No. 0 7-15- 00 113

- CV

IN THE SEVENTH COURT OF APPEALS,
AMARILLO , TEXAS

M OHAMMED F AWWAZ S HOUKFEH

, M.D., PA; D / B / A T EXAS C ARDIAC C ENTER
,

A PPELLANT

,

V

.

T EXAS W ORKFORCE C OMMISSION AND J AMES G. G RATTAN

,

A PPELLEE S

A PPEALED FROM THE 99 TH D ISTRICT C OURT OF L UBBOCK C OUNTY

, T EXAS D ISTRICT C OURT C AUSE N O

. 2014

- 510,479
H ON

. W ILLIAM S OWDER P RESIDING

B RIEF OF A PPELLEE T EXAS W ORKFORCE C OMMISSION

KEN PAXTON Attorney General of Texas

CHARLES E. ROY First Assistant Attorney General

JAMES E. DAVIS Deputy Attorney General for Defense Litigation

ROBERT O ’ KEEFE Chief, Financial Litigation, Tax, and
Charitable Trusts Division PETER E. LAURIE Assistant Attorney General Financial Litigation, Tax, and
Charitable Trusts Division
State Bar No. 24070973
PO Box 12548 Austin, Texas 78711 TEL: (512) 475

- 2940 FAX: (512) 478

- 4013 peter.laurie@texasattorneygeneral.gov

ATTORNEY FOR APPELLEE
TEXAS WORKFORCE
COMMISSION

O RAL ARGUMENT R EQUESTED ACCEPTED 07-15-00113-CV SEVENTH COURT OF APPEALS

AMARILLO, TEXAS 7/1/2015 4:28:47 PM Vivian Long, ClerkIDENTITIES OF PARTIES AND COUNSEL

In order that the members of this Court may determine disqualification and recusal under the Texas Rules of Appellate Procedure, this Appellant certifies that the following is a complete list of the parties, attorneys, and other persons in this
lawsuit.

Appellant: Mohammed Fawwaz Shoukfeh, M.D. P.A.
d/b/a Texas Cardiac Center

Attorney for Appellant: H. Grady Terrill
Elizabeth G. Hill Craig, Terrill, Hale & Grantham, LLP 9816 Slide Road, Ste. 201 Lubbock, Texas 79424

Appellee: James G. Grattan

Attorney for Appellee : John H. Simpson Splaw Simpson Pitts
P.O. Box 1376 Lubbock, Texas 79408

- 1376

Appellee: Texas Workforce Commission

Attorney for Appe llee: Peter E. Laurie Assistant Texas Attorney General Financial Litigation, Tax, and Charitable
Trusts Division
P. O. Box 12548 Austin, TX 78711

- 2548

iT ABLE OF C ONTENTS

IDENTITIES OF PARTIES AND COUNSEL

................................ ......................... i

INDEX OF AUTHORITIES

................................ ................................ ................ iii

- iv

STATEMENT OF THE CASE

................................ ................................ .................. 1

STATEMENT REGARDING ORAL ARGUMENT

................................ ............... 1

ISSUES PRESENTED

................................ ................................ ............................... 1

STATEMENT OF FACTS

................................ ................................ ........................ 2

SUMMARY O F ARGUMENT

................................ ................................ ................. 5

ARGUMENT

................................ ................................ ................................ ............. 5

I. Judicial review of a TWC Payday decision is by trial de novo
based on the substantial evidence rule.

................................ .................. 5

II. Grattan is entitled to $125,988.91 in unpaid wages from Texas
Cardiac.

................................ ................................ ................................ .. 7

III. Texas Cardiac has not met its burden.

................................ ................. 10

IV. Texas Cardiac’s contract with Dr. Ahmad Qaddour is not
relevant.

................................ ................................ ................................ 11

PRAYER

................................ ................................ ................................ .................. 12

CERTIFICATE OF COMP LIANCE

................................ ................................ ....... 13

CERTIFICATE OF SERVI CE

................................ ................................ ................ 14

iiI NDEX OF A UTHORITIES

Cases Bollner v. Plastics Solutions of Texas, Inc ., 270 S.W.3d 157 (Tex. App. El Paso 2008, no pet.)

................................ ................................ ................................ ........... 7

City of San Antonio v. Flores , 619 S.W.2d 601 (Tex. Civ. App.

– Houston [14th

Dist.] 1981, writ ref’d n.r.e.)

................................ ................................ ............... 5, 6

Collingsworth Gen. Hosp. v. Hunnicut , 988 S.W.2d 706, 708 (Tex. 1998); Mercer

v. Ross , 701 S.W.2d 830, 801 (Tex. 1986)

................................ ............................. 5

Cusson v. Firemen’s & Policemen’s Civil Serv. Comm’ n , 524 S.W.2d 88 (Tex.

Civ. App.

– San Antonio 1975, no writ)

................................ ............................... 5, 6

DeLeon v. Tex. Employment Comm’n , 529 S.W.2d 268, 270 (Tex. Civ. App.

— Corpus Christi 1975, writ ref’d n.r.e.)

................................ ................................ ..... 6

Direct Commc’ns v. Tex. Employment Comm’n , 906 S.W.2d 537, 542 (Tex. App.

— Dalla s 1995, no writ)

................................ ................................ ................... 5

Luling Oil & Gas Co. v. Humble Oil & Refining Co ., 144 Tex. 475, 191 S.W.2d 716 (1945)

................................ ................................ ................................ ............... 8

Mescalero Energy, Inc. v. Underwriters Indem. General Agency, Inc ., 56 S.W.3d 313 (Tex. App. Houston [1 st Dist.] 2001 pet. denied)

................................ ............. 8

Mutual Bldg. an d Loan Ass’n v. Lewis , 572 S.W.2d 771, 778 (Tex. Civ. App.

– Austin 1978, no writ)

................................ ................................ .............................. 6

Olivarez v. Aluminum Corp. of Am. , 693 S.W.2d 931, 932 (Tex. 1985)

................... 6

Prof’l Mobile Home Transport v. R.R. Comm'n of Tex. , 733 S.W.2d 892. 899 (Tex. App. Austin 1987, writ re fused n.r.e.)

................................ ................................ .... 6

Tex. Aeronautics Comm’n v. Braniff Airways, Inc ., 454 S.W.2d 199, 202, 205

(Tex. 1970)

................................ ................................ ................................ .............. 6

Tex. Employment Comm’n v. Holberg , 440 S.W.2d 38 (Tex. 1969)

......................... 6

iiiI NDEX OF A UTHORITIES ( CONT ’ D )

Statutes

Tex. Lab. Code § 61.018 (West 2015)

................................ ................................ ....... 8

Tex. Lab. Code Ann. § 61.062 (West 2015)

................................ .............................. 5

Other Authorities

Black’s Law Dictionary 575 (3 rd pocket ed. 2006)

................................ .............. 8, 11

Webster’s Ninth New Collegiate Dictionary 944 (1989)

................................ ..... 8, 11

Rules

Texas Rule of Appellate Procedure 38.2(a)(1)(B)

................................ ..................... 1

ivSTATEMENT OF THE CASE

Nature of the Case: This appeal concerns a Texas Workforce Commission ( “ TWC ” ) wage claim decision. The TWC determined that Appellee Mohammed Fawwaz Shoukfeh, MD PA d/b/a Texas Cardiac Center (“ Texas Cardiac ”) owed James G.
Grattan (“Grattan”) $125,988.91 in unpaid wages. The TWC filed a motion for summary judgment asserting that sub stantial evidence supported the decision Texas
Cardiac challenged

.

Trial Court Disposition: The trial court granted the TWC ’ s motion for summary judgment and dismissed the case, in its entirety.

STATEMENT REGARDING ORAL ARGUMENT

The TWC believes oral argument should be denied as it will not aid this Court

in addressing the legal issues presented in this appeal. The facts and legal arguments

are adequately presented in the briefs and record, and the decisional pro cess would

not be significantly aided by oral argument. But if the Court deems oral argument

necessary, the TWC reserves its right to participate.

ISSUES PRESENTED

The TWC is dissatisfied with Texas Cardiac’s Statement o f Issues and restates

the issue pursuant to Texas Rule of Ap pellate Procedure 38.2(a)(1)(B) as follows:

There is only one issue in this case: Does substantial evidence support the decision Texas Cardiac challenged ?

1STATEMENT OF FACTS

Grattan worked as a cardiologist for Texas Cardiac from June 19, 2006

through April 30, 2013. 1 When Grattan began his employment with Texas Cardiac

,

the parties laid out the terms of Grattan’s employment in a formal agreement (the

“Agreement”), including how his pay would be calculated

. 2 The Agreement

provided that Grattan would receive six percen t of the designated health service

revenue, defined by the Agreement, duri ng his first year of employment. 3 Grattan

was responsible for specific expenses, including his share of overhead expen se s

. 4

Additionally, Grattan would receive his net receipts less his pro rata share of the

overhead expenses. 5

While Grattan was employed by Texas Cardiac , the number of physicians

working for Texas Cardiac fluctuated. 6 As a result, Grattan’s pro rata share of t he

overhead expenses changed based upon the number of physicians employed by

1 Clerk’s Record (“CR”): 260.

2 CR: 262

- 264.

3 CR: 262.

4 CR: 262

- 263.

5 CR: 369

- 372; 399

- 400.

6 Id.

2Texas Cardiac

. 7 In September of 2012, Texas Cardiac employed three physicians,

including Grattan, and the overhead expenses were split even ly among the three

physicians

. 8

I n November 2012, a new physician came to work for Texas Cardiac , bringing

the number of physicians to four. 9 But Texas Cardiac deducted o ne

- third of the

overhead expenses from Grattan’s net receipts from November 2012 through April

2013, despite the fact there w ere now four physicians. 10

The Agreement between Texas Cardiac and Grattan regarding his

employment and compensation was not modified when the new physician joined the

practice, and Grattan did not authorize deductions from his wages beyond what was

agreed upon in the formal written agreement dated June 19, 2006. 11

In May of 2013 Defendant Grattan filed a wage claim with the TWC seeking

wages earned but not received from September 2012 through April 2013 from Texas

Cardiac

. 12 On June 20, 2013, the TWC receive d Texas Cardiac ’s re sponse to

7 Id.

8 Id.

9 Id.

10 CR: 369

- 372; 400.

11 Id.

12 CR: 233

- 234.

3Grattan’s wage claim. 13 The TWC mailed a Preliminary Wage Determination Order

finding, based upon the information provided by Texas Cardiac and Grattan, that

Grattan was entitled to $38,435.89 in unpaid wag es. 14

Both Texas Cardiac and Grattan appealed. After a telephonic hearing, the

TWC Wage Claim Appeal Tribunal issued its determination modifying the August

14, 2013 determination based upon the testimony and evidence presented in the

hearing to find that Grattan was entitl ed to $5,817.32 in unpaid wages. 15 Again, both

Texas Cardiac and Grattan appealed. On February 6, 2014, the TWC Commission

issued its Findings and Decisions modifying the Wage Claim Appeal Tribunal’s

decision and finding that Grattan was entitled to $125,98 8.91 in unpaid wages. 16

Texas Cardiac filed suit challenging the TWC’s decision in the 99 th District

Court. The parties filed cross

- motions for summary judgment. The trial court granted

the TWC’s and Grattan’s motion and entered final judgment against Texas

Cardiac. 17 This appeal followed.

13 CR: 218

- 219.

14 CR: 169

- 170.

15 CR: 94

- 103.

16 CR: 75

- 80.

17 CR: 426

- 427.

4SUMMARY OF ARGUMENT

There is but one legal question before this Court : Does substantial evid ence

supports the TWC’s decision? T his is a question of law and no material fact issues

exist. Because substantial evidence support the TWC’s decision, the Court should

affirm the trial court’s judgment

.

ARGUMENT

I

. Judicial review of a TWC Payday benefits decision is by t rial de novo

based on the substantial evidence r ule

**.**

Judicial review of a TWC decision regarding a claim for unpaid wages is by

trial de novo to determine whether substantial evidence exists to support the TWC

decision. 18 Under this standard, the TWC’s decision is presumed to be valid, and

t he party challenging the decision has a significant burden to prove otherwise. 19

Substantial evidence need not be much evidence, and although “substantial”

means more than a mere scintilla, or some evidence, it need not be a preponderance

of the evidence. 20 “In fact, the evidence may be substantial and yet greatly

18 Tex. Lab. Code Ann. § 61.062 (West 2015) ; see Direct Commc’ns v. Tex. Employment
Comm’n , 906 S.W.2d 537, 542 (Tex. App.

— Dallas 1995, no writ) ; see also City of San Antonio
v. Flores , 619 S.W.2d 601 (Tex. Civ. App.

– Houston [14th Dist.] 1981, writ ref’d n.r.e.) ; Cusson
v. Firemen’s & Policemen’s Civil Se rv. Comm’n , 524 S.W.2d 88 (Tex. Civ. App.

– San Antonio 1975, no writ)

.

19 Collingsworth Gen. Hosp. v. Hunnicut , 988 S.W.2d 706, 708 (Tex. 1998); Mercer v. Ross

, 701 S.W.2d 830, 801 (Tex. 1986)

.

20 Mutual Bldg. and Loan Ass’n v. Lewis , 572 S.W.2d 771, 778 (Tex. Civ. App

. – Austin 1978, no

5preponderate the other way.” 21

When conducting a substantial evidence review of a state agency’s

administrative decision, it is error for a court to engage in an independent factual

inquiry. 22 A court ’s role, under this standard, is to hear and consider evidence to

determine whether reasonable support e x ists for the agency’s decision. 23

A court must uphold the TWC’s decision if it is reasonable even though the

court , if it were acting as the trier of fact, might have reached a different

conclusion. 24 If the arguments of both sides are reasonable, even if there is

conflicting evidence, then there is substantial evidence to support the TWC’s

decision and a court must uphold the agency decision. 25 A court may only set aside

the agency’s decision if it find s the decision “to have been made without regard to

the law or the facts and therefore was unreasonable, arbitrary, or capricious.” 26

writ) ; Olivarez v. Alumin um Corp. of Am. , 693 S.W.2d 931, 932 (Tex. 1985)

.

21 Olivarez, 693 S.W.2d at 932

.

22 Prof’l Mobile Home Transport v. R.R. Comm'n of Tex. , 733 S.W.2d 892. 899 (Tex. App. Austin 1987, writ refused n.r.e.)

.

23 Id.

24 Flores , 619 S.W.2d at 602

.

25 Tex. Aeronautics Comm’n v. Braniff Airways, Inc ., 454 S.W.2d 199, 202, 205 (Tex. 1970) ; Cusson , 524 S.W.2d at 90

.

26 DeLeon v. Tex. Employment Comm’n , 529 S.W.2d 268, 270 (Tex. Civ. App.

— Corpus Christi 1975, writ ref’d n.r.e.) ; see also Tex. Employment Comm’n v. Holberg , 440 S.W.2d 38 (Tex. 1969)

.

6II

. Grattan is e ntitled to $125,988.91 in u npaid w ages from Texas Cardiac

**.**

Texas Cardiac is liable for unpaid wages owed to Grattan. Texas Labor Code

§ 61.001(7) defines wages, in part, to mean “compensation owed by an employer for

labor or services rendered by an employee, whether computed on a time, t ask, piece,

commission or other basis[.]” The Labor Code states that an employer may not

withhold or divert any part of an employee’s wages unless the employer (1) is

ordered to do so by a court of competent jurisdiction, (2) is authorized to do so by

state or federal law; or (3) has written authorization from the employee to deduct

part of the wages for a lawful purpose. 27

While employed by Texas Cardiac , Grattan’s wages were calculated based

up on the Agreement. 28 Under th e Agreement, Grattan wa s respon sible for :

. . . a pro rata share of the o verhead expenses . . . and [Grattan] will receive Physician’s Net Receipts collected by Association less [Grattan’s] pro rata share of the overhead expenses.

The A greement does not define “ pro rata .” Thus, the ques tion is: how is the pro rata

share calculated? I n the absence of a contractual definition, a court can resort to a

standard dictionary to supply the meaning

. 29 Webster’s Dictionary defines ‘ pro

27 Tex. Lab. Code § 61.018 (West 2015)

.

28 CR: 262

- 263.

29 Bollner v . Plastics Solutions of Texas, Inc ., 270 S.W.3d 157 (Tex. App. El Paso 2008, no pet.)

.

7rata ’ as “proportionately according to an exactly calculable factor”, and Black’s

Legal Dictionary contains a similar definition of “proportionately; according to an

exact rate, measure or interest.” 30

In addition, Texas Cardiac ’s custom and practice can assist the Court in

resolving this question. W hen construing a contract the C ourt may consider the

general customs and practices affecting the s ubject matter of the agreement, and

extrinsic evidence of the commonly understood meaning of a term in a contract may

be offered. 31

In the past , overhead was divided among all phy sicians working for Texas

Cardiac

. 32 Consistent with that practice overhead expenses of the practice were split

among all physicians working for Texas Cardiac

. 33

Grattan ’s gross salary, before taxes, for September 2012 was $15,024. 36, and

$28,022.12 for October. 34 These wages were calculated based upon the formula

provided in the 2006 agreement, and correctly reflect the overhead divided among

30 Webster’s Ninth New Collegiate Dictionary 944 (1989) ; Black’s Law Dictionary 575 (3 rd pocket ed. 2006)

.

31 Luling Oil & Gas Co. v. Humble Oil & Refining Co ., 144 Tex. 475, 191 S.W.2d 716 (1945) ; Mescalero Energy, Inc. v. Underwriters Indem. General Agency, Inc ., 56 S.W.3d 313 (Tex. App. Houston [1 st Dist.] 2001 pet. denied)

.

32 Id.

33 Id.

34 CR: 369

- 372; 393.

8the then three employed physicians.

Under th e customary practice

, the pro rata method of calculating overhead

,

from November 2013 forward, Grattan earned the following wages:

November: $35,423.50
December: $32,128.27 January: $

- 4,350.45 February: $21,934.28
March: $5,443.97 April: $24,377.54 35

In all, between September 2012 and April 2013, Grat tan earn ed $158,003.59 in gross

salary. 36 Texas Cardiac issued Grattan a check for $32,014.68 in May of 2013. 37

Taking this partial payment into account, Grattan is entitled to $ 158,003.59 less the

$ 32,014.68, which equals $125,988.91 in gross wages before t he customary pro rata

deduction and other standard deductions for taxes.

And $125,988.91 in gross wages is the amount the TWC awarded Grattan.

Th is award is based on credible evidence presented to the TWC during the

administrative process and to the trial court on summary judgment. The TWC’s

decision is supported by substantial evidence and the trial court properly affirmed it

on summary judgment.

35 Id.

36 Id.

37 CR: 371.

9I II

. Texas Cardiac has not met its burden

**.**

Texas Cardiac alleges that the TWC ignored the plain language of the June

19, 2006 Agreement when it found that the ‘pro rata share of overhead expenses’

meant that the overhead expenses should be divided by the total number of

physicians employed by Texas Cardiac

. 38 Texas Cardiac ’s argument is that the

TWC should not have accepted Grattan’s interpretation of the language but should

have accepted Texas Cardiac ’s method. Instead of calculating pro rata shares based

on the total number of physicians working fo r Texas Cardiac

, Texas Cardiac urges

the Court to make this calculation based on jus t three physicians.

Texas Cardiac ’s argues that the overhead expenses should be divided among

three physicians, not four

, because the new physician did not yet have privileges

and was differently situated from other physician’s in Texas Cardiac’s practice

. 39

But t he Agreement between Grattan and Texas Cardiac does not include any such

exception to the pro rata calculation. A nd calculating Grattan’s wages according to

this method would be inconsistent with the plain meaning of pro rata and

inconsistent with Texas Cardiac’s past practices.

38 Appellant’s Brief: 8

- 20.

39 Webster’s Ninth New Collegiate Dictionary 944 (1989) ; Black’s Law Dictionary 575 (3 rd pocket ed. 2006)

.

10The TWC’s decision is based on the plain language of the Agreement between

Texas Cardiac and Grattan and based on Texas Cardiac’s past payment practices.

Texas Cardiac’s alternate calculation method does not “totally destroy” the basis

upon which the TWC rendered its decision.

Because Texas Cardiac did not meet its burden to “totally destroy” the TWC’s

case, t he trial court properly granted summary judgment in the TWC’s and Grattan’s

favor

.

I V. Texas Cardiac ’s contract with Dr. Ahmad Qaddour is not relevant

**.**

Texas Cardiac spends a considerable portion of his brief arguing that the

TWC’s decision is illegal under the Labor C ode and imposes extra

- contractual

responsibilities on Texas Cardiac

. 40 Texas Cardiac argues that the decision

requires it to “deduct over head expenses to Qaddour.” 41 Because of this

“requirement” Texas Cardiac claims that it must deduct wages from Qaddour’s

salary without a contractual agreement to do so in violation of the Labor Code.

Texas Cardiac ’s argument is based on this premise: The TWC’s decision

requires Texas Cardiac to alter the terms of his contract with Qaddour. This premise

is flawed, and the TWC responds to the argument as follows:

40 Appellant’s Brief: 20

- 26.

41 Appellant’s Brief: 20

11First, the only contract relevant to the Court’s analysis is the one between

Grattan and Texas Cardiac ;

Second, nothing in the TWC’s order requires Texas Cardiac to do an ything

with respect to Qaddour; and

Third, to the extent Texas Cardiac ’s agreements with Grattan and Qaddour

cause d it to incur unanticipated expenses, Texas Cardiac cannot shift the cost of its

oversight to Grattan.

For these reasons, the Court should place no weight on Texas Cardiac ’s

argument that the TWC’s decision imposes extra

- contractual obligations on Texas

Cardiac and/or is illegal.

PRAYER

F OR THESE REASONS, the TWC prays that this Court affirm the trial

court’s judgment in its entirety.

Respectfully submitted,

KEN PAXTON Attorney General of Texas

CHARLES E. ROY First Assistant Attorney General

JAMES E. DAVIS Deputy Attorney General for Defense Litigation

12ROBERT O’KEEFE
Division Chief Financial Litigation, Tax, and Charitable Trusts
Division

/s/ Peter Laurie
PETER E. LAURIE Assistant Attorney General
Bar No. 24070973 Financial and Tax Litigation
PO Box 125 48 Austin, Texas 78711

- 2548 (512) 475

- 2940 (512) 478

- 4013

- FAX Attorneys for Defendant
Texas Workforce Commission

CERTIFICATE OF COMPL IANCE

This document complies with the typeface requirements of Tex. R. App. P. 9.4(e) because it has been prepared in a conventional typeface no smaller than 14

- point for text and 12

- point for footnotes. This document also complies with the
word

- count limitations of Tex. R. App. P. 9.4(i), if applicable, because it contains
1712 words, excluding any parts exempted by Tex. R. App. P. 9.4(i)(1), as counted by the computer program used to prepare this document.

/s/ Peter E. Laurie
P ETER E. L AURIE Assistant Texas Attorney General

13CERTIFICATE OF SERVI CE

Pursuant to the Texas Rules of Appellate Procedure, the undersigned hereby certifies
that on the 1 st day of July , 201 5 , a true and correct copy of the Brief of Appellee Texas Workforce Commission was se nt via e

- serve

.

/s/ Peter E. Laurie
P ETER E. L AURIE Assistant Texas Attorney General

14