Opinion ID: 1579863
Heading Depth: 3
Heading Rank: 2

Heading: How Does Amended Section 3.01(a) Affect a Trial Court's Adjudicating a Code-based claim?

Text: The Code's primary purpose is to regulate motor vehicle distribution and sales for the State's economy and the citizens' welfare. See TEX.REV.CIV. STAT. art. 4413(36), § 1.02. To accomplish this purpose, the Code strictly regulates the number and locations of motor vehicle dealerships, establishes the requisites for manufacturer and dealer licenses, and makes certain conduct by or between franchise dealers and manufacturers unlawful. See TEX.REV.CIV. STAT. art. 4413(36), §§ 4.01-.07, 5.01-.05. Also, the Code authorizes the Board to (1) administer the Code's provisions, (2) establish licensee qualifications, (3) ensure that motor vehicle distribution, sale, and leasing complies with the Code and the Board's rules, (4) provide for compliance with warranties, and (5) prevent fraud, unfair practices, discriminations, impositions, and other abuses occurring with motor vehicle distribution and sale. TEX.REV. CIV. STAT. art. 4413(36), § 3.02. Moreover, the Code establishes the administrative procedure through which the Board conducts hearings to resolve contested cases and issues under the Code. TEX.REV.CIV. STAT. art. 4413(36), § 3.08. The Code provides that any party affected by a final Board order, rule, decision, or action may obtain judicial review under the substantial evidence rule in a Travis County district court or, if removed, in the Third Court of Appeals. TEX.REV.CIV. STAT. art. 4413(36), § 7.01(a). The Board has the authority to levy penalties payable to the Board, issue cease and desist orders, issue injunctions, or bring suit. TEX.REV.CIV. STAT. art. 4413(36), §§ 6.01-.03. However, the Board cannot award damages to remedy harm a Code violation causes. Instead, an injured party may seek monetary redress in a trial court for Code violations. Specifically, the Code expressly permits a party to bring a DTPA suit and seek damages based on another party's violating Code provisions, including those governing the dealer-manufacturer relationship. Tex.Rev.Civ. Stat. art. 4413(36), § 6.06(a). Further, the Code provides that each party to a franchise agreement owes a duty of good faith and fair dealing and makes this duty actionable in tort. Tex.Rev.Civ. Stat. art. 4413(36), § 6.06(e). Accordingly, the Code creates a hybrid claims-resolution process by which parties may seek damages for certain Code violations. Initially, because the Board has exclusive jurisdiction under section 3.01(a) over claims and issues the Code governs, a party must exhaust administrative remedies to obtain a Board decision about Code violations, if any, to support a DTPA or bad-faith claim based on Code violations. See Tex.Rev.Civ. Stat. art. 4413(36), § 6.06(a), (e). The Board's decision is subject to substantial-evidence review in a Travis County district court or, if removed, in the Third Court of Appeals. See Tex.Rev.Civ. Stat. art. 4413(36), § 7.01(a). The Board's decision becomes final (and thus a party has exhausted administrative remedies) for purposes of a party's pursuing damages in a trial court for Code-based claims: (1) after the time to seek substantial-evidence review of the Board decision expires, if no affected person seeks such review, se Tex.Rev.Civ. Stat. art. 4413(36), § 7.01(a)-(b); or (2) after an affected person who seeks judicial review exhausts the substantial-evidence review avenues, see Tex.Rev.Civ. Stat. art. 4413(36), § 7.01(a). [2] When trying a DTPA or bad-faith claim predicated on Code violations, a trial court must give due deference to the findings of fact and conclusions of law of the [Board] contained in a final order which forms the basis of the action. Tex.Rev. Civ. Stat. art. 4413(36), § 6.06(a). Due deference means that, once the Board's finding about an alleged Code-based DTPA or bad-faith claim is final, the trial court adjudicating the damages arising from those claims must treat the Board's findings as wholly binding. In other words, in finally resolving the Code-based DTPA and bad-faith claims, the trial court cannot retry any Board findings after they become final.