Court Opinion

ID: 9405318
Source: CourtListenerOpinion
Date Created: 2023-06-27 21:09:43.510935+00
Date Added: 2024-06-11T17:20:21.226520
License: Public Domain

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

                                     NO. 03-22-00084-CV

   Anthony V. Udenze and Fidel A. Udenze d/b/a AB’s Like New Auto Sales, Appellants

                                                v.

           Monique Johnston, Director, Motor Vehicle Division Texas DMV, Appellee

       DIRECT APPEAL FROM THE TEXAS DEPARTMENT OF MOTOR VEHICLES
                         MOTOR VEHICLE DIVISION
               DOCKET NO. XX-XXXXXXX.ENF, MVD CASE NO. XX-XXXXXXX

                            MEMORANDUM OPINION

                This is a direct appeal from a final order of the Motor Vehicle Division of the

Texas Department of Motor Vehicles (DMV). See Tex. Occ. Code § 2301.751. Anthony V.

Udenze and Fidel A. Udenze1 d/b/a AB’s Like New Auto Sales request that we reverse the

DMV’s order revoking their vehicle-dealer license and assessing a civil penalty as sanctions for

their alleged violations of certain applicable laws and regulations. The Udenzes argue that the

DMV denied them due process by not construing their communications attempting to negotiate a

lesser sanction as a request for an administrative hearing. The DMV responds that the Udenzes

had been fully and properly informed of their right to request a hearing and the consequences of

a failure to do so, that substantial evidence supports the DMV’s finding that the Udenzes did not

timely request a hearing, that the alleged violations were thus properly deemed admitted, and that

       1
          Because appellants share the same last name, we use their first names when necessary to
refer to them individually but otherwise refer to them collectively as appellants or the Udenzes.
the Udenzes did not raise any grounds adequate to support rehearing. As explained below, we

will affirm the DMV’s order.

                                         BACKGROUND

               The Udenzes operate a used-car dealership pursuant to a General Distinguishing

Number (GDN) license issued by the DMV. See id. § 2301.255; Tex. Transp. Code § 503.021.

On October 11, 2021, the DMV sent the Udenzes a letter enclosing a Notice of Department

Decision (NODD), informing them that the DMV had investigated their business and determined

that they had violated enumerated applicable laws through the following alleged acts or

omissions: misuse of a buyer’s tag; failure to comply with the requirements for issuance or

recordkeeping of a buyer’s tag; failure to keep a complete record of all vehicles purchased or

sold; failure to remit motor vehicle sales tax; failure to apply for the registration and title for car

sales; and failure to meet premises requirements to operate as a dealer pertaining to required

signage, parking spots, and posting of business hours. The letter stated,

       If there are circumstances surrounding the allegations that you believe should
       mitigate any sanction imposed by the Decision you can discuss an informal
       settlement with the undersigned enforcement attorney. To discuss an informal
       settlement of the case you must first request an administrative hearing as
       explained in the Decision within twenty-six (26) days from the date of the
       Decision. For your convenience, you may use the request for hearing form
       included in this packet.

       In most instances, an informal settlement can resolve the case in a shorter period
       of time with reduced civil penalties or other sanctions and without the costs
       associated with a formal proceeding. The undersigned attorney can be contacted
       at [number omitted] or by writing using the address above.

       ...

       If you do not request an administrative hearing within twenty-six (26) days
       from the date of the Decision, the terms and any sanctions contained therein
       become final.

                                                  2
               The enclosed NODD stated that the DMV recommended the assessment of a civil

penalty of $8,000 and that the Udenzes’ GDN license be revoked. The NODD informed the

Udenzes of their right to request a hearing and the procedures therefor:

       If you wish to contest the allegations, recommended civil penalty, or other
       sanction you must first request an administrative hearing in writing. You may
       send your own request for hearing or use the Request for Administrative Hearing
       form included in this packet. Send your request to the following address:

       ...

       The Department must receive your written hearing request not later than the 26th
       day after the date of this Decision.

       If you timely submitted a written request for a hearing, the Department may enter
       into an informal settlement agreement with you regarding these violations and
       enforcement action at any time before a final decision is rendered in this case.

       ...

       If you do not request a hearing by the 26th day from the date of this notice, the
       Department Decision becomes final. After that date the Department may issue a
       Final Order implementing the Decision.

Attached to the NODD was a form entitled “Request for Administrative Hearing.” The first

paragraph of that form read, “If you intend to contest the allegations listed in the [NODD] in this

matter or negotiate a settlement with the assigned enforcement division attorney you must first

request an administrative hearing. You may use this form to request a hearing.” The form

included a box to check (either yes or no) for whether the person requesting the hearing would

“like to discuss a resolution of this case without a hearing.” At the bottom of the form was

printed the following in bold, italicized font: “This request for hearing must be received at the

below address no later than 26 days from the date of the Notice of Department Decision.”

                                                3
               Attached to the hearing-request form were several pages entitled “Information

about the Notice of Department Decision.” Within these pages the mandate to timely request a

hearing was again reiterated: “You may settle this matter informally and avoid a hearing before

an Administrative Law Judge (“ALJ”) at the State Office of Administrative Hearings (“SOAH”)

by timely filing a request for hearing within 26 days of the date of the Decision and discussing

the case with the enforcement attorney.” The due date, therefore, to request an administrative

hearing was November 6, 2021.

               On November 24, 2021, the DMV’s Director signed a final order finding that the

Udenzes “failed to submit in writing a request for hearing or to enter into a settlement agreement

before the 27th day after the date of the Department’s Decision” and concluding that such failure

“deems the findings and administrative sanction cited in the Decision as final in accordance with

43 Tex. Admin. Code § 215.500(g).” The order notified the Udenzes that their GDN license was

revoked, that they must cease and desist from operating as a motor-vehicle dealer until they

secure a new license from the DMV, that revocation of their license may result in denial of a

subsequent license application, and that they must pay a civil penalty of $8,000 within thirty

days. The cover letter enclosing the final order and sent to the Udenzes notified them that if they

“disagree[d] with the final order,” they were entitled to file a motion for rehearing within twenty-

five days. The letter specified the process for filing a motion for rehearing and stated that the

motion must (1) include the specific reasons, exceptions, or grounds asserted by a party as the

basis of the request for rehearing; and (2) recite the specific finding of fact, conclusion of law, or

any other portion of the final order to which the party objects.

               On December 15, 2021, Anthony filed with the DMV a motion for rehearing in

which he explained that he had sent several emails to the DMV attorney assigned to this case,

                                                  4
Jennafer Tallant, and that Tallant had called him back and informed him that he should “get back

to her after changing our business address” but did “not mention any date for my response or

compliance to the issues on this case.” He further explained in the motion some of the Covid-19-

pandemic-related difficulties he and his business had experienced and pleaded that the DMV

“grant my appeal so that [Tallant] and I could negotiate this case amicably or extend me time to

secure a lawyer for appropriate legal representation.” In the next section of his motion, Anthony

responded directly to each of the eight alleged substantive violations noticed in the NODD. He

attached several “evidentiary documents” and pleaded for “another chance.” His motion was not

verified or accompanied by an affidavit averring to the truth of the matters he had asserted or to

the authenticity of the attached documents.

               One of the documents attached to Anthony’s motion for rehearing was a print-out

of an October 20, 2021 email he sent to Tallant, stating that he was in receipt of the NODD and

asking Tallant to please call him “so that we can discuss this case,” explaining that he and his

business had suffered and had “not fully recovered” from the Covid-19 pandemic. Within the

email Anthony referenced August 2020 communications from a “Ms. Blackwell” with the DMV,

during the “high p[eak]” of the pandemic, and Anthony’s sending to Ms. Blackwell “some” of

the information she had requested. Anthony ended his October 20 email thusly: “I will really

need your help in resolving this matter with [a] warning. If and when you call me back, I will

like to give you my response for each of this [sic] charges.” Anthony attached to his motion for

rehearing a print-out of another email he sent Tallant on October 27, “since [he had] not heard

from” her. He indicated that he was “waiting for [Tallant’s] communication so that we can

discuss this case fairly in other [sic] to give me clarity to understand my next course of action.”

                                                  5
                Anthony additionally attached to his motion for rehearing a print-out of an email

that Tallant sent him on October 28, 2021, but that Anthony appears to have received and printed

out on December 17, 2021 (as indicated by the page’s header). The print-out contains the

following handwritten notation (purportedly made by Anthony): “I never received this email till

yesterday [December 16, 2021] in my spam box this was sent after our phone conversation!”2 In

the October 28 email, Tallant informed Anthony that a “warning is not appropriate for this case”

but that “to avoid revocation and to move forward on settling, [he] need[ed] to come in

compliance with the premises violations,” and listed three specific action items related to the

business premises. Tallant’s email concluded, “[o]nce you have the three things taken care of, e-

mail me pictures of compliance, and we will go from there. I’ll set a reminder for a week from

today.” The remaining documents attached to Anthony’s motion for rehearing consisted of

photographs of his business premises and other documents purporting to rebut the DMV’s

allegations of the non-premises violations.

                On January 18, 2022, the DMV sent the Udenzes a letter enclosing a “Decision

and Order Denying the Motion for Rehearing,” stating that the order “concludes the appeal

process at the administrative agency level” and informing the Udenzes of their right to file an

appeal in Travis County district court or this Court within thirty days. The Udenzes timely filed

their direct appeal in this Court.

        2
          In their brief, after reprinting the text of Tallant’s email, the Udenzes represent,
“Unfortunately, [Tallant’s] email went into Appellants’ spam account. See notation [on print-out
of email].”
                                                6
                                          DISCUSSION

               In three issues, the Udenzes contend that (1) the initial email correspondence

they sent the DMV on October 20, 2021, should have been construed as a request for an

administrative hearing, given that the Department responded and “suggested mitigation factors”

and further discussions; (2) the default order against them should be vacated because (a) their

default was unintentional and not the result of conscious indifference, (b) they have a meritorious

defense to the allegations, and (c) setting aside the default will not delay or otherwise injure the

DMV; and (3) the DMV’s actions denied them due process.

               We review the DMV’s final order, including the order’s fact findings and legal

conclusions, under the substantial-evidence rule. See Tex. Occ. Code § 2301.751(a); Tex. Gov’t

Code § 2001.174(a)(2); Buddy Gregg Motor Homes, Inc. v. Motor Vehicle Bd., 156 S.W.3d 91,

98–99 (Tex. App.—Austin 2004, pet. denied). Under that rule, a reviewing court presumes the

agency’s order is supported by substantial evidence, see Texas Health Facilities Comm’n v.

Charter-Med.-Dall., Inc., 665 S.W.2d 446, 452 (Tex. 1984), and will uphold a decision where

the record contains reliable and probative evidence that reasonably supports the agency’s

decision, see Graff Chevrolet Co. v. Texas Motor Vehicle Bd., 60 S.W.3d 154, 159 (Tex. App.—

Austin 2001, pet. denied). Furthermore, when—as here—a party’s motion for rehearing is a

prerequisite for judicial review, the motion must “identify with particularity [the] findings of

fact or conclusions of law that are the subject of the complaint and any evidentiary or legal

ruling claimed to be erroneous.” Atkins v. Texas Dep’t of Motor Vehicles, No. 03-19-00964-CV,

2021 WL 5457223, at *3 (Tex. App.—Austin Nov. 18, 2021, no pet.) (mem. op.) (citing Tex.

Gov’t Code § 2001.146(g)); see also Tex. Gov’t Code § 2001.145(a) (noting when motion for

rehearing is prerequisite to appeal in contested case).

                                                  7
               Regarding the Udenzes’ first issue, in which they argue that their email

correspondence with the DMV should have been construed as a request for a hearing, we

conclude that the record contains substantial evidence to support the DMV’s findings and

conclusions that the Udenzes did not thereby (or otherwise) request a hearing. The Udenzes did

not use the word “hearing” in any of their email correspondence, and they point to no evidence

otherwise appearing in the record (including the documents attached to their motion for

rehearing) of any written hearing request they made or of any reference to a hearing in their

correspondence with the DMV. See Atkins, 2021 WL 5457223, at *3 (holding that appellant’s

representation in his motion for rehearing that he had been communicating with agency staff to

try to negotiate case was not sufficient to rebut agency’s finding that he did not timely request

hearing). The DMV’s NODD and accompanying documents repeatedly and consistently stated

the requirement for a timely written hearing request to avoid the NODD’s becoming final and

even contained a simple one-page form that the Udenzes could have used to request one. But the

Udenzes did not make a written request for a hearing. Furthermore, in their motion for rehearing

the Udenzes did not specifically challenge any of the DMV’s findings or conclusions related to

their failure to request a hearing. See Tex. Gov’t Code § 2001.146(g); Atkins, 2021 WL 5457223,

at *3 (basing affirmance of DMV order in part on appellant’s failure to identify in motion for

rehearing any finding of fact or conclusion of law he was challenging).

               The fact that Tallant responded to the Udenzes’ email correspondence with an

email identifying three actions the Udenzes must take to “come into compliance with the

premises violations” and to “avoid revocation and to move forward on settling” does not

transform the Udenzes’ email correspondence into a hearing request or require a finding or

conclusion that it should have been so construed. Furthermore, by Anthony’s own admission,

                                                8
the Udenzes did not even know about Tallant’s email suggesting the possibility of settling the

case until after the deadline to request a hearing or settle the case had passed; thus, the Udenzes

cannot reasonably claim that they relied on the DMV’s correspondence in failing to timely

request a hearing. Concluding that substantial evidence supports the DMV’s finding that the

Udenzes did not timely request a hearing, we overrule the Udenzes’ first issue.

               In their second issue, the Udenzes attempt to assert a Craddock defense to what

was essentially a default order rendered against them, and we acknowledge that this Court has

held the Craddock test may apply to administrative proceedings in appropriate circumstances.

See Anderson v. Railroad Comm’n, 963 S.W.2d 217, 219 (Tex. App.—Austin 1998, pet. denied)

(stating, “we think the Craddock standard is appropriate to apply to agency denials of rehearings

after a default order,” and specifying three elements of Craddock test); see also Craddock v.

Sunshine Bus. Lines, 133 S.W.2d 124, 126 (Tex. 1939).

               The first element of the Craddock test is that the default was unintentional and not

a result of conscious indifference, and when applying the test to an agency proceeding, the

appellant must support this allegation with evidence attached to a motion for rehearing.

Anderson, 963 S.W.2d at 219; see Statewide Convoy Transports, Inc. v. Railroad Comm’n,

753 S.W.2d 800, 805 (Tex. App.—Austin 1988, no writ) (holding that agency did not abuse

discretion in denying motion for rehearing that was not verified and where party did not attempt

to adduce evidence before agency to support allegation in motion that its withdrawal from case

was due to mistake); see also In re Marriage of Sandoval, 619 S.W.3d 716, 721–22 (Tex. 2021)

(stating that it is abuse of discretion to deny motion for new trial if uncontroverted factual

allegations in supporting affidavit are sufficient under Craddock; that “some excuse,” including

mistake of law, meets first element; and that court must accept as true uncontroverted facts

                                                9
within affiant’s personal knowledge); Comanche Nation v. Fox, 128 S.W.3d 745, 750 (Tex.

App.—Austin 2004, no pet.) (noting that to meet first Craddock prong, movant must support

factual allegations in motion with affidavit providing “some excuse, though not necessarily a

good excuse” for failing to appear or answer with respect to default judgment).

               The Udenzes’ motion for rehearing was not verified or accompanied by an

affidavit, and none of their attached “documentary evidence” was verified or otherwise

authenticated. Thus, assuming that the Craddock test applies to this case, the mere allegations in

the Udenzes’ motion for rehearing were insufficient to support rehearing under the Craddock

test. See Anderson, 963 S.W.2d at 219; see also Adekoya v. Adekoya, No. 03-16-00195-CV,

2017 WL 3902945, at *1 (Tex. App.—Austin Aug. 24, 2017, no pet.) (mem. op.) (“The facts

alleged in the [Craddock] motion for new trial must be supported by affidavits or other

competent evidence.”).    However, even if the DMV could properly have considered the

unverified allegations in the Udenzes’ motion and its unauthenticated attached documents in

determining whether to grant the motion, those allegations and documents do not support the

first Craddock element because they contain no explanation for the Udenzes’ failure to request a

hearing. Anthony states in his motion for rehearing that he had been “cooperating” with DMV

agents regarding these violations since before the NODD was sent and had been communicating

with Tallant via telephone and email since receiving the NODD but that Tallant “did not mention

any date for my response or compliance to the issues on this case but only that I should get back

to her after changing our business address.” However, he does not allege in the motion any facts

to explain why he did not request a hearing. For instance, he does not allege that he believed

Tallant had construed his communications as a hearing request, that he was misled by the

DMV in any way about the explicit hearing-request requirements noted in the NODD and

                                               10
accompanying materials, that he misunderstood the hearing-request requirements, or that any

DMV communications waived the hearing-request requirement.3             He simply offered no

explanation or excuse for why he did not request a hearing. Under these circumstances and on

this record, we hold that the DMV did not abuse its discretion in denying the Udenzes’ motion

for rehearing. See Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 82–83 (Tex. 1992)

(holding that trial court did not abuse discretion in denying motion for new trial because

supporting affidavit provided nothing more than conclusory allegations, without any supporting

facts, regarding first Craddock element); see also Paul v. ATX Lender 5, LLC, No. 03-21-00346-

CV, 2023 WL 1998890, at *5 (Tex. App.—Austin Feb. 15, 2023, no pet. h.) (mem. op.) (holding

that trial court did not abuse its discretion in finding that first Craddock element was not met

where party made mere conclusory statement that his failure to timely answer suit was neither

intentional nor result of conscious indifference and there was controverting evidence in record).

We overrule the Udenzes’ second issue.

              In their third issue, the Udenzes contend that the DMV deprived them of their

right to due process by beginning to negotiate with them after receiving their initial email

correspondence but not construing the correspondence as a hearing request. They cite the

supreme court’s Mosley opinion in support of their argument. See Mosley v. Texas Health &

Hum. Servs. Comm’n, 593 S.W.3d 250, 263, 268 (Tex. 2019). Although we acknowledge the

supreme court’s admonition in Mosley that remand may be required when an agency’s

affirmative misdirection has deprived a party of its right to judicial review and to due process,

       3
          As already noted, Anthony’s own admission that he did not receive Tallant’s
negotiation attempt until December 15—well after the period for requesting a hearing had
expired—belies any argument he might have made that Tallant misled him into thinking that the
DMV had deemed his email or phone correspondence sufficient to constitute a hearing request.
                                               11
the record does not support the application of the Mosley rule here. See id. (observing that

agency’s affirmative misdirection to party about proper procedures to seek judicial review of

adverse order deprived party of due process when she followed such misdirection and thereby

failed to file requisite motion for rehearing to perfect appeal).         The facts in Mosley are

distinguishable from those here because the Udenzes have not cited any evidence in the record

that the DMV made any affirmative misrepresentation concerning the procedures for requesting

a hearing. Cf. id. at 255–56. Furthermore, the procedural posture in Mosley is distinguishable

because the agency’s misdirection there resulted in the reviewing court’s lacking jurisdiction

(due to the appellant’s failure to file a motion for rehearing), whereas here this Court’s

jurisdiction over the Udenzes’ direct appeal is not at issue because the Udenzes filed a motion for

rehearing and thereby had the opportunity to be heard and have such ruling reviewed on appeal.

Finally, unlike in Mosley, the Udenzes made no argument and alleged no facts in their motion for

rehearing that they relied to their detriment on the DMV’s representations. We overrule the

Udenzes’ third issue.

                                        CONCLUSION

               Having overruled the Udenzes’ issues, we affirm the DMV’s final order.

                                               __________________________________________
                                               Thomas J. Baker, Justice

Before Justices Baker, Theofanis, and Jones*

Affirmed

Filed: June 22, 2023
*
 Before J. Woodfin Jones, Chief Justice (Retired), Third Court of Appeals, sitting by assignment.
See Tex. Gov’t Code § 74.003(b).

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