                                                                                   ACCEPTED
                                                                               01-14-00104-CV
                                                                    FIRST COURT OF APPEALS
                                                                            HOUSTON, TEXAS
                                                                         11/16/2015 8:50:33 PM
                                                                         CHRISTOPHER PRINE
                                                                                        CLERK



                    IN THE COURT OF APPEALS
              FIRST DISTRICT OF TEXAS AT HOUSTON         FILED IN
                                                   1st COURT OF APPEALS
    ___________________________________________________________
                                                       HOUSTON, TEXAS
                                                       11/16/2015 8:50:33 PM
                           NO. 01-14-00104-CV          CHRISTOPHER A. PRINE
                                                                Clerk
    ___________________________________________________________

                    WHITE LION HOLDINGS, L.L.C.

                                Appellant

                                   vs.

                          THE STATE OF TEXAS
                              Appellee
    ___________________________________________________________

                              On Appeal from
                     th
                The 98 District Court of Travis County, Texas
         Trial Court No. D-1-GV-06-000627 and D-1-GV-13-001068
    ___________________________________________________________

           APPELLANT’S MOTION FOR REHEARING AND
                    REHEARING EN BANC


Jacqueline Lucci Smith                      Joan Lucci Bain
TBA #: 00786073                             TBA #: 01548020
LUCCI SMITH LAW PLLC                        BAIN & BAIN PLLC
10810 Katy Freeway, Suite 102               10810 Katy Freeway, Suite 102
Houston, Texas 77043                        Houston, Texas 77043
Tel.: 832-494-1700                          Tel.: 713-629-6222
Fax: 832-494-1426                           Fax: 713-629-6226
Email: JLS@LucciSmithLaw.com                JBain@BainandBainlaw.net
                                    TABLE OF CONTENTS

                                                                                                           Page

TABLE OF CONTENTS…………………………………………………………...i

TABLE OF AUTHORITIES…………………………………………………….....ii

ISSUES PRESENTED……………………………………………………………..1

I.     REASONS EN BANC REVIEW………………………………………….... 2

II.    RELEVANT FACTS OMITTED BY PANEL…………………………….. 3

III.   FACTUAL ERRORS IN THE MAJORITY OPINION…………………….7

IV.    ARGUMENT AND AUTHORITIES……………………………………...10

         A. TO AFFIRM THE TRIAL COURT’S SEVERANCE, THE PANEL
            IMPROPERLY EXPANDED MEMBER/AGENT LIABILITY IN
            TWO WAYS.......................................................................................10

             1. The Panel Imposed Unprecedented Duties on a Member of an
                LLC to Guarantee its Statutory and Financial Obligations............12

                      a. Personal Liability is Not Separate Liability........................13

                      b. “Person” as Defined in the Water Code Does Not
                          Authorize Personal and Separate Liability..........................15

             2. The Panel Distorted Statutory Authority for Personal Liability
                of Agents........................................................................................16

         B. SEVERANCE WAS AN ABUSE OF DISCRETION AND
            DEPRIVES THIS COURT OF JURISDICTION OVER THE
            APPEAL..............................................................................................19

V.     PRAYER…………………………………………………………………...20

CERTIFICATE OF SERVICE……………………………………………………22
                                                      i
CERTIFICATE OF COMPLIANCE……………………………………………...22

PANEL OPINION DATED SEPTEMBER 24, 2015..............................EXHIBIT 1


                                    TABLE OF AUTHORITIES


CASES
Crown Life Ins. Co. v. Casteel,
  22 S.W.3d 378 (Tex. 2000) ................................................................................. 11

Guar. Fed. Sav. Bank v. Horseshoe Operating Co.,
 793 S.W.2d 652 (Tex. 1990) ................................................................................ 11

In re Merrill Lynch Trust Co. FSB,
   235 S.W.3d 185 (Tex. 2007) ............................................................................... 12

Jones v. Ray,
  886 S.W.2d 817 (Tex. App.—Houston [1st Dist.] 1994, orig. proceeding) ....... 11

Light v. Wilson,
  663 S.W.2d 813 (Tex. 1984) ............................................................................... 16

Maxey v. Citizens Nat’l Bank of Lubbock, 507 S.W.2d 722 (Tex. 1974) ............... 10

Miller v. Keyser,
  90 S.W.3d 712 (Tex. 2002) .....................................................................10, 17, 19

Shook v. Walden,
  368 S.W.3d 604 (Tex. App.—Austin 2012, pet. denied).................................... 10

Stewart Title Guar. Co. v. Sterling,
  822 S.W.2d 1 (Tex. 1991) ................................................................................... 11

Stroud v. VBFSB Holding Corp.,
   917 S.W.3d 75 (Tex. App.--San Antonio 1996, writ denied).......................19, 20


                                                        ii
Weeks Marine, Inc. v. Garza,
 371 S.W.3d 157 (Tex. 2012) ............................................................................... 11

Wetzel v. Barnes,
 691 S.W.2d 598 (Tex. 1985) ......................................................................... 10, 16

STATUTES
Assisted Living Facility Licensing Act (“ALFLA”)......................................... 18, 19

TEX. BUS. ORG. CODE §§101.113 and 101.114 ................................................. 10, 13

TEX. HEALTH AND SAFETY CODE ANN. § 247.045(a) (Vernon 2014) ..................... 18

TEX. HEALTH AND SAFETY CODE ANN. §247.045(h) .............................................. 19

TEX. WATER CODE § 7.031(e) ........................................................................... 18, 19

TEX. WATER CODE § 7.032 ..................................................................................4, 11

TEX. WATER CODE § 7.101 ...................................................................................... 15

TEX. WATER CODE § 7.102 ...........................................................................4, 11, 18

RULES
Tex. R. Civ. Proc. 41 ............................................................................................... 11




                                                           iii
TO THE HONORABLE JUSTICES OF THE FIRST COURT OF APPEALS:

      This motion for rehearing and rehearing en banc is filed by Appellant, White

Lion Holdings, LLC (“WLH”) in response to the panel opinion and judgment issued

on September 24, 2015. See White Lion Holdings, L.L.C. v. State, 01-14-00104-CV

(Attached Exhibit 1), (cited as White Lion at Exhibit 1). Due to space limitations,

WLH incorporates its prior briefing on file with Court, especially regarding the

constitutional implications and presented in the Motion for Rehearing En Banc filed

on June 12, 2015. WLH filed its Motion to Supplement the Record on May 26, 2015

which the Panel denied in the opinion issued on September 24, 2015 and for which

WLH seeks rehearing. WLH re-urges the Motion as the documents are necessary for

consideration of this Motion. The documents referenced as “App. 1-4” are contained

in the Appendix concurrently filed with the Motion to Supplement on May 26, 2015.

                             ISSUES PRESENTED

      1. Did the panel err in affirming an improper severance which allowed the

         State double recovery against both the company and its member for the

         same conduct and same violations?

      2. Did the panel err in creating new legal duties for members of limited

         liability companies beyond the narrow exceptions currently recognized?




                                        1
                         I.     REASONS EN BANC REVIEW
       The panel opinion eviscerates important legal safeguards affecting future cases

against all owners of corporate entities, particularly members of a limited liability

company (“LLC”). 1 First, the panel creates unprecedented individual duties for

members to personally guarantee the company’s compliance with statutory and

financial obligations. Second, severance of the member from the company for the

same violation creates double recovery, transforming the corporate shield into a

sword for the state. Such precedent is contrary to public policy and will have a

chilling effect on all business enterprise and development in Texas.




1
 The panel’s opinion is not limited to members of LLC’s and thus its ruling impacts all corporate
entities and their owners and officers equally.
                                                2
                  II.    RELEVANT FACTS OMITTED BY PANEL
         Vision Metals, Inc., (“Vision”), prior owner of a facility in Rosenberg

(“Property”) received a permit from the predecessor of Texas Commission on

Environmental Quality (“TCEQ”) to operate an Industrial Waste Management Site

(Permit No. HW-50129-001), the regulatory document which controls activities at

the Property. CR. 96-97. A compliance plan (CP-50129) issued the same day

addressed monitoring and cleanup of contaminated groundwater. CR 20-21; 116-

148; 278. Vision operated a corrective action system (“CAS”) consisting of

monitoring wells, groundwater recovery and treatment wells and an Acid

Neutralization Treatment System (“ANTZ”) in conjunction with the manufacturing

process that generated hazardous waste. CR 21; 102; 116-118; 190-197; 278. Vision

failed to repair inoperable wells and defaulted on all obligations. TCEQ knew Vision

was wholly noncompliant with its obligations under the permit and compliance plan.

CR 198-225; 357-359. 2 Despite Vision’s default, TCEQ never made a claim against

Vision’s closure and post closure insurance policy (financial assurance) or filed any

enforcement action. CR 285. Vision filed for bankruptcy in 2000.

         In April, 2004, WLH acquired the Property from Vision through a bankruptcy

auction; personal property and business fixtures were sold to others. CR. 43-84. At

the time, the CAS was damaged but operational and needed some repairs. CR 198-


2
    2004 inspection report establishes TCEQ knew wells were inoperable. CR 198-225.
                                               3
225. The bankruptcy order required WLH allow buyers access between April and

August, 2004 to remove machinery, equipment and other items. CR 50; 69; 282-284.

Meanwhile, the obligations of CP-50129 were transferred to WLH. CR 22; 168-169.

As part of the Purchase Agreement, Vision’s financial assurance also was assigned

to WLH, and remained in effect until January 11, 2005. CR 292; 294-304.3

       When WLH acquired unfettered control of the Property, there was significant

damage to the Property and CAS, including gas, water and electrical systems

necessary for operation. WLH was left with significant property damage, a destroyed

CAS, no utilities, machinery or equipment necessary to operate the CAS and

consequently, no way to comply with the plan or permit. CR 282-285; 372-515.

       The State remained idle and did not file a claim against the insurance policy in

effect. Instead, after the policy lapsed, enforcement actions were filed against WLH

and its member, Bernard Morello, under TEX. WATER CODE §§ 7.102, 7.032. CR 3-

14; 280. Ironically, the judgments against WLH and Morello are based on the failure

to obtain financial assurance which was available but the State failed to utilize.

       Even prior to WLH ownership, the United States Environmental Protection

Agency (“EPA”) notified Vision and TCEQ that a study indicated there was little

likelihood groundwater used for human or animal consumption or irrigation was



3
 Contrary to summary judgment standards, the panel rejected this evidence and approved fines
and penalties assessed as early as October, 2004.
                                              4
affected by the existing contamination and several alternative corrective actions were

available in lieu of the existing CAS network. CR 305-356. For several years, WLH

worked with the EPA (and TCEQ) to modify the outdated and unfeasible plan and

permit, gaining valuable information and investigating alternatives. The EPA even

assisted WLH in drafting correspondence to the TCEQ. CR. at 361-363. The EPA

suggested an alternative plume management plan to monitor the ground water. CR

328; 360-363; 365. In order to implement this approach and modify the existing plan,

WLH needed the approval of TCEQ and enforcement action abated. CR 365. After

TCEQ refused, the EPA disqualified the Property. CR 21-22; 268-270.

      Although a formal request for major modification to the plan was not filed, the

negotiations were ongoing, both before and during the pendency of the case,

regarding such modifications. WLH also allowed TCEQ access to conduct numerous

inspections of the Property. CR 280. When negotiations fell through, with little notice

and no additional discovery, the State filed its motion for summary judgment against

WLH only, and sought severance within its motion. (App. 1, State MSJ p. 24-25).

      WLH filed a sworn motion for continuance to allow time to confer with experts

to determine the cost and feasibility of restoring or modifying the existing remedial

system, issues central to its defense that required expert testimony. CR 516-530; 1

RR 12. Furthermore, despite the ongoing discussions and cooperation by WLH, the

State did not provide WLH copies of the 2005 and 2008 TCEQ inspection reports

                                          5
until August 21, 2013 or a copy of the July 29, 2013 TCEQ inspection report until

shortly before the summary judgment hearing. CR 518. The State’s failure to timely

provide these reports prevented WLH from obtaining an expert report for its response

to the summary judgment motion to refute issues identified in the reports and raised

in the State’s motion, also central issues. The panel opinion rebukes WLH for

supposedly doing nothing for several years and not presenting evidence of the cost of

repairing the system. White Lion at 17. The panel even dismisses the significance of

the evidence of numerous lawsuits detailing the damage to the Property which WLH

filed, while the State did nothing to prosecute its case during those same years. Id.

The State’s sudden change of tactic left WLH with no time to prepare its defense to

a case that it had been working toward resolving.

      Both judgments against WLH and Morello are based on two violations: (1)

WLH failed to comply with CP-50129; and (2) WLH failed to acquire financial

assurance in the amount of $574,000. As to WLH, the State stipulated to the

minimum daily fine of $50 for each violation (avoiding a fact issue on the fine). CR.

at 31. The trial court severed WLH, transforming the interlocutory summary

judgment into a final one and leaving a pending case against Morello. CR 549-554,

629. After briefing herein, the State successfully moved for summary judgment

against Morello for the same violations against WLH, again stipulating to the

minimum fines. App. 1. The State made clear that its claims against Morello were

                                         6
not based on independent tortious acts and did not seek to pierce the corporate veil.

App. 4, Ex. G at 14, 34. Accordingly, the judgment against Morello cannot not based

on his individual, independent conduct, rather it is admittedly based on the fact that

“Morello [is] operator and sole decision maker of White Lion . . .” App. 1, Pl’s MSJ

at p. 29.



            III.    FACTUAL ERRORS IN THE MAJORITY OPINION

   1. The State’s case against Morello is not based on his individual “actions

       and failures to act, distinct from WLH’s actions and inactions.” White Lion

       at 7. Rather the case is wholly based on “his company [failing] to perform its

       duties under the Compliance Plan.” State Resp. to Motion for Rehearing at 18.

   2. There were no acts that Morello “personally took or failed to take”…

       “that resulted in WLH’s violation of the compliance plan…” White Lion at

       8. The evidence is undisputed and the State concedes that all Morello’s acts or

       omissions were as the member of the company in furtherance of company

       interests.

   3. Morello did not “purchase the site personally and assign it to White Lion”

       nor did he have “his own obligations with respect to the site[.]” White Lion

       at 7. The State did not allege Morello owned the Property. App. 4. Ex. G. at

       33. While it is true that Morello bid on the Property, it is also true that Morello

                                            7
  assigned his rights to purchase the Property to WLH. CR at 76. Vision

  conveyed the Property directly to WLH. CR at 78-84. The evidence

  conclusively establishes Morello never owned the Property.

4. It is not true that Morello “lacked the expertise to manage the site and

  made no efforts to manage it until the State filed suit[.]” White Lion at 8.

  Shortly after acquiring the property, WLH, through Morello, worked diligently

  to identify and develop an alternative monitoring and remediation plan that

  was appropriate for the current conditions and use of the Property. CR 22; 265-

  267; 360-365. The State refused to abate the suit which the EPA required to

  finalize the recommendation so the request for modification could be filed and

  approved. CR 21-22; 268-270. In addition, WLH maintained soil stabilization

  areas and secured the site. CR 285.


5. WLH did provide financial assurance for a period of time after purchase.

  Although the panel disregards the financial assurance that WLH acquired

  through assignment with its purchase, claiming that the correspondence

  authorizing assignment did not prove it was actually assigned, the evidence, at

  the very least, creates an inference that the financial assurance was assigned

  and provided, precluding summary judgment. CR at CR 292; 294-304.




                                        8
6. The EPA was “ready, willing and able” to work with WLH to gain

  approval and implement the alternative plan. EPA would not assist unless

  the enforcement action was abated, which the State refused. CR. at 365. Only

  after the State refused (and nearly a year later) did the EPA withdraw its

  recommendations and find “such an approach was not feasible.” CR. at 276-

  277; White Lion at 3.




                                    9
                    IV.   ARGUMENT AND AUTHORITIES

A.    TO AFFIRM THE TRIAL COURT’S SEVERANCE, THE PANEL IMPROPERLY
      EXPANDED MEMBER/AGENT LIABILITY IN TWO WAYS.
      The panel shattered pro-business public policy of Texas and turned Texas law

on its head when it failed to recognize basic principles required to impose personal

liability on company members/officers. Texas law allows personal liability when:

          • the corporate veil is pierced;
          • the member commits a fraud or tortious act; or
          • the regulation specifically provides an exception (statutory exception).

See, TEX. BUS. ORG. CODE §§101.113 and 101.114; Shook v. Walden, 368 S.W.3d

604, 613–14 (Tex. App.—Austin 2012, pet. denied); Miller v. Keyser 90 S.W.3d 712,

717 (Tex. 2002); Wetzel v. Barnes, 691 S.W.2d 598 (Tex. 1985). See also, Maxey v.

Citizens Nat’l Bank of Lubbock, 507 S.W.2d 722, 726 (Tex. 1974) (citation omitted).

None of these exceptions are present here. The State admits it did not seek to pierce

the corporate veil and that its claims are not based on tortious conduct. Leaving only

the statutory exception, the panel confused specific liability statutes with tortious

conduct statutes. In so doing, it allowed personal liability without any legal basis.

      The panel incorrectly uses the personal liability of Morello to justify the

severance of the case against the member from the case against the company,

violating the one-satisfaction rule. Severance is proper only when: (1) the controversy

involves more than one cause of action; (2) the severed claim is one that could be

asserted independently in a separate lawsuit; and (3) the severed actions are not so

                                          10
interwoven with the other claims that they involve the same facts and issues. Guar.

Fed. Sav. Bank v. Horseshoe Operating Co., 793 S.W.2d 652, 658 (Tex. 1990); Tex.

R. Civ. Proc. 41. If a court severs a claim and any of the three elements are not

satisfied, the result is an abuse of discretion. See Jones v. Ray, 886 S.W.2d 817, 822

(Tex. App.—Houston [1st Dist.] 1994, orig. proceeding)(emphasis added).

      Rule 41 prevents violation of the one-satisfaction rule, which applies when

multiple defendants commit the same act or when multiple defendants commit

different acts that result in a single injury. Crown Life Ins. Co. v. Casteel, 22 S.W.3d

378, 391 (Tex.2000). See also Weeks Marine, Inc. v. Garza, 371 S.W.3d 157, 162

(Tex.2012) ("The basis of a double recovery challenge is that a party recovered twice

for one injury."). The fact that more than one defendant may have caused the injury

or that there may be more than one theory of liability does not modify this rule.

Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1, 8 (Tex.1991).

      In affirming severance to sustain subject matter jurisdiction, the panel

improperly expanded member/agent liability and rewrote Texas law in two ways.

First, the panel created unprecedented duties on members to guarantee the conduct of

the company. Second, the panel expanded the reach of the Water Code, interpreting

it as a statutory exception to the corporate shield without clear legislative authority,

imposing liability on the member and allowing double recovery.




                                          11
      1. THE PANEL IMPOSED UNPRECEDENTED DUTIES ON A MEMBER
      OF AN LLC TO GUARANTEE ITS STATUTORY AND FINANCIAL
      OBLIGATIONS.


      The import of the panel’s opinion regarding personal liability is that members

are now personally liable for violations of company obligations. Any act or omission

(violation) by the company necessarily stems from acts taken by the member because

companies can act only through human agents. In re Merrill Lynch Trust Co. FSB,

235 S.W.3d 185, 188 (Tex. 2007). Artificially separating one from the other, the

panel created a path to turn single “human acts” into multiple legal acts (and multiple

judgments). Simply by couching the “act” of the individual in the terms of “allowed,

permitted or directed [the company] to…” does not transform the act itself into an act

separate from the company and violates long-standing precedent.

      Severance of claims against the company and its member creates

uncontemplated duties upon members to personally guarantee the conduct of the

company and its financial obligations, separate and distinct from the company’s

contemplated legal duties. The panel’s opinion eviscerates liability protections

afforded members who will always be human actors since companies must “act”

through these individuals. Id. Thus any “act or omission” by the company is also an

“act or omission” by the individual member and therefore, rather than being a shield

from liability, the company structure is actually a pathway to duplicate recovery and

double jeopardy.

                                          12
                        a)     PERSONAL LIABILITY IS NOT SEPARATE LIABILITY.


         Allowing personal liability4 is one thing, but allowing severance under the

premise that these are separate causes of action, not interwoven in facts and issues to

somehow justify a double recovery is unconscionable. The idea that Morello had a

separate, personal duty to ensure the company did no wrong is unprecedented.

Furthermore, the claims are based on the exact same actions taken (or not taken)

which necessarily effected the same violation and this fabricated separation of the

company “doing’ and the member “directing” is disingenuous. In the panel’s world,

members will be subjected to double fines and penalties because the LLC designed

to provide a company shield for its members instead creates two legal targets in direct

contravention of clear statutory mandate. TEX. BUS. ORG. CODE §§101.113 and

101.114. Although the “act” occurs only once, the illusion created by the panel sees

two separate and distinct acts; one under the hat of the company (WLH) and another

under the hat of its member (Morello). Such a stretch clearly violates the one

satisfaction rule.

         Even if the panel were correct that these “human actors” are legally separate,

the panel opinion allows multiple persons to be separately liable for the same injury

(violation). The judgment against WLH is based on its violation of the compliance



4
    WLH in no way admits or suggests that Morello is personally liable.
                                                 13
plan. Morello was fined because “he personally took or failed to take actions that

resulted in White Lion’s violation of the compliance plan…and directing White Lion

not to comply with the compliance plan…” White Lion at 8. The same faulty logic

was applied to the duty and obligation to provide financial assurance. The failure to

provide financial assurance is most disturbing. Without requesting or securing from

Morello a personal guarantee at the time it assigned the obligations of Vision to

WLH, the State made Morello not just liable, but separately liable for the financial

obligations of WLH. Another clear violation of the one satisfaction rule.

         In sum, the panel ignores the one satisfaction rule in two ways: (1) it holds a

single actor (company) liable in multiple capacities (member and company); and (2)

it allows double recovery for a single violation. The impact is undeniable; the State

is free to recover against a company for failing to comply with a plan; then, after

securing payment, recover another judgment against the member(s) for “allowing or

permitting” the company violation. How can the panel maintain that these are not the

same claim? White Lion at 7-8. Ignoring for the moment the constitutional and strict

statutory construction requirements where state action is involved 5, where in Texas

jurisprudence has a court allowed separate causes of action against a company and

its member for the same offense; one for committing the offense and the other for

allowing the offense to be committed? Such a circular and strained application


5
    See Amended Motion for Rehearing En Banc filed June 12, 2015 at 17-21.
                                               14
completely abolishes the statutory shield, creates a corporate target and flies in the

face of Texas law.



                     b)  “PERSON” AS DEFINED IN THE WATER CODE DOES NOT
                     AUTHORIZE PERSONAL AND SEPARATE LIABILITY.
      The State’s summary judgment motion against Morello began with the premise

that, under Texas Water Code Section 7.101, “a person” incurs civil liability where

he “cause[s], suffer[s], allow[s], or permit[s] a violation of a statute within the

commission’s jurisdiction or a rule adopted or an order or permit issued under such a

statute” and that the term “person” includes individuals. The panel ignores long

standing legal principles that distinguish between actions of the corporation and

actions of the individual. Just because Morello is an individual does not make him

personally and separately liable for violations of the company. This logic creates a

new cause of action against every member, officer, director or owner of any entity

that is found liable because he or she “didn’t stop the violation” and makes them

individually liable for a second penalty.

      The panel opines that Morello’s liability was direct and flowed from the mere

fact that he was a “person” in violation of Texas Water Code Section 7.101. The panel

states severance was proper because the “ways in which White Lion and Morello

allegedly violated the compliance plan are different.” White Lion at 8. The panel

ignores the fact that Morello was not subject to the compliance plan and had no duty
                                            15
under the plan other than as the member of WLH. Morello never owned the Property

and never assumed any obligations under the plan or permit. The effect of allowing

the severance and duplicate judgments to stand is to create a new standard making

members liable for the acts and omissions of the company merely because they are

“human actors.” There is simply no precedent for imposition of such personal,

duplicate liability against the member. The ruse that Morello “directed White Lion

not to comply with the compliance plan” in order to assess liability for separate acts

flies in the face of all reason and logic.



      2. THE PANEL DISTORTED STATUTORY AUTHORITY FOR PERSONAL
      LIABILITY OF AGENTS.


      The panel misconstrues the statutory exception to the general rules regarding

personal liability of members. Under traditional standards, for Morello to be

personally liable, the State must show actual tortious conduct. Wetzel v. Barnes, 691

S.W.2d 598; Light v. Wilson 663 S.W.2d 813 (Tex. 1984). This makes perfect sense

because every person, individual or otherwise, has a duty to avoid tortious conduct.

The State expressly denied liability based upon independent tortious conduct:

      Morello asserts that compliance with the Compliance Plan has been
      caused by or otherwise rendered impractical by third parties. This matter
      is not a tort action. This is a statutory enforcement action brought against
      Morello as operator and sole decision maker of White Lion . . . (App..
      1, Pl. MSJ.)


                                             16
      There can be no doubt the judgment against Morello is not derived from an

independent tort. (App.. 1, Pl. MSJ). Instead, the State openly conceded it was

seeking a second judgment against Morello because “Morello is White Lion.” (App..

4, Ex. G, Supp. RR at 10:14). Accordingly, the only legal basis for Morello to be held

liable is through a clear and unequivocal statutory exception. Instead of looking to

statutes which impose liability on company owners and operators, the panel relied on

the DTPA and Keyser, for the proposition that “[s]tatutes providing for liability of

any "person" in violation allow courts to render judgments against both corporate

entities and their agents.” White Lion at 8.

      Keyser, is a DTPA suit against a home builder, D.B. Interests, Inc. (“DBI”),

and Keyser, the sales agent, for fraud and misrepresentations. 90 S.W.3d 712. After

the court dismissed claims against DBI as untimely, trial proceeded against Keyser.

Id. The jury found Keyser liable but the intermediate court of appeals reversed,

holding a corporate agent acting within the scope of his employment could not be

personally liable under the DTPA. Keyser, 90 S.W.3d at 717. On review, the

Supreme Court reversed and recognized “Texas’ longstanding rule that a corporate

agent is personally liable for his own fraudulent or tortious acts.” Id. (emphasis

added). Id at 717. As such, Keyser does not provide authority for a statutory

exception to liability, but for actions based in tort, which this is not.




                                            17
      In order to avoid the requirement that Morello committed fraud or a tort, the

State argued that “the actions are viewed, not in the context of a tort, but in the context

of whether such actions amount to causing, suffering, allowing, or permitting a

violation of law” as set forth in Texas Water Code section 7.102. (Pl’s MSJ Reply at

5.) This misses the point. In order to find Morello personally liable under a statutory

exception in the Water Code, it is not necessary to determine if Morello is a “person”

(of course he is) but whether there is language purporting to specifically authorize

liability of and claims against members. The Water Code is clear: “If a person named

in the order does not comply with the order, the commission may assess an

administrative penalty or seek a civil penalty in accordance with this chapter. TEX.

WATER CODE §7.031(e). Morello is not named in the plan or permit.

      One statute that specifically provides otherwise is the Assisted Living Facility

Licensing Act (“ALFLA”).

      Except as provided by Subsections (b) and (c), a person who violates
      this chapter or who fails to comply with a rule adopted under this chapter
      and whose violation is determined by the department to threaten the
      health and safety of a resident of an assisted living facility is subject to
      a civil penalty of not less than $100 nor more than $10,000 for each act
      of violation. Each day of a continuing violation constitutes a separate
      ground of recovery. TEX. HEALTH AND SAFETY CODE ANN. § 247.045(a)
      (Vernon 2014).




                                            18
       Unlike the Water Code, ALFLA provides a specific statutory exception to the

corporate shield by authorizing a “controlling person 6” to be held liable:

       If a person who is liable under this section fails to pay any amount the
       person is obligated to pay under this section, the state may seek
       satisfaction from any owner, other controlling person, or affiliate of the
       person found liable. The owner, other controlling person, or affiliate
       may be found liable in the same suit or in another suit on a showing by
       the state that the amount to be paid has not been paid or otherwise legally
       discharged. The executive commissioner by rule may establish a method
       for satisfying an obligation imposed under this section from an insurance
       policy, letter of credit, or other contingency fund.

       TEX. HEALTH AND SAFETY CODE ANN. §247.045(h).


       The Water Code does not contain an analogous provision and instead, as noted

by the panel, parallel’s the DTPA. Notably, ALFLA allows separate suits against the

“controlling person” only after the company fails to pay the fines and therefore

prevents double recovery. The panel’s reliance on Keyser is misplaced and the Water

Code provisions insufficient to support personal liability of a member.

B.     SEVERANCE WAS AN ABUSE OF DISCRETION AND DEPRIVES THIS COURT OF
       JURISDICTION OVER THIS APPEAL.
       WLH and Morello are now in the impossible position of having to fight the

same case on two fronts before two different appellate courts, with neither court

having the full record before it. See Stroud v VBFSB Holding Corp., 917 S.W.2d 75,




6
 The definition of “controlling person” clearly includes a sole, managing member. TEX. HEALTH
& SAFETY CODE §247.005.
                                             19
78 (Tex. App. -- San Antonio 1996, writ denied) (dismissal of compulsory

counterclaims improperly severed, “placed [appellant] in the impossible position of

having to perfect a new appeal based on the then-final judgment before this court had

issued its dismissal of his first appeal.”).

      Conflicting authorities among the appellate courts over whether an improper

severance deprives an appellate court of jurisdiction makes rehearing essential to re-

examine this Court’s jurisdiction and perhaps resolve the procedural dilemma that

has plagued courts and litigants. Several courts, including the Austin Court of

Appeals, have held that a severance that splits a cause of action or single ground of

recovery deprives the appellate court of jurisdiction, particularly where the severance

is needed to make the judgment final.



                                    V.     PRAYER
      Appellant White Lion Holdings LLC, requests that this Court grant this Motion

for Rehearing En Banc, and upon rehearing, withdraw the September 24, 2015 panel

opinion, reverse the order of severance and dismiss this appeal for lack of jurisdiction.

WLH prays for such further relief to which he may show himself justly entitled.




                                               20
Respectfully Submitted,

LUCCI SMITH LAW PLLC


By: /s/ Jacqueline Lucci Smith
Jacqueline Lucci Smith
TBA #: 00786073
10810 Katy Freeway, Suite 102
Houston, Texas 77043
Tel.: 832-494-1700
Fax: 832-494-1426
Email: JLS@LucciSmithLaw.com

BAIN & BAIN PLLC

By: /s/ Joan Lucci Bain
Joan Lucci Bain
TBA #: 01548020
10810 Katy Freeway, Suite 102
Houston, Texas 77043
Tel.: 713-629-6222
Fax: 713-629-6226
Email: JBain@BainandBainlaw.net




        21
                        CERTIFICATE OF SERVICE
      I certify that a copy of this Appellant’s Motion for Rehearing and Rehearing
En Banc was served on counsel for the State, Craig Pritzlaff, by email on November
16, 2015.

                                                  /s/ Jacqueline Lucci Smith

                                                  Jacqueline Lucci Smith




                     CERTIFICATE OF COMPLIANCE
       I certify that the computer program used to prepare this document counted
4496 words in the pertinent parts of the document in accordance with TRAP
9.4(i)(2)(D).

                                                  /s/ Jacqueline Lucci Smith

                                                  Jacqueline Lucci Smith




                                       22
                                   EXHIBIT 1

Opinion issued September 24, 2015




                                      In The

                               Court of Appeals
                                      For The

                          First District of Texas
                             ————————————
                               NO. 01-14-00104-CV
                            ———————————
                 WHITE LION HOLDINGS, L.L.C., Appellant
                                         V.
                       THE STATE OF TEXAS, Appellee


                    On Appeal from the 98th District Court
                             Travis County, Texas
                    Trial Court Case No. D-1-GV-13-001068


                MEMORANDUM OPINION ON REHEARING

      The trial court entered summary judgment for the State of Texas that White

Lion Holdings, L.L.C. violated the terms of a compliance plan issued by the Texas

Commission on Environmental Quality (TCEQ). White Lion appeals, arguing in

two issues that the trial court improperly denied its motion for continuance and that
the summary-judgment evidence raised questions of material fact sufficient to

prevent summary judgment. We affirm. 1

                                    Background

      In 2006, the State initiated this lawsuit, alleging that White Lion violated a

waste-management compliance plan issued by TCEQ.                 The plan and a

contemporaneously-issued permit govern the             monitoring, treatment, and

management of surface wastewater impoundments and a plume of contaminated

groundwater at a facility now owned by White Lion and formerly used for pipe

manufacturing in Rosenberg, Texas.         During its operational life, the facility

generated hazardous wastewater that was treated on-site in a system that included

five surface impoundments.       The prior owner of the facility, Vision Metals,

discovered that the impoundments were sources of groundwater contamination,

including elevated concentrations of cadmium, cobalt, lead, barium, chromium,

nickel, silver, zinc, iron, sulfate, and acidic compounds.




1
      On April 9, 2015, we rendered our original opinion in this case. On May 26,
      2015, White Lion filed three motions: a motion to supplement the record, a
      motion for rehearing, and a motion for rehearing en banc. It subsequently
      amended the motion for panel rehearing and the motion for rehearing en
      banc. We deny the motion to supplement the record and motion for panel
      rehearing, but withdraw our opinion and judgment of April 9, 2015, and
      issue this opinion and a new judgment in their stead. We dismiss the motion
      for rehearing en banc as moot. See, e.g., Brookshire Bros., Inc. v. Smith, 176
      S.W.3d 30, 41 (Tex. App.—Houston [1st Dist.] 2005, pet. denied).
                                          2
      In 1988, the TCEQ’s predecessor, the Texas Natural Resources

Conservation Commission, issued Hazardous Waste Permit 50129-001 to Vision

Metals to govern the management, closure, and long-term care of the wastewater

impoundments. Contemporaneously, it issued to Vision Metals Compliance Plan

50129. The compliance plan has been modified several times since then.

      White Lion acquired the facility in a bankruptcy sale in April 2004. At the

same sale, various third parties purchased machinery and equipment at the

property. According to White Lion, some of those third parties damaged the

facility while removing their property in the period from April 2004 through

August of that year. White Lion estimated the costs of repairs to exceed $1.4

million and initiated lawsuits to recover damages from the third parties.

      Meanwhile, the existing permit and compliance plan were transferred to

White Lion. White Lion, however, did not provide the State with a required

“financial assurance” mechanism, such as a bond or irrevocable letter of credit,

guaranteeing its performance of its obligations under the permit and compliance

plan. It did, however, request an extension of time to provide such assurance.

White Lion also discussed with the United States Environmental Protection

Agency switching the site to a “plume management approach,” which would

simplify management of the site, but the EPA told White Lion that such an

approach was not feasible.


                                          3
       TCEQ gave White Lion an extension of time to address outstanding

compliance issues and submit an amendment to the compliance plan but did not

extend the time for White Lion to provide financial assurance. White Lion never

submitted any application to amend the compliance plan and never provided any

financial assurance.

       In 2006, the State sued White Lion for violations of the compliance plan,

seeking civil penalties under the Water Code, unpaid hazardous waste facility fees,

an injunction to secure White Lion’s performance of its duties under the

compliance plan, and attorney’s fees. The State later amended its petition, naming

White Lion’s owner, Bernard Morello, as an additional defendant.

       The case was set for trial in 2008, continued, set again in 2011, and

continued again. In August 2013, the State filed a motion for summary judgment.

White Lion responded, arguing in part that full compliance with the plan was

impossible, that it had complied to the extent possible, and that injunctive relief

was improper in the absence of a showing of a risk of irreparable injury. White

Lion also moved for a continuance to obtain an expert opinion on the costs and

feasibility of repairs to the site.

       The trial court held a hearing at which it denied White Lion’s motion for

continuance and then granted the State’s motion for summary judgment. It entered

judgment that the State recover from White Lion (1) civil penalties of $325,600,


                                        4
(2) unpaid hazardous waste facility fees of $129,464.15, (3) pre-judgment interest

on the unpaid hazardous waste facility fees, (4) attorney’s fees, (5) costs of court,

and (6) post-judgment interest.2 It also enjoined White Lion as follows: “White

Lion shall [immediately] comply with each limitation, requirement, and condition

of the Compliance Plan.” In the same order, the trial court severed the State’s case

against Morello, rendering the judgment against White Lion final. The State later

obtained summary judgment in the severed case against Morello.

       In two issues, White Lion appeals, arguing, first, that the trial court erred in

denying White Lion’s motion for continuance and, second, that the trial court

improperly granted summary judgment because White Lion raised questions of

material fact. 3

                         Our Jurisdiction over this Appeal

       On rehearing, White Lion argues for the first time that we lack jurisdiction

to hear this appeal. It argues that the State’s case against Morello was improperly

severed from the case against White Lion and that, under controlling authority, a
2
       The original judgment incorrectly stated, under the heading “Post-Judgment
       Interest,” that “[t]he State shall recover pre-judgment interest on all amounts
       awarded in this judgment at the annual rate of 5.00%.” On the State’s motion, the
       trial court entered judgment nunc pro tunc correcting “pre-judgment” in that
       section to “post-judgment” and making other clerical corrections.
3
       On January 7, 2014, the Texas Supreme Court ordered this appeal transferred from
       the Court of Appeals for the Third District of Texas. See TEX. GOV’T CODE ANN.
       § 73.001 (West 2013) (authorizing transfer of cases). We are unaware of any
       conflict between the precedent of the Court of Appeals for the Third District and
       that of this Court on any relevant issues. See TEX. R. APP. P. 41.3.
                                           5
judgment rendered after an improper severance is not an appealable, final

judgment. In support of this argument, White Lion has submitted to this Court

(1) the State’s motion for summary judgment against Morello, (2) Morello’s

response, (3) the final summary judgment against Morello, (4) Morello’s motion

for new trial, and (5) the “Trial Court Order, if any, denying Motion for New

Trial.” It asks that we grant leave to supplement the record to include these

documents and, having done so, hold that the severance was improper.

      White Lion’s jurisdictional argument has three parts: (1) the State’s case

against Morello is based entirely on his status as the sole member of White Lion;

(2) the severance order is invalid because it (a) severs a single cause of action into

separate claims and (b) severs inextricably intertwined claims against different

parties; and (3) an invalid severance requires dismissal under the case law of the

Austin Court of Appeals where this appeal was originally filed.

      We have jurisdiction only over final judgments “[u]nless there is a statute

specifically authorizing an interlocutory appeal.” Cherokee Water Co. v. Ross, 698

S.W.2d 363, 365 (Tex. 1985) (orig. proceeding) (per curiam); see Rusk State Hosp.

v. Black, 392 S.W.3d 88, 95 (Tex. 2012). “Jurisdiction over the subject matter of

an action may not be conferred or taken away by consent or waiver, and its

absence may be raised at any time.” Carroll v. Carroll, 304 S.W.3d 366, 367




                                          6
(Tex. 2010) (per curiam) (citing Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852

S.W.2d 440, 445 (Tex. 1993)).

      Under Rule 41 of the Texas Rules of Civil Procedure, “[a]ny claim against a

party may be severed and proceeded with separately.” TEX. R. CIV. P. 41. “This

rule grants the trial court broad discretion in the matter of severance and

consolidation of causes.” Guar. Fed. Sav. Bank v. Horseshoe Operating Co., 793

S.W.2d 652, 658 (Tex. 1990) (citing McGuire v. Commercial Union Ins. Co. of

N.Y., 431 S.W.2d 347 (Tex. 1968)).            “The trial court’s decision to grant a

severance will not be reversed unless it has abused its discretion.” Id. (citation

omitted). “A claim is properly severable if (1) the controversy involves more than

one cause of action, (2) the severed claim is one that would be the proper subject of

a lawsuit if independently asserted, and (3) the severed claim is not so interwoven

with the remaining action that they involve the same facts and issues.”            Id.

(citations omitted).

      The first step of White Lion’s argument is factually incorrect: the State’s

motion against Morello focuses on Morello’s actions and failures to act, as distinct

from White Lion’s actions and inactions. Among other theories, the State argues

that Morello is liable for penalties because (1) he purchased the site personally and

assigned it to White Lion, but did not himself comply with his own obligations

with respect to the site; (2) as a corporate officer, he can be held personally liable


                                          7
for penalties under the Water Code; (3) he lacked the expertise to manage the site

and made no efforts to manage it until the State filed suit; and (4) he personally

took or failed to take actions that resulted in White Lion’s violation of the

compliance plan, such as removing the groundwater treatment system, throwing

away “monitoring well protective housing caps,” and directing White Lion not to

comply with the compliance plan in various ways.

      The second step of White Lion’s argument is also flawed. The severance

order did not split one cause of action, but rather split two causes of action on the

same legal theory: one claim against each defendant. Nor did it split inextricably

intertwined claims. The claims against White Lion and those against Morello are

based on the Water Code, which imposes liability on any “person who causes,

suffers, allows, or permits a violation of a statute, rule, order, or permit relating to

any . . . matter within [TCEQ’s] jurisdiction to enforce.” TEX. WATER CODE. ANN.

§ 7.102 (West 2008). Statutes providing for liability of any “person” in violation

allow courts to render judgments against both corporate entities and their agents.

E.g., Miller v. Keyser, 90 S.W.3d 712, 715–18 (Tex. 2002) (because Deceptive

Trade Practices Act imposes liability on “any person” who violates it, both

companies and their agents can be held liable). The ways in which White Lion and

Morello allegedly violated the compliance plan are different. Moreover, to the

extent the facts supporting the State’s claims against White Lion are intertwined


                                           8
with those supporting the claims against Morello, those facts are undisputed. No

party disputes, for example, that no monitoring is being performed at the site or

that the site’s remediation, monitoring, and control systems are offline, disabled,

dismantled, or missing entirely. In other words, the claims overlap only with

respect to facts that are conclusively established in the record, and there is no risk

that a severance would create inconsistent judgments.

      In its motion for rehearing, White Lion also argues for the first time that the

severance violates the due process protections and prohibitions on excessive fines

in the United States and Texas Constitutions. It did not, however, preserve these

arguments by raising them in the trial court, nor did it raise them on appeal. “As a

rule, a claim, including a constitutional claim, must have been asserted in the trial

court in order to be raised on appeal.” Dreyer v. Greene, 871 S.W.2d 697, 698

(Tex. 1993). Both due-process and excessive-fines arguments can be waived.4 By

failing to preserve these arguments, White Lion has waived them. TEX. R. APP.

P. 33.1(a)(1).




4
      E.g., In re L.M.I., 119 S.W.3d 707, 711 (Tex. 2003) (due process); Anderson v.
      McCormick, Nos. 01-12-00856-CV, 01-12-00857-CV, 2013 WL 5884931, at *3
      (Tex. App.—Houston [1st Dist.] Oct. 31, 2013, no pet.) (mem. op.) (due process);
      Ratsavong v. Menevilay, 176 S.W.3d 661, 671 (Tex. App.—El Paso 2005, pet.
      denied) (due process); Konkel v. Otwell, 65 S.W.3d 183, 188 (Tex. App.—
      Eastland 2001, no pet.) (excessive fines); Armstrong v. Steppes Apartments, Ltd.,
      57 S.W.3d 37, 49 (Tex. App.—Fort Worth 2001, pet. denied) (both due process
      and excessive fines).
                                          9
      We hold that the trial court did not abuse its discretion by granting the

State’s conditional motion for severance. Because the severance was proper, we

need not reach the final step of White Lion’s argument: whether this Court, as the

transferee court of an appeal originally filed in the Austin Court of Appeals, can

exercise jurisdiction over a summary judgment that purports to be final but results

from an improper severance. Because the documents that White Lion has provided

from the State’s case against Morello are relevant only to its jurisdictional

arguments, we deny White Lion’s motion to supplement the record.

      We have jurisdiction over this appeal. Accordingly, we proceed to the

merits.

                             Motion for Continuance

      In its first issue, White Lion argues that the trial court erred in denying

White Lion’s motion for continuance. White Lion requested a continuance on two

occasions. First, in its response to the State’s motion for summary judgment, it

requested “that any hearing on [the motion] be reset for at least 90 days to give

[White Lion] time to consult with experts to determine what remedial action is

feasible.” In that response, it admitted that the facility’s mitigation and monitoring

systems had no electrical power and were not operational, arguing that

“[c]ompliance with the [Compliance] Plan has been rendered impractical and

commercially and economically [i]nfeasible by damages to the facility by third


                                         10
parties.” White Lion then filed a motion for continuance, asking “that the court

reset the hearing [on] the State’s [motion for summary judgment] for 90 days . . . to

give [White Lion] time to confer with experts to determine the cost and feasibility

of restoring the existing remedial system and/or modifying the remedial system.”

According to White Lion, it “want[ed] to resolve this matter but need[ed] a

reasonable time to evaluate the situation.” In the motion, it acknowledged that it

needed “an extension to comply with TCEQ’s requests” and that, as of August

2013, White Lion “need[ed] to quickly come into full compliance with the existing

[compliance] plan.” The trial court denied the motion for continuance at the start

of the hearing on the motion for summary judgment.

A.    Standard of review

      We review a trial court’s ruling denying a motion for continuance for an

abuse of discretion. BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 800

(Tex. 2002); Carter v. MacFadyen, 93 S.W.3d 307, 310 (Tex. App.—Houston

[14th Dist.] 2002, pet. denied). A trial court abuses its discretion when it reaches a

decision so arbitrary and unreasonable as to amount to a clear and prejudicial error

of law. Marchand, 83 S.W.3d at 800. The trial court may order a continuance of a

summary judgment hearing if it appears “from the affidavits of a party opposing

the motion that he cannot for reasons stated present by affidavit facts essential to

justify his opposition.” TEX. R. CIV. P. 166a(g). In a first motion for continuance


                                         11
based on the ground that testimony is needed, the affidavit supporting the motion

must (1) show that the testimony is material and (2) state that due diligence has

been used to procure the testimony, describing the diligence used and why it failed,

if known. TEX. R. CIV. P. 252. In determining whether there has been an abuse of

discretion, we view the evidence in the light most favorable to the trial court and

indulge every presumption in favor of the judgment. Hatteberg v. Hatteberg, 933

S.W.2d 522, 526 (Tex. App.—Houston [1st Dist.] 1994, no writ) (citing Parks v.

U.S. Home Corp., 652 S.W.2d 479, 485 (Tex. App.—Houston [1st Dist.] 1983,

writ dism’d)).

B.    The trial court did not abuse its discretion

      White Lion has not shown that the trial court abused its discretion by

denying the requested continuance. White Lion acquired the property in April

2004. TCEQ transferred the then-existing permit and compliance plan to White

Lion and issued a revised permit and compliance plan identifying White Lion as

the permittee and property owner in July 2004. The State initiated this suit in April

2006 and filed its motion for summary judgment in August 2013. White Lion thus

had possession of the property for over nine years and notice of the State’s claims

for more than seven years before the summary-judgment motion. But it admits

that it made no attempt to retain an environmental consultant during that period of

over nine years, waiting until just two weeks before the State filed its motion for


                                         12
summary judgment to begin its search. White Lion makes no attempt in either its

motion for continuance or its appellate brief to explain why it could not have

retained an expert and obtained a report before that time.

      Further, White Lion did not articulate in its motion for continuance why it

needed an expert’s opinion before the motion for summary judgment hearing. It

stated only that it wanted “time to confer with experts to determine the cost and

feasibility of restoring the existing remedial system and/or modifying the remedial

system.” But those were not issues before the trial court when it considered the

motion for summary judgment. That motion addressed only whether White Lion

had complied with the compliance plan and governing law and, if not, what civil

penalties, unpaid fees, and injunctive relief should be assessed against it. White

Lion’s evidence, if obtained, would have pertained to the cost of remediation, not

White Lion’s liability or the calculation of penalties or fees for its past

noncompliance.     Indeed, White Lion made no attempt to connect the expert

opinions that it sought to any of the claims on which the State obtained summary

judgment.

      We also note that the affidavit supporting the motion for continuance did

not describe the evidence that White Lion sought, show that the evidence is

material, state that due diligence has been used to procure the evidence, or describe

the diligence and why it failed, if known. TEX. R. CIV. P. 252.


                                         13
       Because White Lion failed to demonstrate that it needed a continuance to

obtain evidence essential to its defense, we hold that the trial court did not abuse its

discretion in denying the motion for continuance. Accordingly, we overrule White

Lion’s first issue.

                          Motion for Summary Judgment

       In its second issue, White Lion argues that the trial court erred in granting

the State’s motion for summary judgment.              White Lion contends that it

demonstrated the existence of genuine issues of material fact in five categories:

(1) whether its compliance was excused under the compliance plan’s force majeure

clause; (2) whether the State “misrepresented” to the trial court the financial

assurance requirements to which White Lion is subject; (3) whether the hazardous

waste permit fees awarded in the judgment were “legally valid”; (4) whether the

State provided sufficient evidence to obtain injunctive relief; and (5) whether the

State improperly sought judgment as to lands owned by White Lion but not subject

to the permit or compliance plan. We will address each argument in turn.

A.     Standard of review

       We review a trial court’s grant of summary judgment de novo. Mann

Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex.

2009). Rule of Civil Procedure 166a(c) provides that a movant is entitled to

summary judgment if the summary-judgment evidence establishes that “there is no


                                          14
genuine issue as to any material fact and the moving party is entitled to judgment

as a matter of law on the issues expressly set out in the motion or in an answer or

any other response.” TEX. R. CIV. P. 166a(c); Am. Tobacco Co., Inc. v. Grinnell,

951 S.W.2d 420, 425 (Tex. 1997). “Issues not expressly presented to the trial court

by written motion, answer or other response shall not be considered on appeal as

grounds for reversal.” TEX. R. CIV. P. 166a(c).

B.    White Lion’s noncompliance was not excused

      White Lion first argues that its failure to comply with the compliance plan

was excused under the plan’s force majeure clause, which provides that “non-

compliance with one or more of the provisions of this Compliance Plan may be

justified only to the extent and for the duration that non-compliance is caused by a

‘Force Majeure’ event . . . .” The compliance plan defines “Force Majeure” as “an

event that is caused by an Act of God, labor strike, or work stoppage, or other

circumstance beyond the Permittee’s control that could not have been prevented by

due diligence, and that makes substantial compliance with the applicable provision

or provisions of this Compliance Plan impossible.”

      According to White Lion, the evidence that it submitted in response to the

State’s motion for summary judgment raised a fact issue as to whether the force

majeure clause applies due to actions taken by third parties that damaged the

facility. When it purchased the facility, other buyers purchased equipment located


                                        15
at the facility, and the bankruptcy court required it to give those buyers access to

the facility to remove the machinery and equipment that they had purchased.

According to White Lion, some of those buyers caused significant damage to the

property, resulting in the virtual destruction of the electrical system and

disconnection of all electrical power. It estimates that repairing the electrical

system, which is necessary to operate corrective equipment, will cost at least

$500,000.    White Lion has sought to recover damages from certain of the

equipment buyers and their contractors, with varying success. It argues that,

without such recoveries, the damages caused by these third parties made its

“compliance with the Compliance Plan . . . a physical impossibility when it

acquired the Property.”    It also argues that compliance was “impractical and

commercially and economically infeasible.” Thus, according to White Lion, there

is a fact issue regarding whether its noncompliance was excused.

      The State argues that White Lion did not preserve this argument for appeal

because it did not mention the force majeure clause or the concept of force majeure

in its response to the motion for summary judgment. The State is correct. White

Lion has waived its contractual force majeure argument on appeal. See TEX. R.

CIV. P. 166a(c); TEX. R. APP. P. 33.1(a). But White Lion’s response argued that

compliance was “rendered impractical and commercially and economically




                                        16
[i]nfeasible by damages to the facility by third parties.” It has therefore preserved

a common-law excuse-by-impossibility argument.5

      White Lion did not introduce any evidence that it could not control, mitigate,

or, after the fact, remediate the actions of third parties at the site, even though it

acknowledges that such actions ceased by August 2004, more than a decade before

the trial court entered summary judgment. While it attached to its response to the

motion for summary judgment pleadings from various lawsuits that it has filed

against third parties, none of those pleadings was verified or sworn. At most, those

documents demonstrate the nature of White Lion’s claims against those parties.

They do not demonstrate that the claims are true, much less that the cost of

repairing the damage caused by third parties rendered compliance with the

compliance plan impossible at any point in time. Nor did White Lion demonstrate

that it was unable to pay the costs of the necessary repairs.

      We hold that White Lion failed to raise a fact issue with respect to whether

its noncompliance with the compliance plan was excused.




5
      The State argues that no such excuse is possible because “White Lion’s defenses
      are limited to those set forth in the Compliance Plan and the Texas Water Code.”
      We need not address this argument because, even assuming that the economic
      impossibility defense is available, White Lion has failed to demonstrate that a fact
      issue exists regarding that defense.
                                           17
C.    White Lion admitted that it did not meet its financial assurance
      requirements

      White Lion next contends that the State “misrepresented” facts to the trial

court, specifically that (1) White Lion was required to maintain $574,000 in

“financial assurance,” guaranteeing its performance of its obligations; (2) White

Lion never provided any financial assurance to the State; and (3) White Lion was

required to maintain financial assurance in the amount set by the original 1988

compliance plan, even though the costs of remaining post-closure work at the

facility were much lower.

      As a threshold matter, we note that the State adduced evidence that White

Lion violated the compliance plan in numerous ways, not merely by failing to

provide financial assurance. “When the trial court does not specify the basis for its

summary judgment, the appealing party must show it is error to base it on any

ground asserted in the motion.” Star–Telegram, Inc. v. Doe, 915 S.W.2d 471, 473

(Tex. 1995). For the reasons below, we hold that the evidence supports the State’s

arguments in its motion for summary judgment regarding White Lion’s financial-

assurance obligations.

      TCEQ is required to establish a compliance plan governing “compliance

monitoring and corrective action for facilities that store, process, or dispose of

hazardous waste in surface impoundments, waste piles, land treatment units, or

landfills . . . .” 30 TEX. ADMIN. CODE § 305.401(a) (West 2015). The owner or

                                         18
operator of an affected site must perform the duties set forth in the compliance

plan. Id. § 335.166(2) (West 2015). He also must establish and maintain financial

assurance for the corrective actions to be taken. Id. § 335.167(d) (West 2015).

      The State sent a request for admission under Rule of Civil Procedure 198.1,

asking White Lion to admit that the compliance plan “requires White Lion to

provide at least $574,000 in financial assurance for the Facility.” White Lion

admitted this to be true. White Lion also admitted, in response to another request

for admission, that it “has never obtained financial assurance for the Facility.”

White Lion argues, however, that the permit required a lesser amount of financial

assurance than that required by the compliance plan, the permit is the controlling

document, and the different amounts therefore raise a fact issue.           But the

Administrative Code requires White Lion to comply with both the permit and the

compliance plan. E.g., 30 TEX. ADMIN. CODE §§ 335.166–.167. While the permit

incorporates the compliance plan as part of its terms, the plan is enforceable in its

own right. Id. White Lion admits that the compliance plan required $574,000 in

financial assurance, a requirement that it had not met.

      White Lion also argues that the State “misrepresented” to the trial court that

the amount of financial assurance required by the compliance plan was $574,000,

the same amount set in the first compliance plan in 1988, when the actual

requirement is lower. It reasons that the amount required by the Administrative


                                         19
Code is “an amount no less than the current cost estimate” for closure, post

closure, or corrective action.   30 TEX. ADMIN. CODE § 37.121 (West 2015).

According to White Lion, the “current cost estimate” is lower than the original

$574,000 figure due to changes at the facility over the years. In support, it relies

on an EPA report from 2003 that purportedly concluded, as White Lion

summarizes it, that “there was no imminent endangerment to public health and the

environment.”

      But the report in question does not support such a conclusion. Rather, it

indicated that contamination from the facility was “high unlikely” to impact “the

drinking and agricultural water supply,” but also concluded that “the plume may

not be stable” and that the risk of additional exposures “is dependent on actions

taken to mitigate the plume,” including maintenance of the monitoring and

recovery wells on-site. The undisputed evidence shows that each such well has

been closed, destroyed, or abandoned.        It also shows that the State correctly

represented to the trial court the amount of financial assurance required by the

compliance plan now in effect: $574,000. Moreover, contrary to White Lion’s

arguments, the “current cost estimate” is not simply the owner or operator’s

estimate of the costs associated with a waste site. Rather, that term is defined by

statute as “[t]he most recent estimates prepared in accordance with commission

requirements for the purpose of demonstrating financial assurance for closure, post


                                        20
closure, or corrective action.” 30 TEX. ADMIN. CODE § 37.11(6) (West 2015). The

only manner in which either the amount of financial assurance required or the

current cost estimate could be decreased is upon a request by White Lion, subject

to approval by TCEQ. Id. § 37.151 (West 2015). White Lion has never made such

a request.

      The record thus conclusively shows that the compliance plan requires

financial assurance of $574,000 and that White Lion “has never obtained financial

assurance for the Facility.”

      White Lion also argues that it raised an issue of material fact regarding the

calculation of civil penalties for its violation of the financial assurance

requirements of the compliance plan. Specifically, it argues that Vision Metals

provided financial assurance, that it assigned that financial assurance to White

Lion, and that the financial assurance remained in effect until January 11, 2005.

Thus, it contends that it raised a fact issue as to whether civil penalties could apply

for any date before January 12, 2005.

      We disagree. The evidence shows that Zurich North America, through its

agent, Steadfast Insurance Company, issued an insurance policy to Vision Metals

to satisfy the latter’s financial assurance requirements. In April 2004, Vision

Metals asked Zurich to assign its rights and obligations under that policy to White

Lion. The record contains no evidence, however, that Zurich or Steadfast accepted


                                          21
this assignment.6 Critically, it also contains no evidence that anyone provided

evidence of such an assignment or attempted assignment to the State. Rather, the

evidence shows only that White Lion informed the State in August 2004 that “[t]he

financial assurance provided by [Vision Metals] will remain in effect with Zurich

North America Insurance (Policy No. PLC3572779-04) until January 11, 2005.”

TCEQ responded on September 20, 2004, as follows:

      We understand that financial assurance for this permit and compliance
      plan currently is in effect through an insurance policy issued by
      Zurich North America Insurance to the previous facility owner,
      Visions Metals, Inc. However, as we stated in our August 27, 2004
      letter to you, White Lion, as the new owner and operator, is required
      to establish financial assurance with[in] six months of the ownership
      change. To date, this has not been done.

There is thus no evidence that White Lion actually established financial

assurance—whether in the form of the Zurich policy or otherwise—and provided it

to the State. Rather, White Lion expressly admitted that it never obtained any

financial assurance for the facility.

      The evidence conclusively established that White Lion assumed

responsibility under the compliance plan when it became the transferee of that plan

on July 23, 2004. The evidence also conclusively established that White Lion

never submitted any required water samples or reports as required by the plan and


6
      The policy provides that it “may not be assigned to a successor owner or operator
      of any ‘waste facility’ without the consent of [Steadfast] which shall not be
      unreasonably withheld, delayed or denied.”
                                          22
failed to prevent the destruction, removal, or abandonment of the recovery and

monitoring wells or to repair or replace the wells after they were destroyed,

removed, or abandoned. Thus, White Lion was in continuous violation of the plan

from that date through the date of the summary-judgment hearing on July 29, 2013,

a period of 3,294 days. See discussion in Section E, infra. The evidence also

conclusively showed that White Lion’s deadline for establishing financial

assurance was October 6, 2004. It had not established financial assurance by the

summary-judgment hearing, 3,218 days later, resulting in additional violations of

the plan. Under the Water Code, the civil penalty for violations of the compliance

plan shall be not less than $50 nor more than $25,000 for each violation, and

“[e]ach day of a continuing violation is a separate violation.” TEX. WATER CODE

ANN. § 7.102. The State stipulated to the minimum penalty for these violations of

$50 each. The trial court thus awarded $50 per violation for a total of 6,512

violations, or $325,600. The evidence raised no question as to the dates for which

the penalties should be imposed, and the trial court therefore did not err in its

imposition of penalties. 7


7
      On rehearing, White Lion argues that it has raised fact issues regarding whether
      the State (1) “failed to mitigate its damages by failing to timely file a claim against
      the [prior owner’s] insurance policy” and (2) is estopped from recovering due to
      its own dilatory conduct. White Lion did not make either of these arguments in its
      brief on appeal. Accordingly, it has waived them. TEX. R. APP. P. 33.1(a). Even
      to the extent that these arguments might have been implied in White Lion’s
      briefing, they have no merit. This is not a case for damages, but for civil penalties,
                                            23
D.    The trial court properly awarded the State unpaid hazardous waste
      facility fees

      According to White Lion, it never received a bill from TCEQ for permit fees

for the years 2009 through 2013, nor did TCEQ make a demand for such fees until

the State filed its motion for summary judgment. White Lion also argues that the

permit expired in 2009. It concludes that these facts raise “fact questions as to

whether these hazardous waste permit fees are legally valid, and in particular any

fees accruing after the Permit expired in 2009.”

      White Lion does not attempt to explain why its obligation to pay hazardous

waste facility permit fees, a statutory obligation imposed by Section 361.135 of the

Health and Safety Code, could be contingent on receipt of an invoice or bill of any

kind. See TEX. HEALTH & SAFETY CODE ANN. § 361.135 (West 2010). It did not

raise this argument in response to the motion for summary judgment, but asserted

it for the first time in its motion for new trial. Because White Lion did not timely

make this argument to the trial court in opposing the motion for summary




      in part for White Lion’s own failure to obtain an insurance policy as required by
      statute. See 30 TEX. ADMIN. CODE § 335.167(d) (West 2015). White Lion does
      not and cannot demonstrate that the State had any obligation to “mitigate” its
      recovery of penalties for White Lion’s noncompliance. Further, the circumstances
      of this case do not “clearly demand” application of the doctrine of estoppel to the
      State “to prevent manifest injustice,” given White Lion’s decade-long failure to
      comply with its obligations despite notices of violation and the filing of this
      lawsuit. See Tex. Dep’t of Transp. v. A.P.I. Pipe & Supply, LLC, 397 S.W.3d 162,
      170 (Tex. 2013).
                                          24
judgment, it has waived it.     TEX. R. CIV. P. 166a(c); see also TEX. R. APP.

P. 33.1(a).

      White Lion also made no argument related to the permit’s 2009 expiration in

response to the motion for summary judgment. Rather, it raises those arguments

for the first time on appeal. We therefore hold that it has waived any argument

based on the expiration of the permit.

E.    The trial court did not abuse its discretion in issuing a permanent
      injunction

      White Lion contends that the trial court abused its discretion in entering a

permanent injunction because it failed to consider all of the summary judgment

evidence. Although White Lion does not specify which evidence it alleges that the

trial court ignored, the essence of its argument is that it “never violated or

threatened to violate the Permit or Compliance Plan and, in fact . . . did everything

in its power to comply, despite other circumstances beyond [its] control that could

not be prevented by due diligence.” It also argues that the EPA and a contractor

hired by White Lion both determined that the contamination on the property is

decreasing; therefore, according to White Lion, the trial court should not have

granted an injunction.

      Texas Water Code Section 7.032 gives TCEQ the right to enforce its rules

and permits by seeking an “injunction or other appropriate remedy.” TEX. WATER

CODE ANN. § 7.032(a) (West 2008). When a statute provides for injunctive relief,

                                         25
“the statute’s express language supersedes the common law injunctive relief

elements such as imminent harm or irreparable injury and lack of an adequate

remedy at law.” West v. State, 212 S.W.3d 513, 519 (Tex. App.—Austin 2006, no

pet.); see also Rio Grande Oil Co. v. State, 539 S.W.2d 917, 921 (Tex. Civ. App.—

Houston [1st Dist.] 1976, writ ref’d n.r.e.) (State need only meet statutory

provisions of Securities Act and is not required to otherwise show probable injury);

Gulf Holding Corp. v. Brazoria Cnty., 497 S.W.2d 614, 619 (Tex. Civ. App.—

Houston [14th Dist.] 1973, writ ref’d n.r.e.) (State need not prove irreparable injury

to be entitled to injunction under Open Beach Act). Thus, “[w]hen it is determined

that a statute is being violated, it is the province and duty of the district court to

restrain it, and the doctrine of balancing of equities does not apply.” Gulf Holding

Corp., 497 S.W.2d at 619.

      The record demonstrates conclusively that White Lion never fully complied

with the compliance plan. In addition to its failure to provide the required financial

assurance, the evidence demonstrates conclusively other violations. For example,

the compliance plan required White Lion to install and maintain a groundwater

monitoring and “corrective action” system with specific components, including

various types of wells; sample, recover, and treat groundwater; and file various

reports regarding White Lion’s compliance with the plan and the status of the site.

But the affidavit of TCEQ employee Elijah Gandee shows that, by July 2013, the


                                         26
“corrective action recovery and monitoring wells had been removed from the

Property without authorization and/or had been improperly abandoned.”             The

groundwater recovery and monitoring system had also been destroyed or removed,

the wells had been plugged and abandoned without required approvals, and one

well head had been cut off, leaving an open hole. White Lion failed to submit any

of the reports required by the plan.      It never took any required samples or

maintained any required records. The evidence thus conclusively disproves that

White Lion raised any fact issue as to whether it violated the compliance plan.

      The EPA report has no bearing on White Lion’s violations of the plan. The

“post-judgment inspection” report prepared by White Lion’s consultant was not

part of the summary-judgment record. Any argument based on that report is

waived. TEX. R. CIV. P. 166a(c).

      We hold that the trial court did not err in entering a permanent injunction

requiring White Lion to comply with the compliance plan.

F.    The summary judgment order was not overbroad

      Finally, White Lion argues that the trial court erred by granting injunctive

relief affecting land not subject to the compliance plan. This argument is based on

a faulty premise.

      The trial court’s summary judgment order was a modified form of the

proposed order submitted by the State. Both the proposed order and the order


                                         27
entered by the trial court included a definition of the term “Property” as including a

total of approximately 172.19 acres. The trial court, however, struck all portions of

the proposed order that referenced the term “Property,” other than the definition.

The only injunctive relief that the trial court granted was to require White Lion to

“comply with each limitation, requirement, and condition of the Compliance Plan.”

Thus, nothing in the judgment, other than the unused definition of “Property,”

mentions or affects land not covered by the compliance plan.

      Because White Lion has failed to demonstrate that any issue of material fact

precluded summary judgment, we hold that the trial court did not err in granting

summary judgment to the State.

                                    Conclusion

      We deny all pending motions and affirm the judgment of the trial court.




                                              Harvey Brown
                                              Justice

Panel consists of Chief Justice Radack and Justices Brown and Lloyd.




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