Texas Workforce Commission v. City of Houston ( 2009 )

Reversed and Rendered and Memorandum Opinion filed February 19, 2009

Reversed and Rendered and Memorandum Opinion filed February 19, 2009.

In The

Fourteenth Court of Appeals

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NO. 14-07-00407-CV

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TEXAS WORKFORCE COMMISSION, Appellant

V.

CITY OF HOUSTON, Appellee

On Appeal from the 152nd District Court

Harris County, Texas

Trial Court Cause No. 2003-35535

M E M O R A N D U M   O P I N I O N

The City of Houston filed suit against the Texas Workforce Commission appealing the commission=s declaration that the city=s protest of an unemployment-benefits claim was untimely and that the city had therefore waived its right to appeal an award of unemployment compensation.  The trial court reversed the commission=s decision, holding that it was not supported by substantial evidence.  The commission timely filed this appeal.

I.  Factual and Procedural Background

On November 3, 2001, Willinda Adams began her job as a collector/adjustor in the City of Houston=s Municipal Courts Administration Department.  On October 1, 2002, she was fired for excessive tardiness.  Within days of her termination, Adams filed a claim for unemployment benefits with the commission.  On October 15, a claims adjudicator for the commission mailed notice of Adams=s claim to the city.  The notice indicated that the city had until October 29 to protest the claim.  The senior paralegal for the city=s legal department, Ella West, was the city=s designated representative for handling commission claims. On October 29, West received a phone message from Isabelle Ortega, a commission claims adjudicator, asking that the city provide her with information about Adams=s termination.

In the recorded message, Ortega stated that if the commission had not received the information by October 31, it would decide the fate of Adams=s claim with just the information it had already received.  West testified that when she heard the message, she took it Ato mean that [Ortega] had extended the deadline.@  On October 30, one day after the deadline set forth in the notice of claim to the commission, West faxed the city=s notice of protest as well as the information Ortega had specifically requested about the termination.

On November 1, Ortega denied Adams=s claim for unemployment benefits.  Her decision did not address the timeliness of the city=s protest.  Adams appealed Ortega=s decision to the commission=s appeals tribunal.  On January 13, 2003, the tribunal reversed Ortega=s decision and ruled that Adams was entitled to unemployment compensation.  Again, the appeals tribunal did not address the timeliness of the protest.  The city then appealed the tribunal=s decision to the commission itself.  On February 26, 2003, the commission ruled that the city=s initial protest was filed late and that the city had Awaived all rights in connection with the claim, including rights to appeal.@  Accordingly, the commission dismissed the appeal and affirmed the appeals tribunal.  After the commission denied the city=s motion for rehearing on April 11, 2003, the city appealed to district court. That appeal was assigned a separate cause number from the case before us now, and the two cases are distinct from one another.

          The appeal before us now originated with a hearing examiner=s decision on February 21, 2003.  That decision addressed only the timeliness of the city=s initial protest and whether the city had been granted an extension.  The examiner ruled that the protest was untimely, that the city had not received an extension, and that it had waived its right to appeal the decision awarding benefits to Adams.  On April 11, 2003, the same day that the commission denied the city=s motion for rehearing on the benefits claim, the appeals tribunal affirmed the hearing examiner=s decision.  The commission, in turn, affirmed the tribunal on June 2, and expressly adopted its reasoning.  The city then appealed the commission=s decision to district court.  In a bench trial, the district court determined that the decision was not supported by substantial evidence and reversed it.  The commission filed a plea to the jurisdiction and a motion for new trial, both of which the district court denied.  This appeal followed.

The commission presents four issues for review: (1) whether the district court had jurisdiction to review the commission=s April 11 decision awarding benefits to Adams, (2) whether the district court had jurisdiction to review the commission=s June 2 decision addressing the timeliness of the city=s protest, (3) whether the commission=s June 2 decision was supported by substantial evidence, and (4) whether the district court could rule on the merits of Adams=s benefits claim.  We will address subject-matter jurisdiction first, then whether the city received an extension to protest the initial claim.  We need not address the merits of Adams=s unemployment-benefits claim for the reasons set forth below.

II.  Jurisdiction

The commission argues that this court does not have subject-matter jurisdiction to review its decision of April 11, 2003, denying the city=s motion for rehearing on the benefits claim.  Because that decision was separate from the line of decisions that led to this appeal, we agree.

The courts have subject-matter jurisdiction to review only a final decision by the commission.  See Tex. Lab. Code Ann. ' 212.201 (Vernon 2006).  The examiner determined on February 21 that the city filed its protest one day late and therefore waived its rights to  appeal the decision on the protest.  The February 21 decision did not address whether the employee was eligible to receive unemployment benefits.  Because timeliness was the only issue addressed in the February 21 decision, that was the only issue properly before the appeals tribunal when it affirmed the February 21 decision on April 11, and it was likewise the only issue before the commission when it affirmed the April 11 tribunal decision on June 2.  The case before us now concerns only the city=s appeal of the commission=s decision on June 2.  The scope of this court=s jurisdiction only extends as far as the language of the decision being appealed.  Therefore, we have subject-matter jurisdiction only over the June 2 decision regarding the timeliness of the city=s protest, and not over the April 11 decision by the commission on the city=s motion to rehear Adams=s unemployment-benefits claim.

The commission also asserts that we do not have jurisdiction to review the commission=s June 2 decision in which it determined that the city=s protest was untimely.  We disagree.  To have jurisdiction to review a commission decision, the party bringing suit must take two procedural steps.  First,  the party claiming to be aggrieved by a final decision of the commission must have exhausted the available administrative remedies.  Tex. Lab. Code Ann. ' 212.203(a) (Vernon 2006).  The commission asserts that a failure to comply with statutory deadlines results in a failure to exhaust administrative remedies and, as a result of this failure, the city cannot exhaust administrative remedies.  See Brown v. Tex. Employment Comm=n, 801 S.W.2d 5, 7 (Tex. App.CHouston [14th Dist.] 1990, writ denied).  However, the statutory deadline in Brown dealt with time requirements to appeal, not time requirements to protest.  In this case, the city timely filed each appeal within the agency.  The city exhausted its remedies when it appealed this decision to the highest tribunal within the commission. 

Second, a party aggrieved by a final decision of the commission must bring an action in a court of competent jurisdiction against the commission on or after the date on which the decision is final, and not later than 14 days thereafter.  Tex. Lab. Code Ann. ' 212.201(a).  A decision of the commission becomes final 14 days after the date the decision is mailed.  Tex. Lab. Code Ann. ' 212.153 (Vernon 2006).   In this case, the commission=s decision was mailed on June 2 and became final on June 16.  The last day to appeal was June 30.  The city filed its petition in the district court on June 26.  Therefore, the appeal was timely, and we have subject-matter jurisdiction over the June 2 decision. 

III.  Issues and Analysis

On June 2, the commission issued a decision holding that (1) the claims adjudicator did not grant the city an extension of the protest deadline, (2) the city did not protest within the allotted time, and (3) the city waived the right to protest and appeal the benefits claim.  The city appealed this decision to the district court arguing that there was not substantial evidence to support the commission=s decision.  The city argued that either Ortega gave the city an extension to file a protest or that the city was entitled to an extension under the Texas Administrative Code because it had been misled.  See 40 Tex. Admin. Code ' 815.32 (2000). The district court agreed with the city, holding that an extension had been given and that there was not substantial evidence to the contrary.  We disagree.

A. Was the City Given an Extension?

The city argues that when Ortega left the telephone message for West, it amounted to the commission giving the city an extension.  The commission argues that Ortega contacted the city merely to gather information the commission needed to decide the claim, regardless of whether the city protested.  In other words, the commission argues that the telephone- message request for information was distinct from and irrelevant to the protest deadline of October 29. 

Judicial review of a commission decision is by trial de novo based on the substantial- evidence rule.  Tex. Lab. Code Ann. ' 212.202(a).  The substantial-evidence rule requires the court to determine, as a matter of law, whether the commission=s decision is supported by substantial evidence.  Mercer v. Ross, 701 S.W.2d 830, 831 (Tex. 1986); Hernandez v. Tex. Workforce Comm=n, 18 S.W.3d 678, 681 (Tex. App.CSan Antonio 2000, no pet.); Direct Commc=ns, Inc. v. Lunsford, 906 S.W.2d 537, 541 (Tex. App.CDallas 1995, no writ).  Reviewing courts are not bound by, nor do they review, the commission=s findings of fact.  Hernandez, 18 S.W.3d at 681; Direct Commc=ns., 906 S.W.2d at 541.  The trial court bases its decision on the evidence admitted at the trial de novo, not the evidence presented at the commission hearing.  Mercer, 701 S.W.2d at 831; Hernandez 18 S.W.3d at 681.  The purpose of the de novo trial is not to substitute the court=s judgment for that of the agency on controverted issues of fact.  Mercer, 701 S.W.2d at 831; Hernandez 18 S.W.3d at 681. Rather, the court may only set aside the commission=s decision if the decision was made without regard to the law or the facts and was therefore unreasonable, arbitrary, or capricious. Mercer, 701 S.W.2d at 831; Hernandez 18 S.W.3d at 681.

While the language of the telephone message may be open to a different interpretation, it is not within the court=s power to substitute its own judgment for that of the agency.  See Mercer, 701 S.W.2d at 831.  So long as reasonable minds could interpret the message as a request for information rather than as an extension of time to protest, the agency decision must be affirmed.  In this case, Ortega did not unambiguously tell the city that it was being granted an extension.  Moreover, the commission=s interpretation of the message=s meaning as merely a request for information is not unreasonable.  We conclude that there is substantial evidence to support the agency=s finding that the message did not amount to an extension.

B. Was the City Misled into Believing There Was an Extension?

The city also argues, and the district court agreed, that the city was misled into believing that there was an extension and that, as a result, the city had a right to appeal the November 1 decision on the merits of the benefits claim.  The city relies on the following language from the Texas Administrative Code:

(a) Unless otherwise specified in this chapter, appeals time frames are generally determined within these guidelines:

(1) as established in the Texas Unemployment Compensation Act; and

(2) are extended one working day following a deadline which falls on a weekend, an official state holiday, a state holiday for which minimal staffing is required, or a federal holiday.

. . .

(i) Exceptions.  The substantive nature of certain cases causes, or creates, exceptions to the general timeliness rules, even where notice is proper or response is clearly late.

. . .

(7) Timeliness sanctions shall not apply when an Agency representative or a representative of a Board or an agent state representative has given misleading information on appeal rights to a party, if the party:

(A) specifically establishes how the party was misled; or

(B) specifically establishes what the party was told that was misleading and, if possible, by whom the party was misled.

40 Tex. Admin. Code ' 815.32.  The commission responds that section 815.32 applies only when a party was misled specifically about the right to appeal.  We agree with the commission.  Section 815.32 does not provide extensions to the statutory time available to protest. 

When interpreting the meaning of a rule, a court will follow the rule=s plain language.  See Bragg v. Edwards Aquifer Auth., 71 S.W.3d 729, 734 (Tex. 2002).  Section 815.32 removes timeliness sanctions in the case of an untimely appeal when the commission provided misleading information about the party=s rights to appeal.  Section 815.32 does not provide a remedy when misleading information is given about the time allowed to protest a claim.   The city argues that it was misled into believing that it had an extension to file its protest, but it does not present how the phone message constitutes Amisleading information on appeal rights.@  For this reason, we hold that title 40, section 815.32, does not apply.

Accordingly, we reverse the trial court=s judgment and render judgment affirming the commission=s decision that the city=s protest to Willinda Adams=s unemployment-benefits claim was untimely.                      

/s/        Jeffrey V. Brown

Justice

Panel consists of Justices Yates, Anderson, and Brown.