Court Opinion

ID: 4078775
Source: CourtListenerOpinion
Date Created: 2016-10-03 09:33:54.730126+00
Date Added: 2024-06-11T14:33:04.268789
License: Public Domain

ACCEPTED
                                                                             03-16-00222-CV
                                                                                   12945129
                                                                  THIRD COURT OF APPEALS
                                                                             AUSTIN, TEXAS
                                                                       9/28/2016 10:59:37 AM
                                                                           JEFFREY D. KYLE
                                                                                      CLERK
                                No. 03-16-00222- CV

                                                          FILED IN
                                                   3rd COURT OF APPEALS
                                                        AUSTIN, TEXAS
                         IN THE COURT OF APPEALS   9/28/2016 10:59:37 AM
                     FOR THE THIRD DISTRICT OF TEXAS JEFFREY D. KYLE
                                                            Clerk

                           LMV – AL VENTURES, LLC,
                             Appellant/Cross-Appellee

                                          v.

          TEXAS DEPARTMENT OF AGING AND DISABILITY SERVICES
                  and COMMISSIONER JON WEIZENBAUM,
                             Appellees/Cross-Appellants.

     APPELLANT/CROSS-APPELLEE LMV-AL VENTURES, LLC’S
      RESPONSE TO APPELLEES/CROSS-APPELLANTS’ BRIEF

                         From Cause No. D-1-GN-15-001219
                          in the 98th Judicial District Court,
                                 Travis County, Texas

Walter V. Williams
State Bar No. 21584800
walter@modwill.com
Jack M. Modesett, III
State Bar No. 14244337
MODESETT WILLIAMS, PLLC
515 Congress Ave, Ste 1650
Austin, Texas 78701
Telephone: (512) 472-6097
Facsimile: (512) 481-0130
ATTORNEYS FOR APPELLANT

ORAL ARGUMENT REQUESTED
                  IDENTITY OF PARTIES AND COUNSEL

      Pursuant to Tex. R. App. P. 38.1(a), Appellant presents the following list of

all parties and the names and addresses of counsel:

Appellant:                            LMV-AL Ventures, LLC

Appellant's Counsel:                  Walter V. Williams
                                      State Bar No. 21584800
                                      walter@modwill.com
                                      Jack M. Modesett, III
                                      State Bar No. 14244337
                                      MODESETT WILLIAMS, PLLC
                                      515 Congress Ave, Ste 1650
                                      Austin, Texas 78701
                                      Telephone: (512) 472-6097
                                      Facsimile: (512) 481-0130

Appellees:                            Texas Department of Aging and Disability
                                      Services and Commissioner Jon
                                      Weizenbaum

Appellees' Counsel:                   Ken Paxton
                                      Attorney General of Texas
                                      Charles E. Roy
                                      First Assistant Attorney General
                                      James E. Davis
                                      Deputy Attorney General for Civil
                                      Litigation
                                      David A. Talbot, Jr.
                                      Chief, Administrative Law Division
                                      Ari Cuenin
                                      Assistant Solicitor General
                                      Eugene A. Clayborn
                                      State Bar No.: 00785767
                                      Asst. Attorney General

                                      Deputy Chief, Administrative Law Division
                                      Office of the Attorney General of Texas
                                         ii
P.O. Box 12548, Capitol Station
Austin, Texas 78711-2548
Telephone: (512) 475-3204
Facsimile: (512) 320-0167
Eugene.clayborn@texasattorneygeneral.gov

  iii
                         TABLE OF CONTENTS

IDENTITY OF PARTIES AND COUNSEL...……………………………………ii

TABLE OF CONTENTS…………………………………………………….........iv
INDEX OF AUTHORITIES…...……………………………………………….…vi

ABBREVIATIONS OF RECORDS REFERENCES…………………………….vii
STATEMENT REGARDING ORAL ARGUMENT……………………………...1

ISSUES PRESENTED……………………………………………………………..1

STATEMENT OF FACTS…………………………………………………………2

SUMMARY OF THE ARGUMENT………………………………………………5
ARGUMENT……………………………………………………………………….6

       I.     STANDARD OF REVIEW……………………………………6
       II.    THERE IS JURISDICTION UNDER APA SECTION 2001.038
             ……………………………………………………………………6
               A.   LMV CHALLENGES THE APPLICABILITY OF RULE
                    92.62(M)(1)(B) AND THE VALIDITY AND
                    APPLICABILITY OF DADS’ “SECRET” MEASURING
                    RULE …………………………………………………..6

                    1.     LMV CHALLENGES THE APPLICABILITY OF
                           RULE 92.62 (M)(1)(B) ……………….................7

                    2.     LMV ALSO CHALLENGES THE VALIDITY
                           AND APPLICABILITY OF DAD'S "SECRET
                           RULE"….……………………………………….8

              B.    LMV HAS STANDING TO CHALLENGE AGENCY
                    ACTIONS THAT IMPOST REGULATORY BURDENS
                    OR   IMPEDE    BUSINESS   OPPORTUNITIES
                    ……………………………………………………....…13

                                  iv
             C.     LMV DOES NOT SEEK AN IMPROPER ADVISORY
                    OPINION …………………………………………….15

      III. THERE IS JURISDICTION UNDER UDJA …………………..25

             A.    LMV'S ULTRA VIRES CLAIM IS COGNIZABLE
                   UNDER THE UDJA……………………….……….....25

             B.    LMV'S CLAIM AGAINST THE COMMISSIONER IS
                   NOT JURISDICTIONALLY REDUNDANT ……..…25

       IV.   THE CONSTITUTIONAL CLAIMS ALSO ESTABLISH
             SUBJECT MATTER JURISDICTION ...................................26

PRAYER……………………………………………………………………….…27

CERTIFICATE OF COMPLIANCE…………………………………………..…28
CERTIFICATE OF SERVICE……………………………………………………29

                                   v
                      INDEX OF AUTHORITIES

Cases                                                                 Page(s)

City of Alvin v. Pub. Util. Com'n of Texas, 143 S.W.3d 872, 879 (Tex. App.—Austin
2004, no pet.) ………………………………………………………………………7

City of El Paso v. Heinrich, 284 S.W.3d 366 (Tex. 2009)………………………..26

City Pub. Serv. Bd. of San Antonio v. Pub. Util. Com'n of Texas, 96 S.W.3d 355, 359
(Tex. App.—Austin 2002, no pet.) …………………………………………………7

Combs v. Entm't Publications, Inc., 292 S.W.3d 712, 721-24 (Tex. App.—Austin
2009, no pet.)……………………………………………………………………...10

Creedmoor-Maha Water Supply Corp. v. Texas Com'n on Envtl. Quality, 307
S.W.3d 505, 526 (Tex. App.—Austin 2010, no pet.)……………………………..27

Eldercare Properties, Inc. v. Dep't of Human Services, 63 S.W.3d 551, 558 (Tex.
App.—Austin 2001, pet. denied)…………………………………………………...7

El Paso Hosp. Dist. v. Texas Health & Human Services Com'n, 247 S.W.3d 709
(Tex. 2008) ……………………………………………………………………….12

El Paso Hosp. Dist. v. Texas Health and Human Servs. Comm’n, 247 S.W.3d 709,
714 (Tex. 2008) …………………………………………………………………..10

Mayhew v. Town of Sunnyvale, 964 S.W.2d 922, 931 (Tex. 1998)………………22

S.C. San Antonio, Inc. v. Tex. Dep’t of Human Servs., 891 S.W.2d 773 (Tex.App.—
Austin 1995, writ denied) ………………………………………………………...14

State Bd. of Ins. v. Deffebach, 631 S.W.2d 794, 797 (Tex.App.—Austin 1982, writ
ref’d n.r.e.) …………………..……………………………………………………17

State v. BP Am. Prod. Co., 290 S.W.3d 345 (Tex.App.—Austin 2009, pet. denied)
……………………………………………………………………………………………….14

                                        vi
Teladoc, Inc. v. Texas Med. Bd., 453 S.W.3d 606, 616 (Tex. App.—Austin 2014,
pet. denied) ……………………………………………………………………….11

Pharmacy Sols., Inc. v. Tex. Health & Human Servs. Comm’n, 408 S.W.3d 549 (Tex.
App.—Austin 2013, pet. denied) ……………………………….………………..14

Texas Dept. of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex. 2004)
………………………………………………...……………………………………6

Tex. Dep’t of Protective & Regulatory Servs. v. Mega Child Care, Inc., 145 S.W.3d
170 (Tex. 2004) ………………………………………………………………..…...7

Texas Dept. of State Health Services v. Balquinta, 429 S.W.3d 726, 741 (Tex.
App.—Austin 2014, pet. dism'd) ……………………………………………..13, 25

Texas Mun. Power Agency v. Pub. Util. Com'n, 100 S.W.3d 510, 516 (Tex. App.—
Austin 2003, pet. denied) …………………………………………………………27

Texas Mut. Ins. Co. v. Texas Dept. of Ins., Div. of Workers' Comp., 214 S.W.3d 613,
622 (Tex. App.—Austin 2006, no pet.) …………………………………………...17

Texas State Bd. of Pharmacy v. Witcher, 447 S.W.3d 520, 528-35 (Tex. App.—
Austin 2014, review denied as improvidently granted, Apr. 1, 2016) …………...10

                                        vii
Statutes

40 Tex. Admin. Code § 92.62(m)(1)(B) ……………...5,6,7,8,10,13,14,15,19,20,25

Tex. Gov't Code Ann. § 2001.038 ………...…2,6,7,8,9,10,11,12,13,15,16,19,21,22

Tex. Gov't Code Ann. § 2001.003(6)(B) ………………………………………...10

                                    viii
             ABBREVIATIONS AND RECORD REFERENCES

Abbreviations:

Appellant LMV-AL Ventures, LLC will be referred to as “LMV.”

Appellees Texas Department of Aging and Disability Services and Commissioner
Jon Weizenbaum will be referred to, collectively, as “DADS.”

The Administrative Procedure Act will be referred to as “APA.” Tex. Gov't Code
§§ 2001.001–.902.

Assisted living and memory care facilities will be referred to as “ALMC.”

The Harbor at Lakeway, LMV’s ALMC facility at issue, will be referred to as “the
Harbor.”

Record References:

References to the Clerk’s Record are in the form of “CR ____.”

                                        ix
              STATEMENT REGARDING ORAL ARUGMENT

      Oral argument is requested. Oral argument should be permitted because it

would help the Court crystallize the issues in this case, which affect important areas

of law regarding agency rulemaking and interpretation.

                              ISSUES PRESENTED

      A published DADS rule governs minimum bedroom-area “usable floor space”

for multiple occupancy Alzheimer’s patients’ rooms in assisted-living facilities.

LMV complied with that rule, which by its plain language would allow LMV double

occupancy in the rooms in dispute. However, DADS rejected LMV’s application

for double occupancy, relying on an unpublished “secret” rule that excluded

admittedly “usable” floor space if certain dimensions were not met.             After

subsequent negotiations failed to resolve the dispute, LMV challenged the validity

and applicability of DADS’ “secret” rule and the applicability (i.e. application) of

DADS’ published rule. LMV sought a declaration that, inter alia: DADS exceeded

its legal and statutory authority in making its occupancy determination and rejecting

LMV’s application for double occupancy; that such actions were ultra vires; that

DADS’ improperly excluded from its calculation floor space that is indisputably

“usable;” that DADS’ decision was arbitrary and capricious; that the use of the

“secret” measuring rule was invalid as secret rulemaking in violation of the APA’s

notice, publication, and comment provisions as well as the APA requirement that

                                          1
rules be published and made available; and that DADS’ interpretation violates

substantive and/or procedural due process. DADS sought declaratory relief under

the Uniform Declaratory Judgments Act (“UDJA”) (Chapter 37 of the Tex. Civ.

Prac. & Rem. Code) as well as section 2001.038 of the Administrative Procedure

Act (“APA”) (Tex. Gov’t Code § 2001.038.) 1

        Regarding DADS’ plea to the jurisdiction, the issues are:

    1. Whether LMV established subject-matter jurisdiction under section

        2001.038 of the APA.

    2. Whether LMV established subject-matter jurisdiction under the UDJA.

    3. Whether LMV established subject-matter jurisdiction under the

        constitutional claims.

                                      STATEMENT OF FACTS

        LMV incorporates by reference the Statement of Facts in LMV’s Appellant’s

Brief, and adds the following:

        Over the course of at least several months, there were numerous discussions

between LMV and DADS regarding occupancy and other matters relating to the

construction of the facility, prior to DADS issuance of the license. See CR 210,

DeNucci Aff. ¶ 4-5. DADS representatives conducted onsite inspections between

1
 Although these issues are addressed directly in the briefing on the merits, LMV is dissatisfied with this portion of
DADS’ brief, and feels compelled to clarify the issues presented as described by DADS. See Tex. R. App. P.
38.2(a)(1)(B). LMV also incorporates by reference the Issues Presented as described in LMV’s Appellant’s Brief.
                                                         2
October 2014 and March 2015. CR 434, Anglin Aff. ¶ 5. Following construction,

LMV increased the number of occupants for which it sought approval. CR 211,

DeNucci Aff. ¶ 6. While working with DADS on the occupancy number, the issue

arose of DADS’ secret calculation method, which excluded “usable floor space” that

was less than 10’ in any dimension. DADS could not point to any published code

or rule that authorized it to exclude any usable floor space. See CR 129 (January 9,

2015 email from LMV principal Paul DeNucci to DADS stating that the relevant

code provisions do not define usable floor space and requesting reconsideration of

the occupancy determination, and other emails in the email string).

      Before the license was issued, DADS and LMV representatives

communicated multiple times about the occupancy dispute. See, e.g., CR 111

(March 6, 2015 email from DeNucci to DADS that asks DADS to provide the section

of code that states that all usable floor space must include a 10’ dimension and to

allow double occupancy either per DADS’ discretion or because the minimum

requirements published in the code were met); CR 392 (March 9, 2015 email from

DeNucci to DADS noting disagreement on “what the code says” but asking for

DADS to reconsider and allow double occupancy).

      On March 11, 2015, DADS approved the Harbor’s license but LMV’s

application for double occupancy in the disputed rooms. LMV’s attorney emailed

DADS representatives on that day and stated:

                                         3
      [DADS] should approve the memory care rooms for double occupancy
      because they meet the 160 square foot minimum and because the
      vertical PTAC units solve a health and sanitation issue, while still
      providing the residents with sufficient space. … Please consider this to
      be a repeated formal request that DADS legal/exec today exercise its
      authority … to “specifically approve” the rooms if DADS’ staff is
      continuing to interpret the vertical PTAC heating and cooling units to
      somehow render the ‘smallest dimension’ to be less than ten feet.

CR 156. Following the March 11th approval, LMV and DADS continued to discuss

the occupancy issue. See CR 152 (March 16, 2015 email from LMV attorney to

DADS attorney asking for the exact reason why double occupancy was denied in the

disputed rooms, citing the code). On April 8, 2015, the Harbor was issued its actual

license.

      In summary, there was a protracted back and forth between counsel about the

occupancy issue and additional and repeated requests for DADS to reconsider the

denial of double occupancy in the rooms in dispute.

                                         4
                                 SUMMARY OF THE ARGUMENT

           This case is not as complicated as Appellees/Cross-Appellants’ Brief2 would

suggest. On the merits, this case is about the meaning of "usable floor space" under

40 TAC § 92.62(m)(1)(B) and whether DADS ignored the plain meaning of those

three words in calculating such space at Plaintiff's assisted living facility. It is also

about the validity of DADS’ “secret rule,” unpublished and not promulgated

pursuant to the Administrative Procedure Act, which DADS uses to justify omitting

admittedly “usable” floor space. See Appellant’s Brief, incorporated herein by

reference.

           On jurisdictional issues, this case is also not as complicated as DADS’ Brief

suggests. Contrary to DADS’ contentions, LMV is challenging both the applicability

of Rule 92.62(m)(1)(B) and the validity and applicability of DADS’ “secret”

measuring rule. “Applicability” under APA section 2001.038 and caselaw includes

the application of the rule to the facts at hand. Further, the validity of DADS’

“secret” rule is challenged, because the rule was not promulgated pursuant to APA

requirements and not published. Thus, there is subject matter jurisdiction under

APA section 2001.038. LMV has standing to challenge DADS’ action because it

imposes a regulatory burden and impedes LMV’s business opportunities. Under the

APA section 2001.038 framework and relevant caselaw, LMV’s lawsuit is ripe and

2
    Br. for Cross-Appellants, hereinafter "DADS’ Brief."
                                                           5
seeks more than an advisory opinion. In addition, there is subject matter jurisdiction

for the ultra vires claims under the UDJA and subject matter jurisdiction for the

constitutional due process claims (which DADS failed to brief).

      DADS’ plea to the jurisdiction and arguments in its brief are smoke and

mirrors, designed to divert attention from DADS’ failure to (1) apply the

indisputable plain language of its own rules and (2) follow APA requirements for

promulgating otherwise “secret” and invalid rules.

                                     ARGUMENT

I.    STANDARD OF REVIEW

      Whether a plaintiff has alleged facts that, taken as true, affirmatively

demonstrate a trial court’s subject matter jurisdiction is a question of law reviewed

de novo. Texas Dept. of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex.

2004). Courts construe the pleadings liberally in favor of the plaintiff and “look to

the pleaders’ intent.” Id. at 226.

II.   THERE IS JURISDICTION UNDER APA SECTION 2001.038

      A.     LMV Challenges the Applicability of Rule 92.62(m)(1)(B) and the
             Validity and Applicability of DADS’ “Secret” Measuring Rule

      As noted by DADS, “The APA provides a specific, narrow waiver of

sovereign immunity for lawsuits addressing a rule’s validity or applicability.”

(DADS Br., p. 10.) Tex. Gov’t Code § 2001.038(a). There is jurisdiction under the

APA because, contrary to DADS assertion that LMV does not challenge a rule’s
                                          6
validity or application, LMV challenges both the applicability of Rule

92.62(m)(1)(B) and the validity and applicability of DADS’ “secret” measuring rule.

              1. LMV Challenges The Applicability of Rule 92.62(m)(1)(B)

       LMV challenges DADS implementation of 40 Tex. Admin. Code §

92.62(m)(1)(B) (“Rule 92.62(m)(1)(B)”) to this particular fact situation. As this

Court has held, “applicability” challenges include challenges to the “implementation

of the rule to [a] particular fact situation.”

       [A]n applicability challenge does not question the overall legitimacy of a rule.
       Rather, an applicability challenge provides the party challenging the rule the
       opportunity to obtain a judicial declaration of the implementation of the rule
       to its particular fact situation.

City Pub. Serv. Bd. of San Antonio v. Pub. Util. Com'n of Texas, 96 S.W.3d 355, 359

(Tex. App.—Austin 2002, no pet.), citing Eldercare Properties, Inc. v. Dep't of

Human Services, 63 S.W.3d 551, 558 (Tex. App.—Austin 2001, pet. denied),

abrogated on other grounds, Tex. Dep’t of Protective & Regulatory Servs. v. Mega

Child Care, Inc., 145 S.W.3d 170 (Tex. 2004). Indeed, an objection that an agency

considered evidence outside the scope of a rule – in this case, whether a section of

usable floor space had a dimension smaller than 10’ – has been held to be a challenge

to the application of the rule, not to the validity of the rule. City of Alvin v. Pub.

Util. Com'n of Texas, 143 S.W.3d 872, 879 (Tex. App.—Austin 2004, no pet.)

(describing this Court’s decision in City Pub. Serv. Bd. of San Antonio, stating “we

held that a challenge asserting that the Commission considered evidence outside the
                                             7
scope of the rule … was a challenge to the application of the rule, not to the validity

of the rule’s failure to mention use of that evidence.”)

      LMV alleges “DADS failed to properly apply the ‘usable floor space’ portion

of 40 TAC § 92.62(m)(1)(B), and therefore wrongfully denied double occupancy for

the 30 Memory Care Rooms.” CR 1756, Pl. Second Am. Pet. at ¶ 5. LMV

challenges the applicability of the rule as it is applied to the facts at issue, which is

clearly allowed by the APA and this Court’s caselaw, and gives the court subject

matter jurisdiction under Tex. Gov’t Code § 2001.038.

             2. LMV Also Challenges the Validity and Applicability of DADS’

             “Secret” Rule

      Not only is LMV challenging the applicability of Rule 92.62(m)(1)(B), LMV

is also challenging the validity and applicability of DADS’ “secret rule.” DADS did

not include certain floor space in its calculation of “usable floor space,” based on an

unpublished and secret rule. The unpublished secret rule, as articulated by DADS’

counsel after the lawsuit was filed, is:

      DADS calculates usable floor space by multiplying length x width to
      obtain total square footage. Pursuant to the rule, DADS staff does not
      include any room floor space with a width or length of less than 10 feet.
      Therefore, if the room’s perimeter walls form a walled enclosure jutting
      into the room, or if the enclosure reduces any adjacent room area to a
      dimension that is less than ten feet, the interrupted length or width is
      not considered in the calculation of usable floor space for determining

                                           8
         the total of square feet of floor area and whether the room meets the
         requirements for either single or double occupancy.3

It is undisputed that this rule was not promulgated pursuant to the APA and is not

published anywhere.4                Based on its unpublished rule, DADS denied LMV’s

application for double occupancy. LMV challenges the validity of this secret rule.

         Under Tex. Gov’t Code § 2001.038(a), a party may challenge this “validity”

of an agency “rule.” The secret rule is a “rule” under the APA. The APA defines

a “rule” as follows:

         “Rule”:
         (A) means a state agency statement of general applicability that:
                (i) implements, interprets, or prescribes law or policy; or
                (ii) describes the procedure or practice requirements of a state
                agency;
         (B) includes the amendment or repeal of a prior rule; and
         (C) does not include a statement regarding only the internal
         management or organization of a state agency and not affecting private
         rights or procedures.

Tex. Gov't Code Ann. § 2001.003(6). In other words, a “rule” is defined as “a

statement implementing, interpreting, or prescribing the agency’s policy that affects

3
  CR 290, Def. Resp. to Pl. Mot. Summ. J. & Cross-Mot. Summ. J., at p. 27; CR 121, Def. Resp. to Pl. Interrogatories,
Interrogatory No. 1.
4
  See CR 121, Def. Resp. to Interrogatories, Interrogatory No. 3; CR 50-70, Pl. Mot. Summ. J., App. 1, Anglin Dep.,
19:15-20:8; 33:6-17; 42:24-43:7; 50:3-12; 81:22-24; 86:1-5; 90:10-13; 91:1-4; 97:19-98:22. DADS argues that
“[w]hether an agency policy or rule-interpretation is a ‘secret rule’ is a mixed question of law and fact,” that “the trial
court necessarily concluded that” the rule was not a “secret rule” and that “[f]or cross-appeal purposes, that is
dispositive of the issue.” (DADS’ Br., p. 13-14.) If that conclusion could be implied from the court’s ruling, it is
certainly not dispositive of the plea to the jurisdiction. The court did not grant DADS’ plea to the jurisdiction, but
instead implicitly held there was subject matter jurisdiction and then granted DADS’ motion for summary judgment
and denied LMV’s. Where “parties file competing motions for summary judgment, with one granted and the other
denied, [courts of appeal] review all the summary judgment evidence presented and determine the propriety of the
rulings on both summary judgment motions.” The court “determine[s] all questions presented, and render[s] the
judgment the trial court should have rendered.” Evergreen Nat. Indem. Co. v. Tan It All, Inc., 111 S.W.3d 669, 675
(Tex. App.—Austin 2003, no pet.)
                                                            9
private rights.” Texas State Bd. of Pharmacy v. Witcher, 447 S.W.3d 520, 528-35

(Tex. App.—Austin 2014, review denied as improvidently granted, Apr. 1, 2016)

(Board's disciplinary order, "a statement implementing, interpreting, or prescribing

the agency's policy that affects private rights" was a "rule" within the meaning of the

APA). See also El Paso Hosp. Dist. v. Texas Health and Human Servs. Comm’n,

247 S.W.3d 709, 714 (Tex. 2008) (agency rate-calculation procedure claimed to be

merely an interpretation of its formally promulgated rules, was itself a "rule" that

was invalid for failing to comply with APA's notice-and-comment provisions);

Combs v. Entm't Publications, Inc., 292 S.W.3d 712, 721-24 (Tex. App.—Austin

2009, no pet.) (letters constituted a "rule" under APA and such rule was invalid for

failing to comply with APA procedures).

      The secret measuring rule both “interprets … law or policy” and “describes

the procedure or practice requirements of a state agency.” Tex. Gov't Code Ann. §

2001.003(6)(A).    Further, the secret measuring rule, in effect, operates as an

amendment to 40 TAC § 92.62(m)(1)(B) and creates a new rule. Tex. Gov't Code

Ann. § 2001.003(6)(B).

      [I]n the aftermath of the Texas Supreme Court's El Paso Hospital
      decision, it is equally clear that an agency's “interpretations” or
      “applications” of existing formally promulgated rules will themselves
      be held to be “rules” where they have the effect of amending the
      existing rules, or of creating new rules, and the other requirements of
      the APA's “rule” definition are met.

                                          10
Teladoc, Inc. v. Texas Med. Bd., 453 S.W.3d 606, 616 (Tex. App.—Austin 2014,

pet. denied) (emphasis added). Where the agency goes “beyond a mere restatement

of its existing formally promulgated rules or underlying statutes” it has created a

“rule” under the APA. Teladoc, Inc., 453 S.W.3d at 608.

      Because the secret rule is a “rule” under the APA, LMV “properly invoked

the district court’s jurisdiction through [APA] section 2001.038 and established its

entitlement to summary judgment on its declaratory claim under that statute, as it is

undisputed that [the agency] did not promulgate the [rule] in accordance with the

APA’s notice-and-comment rulemaking requirements.” Teladoc, Inc., 453 S.W.3d

at 613-614.

      The fact that the secret rule was not published does not exclude it from being

a “rule” under the APA. In fact, because the secret measuring rule was not

promulgated or published pursuant to APA procedures, it is invalid. An overriding

policy of the APA is that agency rulemaking needs to be public, to ensure fairness

and due process. Where a rule says “do X, and you’ll get Y,” but an agency creates

a secret exception to this rule (“Unless Z”), the APA requires that the exception be

adopted pursuant to public notice and comment. Otherwise, agencies would have

the ability to create secret rules that would override all their own published rules –

secret exceptions that would swallow the APA promulgated rules.

                                         11
      The Texas Supreme Court was faced with a similar issue, on quite analogous

facts, in El Paso Hosp. Dist. v. Texas Health & Human Services Com'n, 247 S.W.3d
709 (Tex. 2008). At issue was how HHSC calculated rates for Medicaid payments

to hospitals. HHSC established a cut off date (Feb. 28th) used in calculating rates

that the hospitals contended resulted in only “95-97 percent” of claims being used

to calculate rates, where the rule required a “true cost average.” Thus, HHSC’s

calculation method omitted a certain portion of the claims, while the rule itself

provided no support for omitting any portion of the claims. Hospitals sued under

APA section 2001.038 for declaratory judgment challenging the validity or

applicability of a rule. HHSC defended the suit arguing that the Feb. 28th cutoff

was not a rule itself, but rather an interpretation of the rules. The Texas Supreme

Court disagreed, finding that the cutoff date was a rule. And because it was not

promulgated pursuant to the APA procedures, it was invalid.

      Just like how the HHSC only considered a portion of claims (95-97%) in its

decision making, contrary to the plain language of the regulation, DADS is only

considering a portion of “usable floor space,” contrary to the plain language of the

regulation. While HHSC argued, like DADS does now, that the “rule” was really

only an interpretation, the court disagreed.   El Paso Hospital District is binding

precedent, and requires that if DADS is going to only consider a portion of “usable

square feet” pursuant to a measuring rule that excludes space less than 10’ in

                                         12
dimension, DADS needed to promulgate that rule pursuant to the APA. Because

DADS has failed to do so, the measuring rule is invalid and all “usable floor space”

must be included.

      There is jurisdiction under APA section 2001.038 because LMV challenges

both the applicability of Rule 92.62(m)(1)(B) and the validity and applicability of

DADS’ “secret” measuring rule.

      B.     LMV Has Standing to Challenge Agency Actions that Impose
             Regulatory Burdens or Impede Business Opportunities

      DADS argues that LMV lacks standing because the right to have double

occupancy is insufficient. DADS argues that having double occupancy in the

memory care rooms is only an “expectation” interest that, DADS argues, falls

outside a “right or privilege” under APA section 2001.038. However, the APA, as

interpreted by the courts, provides for standing in cases like this case. “A business

can have standing to challenge the legality of governmental actions based on

pleadings or proof that the actions impose regulatory burdens … or impede business

opportunities.” Texas Dept. of State Health Services v. Balquinta, 429 S.W.3d 726,

741 (Tex. App.—Austin 2014, pet. dism'd).                DADS’ application of Rule

92.62(m)(1)(B) using DADS’ secret measuring rule imposes a regulatory burden on

LMV and impeded its business opportunity by preventing it from filling its assisted

living facility to full capacity. This is sufficient for standing.

                                           13
      The cases cited by DADS are distinguishable. In Sw. Pharmacy Sols., Inc. v.

Tex. Health & Human Servs. Comm’n, 408 S.W.3d 549 (Tex. App.—Austin 2013,

pet. denied), plaintiff organization’s members’ economic loss was not based on

regulatory burdens, but instead based on new legislation. See id., at 565 (“At most,

American Pharmacies had an ‘expectation based on the anticipated continuance’ of

the prior law,” which was modified by legislation, not by regulation.) In S.C. San

Antonio, Inc. v. Tex. Dep’t of Human Servs., 891 S.W.2d 773 (Tex.App.—Austin

1995, writ denied) the court held, inter alia, that plaintiff Southwest General only

had an expectancy of receiving additional reimbursement contingent on the

hospital’s level of services provided to indigent patients compared to that of other

hospitals. Southwest General had erred and miscalculated its own figures when

applying for additional funding, and thereby failed to meet the top twenty-five

percent required for additional reimbursement. It was Southwest General’s own

error in calculation that cost it the additional reimbursement, without the error the

agency would have provided the additional reimbursement. Id., at 778. In that case,

nothing the agency did resulted in any economic loss, regulatory burden, or

impediment to business opportunities. In State v. BP Am. Prod. Co., 290 S.W.3d
345 (Tex.App.—Austin 2009, pet. denied), at issue was title to submerged land

under the San Jacinto River. All BP Am. Prod. Co. stands for, as far as APA Section

2001.038 is concerned, is that the section may be used to test the applicability or

                                         14
validity of a rule, but not to try title to land subject to a state claim. DADS’ reliance

on this decision is misplaced because at issue in the present case is not disputed title,

but the application of Rule 92.62(m)(1)(B) and the application and validity of the

secret measuring rule.

         C.       LMV Does Not Seek an Improper Advisory Opinion

         DADS argues that, “The conclusion of an administrative process … moots

subsequent attempts to obtain relief under section 2001.038 regarding rules applied

during those proceedings.” (DADS’ Br., p. 17.) DADS argues that because DADS

already issued the license (without double occupancy in the disputed rooms), LMV’s

request for judicial involvement would amount to a mere advisory opinion.5

         5
           The cases DADS cites in support of its “mootness” argument are not analogous to this case. In Tex. Logos,
L.P. v TxDOT, 241 S.W.3d 105 (Tex.App.—Austin 2007, no pet.), a sign company that failed to win a state contract
challenged the rules implemented by TxDOT on how to award sign contracts. The court of appeals noted that Tex.
Logos was aggrieved by TxDOT’s award of the sign contract to a competitor and was primarily challenging that
award, not a rule under APA section 2001.038. Id. at 123. The purpose of APA section 2001.038 is to challenge the
validity or application of a rule; it is not an alternative means of challenging TxDOT’s award of a sign contract to a
competitor.
          In Friends of Canyon Lake, Inc. v. Guadalupe-Blanco River Auth., 96 S.W.3d 519 (Tex. App.—Austin 2002,
pet. denied), an environmental group challenged a ruling by the Texas Natural Resource Conservation Commission 5
(TNRCC) that occurred before the group was even formed. Id. at 523. Notice of the proposed action was published
two years before TNRCC’s decision. Id. The group failed to exhaust administrative remedies by requesting a contested
case hearing or intervening at all in the administrative process. The court held that the APA was not a workaround
when the environmental group never involved itself in the administrative process. Id. at 529. (The group could also
not identify the specific it was challenging. Id.)
          Charlie Thomas Ford, Inc. v. A.C. Collins Ford, Inc., 912 S.W.2d 271 (Tex. App.—Austin 1995, writ dism'd)
was an appeal of a contested case heard by the Texas Motor Vehicle Commission. A car dealership sought to relocate
and was denied approval after a contested hearing in front of the Commission. The dealership failed to timely file a
motion for rehearing, as required to preserve error under the Administrative Procedure and Texas Register Act (now
APA) and the Motor Vehicle Commission Code which governed the proceeding. The trial court dismissed the
subsequent lawsuit, and the court of appeals affirmed. It held that the trial court property dismissed the lawsuit and,
having determined there was no valid “suit for judicial review of the Commission’s final order” because of the
dealership’s failure to preserve error, the court held that a declaratory judgment could have no legal effect. Id. at 275.
          Finally, KEM Texas, Ltd. v. Texas Dept. of Transp., 03-08-00468-CV, 2009 WL 1811102 (Tex. App.—
Austin June 26, 2009, no pet.) (not designated for publication), involved the owner of a sign easement contesting
TxDOT’s denial of its request to erect a billboard. The owner did not plead an APA section 2001.038 claim and

                                                           15
         DADS’ position is that LMV could challenge only the threatened application

of its rules, not the actual application of its rules. This argument contravenes the

plain language of APA section 2001.038. APA section 2001.038(a) provides:

         The validity or applicability of a rule … may be determined in an action
         for declaratory judgment if it is alleged that the rule or its threatened
         application interferes with or impairs, or threatens to interfere with or
         impair, a legal right or privilege of the plaintiff.

Tex. Gov't Code § 2001.038. If a declaratory judgment under this section were only

available before the rule was applied (i.e. when the rule’s application is merely

“threatened”), then it would say so. Instead, the plain language of the statute makes

clear that a plaintiff may challenge “the rule or its threatened application.” If a

plaintiff could only invoke section 2001.038 in the limited window when a rule is

threatened to apply but has not been actually applied yet, then the statute would leave

out “the rule” and just say “the rule’s threatened application.” While “one is not

required to wait until the rule is attempted to be enforced against him before he may

resort to declaratory relief,” one may challenge either the application or threatened

application of a rule. Texas Mut. Ins. Co. v. Texas Dept. of Ins., Div. of Workers'

Comp., 214 S.W.3d 613, 622 (Tex. App.—Austin 2006, no pet.), quoting State Bd.

apparently did not challenge the validity or application of any rule; it just challenged TxDOT’s decision on the merits.
APA section 2001.038 was mentioned only in dicta in a single footnote in the opinion. None of these cases are
analogous to the facts of the present case.

                                                          16
of Ins. v. Deffebach, 631 S.W.2d 794, 797 (Tex.App.—Austin 1982, writ ref’d n.r.e.)

(emphasis added).

      Moreover, the issue was not mooted by DADS’ issuance of a license only

approving single occupancy in the disputed rooms, instead the controversy

continued as it had for several months. For several months prior to officially

approving the license (and denying the application for double occupancy in the

rooms at issue), LMV and DADS had numerous discussions back and forth about

the occupancy and other issues.     See CR 210, DeNucci Aff. ¶ 4-5.         DADS

representatives conducted onsite inspections between October 2014 and March

2015. CR 434, Anglin Aff. ¶ 5. Upon learning that DADS would not approve the

disputed rooms for double occupancy, LMV representatives repeatedly requested

specific authority that authorized DADS’ exclusion of otherwise “usable floor

space.” See CR 129 (January 9, 2015 email from LMV principal Paul DeNucci to

DADS stating that the relevant code provisions do not define usable floor space and

requesting reconsideration of the occupancy determination); CR 111 (March 6, 2015

email from DeNucci to DADS that asks DADS to provide the section of code that

states that all usable floor space must include a 10’ dimension and to allow double

occupancy either per DADS’ discretion or because the minimum requirements

published in the code were met); CR 392 (March 9, 2015 email from DeNucci to

DADS noting disagreement on “what the code says” but asking for DADS to

                                        17
reconsider and allow double occupancy); CR 156 (email on the same day DADS

approved issuance of the license from DADS’ attorney asking for reconsideration6).

DADS was unable to provide any published authority for excluding the “usable floor

space” in its calculations. LMV repeatedly asked DADS to reconsider, but DADS

refused. After approval of the license on March 11, 2015, LMV and its counsel again

objected to DADS’ decision and asked for an authoritative basis for denying double

occupancy in the disputed rooms. See CR 152 (March 16, 2015 email from LMV

attorney to DADS attorney asking for the exact reason why double occupancy was

denied in the disputed rooms, citing the code). DADS’ mootness argument assumes

that there was a discrete application for double occupancy and a discrete denial, but

in reality the occupancy issue played out for several months and was not resolved

by DADS’ issuance of a license to the Harbor. It would truly elevate form over

substance to say that the court has jurisdiction if the last email before the lawsuit

was filed was from DeNucci’s counsel requesting reconsideration, rather than from

DADS’ denying reconsideration, but that is precisely what DADS’ argument

implies.

6
  The email stated: “[DADS] should approve the memory care rooms for double occupancy because they meet the 160
square foot minimum and because the vertical PTAC units solve a health and sanitation issue, while still providing
the residents with sufficient space. … Please consider this to be a repeated formal request that DADS legal/exec today
exercise its authority … to “specifically approve” the rooms if DADS’ staff is continuing to interpret the vertical
PTAC heating and cooling units to somehow render the ‘smallest dimension’ to be less than ten feet.” CR 156.
                                                         18
      Strangely, after arguing that LMV should have brought an APA section

2001.038 challenge prior to DADS’ initial licensure decision, DADS then argues

that LMV should have filed another request for double occupancy post-licensure.

DADS argues that the failure to repeat its request in a formal application for an

increase in occupancy post-licensure means that judicial intervention would be

merely advisory.

      First, DADS cannot have it both ways. DADS cannot argue that the issue is

moot but also that LMV has the opportunity to reapply for the originally sought

occupancy under the same rules in dispute. Clearly LMV would be subjected to the

same “threatened application” of the Rule 92.62(m)(1)(B) and the “secret rule” in

the event of a post-licensure request for additional capacity as it was in the initial

application. (This argument actually further supports LMV’s case; LMV has a valid

claim under APA section 2001.038 with regard to both the rules already applied and

those “threatened” to be applied again in the event of a post-licensure application for

increased occupancy.)

      Second, a post-licensure application for increased occupancy would have

been futile. There is no reason to believe that DADS would approve a post-licensure

request for double occupancy in the disputed rooms after denying the pre-licensure

request (and repeated requests for reconsideration). DADS does not dispute that Rule

92.62(m)(1)(B)’s “usable floor space” requirements apply to both pre- and post-

                                          19
licensure applications for double occupancy. Indeed, 40 TAC § 92.18(d) specifies

that for post-licensure request for increased capacity, a facility must meet the

licensure requirements in Subchapter D,7 relating to Facility Construction. The

“usable floor space” requirement is part of Subchapter D.                                 It is completely

implausible to suggest that after using the secret measuring rule to deny LMV’s

application for double occupancy and repeatedly rejecting LMV’s requests for

reconsideration, DADS would somehow reach a different conclusion under a

subsequent post-licensure application with identical “usable floor space”

requirements. If we take DADS at its word, it would certainly also apply the same

“secret” rule to exclude usable floor space from the calculation. Indeed, suggesting

there could be a different outcome if LMV filed an additional application would be

to admit that DADS acted arbitrarily in denying LMV’s request.8

        Further, the APA makes clear that the declaratory judgment remedy is

available regardless of whether a plaintiff has exhausted all administrative remedies

with regard to the rule. “A court may render a declaratory judgment without regard

to whether the plaintiff requested the state agency to rule on the validity or

applicability of the rule in question.” Tex. Gov’t. Code § 2001.038(d). There is

7
  40 TAC § 92.61-92.64.
8
  Moreover, it would be injudicious and wasteful to require LMV to go back and submit such an application and then
restart this entire litigation.

                                                       20
simply no requirement that LMV seek a post-licensure request for increased

occupancy before challenging DADS’ rules.9

        It is Kafkaesque to suggest that the courthouse is closed to LMV because

LMV (1) waited until DADS denied its application for double occupancy and (2) did

not submit a subsequent post-licensure application for double occupancy. DADS’

arguments would shut the courthouse doors on LMV regardless of what LMV did.

LMV filed the lawsuit after being rejected for double occupancy in the disputed

rooms at licensure, and after lengthy negotiations and discussions failed to

materialize a compromise or reconsideration. As a result of that timeline, DADS

argues (first) that LMV’s dispute is moot because DADS already applied the rules

in dispute and rendered a final decision and (second) that LMV should have sought

a post-licensure request for increased occupancy—a pseudo exhaustion of remedies

argument.        However, if LMV did seek a post-licensure request for increased

occupancy, it would have certainly been denied, and then, according to DADS,

LMV’s claim would be mooted by the agency’s final decision. (Under DADS’

theory, an agency would always be able to escape APA section 2001.038 review by

issuing a ruling and therefore, according to DADS, mooting any justiciable dispute.)

If, on the other end of the spectrum, LMV filed a lawsuit after the initial request for

9
  Indeed, under DADS’ “mootness” argument, LMV filed the challenge to the rules at the right time, when the rules’
threatened application would result in denial of a post-licensure request for increased occupancy.
                                                       21
occupancy but before licensure, the dispute would not be ripe – DADS would not

yet have applied the “secret” rule to limit LMV’s occupancy. Under DADS’ theory,

at what time would LMV ever be able to bring an APA section 2001.038 challenge?

The answer would be “never.” DADS’ logic would mean that LMV would not get

through the courthouse doors no matter when it filed its suit. That is clearly not what

is intended by APA section 2001.038, which allows for a challenge to an actual or

prospective application of a rule, and does not require a plaintiff to first request the

agency to rule on the validity or applicability of the rule in question.

      In contrast to DADS’ Kafkaesque interpretation of the law, LMV’s position

is in harmony with the plain language of APA section 2001.038 as well as caselaw

on ripeness. In Mayhew v. Town of Sunnyvale, 964 S.W.2d 922, 931 (Tex. 1998),

property owners filed a takings suit after the Town of Sunnyvale denied their

application for a planned residential development. In an argument that echoes

DADS’ argument in this case, the Town argued that the owners’ dispute was not ripe

because the owners never reapplied or sought a variance. The court rejected the

Town’s argument:

      The Town maintains that the Mayhews' claims regarding the denial of
      their planned development application are not ripe because the
      Mayhews submitted only one planned development application and did
      not thereafter reapply for development or submit a “variance.” The
      Mayhews counter that, under the circumstances of this case, their
      planned development application and amended request for 3,600 units
      were sufficient, and that any further applications would have been
      futile. We agree with the Mayhews. …
                                          22
       We accordingly conclude that, under the circumstances of this case, the
       Mayhews were not required to submit additional alternative proposals,
       after a year of negotiations and $500,000 in expenditures, to ripen this
       complaint. …
       The Town clearly was not going to approve the Mayhews' development
       proposal for 3,600 units, making a subsequent application or variance
       request for 3,600 units a futile act. We therefore hold that the Mayhews'
       claims that the Town violated their constitutional rights by denying
       their planned development proposal for 3,600 units are ripe for this
       Court's review.

Mayhew, 964 S.W.2d at 931-932. The court looked to the fact that the specifics of

the development were determined through lengthy negotiations between the Town

and the owners, and that there were meetings and attempts to compromise. Id. at

931.

       Like in Mayhew, the construction and permitting of an ALMC facility is a

lengthy process involving several inspections by DADS representatives and frequent

communication and negotiation. DADS’ Brief, at first blush, might lead one to the

conclusion that the license application process for ALMC facilities is like a contested

hearing, with the facility putting on evidence, arguing its case, and then an

administrative law judge issuing a ruling. But it is not like that. Instead, the process

of getting a license for an ALMC facility like the Harbor is much more akin to the

complicated, drawn out, and collaborative process in the Mayhew case.              The

permitted occupancy of LMV’s facility was an issue that was discussed and debated

at length between DADS and LMV, with changes to the occupancy sought, multiple

inspections and measurements, requests for the basis of the “secret” measuring rule,
                                          23
and discussions between counsel to try to resolve the dispute. See record cites

discussed infra, p. 2 (CR 210, CR 434, CR 129, CR 111, CR 392, CR 156). The

controversy was not mooted by DADS’ issuance of a license for occupancy, and the

dispute was ripe for LMV to pursue declaratory relief under Mayhew.

       Moreover, DADS’ position is bad policy. It is ludicrous to suggest that in

order to thread the jurisdictional needle, an aggrieved party has to rush to the

courthouse and file a lawsuit before efforts to resolve the dispute with the agency

have been concluded. Agencies and the entities they regulated should be free to

work together to resolve disputes and complete regulated projects under a spirit of

compromise and negotiation. If claims under the APA were mooted by an agency’s

final decision, however, regulated entities would abandon efforts to resolve disputes

amicably, and would instead rush quickly to the courthouse the moment a dispute

arose, hoping to file a lawsuit before the agency issued its final ruling and thus

mooted the case. Under DADS’ regime, there would be no hope for efficient

resolution of these sorts of disputes; every little dispute between an agency and those

its regulates would end up in the courthouse, especially in highly regulated industries

like assisted living.

       Finally, DADS misconstrues its discretion. (DADS’ Br., p. 19.) DADS has

discretion to approve a room that does not meet the minimum usable floor space

standards, but has no discretion to not approve a room that does meet the minimum

                                          24
standards. That LMV asked DADS to exercise such discretion is not relevant to

whether DADS misapplied Rule 92.62(m)(1)(B) and whether the “secret” rule is

valid and applicable.

III.   THERE IS JURISDICTION UNDER UDJA

       A.    LMV’s Ultra Vires Claim is Cognizable Under the UDJA

       LMV concedes that its claims challenging the applicability and validity of

DADS’ rules are not cognizable under the UDJA as well as the APA, because such

claims would be redundant of the APA claims. However, the ultra vires claim

against the Commissioner is not redundant and is properly brought pursuant to the

UDJA.

       B.    LMV’s Claim Against the Commissioner is Not Jurisdictionally
             Redundant

       Sovereign immunity does not apply to ultra vires acts. See Texas Dept. of

State Health Services v. Balquinta, 429 S.W.3d 726, 748-749 (Tex. App.—Austin

2014, pet. dism'd) (“Sovereign immunity is held not to bar [ultra vires] claims

because, in theory, acts that are not lawfully authorized … are not considered to be

acts of the State or the agency itself, and the remedy of compelling the ‘official’ to

comply with the law, while binding on the State, ‘do[es] not attempt to exert control

over the state [but] attempt[s] to reassert the control of the state.’”) (citations

omitted). In acting in contravention of its own regulations, the Commissioner’s

denial of LMV’s application for double occupancy was ultra vires, and subjects the

                                         25
Commission to suit pursuant to the UDJA. Governmental immunity does not bar

claims against the Commissioner in his official capacity for acting ultra vires. City

of El Paso v. Heinrich, 284 S.W.3d 366 (Tex. 2009) (where official acted without

legal authority or failed to perform a purely ministerial act, suit is not barred by

sovereign immunity). The Commissioner does not have discretion to willy-nilly

determine whether single or double occupancy is allowed. Instead, all "usable floor

space" must be measured and if the square footage exceeds 160 for the type of

facility at issue, the facility must be licensed for double occupancy. Approving

double occupancy where the minimal requirements are met is not discretionary; it is

a ministerial act that the Commissioner must perform. Refusal to do so is ultra vires,

and suit against the Commissioner in his official capacity to force him to comply

with DADS' own regulations is not barred by sovereign immunity. Id.

IV.   THE CONSTITUTIONAL CLAIMS ALSO ESTABLISH SUBJECT
      MATTER JURISDICTION

      The trial court has “inherent jurisdiction to protect against ultra vires or

unconstitutional agency actions.” Creedmoor-Maha Water Supply Corp. v. Texas

Com'n on Envtl. Quality, 307 S.W.3d 505, 526 (Tex. App.—Austin 2010, no pet.).

See also Texas Mun. Power Agency v. Pub. Util. Com'n, 100 S.W.3d 510, 516 (Tex.

App.—Austin 2003, pet. denied) (“a declaratory judgment to interpret the scope of

an agency's statutory authority in light of a constitutional right or property interest

                                          26
is sufficient to invoke the trial court's jurisdiction and to waive sovereign

immunity”).

       LMV alleges that DADS’ secret rule violates procedural and substantive due

process guaranteed by the U.S. Constitution and Texas Constitution. CR 1763, Pl.

Second Am. Pet., ¶¶ 33(4). DADS did not respond to this argument in the trial court

and has not responded to this argument in this Court – untimely though it would now

be. This is an independent basis for jurisdiction and another reason this Court should

affirm the trial court’s denial of DADS’ plea to the jurisdiction. LMV incorporates

by reference its briefing on the constitutional issues in its opening brief. See

Appellant LMV’s Br., p. 30-31.

                                      PRAYER

       WHEREFORE, PREMISES CONSIDERED, Appellant LMV prays that the

Court: affirm the trial court’s denial of DADS’ plea to the jurisdiction, reverse the

trial court’s sustaining of Appellees’ objections to the DeNucci affidavit, reverse the

judgment of the trial court, render judgment in favor of Appellant LMV and against

Appellees, and for such further relief to which Appellant LMV may show itself justly

entitled.

                               Respectfully submitted,

                                  /S/ WALTER V. WILLIAMS
                                  WALTER V. WILLIAMS
                                  STATE BAR NO. 21584800
                                          27
                                WALTER@MODWILL.COM
                                JACK M. MODESETT, III
                                STATE BAR NO. 14244337
                               MODESETT WILLIAMS, PLLC
                               515 CONGRESS AVE, STE 1650
                               AUSTIN, TEXAS 78701
                               TELEPHONE: (512) 472-6097
                               FACSIMILE: (512) 481-0130
                             ATTORNEYS FOR APPELLANT

                      CERTIFICATE OF COMPLIANCE

      Based on a word count run in Microsoft Word 2013, this brief contains 5756

words, excluding the portions of the brief exempt from the word count under Texas

Rule of Appellate Procedure 9.4(i)(1).

                                              /s/Walter V. Williams
                                              Walter V. Williams

                                         28
                         CERTIFICATE OF SERVICE

      I hereby do certify that in compliance with the provisions of Rule 21a, a true
and correct copy of the above and foregoing has been electronically served via
ProDocs efiling system on this 28TH day of September, 2016 as follows:

Ken Paxton
Attorney General of Texas

Charles E. Roy
First Assistant Attorney General

James E. Davis
Deputy Attorney General for Civil Litigation

David A. Talbot, Jr.
Chief, Administrative Law Division

Ari Cuenin
Assistant Solicitor General
Office of the Attorney General of Texas
ari.cuenin@texasattorneygeneral.gov

Eugene A. Clayborn
Deputy Chief, Administrative Law Division
Office of the Attorney General of Texas
P. O. Box 125478, Capitol Station
Austin, Texas 78711-2548
Eugene.clayborn@texasattorneygeneral.gov

                                               /s/Walter V. Williams
                                               Walter V. Williams

                                          29