IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 17-10349

AUTOBAHN IMPORTS, L.P., doing business as Land Rover of Fort Worth, 

 Plaintiff - Appellee

v.

JAGUAR LAND ROVER NORTH AMERICA, L.L.C., 

 Defendant - Appellant

Appeal from the United States District Court

for the Northern District of Texas

USDC No. 4:16-CV-1172

Before STEWART, Chief Judge, CLEMENT, and SOUTHWICK, Circuit 

Judges.

PER CURIAM:*

Autobahn Imports, LP, sued Jaguar Land Rover North America, LLC,

for damages. The claim was based on an earlier determination by the Board 

of the Texas Department of Motor Vehicles that Land Rover had violated the 

Texas Occupations Code by certain financial charges it made to Autobahn, its 

franchisee. Land Rover asserted two counterclaims for breach of contract. The 

 

* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not 

be published and is not precedent except under the limited circumstances set forth in 5TH 

CIR. R. 47.5.4.

United States Court of Appeals

Fifth Circuit

FILED

April 3, 2018

Lyle W. Cayce

Clerk

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district court dismissed the counterclaims for lack of subject matter 

jurisdiction after determining that the Board retained exclusive jurisdiction to 

make the initial determinations on the counterclaims. We AFFIRM. 

FACTUAL AND PROCEDURAL BACKGROUND

The plaintiff Autobahn Imports, LP, is a franchised dealer in Fort Worth, 

Texas for the defendant Jaguar Land Rover North America, LLC. In addition 

to a dealer agreement between the parties, Land Rover utilizes an incentive 

program known as the Business Builder Program to provide dealers with a 

percentage of the retail price of every vehicle sold if certain requirements are 

met. The terms of the program are set forth in two documents: the Business 

Builder Program Manual (“Manual”) and the Operations Bulletin, also known 

as the Contests and Incentives Standard Eligibility Rules for Retail Programs 

(“Rules”). The Manual and the Rules are collectively referred to as the 

Business Builder contracts.

In 2010, Autobahn and Land Rover disagreed about certain provisions of 

the 2011 Business Builder Program. Autobahn filed a complaint with the 

Board of the Texas Department of Motor Vehicles (“the Board”). Before the 

Board ruled, the parties executed a Settlement Agreement establishing future 

policies for newly-sold vehicles as well as documentation requirements for the 

delivery of new vehicles to retail purchasers. The Business Builder contracts 

and the Settlement Agreement stipulated that incentive payments would be 

contingent on Autobahn’s delivering newly-sold vehicles directly to the enduser. In addition, Autobahn was required to maintain documentation to 

validate the end-user addresses. 

In 2014, Land Rover audited Autobahn’s sales records and determined 

that approximately 85 vehicles sold in 2013 had not been delivered directly to 

an end-user according to its interpretation of the Manual and Settlement 

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Agreement. Because Autobahn allegedly delivered the vehicles to a leasing 

company who then delivered the vehicles to subsequent users, Land Rover 

charged back approximately $317,000 from Autobahn’s account. Autobahn 

challenged the charge-back by filing a complaint with the Board in May 2014. 

Autobahn argued that the terms of the incentive program violated Texas 

Occupations Code § 2301.467, barring distributors from requiring “adherence 

to unreasonable sales or service standards[.]” The Board ruled in favor of 

Autobahn in September 2016. Land Rover appealed to the Court of Appeals 

for the Third District of Texas in Austin, which affirmed the Board’s decision 

in December 2017. Jaguar Land Rover N. Am. v. Bd. of the Tex. Dep’t of Motor 

Vehicles, No. 03-16-00770-CV, 2017 WL 6756997, at *1 (Tex. App.—Austin 

Dec. 21, 2017, no pet.). 

Because the Texas Occupations Code does not grant the Board authority 

to award damages, Autobahn filed suit in Texas state court in November 2016 

for damages based on the Board’s holding. In December 2016, Land Rover 

removed the case to the United States District Court for the Northern District 

of Texas based on diversity of citizenship. In its answer to the suit, Land Rover 

asserted as counterclaims that Autobahn breached the Business Builder 

contracts and the Settlement Agreement. Autobahn moved to dismiss the 

counterclaims for lack of subject matter jurisdiction. It argued that the Board 

had exclusive jurisdiction over such claims, requiring Land Rover to present 

them first to the Board. In February 2017, the district court granted 

Autobahn’s motion. Land Rover timely appealed the district court’s dismissal 

of the two counterclaims.1 

 

1 The district court later granted summary judgment in favor of Autobahn on its 

damages claim, awarding nearly a million dollars in damages. See Autobahn Imps., LP v. 

Jaguar Land Rover N. Am., LLC, No. 4:16-CV-1172-A, 2017 WL 2684055, at *7 (N.D. Tex. 

June 20, 2017). Land Rover’s appeal of that judgment is pending. No.17-10737. 

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DISCUSSION

Land Rover raises two issues on appeal. First, it argues the district court 

erred in determining that the Board retains exclusive jurisdiction over its 

breach of contract counterclaims. Second, it argues error in the district court’s 

alternative holding, that the Board retains primary jurisdiction. 

Sitting in diversity, we apply Texas substantive law. Austin v. Kroger 

Tex. LP, 746 F.3d 191, 196 (5th Cir. 2014). In determining that law, we look 

“first to the final decisions of the Texas Supreme Court.” Id. If that court has 

not spoken to an issue, we seek to predict its rulings “by looking to the 

precedents established by intermediate state appellate courts.” Howe ex rel. 

Howe v. Scottsdale Ins. Co., 204 F.3d 624, 628 (5th Cir. 2000).

Under Texas law, whether an agency has exclusive or primary 

jurisdiction is a question of law reviewed de novo. Subaru of Am., Inc. v. David 

McDavid Nissan, Inc., 84 S.W.3d 212, 222 (Tex. 2002). Similarly, we review a 

district court’s dismissal of claims for want of subject matter jurisdiction de 

novo. SmallBizPros, Inc. v. MacDonald, 618 F.3d 458, 461 (5th Cir. 2010). 

I. Exclusive Jurisdiction

Under Texas law, state “district courts are authorized to resolve disputes 

unless the Constitution or other law conveys exclusive jurisdiction on another 

court or administrative agency.” In re Sw. Bell Tel. Co., 235 S.W.3d 619, 624 

(Tex. 2007). “Whether an agency has primary or exclusive jurisdiction to 

resolve an issue determines if a party must first exhaust administrative 

remedies before a trial court has subject matter jurisdiction over a dispute.” 

Subaru, 84 S.W.3d at 222. If exhaustion is required and has not occurred, “the 

trial court lacks subject matter jurisdiction and must dismiss the claims within 

the agency’s exclusive jurisdiction.” Id. at 221. 

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A Texas administrative agency “has exclusive jurisdiction when the 

Legislature gives the agency alone the authority to make the initial 

determination in a dispute.” Cash Am. Int’l Inc. v. Bennett, 35 S.W.3d 12, 15 

(Tex. 2000). Whether an agency has such authority turns on whether “a 

pervasive regulatory scheme indicates that the Legislature intended for the 

regulatory process to be the exclusive means of remedying the problem to 

which the regulation is addressed.” In re Sw. Bell, 235 S.W.3d at 624–25. The 

determination is therefore a matter of statutory construction governed by the 

plain language of the statute and legislative intent. Butnaru v. Ford Motor 

Co., 84 S.W.3d 198, 203 (Tex. 2002).

The Texas Supreme Court has held that the Texas Occupation Code 

“clearly expresses the Legislature’s intent for the Board to have exclusive 

jurisdiction over matters the Code governs.” Subaru, 84 S.W.3d at 223. 

Accordingly, “[t]he board has the exclusive original jurisdiction to regulate 

those aspects of the distribution, sale, or lease of motor vehicles that are 

governed by this chapter, including the original jurisdiction to determine its 

own jurisdiction.” TEX. OCC. CODE § 2301.151(a). As to franchises, the Code 

states that “[t]he terms and conditions of a franchise are subject” to the Code. 

§ 2301.003(a). That means that any “term or condition of a franchise 

inconsistent with [the Code] is unenforceable.” § 2301.003(b). 

Autobahn cites to Section 2301.002(15), the definitions subsection of the 

Code, to define “franchise” as it relates to the claims at issue. The definition 

broadly includes “contracts between a franchised dealer as franchisee and a 

manufacturer . . . including a written communication from a franchisor to a 

franchisee in which a duty is imposed on the franchisee[.]” § 2301.002(15). 

Autobahn also relies on general provisions of the Code: Section 2301.467 

prohibits “adherence to unreasonable sales or service standards”; Section

2301.4749 requires a franchisor to provide “reasons for the rejection” when 

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denying an incentive payment; and Section 2301.475 permits a charge-back of 

incentive payments only upon “reasonable grounds to conclude that the dealer 

committed fraud[.]” 

In interpreting whether these provisions grant exclusive jurisdiction, the 

parties look primarily to three cases. The first two opinions were issued by the 

Texas Supreme Court on the same day in 2002. See Butnaru, 84 S.W.3d 198; 

Subaru, 84 S.W.3d 212. In addition, Land Rover relies on one of our decisions 

handed down in 2003. See Saturn Distrib. Corp. v. Paramount Saturn, Ltd., 

326 F.3d 684, 686–87 (5th Cir. 2003).

In one of the Texas Supreme Court decisions, it considered whether the 

Board retained exclusive jurisdiction over a dispute between Subaru and one 

of its franchisee dealers. Subaru, 84 S.W.3d at 222–23. The court held that 

the statutory “language clearly and plainly evidences the Legislature’s intent 

that it is a jurisdictional prerequisite that the Board resolve Code-based issues 

and claims before a party proceeds in court.” Id. at 223. The plaintiff dealer 

alleged that Subaru unlawfully withheld approval to relocate a dealership 

contrary to an oral agreement between the parties. Id. at 226. The Code, 

however, only regulates written applications to relocate, and the provision at 

issue therefore could not provide the basis for exclusive jurisdiction. Id. 

Nonetheless, the court held that other provisions of the Code strictly regulated 

the “facts underlying” the breach of oral contract claims because the Board 

must still approve a license for any dealership location. Id. The plaintiff’s 

claims were therefore “predicated on the assumption that the Board would 

have allowed the relocation and granted the license[.]” Id. The Board therefore 

retained exclusive jurisdiction over the claims because the underlying facts 

raised Code-based issues, even though oral contracts for dealership relocation 

were not expressly addressed by the Code. See id. 

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The other Texas state court decision addressed a prospective dealer’s suit 

against Ford Motor Company for tortious interference with its attempted 

purchase of a dealership. Butnaru, 84 S.W.3d at 207. Applying the 

jurisdictional standard announced that same day in Subaru, the court 

concluded that the language of the Code did not signal legislative intent to 

replace the remedies available to a prospective purchaser of a dealership as 

opposed to a current dealer. See id. at 207–08. Thus, there was no Code 

provision dealing with the underlying facts of the plaintiff’s claim. See id. The

Board therefore lacked exclusive jurisdiction. See id. at 207. 

Finally, this court considered whether an arbitration clause in a 

franchise agreement was sufficient to override the Board’s jurisdiction. 

Saturn, 326 F.3d at 686. Land Rover principally relies on this language:

“There are no legal restraints external to the parties’ arbitration agreement 

that foreclose the arbitration of their dispute because the [Board] does not have 

exclusive jurisdiction of contractual disputes between franchisors and 

franchisees in the motor vehicle industry.” Id. at 687. “Even if it did,” the 

court held, “the strong federal policy favoring arbitration preempts state laws 

that act to limit the availability of arbitration.” Id. 

Here, the district court held that “[t]he subject matters of both of [Land 

Rover’s] breach of contract claims are within the exclusive jurisdiction of the 

Board[.]” Land Rover argues that the exclusive jurisdiction question is 

foreclosed by our decision in Saturn. In the alternative, Land Rover argues 

that Subaru and Butnaru require exclusive jurisdiction only when the claims 

explicitly allege a violation of the Code or are “predicated on a regulatory 

decision within the Board’s sole authority.” Because Land Rover is alleging 

Autobahn violated the Business Builder Contracts and the Settlement 

Agreement, not the Code, it argues this case is more like Butnaru. 

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Autobahn argues that Land Rover must demonstrate a valid and 

enforceable contract between the franchisor and franchisee. Werline v. E. Tex. 

Salt Water Disposal Co., 209 S.W.3d 888, 898 (Tex. App.—Texarkana 2006), 

aff’d, 307 S.W.3d 267 (Tex. 2010). Because (1) the Code deems unenforceable 

any franchise terms and conditions contrary to the Code (Section 2301.003); (2) 

all written communications imposing obligations between parties to the 

franchise are encompassed by the Code (Section 2301.002(15)); and (3) the 

Business Builder Contracts and Settlement Agreement imposed obligations on 

Autobahn; then (4) the Board has exclusive jurisdiction to determine whether 

the Business Builder Contracts and the Settlement Agreement are consistent 

with the Code in order for the documents to be enforceable. Restated according 

to Suburu, even if Land Rover’s breach of contract claims are not explicitly 

alleging Code violations, the underlying facts still require determinations

governed by the Code. 

We first examine Saturn. Both parties go too far in characterizing our 

holding. Autobahn’s argument that our statement regarding exclusive 

jurisdiction is dicta is incorrect. The Board’s lack of exclusive jurisdiction over 

contractual disputes and the FAA’s preemption of the Code are alternative 

holdings. See Saturn, 326 F.3d at 687. “This circuit follows the rule that 

alternative holdings are binding precedent and not obiter dicta.” United States 

v. Bueno, 585 F.3d 847, 850 n.3 (5th Cir. 2009) (citation omitted). 

Similarly flawed is Land Rover’s argument that Saturn forecloses the 

question of the Board’s exclusive jurisdiction in all cases. Although we did not 

discuss Subaru in Saturn, there is no conflict between Subaru’s holding that 

the Board retains exclusive jurisdiction over matters the Code governs and 

Saturn’s holding that the Board’s exclusive jurisdiction cannot serve as an 

external legal restraint to arbitration clauses. In that sense, we held that the 

Board’s jurisdiction is not exclusive in all respects. See Saturn, 326 F.3d at 

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687. Although the Board maintains exclusive jurisdiction over matters the 

Code governs, the Code does not govern every situation. In those instances, 

the Board lacks exclusive jurisdiction. See Subaru, 84 S.W.3d at 223. The 

Saturn arbitration clause was such an instance. See 326 F.3d at 687. 

The plain language of the Code indicates that a written agreement

between a franchisor and franchisee is unenforceable if it violates the Code. 

See §§ 2301.002(15), 2301.003. A complaint that seeks to enforce a contract 

between a franchisor and franchisee necessarily raises a Code question.

Concerning Butnaru, Land Rover argues that if the Subaru test looks to 

whether underlying facts raise Code-related questions, then the Butnarus’

claims would have warranted exclusive jurisdiction. It then posits that 

because the court denied exclusive jurisdiction, Autobahn’s articulation of the 

Subaru test must be too broad. A closer reading of Butnaru, however, reveals 

the court did suggest that the underlying facts would have brought the 

Butnarus’ claims under the umbrella of the Board’s exclusive jurisdiction but 

for their identity as a third party as opposed to a franchisor or franchisee. See 

84 S.W.3d at 207–08. 

Land Rover’s counterclaims for breach of contract require the presence 

of an enforceable contract, a question implicating the Code. Land Rover cannot 

bypass the Board’s exclusive jurisdiction by choosing to avoid explicitly relying 

on a Code provision as the basis for its counterclaims. Because Land Rover’s

allegation is that Autobahn breached a written agreement between a vehicle 

franchisor and franchisee, a Code determination is required to determine if 

there was an enforceable agreement between the parties. The Board therefore 

retains exclusive jurisdiction over Land Rover’s counterclaims. 

Given the Board’s exclusive jurisdiction, we need not reach the 

alternative issue of whether the Board retains primary jurisdiction.

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II. Dismissal vs. Abatement of the Counterclaims

The parties dispute whether it is more appropriate to dismiss or abate 

Land Rover’s counterclaims in light of the Board’s exclusive jurisdiction. The 

district court dismissed the counterclaims. The parties both cite to different 

passages of Subaru. Autobahn argues that Subaru permits discretion in 

determining whether to dismiss or abate the counterclaims while Land Rover 

argues that Subaru requires abatement. 

As with the exclusive jurisdiction issue, we look to the decisions of the 

Texas Supreme Court for guidance and, in the alternative, “to the precedents 

established by intermediate state appellate courts.” Howe, 204 F.3d at 628. 

The Texas Supreme Court has noted that typically, when a trial court 

determines it lacks subject matter jurisdiction on account of a state agency’s 

exclusive jurisdiction, the court must dismiss the claims. Subaru, 84 S.W.3d 

at 227. Only when the impediment to jurisdiction can be removed may a court 

abate rather than dismiss the claim. Id. at 228. Applied to the facts of Subaru, 

the court held that the plaintiff had a “reasonable opportunity to cure the 

jurisdictional problem” by first exhausting his claim before the Board. Id. 

At least one Texas intermediate appellate court has held that Subaru 

failed to elaborate “the circumstances which justify an abatement[.]” O’Neal 

v. Ector Cnty. Indep. Sch. Dist., 221 S.W.3d 286, 290 (Tex. App.—Eastland 

2006), aff’d on other grounds, 251 S.W.3d 50 (Tex. 2008). That court believed 

Subaru and related Texas Supreme Court opinions indicated “dismissal was 

the appropriate remedy where an administrative agency . . . had exclusive 

jurisdiction and had not yet ruled.” See id. 

Here, the district court noted that Land Rover is raising many of the 

same arguments in support of its counterclaims as it did when challenging

Autobahn’s claims already adjudicated by the Board. Although we do not 

forecast the Board’s potential evaluation of Land Rover’s counterclaims, 

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Subaru indicates that abatement turns largely on the possibility that the 

claims will eventually return to the trial court. See 84 S.W.3d at 227–28. The 

district court therefore did not err in determining that dismissal was 

appropriate given the unlikelihood of Land Rover’s claims returning to the 

district court following adjudication by the Board. 

AFFIRMED.

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