### T E X A S C O U R T O F A P P E A L S , T H I R D D I S T R I C T , A T A U S T I N

NO. 03-12-00760- CV

Winn ebago Ind ustries, Inc., Appellant

v. Texas Depart m ent of Motor V ehicles, Mot or Ve hicle Division , Appellee

DIRECT AP P EAL F ROM TH E MO TOR VEHI CLE DIVISI ON OF TH E

TEXAS DEP ARTMENT O F MO TOR VEHI CLES

M E M O R A N D U M O P I N I O N
Winnebag o I ndustries, I nc., seeks direc t judicial revie w in this Court of a final order issued by the Motor Vehicle Division of the Texas De p ar t m en t of Motor Vehicle s (TxDMV) following a complaint pursuant to the Texas “L emon L aw.” See Tex. Occ

. Code §§ 2301.601–.613 (“L emon L aw” ), .751(a )(2) (providing for direct appeal t o this Court). I n four issues, Winnebag o contends that Tx DMV err ed in failing to require that the vehicle be prese nt at the hear ing, allowing

ex parte commun i ca t i o n s betwee n the administrative law judge (AL J ) and the complainants, allowing into e vidence an expert witness re port, and c onducting the hea ring in a way that violated Winnebag o’s due proce ss rig hts. For the rea sons that follow, we reve rse Tx DMV’s order and

rema nd for f urther pr ocee dings c onsistent with thi s opinion.F ACTUAL AND P ROCEDURAL BACK GR OUND The complainants purcha sed a 2010 Winnebag o Tour motor home in J une 2011 for

a purcha se price of $218,523.00. Soon afte r the purcha se, problems arose wit h t h e v eh i cle. Although there wer e multiple issues, the primary complaint was malfunctioning “slide-outs,” side
compar tments that slide out to expand the usable space in the RV

. Af t er m u l t iple attempts by Winnebag o to r epair the vehicle, including a return to the f

actor y , the complainants filed a L emon L aw complaint ag ainst Winnebag o and subsequently informed Winnebag o that they n o longe r wanted the vehicle. When the vehicle was returne d from the fac tory , the complainants met wi th Winnebag o’s district service manag er Steve Mary to revie w and inspect the repa irs. Although Mary stated in his repor

t that the slide-outs wer e opera tin g smoothly , the complainants continued to maintain that they

wer e not func tioning prope rly . I n Marc h 2012, Tx DMV employ ee Bob S war ts conducte d an inspection of the vehicle at wh i ch Mary was prese nt. Swarts’s subsequent repor t included a statement that the passeng er side s l i d e- o u t wa s not opera ting as desig ned. I n an April 2 0 1 2 i nspection report, Mary stated t hat t he passeng er side slide-out was operating “fr eely ” but neede d an adjustment.

A hear ing on the compl ai n t wa s co n ducted by the AL J in May 2012. See id. § 2301.704(a) (L emon L aw hear ing must be conducte d by administrative law judge of State Offic e of Admi nistrative Hearing s (SOAH))

. Prior to the hearing , the complainants contac ted t he AL J ’s office , asked if they had to bring the ve hicle to the hea ring , and were informed t hat t hey did not. 1

The complainants testified that they “ca lled” and “the judge ” said they did not have to bring 1 the vehicle. I n his response to Winnebag o’s exceptions to his proposal for decision, the AL J stated that the complainants called his administrative assistant and, upon lear ning of the inqui ry , he 2Winnebag o was not informed of the complainants’ inquiry or t he AL J ’s response. Upon l ear ning
at the hear ing that the vehicle was not prese nt, Winnebag o objected to its absenc e. The AL J stated that since all the parties had been aff orded an opportunity to inspect the vehicle and since he “do[es]
not make it a prac tice to inspect or look at the vehicle,” it was not nece ssary for it to be prese nt. At the end of the hear ing, Winnebag o reques t ed t h at t h e AL J leave the rec ord open so that the AL J could inspect and test the vehicle, but the AL J stated that he did not want to injec t himself into the

rec ord as a

witness by

viewing the vehicle and denie d the motion. The AL J issued a proposal for decision (PFD) in J uly 2012, finding that the kitchen slide out was “not proper ly oriented” and that althoug h the problem may be “ea sed tempora rily by periodic adjustments,” the problem h ad “n o t been reme died.” The AL J conclude d that there was sufficie nt evidenc e to support repur chase and rec ommended Winnebag o repur chase the vehicle for $212,774.42, repr esenting the orig inal purcha se price , less a rea sonable allowanc e for use. See id. § 2301.604(a) (2). Winnebag o filed exceptions to the PFD on g rounds asser ted in this appea l. The
AL J responde d to Winnebag o’s complaint conce rning the AL J ’s decision not to require the vehicle to be pre sent at the he aring and re commended tha t the exceptions be overr uled. Tx DMV issued a final order in September 2012, adopting the PFD without ch ange. Winnebag o filed a motion for rehe aring , which TxDMV denied. This direc t appea l followed.

instructed his assistant to tell them it would not be nec essar y . 3STANDARD OF REVIEW Ou r revie w of a final ag ency decision in a contested case is g overne d by section 2001.174 of the Administrative Procedur e Act. See id. § 2301.751; T ex. Gov’ t Code § 2001.174. This standard require s that we reve rse or rema nd a case for further proce eding s “if substantial rig hts of the appellant have been prejudice d beca use the administrative finding s, infere nces, conclusions, or dec isions” are
(A) in violation of a

constitutional or statutory provision; (B ) in excess of the a g ency ’s statutory authority ; (C) made throug h unlawful proc edure ; (D) a ffe cted by

other e rror

of law; (E) not rea sonably supported by sub s t antial evidenc e considering the reliable and probative e vidence in the rec ord as a whole; or (F ) arbitra

ry or capr icious or char acte rized by abuse of discretio n o r clearly unwar rante d exercise of

discretion.
Tex. Gov’t Code § 2001.174(2).

Her e, Winnebag o challeng es Tx DMV’s interpre tation of and adherenc e to its own rule. Thus, this case raises a question of rule construction, which we revie w de novo. See Railroad Comm’n v. Texas Citi

zens for a Safe Future & Clean W ater , 336 S.W .3d 619, 624 (Tex. 2011). We interpre t administrativ e rules, like statutes, under traditional principles of statutory construction. See TGS-NOPEC Geophy

sical Co. v. Combs , 340 S.W .3d 432, 438 (Tex. 2011); Rodriguez v. Se rvice Lloyds Ins. Co. , 997 S.W

. 2d 248, 254 (Tex. 1999). We consider the rule as a whole, avoid

4construing isolated provisions, and consider its role in the broad er re gu l atory scheme

. See

TGS-NOPEC , 340 S.W .3d at 439; 20801, Inc. v. Parker , 249 S.W .3d 392, 396 (Tex. 2008) ; Texas Dep’ t of Transp. v. City of Sunset Va l l ey , 1 4 6 S

. W

. 3d 637, 642 (Tex. 2004). We g ive undefine d
terms their ordinary meaning and follow the clea r lang uag e of an unambig uous rule unless such an interpre tation would lead to absurd results. TGS-NOPEC , 340 S.W .3d at 439; Rodriguez , 997 S.W .2d at 254. I f an ag ency h as fa i l ed t o follow the clear, unambiguous langua g e of its own
reg ulatio n , we m u s t reve rse its action as arbitra ry and capr icious. See Texas Indus. Energy Consumers v. Cent er

P o i n t E nergy Hous. Elec., LLC , 324 S.W .3d 95, 104 (Tex. 2010) (citing Rodriguez , 997 S.W .2d at 255).

DISCUSSIO N

I n its first issue, Winnebag o arg ues that the ALJ err ed in not requiring the complainants to bring the vehicle to the hear ing, thus preve nting Winnebag o from putting on its full defe nse. At the time of the he aring , Tx DMV Rule 215.206(9) ( the Rule) provide d:

Ex cept for hear ings conducte d by written submissi on o n l y o r by telephone, the complainant will be required to bring the v eh i cl e i n question to the hearing for the purpose of having the vehicle inspected and test driven, unless otherwise order ed by the hear ing office r upon a showing of g ood cause as to why the complainant should not be re quired to bring the vehicle to the hear ing.

4 3 T ex. Admin. Code § 215.206(9) (Tex. Dep’ t of Motor Vehicle s, Hea ring s) repealed 37 Tex. Reg

. 49 5 0 (2 0 12) (proposed M ar. 9, 2012) (cited here in as Former 43 Tex. Admin. Code

5§ 215.206(9). Winnebag o contends that the Rule requir ed the AL J to inspect and test the ve hicle 2 during the course of the hear ing so that he could assess for himself whether a defe ct that substantially i m p ai re d t h e marke t value of the vehicle exis ted at the time of the hear ing. See Tex. Occ

. C o d e § 2301.604(a) (establishing substantial impairment of marke t value as one standard for repla ceme nt

or ref und). Winnebag o further contends that the AL J could not dispense with the require ment that the vehicle be prese nt for his inspection and testing without the complainants’ making a showing of
g ood cause as to why they should not be require d to bring the vehicle and g iving Winnebag o notice and an opportunity to respond. I n doing so, Winnebag o arg ues, the AL J acte d arbitra rily and prejudice d Winnebag o by depriving it of an inspection and test that would have cause d the AL J to

rea ch a differ ent conclusion. Tx DMV responds that the rule does not require that a hear ing be held

on the issue of g ood cause , that the prese nce of the vehicle was not require d becau s e of the prior inspections, and that Winnebag o was not prejudice d by the absenc e of the vehicle beca use the AL J stated that eve n if it had bee n prese nt, he would not have inspe cted it.

We first consider whether the Rule was mandatory or direc tory

. I n d etermining whether a rule is direc tive or mandatory , “we consider the plain meaning of the words used, as well

as the entire [reg ulatory scheme ], its nature and object, and the conseque nces that would follow from

The c urre nt version of the r ule provides: 2
Ex cept for hear ings conducte d b y wr i t t en submissi on only or by telephone, the complainant must bring the vehicle in question to the hear ing so that the vehicle may be inspected and test driven, unless otherwise order ed by the AL J upon a showing of g ood cause by

the complainant. 43 Tex. Admin. C ode § 215.206(8) (Tex. Dep’t of Motor V ehicles, H ear ings)

.
6eac h construction.” Helena Chem. Co. v. W ilkins , 47 S.W .3d 486, 494 (Tex. 2001). T he Rule provided that the complainant “will be require d” to bring the vehicle to the hear ing unless otherwise “orde red” by the AL J “upon a showing of g ood cause .” For mer 43 Tex. Admin. Code § 215.206(9).
Her e, it is undisputed that the AL J did n o t re q u ire the complainants to bring the vehicle to the hear ing. I n his response to Winnebag o’s exceptions to his PF D, the AL J stated that he considere d the require ment of the Rule that the complainant bring the vehicle to the hear ing to be “a proce dural matter, meant to assure that the manufa cture r can have a opportunity to inspect the subject vehicle” and that it “should be con s i d er ed direc tory , rathe r than mandatory .” Howeve r, the word “‘[w]il l denotes cer

tainty

. . . ,” see Gleghorn v. W ichita Falls , 545 S.W .2d 446, 447 (Tex. 1976) (per curia m
op. on r’hr g of application for writ of err or), and in that reg ard is s i milar to “shall” and “must,” which are g ener ally reg arde d as m an d at o ry , s ee City of Austin v. Southwestern Bell Tel. Co. , 92 S.W .3d 434, 442 (Tex. 2002) (“sha ll” g ener ally construed as mandatory unless leg islative intent expressed in pla in lang uag e of statute sug g ests otherwise) ; W ilkins , 47 S.W .3d at 494 (“sha ll” and “must” g ener ally

rec og nized as mandatory , cre ating a duty or oblig ation). Had Tx DMV intended the prese nce of the vehicle to be permissive, it co u l d h av e provided that the complainant “may ” bring the vehicle, as it provided in the subsequent subsection of the Rule that Tx DMV “ may have the vehicle in que stion inspec ted.” See 43 Tex. Admin. Code § 2 1 5 .206(10) (Tex. Dep’ t of Motor Vehicle s, Hea ring s) repeale d 37 Tex. Reg

. 4950 (2012) (propose d Mar. 9, 2012) (cur rent version at 43 Tex. Admin. Code § 215.206(9) (Tex. Dep’ t of Motor Vehicle s, Hea

ring s)) (empha sis added) ; Br a y v. Tejas Toyota, Inc. , 363 S.W .3d 777, 785 (Tex. App.—Austin 2012, no p et

. ) (t extual distinctions betwee n adjac ent s tatutory provisions indicated

7leg islature intended one to be discretionar y and other to be mandatory ). I nstead, it chose the words

“ will be required,” and we must presume it chose those words for a p u rp o s e. See Ojo v. Farmers Grp., Inc. , 356 S.W .3d 421, 427 n.5 (Tex. 2011) (rule of statutory construction that ever

y word of
statute presumed used for a purpose (citing Cameron v. Terrell & Garrett, Inc. , 618 S.W .2d 535, 540 (Tex. 1981)))

. I n addition, the plain meaning of the rema inder of the phrase —be 3 required— supports the construction that the Rule is ma ndatory

. See TGS-NOPEC , 340 S.W .3d at 439; W ebster’s Third New Int’l Dictionary 1929 (2002) (def ining “to requ ire” as “to demand as

nece ssary or essential” or “t o d em an d of (one) that something be done or some action taken” ). Considering the plain lang uag e of the entire Rule in the context of the statutory scheme of the L emon L aw and Tx DMV rules, we conclude that it is mandatory unless the subsequent conditions are met—a showing of g ood cause why the vehicle does not nee d to be pre sent and a n order relieving
t he complainants of their otherwise mandatory duty to bring the vehicle. See TGS -N OP E C , 340 S.W .3d at 439; 20801, Inc. , 249 S.W .3d at 396.

Turning to the first condition, we obser ve that ther e is no evidenc e in t he record as
to a ny showing of g ood cause upon which the AL J ’s deter mination not to r equire the vehicle to be
prese nt was based. Be cause the Rule does not define “g ood cause ,” we look to its ordinary meaning

. See TGS-NOPEC , 3 4 0 S.W .3d at 439. Her e, the rec ord reflec ts that the complainants telephoned the AL J ’s offic e and asked the A L J ’s assistant if they had to bring the vehicle . The re cord f urther ref lects that they did not offe r the AL J ’s assistant any rea son for not being require d to bring the

We also note that the curr ent version of the rule provides that the complainant “must” bring 3 the vehicle. See 43 Tex. Admin. Code § 215.206(8); Helena Chem. Co. v. W ilkins , 47 S.W .3d 486, 494 (Tex. 2001) (“must” g ener ally rec og nized as mandatory , cre ating a duty or oblig ation). 8vehicl e, much less a rea son that would support a finding of g ood cause . See In re M.C.F. ,

121 S.W .3d 891, 896 (Tex. A pp.—For t Worth 2003, pet. denied) (no g ood cause in paternity case under section 160.636 of Family Code wher e appellee did not prese nt any rea son why child’s name should be chang ed); cf. In re S.M.V. , 287 S.W .3d 435, 449 (Tex. App.—Dallas 2009, no pet.) (g ood

cause shown in pater

nit y ca s e under section 160.636 of Fa mily Code wher e parties’ testimony established leg ally

sufficie nt rea sons to chang e child’s na me). Nor, as the AL J sug g ests and Tx DMV now arg ues, does the fac t that Winnebag o had previously

inspected the vehicle constitute “a showing of g ood cause ” under the plain lang uag e of the Rule. I n his response to Winnebag o’s exceptions to his PFD, the AL J stated that all responde nts
to the complaint had ex erc ised their right t o inspect t he vehicle pri or t o the complainants’ inquiry

conce rning bring ing the vehicle to the hear ing and that he had conclude d that “no cause exis ted for Complainant to bring the [vehicle] to the hear ing site.” Howeve r, the L emon L aw affords a

man u fa ct u re r a “re asonable number of attempts” to repa ir a vehicle befor e it can be require d to repla ce the vehicle or ref

und the purcha se price , less a rea sonable allowanc e for use. See Tex. Occ

. Code § 2301.604(a)

. Consequently , in ever y complaint proce ss, a manufa cture r has an opportunity
to inspect the vehicle prior to a contested case hear ing. See id. § 2301.703 (He aring Required in Contested Case).

I f we wer e to construe the Rule to mean that prior inspection constituted “a showing of g ood cause ,” then complainants would never be require d to bring the vehicle, and the Rule itself would become me a

n ing less surplusag e. See In re Nalle Plastics Family Ltd.P’ship , 406 S.W .3d 168, 173–74 (Tex. 2013) (we must give eff ect to all words of statute and not trea t any lang uag e as

9surplusag e if possible (citing Spradlin v. Jim W alter Homes, Inc. , 34 S.W .3d 578, 580 (Tex. 2000))) ; Columbia Med. Ctr

. of Las C olinas, Inc. v. Hogue , 271 S.W .3d 238, 256 (Tex. 2008) (cour ts may
not adopt construc t i o n that rende rs any part of statute meaning less or superf luous). We cannot
presume that Tx DMV adopted a meaning less rule. See Texas Lottery Comm’n v. First State Bank of DeQue en , 325 S.W .3d 628, 637 (Tex. 2010) (“Courts ‘do not lightly presume that the L eg islature
may have done a useless act.’ ” (quoting Liberty Mu t

. Ins. Co. v. Garrison Contractors, Inc. , 966 S.W .2d 482, 485 (Tex. 1998))).

Had Tx DMV intended to include an exception to the require ment that the vehicle be
prese nt when the manufa cture r has alre ady inspected it, it could have done so. See Ojo , 356 S.W .3d
at 4 2 7 (eve ry word excluded presumed excluded for a purpose) ; Zimmer US, Inc. v. Combs , 368 S.W .3d 579, 586 (Tex. App.—Austin 2012, no pet.) (same)

. I nstead, the Rule provided that the

co m plainant will be require d to bring the vehicle unless otherwise order ed by the AL J u p o n a showing of g ood cause even t h o ug h the statutory L emon L aw proce eding assure s that the manufa cture r has ample opportunity to inspect the vehicle prior to the hear ing. See Tex. Occ

. Code § 2301.604(a)

. I n addition, the Rule provides that the vehicle be broug ht to the hear ing for purposes of both inspection and testing. See id. There fore , we cannot conclude that the prior inspections by Winnebag o constituted “a showing of g ood cause ” as require d by the Ru l e. See For mer 43 Tex. Admin. Code § 215.206(9); In r e M. C

. F

. , 121 S.W .3d at 896–97 (discussing fac tors courts have found to constitute g ood cause in other conte x ts).

Even if we wer e to consider the prior inspections “a showing of g ood cause ,” it is also undisputed that the AL J issued no “orde r” that would have g iven Winnebag o notice of his decision

10not to require that the vehicle be prese nt. Rather, he instructed his a ssistant to verbally inform the complainants over the telephone that they need not bring the vehicle, did not co m m i t this communication to writing , and did not inform Winnebag o. The rules of proce dure for SOAH judge s provide that the AL J has the authority to issue order s and that “[ r] u l i n g s not made orally at a

rec orded prehea

ring confe renc e or hear ing shall be in writing and is sued t o all parties o f record.”
1 Tex. Admin. Code § 1 5 5

. 1 5 5 (a)(1), (b); see also Black’ s Law Dictionary 1206 (9th ed. 2009) (def ining “orde r” as “a written direc tion or comm an d delivere d by a court or judge ”). There fore ,
even if there had been a showing of g ood cause , we would conclude that the AL J ’s second- hand verba l instruction to the complainants did not comply with section 15 5.155 and did not result in complainants’ having been “orde red” not to bring the vehicle within the plain meaning of the Rule. See Tex. Occ

. Code § 155.155(a) (1); For mer 43 Tex. Admin. Code § 2 1 5

. 2 0 6(9); TGS-NOPEC , 340 S.W .3d at 439.

The AL J was require d to conduct the hear ing in acc ordanc e with the L emon L aw and
any order , decision, or rule of Tx DMV. See Tex. Occ

. Code §§ 2301.703(a) , .704(a)

. I n dispensing with the require ment of the Rule that the vehicle be prese nt at the hear ing without a showing of g ood

cause and without issuing an order , the AL J failed to follow the clea r, unambig uous lang uag e of the Rule. Fur

ther, in conducting the hear ing, the AL J acte d wi th “all of [Tx DMV’s] power and authority ,” including its power to make proce dural and evidentiar y decisions. See id. § 2301.704(b).
I n adopting the AL J ’s PFD unchang ed and issuing its final order without enfor cing the require ment of Rule 215.206(9) that the vehicle be prese nt at the h ea ri ng , Tx DMV failed to follow the unambig uous lang uag e of its o wn rul e. We there fore conclude that Tx DMV acted arbitrarily and

11capr iciously and that Winnebag o’s substantial rig hts wer e prejudice d when it was denied the

opportunity to present its full defe nse, including inspection and testing of the ve hicle by the AL J

. See Tex. Gov’ t Code § 2001.174(2)( F) ; Texas Indus. Ene rgy Consumers , 324 S.W .3d at 104. We sustain Winn e b a g o ’ s f

ir st issue. Be cause our deter mination of Winnebag o’s first issue is dispositi ve,

we do not rea ch its rema ining issues. See Tex. R. App. P. 47.1 (appe llate court must issue opinion that is as brief a s prac ticable a nd addre sses eve ry

issue nece ssary

to final dispositi on).

CONCLUSION Having sustained Winnebag o’s first issue, we reve rse Tx DMV’s final order and

rema nd for f urther pr ocee dings c onsistent with thi s opinion.

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Melissa Goodwin, Jus tice
Be fore J ustices Pury ear , Rose, and Goodwin
Reverse d and Remande d Filed: Apr il 10, 2014

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