Court Opinion

ID: 4055767
Source: CourtListenerOpinion
Date Created: 2016-09-29 07:20:23.511614+00
Date Added: 2024-06-11T14:31:53.836486
License: Public Domain

ACCEPTED
                                                                              01-14-00104-CV
                                                                   FIRST COURT OF APPEALS
                                                                           HOUSTON, TEXAS
                                                                         5/26/2015 9:57:17 PM
                                                                        CHRISTOPHER PRINE
                                                                                       CLERK

                    IN THE COURT OF APPEALS
              FIRST DISTRICT OF TEXAS AT HOUSTON
    ___________________________________________________________
                                                        FILED IN
                                                   1st COURT OF APPEALS
                                                       HOUSTON, TEXAS
                         NO. 01-14-00104-CV        5/26/2015 9:57:17 PM
                                                   CHRISTOPHER A. PRINE
    ___________________________________________________________
                                                           Clerk

                    WHITE LION HOLDINGS, L.L.C.

                                Appellant

                                   vs.

                         THE STATE OF TEXAS

                              Appellee
    ___________________________________________________________

                              On Appeal from
                    th
                The 98 District Court of Travis County, Texas
         Trial Court No. D-1-GV-06-000627 and D-1-GV-13-001068
    ___________________________________________________________

     APPELLANT’S MOTION FOR RECONSIDERATION EN BANC

Jacqueline Lucci Smith                      Joan Lucci Bain
TBA #: 00786073                             TBA #: 01548020
LUCCI SMITH LAW PLLC                        BAIN & BAIN PLLC
10575 Katy Freeway, Suite 470               10575 Katy Freeway, Suite 405
Houston, Texas 77024                        Houston, Texas 77024
Tel.: 832-494-1700                          Tel.: 713-629-6222
Fax: 832-494- 1426                          Fax: 713-629-6226
Email: JLS@LucciSmithLaw.com                JBain@BainandBainlaw.net

                  ORAL ARGUMENT REQUESTED

                                    1 
 
TO THE HONORABLE JUSTICES OF THE FIRST COURT OF APPEALS:

      Appellant, White Lion Holdings, LLC seeks rehearing en banc asking the

Court to reconsider the panel opinion issued April 9, 2015 in order to determine

whether the panel had jurisdiction or authority to affirm the judgment below because

of the improper severance of this case.

    STATEMENT REGARDING NEED FOR ORAL ARGUMENT AND
                EN BANC RECONSIDERATION

      En banc reconsideration is appropriate to address an issue of first impression

which is of exceptional importance to procedural and substantive law and requires

analysis of conflicting authorities concerning this Court’s jurisdiction. The issue has

developed because of the severance of the judgment against White Lion Holdings

LLC and the State’s subsequent actions in the case from which White Lion was

severed.   Specifically, this Court must determine whether the State may use

severance to split a single statutory violation into duplicate claims against a limited

liability company and its sole member in order to recover a duplicate statutory fine

against each defendant. The summary judgment below awarded statutory fines

against White Lion for violating a Compliance Plan with the Texas Commission on

Environmental Quality (TCEQ). The judgement against White Lion awarded the

full amount of the fine the State had stipulated to. At the State’s request, the trial

                                          2 
 
court severed White Lion from the original proceeding in its final summary

judgment order.

      After the briefs had been filed in this appeal, the State moved for summary

judgment in the remaining case seeking the identical judgment against the sole

member of White Lion for the same violations which formed the basis of the

judgment against the LLC. The State now holds two judgments in separate cases for

the same violation – one against White Lion and the other against its manager,

Bernard Morello – a result that forces examination of the validity of the severance

order and this Court’s jurisdiction over this appeal. Further, because this case was

transferred from the Austin Court of appeals, this Court must consider the conflict

among the courts of appeals regarding an appellate court’s jurisdiction after

improper severance and apply the precedent of the Austin Court to determine

whether to dismiss this appeal, remand for rejoinder with the original case, or abate

this appeal until the cases can be joined before this Court. TEX. R. APP. P. 41.3.

      Before issuing its opinion, this Court’s panel did not address the double

jeopardy by severance issue because at the time of briefing the State had not filed its

second motion in the trial court. The panel denied oral argument, so there was no

opportunity for White Lion to apprise the Court of the developments in the

underlying case. Further, because the State’s pleadings in the original case referred

                                          3 
 
to White Lion and Morello jointly in all allegations, White Lion did not anticipate

that the State would seek duplicate recovery.

                                 ISSUES PRESENTED:

     A. First Issue:   The Improper Severance Is Invalid.
     B. Second Issue: The Invalid Severance Requires Dismissal or Remand
     C. Third Issue:   The Invalid Severance Provided a Mechanism for A
        Double Penalty Thereby Denying White Lion and Morello Due Process
        and Allowing the State to Impose an Excessive Fine

                          ARGUMENT AND AUTHORITIES

        A. FIRST ISSUE:         THE SEVERANCE IS INVALID.

      The State’s suit against White Lion consisted of two claims. The first was

that White Lion failed to comply with CP-50129 rendering it in violation of Texas

Water Code section 7.102. The second claim was that White Lion failed to acquire

financial assurance in the amount of $574,000 in violation of the Texas

Administration Code. In order to obtain severance, the State represented that its

remaining claims against Morello were independent from those that it was asserting

against White Lion, stating that “If this Court grants the State’s Motion for Summary

Judgment, all issues and causes of action against White Lion will be resolved.” (CR

                                         4 
 
___, Appendix 1, State MSJ p. 24-25). 1 The State’s motion wholly failed to apprise

the trial court of the limits on severance that would apply in the event the State

proceeded against Morello on the identical grounds for recovery. The trial court’s

summary judgment order severed White Lion from the original case, D-1-GV-06-

000627, and the case against White Lion was re-designated as D-1-GV-13-001068.

(CR 549-554, 629). Notably, the State waited until after the issues in this appeal

were defined by White Lion’s opening brief to file its identical motion for summary

judgment against Morello individually.

              The State’s motion against Morello did not even attempt to assert any

independent ground for recovery proving that the State’s claims against White Lion

were not independent, and that the severance order is invalid. The motion sought

to hold Morello individually liable for a second full fine because he is the sole

member of White Lion.                                          Specifically, the State argued, “This is a statutory

enforcement action brought against Morello as operator and sole decision maker

of White Lion . . . .” (Supp. CR ___, Appendix 1, Pl’s MSJ at p. 29, emphasis added.)

The State neither plead nor argued that it was seeking liability against Morello by

piercing the corporate veil, and it expressly disavowed that the judgment it sought

against Morello derived from an independent tort. (Supp. CR, Appendix 1, Pl. MSJ).

                                                            
1
     All references to Appendix  in this Motion are to Appellant’s Appendix to Motion to 
Supplement The Record, Motion for Rehearing, and Motion for Rehearing en banc, Parts 1 and 
2, filed May 26, 2015. 
                                                                           5 
 
The State openly conceded that it was seeking a second judgment against Morello

because “Morello is White Lion.” (Appendix 4, Exhibit __, Supp. RR at 10:14). The

motion against Morello was presented to the trial court on February 19, 2015. This

Court issued its opinion on April 9, 2015, just five days before the trial court entered

judgment against Morello on April 14, 2015. (Appendix 3). The judgment against

Morello is for the same fines that were awarded in the summary judgment against

White Lion.

              1. THE SEVERANCE ORDER IS INVALID BECAUSE IT SPLITS A SINGLE
                 CAUSE OF ACTION INTO SEPARATE CLAIMS.

      While TEX R. CIV. P. 41 states that “[a]ny claim against a party may be severed

and proceeded with separately” a trial court’s discretion to sever is not unlimited.

Dalisa Inc. v. Bradford, 81 S.W.3d 876, 879 (Tex. App. – Austin, no pet). (“Such

discretion may not be exercised contrary to legal rules and principles applicable in

the particular case.” Id., quoting from Womack v. Berry, 156 Tex. 44, 291 S.W.2d
677, 683 (1956)). The decision whether a severance is valid is a question of law.

Guar. Fed. Savs. Bank v. Horseshoe Operating Co., 793 S.W.2d 652, 658-659 (Tex.

1990).

      Rule 41does not permit severance of a single cause of action against separate

parties. Dalisa Inc. 81 S.W.3d at 879 (Tex. App. – Austin, no pet) ("[s]everance of

a single cause of action into two parts is never proper " … “The reason for the rule

lies in the necessity for preventing vexatious and oppressive litigation, and its
                                           6 
 
purpose is accomplished by forbidding the division of a single cause of action so as

to maintain several suits when a single suit will suffice."), quoting from Pierce v.

Reynolds, 160 Tex. 198, 329 S.W.2d 76, 79 n. 1 (1959) and Pustejovsky v. Rapid

American Corp., 35 S.W.3d 643, 647 (Tex.2000). The controlling reasons to grant a

severance are to do justice, avoid prejudice and to further convenience the parties.

FFP Operating Partners LP v. Duenez, 237 S.W.3d 680, 693 (Tex. 2007); Nicor

Exploration Co., Nicor Exploration Co. v. Florida Gas Transmission Co., 911
S.W.2d 479, 482 (Tex. App. – Corpus Christi 1995, writ denied).

      Severance of a claim is only proper if (1) the controversy involves more than

one cause of action; (2) the severed claim is properly the subject of a separate

lawsuit; and (3) the severed claim is not so interwoven that it involves the same facts

and issues. FFP Operating Partners LP v. Duenez, 237 S.W.3d at 693; Guar. Fed.

Savs. Bank 793 S.W.2d at 658 (emphasis added). If the claim a party seeks to sever

does not meet all three prongs, then the claim may not be severed, and to do so

amounts to an abuse of discretion. Nicor Exploration Co. 911 S.W.2d at 482 (“By

severing [one plaintiff’s action from the action of another plaintiff], the trial court

effectively severed a party, instead of a cause of action.”).

             2. THE SEVERANCE IS INVALID BECAUSE THE STATE’S CLAIMS
                AGAINST WHITE LION ARE INEXTRICABLY INTERTWINED WITH
                ITS CLAIMS AGAINST MORELLO.

                                           7 
 
      Tex. R. Civ. P. 41 allows the severance of “actions” or separate “grounds of

recovery” that have been improperly joined. The State’s motion for summary

judgment against Morello makes it apparent that neither situation is present here.

Claims in a case are considered interwoven when their severance would result in two

or more separate judgments that, taken in the abstract, would either: (1)

undercompensate the plaintiff (because the respective juries could each find the

other defendant fully liable and thus each award plaintiff nothing), or (2) over

compensate the plaintiff (because the respective juries could each find their

respective defendant fully liable and enter two verdicts imposing a double recovery).

In situations such as this presenting the prospect of double recovery for the plaintiff

or double jeopardy for the defendant, severance is improper because the third

Guaranty Federal factor cannot be met. See Jones v. Ray, 886 S.W.2d 817, 821-

822 (Tex. App. – Houston [1st Dist.] 1994, orig. proceeding).

      If a claim involving an indivisible injury is severed, the facts and issues

relating to each particular entity's liability for their part in causing the injury are

the same. “[T]o divide [such a suit] into two suits would produce two trials focused

on the same facts and same injury, and could potentially lead to undue repetition,

confusion and prejudice to the interests of both the plaintiffs (who could be either

over or under compensated) and the defendants (who could face unduly low or high

fractional shares of the total liability for damages).” Santos v. Holzman, No. 13-

                                          8 
 
02-662-CV, 2005 WL 167309, at *4 (Tex. App.-Corpus Christi Jan. 27, 2005, pet.

denied) (mem. op.), citing Jones v. Ray, 886 S.W.2d a t 822. See also, Levetz v.

Sutton, 404 S.W.3d 798, 801 (Tex. App. – Dallas, 2013, pet. denied) (reversing order

of severance because the facts were interwoven and the severance did not avoid

prejudice or further convenience.).

       By splitting the same ground of recovery into separate actions the State was

able to avoid complicated issues of first impression – whether a member of an LLC

can be held individually liable for statutory fines based upon acts taken on behalf of

the LLC, and if so, how the liability is to be apportioned between the entity and the

individual. Exhaustive research failed to identify a single case that allowed a

member of an LLC that was not an employee of the LLC to be held liable for

statutory fines assessed solely on the basis of his membership in the LLC. It is

undisputed in this case that Morello in his individual capacity has never been in the

chain of title to the Property or a party to the Compliance Plan. Therefore, it is also

undisputed that Morello in his individual capacity had no duty in relation to same.

      If in fact liability exists, but is joint and several, it is clear that the severance

order was void because it deprived both defendants of the opportunity to have the

court determine whether White Lion, or Morello in his individual capacity, or both

were responsible for the alleged violations, and to apportion responsibility between

them. FFP Operating Partners LP v. Duenez, supra, 237 S.W. 3d at 693-694

                                            9 
 
(reversing jury verdict because trial court had improperly severed co-defendant

preventing apportionment of liability between the defendants. To further illustrate

the invalidity of the severance, it was untimely.2

B.            SECOND ISSUE:                                THE INVALID SEVERANCE REQUIRES DISMISSAL     OR
              REMAND

              Without the order of severance, the summary judgment against White Lion

was interlocutory and not subject to appeal. Although there is a conflict among the

courts of appeal as to whether an improper severance deprives an appellate court of

jurisdiction, several courts have held that a severance that splits a cause of action or

single ground of recovery deprives the appellate court of jurisdiction, particularly

where the severance is needed to make the judgment that is being appealed final. At

a minimum, this Court should re-examine its jurisdiction and determine whether it

has authority to render any judgment other than dismissal or remand. Even those

cases that find jurisdiction exists disagree over the appropriate resolution of the case.

To complicate the issue further, because this case was transferred from the Austin

Court of Appeals pursuant to order of the Supreme Court, this Court must examine

and apply the precedent of the Austin Court. Tx. R. App. P. 41.3.

                      1. THE CONFLICT AMONG                           THE   COURTS   OF   APPEALS REGARDING
                         JURISDICTION.

                                                            
2
  TEX.R. CIV. P. 41prohibits severance after the case is submitted to the trier of fact. Here, the
trial court severed the case in its summary judgment order – after the case was submitted.
                                                                      10 
 
        The Dallas Court of Appeals recently summarized the conflict among the

various courts of appeals regarding an appellate court’s jurisdiction when the trial

court has improperly severed a claim or party:

              Although the severance order is not challenged by the parties, we briefly
        address the propriety of the severance order because of a conflict in the courts
        of appeal as to whether an improper severance order affects the court's
        jurisdiction over the appeal. Some courts hold that an improper severance is
        trial court error and does not deprive the appellate court of jurisdiction to
        consider the appeal. See Rucker v. Bank One Tex., N.A., 36 S.W.3d 649, 652
        (Tex.App.-Waco 2000, pet. denied); Nicor Exploration Co. v. Fla. Gas
        Transmission Co., 911 S.W.2d 479, 482-83 (Tex.App.-Corpus Christi 1995,
        writ denied). Other courts have concluded that pretrial discovery and sanction
        orders are not severable because they cannot stand alone as independent suits
        and are interwoven with the merits of the main lawsuit. H.E. Butt Grocery Co.
        v. Currier, 885 S.W.2d 175, 177 (Tex.App.-Corpus Christi 1994, no writ).
        Such orders are not "claims" that may be severed under rule 41 and absent a
        valid severance, the appellate court lacks jurisdiction. Id. See also Tex.R. Civ.
        P. 41; Dalisa, Inc. v. Bradford, 81 S.W.3d 876, 882 (Tex.App.-Austin 2002,
        no pet.) (holding severance improper and dismissing appeal for want of
        jurisdiction); Cass v. Stephens, 823 S.W.2d 731, 733 (Tex.App.-El Paso 1992,
        no writ) (same), overruled in part by In re Hoover, Bax & Slovacek, L.L.P., 6
S.W.3d 646, 649 (Tex.App.-El Paso 1999, orig. proceeding).

    Jones v. America Flood Research Inc. 153 S.W.3d 718, 722-723 (Tex. App. –

Dallas, 2005) rev’d on other grounds, 192 S.W.3d 581 (Tex. 2006). Further, nearly

every court which has concluded that it has jurisdiction after an improper severance

resolves the case by dismissal or remand to remove the severance. The Jones Court

did the same. Id. at 723. See also Rucker v. Bank One Texas N.A., 36 S.W.3d 649,

__ (Tex. App. – Waco 2000, pet. denied) (agreeing with the position of the Corpus

Christi Court of Appeals in Nicor “for a different reason. This judgment was final.”).

                                            11 
 
Most Courts that find jurisdiction do so based on dicta in two old Supreme Court

cases, Pierce v. Reynolds, 160 Tex. 198, 329 S.W.2d 76 (1959) and Schieffer v.

Patterson, 433 S.W.2d 418 (Tex.1968), but many Courts since then have found no

jurisdiction to hear the appeal. In situations such as the one presented here, where

the severance order splits a cause of action, courts almost uniformly dismiss the

appeal for lack of jurisdiction. Dalisa, Inc. v. Bradford, 81 S.W.3d at 882; Jones v.

Ray, 886 S.W.2d a t 822; Smith v. Rhodes Properties, No. 05-08-00856-CV (Tex.

App. – Dallas, 2010, per curiam). The San Antonio Court has adopted the rule that

where the severance order is necessary to make the judgment on appeal final, the

case must be dismissed for lack of jurisdiction. Stroud v. VBFSB Holdings, 901
S.W.2d 657, 660-661 (Tex. App.—San Antonio, 1995, no pet.).

      While it is clear that the courts of appeals have struggled with the issue of

jurisdiction after improper severance there is no single rule that has emerged to

resolve the conflict. The limitations on the length of this motion make it impossible

to present a comprehensive analysis of the various approaches, or to reconcile or

distinguish each individual case. What is decisive for this Court, however, is the

fact that this case was transferred from the Austin Court of Appeals, and this Court

is therefore bound to follow the precedent of that Court to resolve the issue.TEX. R.

APP. P. 41.3.

         2. THE AUSTIN COURT OF APPEALS WOULD DISMISS FOR LACK                    OF
            JURISDICTION.
                                         12 
 
        Dalisa, Inc. v. Bradford, 81 S.W.3d 876 (Tex.App.-Austin 2002, no pet.)

remains the controlling precedent in the Austin Court of Appeals. Dalisa holds that

where an otherwise interlocutory judgment is made final by an invalid severance

order, the appellate court lacks jurisdiction over the appeal, requiring dismissal of

the appeal. The Austin Court continues to follow that precedent. In Re Stonebridge

Ins. Co. 279 S.W.3d 360, 363 (Tex. App. – Austin 2008, orig. proceeding) (“Texas

trial courts have broad discretion regarding the severance and consolidation of cases-

but that discretion is not unlimited. One well-established limitation on that discretion

is the single-action rule, or the rule against splitting claims.”), relying in part on

Dalisa, Inc. v. Bradford, 81 S.W.3d at 879. See also, In Re Henry, 388 S.W.3d 719,

726 (Tex. App. – Houston [1st Dist.] 2012, pet. denied) (relying on Dalisa to review

the propriety of a severance order for abuse of discretion.). Thus, where as here, the

trial court has split a cause of action through severance in order to make an otherwise

interlocutory summary judgment final, the Austin Court of Appeals would find it

lacked jurisdiction over the appeal and dismiss the appeal. This Court should do the

same.

C.      THIRD ISSUE:   IMPROPER SEVERANCE IN THIS CASE RESULTS IN
        DENIAL OF DUE PROCESS AND AN EXCESSIVE FINE IN VIOLATION OF THE
        TEXAS AND UNITED STATES CONSTITUTIONS

        By obtaining separate judgements, the State was able to avoid its stipulation

that it would accept the minimum fine. The state has now recovered fines totalling
                                          13 
 
over $760,494 (more than five times the purchase price of the property). Under these

circumstances, severance violates due process and the constitutional protection

against excessive fines.

         1. THE STATUTORY PENALTIES RECOVERED BY THE STATE ARE
            PUNITIVE WITHIN THE MEANING OF THE TEXAS AND FEDERAL
            CONSTITUTIONS.

      Article I, section 13 of the Texas Constitution provides, "[e]xcessive bail shall

not be required, nor excessive fines imposed, nor cruel or unusual punishment

inflicted." TEX. CONST. ART. I, § 13. The United States Constitution has the same

prohibition. (“Excessive bail shall not be required, nor excessive fines imposed, nor

cruel and unusual punishments inflicted; U.S. CONST. amend. VIII.) The Eighth

Amendment is applicable to the States through the Fourteenth Amendment.

Robinson v. California, 370 U.S. 660, 82 S. Ct. 1417, 8 L. Ed. 2d 758 (1962).

      The term “fines” includes civil penalties. See Pennington v. Singleton, 606
S.W.2d 682, 690 (Tex. 1980). The Beaumont Court of Appeals explained the U.S.

Supreme Court’s definition of fines in One Car, 1996 Dodge X-Cab Truck White In

Color 5YC-T17 VIN 3B7HC13Z5TG163723 v. State, 122 S.W.3d 422, 427 (Tex.

App.-- Beaumont 2003, no pet.) as follows:

                  (1) the protections afforded by the Eighth Amendment are not
                  limited to criminal prosecutions, or civil proceedings so punitive
                  as to be considered criminal in nature, Id. at 607-09, 113 S. Ct.
2801; (2) the Excessive Fines Clause limits the government's
                  power to extract payments as punishment for some offenses, Id. at
                  609, 113 S. Ct. 2801; (3) "punishment" cuts across the division
                                          14 
 
                   between criminal and civil proceedings; the question being not
                   whether the statutes in question are labeled civil or criminal, but
                   rather whether the imposition sought by the government is
                   considered "punishment," Id. at 610, 113 S. Ct. 2801; [and] (4)
                   while recognizing that sanctions may serve more than one
                   purpose, i.e., remedial and punitive, any sanction that cannot fairly
                   be said solely to serve a remedial purpose, but can also be said to
                   serve either retributive or deterrent purposes, constitutes
                   punishment, Id. at 610, 113 S. Ct. 2801.

Id. at 423-424, quoting from and citing to Austin v. United States, 509 U.S. 602, 113
S. Ct. 2801, 125 L. Ed. 2d 488 (1993). Generally, prescribing fines is a matter within

the discretion of the legislature. There is no question that the penalties imposed by

the Texas Water Code are punitive in nature so as to bring the statute’s penalties

within the purview of both the Texas and Federal Constitutions’ prohibitions against

excessive fines.

          2. A DOUBLE RECOVERY         FOR THE   SAME CONDUCT CONSTITUTES AN
             EXCESSIVE FINE

      There is no precedent for imposing individual duplicate liability against the

member of an LLC just because he is the sole member of the LLC. Assuming without

conceding that any penalty is justified in this case, the State should have been limited

to one penalty against the responsible party, whether it was White Lion or Morello.

By severing White Lion, the State avoided a finding on a critical issue central to both

motions – who is the responsible party? Even if the State could argue that the

corporate veil should be pierced (which Morello denies), at most it would have been

                                           15 
 
entitled to joint and several liability against Morello and White Lion, not a double

recovery.

       In its two judgments, the Court has now awarded over $760,494 in fines

against Morello and White Lion after the State stipulated that the civil penalties

should only be $50 per day (five times the purchase price of the Property). ( Sup.

CR ; A p p e n d i x 4 , E x .   ) . Morello and White Lion have both consistently

maintained inability to pay the fine and to conduct the remediation the state is

demanding.

       Where the amount of a penalty imposed by a State agency is so high that it

effectively deprives a citizen of the ability to litigate his defense to such penalty, it

is unconstitutional. See R. Communications Inc. v. Sharp, 875 S.W.2d 314, (Tex.

1994) (holding that conditioning a taxpayer's right to initiate judicial review on the

payment of taxes or the posting of a bond equal to twice the alleged tax obligation

violates the open courts mandate of the Texas Bill of Rights. TEX. CONST. art. I, §

13. “Taxes cannot be raised by means that make meaningless our constitutional

guarantees.”). While this case does not present an open courts question, it does

present an unconstitutional denial of due process and equal protection under state

and federal law.

            3. THE DOUBLE RECOVERY IMPOSED BY THE TWO JUDGMENTS FAILS
               THE PROPORTIONALITY TEST MAKING THE FINES EXCESSIVE.

                                           16 
 
      Beyond the issue of ability to pay, a fine must be proportionally related to the

offense it is designed to deter or punish. In determining whether the fine is

excessive, a court must consider proportionality, i.e., the amount of the fine must

bear some relationship to the gravity of the offense that it is designed to punish. The

wide latitude the state has in imposing fines is exceeded and denies due process

"where the penalty prescribed is so severe and oppressive as to be wholly

disproportioned to the offense and obviously unreasonable." Pennington, 606
S.W.2d at 690 (quoting St. Louis, Iron Mountain & S. Ry. Co. v. Williams, 251 U.S.
63, 66-67, 40 S. Ct. 71, 64 L. Ed. 139 (1919)); see Owens-Corning Fiberglas Corp.

v. Malone, 972 S.W.2d 35, 44-48 (Tex.1998) (due process analysis of punitive

damages). See also, United States v. Bajakajian, 524 U.S. 321, 334, 118 S. Ct. 2028,

2036 (1998).

          4. THE IMPROPER SEVERENCE VIOLATES THE EQUAL PROTECTION,
             AND DUE COURSE OF LAW PROVISIONS OF THE TEXAS
             CONSTITUTION, AND THE DUE PROCESS AND EQUAL PROTECTION
             PROVISIONS OF THE U.S. CONSTITUTION.

      By presenting each motion as a separate case, the State was able to convince

the trial court, and the panel in this Court, that the only issue was whether a violation

occurred, and if so the applicable penalty. Even if Morello appeals the judgment

against him individually, that appeal will go to the Austin Court of Appeals, as this

case would have absent the Supreme Court’s Order transferring it here, exposing

Morello and White Lion to different holdings in the same case against them.
                                           17 
 
Further, this appeal will have either become final or moved on to the next stage.

There will never be an opportunity to address the correct assessment and or

apportionment of liability in either case. See FFP Operating Partners LP v. Duenez,

supra, 237 S.W. 3d at 693-694 (reversing jury verdict because trial court had

improperly severed co-defendant preventing apportionment of liability between the

defendants.)

       White Lion and Morello are now in the impossible position of having to fight

the same case on two fronts before two different appellate courts, with neither court

having the full record before it. See Stroud v VBFSB Holding Corporation, 917
S.W.2d 75, 78 (Tex. App. -- San Antonio 1996, writ denied) (recognizing that

dismissal of compulsory counterclaims which the Court previously found to be

improperly severed, “placed [appellant] in the impossible position of having to

perfect a new appeal based on the then-final judgment before this court had issued

its dismissal of his first appeal.”).

       Worse, because of the severance, neither court will have all of the necessary

parties before it to adjudicate under what circumstances, if any, an officer or member

of an entity may be held liable for the entity’s penalties under Tex. Water Code

Section 7.101, or the appropriate method to apportion the responsibility between

them. Further, assuming “White Lion is Morello” the State’s remedy would have

                                         18 
 
been to pierce the corporate veil and obtain joint and several liability against White

Lion and Morello, not a double recovery against each defendant.

                                         PRAYER

      Appellant White Lion Holdings LLC, requests that this Court grant this Motion

for Rehearing En Banc, and upon rehearing, withdraw the April 9, 2015 panel

opinion, and dismiss this appeal for lack of jurisdiction. Alternatively, White Lion

requests that the Court withdraw the panel opinion, set aside the severance order and

remand the case to the trial court for rejoinder with the case against White Lion’s sole

member, Bernard Morello. White Lion prays for such further relief to which he may

show himself justly entitled.

                                 Respectfully Submitted,

                                 LUCCI SMITH LAW PLLC

                                 By: /s/ Jacqueline Lucci Smith
                                 Jacqueline Lucci Smith
                                 TBA #: 00786073
                                 10575 Katy Freeway, Suite 470
                                 Houston, Texas 77024
                                 Tel.: 832-494-1700
                                 Fax: 832-494-1426
                                 Email: JLS@LucciSmithLaw.com

                                 BAIN & BAIN PLLC

                                 By: /s/ Joan Lucci Bain
                                 Joan Lucci Bain
                                 TBA #: 01548020
                                          19 
 
                               10575 Katy Freeway, Suite 405
                               Houston, Texas 77024
                               Tel.: 713-629-6222
                               Fax: 713-629-6226
                               Email: JBain@BainandBainlaw.net

                        CERTIFICATE OF SERVICE

      I certify that a copy of this Motion for Rehearing En Banc was served on
counsel for the State, Craig Pritzlaff, by email on May _26, 2015.

                                                  /s/ Jacqueline Lucci Smith
                                                  Jacqueline Lucci Smith

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