      TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN


                                       NO. 03-06-00460-CV



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

                                                  v.

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


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



                                           OPINION


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

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

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

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

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

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

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

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


       *
           The complete list of appellees is attached as Appendix A.
Districts, intervened, also seeking declarations that the system violated article VII, § 1. The trial

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

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

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

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

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

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

Alvarado Districts in a slightly reduced amount.

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

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

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

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

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



                                           BACKGROUND

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

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

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

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




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

                                                    2
dismissal was affirmed by this Court, but the Texas Supreme Court reversed our judgment,

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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




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

                                                   3
                The State filed a direct appeal of the trial court’s judgment to the Texas Supreme

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

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

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

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

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

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

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

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

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

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



                                    STANDARD OF REVIEW

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

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

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

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




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


                                                  4
necessary, or when the award was inequitable or unjust.”                       Bocquet v. Herring,

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



                                           DISCUSSION

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

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

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

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

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

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

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

appeal to the supreme court.

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

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

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

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

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

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

must be raised in appellate proceedings prior to remand. See Nations v. State, 944 S.W.2d 795, 799




                                                   5
(Tex. App.—Austin 1997, pet. ref’d) (holding that State waived argument about reliability of expert’s

testimony when issue was first raised on remand).

                The State argues that the propriety of the award of attorneys’ fees was not within the

direct-appeal jurisdiction of the Texas Supreme Court and that therefore the State’s failure to assert

the issue on direct appeal did not constitute a waiver. The Texas Supreme Court, however, may

exercise jurisdiction over arguments ancillary to an issue over which it has direct-appeal jurisdiction.

Edgewood Indep. Sch. Dist. v. Meno, 917 S.W.2d 717, 749 n.39 (Tex. 1995). When the supreme

court has “appellate jurisdiction of any issue, it acquires ‘extended jurisdiction’ of all other questions

of law properly preserved and presented.” Id. (quoting City of Corpus Christi v. Public Util. Comm’n,

572 S.W.2d 290, 294 (Tex. 1978)). As a result, the State could have properly raised its argument that

the Districts could not seek attorneys’ fees under the UDJA on direct appeal to the Texas Supreme

Court. Because the State failed to do so, the issue is waived and we need not reach the merits of

whether the Districts’ use of the UDJA was appropriate.

                While the State has waived its argument that attorneys’ fees should not be awarded

to the Districts, we may review the trial court’s award of attorneys’ fees to ensure that the award is

equitable and just. Bocquet, 972 S.W.2d at 21. A trial court’s judgment regarding the award of

attorneys’ fees “will not be reversed on appeal absent a clear showing that [the trial court] abused [its]

discretion.” Oake, 692 S.W.2d at 455.

                The record reflects that each set of Districts made significant contributions in what

turned out to be a highly complex lawsuit that required large amounts of statistical and demographic



                                                    6
data. The contributions of each set of Districts were essential to the litigation as a whole, including

the claim that ultimately prevailed. Furthermore, as the trial court noted in the April 11, 2006 hearing

on attorneys’ fees, “[i]f it weren’t for this case . . . I’m not sure the State leaders in the legislative

branch would be as active as they are at problem-solving these dire problems. And to that extent, the

litigation is absolutely necessary and indispensable.” We hold that the award of attorneys’ fees to

each of the Districts was equitable and just, in light of the fact that the Districts were required to

pursue extensive and costly litigation in order to remedy a school-finance problem with

statewide implications.

                The State argues that the trial court abused its discretion in awarding attorneys’ fees

to parties that did not prevail on their claims. However, “the award of attorneys’ fees in declaratory

judgment actions is clearly within the trial court’s discretion and is not dependent on a finding that

a party ‘substantially prevailed.’” Barshop v. Medina County Underwater Conservation Dist.,

925 S.W.2d 618, 637 (Tex. 1996). As a result, we hold that the trial court did not abuse its discretion

by awarding attorneys’ fees to nonprevailing parties.

                The State also contends that if attorneys’ fees are awarded to the Districts, such awards

should be offset by the State’s fees related to claims in which the State prevailed. The State has not

provided this Court with any authority for using such a method of calculating the amount of attorneys’

fees to be awarded. The trial court is free to consider the relative success of the parties when

determining the amount of the Districts’ attorneys’ fees. Mercier v. Southwestern Bell Yellow Pages,

Inc., 214 S.W.3d 770, 776 (Tex. App.—Corpus Christi 2007, no pet.). There is no evidence



                                                    7
suggesting that the trial court did not make such a consideration in determining the amount of

attorneys’ fees to award on remand. Furthermore, as noted above, whether or not a party prevails on

its claim is not determinative in the decision to award attorneys’ fees for declaratory-judgment

actions. See Barshop, 925 S.W.2d at 637. As a result, we hold that the State’s argument for

offsetting the award of attorneys’ fees is without merit.



                                          CONCLUSION

               Because the State waived its argument regarding the propriety of the attorneys’ fees

awarded by not asserting it on direct appeal to the Texas Supreme Court and because the awards were

equitable and just, the trial court’s judgment awarding attorneys’ fees is affirmed.




                                      ________________________________________________

                                      Diane Henson, Justice

Before Chief Justice Law, Justices Puryear and Henson

Affirmed

Filed: June 21, 2007




                                                  8
                                           Appendix A

The complete list of appellees is as follows:

West Orange-Cove Consolidated Independent School District; Coppell Independent School District;
La Porte Independent School District; Port Neches-Groves Independent School District; Dallas
Independent School District; Austin Independent School District; Houston Independent School
District; Alamo Heights Independent School District; Allen Independent School District; Argyle
Independent School District; Beckville Independent School District; Carrollton-Farmers Branch
Independent School District; Carthage Independent School District; College Station Independent
School District; Cypress-Fairbanks Independent School District; Darrouzet Independent School
District; Deer Park Independent School District; Fairfield Independent School District; Graford
Independent School District; Grapevine-Colleyville Independent School District; Hallsville
Independent School District; Highland Park Independent School District; Humble Independent School
District; Katy Independent School District; Kaufman Independent School District; Lake Travis
Independent School District; Lewisville Independent School District; Lubbock Independent School
District; Marble Falls Independent School District; McCamey Independent School District; Miami
Independent School District; Northeast Independent School District; Northside Independent School
District; Northwest Independent School District; Palo Pinto Independent School District; Pearland
Independent School District; Plano Independent School District; Pringle-Morse Consolidated
Independent School District; Richardson Independent School District; Round Rock Independent
School District; Round Top-Carmine Independent School District; Spring Branch Independent School
District; Spring Independent School District; Stafford Municipal Independent School District; Sweeny
Independent School District; Terrell Independent School District; Texas City Independent School
District; Abbott Independent School District; Academy Consolidated Independent School District;
Aldine Independent School District; Alpine Independent School District; Alvarado Independent
School District; Amarillo Independent School District; Anna Independent School District; Anthony
Independent School District; Aspermont Independent School District; Athens Independent School
District; Aubrey Independent School District; Avalon Independent School District; Avery
Independent School District; Axtell Independent School District; Balmorhea Independent School
District; Bangs Independent School District; Beeville Independent School District; Bells Independent
School District; Belton Independent School District; Big Sandy Independent School District; Blanket
Independent School District; Blooming Grove Independent School District; Boles Independent School
District; Boling Independent School District; Bonham Independent School District; Booker
Independent School District; Borger Independent School District; Bowie Independent School District;
Brock Independent School District; Brownfield Independent School District; Bruceville-Eddy
Independent School District; Bryson Independent School District; Buckholts Independent School
District; Burkburnett Independent School District; Burkeville Independent School District; Cameron
Independent School District; Campbell Independent School District; Canton Independent School
District; Canutillo Independent School District; Canyon Independent School District; Central Heights


                                                 9
Independent School District; Central Independent School District; Chapel Hill Independent School
District; Childress Independent School District; China Spring Independent School District; Chireno
Independent School District; Cisco Independent School District; City View Independent School
District; Cleburne Independent School District; Clint Independent School District; Coleman
Independent School District; Collinsville Independent School District; Commerce Independent
School District; Community Independent School District; Como-Pickton Independent School District;
Connally Independent School District; Cooper Independent School District; Copperas Cove
Independent School District; Corpus Christi Independent School District; Cotton Center Independent
School District; Covington Independent School District; Crandall Independent School District;
Crawford Independent School District; Crosby Independent School District; Dalhart Independent
School District; Desoto Independent School District; Detroit Independent School District; Diboll
Independent School District; Dickinson Independent School District; Dilley Independent School
District; Dime Box Independent School District; Dimmitt Independent School District; Dodd City
Independent School District; Douglass Independent School District; Driscoll Independent School
District; Early Independent School District; Ector Independent School District; El Paso Independent
School District; Electra Independent School District; Elkhart Independent School District; Elysian
Fields Independent School District; Ennis Independent School District; Era Consolidated Independent
School District; Etoile Independent School District; Everman Independent School District; Falls City
Independent School District; Fannindel Independent School District; Ferris Independent School
District; Forney Independent School District; Fort Davis Independent School District; Fort Worth
Independent School District; Frost Independent School District; Gainesville Independent School
District; Ganado Independent School District; Garrison Independent School District; Gilmer
Independent School District; Godley Independent School District; Grandview Independent School
District; Gregory-Portland Independent School District; Gunter Independent School District; Hale
Center Independent School District; Hamlin Independent School District; Harleton Independent
School District; Hart Independent School District; Haskell Consolidated Independent School District;
Hawley Independent School District; Hearne Independent School District; Hemphill Independent
School District; Hereford Independent School District; Hico Independent School District; Hidalgo
Independent School District; High Island Independent School District; Holland Independent School
District; Honey Grove Independent School District; Hubbard Independent School District; Hudson
Independent School District; Huffman Independent School District; Huntington Independent School
District; Hutto Independent School District; Itasca Independent School District; Jacksboro
Independent School District; Jasper Independent School District; Joaquin Independent School
District; Karnes City Independent School District; Kermit Independent School District; Kirbyville
Independent School District; Knox City-O’Brien Consolidated Independent School District; Kountze
Independent School District; Kress Independent School District; Krum Independent School District;
La Joya Independent School District; La Pryor Independent School District; Lake Worth Independent
School District; Lamesa Independent School District; Lasara Independent School District; Latexo
Independent School District; Leverett’s Chapel Independent School District; Linden-Kildare
Consolidated Independent School District; Lingleville Independent School District; Lipan
Independent School District; Lockhart Independent School District; Lorena Independent School

                                                10
District; Louise Independent School District; Lyford Independent School District; Lytle Independent
School District; Mabank Independent School District; Magnolia Independent School District;
Martinsville Independent School District; McGregor Independent School District; Meadow
Independent School District; Megargel Independent School District; Mercedes Independent School
District; Meridian Independent School District; Merkel Independent School District; Mesquite
Independent School District; Mildred Independent School District; Millsap Independent School
District; Mission Consolidated Independent School District; Montague Independent School District;
Morton Independent School District; Motley County Independent School District; Muenster
Independent School District; Nederland Independent School District; New Boston Independent
School District; New Castle Independent School District; New Home Independent School District;
New Summerfield Independent School District; Newton Independent School District; Nocona
Independent School District; Nueces Canyon Consolidated Independent School District; Olfen
Independent School District; Olton Independent School District; Orange Grove Independent School
District; Paint Creek Independent School District; Pampa Independent School District; Panhandle
Independent School District; Paradise Independent School District; Paris Independent School District;
Perrin-Whitt Consolidated Independent School District; Petersburg Independent School District;
Pflugerville Independent School District; Poteet Independent School District; Pottsboro Independent
School District; Prairiland Independent School District; Premont Independent School District;
Presidio Independent School District; Princeton Independent School District; Quanah Independent
School District; Ranger Independent School District; Redwater Independent School District; Ricardo
Independent School District; Rice Consolidated Independent School District; Rice Independent
School District; Rio Vista Independent School District; Rivercrest Independent School District;
Robinson Independent School District; Robstown Independent School District; Roby Consolidated
Independent School District; Rochester County Line Independent School District; Rocksprings
Independent School District; Rogers Independent School District; Roosevelt Independent School
District; Rosebud-Lott Independent School District; Rusk Independent School District; Sam Rayburn
Independent School District; Samnorwood Independent School District; San Augustine Independent
School District; San Perlita Independent School District; Sands Consolidated Independent School
District; Sanford Independent School District; Santa Anna Independent School District; Santa Fe
Independent School District; Santa Maria Independent School District; Seagraves Independent School
District; Seguin Independent School District; Seymour Independent School District; Shallowater
Independent School District; Shelbyville Independent School District; Shepard Independent School
District; Shiner Independent School District; Sierra Blanca Independent School District; Sinton
Independent School District; Slaton Independent School District; Smyer Independent School District;
Socorro Independent School District; Southside Independent School District; Splendora Independent
School District; Springtown Independent School District; Spur Independent School District; Stamford
Independent School District; Sulphur Bluff Independent School District; Sulphur Springs Independent
School District; Sunray Independent School District; Tahoka Independent School District; Taylor
Independent School District; Tenaha Independent School District; Texline Independent School
District; Thorndale Independent School District; Throckmorton Independent School District; Timpson
Independent School District; Tolar Independent School District; Tornillo Independent School District;

                                                 11
Trenton Independent School District; Trinidad Independent School District; Troup Independent
School District; Troy Independent School District; Tulia Independent School District; Uvalde
Consolidated Independent School District; Valley View Independent School District; Van Alstyne
Independent School District; Van Independent School District; Venus Independent School District;
Vernon Independent School District; Warren Independent School District; Weatherford Independent
School District; Wellman-Union Independent School District; Wells Independent School District;
West Hardin County Consolidated Independent School District; White Oak Independent School
District; Whitesboro Independent School District; Edgewood Independent School District; Ysleta
Independent School District; Laredo Independent School District; San Elizario Independent School
District; Socorro Independent School District; South San Antonio Independent School District; La
Vega Independent School District; Kenedy Independent School District; Harlandale Independent
School District; Brownsville Independent School District; Pharr-Sun Juan-Alamo Independent School
District; Sharyland Independent School District; Monte Alto Independent School District; Edcouch-
Elsa Independent School District; Los Fresnos Independent School District; Harlingen Independent
School District; Jim Hogg County Independent School District; La Feria Independent School District;
Roma Independent School District; San Benito Independent School District; United Independent
School District; and Raymondville Independent School District.




                                                12
