last twenty-five years, was
easy to install, required fewer joints, and was a quality product with characteristics superior to
copper, galvanized steel, and PVC plumbing systems. U.S. Brass' and Shell's representatives met
with homebuilders many times. U.S. Brass also provided homebuilders
Page 652
with a catalog on the plumbing system representing that the pipes and fittings would not corrode
and that the pipes would not freeze or experience mineral build-up.
      Although the conduct of U.S. Brass comes closer to being in connection with the plaintiffs'
purchase of their homes than the conduct of Shell or Celanese, it also falls short of meeting the
nexus required for DTPA liability. U.S. Brass exercised significant control over the design and
installation of the plumbing systems, but as with Shell and Celanese, U.S. Brass had no role in the
sale of the homes to the plaintiffs. As with Shell, U.S. Brass' marketing efforts were not intended
to, nor were they, incorporated into the marketing of the homes to the plaintiffs. Finally, U.S. Brass'
products were subject to independent evaluation by building code officials, homebuilders, and the
plumbing contractors who installed the materials. Viewed in this context, we conclude that U.S.
Brass' actions were not connected with the plaintiffs' transactions, that is, the sale of the homes, in
a way that justifies liability under the DTPA.
      Our analysis of U.S. Brass' connection with the consumer transactions applies with equal
force to allegations based on misrepresentations and unconscionable acts. The subject matter of
the misrepresentations and the conduct found to be unconscionable is virtually identical. Because
we conclude that the totality of U.S. Brass' involvement in the consumer transaction is insufficient
to support DTPA liability, we reverse the judgments against U.S. Brass under both theories of
DTPA liability.
      Although we have concluded that the homeowners have no DTPA cause of action against
Celanese, Shell, and U.S. Brass, no one disputes that they have a DTPA cause of action against
General Homes, their seller. Given this recourse under the DTPA against the seller, and the
contribution and indemnity provision of the DTPA, see TEX.BUS. & COM.CODE § 17.555, we
think that rather than permit limitless upstream DTPA liability under these circumstances, the
Legislature more likely intended for consumers to seek DTPA recourse against those with whom
they have engaged in a consumer transaction. Then, to the extent that the seller's DTPA liability is
caused or contributed to by the otherwise actionable misconduct of upstream manufacturers or
suppliers, the seller may seek contribution or indemnity against them. Additionally, homeowners
may obtain direct relief for foreseeable injuries due to the negligence of these parties.
III. KNOWLTON --RES JUDICATA
      Under our holding today, the Knowlton homeowners are not entitled to maintain DTPA causes
of action against the manufacturers because the manufacturers' conduct did not occur in
connection with their consumer transactions. Therefore, the court of appeals erred in reversing the
take-nothing judgment in favor of Celanese, Shell, and U.S. Brass as to the DTPA claims. We turn
to the question of whether res judicata bars the Knowlton homeowners' negligence and strict
liability claims.
A.
      Res judicata precludes relitigation of claims that have been finally adjudicated, or that arise
out of the same subject matter and that could have been litigated in the prior action. Barr v.
Resolution Trust Corp., 837 S.W.2d 627, 628 (Tex.1992). It requires proof of the following
elements: (1) a prior final judgment on the merits by a court of competent jurisdiction; (2) identity of
parties or those in privity with them; and (3) a second action based on the same claims as were
raised or could have been raised in the first action. See Texas Water Rights Comm'n v. Crow Iron
Works, 582 S.W.2d 768, 771-72 (Tex.1979). The question presented in this case is whether the
Knowlton homeowners are in privity with prior owners of their homes who sued for damages
allegedly caused by the defective plumbing systems in Michael Diehl v. General Homes Corp., No.
87-21479 (141st Dist. Ct., Harris County, Tex., Mar. 3, 1989).
      Generally people are not bound by a judgment in a suit to which they were not parties. See
TEX.CIV.PRAC. & REM.CODE § 37.006(a). The doctrine of res judicata creates an exception to
this rule by forbidding a second suit arising out of the same
Page 653
subject matter of an earlier suit by those in privity with the parties to the original suit. See Crow
Iron Works, 582 S.W.2d at 771-72. The purposes of the exception are to ensure that a defendant
is not twice vexed for the same acts, and to achieve judicial economy by precluding those who
have had a fair trial from relitigating claims. Benson v. Wanda Petroleum Co., 468 S.W.2d 361,
363 (Tex.1971).
      People can be in privity in at least three ways: (1) they can control an action even if they are
not parties to it; (2) their interests can be represented by a party to the action; or (3) they can be
successors in interest, deriving their claims through a party to the prior action. Getty Oil Co. v.
Insurance Co. of N. Am., 845 S.W.2d 794, 800 (Tex.1992); Benson, 468 S.W.2d at 363.
      To determine whether subsequent plaintiffs are in privity with prior plaintiffs, we examine the
interests the parties shared. See Texas Real Estate Comm'n v. Nagle, 767 S.W.2d 691, 694
(Tex.1989). Privity exists if the parties share an identity of interests in the basic legal right that is
the subject of litigation. Id. To determine whether a prior and later lawsuit involve the same basic
subject matter, we focus on the factual basis of the complaint. Barr, 837 S.W.2d at 630. If the
second plaintiffs seek to relitigate the matter which was the subject of the earlier litigation, res
judicata bars the suit even if the second plaintiffs do not allege causes of action identical to those
asserted by the first. See id. at 630; Crow Iron Works, 582 S.W.2d at 771-72. Res judicata also
precludes a second action on claims that arise out of the same subject matter and which might
have been litigated in the first suit. Crow Iron Works, 582 S.W.2d at 772; Cain v. Balcom, 130 Tex.
497, 109 S.W.2d 1044, 1045-46 (1937). Under the foregoing standards, we consider whether the
Knowlton plaintiffs were in privity with the Diehl plaintiffs, so that res judicata bars the Knowltons'
suit.
B.
      U.S. Brass and Celanese argue that the Knowlton plaintiffs were in privity with the Diehl
plaintiffs because the Knowlton plaintiffs were successors in interest who derived their rights in
property from the Diehl plaintiffs. We agree. " '[A]ll persons are privy to a judgment whose
succession to the rights of property therein adjudicated are derived through or under one or the
other of the parties to the action, and which accrued subsequent to the commencement of the
action.' " Kirby Lumber Corp. v. Southern Lumber Co., 145 Tex. 151, 196 S.W.2d 387, 388 (1946)
(quoting Cain, 109 S.W.2d at 1046). As a matter of law, the Knowlton plaintiffs were in privity with
the Diehl plaintiffs because they succeeded to the rights of property in the homes. See id. ("
'Privity, in this connection, means the mutual or successive relationship to the same rights of
property.' "). Although the rule that res judicata bars the claims of successors in title arose in the
context of land and property rights disputes, see, e.g., Freeman v. McAninch, 87 Tex. 132, 27
S.W. 97, 98-100 (1894), it applies here as well. As we stated in a water rights dispute, "one
acquiring an interest in the property involved in a lawsuit takes the interest subject to the parties'
rights as finally determined by the court." Crow Iron Works, 582 S.W.2d at 771.
      For both the Diehl and Knowlton plaintiffs, the right at issue was the right to be compensated
for injuries caused by the defective plumbing systems. The two lawsuits involved the same subject
matter, the same houses, and the same plumbing systems. The negligence, gross negligence,
products liability, and DTPA claims were virtually identical. Because the Knowlton plaintiffs are the
Diehl plaintiffs' successors in interest and because they brought virtually identical claims
concerning the same subject matter, we hold that res judicata bars the Knowlton plaintiffs' suit.
IV. BARRETT --COMPARATIVE LIABILITY
      Finally, we turn to the issue of comparative liability when the negligence of several defendants
causes an indivisible injury. The court of appeals held that for certain plaintiffs in Barrett, "there is
no evidence from which the jury could have allocated the liability as it did between U.S. Brass and
Page 654
Vanguard," and that accordingly, "there was no evidence of causation of damage to the homes
and personal property" of those plaintiffs. 864 S.W.2d at 633.
      If, however, there was evidence that U.S. Brass' negligence was a proximate cause of the
plaintiffs' damages, U.S. Brass' responsibility for that damage did not evaporate if the jury erred in
apportioning liability between U.S. Brass and Vanguard. If the injuries arising from the plumbing
system could not be apportioned with reasonable certainty, then the plaintiffs' injuries were
indivisible, and the defendants are jointly and severally liable for the whole. See Landers v. East
Tex. Salt Water Disposal Co., 151 Tex. 251, 248 S.W.2d 731, 734 (1952). Because the plaintiffs
established the elements of their negligence claims, they are entitled to recover from U.S. Brass
for its negligence. We accordingly reverse the court of appeals' take-nothing judgment as to the
plaintiffs' negligence claims, and remand those claims to the trial court. At retrial, U.S. Brass will
have the burden of apportioning its liability for the plaintiffs' injuries. If U.S. Brass cannot establish
its percentage of liability, and thus remains liable for the whole, the trial court should credit U.S.
Brass for the amounts the plaintiffs received in settlement from the other joint tortfeasors. See
Riley v. Industrial Fin. Serv. Co., 302 S.W.2d 652, 656 (Tex.1957). [2]
V. CONCLUSION
      A defendant's acts must be in connection with the plaintiff's consumer transaction to support
liability under the DTPA. As explained above, the homeowners presented no evidence that the
conduct of Celanese, Shell, or U.S. Brass was in connection with the purchase of their homes.
      We therefore affirm in part and reverse in part the judgments of the courts of appeals. We
reverse the courts of appeals' judgments in favor of the plaintiffs on their DTPA claims, and render
judgment that these plaintiffs take nothing against Celanese, Shell, or U.S. Brass under the DTPA.
We remand Andraus and Kochie to the trial courts for rendition of judgment for those homeowners
who received favorable jury findings on their negligence claims. We reverse the judgment of the
court of appeals with respect to res judicata in Knowlton, and render judgment in favor of the
defendants. We reverse the judgment of the court of appeals with respect to the apportionment of
negligence damages in Barrett, and remand to the trial court for reapportionment in accordance
with the standards described in this opinion.
     Except to the extent reversed or modified by this opinion, we affirm the judgments of the
courts of appeals.
     GONZALEZ and SPECTOR, JJ., concur in part and dissent in part.
     OWEN, J., not sitting.
     GONZALEZ, Justice, joined by SPECTOR, Justice, concurring in part and dissenting in part.
     I concur in the Court's judgment with respect to the plaintiffs' misrepresentation claims under
the Deceptive Trade Practices--Consumer Protection Act (DTPA). However, I cannot join the
Court's opinion because legally sufficient evidence supports the juries' findings that U.S. Brass
engaged in unconscionable conduct. Thus, I would affirm in part and reverse in part the judgments
of the court of appeals.
     The Legislature has expressed a policy that the DTPA be liberally construed to protect
consumers in their dealings with merchants and tradesmen. See TEX.BUS. & COM.CODE §
17.44. Consumers are authorized to bring suit not merely for false, misleading, or deceptive acts
or practices, see id. § 17.50(a)(1), but also for "any unconscionable ... course of action by any
person." Id. § 17.50(a)(3). An unconscionable course of action includes "tak[ing] advantage of the
Page 655
lack of knowledge, ability, experience, or capacity of a person to a grossly unfair degree." Id. §
17.45(5)(A). To be actionable, the resulting unfairness must be "glaringly noticeable, flagrant,
complete and unmitigated." Kennemore v. Bennett, 755 S.W.2d 89, 92 (Tex.1988). Whether the
defendant commits a misrepresentation or engages in unconscionable conduct, its actions must
be taken "in connection with" the transaction forming the basis of the plaintiff's claim. See, e.g.,
Home Sav. Ass'n v. Guerra, 733 S.W.2d 134, 136 (Tex.1987); Knight v. International Harvester
Credit Corp., 627 S.W.2d 382, 388-89 (Tex.1982); Cameron v. Terrell & Garrett, Inc., 618 S.W.2d
535, 541 (Tex.1981).
     The "in connection with" requirement properly focuses our view of the evidence on producing
cause. A plaintiff must prove the defendant's acts were the producing cause of his damages, but
need not establish the existence of privity between the parties. See Qantel Business Sys., Inc. v.
Custom Controls Co., 761 S.W.2d 302, 305 (Tex.1988); Guerra, 733 S.W.2d at 136. The first
component of producing-cause analysis is a purely fact-based examination, considering whether,
but for the defendant's conduct, the plaintiff's injuries would not have occurred. See Prudential Ins.
Co. v. Jefferson Assocs., Ltd., 896 S.W.2d 156, 161 (Tex.1995). Under the DTPA, a defendant's
acts cannot be the producing cause of a plaintiff's injuries unless the injuries flowed from the
defendant's misconduct in connection with a consumer transaction. In this instance, there can be
no dispute that the plaintiffs' damages flow from the deceptive or unconscionable conduct,
satisfying the "but for" component of producing cause.
     Producing-cause analysis further includes an inquiry into whether the defendants' conduct
was the "legal cause" of the plaintiffs' injuries; that is, whether it was such a substantial factor in
causing the plaintiffs' injuries that liability should be imposed. See Prudential, 896 S.W.2d at 161.
See generally Union Pump Co. v. Allbritton, 898 S.W.2d 773, 779-84 (Tex.1995) (Cornyn, J.,
concurring) (describing development and current status of producing-cause analysis). Policy-
based considerations and "common-sense notions of responsibility" should guide the
determination of whether the causal connection between the defendant's acts and the plaintiffs'
injuries merits the imposition of DTPA liability. See WILLIAM POWERS, JR., TEXAS PRODUCTS
LIABILITY LAW § 6.022, at 6-4, 6-20 (2d ed. 1992).
     The analysis of legal cause also must be confined to the facts of the particular case, but
courts should consider factors deemed significant in other DTPA cases. A non-exclusive list can
be distilled from this Court's prior decisions. Such a list would include the following:
     (1) the extent to which the defendant benefitted from the overall transaction, see Flenniken v.
Longview Bank & Trust Co., 661 S.W.2d 705, 707 (Tex.1983); Knight, 627 S.W.2d at 389;
     (2) the defendant's control over a product's manufacture, repair, or installation, see Guerra,
733 S.W.2d at 136-37; International Armament Corp. v. King, 686 S.W.2d 595, 599 (Tex.1985);
Hurst v. Sears, Roebuck & Co., 647 S.W.2d 249, 251-52 (Tex.1983);
     (3) the defendant's knowledge of and ability to influence the terms of a sale of a product or
service to consumers, see Knight, 627 S.W.2d at 389; Cameron, 618 S.W.2d at 537-39; Ozuna v.
Delaney Realty, Inc., 600 S.W.2d 780, 781-82 (Tex.1980);
     (4) the defendant's control over the marketing of goods or services, including its intent that its
representations be passed on to consumers, and whether they were passed on to them, see
Kennemore, 755 S.W.2d at 92; Brown v. Galleria Area Ford, Inc., 752 S.W.2d 114, 115-16
(Tex.1988); Kennedy v. Sale, 689 S.W.2d 890, 891-93 (Tex.1985); and
     (5) the extent to which intermediaries or the consumer can reasonably make an independent
assessment of the characteristics of goods or services, and the extent to which they did, see Doe
v. Boys Clubs of Greater Dallas, Inc., 907 S.W.2d 472, 481-82 (Tex.1995); Prudential, 896 S.W.2d
at 161; Dubow v.
Page 656
Dragon, 746 S.W.2d 857, 860-61 (Tex.App.--Dallas 1988, no writ).
     With these factors in mind, I consider the evidence under the appropriate standard of review,
examining it in the light most favorable to the jury verdicts and disregarding all contrary evidence.
See Davis v. City of San Antonio, 752 S.W.2d 518, 522 (Tex.1988); W. Wendell Hall, Revisiting
Standards of Review in Civil Appeals, 24 ST. MARY'S L.J. 1045, 1133 (1993). My review of the
record reveals significant distinctions between U.S. Brass's conduct and that of Celanese and
Shell, which merely supplied some of the materials U.S. Brass used to manufacture the plumbing
system. The record shows that U.S. Brass did the following:
     (1) designed and exclusively manufactured the plumbing system at issue;
     (2) selected the raw materials used in fabricating the system, including polybutylene resin for
the pipe and Celcon compound for the fittings;
     (3) ignored Celanese's recommendations that it test fittings made from Celcon in the severest
anticipated end-use conditions;
      (4) designed and produced the crimping tool used to install the system and the accompanying
crimp rings;
      (5) made representations to building code officials about the system's suitability despite its
failure to test the system's fitness and durability for use under ordinary conditions present in
LaPorte homes;
      (6) conducted an aggressive sales campaign aimed at the new home market and targeted
individual builders for sales of the system;
      (7) represented to builders that the polybutylene plumbing system was durable and would last
twenty-five years;
      (8) depicted the system as easy to install, requiring fewer joints, and as a quality product with
characteristics superior to copper, galvanized steel, and PVC plumbing systems;
      (9) met with home builders numerous times, touting its system;
      (10) provided a catalog on the plumbing system to home builders, which represented that the
pipe would not corrode, freeze, or allow mineral build-up and that the fittings would not corrode;
      (11) prepared the installation instructions for the system and trained the builders' plumbers
and subcontractors on how to install it;
      (12) suppressed a report from one of its product development specialists indicating that
"enormous problems still needed to be overcome" regarding the system;
      (13) ignored the specialist's recommendation that "a serious research and development
program" was needed to fix continuing problems with leaks and excessive failure rates in the pipes
and fittings, see 864 S.W.2d 606, 624; and
      (14) rather than acting on these suggestions to mitigate the system's failure rate, told the
specialist to destroy the most damming portions of his report, id.
      Furthermore, but for U.S. Brass's aggressive promotion of its plumbing system, building
officials would not have approved its use in subdivision homes and new home builders would not
have installed it.
      Under the factors I have listed, particularly whether the plaintiffs could reasonably evaluate
the product, U.S. Brass's conduct clearly meets the "substantial factor" element of producing
cause. The plaintiffs believed the plumbing system installed in their homes was a quality product
that at least met building code standards for performance and longevity. They could not have
known of, nor did they have the ability, experience, or capacity to detect, the micro-fine cracks in
the pipes that would eventually split and burst or the cumulative degradation of the insert fittings
that ultimately gave way because of chlorine exposure and stress. See Kennemore, 755 S.W.2d at
92 (ruling that defendant acted unconscionably in flagrantly taking advantage of consumers' "lack
of knowledge" and inability to correct specific problems). U.S. Brass's conduct caused the
Page 657
installation of systems that failed miserably, resulting in property damage, diminution in the value
of homes, and personal distress to the plaintiff-homeowners. I conclude that more than a scintilla
of evidence supports the juries' findings that U.S. Brass took advantage of the new homeowners'
lack of knowledge and capacity to evaluate the reliability of their plumbing systems and did so to a
grossly unfair degree. See Brown, 752 S.W.2d at 116 (holding that defendant "took advantage" of
plaintiffs "to a grossly unfair degree" by exploiting their lack of knowledge). In light of the policies
animating the DTPA and common-sense notions of responsibility, the jury verdicts imposing
liability upon U.S. Brass for unconscionable conduct toward new home buyers should stand.
      On the other hand, some purchasers acquired their homes from prior owners by private sale
or through foreclosure. U.S. Brass represented the plumbing system's characteristics to the home
builders and to building code inspectors, anticipating that it would expand the new-home market
for its plumbing system by doing so. However, U.S. Brass's role in connection with the acquisition
of homes by subsequent purchasers was far less pronounced. Assuming that U.S. Brass's
unconscionable conduct factually caused the presence of the defective plumbing systems in used
homes, this connection is too attenuated to merit the imposition of DTPA liability. See Boys Clubs,
907 S.W.2d at 481-82.
      In summary, more than a scintilla of evidence supports the juries' findings that U.S. Brass
acted unconscionably and that its acts were a producing cause of the damages to new
homeowners. Therefore, under the facts of these three cases, I would affirm the judgments of the
court of appeals to the extent they approved the imposition of DTPA liability upon U.S. Brass for its
unconscionable conduct toward new home buyers. See TEX.BUS. & COM.CODE §§ 17.45(5)(A),
17.50(a)(3). However, I would reverse the lower court's judgments, as specified by the Court, and
render judgment that the plaintiffs take nothing against Celanese, Shell, and U.S. Brass for any
alleged DTPA misrepresentations.
---------
Notes:
[1] Most of the homes were owned by married couples, but some were owned by individuals.

During discovery and trial, the members of each household were treated as one plaintiff. For
example, one set of jury questions was asked for each couple. In this opinion, the words
"homeowner," "household," and "plaintiff" are used interchangeably, and may refer to more than
one person.
[2] We note that David and Tammie Love have also brought a point of error complaining of the

court of appeals' holding that the statute of limitations barred their negligence claim. Because they
did not reurge that complaint in their motion for rehearing before the court of appeals, we cannot
consider it. Smith v. Baldwin, 611 S.W.2d 611, 618 (Tex.1981); see TEX.R.APP.P. 131(e).
---------
837 S.W.2d 627 (Tex. 1992), D-2082, Barr v. Resolution Trust Corp. ex rel. Sunbelt Federal Sav.
Page 627
837 S.W.2d 627 (Tex. 1992)
George J. BARR, Petitioner,
v.
RESOLUTION TRUST CORP., ex rel. SUNBELT FEDERAL SAVINGS, Respondent.
No. D-2082.
Supreme Court of Texas.
September 23, 1992
      Albert B. Greco, Jr., Barbara L. Wohlrabe, Dallas, for petitioner.
      Jack N. Ross, II, Dallas, for respondent.
      OPINION
      GONZALEZ, Justice.
      The issue in this case is whether a claim by Sunbelt Federal Savings against George Barr
based on a partnership promissory note and guarantee agreement is barred by the doctrine of res
judicata. The trial court granted Barr's motion for summary judgment based on res judicata. The
court of appeals, with one Justice dissenting, reversed the trial court's judgment, holding that the
doctrine did not apply. 824 S.W.2d 600. We reverse the judgment of the court
Page 628
of appeals and affirm the trial court's judgment.
      In 1985, Barr and Ron Knott were partners in the Bar III Venture. On March 14, 1985 Bar III
executed a promissory note for $369,750 in favor of Sunbelt's predecessor in interest. The same
day, Barr and Knott executed a personal guarantee of the note. In March 1987, Bar III defaulted
on the note.
      On May 24, 1988, Sunbelt filed two separate lawsuits on the note. In one suit, Sunbelt alleged
liability against the partnership as maker of the note and against Knott as guarantor of the note. In
the other, Sunbelt alleged that Barr was personally liable because of his unconditional guarantee
of the note.
      Barr moved for summary judgment in the latter lawsuit on the grounds that the terms of the
guaranty agreement were too uncertain to be enforceable. Barr argued that the agreement, a
standard form containing a number of options to choose and blanks to complete, was not
sufficiently completed to ascertain his liability. The trial court granted the motion, and rendered a
final take-nothing judgment. Sunbelt did not appeal the judgment.
      Thereafter, Sunbelt amended its pleadings in the suit against the partnership and Knott by
adding Barr as a defendant, alleging that his status as a partner created liability for the note. Barr's
answer asserted res judicata, among other defenses.
      Barr moved for summary judgment on the grounds that the take-nothing judgment in the first
lawsuit barred litigation of the claims against him in the second lawsuit. Sunbelt also moved for
summary judgment, requesting a judgment on the note. The trial court granted Barr's motion and
denied Sunbelt's. This interlocutory judgment became final when the court rendered judgment for
Sunbelt on its claims against the partnership and Knott for the full amount of the note.
     Sunbelt appealed, arguing that the trial court should have granted its summary judgment
instead of Barr's. The court of appeals, with one justice dissenting, determined that the first suit did
not bar the second. However, the court concluded that questions of fact prevented rendition in
Sunbelt's favor, and thus remanded the case to the trial court. Both Barr and Sunbelt sought
review in our court.
     Much of the difficulty associated with the doctrine of res judicata is due to the confusion of
several related theories. Broadly speaking, res judicata is the generic term for a group of related
concepts concerning the conclusive effects given final judgments. Puga v. Donna Fruit Co., 634
S.W.2d 677, 679 (Tex.1982). Within this general doctrine, there are two principal categories: (1)
claim preclusion (also known as res judicata); and (2) issue preclusion (also known as collateral
estoppel). [1] Res judicata, or claims preclusion, prevents the relitigation of a claim or cause of
action that has been finally adjudicated, as well as related matters that, with the use of diligence,
should have been litigated in the prior suit. Gracia v. RC Cola-7-Up Bottling Co., 667 S.W.2d 517,
519 (Tex.1984); Bonniwell v. Beech Aircraft Corp., 663 S.W.2d 816, 818 (Tex.1984). Issue
preclusion, or collateral estoppel, prevents relitigation of particular issues already resolved in a
prior suit. [2] Bonniwell, 663
Page 629
S.W.2d at 818. Barr's argument, that Sunbelt should have brought all theories of liability in one
suit, is the defense of claim preclusion.
     Claim preclusion prevents splitting a cause of action. Jeanes v. Henderson, 688 S.W.2d 100,
103 (Tex.1985). The policies behind the doctrine reflect the need to bring all litigation to an end,
prevent vexatious litigation, maintain stability of court decisions, promote judicial economy, and
prevent double recovery. Zollie Steakley & Weldon U. Howell, Jr., Ruminations on Res Judicata,
28 Sw.L.J. 355, 358-59 (1974).
     The question that has given courts the most difficulty is determining what claims should have
been litigated in the prior suit. Early on, this Court held that res judicata "is not only final as to the
matter actually determined, but as to every other matter which the parties might litigate in the
cause, and which they might have decided." Foster v. Wells, 4 Tex. 101, 104 (1849). We have
never repudiated this definition of claim preclusion, and it appears in some form in most definitions
of res judicata. See, e.g., Jeanes v. Henderson, 688 S.W.2d 100, 103 (Tex.1985) (res judicata
bars not only what was actually litigated but also claims that could have been litigated in the
original cause of action). If taken literally, this definition of the rule would require that all disputes
existing between parties be joined, regardless of whether the disputes have anything in common.
This court has resorted to a wide variety of theories and tests to give res judicata a more restrictive
application. [3] See generally 5 WILLIAM V. DORSANEO III, TEXAS LITIGATION GUIDE §
131.06[b][ii] (1991); Steakley, 28 Sw.L.J. 355.
     Even if only cases from more recent times are considered, our holdings with respect to res
judicata are difficult to reconcile. In Griffin v. Holiday Inns of America, 496 S.W.2d 535 (Tex.1973)
the court determined that a take-nothing judgment in a suit to recover in contract for services and
materials did not preclude a subsequent suit to be compensated in quantum meruit. The court
rejected the view that a judgment as to one claim is res judicata of all claims or causes of action
arising out of the same transaction, and stated that, "[a]s a general rule a judgment on the merits
in a suit on one cause of action is not conclusive of a subsequent suit on a different cause of
action except as to issues of fact actually litigated and determined in the first suit." Id. at 538. The
court acknowledged, however, that alternative theories of recovery for the same "claim" may not
be brought in different lawsuits. [4]
Page 630
       Thus, in Griffin, the court determined that a "cause of action" for res judicata purposes is
something more than the set of facts necessary to establish a single theory of recovery but not
necessarily the entire transaction between the parties. Id. at 537-38. The court gave no guidance
on the question of how to make this fine distinction between a mere alternative theory of recovery
and a different cause of action. Every theory of recovery has its unique elements of proof. As the
Griffin case illustrates, only slight variations of the facts to support different theories of the same
incident can result in a court finding different causes of action, thus thwarting the purposes of res
judicata. See Steakley, 28 Sw.L.J. at 361-62.
       The court took an entirely different approach in Westinghouse Credit Corp. v. Kownslar, 496
S.W.2d 531 (Tex.1973). In that case Kownslar had guaranteed all promissory notes by the maker.
The issue was whether res judicata required that Westinghouse bring in one suit its claims for all
notes guaranteed by Kownslar that were then in default. Rather than decide whether there was
more than one cause of action involved, the court decided the case solely on whether it appeared
that the policies of res judicata required such a result. [5]
       This pure policy approach as exemplified by Westinghouse makes it virtually impossible to
determine in advance what policy will win out in any given case. Without any objective standards,
each case is decided ad hoc, and therefore the doctrine is "inherently unpredictable" and "affords
little basis for consistency and formulation of precedent." Steakley, 28 Sw.L.J. at 362-63.
Westinghouse is the only case we have decided solely on policy grounds.
       Then, in Texas Water Rights Comm. v. Crow Iron Works, 582 S.W.2d 768 (Tex.1979), the
court shifted the focus from the cause of action to the subject matter of the litigation. The question
was whether a major lawsuit instigated to sort out water rights to the lower Rio Grande river
precluded a subsequent suit based on the claim that during the pendency of that suit the plaintiff
had purchased additional rights. The court concluded that the subsequent claim was barred,
noting that:
The scope of res judicata is not limited to matters actually litigated; the judgment in the first suit
precludes a second action by the parties and their privies not only on matters actually litigated, but
also on causes of action or defenses which arise out of the same subject matter and which might
have been litigated in the first suit.
       Id. at 771-72 (emphasis added). Accord, Gracia, 667 S.W.2d at 519. Thus this definition is not
consistent with earlier formulations of the rule, such as in Griffin, that only issues related to a
single cause of action are barred in a subsequent suit. While we did not expressly overrule the
Griffin test in either Crow Iron Works or Gracia we do so now.
       A determination of what constitutes the subject matter of a suit necessarily requires an
examination of the factual basis of the claim or claims in the prior litigation. It requires an analysis
of the factual matters that make up the gist of the complaint, without regard to the form of action.
Any cause of action which arises out of those same facts should, if practicable, be litigated in the
same lawsuit. Gracia, 667 S.W.2d at 519; Crow Iron Works, 582 S.W.2d at 772.
      The definition of res judicata in Gracia and Crow Iron Works is substantially similar to the rule
of compulsory counterclaims embodied in the rules of civil procedure. A party defending a claim
must bring as a counterclaim any claim that "arises out of the transaction or occurrence that is the
subject matter of the opposing party's claim...." Tex.R.Civ.P. 97.
Page 631
      The Restatement of Judgments also takes the transactional approach to claims preclusion. It
provides that a final judgment on an action extinguishes the right to bring suit on the transaction,
or series of connected transactions, out of which the action arose. Restatement of Judgments §
24(1). A "transaction" under the Restatement is not equivalent to a sequence of events, however;
the determination is to be made pragmatically, "giving weight to such considerations as whether
the facts are related in time, space, origin, or motivation, whether they form a convenient trial unit,
and whether their treatment as a trial unit conforms to the parties' expectations or business
understanding or usage." [6] Id. § 24(2).
      We conclude that the transactional approach to claims preclusion of the Restatement
effectuates the policy of res judicata with no more hardship than encountered under rule 97(a) of
the rules of civil procedure. Modern rules of procedure obviate the need to give parties two bites at
the apple, as was done in Griffin, to ensure that a claim receives full adjudication. Discovery
should put a claimant on notice of any need for alternative pleading. Moreover, if success on one
theory becomes doubtful because of developments during trial, a party is free to seek a trial
amendment.
      In the case now before us, there is no valid reason to subject Barr to two different lawsuits. In
the suit brought previously against Barr, the bank alleged that he executed the guarantee on the
same day and as part of the "same transaction" as the promissory note. In both suits Sunbelt
seeks to hold Barr primarily liable for payment of the note and seeks the same amount of
damages. Both suits require proof establishing the notes of the partnership, that the notes are due,
and that the partnership has defaulted. The only factual allegation that Sunbelt pleaded in the
second suit that was not in the first is that Barr is a general partner of Bar III Venture.
      It is clear that in this case the execution of the partnership note and Barr's guarantee of it
were related in time and space and motivation, and the parties considered it as a single
transaction. The issues of both claims form a convenient trial unit, whereas separate lawsuits
would require significant duplication of effort of the court and the parties involved. With due
diligence, the claim that Barr was liable because he is a partner could have been joined in the suit
on his guarantee of the partnership note.
      We reaffirm the "transactional" approach to res judicata. A subsequent suit will be barred if it
arises out of the same subject matter of a previous suit and which through the exercise of
diligence, could have been litigated in a prior suit. For these reasons, the judgment of the court of
appeals is reversed and that of the trial court is affirmed.
---------
Notes:
[1] Res judicata may be further categorized into merger and bar, because the doctrine has

different applications depending on which party is successful in the prior suit. If the party asserting
a claim prevails, the cause of action is merged into the judgment, and the cause of action as such
ceases to exist. Jeanes v. Henderson, 688 S.W.2d 100, 103 (Tex.1985). If the party defending a
claim prevails in the prior suit, the judgment acts as a bar to matters which could have been
litigated in the original suit. Id.
[2] An example of the confusion concerning collateral estoppel is the court of appeals' holding that

"res judicata does not preclude relitigation of issues that the first court did not actually try and
determine, unless a determination of those issues was essential to the judgment in the first suit."
824 S.W.2d at 602. The court relied on RESTATEMENT (SECOND) OF JUDGMENTS § 27
(1982), which is entitled "Issue Preclusion--General Rule", i.e., collateral estoppel. See Id. § 17(3),
and comment (c). We disapprove similar language in the case cited by the court, Faour v. Faour,
762 S.W.2d 361 (Tex.App.--Houston [1st Dist.] 1988, writ denied).
Our own recent holdings have contributed to the confusion by holding without elaboration that res
judicata requires an "identity of issues" between the prior and subsequent suits. See, e.g.,
Coalition of Cities for Affordable Utility Rates v. Public Utilities Commission, 798 S.W.2d 560, 563
(Tex.1990); Byrom v. Pendley, 717 S.W.2d 602, 606 (Tex.1986); Bonniwell v. Beech Aircraft
Corp., 663 S.W.2d 816, 818 (Tex.1984). If an identity of issues is strictly required, then there is no
basis for precluding issues that should have been raised in the prior suit but were not, and there is
no distinction between claim preclusion and issue preclusion. See Flores v. Edinburg Consolidated
Indep. School Dist., 741 F.2d 773, 776 (5th Cir.1984).
[3] See, e.g., Philipowski v. Spencer, 63 Tex. 604, 607 (1885) ("cause of action", being the

grievance and wrong complained of, must be identical in both the earlier and subsequent suit,
regardless of form of action); Hanrick v. Gurley, 93 Tex. 458, 56 S.W. 330, 330 (1900), (all matters
that could support the "claim or demand in controversy" in the prior suit would be precluded in a
succeeding suit); Freeman v. McAninch, 87 Tex. 132, 27 S.W. 97, 100 (1894) (pleader must use
diligence in pleading all claims concerning the same "subject matter" of the suit); Moore v.
Snowball, 98 Tex. 16, 81 S.W. 5, 8-10 (1904) (proof of legal title is sufficiently different from proof
of equitable title so as to be different "cause of action" for res judicata purposes); Ogletree v.
Crates, 363 S.W.2d 431, 436 (Tex.1963) (while suit to modify a divorce decree and suit to set it
aside for fraud are technically different causes of action, they are the same "broad cause of
action," and public policy requires all complaints concerning custody could and should have been
brought in the same suit).
[4] The court did not attempt to apply any test for res judicata to the facts in Griffin. Ultimately, the

Court based its decision on stare decisis, because other courts had held that quantum meruit is
not barred by a judgment on the contract. Griffin, 496 S.W.2d at 538. The court did so without
discussion of the reasoning in the cases upon which it relied.
[5] The court announced a two-step analysis. First the court looked to see if stare decisis decided

the case, and determined that there was no controlling case. Second, the court looked to see
"whether the factual situation presented is such that the purposes of the doctrine of merger shall
be frustrated absent enforcement of the bar." 496 S.W.2d at 532.
[6] In Jeanes v. Henderson, 688 S.W.2d 100, 103 (Tex.1985), we cited section 24(2) of the

Restatement as authority for the definition of claims preclusion. We did not clearly adopt the
Restatement in that case, however.
---------
34 S.W.3d 650 (Tex.App. —San Antonio 2000), 04-99-00906, City of San Antonio v. Bullock
Page 650
34 S.W.3d 650 (Tex.App. —San Antonio 2000)
CITY OF SAN ANTONIO, Appellant,
v.
Thomas M. BULLOCK, et al., Appellees.
No. 04-99-00906-CV.
Court of Appeals of Texas, Fourth District, San Antonio
November 22, 2000
Page 651
[Copyrighted Material Omitted]
Page 652
      David W. Strickler, Ruben D. Campos, Wickliff & Hall, P.C., San Antonio, for Appellant.
      B. Craig Deats, Deats & Levy, P.C., Austin, for Appellee.
      Sitting: CATHERINE STONE, Justice, PAUL W. GREEN, Justice, KAREN ANGELINI,
Justice.
OPINION
      Opinion by KAREN ANGELINI, Justice.
      A group of San Antonio Firefighters brought suit against the City of San Antonio, alleging the
City failed to fill vacant positions in violation of the Civil Service Act. The Firefighters moved for
summary judgment, and the trial court granted their motion. The City appeals in seven issues. We
disagree with its assertions, however, and affirm the trial court's judgment.
Factual and Procedural Background
      On June 24, 1997, the City took personnel action which it characterized as a reclassification
of four captain positions to four district fire chief positions. The City claimed that the
reclassification's effect was to decrease the number of captain positions by four and increase the
number of district fire chief positions by four.
      Thomas Bullock, along with several other San Antonio Firefighters (collectively referred to as
"the Firefighters,") viewed the reclassification's effect quite differently than the City. Specifically,
the Firefighters believed that the reclassification created four vacancies in the district fire chief s'
positions. Four captains were then promoted into those vacancies, leaving four vacancies in the
captains' rank. No one, however, was promoted to fill the vacancies in the captains' positions.
      The Firefighters brought suit seeking declaratory, injunctive, and equitable relief, along with
back pay and benefits. In their petition, the Firefighters claimed that the City's failure to fill the
alleged vacancies violated its obligation to do so and their rights under the Civil Service Act. Tex.
Loc. Gov't Code Ann. §§ 143.028-.037 (Vernon 1999). Specifically, this reclassification of the
captains' positions, according to the Firefighters, effectively abolished those positions in violation
of the Civil Service Act. And, where a classified position is not abolished by ordinance, the position
is vacant and must be filled. See Duckett v. City of Houston, 495 S.W.2d 883, 886 (Tex.1973);
International Ass'n of Firefighters, Local 624 v. City of San Antonio, 822 S.W.2d 122, 131
(Tex.App.--San Antonio 1991, writ denied). The Firefighters argued that those firefighters on the
eligibility lists at the time the vacancies arose were entitled to promotion into the vacancies. The
vacancies were never filled, and the eligibility lists expired. The Firefighters, therefore, claimed
they lost their positions on the lists, and, potentially, the opportunity to be promoted.
       The Firefighters moved for summary judgment, and the trial court granted the motion in its
entirety. The City appeals the summary judgment in seven issues.
Standard of Review
        The underlying purpose of Texas' summary judgment rule is to eliminate unmeritorious
claims. Casso v. Brand, 776 S.W.2d 551, 556 (Tex.1989). To this end, Texas Rule of Civil
Procedure 166a(c) provides that where there is no genuine issue
Page 653
as to any material fact, the movant is entitled to judgment as a matter of law. Tex.R. Civ. P.
166a(c). [1] In a summary judgment proceeding, the burden is on the moving party. Roskey v.
Texas Health Facilities Comm'n, 639 S.W.2d 302, 303 (Tex.1982). When the plaintiff moves for
summary judgment, he or she must show that he or she is entitled to prevail on each element of
the cause of action, except for damages. MMP, Ltd. v. Jones, 710 S.W.2d 59, 60 (Tex.1986);
Ortiz v. State Farm Mut. Auto. Ins. Co., 955 S.W.2d 353, 355 (Tex.App.--San Antonio 1997, pet.
denied). Once the movant establishes its right to summary judgment, the burden then shifts to the
nonmovant to present issues that preclude summary judgment. Garcia v. John Hancock Variable
Life Ins. Co., 859 S.W.2d 427, 430 (Tex.App.--San Antonio 1993, writ denied).
       This court reviews a summary judgment de novo. Valores Corporativos, S.A. de C.V. v.
McLane Co., Inc., 945 S.W.2d 160, 162 (Tex.App.--San Antonio 1997, writ denied). In deciding
whether a fact issue was raised to preclude summary judgment, this court takes evidence
favorable to the nonmovant as true. We also indulge every reasonable inference in favor of the
nonmovant, and resolve all doubts in the nonmovant's favor. Nixon v. Mr. Property Management
Co., Inc., 690 S.W.2d 546, 548-49 (Tex.1985); Montgomery v. Kennedy, 669 S.W.2d 309, 310-11
(Tex.1984).
The Civil Service Act
        The City is a municipality governed by the Firefighter and Police Civil Service Act, chapter
143 of the Local Government Code. Tex. Loc. Gov't Code Ann. §§ 143.001-.002 (Vernon 1999).
All promotions and reclassifications must, therefore, comply with the Act's provisions. The Civil
Service Act provides that the City's governing body shall, by ordinance, establish firefighter
classifications, as well as the number of positions in each class. Tex. Loc. Gov't Code Ann. §
143.021(a) (Vernon 1999).
       The Civil Service Act, in addition to granting the San Antonio City Council the power to
regulate the classifications and numbers of firefighters in each class, prescribes the procedure for
promoting firefighters from one class to another. Generally Tex. Loc. Gov't Code §§ 143.028-.037
(Vernon 1999). This procedure uses scores from a competitive written examination, as well as
seniority points, to create an eligibility list for any possible promotions. Id. §§ 143.032(c),
143.033(b). An eligibility list is valid for one year from the date the written examination is
administered. Id. § 143.036(h). If a vacancy occurs, and such an eligibility list exists, the names of
the persons having the top three grades on the list are certified to the department for
consideration. Id. § 143.036(b).
      The Civil Service Act allows for collective bargaining between the City and a Union. Tex.
Local Gov't Code Ann. § 174.006(a) (Vernon 1999); City of San Antonio v. Scott, 16 S.W.3d 372,
376 (Tex.App.--San Antonio 1999, pet. denied). A collective bargaining agreement may vary any
provision in the Act. Tex. Local Gov't Code Ann. § 174.006(a) (Vernon 1999); Scott, 16 S.W.3d at
376. Any variance, however, must be specifically provided for in the collective bargaining
agreement. Tex. Local Gov't Code Ann. § 174.006(a) (Vernon 1999); Scott, 16 S.W.3d at 376.
Collecting Bargaining Agreement
       The City argues that the collective bargaining agreement between the City and the
International Association of Firefighters Local 624 (the Union) supersedes
Page 654
the Civil Service Act. Tex. Loc. Gov't Code Ann. § 143.001 et seq. (Vernon 1999). [2] Specifically,
the City claims that the management rights clause contained in the collective bargaining
agreement includes "an extremely broad reservation of power" and reserves the power to
reclassify firefighter positions to the City in the manner in which it was done here. The clause
reads, in part:
       Management rights
Section 1. The Union recognizes the management of the City of San Antonio and the direction of
the Fire Department are vested exclusively in the City, subject to the terms of this Agreement, and
nothing in this Agreement is intended to circumscribe or modify the existing rights of the City.
These rights include:
      B. Hire, promote, demote, transfer, assign, and retain employees in positions within the City,
subject to Civil Service regulations and/or terms of this Agreement ...
      D. Maintain the efficiency of governmental operations ...
      H. Determine the methods, processes, means, and personnel by which operations are to be
carried out.
      According to the City, by giving effect to all the provisions in the collective bargaining
agreement, it is readily apparent that the City reserved to itself the power to reclassify the captain
positions without creating any vacancies. And, because the method of reclassifications at issue
here is not mentioned in the Civil Service Act it is not subject to any statutory provisions.
      This court faced an issue similar to that presented in this case in City of San Antonio v.
Scott, 16 S.W.3d 372 (Tex.App.--San Antonio 1999, pet. denied). In that case, Scott was ranked
twenty-first on the captains' eligibility list. Id. at 373. Before that list expired in February, 1995,
twenty vacancies occurred in the captain positions, leaving Scott first on the eligibility list. Id.
      In July, 1994, an assistant fire chief retired. Id. The vacancy created by the chief's retirement
could be filled only by a deputy chief or a captain. Id. The vacancy was filled in May, 1995, after
Scott's eligibility list expired. Id.
      Scott sued the City, alleging that it violated the Civil Service Act, which requires that
vacancies in the assistant fire chief position be filled within ninety days of their creation. Id. Scott
claimed that if the ninety-day requirement had been met, the appointment to the assistant fire chief
vacancy would have been made on October 27, 1994, and a vacancy in a captain's position would
have been created that he would have received. Id.
       Scott moved for summary judgment, claiming that the Civil Service Act controls over the
terms of the collective bargaining agreement. Id. The trial court granted his motion. Id. However,
this court reversed and remanded the case, finding that Scott had failed to prove that the San
Antonio City Council approved the statutory appointment procedure that included the ninety-day
requirement by ordinance. Id. Scott prevailed on remand, and the City appealed. Id. at 374.
       The City, on appeal, noted that the appointment procedure contained in the collective
bargaining agreement was different from the Civil Service Act's appointment procedure and in no
way mentioned the ninety-day requirement. Id. at 375. The City argued that, because the
appointment procedure contained in the agreement was inconsistent with the statutory provisions,
the City's approval of the agreement was not an approval of the statutory procedure; therefore the
ninety-day requirement was not applicable. Id.
       Scott, however, argued that because the ninety-day requirement was not inconsistent with
any provision in the collective
Page 655
bargain agreement, it was applicable. Id. This court agreed. Id. at 376. We held that "[t]he
collective bargaining agreement as to when to appoint [was] silent; therefore the Civil Service Act's
ninety day requirement prevails because the collective bargaining agreement did not specifically
provide otherwise." Id. (citing Tex. Local Gov't Code Ann. § 174.006(a) (Vernon 1999)).
Essentially, then, the collective bargaining agreement controls to the extent that it specifically
conflicts with the Civil Service Act.
       The City's argument that the collective bargaining agreement supersedes the Civil Service
Act in this case is flawed. First, the collective bargaining agreement here does not conflict with the
Civil Service Act. To conflict with the Act, the agreement here would have had to expressly provide
for reclassification. Without the simultaneous creation of a vacancy, it does not. And, the City's
argument that the broad reservation of power supersedes the Civil Service Act is inconsistent with
the Act's specificity requirement. The broad reservation of power in the management clause
would, under the City's argument, render the Civil Service Act virtually meaningless.
       The City also claims that because a reclassification is not contemplated by the Civil Service
Act, any reclassification would not be subject to statutory protection. This assertion, however, is
unreasonable in light of the Civil Service Act's stated purpose: "to secure efficient fire ...
departments composed of capable personnel who are free from political influence and who have
permanent employment tenure as public servants." Tex. Loc. Gov't Code Ann. § 143.001(a)
(Vernon 1999). If a city were permitted to reclassify positions without acting inside the boundaries
set by the Civil Service Act, then every personnel decision could be made under the guise of a
reclassification, allowing the city to circumvent the Act's hiring and promotion procedures. We,
accordingly, overrule the City's issue.
Reclassification: Does it Create a Vacancy?
       Alternatively, the City argues that if the collective bargaining agreement does not supersede
the Civil Service Act in this situation, the City did not violate the Act because a "reclassification"
does not necessarily result in the "creation" or "abolishment" of a position. The City points out that
the Legislature addressed only two types of personnel actions that can be taken in the civil service
context: creation and abolishment of a position. The City argues that even though the Civil Service
Act mentions only two personnel acts, a reclassification may still be effected without creating a
vacancy. And, it claims that interpreting position reclassifications in this case so as to create new
positions under the Civil Service Act would produce absurd results by creating "twelve superfluous
ranked positions."
The Civil Service Act:
        The City's contention that the Civil Service Act contemplates only creation and abolishment
of positions is incorrect. Section 143.021 contains language that is broad enough to encompass a
reclassification. Whether section 143.021(c)'s language contemplates a "reclassification" is a
question of statutory interpretation. A fundamental rule of statutory construction is that a court
should first ascertain the Legislature's intent in enacting the statute as expressed in its plain
language. Schorp v. Baptist Mem'l Health Sys., 5 S.W.3d 727, 734 (Tex.App.--San Antonio 1999,
no pet. h)(citing St. Luke's Episcopal Hosp. v. Agbor, 952 S.W.2d 503, 505 (Tex.1997)). However,
where an application of a statute's plain language leads to absurd results, courts do not enforce
the statute under a literal interpretation. See City of Amarillo v. Martin, 971 S.W.2d 426, 428 n. 1
(Tex.1998).
       Section 143.021 addresses a reclassification in mandating that new positions must be filled
from an eligibility list. Specifically, section 143.021(c) states:
Page 656
[A]n existing position or classification or a position or classification created in the future by name or
by increase in salary may be filled only from an eligibility list that results from an examination held
in accordance with this chapter.
       Tex. Gov't Code Ann. § 143.021(c) (Vernon 1999) (emphasis added). The Civil Service Act's
plain language expressly states that a new position or classification may be created "by name or
by increase in salary." [3] This court has held that a vacancy occurs when a newly created position
is established by ordinance. City of San Antonio v. Edwards, 974 S.W.2d 148, 151 (Tex.App.--San
Antonio 1998, no pet.); International Ass'n of Firefighters Local 624 v. City of San Antonio, 822
S.W.2d 122, 131 (Tex.App.--San Antonio 1991, writ denied). Therefore, when a new position is
created by name, a vacancy arises. When the City, here, reclassified the fire captain positions as
district chief positions, it created new district chief positions by name and thus vacancies in those
positions. The captains were then promoted into the newly created positions, leaving vacancies in
their former rank.
Case Law:
       To support its argument that no vacancies arose as a result of the reclassifications, the City
cites a number of cases involving promotions and draws distinctions between those cases and the
one before us. [4] It concedes, however, that most of those cases offer little help in making that
determination. Those cases each assume a vacancy. There are, however, two other cases that
are helpful to the issue of whether the "reclassification" here resulted in a vacancy. The first is
Nichols v. Houston Police Officers Pension Bd., 335 S.W.2d 261 (Tex.Civ.App.--Waco 1960, writ
ref'd n.r.e.). In Nichols, the central issue was computation of retirement benefits. Id. at 262. A
collateral issue, however, was whether an ordinance that purported to "create and recreate ...
positions, classes, classifications and base pay" actually did create new classifications, requiring
the City to fill those new classifications by competitive examination. Id.
       In Nichols, the City, by ordinance, "creat[ed] and recreat[ed]" six positions in the Grade VI,
Inspector of Police Classification. Id. The ordinance paid first-year Inspectors $625 per month,
second and third-years $650 per month, fourth and fifth-years $700 per month, and those with
over five years of service $750 per month. Id. Daut became an inspector in 1953. After the
passage of the ordinance in 1957, Daut drew a $700 monthly salary as an inspector with four
years experience. Id. at 263. Then in 1958, Daut retired as an inspector with over five years'
experience, earning $750 per month in salary. Id.
       The City argued that Daut's retirement benefits should be computed on the base pay amount
of $625. Id. Its argument was premised on an older version of the Civil Service Act which provided
that retirement benefits shall be 30% of the "base salary provided for the classified position in the
police department." Id. Another section specified that all persons in each classification be paid the
same salary plus any longevity pay they may be entitled to. Id. The statute also provided, like
today, that "no classification now in existence, or that may be hereafter created shall ever be filled
except by examination and that the City shall set up classifications, specifying the salaries for each
classification." Id. The City argued that if the ordinance creates a
Page 657
new classification by increase in salary without filling such new classified positions by competitive
examination, then the ordinance is void because it conflicts with the Civil Service Act. Id.
       The court held that the ordinance did not contravene the Civil Service Act. Id. The court
declared that "[t]he grade, position and classification remain the same ... The 'classification' here
involved is clear: It is 'Inspector of Police, Grade VII.' That classification is retained notwithstanding
expiration of time or the fact length of tenure is compensated." Id. at 263-64. In Nichols, the fact
that Daut's actual classification, Inspector, did not change was the controlling factor in determining
whether a new class, and thus a vacancy, arose, which was required to be filled through
competitive examination procedures. Because the class rank did not change, the court reasoned,
there was no new position to be filled. Id. at 263. In this case, however, the firefighters'
classifications did change from captain to district fire chief. Under the reasoning in Nichols, the
classification here did create a vacancy in the district chief rank that must be filled according to the
statute's direction.
        City of Houston v. Reyes, 527 S.W.2d 489 (Tex.Civ.App.--Houston [1st Dist.] 1975, writ ref'd
n.r.e.) is another case that is instructive on the issue of whether the reclassification here created a
vacancy. In Reyes, the City of Houston enacted an ordinance that changed the title of Emergency
Medical Technicians (EMT) to Chauffeurs. Id. at 492. The ordinance specifically said that the
change would not affect the status, classification, salary or tenure of the persons holding the EMT
positions. Id. at 493. The issue in Reyes was whether the ordinance created new positions that
were required to be filled from the eligibility lists. The Houston court considered Vernon's Civil
Statutes Annotated, Article 1269m, section G (today Tex. Gov't Code Ann. § 143.021), which
states: "[i]n the event any new classification is established either by name or by increase of salary,
the same shall be filled by competitive examination in accordance with this law." Id. at 494. The
court held that no new classification was established, finding that
       "[t]he effect of the ordinance was to merge the two formerly separate classifications. The
transfer of a position from one classification to another within the same grade level constitutes
neither a promotion, demotion, nor a suspension of that person occupying such position. No new
classification was created, but positions in one classification were transferred to another
classification within the same grade level. Such a transfer did not create a new position."
        Id. at 495-96 (emphasis added).
       The court in Reyes appears to have relied on the same principles that the court in Nichols
relied upon. In both cases, the courts hinged their decisions on the fact that there was no change
in the positions' grades or classifications. Here, because there was an upward change in
classification from captain to district fire chief, there would logically be a promotion, leaving a
vacancy in the captain positions. See City of Fort Worth v. Nyborg, 999 S.W.2d 451, 454
(Tex.App.--Fort Worth 1999, pet. denied). Accordingly, we find the reclassification, here, created
vacancies in the district chief positions.
Whether a Vacancy is Absurd Under These Facts:
        The City argues that holding that the reclassification created a vacancy would produce
absurd results. As support for its position, the City attempts to distinguish this case from City of
Fort Worth v. Nyborg, 999 S.W.2d 451 (Tex.App.--Fort Worth 1999, pet. denied). The City asserts
that if Nyborg is read in such a way as to find that a reclassification results in the creation of new
positions, we should not follow the result reached in that case because that result is absurd.
Page 658
       In Nyborg, the Fort Worth City Council adopted an ordinance that created one additional
captain's position and deleted one lieutenant's position. Id. at 453. Kneblick was promoted to fill
the new position. Id. Nyborg pointed out to the City that Kneblick's promotion created a vacancy in
her lieutenant's position and that he was entitled to a promotion to lieutenant because he ranked
first on the lieutenant's eligibility list. Id. The City and, later, the Fort Worth Firefighters and Police
Officers Civil Service Commission rejected his claim. Id. at 453-54. Nyborg then filed suit in district
court, asking that the Commission's decision be set aside. Id. at 454. Both parties moved for
summary judgment on the sole issue of whether the ordinance created a vacancy in the
lieutenant's position during the period Nyborg was eligible for promotion to lieutenant. Id. The trial
court granted Nyborg's motion, finding that a vacancy arose in the lieutenant classification upon
Kneblick's promotion to captain. Id.
       On appeal, the Fort Worth court first defined the term "vacancy." "A vacancy occurs when an
existing position is vacated or a newly created position is established by ordinance." Id. at 455
(citing City of San Antonio v. Edwards, 974 S.W.2d 148, 151 (Tex.App.--San Antonio 1998, no
pet.) and International Ass'n of Firefighters Local 624 v. City of San Antonio, 822 S.W.2d 122, 131
(Tex.App.--San Antonio 1991, writ denied)). The court, accordingly, found that the ordinance
created a new captain's position, and therefore created a vacancy in the captain's position. Id.
When Kneblick was promoted into the captain's position, she vacated her position as lieutenant,
leaving a vacancy in the lieutenant's position. Id.
       The court then went on to discuss whether the City was required to fill the vacant lieutenant's
position. The City argued that it was not because the ordinance abolished the lieutenant's position
before Nyborg was entitled to be promoted. The court, however, disagreed. In doing so, the court
relied on the plain language of the Civil Service Act:
       If a municipality's governing body adopts an ordinance that vacates or abolishes a fire or
police department position, the fire fighter or police officer who holds that position shall be
demoted to the position immediately below the vacated or abolished position. If one or more
positions of equal rank are vacated or abolished, the fire fighters or police officers who have the
least seniority in a position shall be demoted to the position immediately below the vacated or
abolished position. If a fire fighter or police officer is demoted under this subsection without
charges being filed against the person for violation of civil service rules, the fire fighter or police
officer shall be placed on a position reinstatement list in order of seniority. If the vacated or
abolished position is filled or recreated within one year after the date it was vacated or abolished,
the position must be filled from the reinstatement list. Appointments from the reinstatement list
shall be made in order of seniority. A person who is not on the list may not be appointed to the
position during the one-year period until the reinstatement list is exhausted.
        Id. at 456 (citing Tex. Loc. Gov't.Code Ann. § 143.085(a)).
       The City argued that section 143.085 was inapplicable to the case because the lieutenant's
position was abolished before Nyborg was entitled to be promoted. Id. at 455. The court
concluded, however, that when an ordinance abolishes a position, the officer with the least
seniority in that position must be demoted to the position immediately below the abolished position
and placed on a reinstatement list. Id. at 456. The ordinance at issue stated, "[U]pon the
promotion of a Lieutenant into the newly created Captain's position, said Lieutenant's position shall
be considered to be contemporaneously abolished." Id. at 455, 456.
Page 659
The court found that, based on this language, the lieutenant's position was not abolished until
Kneblick was promoted to captain, at which point Nyborg was entitled to be promoted to
lieutenant. Id. at 456. The court, therefore, held that the proper procedure in the case would have
been to promote Nyborg to lieutenant, then demote him back to sergeant, and place him on the
lieutenant's reinstatement list. Id.
       The City, here, argues that applying the holding in Nyborg to the facts in this case would
"[yield] a construction of the Civil Service Act and a result that is both foolish and absurd." The City
emphasizes that no one here suffered any "negative ramifications" and that the
"promotion/demotion construct is simply a useless drill and a waste of taxpayer dollars." This
argument, however, is based on an improper understanding of the Civil Service Act.
       The City here argues that to comply with Nyborg, it must have done the following:
       "(a) promote Flores, Ibarra, Elizondo and George to District Chief; (b) promote the next four
individuals on the Captain promotion eligibility list; (c) promote the next four individuals on the
Lieutenant promotion eligibility list; (d) promote the next four individuals on the FAO eligibility list;
then (e) demote the four individuals who were just promoted to Captain and place them back on
the promotion eligibility list; (f) demote the four individuals who were just promoted to Lieutenant
and place them back on the promotion eligibility list; and (g) demote the four individuals who were
just promoted to FAO and place them back on the promotion eligibility list."
        The problem with this construction is that the statute does not require that the demoted
firefighters be placed back on the promotion eligibility list. Rather, the statute dictates they be
placed on a position reinstatement list. If a vacated or abolished position is filled or re-created
within one year, the position must be filled from the reinstatement list, in order of seniority. Tex.
Loc. Gov't Code Ann. § 143.085(a) (Vernon 1999). Only after the reinstatement list is exhausted,
may other firefighters be considered for the vacancy. Id. Clearly, the firefighters here will receive a
benefit by following the construct of the Civil Service Act as dictated in Nyborg, by being eligible
first for any vacancy in a position they previously lost. Further, this construction is in line with the
Civil Service Act's purpose. Tex. Gov't Code Ann. § 143.001(a) (Vernon 1999); see also Klinger v.
City of San Angelo, 902 S.W.2d 669, 676 (Tex.App.--Austin 1995, writ denied) (overall intent of the
Civil Service Act is to secure efficient, capable, non-politicized fire and police department
personnel by means of civil service system that establishes promotions based upon demonstrated
merit and fitness). We, therefore, find the result reached in Nyborg, and as applied here, is not
absurd. By following Nyborg, the firefighters' rights under the Civil Service Act would be protected
and the City would not be required to create twelve new classified positions. Unfortunately,
however, by failing to follow the Nyborg procedure, in order to protect firefighters' rights under the
Civil Service Act, the City is required to create and fill the twelve new positions.
Was the City Required to Fill the Vacancy?
        The Civil Service Act requires that any vacancy be filled through certain promotional
procedures. Section 143.036 requires that when a vacancy occurs, the vacancy must be filled
according to the procedures outlined in the Civil Service Act. The Act mandates that the person
next in line on the promotional list has the primary right to fill the vacancy. See Tex. Gov't Code
Ann. § 143.036(e) (Vernon 1999); International Ass'n of Firefighters Local 624 v. City of San
Antonio, 822 S.W.2d 122, 131 (Tex.App.--San Antonio 1991, writ denied). Accordingly, because
we find that the reclassification resulted in
Page 660.
a vacancy in the captain positions, then those positions must be filled according to the procedure
outlined in the Civil Service Act.
Did the City Adopt the Reclassification by Ordinance
        The City additionally claims it complied with the Civil Service Act by establishing the new
classifications in the budget ordinance. As summary judgment proof, the City offers a copy of a
Comprehensive Fire FB-1 Report. The FB-1 is a document that is prepared before the budget
ordinance's adoption. Other programs and their costs are added to the costs included in the FB-1
to form the following year's budget.
        There are two problems with this document. First, the FB-1 is not the actual budget, but is
simply a form used to calculate and define the following year's budget. Second, and most
problematic, is that the reclassification took place on June 24, 1997. The budget, which the City
asserts provided for the reclassifications, did not become effective until October 1, 1997, and
accordingly could not have effectuated the reclassification.
Should the Reclassification Be Declared Void Ab Initio?
        The City finally requests that if the court finds that the reclassifications were in violation of
the Civil Service Act, then the reclassifications should be declared void ab initio. The City suggests
that doing so is the "truly equitable solution."
        The Civil Service Act protects firefighters from losing their positions when the governing body
wrongfully created those positions. The Civil Service Act provides that "[t]he failure of the
governing body to establish a position by ordinance does not result in the loss of civil service
benefits by a person entitled to civil service protection or appointed to the position in substantial
compliance with this chapter." Tex. Gov't Code Ann. § 143.021(b) (Vernon 1999).
        The City failed to establish the new district fire chief positions by ordinance. That failure,
however, is irrelevant. The captains promoted to the district fire chief positions were next in line on
the promotion eligibility list for those positions. They were, therefore, promoted in "substantial
compliance" with the Civil Service Act provisions that outline promotional procedures. Thus, we
refuse to declare the creation of the positions and the resulting promotions, as benefits to the
former captains, void ab initio.
Conclusion
        We find the City's reclassification of captain positions to district fire chief positions created
vacancies in the chief positions. And, because the collective bargaining agreement between the
City and the Union is not specific enough to allow for a reclassification without following the Civil
Service Act's requirements, the City must fill those vacancies in accordance with the Act. We,
accordingly, overrule the City's issues and affirm the trial court's judgment.
---------
Notes:
[1] In its brief, the City states it is unsure of the standard of review to apply in this case.

Specifically, in its first issue, it requests the court to assess the nature of the firefighters' motion for
summary judgment to determine whether it is a traditional or a no-evidence motion for summary
judgment. The firefighters respond that their motion was a traditional summary judgment motion.
We will review the case under the traditional summary judgment standard. See TEX. R. CIV. P.
166a(c).
[2] To provide a more logical explanation of our disposition in this case, we address the City's

issues in an order different than that presented in its brief.
[3] The Captains who were reclassified as District Chiefs, received both rank/position name

changes, and received an increase in salary.
[4] The cases the City attempts to distinguish from this case are Lee v. Downey, 842 S.W.2d 646

(Tex.1992), Duckett v. City of Houston, 495 S.W.2d 883 (Tex.1973), International Ass'n of
Firefighters Local 624 v. City of San Antonio, 822 S.W.2d 122 (Tex.App.--San Antonio 1992, writ
denied), City of San Antonio v. Edwards, 974 S.W.2d 148 (Tex.App.--San Antonio 1998, no writ),
and McGregor v. City of Houston, 528 S.W.2d 620 (Tex.Civ.App.--Houston [14th Dist.] 1975, writ
ref'd n.r.e.).
---------
807 S.W.2d 714 (Tex. 1990), C-8203, Eagle Properties, Ltd. v. Scharbauer
Page 714
807 S.W.2d 714 (Tex. 1990)
EAGLE PROPERTIES, LTD. et al., Petitioners,
v.
Clarence SCHARBAUER, Jr. et al., Respondents.
No. C-8203.
Supreme Court of Texas.
December 19, 1990
Page 715
      Opinion Delivered March 27, 1991.
Page 716
     James E. Ingram, San Antonio, and Clinard J. Hanby and W. James Kronzer, Houston, for
petitioners.
     James W. Paulsen, Houston, John H. McElhaney, Morris Harrell, Donald Colleluori and Bruce
A. Budner, Dallas, John E. O'Neill and David T. Hedges, Houston, W.B. Browder, Jr., Midland,
David C. Holmes, Houston, and Michael V. Powell, Dallas, for respondents.
     OPINION
     COOK, Justice.
     This court's opinion of December 19, 1990, is withdrawn and the following is
Page 717
substituted in its place. Petitioners' and Respondents' motions for rehearing are overruled.
     This is a single cause which originated from two related cases. The first case presents us with
the question of whether the doctrines of res judicata and collateral estoppel preclude a state action
following the settlement of a federal court case that involved different parties but the same subject
matter. The second case presents similar questions of res judicata and collateral estoppel but also
addresses whether the statute of limitations for causes of action in fraud is two years or four years.
We hold that the statute of limitations does not bar the claims for fraud in the second case, that res
judicata does not bar the claims in either case, and that collateral estoppel bars only some of the
claims presented in both cases. Therefore, we reverse the judgment of the court of appeals in part
and affirm in part, 758 S.W.2d 911, and remand this cause to the court of appeals for further
consideration of whether Branum's claims other than fraud against TCB, First Republic, and Peat
Marwick are barred by the relevant statutes of limitations.
     In 1982, First National Bank of Midland (First Midland) was experiencing financial problems
due to a large portfolio of energy-related loans. To improve the financial position of First Midland,
Eagle Properties, Ltd., was formed to purchase First Midland's twenty-four story office building,
ten-story parking garage, and drive-in banking facilities for $75 million. M.W. Branum and Thomas
C. Brown were the general partners of Eagle. Charles Fraser, the president and chairman of the
board of First Midland, hand-picked the Eagle partners and solicited their participation. The
consideration consisted of $25 million in unsecured promissory notes from Eagle and two
unfunded letters of credit, each for $25 million, provided by Texas Commerce Bank (TCB) and
InterFirst Bank Dallas. Eagle agreed to lease the premises back to First Midland for three years
and to allow First Midland to manage the properties.
      The financial condition of First Midland continued to deteriorate, and in June 1983 Eagle
agreed to the funding of the letters of credit six months before they were scheduled to be funded.
On October 14, 1983, First Midland was declared insolvent, and the Federal Deposit Insurance
Corporation (FDIC) was appointed receiver. The FDIC accelerated payment on the notes and filed
suit in federal court in February 1984 to collect on them. Eagle counterclaimed for declaratory
judgment on grounds of common law fraud, violations of the Securities Exchange Act, failure of
consideration, violations of the Bank Holding Company Act, and the operation of two subordination
agreements. In a non-jury trial, the federal court held for the FDIC. In particular, the federal court
held that First Midland did not fraudulently induce Eagle to enter into the transaction, execute the
promissory notes, or agree to the early funding of the letters of credit. FDIC v. Eagle Properties,
Ltd., 664 F.Supp. 1027 (W.D.Tex.1985).
      Eagle filed an appeal to the United States Court of Appeals for the Fifth Circuit. While the
case was on appeal, the parties entered into a settlement agreement which explicitly preserved
Eagle's right to file claims against the officers and directors of First Midland. The settlement did not
call for the judgment of the trial court to be vacated. At one point during the negotiations, however,
Eagle offered the FDIC an additional one million dollars in settlement if it would move the Fifth
Circuit to reverse or vacate and remand the judgment of the district court for a take-nothing
judgment, and if these events in fact occurred. The FDIC declined this offer.
      Subsequent to the settlement agreement, two suits were filed in state court. In the first suit,
Eagle Properties, Ltd. v. Mays, Eagle and the individual partners sued certain officers and
directors of First Midland (the Directors), alleging common law and statutory fraud, violations of the
Deceptive Trade Practices Act, and negligence/breach of fiduciary duties. The second suit,
Branum v. Scharbauer, was originally filed by M.W. Branum alone, but
Page 718
Eagle and the remaining partners, except Thomas C. Brown, subsequently intervened as
additional plaintiffs. This suit was brought against the Directors, TCB, InterFirst Bank Dallas (now
First Republic Dallas), and Main Hurdman (now Peat Marwick). The suit alleged common law and
statutory fraud and violations of the Deceptive Trade Practices Act against all defendants, breach
of contract/promissory estoppel against TCB and InterFirst, and negligence by TCB, InterFirst
(hereinafter "First Republic"), and Main Hurdman (hereinafter "Peat Marwick").
      Each of the defendants moved for summary judgment in the trial court, with the exception of
two of the Directors, Joel T. Mays and John P. Butler. The trial court consolidated the two causes,
and severed plaintiffs' claims against Joel T. Mays and John P. Butler, the claims between
Thomas C. Brown and the other plaintiffs, and the counterclaims filed by some of the Directors,
TCB, and First Republic. These claims were made the subject of a separate action, Eagle
Properties, Ltd. v. Fraser. The trial court then entered final judgment with respect to the remaining
claims in favor of the Directors, TCB, First Republic, and Peat Marwick. The summary judgment in
Mays was based upon res judicata, collateral estoppel, and plaintiffs' lack of standing to bring the
negligent mismanagement claims. The summary judgment in Branum was based on res judicata,
collateral estoppel, and the relevant statute of limitations.
     Eagle Properties and its two general partners, Branum and Brown, appealed from the
judgment of the trial court. The court of appeals affirmed the judgment of the trial court.
     Petitioners challenge the judgment of the court of appeals and the trial court's granting of both
summary judgments. We agree in part with petitioners' contentions, and we reverse the judgment
of the court of appeals in part, affirm in part, and remand to the court of appeals for further
consideration of whether Branum's claims other than fraud against TCB, First Republic, and Peat
Marwick are barred by the relevant statutes of limitations.
Res Judicata
     We begin with the issue of res judicata with respect to both Eagle's suit and Branum's suit.
Since the first suit, FDIC v. Eagle, was decided in federal court, federal law controls the
determination of whether res judicata will bar a later state court proceeding. Aerojet-General Corp.
v. Askew, 511 F.2d 710, 715 (5th Cir.), cert. denied, 423 U.S. 908, 96 S.Ct. 210, 46 L.Ed.2d 137
(1975); Jeanes v. Henderson, 688 S.W.2d 100, 103 (Tex.1985). Under federal law, the doctrine of
res judicata will apply if: (1) the parties are identical in both suits; [1] (2) the prior judgment is
rendered by a court of competent jurisdiction; (3) there is a final judgment on the merits; and (4)
the same cause of action is involved in both cases. Nilsen v. City of Moss Point, 701 F.2d 556,
559 (5th Cir.1983). As a general rule, when a cause of action is brought in federal court and there
is no jurisdictional obstacle to advancing claims arising from both federal and state law, and only
federal claims are asserted, the state claims cannot be brought in a subsequent cause of action in
state court. The subsequent action based on the state claims will not be precluded, however, if the
federal court did not possess jurisdiction over the omitted state claims or, having jurisdiction,
would clearly have declined to exercise that jurisdiction as a matter of discretion. Jeanes, 688
S.W.2d at 104. Restatement (Second) of Judgments § 25, comment (e) (1982).
     There is no independent basis of federal jurisdiction over the state court causes of action
brought by Eagle and Branum. These claims do not give rise to federal question jurisdiction, and
diversity of citizenship did not exist between Eagle's partners
Page 719
and the Directors, TCB, InterFirst and Main Hurdman as required by 28 U.S.C. § 1332(a)(1). [2]
Therefore, the federal court in FDIC v. Eagle could have decided the state law claims brought by
Eagle and Branum in Mays and Branum only if those claims fell within the court's ancillary or
pendent-party jurisdiction. [3]
     Last year, in Finley v. United States, 490 U.S. 545, 109 S.Ct. 2003, 104 L.Ed.2d 593 (1989),
the U.S. Supreme Court enunciated the test for determining the existence of pendent-party
jurisdiction, that is, "jurisdiction over parties not named in any claim that is independently
cognizable by the federal court." Finley, 109 S.Ct. at 2006. Where such jurisdiction is sought, it is
not sufficient that the federal and nonfederal claims "derive from a common nucleus of operative
fact" and are such that a plaintiff "would ordinarily be expected to try them in one judicial
proceeding," as required for pendent claim jurisdiction under United Mine Workers v. Gibbs, 383
U.S. 715, 725, 86 S.Ct. 1130, 1138, 16 L.Ed.2d 218 (1966). Finley, 109 S.Ct. at 2006-07. Rather,
there must also be "an examination of the posture in which the nonfederal claim is asserted and of
the specific statute that confers jurisdiction over the federal claim." Finley, 109 S.Ct. at 2007,
quoting Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 373, 98 S.Ct. 2396, 2402, 57
L.Ed.2d 274 (1978).
     The U.S. Supreme Court held in Finley that the Federal Tort Claims Act does not permit the
exercise of pendent-party jurisdiction over additional parties to whom no independent basis for
federal jurisdiction exists. The Court found that the most significant element of "posture" was the
fact that the added claims involved added parties over whom there was no independent basis for
jurisdiction. The Court then read the jurisdiction statute narrowly and found that it did not permit
the exercise of jurisdiction over actions against parties other than the United States. The Court
emphasized the rule expressed in precedent that "a grant of jurisdiction over claims involving
particular parties does not itself confer jurisdiction over additional claims by or against different
parties." Finley, 109 S.Ct. at 2010. Therefore, pendent-party jurisdiction may not be exercised
unless the text of a jurisdiction statute explicitly grants, or manifests an intent to grant, jurisdiction
over additional parties.
     Since Finley, the trend among federal courts has been to read jurisdiction-granting statutes
narrowly, which has frequently resulted in finding a lack of pendent-party
Page 720
jurisdiction. [4] It has even been suggested that pendent-party jurisdiction is no longer a viable
concept in any context. See Staffer v. Bouchard Transp. Co., 878 F.2d 638, 643 n. 5 (2d
Cir.1989).
     Since there is no independent basis of federal jurisdiction over the state court causes of action
brought by Eagle and Branum, we must examine the governing jurisdiction statute, 12 U.S.C. §
1819, and determine whether this statute affirmatively grants federal jurisdiction over Eagle and
Branum's state law claims. In 1985, this statute provided in relevant part:
All suits of a civil nature at common law or in equity to which the [FDIC] shall be a party shall be
deemed to arise under the laws of the United States, and the United States district courts shall
have original jurisdiction thereof, without regard to the amount in controversy.
     12 U.S.C. § 1819 (Fourth) (1988).
     The U.S. district court in Federal Deposit Ins. Corp. v. Israel, 739 F.Supp. 1411, 1413
(C.D.Cal.1990), interpreted nearly identical language in the current version of 12 U.S.C. § 1819,
which reads in part,
Except as provided in subparagraph (D), all suits of a civil nature at common law or in equity to
which the [FDIC], in any capacity, is a party shall be deemed to arise under the laws of the United
States.
     12 U.S.C.A. § 1819(b)(2) (West 1989). In that case, the FDIC was the plaintiff and certain
defendants filed cross-claims against new parties which were exclusively state-law claims for
indemnification. Applying Finley, the court squarely addressed the question of whether 12 U.S.C. §
1819 affirmatively grants jurisdiction over cross-claims of this nature, permitting the federal court to
adjudicate those claims on the merits. After carefully examining the language of the statute and
federal decisions interpreting other jurisdiction statutes, the court held that the terms "civil actions"
or "civil suits" refer to specific claims, not just "the general theme of the suit." Israel, 739 F.Supp.
at 1414. Therefore, 12 U.S.C. § 1819 explicitly grants jurisdiction only over claims to which the
FDIC is a party. The court concluded that it had no subject matter jurisdiction over the defendants'
third-party claims. The court found its decision consistent with the canon that a Congressional
grant of jurisdiction should be read narrowly. Id. at 1413-14. [5]
       In a similar case involving the FSLIC, the Ninth Circuit Court found that jurisdiction existed
over a third-party complaint. In California Union Ins. v. American Diversified Sav., 914 F.2d 1271
(9th Cir.1990), the FSLIC brought claims against directors of a collapsed thrift institution. One of
the directors filed a third-party complaint against an insurer. The court found that 12 U.S.C. §
1730(k)(1) granted jurisdiction over the third-party claim. This differs from the present case in two
respects. First, 12 U.S.C. § 1730(k)(1) contains broader language than 12 U.S.C. § 1819, referring
to "any civil action, suit, or proceeding to which the [FSLIC] shall be a party" (emphasis added), as
opposed to "all suits ... to which the FDIC shall be a party."
Page 721
Second, the court in California Union based its decision in part on the fact that the FSLIC had a
"clear stake" in the director's claim against the insurer and even joined the director in his motion
for summary judgment. The FDIC's stake in Eagle's and Branum's claims is not as clear.
       We find Federal Deposit Ins. Corp. v. Israel persuasive. Based on our reading of the relevant
jurisdiction statute, 12 U.S.C. § 1819, and Finley v. U.S., we find that the federal court in FDIC v.
Eagle would not have had jurisdiction over the state law claims subsequently brought by Eagle
and Branum. Therefore, res judicata does not preclude Eagle and Branum from bringing their state
law claims in this case.
Collateral Estoppel
       Next, we address the issue of collateral estoppel. The threshold question is what law governs
collateral estoppel. In this case, the same result will be reached whether federal or state law is
applied to the issue of collateral estoppel. Therefore, we do not decide the choice of law question.
       In order to invoke the doctrine of collateral estoppel, a party must establish "(1) the facts
sought to be litigated in the first action were fully and fairly litigated in the prior action; (2) those
facts were essential to the judgment in the first action; and (3) the parties were cast as adversaries
in the first action." Bonniwell v. Beech Aircraft Corp., 663 S.W.2d 816, 818 (Tex.1984). See Allen
v. McCurry, 449 U.S. 90, 94-95, 101 S.Ct. 411, 414-15, 66 L.Ed.2d 308 (1980); Hicks v. Quaker
Oats Co., 662 F.2d 1158, 1166 (5th Cir.1981).
       A. No Requirement of Mutuality
       In Benson v. Wanda Petroleum Co., 468 S.W.2d 361 (Tex.1971), this Court stated,
The rule [of collateral estoppel] is generally stated as binding a party and those in privity with
him.... Due process requires that the rule of collateral estoppel operate only against persons who
have had their day in court either as a party to the prior suit or as a privy, and, where not so, that,
at the least, the presently asserted interest was actually and adequately represented in the prior
trial.
       Id. at 363. This definition does not require mutuality for the invocation of collateral estoppel;
rather, it is only necessary that the party against whom the plea of collateral estoppel is being
asserted be a party or in privity with a party in the prior litigation. Myrick v. Moody Nat'l Bank, 590
S.W.2d 766, 769 (Tex.Civ.App.--Houston [14th Dist.] 1979, writ ref'd n.r.e.); Hardy v. Fleming, 553
S.W.2d 790, 792-93 (Tex.Civ.App.--El Paso 1977, writ ref'd n.r.e.). As this Court stated in Tarter v.
Metropolitan Sav. & Loan Ass'n, "The doctrine applies when the party against whom collateral
estoppel is asserted had a full and fair opportunity to litigate the issue in the prior suit" (emphasis
added). 744 S.W.2d 926, 927 (Tex.1988) (citing Bonniwell ). Although Eagle cites several cases
for the proposition that a party cannot avail himself of the doctrine of collateral estoppel unless he
was a party or in privity with a party in the prior litigation, in each of those cases we held only that
collateral estoppel cannot be asserted against a party who was not a party or in privity with a party
in the prior litigation. See Employers Casualty Co. v. Block, 744 S.W.2d 940 (Tex.1988);
Bonniwell, 663 S.W.2d 816; Wilhite v. Adams, 640 S.W.2d 875 (Tex.1982); Benson, 468 S.W.2d
361. Similarly, the U.S. Supreme Court abandoned the requirement of mutuality in applying
collateral estoppel in Blonder-Tongue v. Univ. of Illinois Foundation, 402 U.S. 313, 91 S.Ct. 1434,
28 L.Ed.2d 788 (1971). Therefore, the Directors, TCB, First Republic and Peat Marwick are not
barred from asserting collateral estoppel by a requirement of mutuality; it is sufficient that Eagle
and Branum were both parties in FDIC v. Eagle.
      B. Issues Essential to the Federal Judgment
      Next, we must address the question of whether the federal court's findings regarding fraud in
the transaction were essential to its judgment. Under state law, collateral estoppel only precludes
the relitigation of identical issues of fact or law
Page 722
which were actually litigated and essential to the prior judgment. Tarter, 744 S.W.2d at 927; Van
Dyke v. Boswell, O'Toole, Davis & Pickering, 697 S.W.2d 381, 384 (Tex.1985). The Restatement
(Second) of Judgments § 27, comment (i) (1982) provides in part, "If a judgment of a court of first
instance is based on determinations of two issues, either of which standing independently would
be sufficient to support the result, the judgment is not conclusive with respect to either issue
standing alone." The rationale for this rule is that a determination in the alternative may not have
been as rigorously considered as it would have been if necessary to the result, and the losing
party may be dissuaded from appealing one determination because of the likelihood that the other
will be upheld. Id.
      In FDIC v. Eagle, the court found that neither First Midland nor its president, Charles Fraser,
fraudulently induced Eagle and its partners to enter into the sale-leaseback transaction or execute
the promissory notes in issue. 664 F.Supp. at 1045. The court also indicated, however, that the
FDIC had a defense to these fraud claims because the FDIC did not have actual knowledge of the
fraud at the time it entered into the purchase and assumption agreement. Id. at 1037. The court
stated, "[I]f the Court had to, the Court would find that the FDIC did not have actual knowledge of
conduct or communications that would give rise to a finding of fraud." Id. at 1045-46. [6]
      The statement of the federal court regarding FDIC's knowledge of any fraud, viewed in the
context of the entire opinion, does not constitute an alternative holding so as to prevent its holding
on the fraud claims from having preclusive effect. While this alternative reasoning may have had
some adverse effect on defendants' desire to appeal the judgment, it is clear that the federal court
"rigorously considered" defendants' claims of fraudulent inducement, carefully reviewing each
contention. Id. at 1037-45. Therefore, applying state law to the circumstances of this case, we hold
that the defendants' claims of fraudulent inducement were "actually tried" in the federal court and
that the court's findings on fraudulent inducement were "essential" to its judgment for the purposes
of preclusion by collateral estoppel.
      The same result would be reached under federal law. For collateral estoppel to bar relitigation
of an issue, that issue must have been "necessarily determined" in the prior litigation. United
States v. Garza, 754 F.2d 1202, 1209 (5th Cir.1985); Hicks, 662 F.2d at 1168. Nevertheless,
except in very unusual cases, the abandonment of estoppel for the reason that a prior judgment
rests on multiple grounds is inconsistent with the general rule in federal courts that a party is only
entitled to one full and fair opportunity to litigate an issue. 1B Moore's Federal Practice p 0.443[5.-
2] (1988). While the Fifth Circuit has adopted the reasoning of the Restatement (Second) of
Judgments § 27 comment (i), it did so only in the context of offensive collateral estoppel. Hicks,
662 F.2d at 1169-70. Because this case only involves the defensive use of collateral estoppel, and
because we have found the findings of the federal court in FDIC v. Eagle to be "essential" to that
judgment and rigorously considered by that court, we hold that under federal law the alternative
"findings" of the federal court do not preclude the application of collateral estoppel in the present
litigation.
      C. Preclusion of Eagle's Claims
      We now turn to the question of whether any of the issues in Eagle's case, Mays, were litigated
in the prior action, thereby estopping Eagle from asserting the claims in this action.
1. Common Law and Statutory Fraud
      Eagle's first cause of action against the Directors is for common law
Page 723
fraud. The elements of actionable fraud are that: (1) a material representation was made; (2) the
representation was false; (3) when the representation was made the speaker knew it was false or
made it recklessly without any knowledge of its truth and as a positive assertion; (4) the speaker
made the representation with the intent that it should be acted upon by the party; (5) the party
acted in reliance upon the representation; and (6) the party thereby suffered injury. Trenholm v.
Ratcliff, 646 S.W.2d 927, 930 (Tex.1983); Stone v. Lawyers Title Ins. Corp., 554 S.W.2d 183, 185
(Tex.1977).
      Eagle bases its actions for common law and statutory fraud [7] on the grounds that the
Directors made false representations or material omissions with the intent of inducing Eagle to
enter into the sales-leaseback transaction and agree to early funding of the letters of credit. First,
Eagle alleges that the Directors misrepresented the bank's financial condition. The court in FDIC
v. Eagle found that a fiduciary relationship did not exist between Charles Fraser and the individual
defendants, that Fraser's disclosures and representations were adequate to inform Eagle and its
partners of the bank's financial position and the reasons for selling the building, that Fraser had
represented to each Eagle partner that an unfavorable financial report had been received from
bank examiners, and that each defendant knew the bank had definite financial problems. FDIC v.
Eagle, 664 F.Supp. at 1043-44.
      Second, Eagle alleges that the Directors misrepresented that Eagle could depreciate the
property and that the completed sale would occur in 1982. The federal court found that these
representations were only expressions of opinion with legal implications. Generally,
misrepresentations as to matters of law are not actionable fraud. Sawyer v. Pierce, 580 S.W.2d
117, 125 (Tex.Civ.App.--Corpus Christi 1979, writ ref'd n.r.e.). Such misrepresentations may be
actionable between fiduciaries or where the representor has superior knowledge or information
and uses it unfairly. The court found, however, that there was no fiduciary relationship between
Fraser and First Midland and the individual defendants and that Fraser did not have a decided
advantage over them. FDIC v. Eagle, 664 F.Supp. at 1042.
     Eagle also alleges that the Directors misrepresented the fair market value of the property and
the existence of an appraisal in the amount of $75 million. The federal court found that the
representation of such an appraisal was false and material, but that none of the defendants who
heard the representation relied upon it, in that they did not request to view the appraisal and did
not condition their participation on reviewing the appraisal. Furthermore, the court found that the
defendants should have taken the precaution of reviewing an appraisal and informing themselves
of the value of the properties. FDIC v. Eagle, 664 F.Supp. at 1042-43.
     Finally, Eagle alleges that the Directors failed to inform them that the SEC and the Office of
the Comptroller of the Currency had concerns about the validity of the original transaction. The
federal court found, however, that Fraser accurately represented that the OCC viewed the sale as
a positive step for the bank. FDIC v. Eagle, 664 F.Supp. at 1044.
     The court in FDIC v. Eagle held, following its extensive review of the facts surrounding the
transaction, that neither Fraser nor First Midland fraudulently induced the defendants to enter into
the sale-leaseback transaction, execute the promissory notes, or agree to early funding of the
letters of credit. FDIC v. Eagle, 664 F.Supp. at 1045, 1048. We hold that the findings of the federal
court collaterally estop Eagle's actions for common law and statutory fraud in Mays.
2. Deceptive Trade Practices Act
     Eagle also brings claims under the Deceptive Trade Practices Act (DTPA). Based on the
same allegations underlying its fraud claims, Eagle alleges that the
Page 724
foregoing representations and omissions violate TEX.BUS. & COM.CODE § 17.46(b) because
they constitute representations or omissions that (1) the real property has characteristics, uses or
benefits which it does not have, § 17.46(b)(5); (2) the real property is of a particular standard,
quality or grade when it is another, § 17.46(b)(7); and (3) an agreement confers or involves rights,
remedies or obligations which it does not have or involve, or which are prohibited by law, §
17.46(b)(12).
     A defendant may be held liable for the deceptive trade practices described in § 17.46(b)(5),
(7) and (12) even if the defendant did not know that the representations made were false or did not
intend to deceive anyone. Pennington v. Singleton, 606 S.W.2d 682, 690 (Tex.1980). Subdivisions
(5) and (7) are designed to ensure the accuracy of descriptions of goods and services, and covers
both general and specific descriptions. Id. Thus, misrepresentations which do not necessarily
constitute common law fraud may be actionable under the DTPA. See Smith v. Baldwin, 611
S.W.2d 611, 616 (Tex.1980) (noting that a primary purpose of the DTPA was "to provide
consumers a cause of action for deceptive trade practices without the burden of proof and
numerous defenses encountered in a common law fraud or breach of warranty suit"). To the
extent that the federal court found that Charles Fraser and First Midland did not misrepresent the
bank's financial condition and the position of the OCC regarding the transaction, DTPA claims may
not be brought on this basis. However, Eagle is not collaterally estopped from bringing causes of
action under § 17.46(b)(5) or (7) based on other allegations, including representations that there
was an appraisal justifying the asking price of $75 million, which the federal court found to be
false.
     Eagle also alleges that the failure to disclose certain information about the real estate was
intended to induce it into a transaction into which it would not have otherwise entered, §
17.46(b)(23). This subdivision includes an element of intent, and the court in FDIC v. Eagle held
that neither Fraser nor the Bank fraudulently induced the defendants to enter into the sale-
leaseback transaction, execute the promissory notes, or agree to early funding of the letters of
credit. FDIC v. Eagle, 664 F.Supp. at 1045, 1048. Eagle is therefore estopped from bringing a
claim under § 17.46(b)(23) of the DTPA. Therefore, summary judgment was proper on the basis of
collateral estoppel on the DTPA claims brought under § 17.46(b)(23).
3. Negligent Mismanagement
     Eagle's final cause of action against the Directors is for negligent conduct in the performance
of their duties, thereby breaching a fiduciary duty owed to Eagle. In FDIC v. Eagle, the federal
court held that a fiduciary relationship did not exist between Charles Fraser and First Midland and
Eagle's partners. FDIC v. Eagle, 664 F.Supp. at 1043-44. Since the Directors did not owe a
fiduciary duty to Eagle's partners, and Eagle suing on its own behalf as a creditor cannot maintain
a personal action against the Directors of the corporation for breaching their duty to the
corporation, see Sutton v. Reagan & Gee, 405 S.W.2d 828, 834-35 (Tex.Civ.App.--San Antonio
1966, writ ref'd n.r.e.), summary judgment was properly granted for the Directors on Eagle's
negligent management cause of action.
     D. Preclusion of Branum's claims
     Finally, we turn to the question of whether Branum is collaterally estopped from bringing his
claims in Branum. Branum is collaterally estopped to the same extent as Eagle from bringing
claims of fraud against the Directors and DTPA claims against the Directors under TEX. BUS. &
COM.CODE § 17.46(b)(5), (7), (12) & (23).
     In addition to the DTPA claims that parallel Eagle's DTPA claims, Branum has brought a claim
under TEX.BUS. & COM.CODE § 17.50(a)(3), alleging that the Directors' actions constitute an
unconscionable course of conduct. An act or practice that "results in a gross disparity between the
value received and consideration paid,
Page 725
in a transaction involving transfer of consideration," is considered unconscionable conduct under
the DTPA. TEX.BUS. & COM.CODE § 17.45(5) (Vernon 1987). In this case, the consideration
received by First Midland in the sale-leaseback transaction was $75 million. The transaction was
entered into on December 31, 1982. The record shows that the bank property was appraised at
$35 million as of November 23, 1982. Collateral estoppel does not bar Branum from bringing a
DTPA claim on this basis.
     As part of his suit, Branum also alleges that TCB and First Republic owed him a fiduciary
duty, and has brought claims of fraud, negligence, and breach of contract/promissory estoppel
against TCB and First Republic with respect to their participation in the sale of the First Midland
property, a rehabilitation funding program following the sale, and the funding of the $50 million
letters of credit. These claims include allegations that Branum would not have agreed to the early
funding of the $50 million letters of credit if he had known that TCB and First Republic were not
going to fund First Midland with $200 million under the rehabilitation program. Branum has also
presented claims against Peat Marwick for fraud, negligence, gross negligence, and accounting
malpractice with respect to the sale-leaseback transaction. Branum's suit also includes DTPA
claims against these parties.
     In FDIC v. Eagle, the federal court only held that Charles Fraser and First Midland did not
fraudulently induce Eagle into the sale-leaseback transaction, the execution of the promissory
notes, and the early funding of the letters of credit. The issues which were actually litigated and
essential to that judgment are different from the issues presented in Branum's suit against TCB,
First Republic, and Peat Marwick. Therefore, Branum is not collaterally estopped from bringing his
claims against these parties.
Statute of Limitations
     With respect to the suit filed by Branum, the summary judgment in favor of TCB, First
Republic, and Peat Marwick was based in part on the grounds that Branum's claims were barred
by the relevant statute of limitations. Branum's claims which are based on fraud are governed by a
four-year statute of limitations, Williams v. Khalaf, 802 S.W.2d 651 (1990), not a two-year statute
of limitations as held by the court of appeals. Branum's original petition was filed on October 11,
1985. Therefore, the summary judgment on Branum's fraud claims cannot be upheld on the
statute of limitations grounds. Branum's other claims against TCB, First Republic, and Peat
Marwick may be barred by the relevant statutes of limitations. We therefore remand this cause to
the court of appeals to determine which, if any, of Branum's claims other than fraud against TCB,
First Republic, and Peat Marwick are barred by the relevant statutes of limitations, and whether
fact questions existed, sufficient to withstand summary judgment, regarding the date Branum knew
or should have known of the actionable conduct, where necessary for determination of the statute
of limitations questions. Tex.R.App.P. 90(a).
Conclusion
     We hold that res judicata does not preclude Eagle and Branum from bringing their state law
claims in this case. Collateral estoppel bars Eagle and Branum from bringing claims of common
law and statutory fraud against the Directors, some of the DTPA claims against the Directors, and
Eagle's negligent mismanagement claim against the Directors. The remaining DTPA claims
brought against the Directors and the claims brought by Branum against TCB, First Republic, and
Peat Marwick are not collaterally estopped by the federal judgment. Finally, Branum's fraud claims
are not barred by the relevant statute of limitations. Accordingly, we reverse the judgment of the
court of appeals in part, affirm in part, and remand this cause to the court of appeals for further
consideration of whether Branum's claims other than fraud against TCB, First Republic, and
Page 726
Peat Marwick are barred by the relevant statutes of limitations.
---------
Notes:
[1] We note, however, that the "identity of parties" rule has seen significant erosion in the federal

courts in recent years. In most jurisdictions today, the requirement only applies to the party against
whom the effect of the prior judgment is being asserted. 1B Moore's Federal Practice p 0.441
(1988).
[2] Diversity must have existed at the time the federal action was commenced to confer jurisdiction

upon the federal court. Koenigsberger v. Richmond Silver Mining Co., 158 U.S. 41, 49-50, 15 S.Ct.
751, 755, 39 L.Ed. 889 (1895).
[3] Ancillary jurisdiction generally involves claims asserted defensively, i.e., "claims by a defending

party hailed into court against his will," or by a party "whose rights might be irretrievably lost unless
he could assert them in an ongoing action in a federal court." Owen Equip. & Erection Co. v.
Kroger, 437 U.S. 365, 376, 98 S.Ct. 2396, 2404, 57 L.Ed.2d 274 (1987); W.R. Grace & Co. v.
Continental Cas. Co., 896 F.2d 865, 871 (5th Cir.1990). Pendent-party jurisdiction represents an
amalgamation of pendent-claim jurisdiction and ancillary jurisdiction, and involves jurisdiction over
parties not named in claims properly before the federal court and over whom there is no
independent basis of federal jurisdiction. Note, Pendent Party Jurisdiction After Finley v. United
States: A Trend Toward Its Abolition, 24 Ga.L.Rev. 447, 453-54 (1990); A. Miller, Ancillary and
Pendent Jurisdiction, 26 S.Tex.L.J. 1, 5-11 (1985). The U.S. Supreme Court has failed to
definitively distinguish between pendent-party jurisdiction and ancillary jurisdiction. D. Roth, Finley
v. United States: Is Pendent Party Jurisdiction Still A Valid Doctrine?, 39 Am.U.L.Rev. 811, 813,
837-38. Circuit courts have also balked at deciding whether any "principled differences" exist
between pendent and ancillary jurisdiction. See King Fisher Marine Serv. v. 21st Phoenix Corp.,
893 F.2d 1155, 1159 n. 3 (10th Cir.1990). Likewise, we find it unnecessary to resolve this question
for the purposes of this case. The state law claims of defendants Eagle Properties and Branum
against the Directors, TCB, InterFirst and Main Hurdman might have been ancillary, but since they
would have necessitated jurisdiction over new parties not named in any claim independently
cognizable by the federal court, we will consider the question raised as one involving pendent-
party jurisdiction. See Finley v. U.S., 490 U.S. 545, 109 S.Ct. 2003, 2006, 104 L.Ed.2d 593 (1989);
Federal Deposit Ins. Corp. v. Israel, 739 F.Supp. 1411, 1412 (C.D.Cal.1990).
[4] See, e.g., Iron Workers Pension Fund v. Terotechnology, 891 F.2d 548 (5th Cir.1990)

(examining the Employee Retirement Income Security Act, 29 U.S.C. § 1132(e)); Stallworth v. City
of Cleveland, 893 F.2d 830 (6th Cir.1990) (examining 42 U.S.C. § 1983); Lockard v. Missouri
Pacific R.R., 894 F.2d 299 (8th Cir.1990) (examining the Federal Employers' Liability Act, 45
U.S.C. § 56); Flynn v. U.S., 902 F.2d 1524 (10th Cir.1990) (examining the Federal Tort Claims
Act, 28 U.S.C. § 1346(b)). Cf. Roco Carriers, Ltd. v. M/V Nurnberg Express, 899 F.2d 1292 (2d
Cir.1990) (finding pendent party jurisdiction available in admiralty cases, examining 28 U.S.C. §
1333(1)).
[5] See also Federal Deposit Ins. Corp. v. Ohara's, Inc., 713 F.Supp. 966 (N.D.Miss.1989) (holding
that in a suit brought by the FDIC in its corporate capacity, no pendent party jurisdiction can be
exercised against the FDIC in its capacity as receiver for a state bank, because 12 U.S.C. § 1819
specifically excludes the FDIC as receiver from the exercise of subject matter jurisdiction in suits
which involve only the rights or obligations of depositors, creditors, stockholders and the state
bank under state law); Fair v. NCNB Texas Nat'l Bank, 733 F.Supp. 1099 (N.D.Tex.1990) (holding
that the court would not exercise its ancillary or pendent-party jurisdiction because such would not
serve the interests of judicial economy and convenience). Neither of these cases relies upon
Finley, however.
[6] The "finding" of the Court regarding actual knowledge pertained only to defendants' claims that

they were fraudulently induced to enter the sale-leaseback transaction and execute the promissory
notes. The court did not consider the issue of FDIC's "actual knowledge" with respect to
defendants' claim that First National Bank failed to disclose material facts with respect to the early
funding of the letters of credit. 664 F.Supp. at 1048.
[7] The statutory fraud claim is based on TEX. BUS. & COM.CODE § 27.01.

---------
695 S.W.2d 271 (Tex.App. —San Antonio 1985), 04-83-00523, Harrison v. City of San Antonio
Page 271
695 S.W.2d 271 (Tex.App. —San Antonio 1985)
James HARRISON, Clyde Gentle, Larry DeHaven and Tom Polonis,
Appellants,
v.
The CITY OF SAN ANTONIO and the San Antonio Police Officers
Association, Appellees.
No. 04-83-00523-CV.
Court of Appeals of Texas, Fourth District, San Antonio
June 26, 1985
Page 272
[Copyrighted Material Omitted]
Page 273
     Mayo J. Galindo, San Antonio, for appellants.
     Jake Talley, Joseph E. Scuro, San Antonio, for appellees.
     Before ESQUIVEL, BUTTS and REEVES, JJ.
     REEVES, Justice.
     This appeal concerns the construction of a collective bargaining agreement between the City
of San Antonio and the San Antonio Police Officers Association, and the authority of the president
of the Association to amend the agreement without the approval of the membership or its board of
directors.
     The appellants, plaintiffs below, are four members of the San Antonio Police Department who
took an examination for the position of sergeant in the police department. They assert the
examination deviated from the criteria established in the collective bargaining agreement.
     The case was tried to the court and the trial judge found for the City and the police officers
association; the four members bring this appeal.
     The City has adopted the State Civil Service Act applicable to firemen and policemen,
TEX.REV.CIV.STAT.ANN. art. 1269m (Vernon Supp.1985) and TEX.REV.CIV.STAT.ANN. art.
5154c-1 (Vernon Supp.1985), The Fire and Police Employee Relations Act, which grants the City
and the police department the right to negotiate collective bargaining agreements. When a
contract has been negotiated by representatives of the City and the Association, it is then
approved by the City, and submitted to the membership of the Association for its approval.
     The parties entered into a two-year agreement. This agreement, for the first time, contains in
its section dealing with examination for promotions "An Assessment Center Examination." This
provision provides, in part:
B. Assessment Center Examination
     The Assessment Center Board shall consist of three (3) members as follows: ...
     The Assessment Center Examination will include exercises related to the duties and
responsibilities of the job classification in question and shall include as a minimum an in-basket
exercise, a leaderless group discussion and a structured interview....
     Some months before the sergeant's examination, the City, the Association's president and
several members of the board of directors of the Association met to consider the methods to be
used in implementing the Assessment Center Examination. Dr. Terry Eisenburg, a psychologist,
was retained to conduct the Assessment Center Examination. Dr. Eisenburg expressed
dissatisfaction with the number of the members of the Assessment Center Board and the
structured interview examination as provided for in the collective bargaining agreement. He felt
that the number of assessors was inadequate and the structured interview was not as effective as
an oral presentation.
     After several conferences between the City and the president, they agreed to substitute the
structured interview for the oral
Page 274
presentation. This change was reached approximately two weeks before the examination but was
never reduced to writing.
     While no action was requested or obtained modifying the agreement as to the structured
interview, an instrument titled "Memorandum of Agreement and Understanding" was signed by the
president of the Association and the city manager. This memorandum of agreement and
understanding amended Article 11, section 1B by increasing the membership of the Assessment
Center Board from three to five members. The city manager's authorization was based on an
ordinance passed by the city council of San Antonio. The president did not obtain specific
authorization from the board of directors nor the membership of the San Antonio Police Officers
Association.
     Approximately fifty-five police officers took the written examination for sergeant. Appellants
were among the twenty who qualified for the second phase of the examination, the Assessment
Center Examination. The examination was conducted in two days; ten candidates took the exam
each day.
     The Assessment Center Examination was conducted in the following manner: five assessors
and ten candidates were present in the same room during the examination, but only two assessors
graded each candidate on each part of the examination. However, since the examination
consisted of three parts, each assessor graded a part of the examination of all ten candidates.
After all the candidates had completed the examination, the five assessors collaborated in
establishing a candidate's grade.
     The eligibility list for sergeant is established by ranking applicants in the following manner: by
adding fifty percent (50%) of the written exam score and fifty percent (50%) of the Assessment
Center score, plus one point for each year of service in the police department up to a maximum of
ten points. For example, using a candidate with ten years service:
Written Exam Score 96Assessment Center Exam Score 88Overall Exam
ScoreWritten 48Assessment Center 44Seniority Points 10 ___ Total 102


   Appellants are located on the promotional eligibility list for police sergeant in the following
numerical order: Tom R. Polonis (9), James M. Harrison (12), Clyde R. Gentle (13), Lawrence E.
DeHaven (19).
     Appellants allege fifteen points of error asserting there is no evidence or insufficient evidence:
     1. To support a valid execution of the amendment changing the members of the Assessment
Board from three to five and substituting the structured interview to an oral presentation because
the president of the Association acted without the authority of the executive board or the
Association's membership.
     2. That there was legal consideration to support the amendment to the collective bargaining
agreement.
     3. That there was a written amendment to the collective bargaining agreement; this was in
violation of the statute of frauds.
     4. To prove compliance with the collective bargaining agreement, because the undisputed
testimony evinces the five assessors failed to grade each of the twenty applicants on each phase
of the oral Assessment Center Examination.
     5. To prove compliance with the collective bargaining agreement because twenty applicants
were examined in groups of ten, each group over a two day period in violation of
TEX.REV.CIV.STAT.ANN. art. 1269m, § 14 D (Vernon Supp.1985), which requires all applicants
to be given identical exams in the presence of each other.
ALTERATIONS OF THE COLLECTIVE BARGAINING AGREEMENT
     The authority of a president to contract on behalf of a corporation must be found in the
statutes, the corporate charter,
Page 275
express authority from its Board of Directors, or by implication from the nature of the president's
position, custom or habit of doing business. Robert Nanney Chevrolet Co. v. Evans and Moses,
601 S.W.2d 411, 413 (Tex.Civ.App.--Beaumont 1980, no writ); Capital Bank v. American Eyewear,
Inc., 597 S.W.2d 17, 20 (Tex.Civ.App.--Dallas 1980, no writ); Templeton v. Nocona Hills Owners
Association, Inc., 555 S.W.2d 534, 537 (Tex.Civ.App.--Texarkana 1977, no writ). A president of a
corporation, merely by virtue of the office, has no inherent power to bind the corporation except as
to routine matters arising in the ordinary course of business. Templeton, supra, at 538.
     TEX.REV.CIV.STAT.ANN. art. 5154c-1, § 7(c) (Vernon Supp.1985) provides the association
or the public employer may designate any person or persons to negotiate or bargain in its behalf.
     The San Antonio Police Officers Association By-Laws, article 1, section 1, provides: "The
president ... shall preside at all meetings, ... and shall have subject to the control of the Board of
Directors the general management and direction of the affairs of the Association. He shall perform
such other duties as may be consistent with this office."
     The San Antonio Police Officers Association is incorporated under the laws of the State of
Texas. [1] TEX.REV.CIV.STAT.ANN. art. 1396--9.10(A) provides:
Any action required by this Act to be taken at a meeting of the members or directors of a
corporation, or any action which may be taken at a meeting of the members or directors or of any
committee, may be taken without a meeting if a consent in writing, setting forth the action to be
taken, shall be signed by all members entitled to vote with respect to the subject matter thereof, or
all of the directors, or all of the members of the committee, as the case may be.
     The president was not given written consent by the membership or the Board of Directors to
amend the agreement.
     A structured interview is an examination where a candidate is given three or four questions in
advance then appears before a Board of Examiners, outside of the presence of the other
candidates. The candidate orally answers the questions; each question usually takes four or five
minutes, and, during that time, the candidate might respond to other inquiries emanating from the
response to the original question. In contrast, an oral presentation is where the candidate taking
the examination is given, in advance and in writing, several topics to be discussed before the
examiners, but in the presence of the other candidates. They are asked to discuss their
educational background, experience in the department, qualifications and how these qualifications
would relate to the position they seek, and things of like nature. The topics are given to them about
one hour prior to the presentation. Each candidate speaks extemporaneously for not over ten
minutes, without interruptions or questions; his audience are his peers and the assessors.
     Although the two examinations might accomplish the same purpose, we are of the opinion
that the tests are different. Certainly the professionals dealing in this type of testing recognized the
difference; Eisenberg sought and got the change.
     It might be argued that the increasing of the assessment from three to five was a routine
matter left to the discretion of the president. Capital Bank v. American Eyewear, Inc., 597 S.W.2d
at 20; Templeton v. Nocona Hills Owners Association, Inc., 555 S.W.2d at 537. However,
appellants make the additional argument that the changes in the contract were not supported by
consideration. It is not necessary for us to address these contentions because we are of the
opinion that approving the modification in the contract by substituting the
Page 276
oral presentation for the structured interview was a deviation that required specific authority from
the membership or, if authorized by the membership, the Board of Directors.
     Appellees contend that Article XI, Section 1B of the agreement was intentionally drawn in
order that amendments could be made without membership or board approval in the Assessment
Center Examination. This section provides in pertinent part:
The City will consult with the Association on issues related to guidelines for administration of and
evaluation of the Assessment Center procedure.
     It is urged its purpose was to give flexibility to the agreement so that modifications could be
made without formally amending the contract. Moreover, since the parties placed that
interpretation on the agreement, we are urged to follow that interpretation. If the language in a
contract is susceptible to different meanings, the court, to ascertain the true intentions of the
parties, will consider the circumstances existing when the contract was executed, and would
generally follow the interpretation of the parties to the contract. Lone Star Gas Co. v. X-Ray Gas
Co., 139 Tex. 546, 164 S.W.2d 504, 508 (Tex.1942). However, we note that not all parties to this
suit adopt this interpretation--the appellants strenuously disagree.
     The contract in question, before it was finalized, was submitted to the membership twice. The
record is silent as to why the agreement was not approved the first time submitted, but it is an
indication that the membership was exercising its right to be the ultimate authority as to the
contents of the agreement. If the membership had intended to give authority to the president or the
Board to change the testing procedure, without its approval, it seems to us the parties would have
used language more forceful than consult. Indeed, it would appear to us that the agreement would
have specifically provided for discretion in the president or the board to change the tests or other
procedures if they deemed it prudent.
     The appellants contend that the agreement, as amended by the oral presentation, is
unenforceable because it was not reduced to writing, in violation of the agreement and the statute
of frauds. [2] We agree. Heretofore the contracts had been for one year, but the one under
consideration is for a two-year period.
     Article XXXIII, section 1, "Stability of Agreement," of the contract states:
No agreement, understanding, alteration or variation of the Agreement, terms of provisions herein
contained shall bind the parties unless made and executed in writing by the parties hereto. The
failure of the City or the employees to insist in any one or more instance, upon performance of any
of the terms or conditions of this Agreement shall not be considered as a waiver or relinquishment
of the right of the City or the employees to future performance of any such term or condition, and
the obligations of the City and the employees to such future performance shall continue in full
force and effect.
     A written agreement coming within the provisions of the statute of frauds may not be orally
modified. Michael v. Busby, 139 Tex. 278, 162 S.W.2d 662, 664 (Tex.1942); Foster v. Mutual
Savings Association, 602 S.W.2d 98, 100 (Tex.Civ.App.--Fort Worth 1980, no writ).
     Appellants also assert that the Assessment Center Examination was conducted in violation of
the agreement. The contract provides:
A minimum score of 70% as determined by the Board as a whole on the composite factors
evaluated by the Board on a consensus
Page 277
basis shall be required to pass the Assessment Center Examination.
     As discussed, the oral examination was conducted over a two day period with all assessors
present, two assessors grading a candidate on each phase but each grading at least a part of
each candidate's examination. The "board as a whole" did consider each candidate and did
collectively reach a decision as to the score of each candidate. We find no merit in this allegation
by the appellants.
     Lastly, appellants contend that the contract was conducted in violation of
TEX.REV.CIV.STAT.ANN. art. 1269m, § 14 D (Vernon 1963) which provides: "All applicants shall
be given an identical examination in the presence of each other...." It is uncontroverted that the
examination was given over a period of two days, one-half of the class taking it one day and the
other half taking it the next day. Appellees respond that this portion of the statute has no
application since the parties specifically provided as follows:
In the event that any provision of this Agreement conflicts or is inconsistent with any provision of
Article 1269M, Revised Civil Statutes of Texas, this Agreement shall prevail notwithstanding any
such provision of Article 1269M.
     TEX.REV.CIV.STAT.ANN. art. 5154c-1, § 20(b) (Vernon Supp.1985) provides that a collective
bargaining agreement made in compliance to the Act takes precedence over state or local Civil
Service provisions whenever the collective bargaining contract so provides. Otherwise, article
1269m, section 14 D prevails. The fact that the contract calls for an oral Assessment Center
Examination does not in and of itself mean that it should be conducted over an extended period of
time. There is no specific provision in the agreement providing for the examination to be taken
over a period of two days. Consequently, as article 1269m controls, we are of the opinion that the
agreement is in violation of the provisions of the article.
CONTENTION OF RATIFICATION OR ESTOPPEL
     Appellees contend the appellants, in submitting to the examination, ratified any changes in the
agreement and are estopped to bring this action. They also contend that prior presidents executed
contract modifications without approval of the membership or the Board of Directors.
     Examinations for promotion in the San Antonio Police Department are not given at regular
intervals; sometimes one-to-two years elapse between examinations. Appellants learned of the
change in the examination procedures immediately before the examination was given. The
evidence as to past presidents' executing modifications in the agreement came from the current
president. He testified, over objection as to relevancy, to modifications he had made earlier and of
modifications made by two prior presidents. In urging its admissibility appellees' attorney stated
that it was being offered for the purpose of showing the president believed he had the power and
authority.
     Appellants contest these theories because they were not pled nor tried by implication.
Appellees went to trial on a general denial. TEX.R.CIV.P. 67 provides, in pertinent part:
When issues not raised by the pleadings are tried by express or implied consent of the parties,
they shall be treated in all respects as if they had been raised in the pleadings. In such case, such
amendment of the pleadings as may be necessary to cause them to conform to the evidence and
to raise these issues may be made by leave of court ... but failure so to amend shall not affect the
result of the trial of these issues; ...
     The doctrine of implied consent is invoked only where the issues have been fully developed.
Watts v. Watts, 563 S.W.2d 314, 316 (Tex.Civ.App.--Dallas 1978, writ ref'd n.r.e.).
     The purpose of Rule 67 is to require the pleader to inform the opposition of the specific
grounds which will be relied
Page 278
upon at the time of the trial. As stated in Jay Fikes & Associates, d/b/a King's Park Apartments v.
Walton, 578 S.W.2d 885, 889 (Tex.Civ.App.--Amarillo 1979, writ ref'd n.r.e.):
That rule does sanction an unpleaded issue to be treated as raised in the pleadings when it is tried
by express or implied consent; but, the rule is intended to cover the exceptional case where it
clearly appears from the record as a whole that the parties tried the unpleaded issue. It is not
intended to establish a general rule of practice and should be applied with care and in no event in
a doubtful situation.
     We are of the opinion that these issues were not tried by implied consent.
     The issues of ratification and estoppel were never fully developed. The testimony of the
president which might conceivably be related to these issues was limited in its admission into
evidence--it went only to the president's belief as to the extent of his authority. Thus, there could
be no trial by consent since that evidence was relevant to other issues that were raised by the
pleadings. Wendell v. Central Power and Light Co., 677 S.W.2d 610, 617 (Tex.App.--Corpus
Christi 1984, writ ref'd n.r.e.). More important, the appellants were never alerted to these defenses
by a request for a trial amendment.
      The judgment of the trial court is reversed. We hold that the Assessment Center Examination
was given in violation of the collective bargaining agreement. The examination is set aside. It is
ordered that the Assessment Center Examination be given in accordance with the original
agreement of the parties or an appropriately amended version of such.
      BUTTS, Justice, dissenting.
      I respectfully dissent.
      Whether the president of the police association, after consulting with the City, could modify
one-third of the second part of the two-part examination for promotion to sergeant [and lieutenant,
captain, and deputy chief] without the written approval of the membership of the association is the
real question.
      The examination is divided into two parts: written and oral, the oral part consisting of review of
responsibilities of the particular job classification (this part is not explained in detail and could
consist of any number of "surprise" questions), a group discussion, and last, the portion which is
under attack ... formerly a structured interview ... now changed to an extemporaneous
presentation on a given subject assigned one hour before.
      Thus, while presentation remained oral in the last one-third of the examination at the second
phase, the manner of presentation was amended. No complaint is made of the written phase of
the examination. The three-part second phase is not administered until after the first part. When a
candidate passes the written test, that person may take the second test (oral). Five days after the
written examination, the Assessment Center Examination date is posted. Each half is valued at
fifty percent, and each year of service earns an additional one point up to ten years.
      It is significant that a classroom orientation period concerning the Assessment Center process
is given prior to the oral phase. All candidates are given the opportunity to attend the orientation.
      It is my belief that under the circumstances as outlined above, the change in the manner of
only one part of the oral examination may be termed "routine." See Templeton v. Nocona Hills
Owners Association, Inc., 555 S.W.2d 534, 538 (Tex.Civ.App.--Texarkana 1977, no writ).
      The following provision appears in the examination procedures section of the collective
bargaining agreement:
The City will consult with the Association on issues related to guidelines for administration of and
evaluation of the Assessment Center procedure.
      This is appropriate because the City has a great stake in assuring its citizens that its police
officers meet certain high standards.
Page 279
I would find this provision means the president of the association, after consultation as in the
present case, impliedly retains the power to modify testing procedure in a routine way.
      The majority's disposition in this case would set aside the examination for all participants.
What happens to those individuals who did pass the examination and were promoted? Because
this seems to me to be an act of the president which is authorized, I would affirm the judgment.
---------
Notes:
[1] The San Antonio Police Department was incorporated pursuant to TEX.REV.CIV.STAT.ANN.

art. 1302, subd. 2. This article was repealed in 1961 and in its stead TEX.REV.CIV.STAT.ANN.
art. 1396-1.01 et seq. (Vernon 1980) Texas Non-Profit Corporation Act was enacted and is
applicable to this case.
[2] TEX.BUS. & COM.CODE ANN. § 26.01(a) (Vernon 1968):

A promise or agreement described in Subsection (b) [an agreement which is not to be performed
within one year from the date of making the agreement] of this section is not enforceable unless
the promise or agreement, or memorandum of it, is
(1) in writing; and
(2) signed by the person to be charged with the promise or agreement or by someone lawfully
authorized to sign for him.
---------
399 S.W.3d 532 (Tex. 2013), 11-0104, Kopplow Development, Inc. v. City of San Antonio
Page 532
399 S.W.3d 532 (Tex. 2013)
56 Tex.Sup.Ct.J. 354
KOPPLOW DEVELOPMENT, INC., Petitioner,
v.
The CITY OF SAN ANTONIO, Respondent.
No. 11-0104.
Supreme Court of Texas.
March 8, 2013
        Argued Sept. 13, 2012.
        Rehearing Denied June 21, 2013.
Page 533
        Dan W. Foster, John N. McClish, Sue Wall, Womack McClish Wall, Foster Brooks, PC,
Austin TX, for Petitioner Kopplow Development, Inc.
        Dan Pozza, Law Offices of Dan Pozza, Jose Ruben Hinojosa, Paul D. Barkhurst, Barkhurst
& Hinojosa, P.C., L. Eric Friedland, Assistant City Attorney, Michael D. Bernard, City Attorney,
Norbert J. Hart, Deputy City Attorney, San Antonio, TX, for Respondent The City of San Antonio.
OPINION
 GUZMAN Justice.
        In this case we determine whether an inverse condemnation claim is premature when
premised on the owner's inability to develop its property as the city previously approved. The
landowner purchased the property for the purpose of developing the land, obtained permits, and
filled the portion of the property at issue in this proceeding to the 100-year flood level. The
municipality then constructed a facility partly on the property that would detain storm water on the
property in a significant flood, thus causing the property to again be below the 100-year flood level
and undevelopable without additional fill. The landowner sought damages under statutory and
inverse condemnation theories. The jury awarded damages of $694,600 and the trial court entered
judgment on the verdict. The court of appeals reversed as to the inverse condemnation claim,
holding the claim was premature because the property had not yet flooded. Because we conclude
that the landowner's claim is for the present inability to develop the property as previously
approved unless the property is filled, we hold the claim is not premature. Accordingly, we reverse
the judgment of the court of appeals and
Page 534
remand to the court of appeals for further proceedings.
I. Background
        Kopplow Development, Inc. (Kopplow) purchased 18.451 acres of land adjoining Loop 410 in
San Antonio in 1996 or early 1997.[1] After retaining an engineering firm, Kopplow filed a plat
application on November 27, 1996 and obtained utility and construction easements on the
adjoining tract south of its property to connect sewer service. Because Kopplow's property was
below the 100-year floodplain elevation of 741 feet above mean sea level, as defined by the
Federal Emergency Management Agency (FEMA), Kopplow obtained a floodplain permit from the
City of San Antonio (City) and filled most of the property to 741 feet in 2000. About one fourth of
the property still fell within the 100-year floodplain, and Kopplow dedicated a drainage easement
over this area. In 2004, the City granted Kopplow a vested rights permit, allowing it to develop the
property under the rules in effect in November 1996 when Kopplow filed its plat application. A
vested rights permit insulates pending development from most future ordinance changes. But
certain floodplain regulation changes apply retroactively even against vested rights holders. See
TEX. LOC. GOV'T CODEE §§ 245.002, 245.004(9).
       San Antonio experienced 100-year floods in 1998 and 2002. The City then planned a
regional storm water detention facility for the Leon Creek watershed south of Kopplow's property
to mitigate downstream flooding. It determined in 2002 that the project would inundate portions of
Kopplow's property and the tract south of Kopplow's property. The City asked Kopplow in late
2003 to donate an easement that the City planned to inundate as part of the project. Kopplow
refused. The City obtained a 207-acre drainage easement from the owner of the property south of
the Kopplow tract in January 2004 and then built a concrete in-flow wall on the portion of the
adjoining tract that includes Kopplow's easements (where Kopplow's easements and the City's
drainage easement overlap on the property south of the Kopplow tract). The City also built a large
berm or dam south of the Kopplow property. The dam's peak elevation is 748 feet. Once Leon
Creek reaches the height of the in-flow wall in a 10-year flood, the wall will guide storm water to be
detained by the berm until storm water in Leon Creek subsides, allowing drainage pipes in the
berm to open and slowly return the detained water into Leon Creek.
       The parties agree the facility will cause increased inundation on Kopplow's property and that
the FEMA 100-year floodplain is two feet higher on Kopplow's property because of the facility. But
the City asserts that the in-flow wall does not cause the increased inundation because it is under
water in a 100-year flood and instead that the berm causes the increased inundation.
       The City also changed its regulatory 100-year floodplain to account for future, upstream
development.[2] A City representative testified that, although Kopplow must file for a floodplain
development permit
Page 535
to further develop its property, the City will permit Kopplow to develop its property if it fills the
property to the new level of the 100-year floodplain. Ultimately, Kopplow must fill the portion of its
property to be developed from the existing 741-foot level to 745.16 feet: two feet due to the
detention facility and two feet due to the City's ordinance change.
       Kopplow sued the City for a taking in May 2004 while it was constructing the facility. The City
counterclaimed for condemnation of Kopplow's easement. Before trial, the trial court granted the
City's motion that Kopplow's vested rights permit was not effective against subsequent floodplain
ordinances and excluded Kopplow's evidence pertaining to two of the four feet of additional fill
needed to develop the property.[3] The jury found that: (1) the value of the part taken was $4,600;
(2) the City's use of the part taken proximately caused damages to the remainder; and (3)
Kopplow's remainder damages were $690,000.
       The City and Kopplow both appealed. The court of appeals affirmed the $4,600 damage
award for the part taken under the statutory takings claim. 335 S.W.3d 288, 296. It reversed the
award of remainder damages under the statutory takings theory, holding that the inflow wall would
not inundate Kopplow's property, even during a 100-year flood. Id. at 294-95. The court also held
the remainder damages unrecoverable under Kopplow's inverse condemnation theory because
the property had not yet flooded and the inverse condemnation claim was therefore premature. Id.
at 296. In light of its holding, the court of appeals did not reach the City's factual sufficiency
challenge or Kopplow's two cross-appeal points.[4] Id. at 296-97.
II. Discussion
        We have described the right to own private property as " fundamental, natural, inherent,
inalienable, not derived from the legislature and as preexisting even constitutions." Eggemeyer v.
Eggemeyer, 554 S.W.2d 137, 140 (Tex.1977). One of the most important purposes of our
government is to protect private property rights. Id. The Texas Constitution resolves the tension
between private property rights and the government's ability to take private property by requiring
takings to be for public use, with the government paying the landowner just compensation. TEX.
CONST. art. I, § 17 (" No person's property shall be taken, damaged, or destroyed for or applied to
public use without adequate compensation being made...." ). The United States Supreme Court
has stated that the rationale for compensating landowners for takings for public use is " to bar
Government from forcing some people alone to bear public burdens which, in all fairness and
justice, should be borne by the public as a whole." Armstrong v. United States, 364 U.S. 40, 49, 80
S.Ct. 1563, 4 L.Ed.2d 1554 (1960). When only part of a tract is taken, Texas law assures just
compensation by entitling the landowner to the value of the part taken as well as the damage to
the owner's remaining property. TEX. PROP.CODE § 21.042(c).
Page 536
        Takings may be categorized as either statutory (if the government compensates the owner
for the taking) or inverse (if the owner must file suit because the government took, damaged, or
destroyed the property without paying compensation). Westgate, Ltd. v. State, 843 S.W.2d 448,
452 (Tex.1992). This proceeding has involved statutory and inverse claims. Initially, Kopplow sued
because the City did not admit to damaging the property, which sounds in inverse condemnation.
335 S.W.3d at 291. The City later counterclaimed for a statutory taking, admitting it had taken
Kopplow's easement. Id.
A. Waiver
        The City contends, and the court of appeals held, that Kopplow's inverse condemnation
claim is not yet ripe. We disagree. As an initial matter, the City asserts that Kopplow did not plead
or try an inverse condemnation claim. But Texas is a notice pleading jurisdiction, and a " petition is
sufficient if it gives fair and adequate notice of the facts upon which the pleader bases his claim.
The purpose of this rule is to give the opposing party information sufficient to enable him to
prepare a defense." Roark v. Allen, 633 S.W.2d 804, 810 (Tex.1982). The City responded to
Kopplow's pleading by asserting that Kopplow's claim was not yet ripe (a response to an inverse
condemnation claim) and the inverse condemnation claim failed because there was no intentional
taking. The City moved for summary judgment on Kopplow's claim, stating that Kopplow alleges
that " the City has inversely condemned a portion of its ... property" but that " there is no evidence
to support Plaintiff's claim for inverse condemnation." The City's subsequent motion for summary
judgment stated: " [t]his is an inverse condemnation case wherein Plaintiff's damages are based
on the increase in the flood plain elevation on its property...." The City also specially excepted to
the inverse condemnation claim, TEX.R. CIV. P. 90, but it failed to obtain a ruling before the case
was submitted to the jury. In sum, the City understood Kopplow was pleading an inverse
condemnation claim and prepared the defense that the claim was not yet ripe but failed to obtain a
ruling on its special exception. See Roark, 633 S.W.2d at 810 (party waived pleading defect issue
by failing to specially except).
       Kopplow also pursued the claim at trial and on appeal. The City asserted at the pre-trial
conference that Kopplow must decide whether to proceed on the statutory or inverse claim but
failed to obtain a specific ruling from the trial court that Kopplow could not proceed on the inverse
claim. In the court of appeals, Kopplow noted that, " [t]o the extent that Kopplow's damage claim
could be correctly characterized as an inverse condemnation claim, the [trial] Court found as a
matter of law that the claim was compensable." Kopplow maintained the position in this Court that
its claim was both statutory and inverse in nature. We conclude Kopplow preserved its inverse
condemnation claim.
B. Ripeness
        Substantively, the court of appeals held that, to the extent Kopplow's claim was for inverse
condemnation, it was premature. 335 S.W.3d at 296. The court of appeals relied primarily on
Tarrant Regional Water District v. Gragg, 151 S.W.3d 546, 555 (Tex.2004). Gragg involved a
water supply reservoir that the Tarrant Regional Water District built. Id. at 550. Heavy rains caused
the District to open the reservoir floodgates in 1990, extensively flooding the Gragg Ranch. Id. at
550. Gragg sued for inverse condemnation, and by the time the case was tried in 1998, the ranch
had experienced a large number of floods. Id.
Page 537
The District argued that the reservoir did not add more downstream water than would naturally
pass through, and if it did, it was mere negligence and there was not sufficient intent to support an
inverse condemnation claim. Id. at 554.
       We observed that mere negligence that eventually contributes to property damage will not
qualify as a taking, primarily because the public would bear the burden of paying for damage for
which it receives no benefit. Id. at 554-55. We also noted that, " [i]n the case of flood-water
impacts, recurrence is a probative factor in determining the extent of the taking and whether it is
necessarily incident to authorized government activity, and therefore substantially certain to
occur." Id. at 555. We held that, " [w]hile nonrecurrent flooding may cause damage, a single flood
event does not generally rise to the level of a taking" because " its benefit to the public, [is] too
temporal or speculative to warrant compensation." Id.
       In a companion case, we clarified that " the requisite intent is present when a governmental
entity knows that a specific act is causing identifiable harm or knows that the harm is substantially
certain to result." Id. (citing City of Dallas v. Jennings, 142 S.W.3d 310, 314 (Tex.2004)). With
flood water impacts, recurrence is a probative factor in assessing intent and the extent of the
taking. Id. We rejected the District's argument that it was, at most, only negligent and found some
evidence to support the taking because the reservoir changed the character of the flooding on the
Gragg Ranch to make the flood waters arrive sooner, flow faster and more forcefully, and last
longer. Id. We observed this could be attributable to the reservoir's ability to hold only eight
percent excess storage, compared to twenty-five to one hundred percent for other reservoirs. Id. at
556.
       In Gragg, we reaffirmed a statement we made over 50 years ago:
[g]overnmental agencies and authorities are necessities. They are capable of rendering great and
beneficent public services. But any appeal to the tradition of our laws which omits a decent regard
for private property rights is both inaccurate and distorted. It is because of this regard that our
governmental agencies and authorities in acquiring properties for their public purposes are
generally required to proceed under the power of eminent domain rather than under the police
power. Such a policy has not resulted in a destruction of flood control and improvement agencies
in the past and there is no reason to apprehend that the continuation of such policy will prove
overly costly or inimical to the American way of life in the future.
Id. at 556 (quoting Brazos River Auth. v. City of Graham, 163 Tex. 167, 354 S.W.2d 99, 107
(1961)).
        Our holding in Gragg does not, as the court of appeals concluded, compel a holding here
that Kopplow's inverse condemnation claim is premature. The focus of Gragg is that the
government's negligent acts that result in an occasional flood do not benefit the public and cannot
qualify as a taking. Id. at 555. The governmental entity in Gragg intentionally constructed a
reservoir with minimal overflow capacity, and the frequent flooding at the ranch indicated this was
not mere negligence. Id. at 556. Here, we need not look to evidence of the frequency of flooding to
deduce the government's intent: the City knew the project would inundate part of Kopplow's
property before it ever began construction, prompting the City to seek a drainage easement from
Kopplow. The project would only result in one tract other than Kopplow's being below the 100-year
Page 538
flood level, and the City obtained a drainage easement for the applicable portion of that tract.
Based on these facts, there is little dispute that the City intended to take Kopplow's property for
the project, and Gragg does not bar the inverse condemnation claim. Id. at 555; Jennings, 142
S.W.3d at 314.
       The court of appeals also relied on Howard v. City of Kerrville, 75 S.W.3d 112 (Tex.App.-San
Antonio 2002, pet. denied), to support its holding that Kopplow's inverse condemnation claim is
not yet ripe. 335 S.W.3d at 296. In Howard, a flood destroyed a dam, which the city rebuilt with the
same specifications. 75 S.W.3d at 115. But the earlier FEMA floodplain maps did not account for
the impact of the dam or increased flow in the Guadalupe River. Id. The new flood level was above
the level to which Howard had previously filled his property. Id. At various times during city
regulation changes, Howard filed and withdrew applications to develop the property and later
sued, in part, for a regulatory taking. Id. at 116. The court of appeals held that Howard's regulatory
takings claim was not ripe because he had no application on file and the court could not determine
what use he sought and what uses the city would or would not allow. Id. at 118. In contrast, here,
there was undisputed testimony that Kopplow sought to develop its property pursuant to the
previously approved plat and that the City would require Kopplow to fill its property to 745.16 feet
to so develop it. Unlike the record in Howard, on this record, we are able to determine whether the
municipality will approve the use the landowner seeks.
       The City further contends that Kopplow's inverse condemnation claim is not yet ripe under
Westgate, 843 S.W.2d at 453. There, Westgate, Ltd. (Westgate) completed construction of
commercial buildings shortly before the government announced plans to build a highway at a route
directly through one of the new buildings. Id. at 450. Westgate was having difficulty leasing the
space in light of the proposed roadway. Id. at 450-51. When the government brought statutory
takings proceedings, Westgate counterclaimed for inverse condemnation to recover its lost profits
accrued before the government acquired the property. Id. at 451. The trial court awarded
Westgate $2,734,000 for the statutory takings claim as the difference in value of Westgate's entire
tract before and after the taking. Id. It also awarded Westgate $633,000 in lost profits for its
inverse condemnation claim. Id. We affirmed the reversal of the award of lost profits under the
inverse condemnation claim because the government's proposed taking was not a direct
restriction on Westgate's property before it actually acquired the property. Id. at 452-53.
       We cited approvingly in Westgate two court of appeals cases where a future loss of property
did not give rise to a present takings claim. Id. at 452-53. Both Allen v. City of Texas City [5] and
Hubler v. City of Corpus Christi [6] involved city drainage systems that rendered the owners'
properties more susceptible to flooding. Westgate, 843 S.W.2d at 453. In Allen, a class of plaintiffs
affected by a levee pleaded an inverse condemnation claim, alleging the levee diminished the
value of their land and made it more susceptible to flooding. 775 S.W.2d 863, 864 (Tex.App.-
Houston [1st Dist.] 1989, writ denied). The Allen court disallowed the claim because no flooding
had occurred and the government
Page 539
had not otherwise appropriated the property. Id. at 865. In Hubler, the plaintiff asserted that the
combined effect of a current drainage project and several proposed others would increase the
surface waters on his land and that the city should have taken a drainage easement. 564 S.W.2d
816, 821 (Tex.Civ.App.-Corpus Christi 1978, writ ref'd n.r.e.). The Hubler court disallowed the
claim because no flooding had occurred as a result of the completed projects. Id.
       Reliance on Allen and Hubler is misplaced because they address when an inverse
condemnation claim for flooding is premature. Kopplow's claim is about development, not flooding.
Kopplow purchased the property to develop it, obtained development permits (including a vested
rights permit), and filled the property to the 100-year flood level to develop it before the City
constructed the project that rendered the land undevelopable unless filled again. Even if the
Kopplow property never actually floods, the property is nonetheless undevelopable unless filled
because of the project. The direct, immediate restriction on Kopplow's property is that it can no
longer develop the property as previously approved, and, on these facts, a lack of ripeness does
not bar Kopplow's inverse condemnation claim.
       We next address two remaining questions: (1) whether proximate cause affects the inverse
condemnation claim, and (2) whether the damages awarded by the jury are recoverable under the
inverse condemnation claim. Here, the charge asked the jury whether the use of the part taken
proximately caused damage to the remainder. The jury answered in the affirmative. The City
challenged the sufficiency of the evidence supporting that answer on appeal, arguing that the use
of the part taken was for the in-flow wall only and would not impound flood waters on Kopplow's
remainder. 335 S.W.3d at 292. A proximate cause question is properly submitted in a partial
statutory takings case where the parties dispute whether the use of the part taken damaged the
remainder. State v. Petropoulos, 346 S.W.3d 525, 531 (Tex.2011). Moreover, causation is still
relevant in an inverse condemnation claim: owners of inversely condemned property cannot
recover damages the government did not cause. See Gragg, 151 S.W.3d at 555 (holding that the
government need not pay even for negligent takings because they do not benefit the public). But
while causation in a partial statutory taking focuses on whether the use of the part taken damaged
the remainder, causation in an inverse condemnation focuses on the extent of the government's
restriction on the property. See Hearts Bluff Game Ranch, Inc. v. State, 381 S.W.3d 468, 477
(Tex.2012).
       Even if the City's challenge to the sufficiency of the evidence also applies to Kopplow's
inverse condemnation claim, it would be legally insignificant as the parties agree that the berm will
impound flood waters on Kopplow's property in a 100-year flood, causing the property to again be
below the 100-year flood level. Likewise, the parties agree that Kopplow must fill its property to the
new 100-year flood level in order to develop it as previously approved. Thus, there is no dispute as
to causation for Kopplow's inverse condemnation claim.
        Moreover, the damages the jury awarded are proper for Kopplow's inverse condemnation
claim. The damages the jury found for the easement ($4,600) [7] and
Page 540
the remainder of Kopplow's property ($690,000) are recoverable under the inverse condemnation
claim, and Kopplow submitted a single question that would have resulted in this amount. See
Westgate, 843 S.W.2d at 457 (holding broad form condemnation charges should ask the
difference in value of the property before and after the taking). Instead, the City requested, and the
trial court approved, a separate question for damages for the easement and the remainder of the
property. It was not harmful error under our Rules and precedent to charge the jury here
separately as to the damages for the easement under the statutory takings claim and the
remainder of the property under the inverse condemnation claim because the ultimate result was
the same. See id. at 451 (damages to property and lost profits pled under separate theories), 457
(level of recovery for condemnation is the difference in value of the property before and after the
taking). Accordingly, because Kopplow's inverse condemnation claim is ripe and was not waived,
it supports the $690,000 damage award.
III. Conclusion
       Kopplow purchased the property to develop it, obtained floodplain and vested rights permits,
and filled the property to the 100-year flood level before the City built a flood control project partly
on its property to detain storm water on the property. That project prevents Kopplow from
developing the property as planned unless it fills it to the new 100-year flood level. Kopplow's
inverse condemnation claim sought damages for the fill. The fact that flooding has not yet
occurred does not render the claim premature because the claim is based on the thwarting of
approved development, not flooding. We thus conclude the award of remainder damages is
recoverable under Kopplow's inverse condemnation claim. In light of the court of appeals' ruling, it
failed to reach Kopplow's cross-appeal point that the trial court erred in excluding some of the
evidence of the cost of the fill. Accordingly, we reverse the judgment of the court of appeals and
remand to the court of appeals for further proceedings consistent with this opinion.
---------
Notes:
[1] The record does not reflect when Kopplow acquired the property. Company president Edward

Kopplow testified that Kopplow acquired the property " in 1996. It might have been early '97."
Kopplow's plat application of November 27, 1996 lists it as the owner. Kopplow originally
purchased a larger tract and sold two portions to develop as restaurants in early 1997.
[2] By contrast, FEMA's 100-year floodplain accounts for only existing conditions.
[3] See TEX. LOC. GOV'T CODEE § 245.004(9) (vested rights do not apply against " regulations

to prevent imminent destruction of property or injury to persons from flooding that are effective
only within a flood plain established by a federal flood control program and enacted to prevent the
flooding of buildings intended for public occupancy" ).
[4] Kopplow asserted that: (1) Kopplow's vested right to develop the property meant that the trial

court erred in excluding evidence of the value of the entire property; and (2) the trial court erred by
including a proximate cause question. 335 S.W.3d at 296.
[5] 775 S.W.2d 863 (Tex.App.-Houston [1st Dist.] 1989, writ denied).
[6] 564 S.W.2d 816 (Tex.Civ.App.-Corpus Christi 1978, writ ref'd n.r.e.).
[7] The trial court entered judgment on this award, and the court of appeals affirmed. 335 S.W.3d

at 297. Neither party challenges that ruling here.
---------
                              Fourth Court of Appeals
                                    San Antonio, Texas
                                MEMORANDUM OPINION
                                       No. 04-15-00085-CR

                                      Ricardo O. MORENO,
                                            Appellant

                                                v.

                                       The STATE of Texas,
                                             Appellee

                     From the County Court at Law No. 13, Bexar County, Texas
                                      Trial Court No. 135229
                          Honorable Monica A. Gonzalez, Judge Presiding

PER CURIAM

Sitting:         Patricia O. Alvarez, Justice
                 Luz Elena D. Chapa, Justice
                 Jason Pulliam, Justice

Delivered and Filed: April 15, 2015

DISMISSED FOR WANT OF JURISDICTION

           In November 2013, Appellant Ricardo O. Moreno was convicted in San Antonio Municipal

Court No. 3 of violation of a municipal ordinance. He appealed his conviction to Bexar County

Court at Law No. 13. See TEX. GOV’T CODE ANN. § 30.00014 (West Supp. 2014) (appeal from

municipal court). On November 18, 2014, the county court dismissed the appeal for want of

jurisdiction. On December 16, 2014, Appellant filed a motion for new trial, and on February 13,

2015, Appellant filed a notice of appeal.
                                                                                       04-15-00085-CR


       To perfect an appeal, a notice of appeal must be filed within thirty days of the date that the

county court entered an appealable order. See id. § 30.00027 (authorizing appeal from a county

court to a court of appeals under certain conditions); TEX. R. APP. P. 26.2(a)(1) (setting deadline

to file a notice of appeal for criminal appeals); Swain v. State, 319 S.W.3d 878, 879 (Tex. App.—

Fort Worth 2010, no pet.) (per curiam). A motion for new trial filed after an appeal from a

municipal court of record to a county court does not extend the deadline to file the notice of appeal.

Swain, 319 S.W.3d at 880. “If a notice of appeal is not timely filed, the court of appeals has no

option but to dismiss the appeal for lack of jurisdiction.” Castillo v. State, 369 S.W.3d 196, 198

(Tex. Crim. App. 2012).

       On March 11, 2015, we ordered Appellant to show cause in writing why this appeal should

not be dismissed for want of jurisdiction. Appellant timely responded, argued that the county court

should not have dismissed his appeal, but did not address how this court has jurisdiction over his

appeal from the county court’s order.

       The county court dismissed Appellant’s appeal on November 18, 2014; Appellant’s notice

of appeal was due on December 18, 2014. See TEX. R. APP. P. 26.2(a)(1); Swain, 319 S.W.3d at

879. Appellant’s motion for extension of time to file a notice of appeal was due on January 2,

2015. See TEX. R. APP. P. 26.3; Olivo v. State, 918 S.W.2d 519, 522 (Tex. Crim. App. 1996).

Appellant did not file his notice of appeal until February 13, 2015. Appellant did not invoke this

court’s jurisdiction, and we may not consider his appeal. See Olivo, 918 S.W.2d at 522.

       We reinstate the appellate deadlines and dismiss this appeal for want of jurisdiction. See

TEX. R. APP. P. 26.2(a)(1); Castillo, 369 S.W.3d at 198; Swain, 319 S.W.3d at 879–80.


                                                   PER CURIAM

DO NOT PUBLISH


                                                 -2-
846 S.W.2d 832 (Tex. 1993), D-2962, Old Republic Ins. Co. v. Scott
Page 832
846 S.W.2d 832 (Tex. 1993)
OLD REPUBLIC INSURANCE COMPANY, Petitioner,
v.
Lola SCOTT, Respondent.
No. D-2962.
Supreme Court of Texas.
February 3, 1993
       Rehearing Denied Feb. 3, 1993.
Page 833
      Lawrence J. West, Houston, for petitioner.
      William A. Badders, Nacogdoches, for respondent.
      PER CURIAM.
      Our prior opinion is withdrawn and the following substituted therefor. Our judgment remains
unchanged.
      This is a worker's compensation case in which a default judgment was granted against Old
Republic on February 1, 1990. [1] Old Republic filed a motion to set aside and motion for new trial
on March 1. The default judgment was first modified on April 16, by order granting Old Republic's
motion for new trial in part, setting aside the damages finding, and granting a hearing on Scott's
damages. A second order, on May 4, included language which provided "for the denial of the
Motion for New Trial without providing for a new trial on the issue of damages."; however, it failed
to state clearly whether the prior judgment was reinstated. On May 14, a third order finally
removed all ambiguity and stated that the court's "ruling that a hearing be held on damages is
hereby rescinded and withdrawn and that Defendant's Motion to Set Aside Default Judgment or in
the Alternative, Motion for New Trial be and it is in all things overruled (emphasis added)." [2] On
June 8, Old Republic filed a second motion for new trial, which the trial court purported to strike by
order dated July 17.
      Old Republic filed its appeal bond on August 9. On appeal, Old Republic complained that the
trial court abused its discretion in not granting its motion to set aside the default judgment or
alternative motion for new trial. Old Republic further complained that the trial court erroneously
concluded that it did not have jurisdiction to hear its second motion for new trial. The court of
appeals dismissed the appeal for want of jurisdiction, stating that the appeal bond had not been
timely filed. 834 S.W.2d 608.
      We hold that the May 14 order, which essentially reinstated the original default judgment,
operated as an order modifying, correcting, or reforming the original default judgment,
automatically beginning the appellate timetable anew from its date. TEX.R.CIV.P. 306a, 329b(h);
Check v. Mitchell, 758 S.W.2d 755, 756 (Tex.1988); Goff v. Tuchescherer, 627 S.W.2d 397, 398
(Tex.1982). A motion for new trial extends the time for filing the appeal bond for ninety days after
the modified judgment has been signed. TEX.R.APP.P. 41(a)(1).
      The June 8 motion for new trial was improperly and ineffectively "stricken" by the trial court.
The filing of a motion for new trial in order to extend the appellate timetable is a matter of right,
whether or not there is any sound or reasonable basis for the conclusion that a further motion is
necessary. See generally, Stoner v. Massey, 586 S.W.2d 843, 846 (Tex.1979). Even so, when the
trial court set aside the award of damages on April 16 and ordered a new trial on that issue, there
was no longer a final judgment from which an appeal could be taken. There was no new final
judgment until the May 14 judgment; therefore, there is no "second motion for new trial" problem.
See Mesa Agro v. R.C. Dove & Sons, 584 S.W.2d 506, 508-10 (Tex.Civ.App.--El Paso 1979, writ
ref'd n.r.e.).
Page 834
      The deadline for the appeal bond was extended to August 12, ninety days after the May 14
order was signed, not May 3, as stated in the court of appeals opinion. Old Republic's August 9
appeal bond was timely filed. Dismissal by the court of appeals was improper.
      We grant the application of Old Republic Insurance Company and, without hearing argument,
a majority of the court reverses the judgment of the court of appeals and remands this cause to
that court for further proceedings consistent with this opinion. TEX.R.APP.P. 170.
---------
Notes:
[1] All relevant dates are in 1990.
[2] The May 14 order amounts to something more than marking through the May 4 signing date

and substituting another date on a final order. Check v. Mitchell, 758 S.W.2d 755, 756 (Tex.1988);
cf. Anderson v. Casebolt, 493 S.W.2d 509, 510 (Tex.1973). This appeal, therefore, does not raise
the issue of an attempt to extend appellate deadlines by signing the same judgment again.
---------
809 S.W.2d 201 (Tex. 1991), C-9731, Public Utility Com'n of Texas v. Gulf States Utilities Co.
Page 201
809 S.W.2d 201 (Tex. 1991)
PUBLIC UTILITY COMMISSION OF TEXAS and Office of Public
Utility Counsel, Petitioners,
v.
GULF STATES UTILITIES COMPANY, Respondent.
No. C-9731.
Supreme Court of Texas.
April 3, 1991
      Rehearing Overruled June 19, 1991.
Page 202
      Dan Morales, Susan D. Bergen, C. Kingsbery Ottmers and John L. Laakso, Austin, for
petitioners.
      Barry Bishop, John F. Williams, Austin, for respondent.
      OPINION
      PHILLIPS, Chief Justice.
      This case is an administrative appeal from a final order of the Texas Public Utility
Commission. Gulf States Utilities Company (GSU) sought the Commission's approval of the sale
of two of GSU's generating units and of GSU's proposed rate treatment of certain revenues and
expenses associated with that transaction. GSU proposed to sell the two plants to a joint venture
comprised of GSU and three of its Louisiana industrial customers; GSU then planned to purchase
the entire electrical output from the plants for distribution to its customers. GSU requested the
Commission to rule that, in future rate proceedings, it be allowed to recover from its ratepayers its
total purchase price for the electricity and furthermore that it be allowed to allocate the proceeds
from the sale of the depreciated plants to its shareholders rather than to its ratepayers.
      The Commission concluded that the proposed sale was generally in the public interest but
imposed two conditions on GSU's treatment of the transaction in future rate proceedings. First, the
Commission determined that it was not in the public interest for GSU's ratepayers "to pay in
excess of GSU's avoided cost" for power purchased from the joint venture. Therefore, the
Commission held that it would not allow GSU to recover from its Texas ratepayers payments for
electricity from the joint venture in excess of GSU's avoided cost. Second, the Commission
determined that GSU must divide the proceeds from the sale of the plants between the ratepayers
and its shareholders in proportion to the amount each group contributed to the cost of the plants.
      The district court affirmed the Commission's order. The court of appeals then reversed the
judgment of the district court and remanded the case to the Commission. 784 S.W.2d 519. The
Commission and the Office of Public Utility Counsel now appeal to this court. We must first
determine whether the applicable state and federal regulations permit a utility purchasing power
from a cogenerator to recover from its ratepayers payments in excess of its avoided cost. Second,
we must determine whether the Commission's allocation of the utility's proceeds from the sale of
its plants was proper. For the reasons that follow, we affirm the judgment of the court of appeals.
      I
      A
      In 1978, in response to rising energy costs and recent fuel shortages, Congress sought ways
to conserve energy to reduce
Page 203
the nation's dependence on foreign oil and on natural gas. See Federal Energy Regulatory
Comm'n v. Mississippi, 456 U.S. 742, 745-46, 102 S.Ct. 2126, 2130, 72 L.Ed.2d 532, 538 (1982).
One possible remedy was to increase the use of cogeneration. Cogeneration involves the
simultaneous production of electrical power and thermal energy, such as heat or steam, usually at
an industrial site. Id. at 750 & n. 11, 102 S.Ct. at 2132 & n. 11, 72 L.Ed.2d at 541 & n. 11. By
making productive use of the "waste" heat produced in the generation of electricity, cogeneration
can reduce fuel consumption by as much as one half. See C. PHILLIPS, THE REGULATION OF
PUBLIC UTILITIES: THEORY AND PRACTICE 452 n. 92 (1988); see also 45 Fed.Reg. 12,215
(1980).
      To encourage cogeneration, Congress enacted section 210 of the Public Utility Regulatory
Policies Act of 1978 (PURPA). Pub.L. No. 95-617, 92 Stat. 3117 (1978) (codified as amended at
16 U.S.C. § 824a-3 (1988)). An obstacle to the development of cogeneration facilities in the past
had been the reluctance of the traditional utilities to purchase excess power from, or sell backup
power to, these nontraditional facilities. FERC v. Mississippi, 456 U.S. at 750-51, 102 S.Ct. at
2132-33, 72 L.Ed.2d at 541. Section 210 of PURPA attempts to remove this obstacle by requiring
that electric utilities purchase electrical energy from qualifying cogenerating or small power
production facilities [1] (QFs) and provide back-up power to QFs on a nondiscriminatory basis. [2]
      In section 210, Congress directed the Federal Energy Regulatory Commission (FERC) to
prescribe, within one year of the statute's enactment, rules requiring electric utilities to purchase
power from and sell power to QFs. PURPA § 210(a), 16 U.S.C. § 824-3(a) (1988). Congress
further provided that the rates established by FERC for the purchases of electricity by a utility (1)
shall be just and reasonable to the utility's customers, and (2) shall not discriminate against QFs.
PURPA § 210(b), 16 U.S.C. § 824-3(b) (1988). Section 210(b) also provides that "[n]o ... rule
prescribed under subsection (a) of this section shall provide for a rate which exceeds the
incremental cost to the electric utility of alternative electric energy." Id. The "incremental cost of
alternative electric energy" is defined as the cost the utility would have incurred if it had generated
itself or purchased from another utility the same amount of power it purchased from the QF.
PURPA § 210(d), 16 U.S.C. § 824a-3(d) (1988). By setting a ceiling of incremental cost on the
amount a utility could be forced to pay for a QF's power, Congress intended to encourage
cogeneration without requiring a utility's ratepayers to subsidize cogenerators. H.R.CONF.REP.
NO. 1750, 95th Cong., 2d Sess. 98, reprinted in 1978 U.S.CODE CONG. & ADMIN.NEWS 7659,
7797, 7832.
      Pursuant to this statutory authority, FERC has adopted regulations governing an electric
utility's purchases from QFs. See 18 C.F.R. pt. 292 (1990). The regulations require that each
electric utility "purchase, in accordance with § 292.304, any energy and capacity which is made
available from a qualifying facility." Id. § 292.303. Section 292.304 sets the rate of payment for
such purchases equal to the utility's full avoided cost unless the state regulatory authority (or an
unregulated utility) determines that a lower rate is in the public interest and is sufficient to
encourage cogeneration. Id. § 292.304(b)(2). (The term "full avoided cost" is equivalent to
PURPA's "incremental cost.") Finally, the regulations provide that "[n]othing in this subpart ...
[l]imits the authority of any electric utility or any [QF] to agree to
Page 204
a rate for any purchase ... which differ[s] from the rate ... which would otherwise be required by
this subpart." Id. § 292.301(b)(1).
      Because Congress intended that state regulatory authorities be the primary enforcers of
PURPA, section 210(f) of PURPA orders each state regulatory authority to implement FERC's
rules. [3] 16 U.S.C. § 824-3(f) (1988). In 1981, the Texas legislature added a provision to the
Texas Public Utility Regulatory Act (Texas PURA) to the effect that the Commission "shall make
and enforce rules reasonably required to implement the rules and regulations of the Federal
Energy Regulatory Commission pertaining to the production of electric energy by [QFs]." Act of
Apr. 1, 1981, 67th Leg., R.S., ch. 31, § 2, 1981 Tex.Gen.Laws 70, 71. This provision was later
amended to order the Commission to "make and enforce rules to encourage the economical
production of electrical energy by [QFs]." Act of May 26, 1983, 68th Leg., R.S., ch. 274, § 1, 1983
Tex.Gen.Laws 1258, 1280 (codified at TEX.REV.CIV.STAT.ANN. art. 1446c, § 16(g) (Vernon
Supp.1991)). Pursuant to these directives, the Commission has enacted its own rules governing a
utility's purchases of power from a QF. Tex.Pub.Util.Comm'n, 16 TEX.ADMIN.CODE § 23.66
(West Sept. 1, 1988) ("Rule 23.66").
      The Texas rules apply to FERC-certified QFs, id. § 23.66(a)(15), and are very similar to
FERC's rules. Rule 23.66(d) of the Texas rules provides that "[i]n accordance with subsections (e)-
-(h) of this section, each electric utility shall purchase any energy and capacity that is made
available from a qualifying facility...." Id. § 23.66(d)(1)(A). Rule 23.66(e) requires that rates for
such purchases "shall be just and reasonable to the consumers of the electric utility and in the
public interest, and shall not discriminate against" QFs. Id. § 23.66(e)(1). The rates "shall not
exceed avoided cost." Id. § 23.66(e)(2). "Avoided cost" has the same meaning as in FERC's
regulations. Id. § 23.66(a)(2). Rates which equal avoided cost are deemed to be just and
reasonable, id. § 23.66(e)(3), and such payments are considered "reasonable and necessary
operating expenses of [the] utility." Id. § 23.66(e)(5). [4] Finally, as in FERC's rules, the Texas
rules provide that nothing in the rules "shall limit the authority of any electric utility or any qualifying
facility to agree to a rate for any
Page 205
purchase, or terms or conditions relating to any purchase, which differ from the rate or terms or
conditions that would otherwise be required by this subsection." Id. § 23.66(b)(2)(A).
      The first issue we must address in this case concerns the proper interpretation of the above
federal and state regulations governing a utility's purchases of electricity from a QF. The questions
presented are (1) whether the regulations prohibit a utility from contracting for and paying a rate in
excess of its avoided cost and (2) whether, if a utility may pay more than avoided cost, the
regulations impose a limitation on how much of these payments the utility can recover from its
ratepayers. The controversy arises because both sets of regulations expressly allow a utility and a
QF to agree to any rate for purchased power, see 18 C.F.R. § 292.301(b)(1) (1990); 16
TEX.ADMIN.CODE § 23.66(b)(2)(A) (West Sept. 1, 1988), but in subsequent provisions limit
purchased power payments to avoided cost. See 18 C.F.R. § 292.304(a)(2) (1990); 16
TEX.ADMIN.CODE § 23.66(e)(2) (West Sept. 1, 1988).
      B
      We consider these questions in light of the circumstances presented by this case. GSU is a
public electric utility located in Texas near the Louisiana border. In 1984, two of GSU's largest
industrial customers, both situated in Louisiana, notified GSU that they were planning to build a
cogeneration facility, which would enable them eventually to withdraw from GSU's system. [5]
Normally, the loss of such major customers from GSU's system would result in increases in the
rates paid by the remaining customers. These increases would occur because the utility's fixed
costs would have to be spread over a smaller number of ratepayers. As a way to keep the
industrial customers in its system and thereby to prevent such rate increases, GSU proposed the
formation of a joint cogeneration venture with the customers.
      GSU and three of its Louisiana-based industrial customers eventually entered into an
agreement to form the Nelson Industrial Steam Company Project (the Venture). Under the terms
of this agreement, GSU agreed to sell two of its electrical generating plants to the Venture and to
run the plants on behalf of the Venture. [6] GSU further agreed to purchase the entire electric
output from the plants for its general power supply at a price calculated by a contractual formula.
[7] In return for GSU's undertakings, the three industrial members of the Venture agreed to

continue as GSU's customers. FERC later certified the Venture as a QF, contingent on the
Venture's reaching certain milestones in converting the plants from natural gas to petroleum coke
operation.
      Completion of the agreement to form the Venture was made contingent on the Commission's
approval of GSU's proposed rate treatment of certain revenues and expenses arising out of the
sale. GSU requested such approval under section 63 of the Texas PURA. This section requires
public utilities to report to the Commission any sale of a plant when the total consideration
exceeds $100,000. The Commission then must determine if the transaction "is consistent with the
public interest." TEX.REV.CIV.STAT.ANN. art. 1446c, § 63 (Vernon Supp.1991). If the
Commission finds that the transaction is not in the public interest, the Commission "shall take the
effect of the transaction into consideration in the rate-making proceedings" and "shall ... disallow
the effect of such transaction if it will unreasonably affect rates or service." Id.
Page 206
      Section 63 does not require a utility to obtain the Commission's approval prior to such sales.
Furthermore, the Commission does not set electric utility rates in a section 63 proceeding.
Nevertheless, the Commission must determine the effect of a transaction on future ratemaking
proceedings in order to determine whether the transaction as proposed will be in the public
interest. In their section 63 application, therefore, the parties to the Venture requested a
prospective ruling on the future rate treatment that would be granted the transaction. Specifically,
GSU requested a ruling from the Commission that GSU be allowed to pass on the full amount of
its payments to the Venture for electricity (the purchased power payments) to its ratepayers and
that it be allowed to allocate the entire proceeds from the sale of the plant to its shareholders.
      After a hearing, the Hearing Examiner determined that the sale of the plants to the Venture
was generally in the public interest. The Examiner then found that GSU's purchased power
payments might at times exceed GSU's avoided cost. The Examiner determined that avoided cost
was the maximum rate that would be deemed just and reasonable and in the public interest under
Rule 23.66(e). However, she concluded that GSU should be allowed to seek recovery of any
purchased power payments in excess of its avoided cost in future rate or fuel-reconciliation
proceedings. [8] In order to recover the payments, GSU would have to show that the
costs were necessary as a means to keep its industrial load on the system, that the ratepayers
benefited by the retention of the industrial load on the system, that the costs in excess of avoided
costs were at a minimum, and that given these circumstances, its fuel costs were at their lowest
reasonable level.
      Tex.Pub.Util.Comm'n, Application of Gulf States Utils. Co. for Approval of a Joint Venture
Cogeneration Project and Treatment of Revenues, Docket No. 7147, 14 TEX.P.U.C.BULL. 49, 66-
67 (Mar. 21, 1988) [hereinafter Docket No. 7147]. The Examiner further determined that it would
be unreasonable for the ratepayers to absorb all the costs associated with the purchased power
payments. As to the allocation of the sale proceeds, the Examiner concluded that the ratepayers
should be credited with 83 percent of the proceeds because they paid for 83 percent of the cost of
the plants. The ratepayers' 83 percent share of the proceeds would be deemed "other electric
utility income" and would be used to offset the amount of revenue otherwise required to be
generated by the rates.
      The Commission's final order deleted the Hearing Examiner's findings that GSU could seek
recovery of the full amount of its purchased power payments and substituted findings that GSU
could not recover anything above avoided cost. The final order thus stated that "[i]t is not in the
public interest for GSU's Texas ratepayers to pay in excess of GSU's avoided cost for purchased
power from a qualifying cogeneration project" and that "[i]n future rate proceedings, [GSU] is
limited to recovering those purchased power payments to the Venture that do not exceed GSU's
avoided costs." [9] Docket No. 7147, supra p. 10, at 98. The parties to the Venture later went
ahead with the transaction despite the Commission's disallowance of the requested rate
treatment.
      GSU appealed to the district court, which affirmed the Commission's order. GSU then
appealed to the court of appeals, which reversed the judgment of the district court and remanded
to the Commission. The court of appeals held that the Commission's interpretation of Rule 23.66
as imposing a ceiling on negotiated purchased power payments was unreasonable under the text
of the provision and contrary to the provisions and purposes of the Texas
Page 207
PURA. 784 S.W.2d at 528. The court of appeals also held that the Commission's allocation of the
sale proceeds was not supported by substantial evidence in the record. 784 S.W.2d at 533.
      II
      We first address that part of the Commission's order holding that GSU cannot recover from its
ratepayers purchased power payments in excess of avoided cost. The Commission's ruling is
based on its interpretation of the state regulations, in particular Rule 23.66. As described above,
Rule 23.66(b)(2)(A) allows utilities and QFs to agree to any rate, while Rule 23.66(e) states that
purchases of energy from QFs shall not exceed avoided cost. Thus, the two rules appear to
conflict. The Commission attempts to harmonize the two rules by interpreting them to permit a
utility and a QF to contract only for rates below avoided cost. The Commission also argues that,
even if Rule 23.66(b) allows a utility to pay a rate above avoided cost, Rule 23.66(e) prohibits a
utility from recovering from its ratepayers any payments, whether negotiated or compelled, in
excess of avoided cost. According to the Commission, Rule 23.66(e) provides that only those
payments that are equal to avoided cost are just, reasonable, and in the public interest. Therefore,
it is not just, reasonable, or in the public interest for the ratepayers to pay more than avoided cost
under any circumstances. Finally, the Commission argues that FERC's regulations also place a
limit of avoided cost on purchased power payments.
      The Commission's interpretation of its own regulations is entitled to deference by the courts.
See Udall v. Tallman, 380 U.S. 1, 16, 85 S.Ct. 792, 801, 13 L.Ed.2d 616, 625 (1965); Lloyd A. Fry
Roofing Co. v. State, 541 S.W.2d 639, 644 (Tex.Civ.App.--Dallas 1976, writ ref'd n.r.e.). Our
review is limited to determining whether the administrative interpretation "is plainly erroneous or
inconsistent with the regulation." United States v. Larionoff, 431 U.S. 864, 872, 97 S.Ct. 2150,
2155, 53 L.Ed.2d 48, 56 (1977) (quoting Bowles v. Seminole Rock Co., 325 U.S. 410, 414, 65
S.Ct. 1215, 1217, 89 L.Ed. 1700, 1702 (1945)). However, if the Commission has failed to follow
the clear, unambiguous language of its own regulation, we must reverse its action as arbitrary and
capricious. See Sam Houston Elec. Coop., Inc. v. Public Util. Comm'n, 733 S.W.2d 905, 913
(Tex.App.--Austin 1987, writ den'd); see also Lewis v. Jacksonville Bldg. & Loan Ass'n, 540
S.W.2d 307, 310 (Tex.1976), and Ex parte Roloff, 510 S.W.2d 913, 915 (Tex.1974). [10]
      We hold that the Commission acted arbitrarily in adopting an interpretation contrary to the
plain language of its regulation. Rules 23.66(b)(2)(A) and 23.66(e) can be harmonized, but not in
the manner suggested by the Commission. We read Rule 23.66(e) as operating solely to set the
rates that the Commission can compel a utility to pay for a QF's power if the utility and the QF are
unable to reach a voluntary agreement. Rule 23.66(e) does not impose a ceiling on the amount a
utility can contract to pay for a QF's power, nor does it limit the amount a utility can recover from
its ratepayers under such voluntary arrangements.
      Our interpretation is based on the interaction between Rule 23.66(e) and Rules 23.66(d) and
23.66(b). Rule 23.66(d) obligates a utility to purchase power from a QF if the QF makes such
power available. Subsection (d) also provides that the rates for purchases made under that
subsection are governed by Rule 23.66(e). See 16 TEX.ADMIN.CODE § 23.66(d)(1)(A) (West
Sept. 1, 1988) ("In accordance with subsection[ ] (e) ... of this section, each electric utility shall
purchase any energy and capacity that is made available from a [QF]...."). Rule 23.66(e)'s
avoided-cost rules therefore do
Page 208
not apply to voluntary contracts arranged outside the requirements of Rule 23.66(d). This
interpretation of subsections (d) and (e) is in harmony with the plain language of Rule 23.66(b),
which permits a utility and a QF "to agree to a rate which differ[s] from the rate that would
otherwise be required" whether above, below, or equal to avoided cost. We find no justification in
the language of Rule 23.66(b) to support the Commission's interpretation that subsection (b)
allows a utility to contract for any price below avoided cost but not for a price above avoided cost.
Finally, because Rule 23.66(e) does not apply to contractual arrangements between utilities and
QFs, it does not impose any limitation on the amount a utility can recover from its customers for
such contractual payments. The provision that payments equal to avoided cost "shall be
considered reasonable and necessary operating expenses of that utility" merely ensures that a
utility can recover the full amount of the payments it is compelled to make by the Commission.
Subsection (e)(5) does not provide that contractual payments above avoided cost can never be
considered reasonable and necessary operating expenses of the utility.
      We must also consider the application of PURPA and the federal regulations because the
transaction between GSU and the Venture is governed by federal law as well as by Texas law.
The interstate activities of GSU clearly bring it within the reach of the federal regulations. FERC v.
Mississippi, 456 U.S. 742, 757, 102 S.Ct. 2126, 2136, 72 L.Ed.2d 532, 545 (1982). In addition, to
the extent that the state regulations implement PURPA, the federal regulations serve as a
guideline to and may control the scope of the state regulations.
      We hold that the federal regulations do not grant the Commission any more authority to
regulate negotiated purchases than do the state regulations. [11] Like the Texas regulations, the
federal regulations do not authorize the Commission to alter the terms of a purchased power
contract between a utility and a QF. Neither do they set a limit of avoided cost on the amount of
such payments a utility can recover from its ratepayers. Thus, section 292.303(a) of the federal
regulations provides that a utility is obligated to purchase any energy and capacity made available
from a QF. Such purchases must be made in accordance with section 292.304, which sets the
rate for purchases at avoided cost. Because section 292.304 is applied through section 292.303,
the avoided-cost limit applies only to compelled purchases. This interpretation of sections 292.303
and 292.304 is in harmony with the language of section 292.301(b)(1), which provides that nothing
is to limit the authority of a utility or QF "to agree to a rate for any purchase ... which differ[s] from
the rate ... which would otherwise be required by this subpart."
Page 209
[12] 18 C.F.R. § 292.301(b)(1) (1990). See American Paper Inst., Inc. v. American Elec. Power

Serv. Corp., 461 U.S. 402, 416, 103 S.Ct. 1921, 1930, 76 L.Ed.2d 22, 35 (1983) ("The
Commission's [full-avoided-cost] rule simply establishes the rate that applies in the absence of a
waiver or a specific contractual agreement."); [13] see also In re Vicon Recovery Sys., 153 Vt.
539, 572 A.2d 1355, 1358 (1990) ("The rate provisions of § 292 apply only ... in a situation where
the electric utility is forced to purchase power from the small producer. The regulations make clear
that utilities and [QFs] can agree to a rate different than would otherwise be mandated."); Barasch
v. Public Util. Comm'n, 119 Pa.Cmwlth. 81, 546 A.2d 1296, 1300 ("privately negotiated contracts
setting rates for QF power are essentially outside the federal and state rules"), modified, 119
Pa.Cmwlth. 81, 550 A.2d 257 (1988) (holding that previous opinion was to have prospective effect
only); Bates Fabrics Inc. v. Public Utils. Comm'n, 447 A.2d 1211, 1214 (Me.1982) ("We conclude
that the federal scheme expressly excludes from its reach all otherwise binding contracts between
utilities and" QFs.). Finally, the regulations say nothing about how much of its purchased power
payments a utility can recover from its ratepayers.
       Our holding that the state and federal regulations governing a utility's purchases of power
from a QF do not apply to voluntary arrangements between a utility and a QF does not deprive the
Commission of its regulatory authority over the amount of such contractual payments that a utility
may recover from its customers. GSU may contract for any purchase price it wishes; however,
whether such cost will be fully recoverable from the ratepayers will be subject to the Commission's
ordinary ratemaking powers. GSU's purchase of electricity from the Venture is a fuel cost, see 16
TEX.ADMIN.CODE § 23.23(b)(2)(B) (West Sept. 1, 1988), which, like any other expense, is
subject to disallowance by the Commission upon a finding that the expense is unreasonable,
unnecessary, or not in the public interest. [14] See TEX.REV.CIV.STAT.ANN. art. 1446c, §§ 38,
39(a), 41(c)(3)(D) (Vernon Supp.1991); [15] 16 TEX.
Page 210
ADMIN.CODE § 23.23(b) (West Sept. 1, 1988) (utility must show that contract negotiations for
purchased power have produced the lowest reasonable cost of fuel to ratepayers); see also
Suburban Util. Corp. v. Public Util. Comm'n, 652 S.W.2d 358, 362 (Tex.1983) ("The PUC's
ratemaking power includes the discretion to disallow improper expenses."). In fact, section 63,
under which this proceeding was brought, expressly orders the Commission to disallow any effect
of the transaction that will unreasonably affect rates.
       The Commission suggests that it would never be fair to the ratepayers for a utility to pay in
excess of its avoided costs for power since by definition the utility could obtain the same amount of
power elsewhere by paying avoided cost. But using this argument to set an absolute ceiling on
purchased power payments ignores the plain language of the Commission's own rules, which do
not authorize the Commission to impose a ceiling of avoided cost on such payments. Under the
rules, the Commission must conduct an independent, factual inquiry in each case to determine
whether payments in excess of avoided cost are reasonable and necessary, considering the
effects of the transaction as a whole. [16]
       Because the Commission was not called upon to set rates in the section 63 proceeding from
which this case arose, we do not remand this part of the case to the Commission. Instead, we
order the Commission to allow GSU to recover purchased power payments in excess of its
avoided cost in future rate proceedings if GSU establishes to the Commission's satisfaction that
the payments are reasonable and necessary expenses. The Commission contends that, since
GSU and the industrial customers have already gone ahead with the Venture, GSU can no longer
justify the payments on the grounds that they are necessary to retain the customers in the system.
However, we believe that it may still be possible for GSU to establish the necessity of the Venture
and the contractual rates. GSU should be allowed to show that, absent the Venture, the industrial
customers would have left its system because independent cogeneration was economically more
attractive than remaining in the system, that the contractual rates are necessary to make the
Venture more attractive than independent cogeneration, and that such rates are at the minimum
level. If GSU is able to satisfy the Commission that payments above avoided cost are justified,
then the Commission should determine what portion of the costs of the Venture it is reasonable
and necessary for the ratepayers to bear, given the distribution of benefits from the Venture to the
ratepayers and to the shareholders. [17]
      III
      The second issue we must resolve is whether the Commission properly allocated the gains
from the sale of the plants between GSU's ratepayers and its shareholders. Under the agreement,
the Venture is to pay for the plants in twenty annual installments of $6.35 million each (the fixed
asset payments), for a total income stream of $127 million. GSU requested that it be allowed to
allocate the entire amount of each fixed asset payment, i.e., the entire proceeds of the sale, to its
shareholders. The Commission instead ordered that GSU allocate 83 percent of each fixed asset
payment, or 83 percent of the total sale proceeds, to its ratepayers, thereby reducing the amount
the utility was entitled to recover through its rates by that amount.
      We must reverse the Commission's allocation of the profits if it is not
Page 211
reasonably supported by substantial evidence in the record or if the Commission's action was
arbitrary, capricious, or an abuse of discretion. Administrative Procedure and Texas Register Act,
TEX.REV.CIV.STAT.ANN. art. 6252-13a, § 19(e)(5), (6) (Vernon Supp.1991); Railroad Comm'n v.
Continental Bus Sys., 616 S.W.2d 179, 181 (Tex.1981). Our inquiry is whether the Commission's
decision is reasonably supported by substantial evidence in view of the reliable and probative
evidence in the record as a whole. Texas Health Facilities Comm'n v. Charter Medical-Dallas, Inc.,
665 S.W.2d 446, 452 (Tex.1984). Agency decisions that are not supported by substantial evidence
are deemed arbitrary and capricious. Id. at 454. In applying this test, we may not, however,
substitute our judgment as to the weight of the evidence for that of the agency. Id. at 452.
      The Commission's decision to allocate 83 percent of the fixed asset payments to the
ratepayers is based on the testimony of the Office of Public Utility Counsel's witness Dr. Steven
Anderson and of the Commission's staff accountant Paul Bellon. GSU has indirectly recovered 83
percent of the cost of the plants from the ratepayers through depreciation expense allowed for the
plants and figured into the rate base. Both Anderson and Bellon testified that "because the
Company and the shareholders have recovered 83 percent of the costs related to [the generating
facilities], the ratepayers should receive 83 percent of the fixed asset payment GSU receives from
the sale of the units." Docket No. 7147, supra p. 10, at 56.
      We hold that the Commission's decision is not reasonably supported by substantial evidence
in the record. The Commission based its decision solely on conclusory testimony that cites only
the evidence of the ratepayers' contribution to depreciation. The Commission did not consider any
other factors that would be relevant to allocation of a utility's proceeds from the sale of assets. The
issue of the proper allocation of such proceeds is a complicated one that cannot be resolved
simply by reference to who paid for the property. See Washington Pub. Interest Org. v. Public
Serv. Comm'n, 393 A.2d 71, 72 (D.C.1978); see also Democratic Cent. Comm. v. Washington
Metro. Area Transit Comm'n, 485 F.2d 786 (D.C.Cir.1973); Kansas Power & Light Co. v. State
Corp. Comm'n, 5 Kan.App.2d 514, 620 P.2d 329 (1980). A proper allocation of proceeds can be
determined only by an analysis of all the equities involved. See, e.g., Democratic Cent. Comm.,
485 F.2d at 821; Kansas Power & Light Co., 620 P.2d at 340.
     The equitable principles commonly used to resolve allocation problems are that "benefits
should follow burdens" and that "gain should follow risk of loss." Democratic Cent. Comm., 485
F.2d at 806; Washington Pub. Interest Org., 393 A.2d at 92. In other words, in the general case,
the gain should be allocated to that group (as between shareholders and ratepayers) that has
borne the financial burdens (e.g., depreciation, maintenance, taxes) and risks of the asset sold. In
addition to these two general equitable factors, courts have also considered numerous other
factors, including whether the asset sold had been included in the rate base over the years,
whether the asset was depreciable property, nondepreciable property, or a combination of the two
types, the impact of the proposed allocation on the financial strength of the utility, the reason for
the asset's appreciation (e.g., inflation, a general increase in property values in the area), any
advantages enjoyed by the shareholders because of favored treatment accorded the asset, the
dividends paid out to the shareholders over the years, and any extraordinary burdens borne by the
ratepayers in connection with that asset. See Democratic Cent. Comm., 485 F.2d at 791-92, 821-
22; id. at 831-32, 841-44 (MacKinnon, J., concurring in part and dissenting in part); Washington
Pub. Interest Org., 393 A.2d at 89, 91-92; Kansas Power & Light Co., 620 P.2d at 341.
     In the present case, the Commission allocated the sale proceeds in direct proportion to the
amount the shareholders and the ratepayers contributed to the cost of the plants. This formula is
based on only one of the above principles, that benefits should follow burdens. In addition to
ignoring the
Page 212
other considerations outlined above, [18] the Commission did not articulate its reasons for
concluding that the ratepayers are entitled to a percentage of the proceeds exactly equal to the
percentage of the cost they have paid. The Commission cited only the testimony of witnesses
Anderson and Bellon but there is no evidence in the record to explain how they reached their
conclusions. We therefore hold that the Commission's allocation is not supported by substantial
evidence because we find that the evidence the Commission cited does not support its decision
and because the Commission failed to consider evidence relating to other relevant factors. We
remand the case to the Commission for it to recalculate the allocation of the fixed asset payments
along the lines of the analysis suggested above, although we do not require the Commission to
consider all of the above factors nor forbid it from considering others. However, the Commission
should set forth the factors it considers relevant and should explain how these factors are
evaluated in the present case.
     IV
     For the reasons stated above, we affirm the judgment of the court of appeals. This case is
therefore remanded to the Commission for it to determine the proper allocation between the
shareholders and ratepayers of the fixed asset payments after consideration of the factors the
Commission determines are appropriate. The Commission is further ordered to allow GSU to
recover its purchased price payments in future rate proceedings if GSU shows that the payments
are reasonable and necessary expenses.
     MAUZY, Justice, concurring and dissenting.
      This utility case presents two issues involving the respective burdens of shareholders and
ratepayers. In disposing of both issues, the majority heeds the complaints of the utility company,
but fails to recognize the burdens borne by the ratepayers. I dissent from part II of the majority
opinion, and concur only in the result of part III.
      As to the first issue, I agree with Justice Gonzalez that Rule 23.66(e) prohibits a utility from
recovering purchased power payments in excess of the utility's avoided cost. Nothing in either the
language or the history of that rule suggests that its terms are inapplicable to negotiated contracts.
Certainly, a utility may contract for a rate which is lower than its incremental cost; but the
governing federal statute explicitly prohibits the adoption of a rate which exceeds the utility's
incremental cost. 16 U.S.C. § 824a-3(b)(1988). Thus, Rule 23.66(e)(2) should be read to mean
exactly what it says: that a utility's purchase rate "shall not exceed avoided cost." See American
Paper Inst., Inc. v. American Elec. Power Serv. Corp., 461 U.S. 402, 416, 103 S.Ct. 1921, 1930,
76 L.Ed.2d 22, 35 (1983) ("[A] qualifying facility and a utility may negotiate a contract setting a
price that is lower than a full avoided cost rate.") (emphasis added).
      As to the allocation of proceeds from asset sales, I agree that the Commission should have
considered factors other than the relative contributions to depreciation. I would emphasize,
however, that the Commission's discretion in this context is sharply limited. By shouldering the
main financial burdens associated with utilities, and by assuming the risk of loss, ratepayers
establish valid interests in utility assets. Those interests must be taken into account whenever
such assets are sold; any failure to do so will necessarily rise to an abuse of discretion.
      GONZALEZ, Justice, concurring and dissenting.
      I concur with the court that PUC's allocation of the fixed asset payments is not supported by
the record. However, I disagree with the court's conclusion that PUC's interpretation of its own rule
was erroneous or arbitrary. In my opinion, PUC correctly interpreted its own Rule 23.66 to hold
that GSU cannot recover from its ratepayers an amount exceeding its "avoided costs." [1] For this
reason, I dissent from part II of the court's opinion.
FEDERAL LAW--THE AVOIDED COST RULE
      In 1978, the United States Congress enacted the Public Utility Regulatory Policies Act of 1978
(PURPA). PURPA established the utility's incremental cost of alternative electric energy as the
ceiling on payments to cogenerators. The term incremental cost is defined in the Act as the cost of
the energy which, but for the purchase from the cogenerator, such utility would generate or
purchase from another source. 16 U.S.C. § 824a-3(d) (1988). Incremental cost is referred to as
"avoided cost" in the Texas Public Utility Regulatory Act (PURA). TEX.REV.CIV.STAT.ANN. art.
1446c (Vernon Supp.1991). With respect to rates for purchases of electricity from qualifying
facilities (QFs), Congress provided that the rate
      (1) shall be just and reasonable to the electric consumers of the electric utility and in the
public interest, and
      (2) shall not discriminate against qualifying cogenerators or qualifying small power producers.
Page 213
No such rule prescribed under subsection (a) of this section shall provide for a rate which exceeds
the incremental cost to the electric utility of alternative electric energy.
      16 U.S.C. § 824a-3(b) (1988). In enacting PURPA, Congress was mindful to maintain the
balance between encouraging cogeneration and not shifting the burden of cost to the ratepayer.
The congressional intent for the incremental cost limitation "was to ensure that PURPA did not
become a utility-funded welfare program for QFs, since such 'funding' would essentially come from
the pockets of electric consumers." Greensboro Lumber Co. v. Georgia Power Co., 643 F.Supp.
1345, 1369 n. 30 (N.D.Ga.1986), aff'd, 844 F.2d 1538 (11th Cir.1988). The concept of limiting
purchased power payments to QFs at or below avoided cost maintains that balance. Pursuant to
the authority granted to it by PURPA, the Federal Energy Regulatory Commission (FERC)
adopted rules and regulations pertaining to cogeneration and small power production. 18 C.F.R.
Part 292 (1990). These regulations require the rates for the purchase of electricity from federal
qualifying cogeneration facilities to be based on avoided cost and establish avoided cost as the
maximum rate. 18 C.F.R. § 292.304(b)(3) (1990). The United States Supreme Court has found
that FERC has the authority to adopt a full avoided cost rule, and to set full avoided cost as the
maximum rate. American Paper Inst., Inc. v. American Elec. Power Serv. Corp., 461 U.S. 402, 103
S.Ct. 1921, 76 L.Ed.2d 22 (1983). [2] FERC has done so. Thus, federal law sets avoided cost as
the maximum rate. [3]
THE PUBLIC UTILITY REGULATORY ACT
      In section 41A of the Public Utility Regulatory Act, the Texas legislature enacted similar
provisions controlling transactions between electric utilities and qualifying cogenerators. Section
41A states in pertinent part:
(b) If an electric utility and a qualifying facility enter into an agreement providing for the purchase
of capacity ... the commission shall determine whether:
(1) the payments provided for in the agreement over the contract term are equal to or less than the
utility's avoided costs as established by the commission and in effect at the time the agreement
was signed....
      PURA, § 41A(b)(1) (emphasis added). Section 41A of PURA requires an automatic
determination that prices paid for power from a qualifying facility that are at or below avoided cost
are just and reasonable. [4] The PUC's prohibition on prices in
Page 214
excess of avoided cost conforms to the requirement of PURA § 41A which obligates the PUC to
approve an agreement between a QF and a utility so long as it determines that payments "are
equal to or less than the utility's avoided cost."
RULE 23.66(e)(2)--THE AVOIDED COST LIMITATION
      Pursuant to its obligation under PURA § 16(g), the PUC enacted rules governing the recovery
of fuel costs and agreements between electric utilities and QFs. The PUC limited a utility's
recovery of purchased power payments to a QF to that utility's "avoided cost."
Tex.Pub.Util.Comm'n, 16 TEX.ADMIN.CODE §§ 23.23(b)(4)(A), 23.66(e) (West Sept. 1, 1988). In
pertinent part, section 23.66(e) states:
      (1) Rates for purchases of energy and capacity from any qualifying facility shall be just and
reasonable to the consumers of the electric utility and in the public interest, and shall not
discriminate against qualifying cogeneration and small power production facilities.
     (2) Rates for purchases of energy and capacity from any qualifying facility shall not exceed
avoided cost; ....
     (3) Rates for purchases satisfy the requirements of paragraph (1) of this subsection if they
equal avoided cost.
     The PUC interprets this rule to mean that only if a utility's purchased power payments to the
QF equal avoided costs or are lower than the avoided costs may those rates be deemed just and
reasonable and in the public interest. Because GSU's purchased power payments to the QF were
not tied to its avoided cost but rather to a contractual rate, the PUC rejected GSU's request for an
automatic pass-through under section 63 of PURA and limited GSU's recovery for those payments
from its Texas ratepayers to its avoided cost.
     GSU contends that section 23.66(b)(2)(A) allows it to contractually agree to a rate in excess of
its avoided cost. Section 23.66(b)(2)(A) provides:
     Nothing in this subsection:
     (A) shall limit the authority of any electric utility or any qualifying facility to agree to a rate for
any purchase, or terms or conditions relating to any purchase, which differ from the rate or terms
or conditions that would otherwise be required by this subsection.
     GSU argues that pursuant to section 23.66(b)(2)(A), the avoided cost ceiling in Rule 23.66(e)
applies only to contracts that are initiated under the mandatory terms of the rule, as opposed to
voluntarily negotiated contracts between electric utilities like GSU and QFs. The PUC rejected this
argument. I agree with the PUC.
     In a seemingly innocuous statement purporting to interpret Rule 23.66(d), the majority states
that "Rule 23.66(e)'s avoided-cost rules ... do not apply to voluntary contracts arranged outside the
requirements of Rule 23.66(d)." at 207-08. Although Rule 23.66(d) does require utilities to
purchase power when a QF makes it available, the language of the rule does not support the
majority's contention that "the avoided-cost limit applies only to compelled purchases." Id. at 208.
The conclusion that the avoided-cost rules do not apply to voluntary contracts is without
foundation. PURA simply does not distinguish between voluntary and involuntary agreements.
Subsection 23.66(b)(2) in no way provides that rule 23.66 does not apply to a "negotiated" rate. It
merely makes clear that the parties can negotiate a rate other than the avoided cost. See, e.g., 16
TEX.ADMIN.CODE § 23.66(d)(1)(F)(iv) (West Sept. 1, 1988) (when purchasing capacity parties
can negotiate for price lower than avoided cost). Nothing in rule 23.66 provides that the utility may
recover an amount greater than the avoided cost from the ratepayers.
     Further, the court's construction would effectively destroy the avoided cost rule. The court's
interpretation allows the utility and QF freedom to agree on a rate as provided for in section
23.66(b)(2)(A) to trump the rule that rates for purchases shall not exceed avoided costs (Rule
23.66(e)(2)), yet still requires the agreed rate to "be just and reasonable," as is required
Page 215
in Rule 23.66(e)(1). There is no logical reason to interpret Rule 23.66(2)(a) to trump Rule
23.66(e)(2), yet be subject to the requirement of Rule 23.66(e)(1). Further, the very avoided cost
limitation of Section 23.66(e)(2) which GSU asserts to be inapplicable to "negotiated contracts"
contains explanatory language referring to "estimates of avoided costs over the specific term of
the contract or other legally enforceable obligation." Thus, the drafters of section 23.66 envisioned
the application of an avoided cost standard to negotiated contracts.
      To allow GSU to pass on the costs of production from the venture even if they exceed the
avoided cost rule allows utilities to make a complete end run around the rule and in the process
completely eviscerate it. In other words, GSU is restricted from raising its rates by the avoided cost
rule so it sells its plants to a joint venture in which it maintains an ownership interest. GSU then
repurchases the electricity at a higher rate than its avoided cost and, because of the majority's
opinion, is allowed to pass through that extra expense to its Texas ratepayers while creating
windfall earnings for GSU's investors. GSU is having its cake and eating it too. It receives
management fees, a percentage of the price that is paid to the venture, and it receives a profit
when that very same energy is sold at higher rates as a result of the production costs that are
passed through to ratepayers even though those costs are in excess of the avoided cost rule. This
is exactly the type of activity that is prohibited by the avoided cost rule.
      An agency's interpretation of its own regulations should be given deference by the courts. See
United States v. Larionoff, 431 U.S. 864, 872-73, 97 S.Ct. 2150, 2155-56, 53 L.Ed.2d 48 (1977);
Calvert v. Kadane, 427 S.W.2d 605, 608 (Tex.1968); Lloyd A. Fry Roofing Co. v. State, 541
S.W.2d 639, 644 (Tex.Civ.App.--Dallas 1976, writ ref'd n.r.e.). In my opinion, the PUC's
interpretation of its rules is not arbitrary, capricious nor plainly erroneous. Accordingly, I would hold
that the PUC correctly interpreted Rule 23.66 to limit GSU's recovery to its avoided costs.
---------
Notes:
[1] Small power production facilities are those which use biomass, waste, geothermal resources,

or renewable resources such as wind, water, or solar energy to produce electrical power.
[2] A further obstacle to cogeneration had been the risk that a cogenerator would be considered a

public utility and thus be subject to burdensome state and federal regulation. FERC v. Mississippi,
456 U.S. at 750-51, 102 S.Ct. at 2133, 72 L.Ed.2d at 541. PURPA directs FERC to prescribe rules
exempting QFs from certain state and federal laws governing conventional electric utilities.
PURPA § 210(e), 16 U.S.C. § 824a-3(e) (1988).
[3] The U.S. Supreme Court has held that the federal government may constitutionally order the

states to implement FERC's regulations through state courts or agencies. FERC v. Mississippi,
456 U.S. at 760-61, 102 S.Ct. at 2138, 72 L.Ed.2d at 547-48. Under this federal command, states
have the authority to promulgate regulations mirroring the federal regulations. 45 Fed.Reg. 12,216
(1980). However, it is unclear whether, under PURPA, a state may promulgate additional
regulations in the field of cogeneration. In general, a state may enact its own laws or regulations
as long as the federal authority has not preempted all state efforts to regulate in the area and as
long as the state laws or regulations do not conflict with federal laws or regulations. City of New
York v. FCC, 486 U.S. 57, 64, 108 S.Ct. 1637, 1642, 100 L.Ed.2d 48, 57 (1988). Whether PURPA
and the FERC regulations completely preempt state regulation in the area of cogeneration is an
open question. The issue of preemption is discussed at infra note 11.
[4] In full, Rule 23.66(e) provides:

(e) Rates for purchases from a qualifying facility.
(1) Rates for purchases of energy and capacity from any qualifying facility shall be just and
reasonable to the consumers of the electric utility and in the public interest, and shall not
discriminate against qualifying cogeneration and small power production facilities.
(2) Rates for purchases of energy and capacity from any qualifying facility shall not exceed
avoided costs; however, in the case in which the rates for purchase are based upon estimates of
avoided costs over the specific term of the contract or their legally enforceable obligation, the rates
for such purchases do not violate this subsection if the rates for such purchases differ from
avoided costs at the time of delivery.
(3) Rates for purchases satisfy the requirements of paragraph (1) of this subsection if they equal
avoided cost.
(4) Rates for purchases from qualifying facilities shall be in accordance with paragraph (1)-(3) of
this subsection, regardless of whether the electric utility making such purchases is simultaneously
making sales to the qualifying facility.
(5) Payments by a utility to any qualifying facility, if in accordance with paragraphs (1)-(3) of this
subsection, shall be considered reasonable and necessary operating expenses by that utility.
16 TEX.ADMIN.CODE § 23.66(e) (West Sept. 1, 1988).
[5] The customers' desire to withdraw was motivated in part by rate increases produced by an

expensive nuclear power plant that GSU had recently brought on line.
[6] GSU would have a 1% interest in the Venture.
[7] The contractual formula is based on the current Louisiana tariff for large industrial customers

and on the Venture's production costs, rather than on GSU's avoided cost. Depending on the
values for the factors in the formula, the purchased power rate may be less than or greater than
avoided cost. If the rate exceeds avoided cost, the industrial customers are required to purchase
additional amounts of electricity to partially offset GSU's increased cost.
[8] At reconciliation proceedings, a utility's fuel costs over a period are reconciled with the

projected costs for that period and a credit or charge is assessed to the ratepayers accordingly.
See 16 Tex.Admin.Code § 23.23(b)(2)(H) (West Sept. 1, 1988).
[9] One of the Commissioners dissented from the part of the final order limiting GSU's recovery to

avoided cost.
[10] The standard for reviewing the Commission's interpretation of its regulations that were

promulgated to implement federal law, as well as for reviewing the Commission's interpretation of
federal regulations, might well be less deferential. However, in the absence of any requests from
the parties to use a different standard, we apply the deferential standard enunciated in the text to
all of the Commission's interpretations in the present case.
[11] Because we find that the federal and state regulations are identical in this regard, we do not

reach the issue of whether the federal law preempts state regulation in the area of cogeneration.
To the extent that the Texas regulations imposed different requirements than did the federal
regulations, it would be necessary to determine whether the federal law preempted Texas
regulation. The answer is unclear. As discussedsupra note 3, PURPA directs states to implement
FERC's rules; however, neither PURPA nor the federal regulations expressly state whether
additional state regulation is preempted.
The preemption issue has previously arisen in situations where states have tried to impose a
compelled rate that is higher than FERC's avoided cost ceiling. FERC originally stated that "the
States are free ... to enact laws or regulations providing for rates which would result in even
greater encouragement of these technologies," i.e., rates above avoided cost. 45 Fed.Reg. 12,221
(1980). In 1988, FERC proposed changes to the regulations that would prohibit states from setting
a compelled rate higher than avoided cost. 53 Fed.Reg. 9331 (1988); see Occidental Chem. Corp.
v. FERC, 869 F.2d 127, 128 (2d Cir.1989). These changes are still pending. Prior to these recent
developments, the lower federal courts had disagreed on whether PURPA preempts state
regulations that set a price above avoided cost. Compare Consolidated Edison Co. v. Public Serv.
Comm'n, 63 N.Y.2d 424, 436 n. 8, 483 N.Y.S.2d 153, 157 n. 8, 472 N.E.2d 981, 985 n. 8 (1984)
with Kansas City Power & Light Co. v. State Corp. Comm'n, 234 Kan. 1052, 1057-58, 676 P.2d
764, 767-68 (1984). The Supreme Court has declined to address the issue. See Consolidated
Edison Co. v. Public Serv. Comm'n, 470 U.S. 1075, 105 S.Ct. 1831, 85 L.Ed.2d 132 (1985)
(dismissing the appeal from the Court of Appeals of New York for want of a substantial federal
question).
[12] FERC's comments accompanying the federal regulations adopt this interpretation:

Paragraph (b)(1) [allowing utilities and QFs to agree to any rate] reflects the Commission's view
that the rate provisions of section 210 of PURPA apply only if a [QF] chooses to avail itself of that
section. Agreements between an electric utility and a [QF] for purchases at rates different than
rates required by these rules ... do not violate the Commission's rules under section 210 of
PURPA. The Commission recognizes that the ability of a [QF] to negotiate with an electric utility is
buttressed by the existence of the rights and protections of these rules.
45 Fed.Reg. 12,217 (1980).
[13] We disagree with the Commission's interpretation of the Supreme Court's comment that "a

qualifying facility and a utility may negotiate a contract setting a price that is lower than a full
avoided cost rate." American Paper Inst., 461 U.S. at 416, 103 S.Ct. at 1930, 76 L.Ed.2d at 35.
We do not read this statement to mean that a utility may not negotiate for a price above avoided
cost because the Court was not asked to consider the status of prices above avoided cost.
[14] Allowing the Commission to examine the fairness and reasonableness of GSU's payments to

the Venture will not result in the improper application of ratemaking principles to cogenerators, as
the Commission warns. Congress intended that cogenerators not be subject to the "type of
examination that is traditionally given to electric utility rate applications to determine what is the
just and reasonable rate that they should receive for their electric power." H.R.Conf.Rep. No.
1750, 95th Cong., 2d Sess. 97, reprinted in 1978 U.S.Code Cong. & Admin.News 7797, 7831.
However, the Commissioner's task in this case is to analyze the purchased power rate in terms of
its fairness to GSU's ratepayers, not its fairness to the Venture, and the former inquiry will not
involve application of ratemaking principles to the Venture.
[15] We do not agree with the court of appeals that Texas PURA section 41A is applicable here.

Under section 41A, a voluntary purchased power agreement between a utility and a QF may be
certified by the Commission if "the payments provided for in the agreement over the contract term
are equal to or less than the utility's avoided costs as established by the commission and in effect
at the time the agreement was signed...." Once certified, the payments under the agreement are
presumed to be reasonable and necessary expenses of the utility in any future rate proceedings.
In the present case, however, section 41A does not apply because GSU has not requested
section 41A certification. Furthermore, we do not think this specific certification procedure was
meant to deprive a utility of its Rule 23.66(b) power to contract for a rate above avoided cost.
[16] We reject the Office of Public Utility Counsel's alternative argument that the Commission's

holding was based on its independent determination that, on the facts of this case, payments in
excess of avoided cost were unreasonable expenses under the general standards for allowability
of expenses or fuel costs. It is clear from the Commission's Final Order, as well as from the
Commission's own position in this appeal, that the Commission's interpretation of Rule 23.66
formed the only basis for its decision.
[17] In conducting this latter inquiry, the Commission should consider the benefits accruing to

GSU's shareholders because of GSU's 1% share in the Venture, as well as any other income
earned by GSU as a result of its operation of the plants on behalf of the Venture.
[18] The Commission itself had previously recommended that some of these factors be considered

in allocation of gain cases. See Tex.Pub.Util.Comm'n, Application of Gulf States Utils. Co. for
Authority to Change Rates and Inquiry of the Public Util. Comm'n of Tex. into the Prudence and
Efficiency of the Planning and Management of the River Bend Nuclear Generating Station, Docket
Nos. 7195 & 6755, 14 TEX.P.U.C.BULL. 1943, 2217 (May 16, 1988) (suggesting that the analysis
described in Judge MacKinnon's concurring and dissenting opinion in Democratic Cent. Comm. be
used in future allocation cases). While we do not necessarily endorse these precise factors, we do
endorse the general approach of considering various equitable factors, such as those discussed in
the text, in allocation determinations.
[1] "Avoided costs" is defined by the substantive rules of the PUC as:

The incremental costs to an electric utility of electric energy or capacity or both, which, but for the
purchase from the qualifying facility or qualifying facilities, such utility would generate itself or
purchase from another source.
Tex.Pub.Util.Comm'n, 16 TEX.ADMIN.CODE § 23.66(a)(2) (West Sept. 1, 1988) (Arrangements
Between Qualifying Facilities and Electric Utilities).
[2] In referring to contractual agreements, the Court cited 18 C.F.R. § 292.301(b)(1), which is

identical to § 23.66(b)(2)(A), for the principle that "a qualifying facility and a utility may negotiate a
contract setting a price that is lower than a full-avoided-cost rate." 461 U.S. at 416, 103 S.Ct. at
1930 (emphasis added). Thus, the full-avoided-cost rule sets the maximum rate that applies in the
absence of a FERC waiver. Nowhere in American Paper is there any indication that a utility and a
QF may negotiate a rate that is above avoided cost.
[3] All parties agree that the FERC regulations preempt a contrary interpretation by the PUC. The

PUC and the Office of Public Utility Counsel (OPC) contend that the PUC has no authority under
federal law to approve a rate in excess of avoided cost. GSU argues that the PUC is
misinterpreting the FERC regulation. GSU's interpretation is contrary to the stated purpose of
PURPA. If GSU is given free rein to charge the public for QF purchases in excess of avoided cost,
the revenue collected from the utility's customers will exceed the revenues that would have been
collected if the utility had procured power from other sources. Such a free rein would permit a
utility and willing cogenerator to circumvent the rule's protection of the general public by simply
converting the transaction into contractual form. So long as the utility may freely pass-through
excessive QF prices to the general public, there is no inherent motivation for either the utility or the
cogenerator to protect ratepayers from rapidly escalating revenue requirements. This result is
inconsistent with the congressional intent behind PURPA.
[4] Section 41A(c) requires the PUC to certify that the agreement meets the avoided cost limitation

of subsection (b)(1). Subsection (c) provides that "[i]n setting the electric utility's rates for a period
during which the certification is effective, the regulatory authority shall consider payments made
under the agreement to be reasonable and necessary operating expenses of the electric utility."
---------
319 S.W.3d 878 (Tex.App.-Fort Worth 2010), 2-10-024-CR, Swain v. State
Page 878
319 S.W.3d 878 (Tex.App.-Fort Worth 2010)
Darren SWAIN, Appellant
v.
The STATE of Texas, State.
No. 2-10-024-CR.
Court of Appeals of Texas, Second District, Fort Worth
July 8, 2010
       Publication Ordered Aug. 12, 2010.
       Darren Swain, Bedford, TX, pro se.
       Jay Doegey, City Atty., David S. Johnson, Linda R. Frank, Asst. City Attys., Arlington, for
The State of Texas.
 PANEL: MEIER, J.; LIVINGSTON, C.J.; and DAUPHINOT, J.
MEMORANDUM OPINION[1]
PER CURIAM.
       In July 2008, a jury convicted Appellant Darren Swain in a municipal court of record of
itinerant vending without a license, and the trial court assessed a fine against him in the amount of
$550. After the trial court denied Swain's motion for new trial, he appealed to the county criminal
court. See Tex. Gov't Code Ann. § 30.00014(a)
Page 879
(Vernon Supp.2009). On November 3, 2009, the county criminal court delivered a written opinion
affirming the municipal court's judgment. See id. § 30.00024(a)(1), (c). On November 19, 2009,
Swain filed a " Motion for Rehearing or, in the Alternative, Motion for New Trial." [2] On January
20, 2010, seventy-eight days after the county criminal court had affirmed the municipal court's
judgment, Swain filed his notice of appeal from the county criminal court's judgment. See id. §
30.00027(a) (Vernon 2004).
       The State filed a motion to dismiss Swain's appeal.[3] It argues that Swain failed to timely
perfect this appeal because (1) under rule of appellate procedure 26.2(a)(1), he did not file his
notice of appeal within thirty days of the county criminal court's judgment affirming the municipal
court's judgment and (2) even though Swain filed a motion for new trial after the county criminal
court had affirmed the municipal court's judgment, rule 26.2(a)(2)'s ninety-day deadline for filing a
notice of appeal when a motion for new trial is filed does not apply in this case because Swain was
convicted after a jury trial in a municipal court of record and thereafter appealed to the county
criminal court, which did not conduct a trial de novo. According to the State, rule 26.2(a)(2) does "
not apply to an appeal from a municipal court of record to a county court, and then to a court of
appeals." Therefore, " [t]here is no reason for [Swain] to file a motion for new trial at the county
level since the trial was held in the municipal court." We agree with the State.
       A person convicted of an offense in a municipal court of record may appeal that conviction to
a county criminal court. Id. § 30.00014(a). The county criminal court may not retry the case;
instead, it must determine the appeal on the basis of the errors shown in the municipal court
record. Id. § 30.00014(b) (" An appeal from the municipal court of record may not be by trial de
novo. " ) (emphasis added). The county criminal court may affirm, reverse, or reform the municipal
court's judgment. Id. § 30.00024(a); Alexander v. State, 240 S.W.3d 72, 74 (Tex.App.-Austin 2007,
no pet.). The defendant may then appeal to the court of appeals if the county criminal court affirms
the municipal court's judgment and if the fine assessed against the defendant exceeds $100. Tex.
Gov't Code Ann. § 30.00027(a).
        Under rule of appellate procedure 26.2(a)(1), a defendant's notice of appeal must be filed
within thirty days after the court enters an appealable order. Tex.R.App. P. 26.2(a)(1); see Garza
v. State, Nos. 14-06-00595-CR, 14-06-00596-CR, 2006 WL 2075147, at *1 (Tex.App.-Houston
[14th Dist.] July 27, 2006, no pet.) (mem. op., not designated for publication); Croes v. State, No.
14-06-00361-CR, 2006 WL 1458485, at *1 (Tex.App.-Houston [14th Dist.] May 25, 2006, no pet.)
(mem. op., not designated for publication); Sharp v. State, No. 05-04-00022-CR, 2004 WL 60770,
at *1 (Tex.App.-Dallas Jan. 14, 2004, no pet.) (not designated for publication); see also Tex. Gov't
Code Ann. § 30.00023(b) (Vernon 2004) (" The appellate courts may make and enforce all rules of
practice and procedure that are not inconsistent with law and that are necessary to expedite the
dispatch of appeals from the municipal courts of record." ). Rule 26.2(a)(2) provides that a notice
of appeal must be filed " within 90 days after
Page 880
the day sentence is imposed or suspended in open court if the defendant timely files a motion for
new trial." Tex.R.App. P. 26.2(a)(2). A notice of appeal that complies with the requirements of rule
26 is essential to vest the court of appeals with jurisdiction. Slaton v. State, 981 S.W.2d 208, 210
(Tex.Crim.App.1998). Without a timely filed notice of appeal, we lack jurisdiction over the appeal.
Id.
        Here, Swain filed his notice of appeal seventy-eight days after the county criminal court had
affirmed the municipal court's judgment. Because Swain did not file the notice of appeal within
thirty days of the county criminal court's judgment, we lack jurisdiction over this appeal unless rule
26.2(a)(2) applies to extend the deadline for filing the notice of appeal. See id.
        It is well established that the granting or denying of a motion for new trial lies within the
discretion of the trial court. Lewis v. State, 911 S.W.2d 1, 7 (Tex.Crim.App.1995). " A plain reading
of [rule of appellate procedure 26.2(a) ] reveals that a timely-filed motion for new trial can only
extend the deadline for filing an appeal from the imposition or suspension of a sentence; it cannot
extend the deadline for filing an appeal from a mere ‘ appealable order.’ " Martin v. State, No. 02-
06-00272-CR, 2007 WL 529905, at *1 (Tex.App.-Fort Worth Feb. 22, 2007, no pet.) (mem. op., not
designated for publication); see Tex.R.App. P. 26.2(a).
       In this case, the municipal court of record conducted Swain's jury trial and imposed the $550
fine. The county criminal court did not impose or suspend Swain's sentence. Swain's appeal to the
county criminal court was not a trial de novo; instead, the county criminal court exercised criminal
appellate jurisdiction under government code section 30.00014(a). See Tex. Gov't Code Ann. §
30.00002(1)(A) (Vernon 2004) (defining " [a]ppellate court" to mean, among other things, the
county criminal court), § 30.00014(a) (providing that the county criminal courts have jurisdiction
over appeals from a municipal court of record), § 30.00014(b) (providing that " [a]n appeal from
the municipal court of record may not be by trial de novo " ) (emphasis added). Accordingly,
Swain's motion for new trial challenging the county criminal court's judgment that affirmed the
municipal court's judgment did not operate to extend the deadline for filing the notice of appeal
under rule 26.2(a)(2).
        Swain's notice of appeal was untimely. Accordingly, we grant the State's motion to dismiss
and dismiss the appeal for want of jurisdiction. See Tex.R.App. P. 42.3(a), 43.2(f).
---------
Notes:
[1] See Tex.R.App. P. 47.4.
[2] The record does not demonstrate that the county criminal court ever ruled on this motion.
[3] Swain filed a response to the State's motion to dismiss.

---------
989 S.W.2d 135 (Tex.App. —San Antonio 1999), 04-98-00656, Texas Dept. of Public Safety v.
Fecci
Page 135
989 S.W.2d 135 (Tex.App. —San Antonio 1999)
TEXAS DEPARTMENT OF PUBLIC SAFETY, Appellant,
v.
Eugene FECCI, Appellee.
No. 04-98-00656-CV.
Court of Appeals of Texas, Fourth District, San Antonio
January 29, 1999
Page 136
      Rehearing Overruled March 9, 1999.
Page 137
     J. Frank Davis, Andres Cedillos, Texas Dept. of Public Safety, San Antonio, for Appellant.
     Kristin Fiacco Dow, Jeffrey J. Pokorak, Laurence A. Dunne, III, Center for Legal and Social
Justice, San Antonio, for Appellee.
     Before: CATHERINE STONE, Justice PAUL W. GREEN, Justice KAREN ANGELINI, Justice.
     OPINION
     CATHERINE STONE, Justice.
     This appeal involves a license revocation resulting from a DWI arrest. In two points of error,
the Texas Department of Public Safety (TDPS) challenges the trial court's reversal of the finding
against Eugene Fecci by the administrative court. Fecci contends that this court does not have
jurisdiction, claiming that TDPS failed to timely file a notice of appeal. Because our jurisdiction has
been properly invoked, and because there is substantial evidence to suspend Fecci's license, we
reinstate the order of the administrative court.
FACTUAL AND PROCEDURAL BACKGROUND
     On October 27, 1997, Officer Broihier observed a pickup truck change lanes four times
without using a turn signal. Upon stopping the vehicle, Broihier approached the driver, Eugene
Fecci, and noticed the strong odor of alcohol on his breath, slurred speech, and bloodshot eyes.
Broihier requested assistance from an officer certified in examining persons for horizontal gaze
nystagmus and Officer Furgason responded. Fecci admitted to spending the evening drinking in a
bar watching a football game. Officer Furgason had Fecci perform three field sobriety tests: the
walk and turn; the one-legged stand; and the horizontal gaze nystagmus. Fecci's unsatisfactory
performance caused Officer Furgason to conclude that Fecci had an alcohol level at or above
0.10.
     Fecci was placed under arrest and taken to the police station. Officer Furgason read the DWI
statutory warning to Fecci and requested a breath specimen. Fecci responded by asking that an
attorney be present. Fecci was taken to the video room and read his Miranda rights. Fecci again
requested that an attorney be present before performing sobriety exercises on video or submitting
a breath specimen. The officer informed Fecci that only police officers and detained persons were
allowed in the intoxilyzer and video rooms. Fecci suggested leaving the room. The officer asked
Fecci several times to take the breath test and Fecci responded each time that he wanted to
speak to an attorney. Fecci indicated that he was not refusing to take the test, but that he just
wanted to talk to his attorney. The interview was finally terminated.
      TDPS thereafter requested that Fecci's license be suspended under TEX. TRANS. CODE
ANN. § 724.035 (Vernon Pamph.1999). At the administrative hearing, the judge granted TDPS'
request. Fecci appealed the order to County Court at Law No. 8. The county court entered a
judgment in favor of Fecci on April 30, 1998. On June 1, 1998, TDPS filed a "Motion for New
Trial/Appellee's Motion for Rehearing." Fecci filed a Motion to Strike the Untimely Pleadings on
June 18. On June 19, TDPS filed a Response to the Motion to Strike the Pleading. That same day
the county court heard the matter characterized by TDPS as "appellee's motion for rehearing" or
"defendant's motion for new trial" and found in favor of Fecci. On July 27, 1998, TDPS filed a
notice of appeal from the county court's decision with this court.
      JURISDICTIONAL REQUIREMENTS
      Fecci contends that TDPS either improperly filed a motion for new trial or untimely filed a
motion for rehearing by filing a "motion for new trial/motion for rehearing." While Fecci asserts that
this was really a motion for rehearing because a motion for new trial would only have been proper
at the administrative court level where the finding of fact occurred, he argues that under either
designation this court lacks jurisdiction. According to Fecci, if it were a motion for new
Page 138
trial, TDPS sought inappropriate relief because a motion for new trial could not have been granted
at the county court level as the county court was acting in an "appellate" capacity and had not held
a trial. Additionally, Fecci notes that TDPS was not entitled to a rehearing because such a motion
would have been untimely. The only rules providing for the appropriate timetables to file a motion
for rehearing are contained in the Rules of Appellate Procedure. According to TEX.R.APP. P.
49.1, an appellant must file a motion for rehearing within 15 days of the reviewing court's decision.
TDPS filed its motion 30 days after the county court's decision.
      Fecci also contends that because this motion was in actuality a motion for rehearing, TDPS
only had 30 days to file its notice of appeal since a motion for rehearing would not augment the
timetables of this court. See TEX.R.APP. P. 26.1(a)(1) (providing that motion for new trial will
extend the deadline to file notice of appeal from 30 to 90 days). Because TDPS filed its notice of
appeal more than 30 days after the judgment was entered, Fecci contends that this court does not
have jurisdiction to consider the case.
      The Texas Rules of Appellate Procedure govern procedure in appellate courts. See
TEX.R.APP. P. 1. Rule 3.1(b) defines an appellate court as the courts of appeals, the Court of
Criminal Appeals, and the Supreme Court. Consequently, even though the county court at law
may have been acting in an appellate or reviewing capacity, the Texas Rules of Appellate
Procedure are not applicable. See Texas Dept. of Public Safety v. Story, 1998 WL 116304, * 9
(Tex.App.--Waco 1998, no writ). The Texas Rules of Civil Procedure control procedure in the
county courts. See TEX.R. CIV. P. 2.
      The primary purpose of a motion for new trial is to give the trial judge an opportunity to cure
any errors by granting a new trial, while the purpose of a motion for rehearing is to provide the
court an opportunity to correct any errors on issues already presented and decided. See
Wentworth v. Meyer, 839 S.W.2d 766, 778 (Tex.1992) (Cornyn, J., concurring); D/FW Commercial
Roofing Co., Inc. v. Mehra, 854 S.W.2d 182, 189 (Tex.App.--Dallas 1993, no writ). Arguably, a
motion for new trial and a motion for rehearing can be treated similarly in certain situations. See
El Paso Elec. Co. v. Public Utility Comm'n, 715 S.W.2d 734, 737-38 (Tex.App.--Austin 1986, writ
ref'd n.r.e.) (analogizing Texas Administrative Procedure and Texas Register Act motion for
rehearing to motion for new trial in civil practice for purposes of determining whether motion was
prematurely filed). Similarly here, TDPS' "Motion for New Trial/Motion for Rehearing" was, for
purposes of filing deadlines, a post-judgment motion. As such, TDPS complied with TEX.R. CIV.
P. 329b, which allows such a motion to be filed within 30 days of the judgment being signed.
     Additionally, while the Rules of Appellate Procedure do not apply to the county court's
deadlines, those rules come into play when determining timetables applicable to this court. This
post-judgment motion made in the lower court extended the time to file a notice of appeal in this
court from 30 to 90 days. See TEX.R.APP. P. 26(a). TDPS subsequently filed its notice of appeal
within 90 days. As a result, we have jurisdiction over the present case.
     SUBSTANTIAL EVIDENCE REVIEW
     The county court's review of an administrative drivers' license suspension is based on the
substantial evidence rule. See 1 TEX. ADMIN. CODE § 159.37(a) (West 1998); Texas Dept. of
Public Safety v. Guajardo, 970 S.W.2d 602, 604 (Tex.App.--Houston [14th Dist.] 1998, no pet.).
The reviewing court shall reverse or remand the administrative court's decision if:
substantial rights of the appellant have been prejudiced because the administrative findings,
inferences, conclusion, or decisions are:
(A) unconstitutional or in violation of a statutory provision;
(B) beyond the agency's statutory authority;
(C) made through unlawful procedure;
(D) affected by other error of law;
(E) not reasonably supported by substantial evidence considering the reliable and
Page 139
probative evidence in the record as a whole; or
(F) arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise
of discretion.
     TEX. GOVT.CODE ANN. § 2001.174(2) (Vernon Pamph.1999). TDPS argues that Fecci did
not prove to the county court that the administrative law judge's decision was arbitrary or
capricious or not supported by substantial evidence. See id. § 2001.174(2)(E-F). Pursuant to
section 2001.174, we review a legal determination by the ALJ de novo and review any findings of
fact for support by substantial evidence. Martin v. Dept. of Public Safety, 964 S.W.2d 772, 774-775
(Tex.App.--Austin 1998, no pet.).
     Fecci's license was suspended under TEX. TRANSP. CODE ANN. § 724.035 (Vernon
Pamph.1999), putting four fact issues in question at the administrative hearing: (1) whether
probable cause existed to stop or arrest the person; (2) whether probable cause existed to believe
that the person was operating a motor vehicle in a public place while intoxicated; (3) whether the
person was placed under arrest by the officer and was requested to submit to the taking of a
specimen; and (4) whether the person refused to submit to the taking of a specimen on request of
the officer. TEX. TRANS. CODE ANN. § 724.042 (Vernon Pamph.1999). The ALJ must find in the
affirmative on each issue in order to suspend the defendant's license. See id. § 724.043.
      In considering whether the decision of the ALJ was not reasonably supported by substantial
evidence, we are governed by the following principles:
(1) the court will hear and consider evidence to determine whether reasonable support for the
agency's order exists, but the agency remains the primary fact finding body, and the question for
the trial court is strictly one of law; (2) the trial court may not substitute its own judgment for that of
the state agency on controverted issues of fact; (3) if the agency heard substantial evidence that
would support either an affirmative or a negative finding, the trial court must allow the agency's
order to stand, even if the court would have differed with the result; (4) the trial court may not set
aside the agency's ruling merely because there was conflicting or disputed testimony; and (5) the
trial court is concerned only with the reasonableness of the agency's order, not its correctness.
Texas Dept. of Public Safety v. Wilson, 969 S.W.2d 438, 439-40 (Tex.App.--Fort Worth 1997, no
pet.). See also Firemen's & Policemen's Civil Serv. Comm'n v. Brinkmeyer, 662 S.W.2d 953, 956
(Tex.1984). Substantial evidence review presents a question of law. See Brinkmeyer, 662 S.W.2d
at 956. Consequently, this court reviews the trial court's conclusion that evidence did not support
the ALJ's findings de novo. See In re Humphreys, 880 S.W.2d 402, 404 (Tex.1994). "Substantial
evidence" exists if reasonable minds could have reached the same conclusion. See Wilson, 969
S.W.2d at 439.
      While the county court did not specify which issues it did not believe were proven at the
administrative hearing, only two of the four factors are contested: refusal to submit a breath
specimen and probable cause to believe Fecci operated a motor vehicle while intoxicated. Fecci
does not dispute that probable cause existed to stop him, or that he was placed under arrest and
requested to submit to the taking of a breath specimen.
Refusal to Submit a Breath Specimen
      Fecci contends that the video demonstrates that he never refused the request for a breath
specimen and that the officer never informed Fecci that speaking with an attorney was not an
option. When Officer Serna asked Fecci if he would take the breath test, Fecci replied that he
wanted to talk to his attorney. Fecci did not tell the officer that he would not take the test. When
Fecci requested an attorney, he was informed that no one other than police personnel and
detained persons were allowed in the room. TDPS argues that by refusing to answer the question
or by answering with a request for an attorney, Fecci refused the breath specimen.
      In Texas Dept. of Public Safety v. Raffaelli, 905 S.W.2d 773 (Tex.App.--Texarkana 1995, no
writ), Raffaelli was stopped by an officer after swerving his vehicle. The officer
Page 140
smelled alcohol on his breath and Raffaelli performed poorly on several field sobriety tests.
Raffaelli, 905 S.W.2d at 776. Raffaelli was arrested, taken to the police station, and informed of his
Miranda rights. Id. at 777. He was placed in a room containing a video camera and asked to
perform additional field sobriety tests. Id. The officer read Raffaelli the statutory warnings
regarding refusal to give a breath specimen. Id. When asked to give the specimen, Raffaelli asked
for an attorney. Id. When asked again, Raffaelli continued to ask for an attorney. Id. The record
reflected that the officer who requested the specimen informed Raffaelli that the presence of his
attorney was not an option, but Raffaelli continued to insist on having an attorney present and did
not consent to providing a breath specimen. Id. The administrative court suspended his license
and the trial court reversed. Id. at 778. The Texarkana court of appeals set aside the trial court's
reversal because it concluded that "[a]ny conflict in the evidence regarding Raffaelli's refusal to
provide a breath specimen was a matter for the administrative law judge." Id. The court refused to
substitute its judgment regarding the weight of the evidence for that of the state agency. Id. The
court also noted that "although substantial evidence is more than a scintilla, the evidence in the
record may preponderate against the decision of the agency but still amount to substantial
evidence." Id.
     In the present case, it is true, as Fecci asserts, that the officer did not inform Fecci that the
presence of his attorney was not an option. Nevertheless, as the Raffaelli decision reflects, a
defendant need not give the officer a definite "no" about whether or not he will take the test.
Moreover, any conflict in the evidence concerning a defendant's refusal to provide a breath
specimen is a matter for the administrative law judge to resolve. See Texas Dept. of Public Safety
v. Latimer, 939 S.W.2d 240, 245 (Tex.App.--Austin 1997, no writ). Accordingly, the question before
this court is whether reasonable minds could have concluded from the evidence that Fecci refused
to submit a specimen. In light of all the evidence, we find that reasonable minds could conclude
that Fecci did so refuse.
Operating a Motor Vehicle in a Public Place While Intoxicated
     Fecci also argues that the video shows that he was not intoxicated, and thus, no probable
cause existed to suspend his license for driving while intoxicated. Fecci was pulled over at
approximately 10:30 p.m. and the video was made at 12:20 a.m. The video is inconclusive; Fecci
slightly sways and exhibits halting speech patterns, but is able to carry on a conversation with the
officer. However, regardless of the video, testimony was introduced supporting the finding that
probable cause existed that Fecci was driving while intoxicated. Officer Broihier testified that Fecci
was unsteady and exhibited a strong odor of alcohol on his breath, slurred speech, and bloodshot
eyes. Officer Furgason also testified that Fecci performed poorly on all three sobriety tests. Even
where evidence exists to support both propositions, this court must simply determine whether
reasonable minds could have reached the conclusion of the factfinder. See Latimer, 939 S.W.2d at
244. In this case, the administrative law judge determined that probable cause existed to believe
that Fecci was intoxicated while operating a motor vehicle in a public place. See Held v. State, 948
S.W.2d 45, 51 (Tex.App.--Houston [14th Dist.] 1997, pet. ref'd) (holding that smelling of alcohol,
slurred speech, glossy, bloodshot eyes, leaning on car for support, and failing field sobriety tests
constituted probable cause to arrest). Officer Furgason and Broihier's testimony amply support this
conclusion. Consequently, substantial evidence indicates that probable cause existed to believe
that Fecci was operating a motor vehicle in a public place while intoxicated. TDPS' first point of
error is sustained. [1]
Page 141
      The judgment of the county court is reversed and the order of the administrative court is
reinstated.
---------
Notes:
[1] In TDPS' second point of error, which we need not address, TDPS supplements its argument

that Fecci refused to submit to a breath test by trying to refute the possible reasoning of the county
court or perhaps the reason behind Fecci's confusion. We note this issue only to point out that
preventing the collection of a breath sample because a defendant has requested counsel "would
severely restrict police officers in the pursuit of lawfully collecting evidence of intoxication and ...
would do nothing to further protect the privilege against self-incrimination." McCambridge v. State,
712 S.W.2d 499, 506 (Tex.Crim.App.1986). By reading the required statutory and Miranda
warnings, the officers did all that was necessary under the law. Under the relevant statutes, police
officers are not required to inform arrested persons that having an attorney present is not an
option in deciding whether or not to submit to a breath test, even where a defendant becomes
confused after being told that one has a right to an attorney but is at the same time not allowed
access to one. Like the McCambridge court, we recognize that while the Legislature is free to
modify the required statutory warnings, "it would inappropriate for this Court to make such an
expansion of statutory warnings absent legislative authority." Id. at 507 n. 18.
---------
961 S.W.2d 6 (Tex.App. —Amarillo 1996), 07-96-0205, Thomley v. Southwood-Driftwood
Apartments Ltd.
Page 6
961 S.W.2d 6 (Tex.App. —Amarillo 1996)
Violet Emelene THOMLEY, Appellant,
v.
SOUTHWOOD-DRIFTWOOD APARTMENTS, LTD., d/b/a Driftwood
Apartments, and Hiw, Inc., Appellees.
No. 07-96-0205-CV.
Court of Appeals of Texas, Seventh District, Amarillo
August 27, 1996
Page 7
      Joe L. Lovell, Channy F. Wood, Garner, Stone & Lovell, Amarillo, for appellant.
      Michael J. Sharpee, Peterson, Farris, Doores & Jones, Amarillo, Andrew L. Pickens, Fulbright
& Jaworski, Houston, Ben Taylor, Fulbright & Jaworski, Dallas, for appellees.
      Before BOYD and QUINN, JJ., and REYNOLDS, Senior Justice. [*]
      PER CURIAM.
      Appellees Southwood-Driftwood Apartments, Ltd., d/b/a Driftwood Apartments, and HIW, Inc.,
(Southwood), seek the dismissal of appellant Violet Emelene Thomley's (Thomley) appeal from a
summary judgment in favor of Southwood. Subject to their motion to dismiss, Southwood has also
filed a Motion for Leave to File Supplemental Transcript and a First Motion for Extension of Time in
Which to File Brief. We deny Southwood's motion to dismiss but grant its motions for leave to file
the supplemental transcript and for extension of time within which to file its brief.
      The thrust of Southwood's motion to dismiss is that Thomley's appeal was not timely
perfected; therefore, this court lacks jurisdiction to consider the appeal. Specifically, Southwood
contends Thomley failed to file an appeal bond or affidavit in lieu of bond within 30 days after the
summary judgment was signed, and did not timely file a motion with this court seeking an
extension of time for late filing.
      The summary judgment was granted March 4, 1996. Absent a filing that extends the deadline,
a party has 30 days from the date a judgment is signed within which to file a cost bond to perfect
an appeal. Tex.R.App. P. 41(a)(1). Thus, absent an extension, the deadline for perfecting this
appeal was April 3, 1996. Counsel for Thomley filed a request for findings of fact and conclusions
of law on March 22, 1996, and a motion for new trial on April 2, 1996, but the certificate of deposit
in lieu of appeal bond was not filed until May 31, 1996.
      With respect to when ordinary appeals are perfected, the Texas Rules of Appellate Procedure
provides, in pertinent part:
When security for costs is required, the bond or affidavit in lieu thereof shall be filed with the clerk
within thirty days after the judgment is signed, or, within ninety days after the judgment is signed if
a timely motion for new trial has been filed by any party or if any party has timely filed a request for
findings of fact and conclusions of law in a case tried without a jury.
      Tex.R.App. P. 41(a)(1).
       When a trial court grants a summary judgment, it makes a determination that no material
issues of fact exist. Besing v. Moffitt, 882 S.W.2d 79, 82 (Tex.App.--Amarillo 1994, no writ). When
a trial court denies such a judgment, it holds that such issues exist; however, it does not decide
the issues. Id. As a result, a summary judgment proceeding has not been "tried" for the purpose of
requesting findings of fact and conclusions of law. Id., citing Zimmerman v. Robinson, 862 S.W.2d
162, 164 (Tex.App.--Amarillo 1993, no writ).
       Because findings of fact and conclusions of law have no place in a summary judgment
proceeding, the appellate timetable was not extended by the requests for such findings and
conclusions in this case. Linwood v. NCNB Texas, 885 S.W.2d 102 (Tex.1994). Southwood
recognizes that the Texas Supreme Court in Torres v. Western Casualty & Surety Co., 457
S.W.2d 50 (Tex.1970)
Page 8
held the filing of a motion for new trial in a summary judgment proceeding extended the appellate
timetable. However, it argues that since Torres, in the Linwood case, the court held that because a
summary judgment proceeding does not constitute a "trial," requests for findings of fact and
conclusions of law are not appropriate to extend the appellate timetable; hence, "the same
reasoning should be used in regard to a motion for new trial."
       In support of that argument, Southwood cites and relies upon a footnote observation in
Chavez v. Housing Auth. of El Paso, 897 S.W.2d 523 (Tex.App.--El Paso 1995, writ denied). In
that case, after noting the Linwood holding, the El Paso court made the following footnote
observation:
It is logical to note that based upon the definition of "trial" as contained in Linwood ..., a summary
judgment proceeding has not been "tried" for purposes of a motion for new trial, either. Although
the Supreme Court has noted that a motion for new trial is not necessarily inappropriate following
entry of a summary judgment despite the fact that no "trial" was actually had, Torres v. Western
Casualty and Surety Company, 457 S.W.2d 50 (Tex.1970), that case and its progeny pre-date
Linwood. If findings of fact and conclusions of law are inappropriate to extend the appellate
timetable because a summary judgment does not constitute a "trial", we are hard-pressed to
understand how a motion for new trial is any more appropriate. We are left, then, with the question
of whether the appellate timetable may ever be extended following summary judgment.
       Id. at 526, n. 1.
       We do not agree that the question as to whether the appellate timetable may ever be
extended following summary judgment is open. In the Torres case, and in referring to the
summary judgment before it, the court specifically noted that although "no 'trial' was actually had,"
a motion for new trial "is not necessarily inappropriate following entry of a summary judgment."
The court held the intermediate appellate court "correctly held that the time for taking the appeal
steps began to run from the overruling of the motion for new trial." Thus, the Linwood holding that
a summary judgment hearing is not a "trial" of such a nature to make appropriate requests for
findings of fact and conclusions of law, is not inapposite to the similar holding by the Torres court.
       Additionally, in Padilla v. LaFrance, 907 S.W.2d 454, 458 (Tex.1995), by holding a transcript
was timely filed 82 days after a summary judgment in which a motion for new trial had been filed,
the supreme court, inferentially if not explicitly, again recognized that the filing of a motion for new
trial extended the appellate timetable. Moreover, various courts of appeal have recognized that the
appellate timetable in a summary judgment appeal is extended by the filing of a motion for new
trial. See Stafford v. O'Neill, 902 S.W.2d 67, 67 (Tex.App.--Houston [1st Dist.] 1995, no writ);
Sewell v. Adams, 854 S.W.2d 257, 260 (Tex.App.--Houston [14th Dist.] 1993, no writ); Mitre v.
Brooks Fashion Stores, Inc., 818 S.W.2d 154, 156 (Tex.App.--Corpus Christi 1991, no writ);
Krchnak v. Fulton, 759 S.W.2d 524, 528 (Tex.App.--Amarillo 1988, writ denied).
      Furthermore, the plain meaning of Rule 41 extends the filing deadline in two separate
instances: 1) if any party files a timely motion for new trial; or 2) in a case tried without a jury, if any
party timely files a request for findings of fact and conclusions of law. Tex.R.App. P. 41(a)(1);
West Columbia Nat'l Bank v. Griffith, 902 S.W.2d 201 (Tex.App.--Houston [1st Dist.] 1995, writ
denied).
      As we have noted, because the granting of a summary judgment itself exemplifies a trial court
holding that as a matter of law the prevailing party is entitled to the relief sought, it is not a "trial"
before the court within the purview of the rule pertaining to findings of fact and conclusions of law.
However, as in any other case, a losing party is certainly entitled to point out reasons why the
judgment was wrongly entered with the possibility that the expense and delay of an appeal might
be obviated. We do not perceive any logical reason why the rule extending the appellate timetable
in cases where a motion for new trial is filed should not apply in summary judgment proceedings
as it does in other cases.
Page 9
      We hold that Thomley's timely filing of a motion for new trial extended the appellate timetable;
therefore, her appeal was timely perfected and Southwood's motion to dismiss is overruled.
However, Southwood's motions for leave to file a supplemental transcript and first motion for
extension of time within which to file its brief are granted.
      It is so ordered.
---------
Notes:
[*] Charles L. Reynolds, Chief Justice (Ret.), Seventh Court of Appeals, sitting by assignment.

Tex. Gov't Code Ann. § 75.002(a)(1) (Vernon Supp.1996).
---------
