City of Magnolia v. Magnolia Bible Church Magnolia's First Baptist Church Believers Fellowship' and Ken Paxton, Attorney General of Texas ( 2020 )

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-19-00631-CV
City of Magnolia, Appellant
v.
Magnolia Bible Church; Magnolia’s First Baptist Church; Believers Fellowship; and
Ken Paxton, Attorney General of Texas, Appellees
FROM THE 419TH DISTRICT COURT OF TRAVIS COUNTY
NO. D-1-GN-18-006882, THE HONORABLE DUSTIN M. HOWELL, JUDGE PRESIDING
DISSENTING OPINION
For the reasons that follow, I respectfully dissent from the Court’s opinion
affirming the district court’s order granting a new trial.
The dispute in this case involves the interplay between the provisions of the
Expedited Declaratory Judgment Act (EDJA), the Texas Rules of Civil Procedure, and the rights
of individuals asserting an interest in the subject matter of a suit under the EDJA. The EDJA
was enacted to provide “a method of quickly and efficiently adjudicating the validity of public
securities and acts affecting those public securities.” Guadalupe-Blanco River Auth. v. Texas
Attorney Gen., No. 03-14-00393-CV, 2015 WL 868871, at *4 (Tex. App.—Austin Feb. 26,
2015, pet. denied) (mem. op.) (quoting Hotze v. City of Houston, 339 S.W.3d 809, 814 (Tex.
App.—Austin 2011, no pet.)); see also Buckholts Indep. Sch. Dist. v. Glaser, 632 S.W.2d 146,
149 (Tex. 1982) (explaining that EDJA was designed to prevent “one disgruntled taxpayer” from
stopping “the entire bond issue by simply filing suit”). The EDJA “allows an issuer to bring a
special, expedited declaratory judgment action to validate proposed public securities or to
resolve any disputes relating to public securities.” Hotze, 339 S.W.3d at 814.
To achieve the goal of quickly and efficiently resolving disputes related to public
securities, the legislature included rather unusual provisions expediting the review of EDJA
determinations, limiting the ability of individuals to challenge determinations made under the
EDJA, and precluding future claims that could have been but were not raised in an EDJA
proceeding. See Guadalupe-Blanco River Auth., 2015 WL 868871, at *6; Hotze, 339 S.W.3d
at 814-15. For example, section 1205.068 governs appeals of trial court rulings under the EDJA;
mandates that “[a]n appeal under this section . . . takes priority over any other matter, other than
writs of habeas corpus”; and directs appellate courts to “render its final order or judgment with
the least possible delay.” Tex. Gov’t Code § 1205.068(e). Additionally, section 1205.068 explains
that “[a]n order or judgment from which an appeal is not taken is final.” Id. § 1205.068(c).
Moreover, the EDJA specifies that for qualifying judgments “[t]he judgment, as to each
adjudicated matter and each matter that could have been raised, is binding and conclusive against
(1) the issuer; (2) the attorney general; (3) the comptroller; and (4) any party to the action,
whether” they are “named and served with the notice of the proceedings” or “reside in the
territory of the issuer,” “own property located within the boundaries of the issuer,” “are
taxpayers of the issuer,” or “have or claim a right, title, or interest in any property or money
to be affected by a public security authorization or the issuance of the public securities.”
Id. §§ 1205.041, .151. Section 1205.151 also directs that a judgment under the EDJA “is a
permanent injunction against the filing by any person of any proceeding contesting the validity
2
of,” among other things, “any adjudicated matter and any matter that could have been raised
in the action.” Id. § 1205.151(c). Finally, section 1205.002 expressly states that “[t]o the extent
of a conflict or inconsistency between this chapter and another law, this chapter controls.”
Id. § 1205.002(a).
After the district court validated the bonds in question under the EDJA, Magnolia
Bible Church, Magnolia’s First Baptist Church, and Believers Fellowship (the Churches) filed
a motion for new trial in the underlying case, and the district court granted the motion.
When responding to the City’s appellate issues asserting that the district court erred by granting a
new trial, the Churches urge that the district court’s ruling was proper under Rule of Civil
Procedure 329. See Tex. R. Civ. P. 329. However, I believe that Rule 329, by its terms, does not
apply in circumstances like those present here. Although Rule 329 governs motions for new trial
for cases in which service of process is accomplished through publication and authorizes a
trial court to grant a motion for new trial filed “within two years after” a judgment is signed, the
Rule also explains that it applies to cases in which a “defendant has not appeared in person or
by attorney of his own selection.” See id. (emphasis added). Even though the Churches are no
doubt “interested parties” as that term is used in the EDJA, see Tex. Gov’t Code § 1205.041, I
am not convinced that the Churches qualify as defendants for the purpose of invoking Rule 329,
see Tex. R. Civ. P. 329. Moreover, the EDJA specifies that trial courts have jurisdiction over
interested parties to the same extent as if they had been “individually named and served,”
indicating that service by publication under the EDJA constitutes personal service. See Tex.
Gov’t Code § 1205.044. However, as set out above, Rule 329 applies when individuals do not
receive personal service and, therefore, would not seem to apply in the circumstances present
here. See Tex. R. Civ. P. 329.
3
Even if the language of Rule 329 could be read as applying here, I agree with the
City of Magnolia’s argument that applying Rule 329 to rulings under the EDJA is inconsistent
with the legislative scheme outlined above requiring that these types of cases be resolved as
expeditiously as possible, precluding challenges that could have been but were not presented
during the EDJA proceeding, and directing that cases in which no appeal is taken are final. See
Cities of Conroe, Magnolia, & Splendora v. Paxton, 559 S.W.3d 656, 664 (Tex. App.—Austin
2018) (noting “extraordinarily expedited process” created under EDJA), rev’d in part on other
grounds, 602 S.W.3d 444 (Tex. 2020). Therefore, the EDJA by its own terms would seem to
preclude applying Rule 329 in this case. See Tex. Gov’t Code § 1205.002(a).
In their appellees’ brief, the Churches also contend that regardless of whether
Rule 329 applies, the district court properly ordered a new trial because their due-process rights
were violated. More specifically, the Churches argue that a new trial was warranted because
they were not given individual notice of the bond validation hearing even though the City was
aware that they were persons “whose legally protected interests” were “directly affected by the
proceedings in question” and even though the City knew their names and addresses.1
1
As support for the proposition that service by publication was constitutionally
inadequate in this case, the Churches primarily rely on the following two cases: Mullane v.
Central Hanover Bank & Trust Co., 339 U.S. 306 (1950), and In re E.R., 385 S.W.3d 552 (Tex.
2012). Although the courts in both of those cases determined that service by publication was
inadequate, the circumstances in those cases differed significantly from those present here. See
Mullane, 339 U.S. at 307-10, 320 (concluding that service by publication for beneficiaries of
trusts who were known to trustee managing pooled investment account was inadequate where
trust company had notified by mail known beneficiaries when first investment was made); In re
E.R., 385 S.W.3d at 555, 566-67, 570 (determining in termination suit that serving parent by
publication violated parent’s due-process rights “when the State knew the mother’s identity, was
in regular contact with her, and had at least one in-person meeting with her after it sued to
terminate the legal rights to her children”).
4
When confronted with a similar question pertaining to the EDJA, one court has
explained that cases requiring “individual mail notice” typically “involve private rights to money
and to real property” as opposed to “the public interest in the bond validation proceeding at
issue” in that case. See Jackson v. Waller Indep. Sch. Dist., No. H-07-3086, 2008 WL 818330, at
*8 (S.D. Tex. March 24, 2008) (mem. op.); see also Oil States Energy Servs., LLC v. Greene’s
Energy Grp., LLC, 138 S. Ct. 1365, 1373 (2018) (explaining that public rights refer to matters
arising between government and others subject to its authority relating to performance of
constitutional functions of legislative or executive branches); Texas Ass’n of Long Distance Tel.
Cos. (TEXALTEL) v. Public Util. Comm’n, 798 S.W.2d 875, 881-82 (Tex. App.—Austin 1990,
writ denied) (explaining that rate-making power is legislative function). In light of this public
versus private distinction, the court concluded that “the publication notice under section
1205.043 of the EDJA was constitutionally sufficient.” Jackson, 2008 WL 818330, at *10; see
Oil States Energy Servs., 138 S. Ct. at 1373.
In light of the preceding, I would similarly conclude that service by publication
did not deprive the Churches of due process. Although the Churches contend that their claims
regarding the water rate pertain to their private rights to enforce their property-tax exemption, to
be free from discriminatory rates, and to avoid undue burdens on their religious exercise, I am
not persuaded by the framing of their issues that the dispute at issue in this case involves private,
as opposed to public, rights. Because I believe that this case involves public rights, I would
conclude that the notice at issue was constitutionally sufficient and, therefore, would not
conclude that the underlying judgment was void and subject to attack.
5
For these reasons, I respectfully cannot join the opinions authored by Chief
Justice Rose or Justice Triana and, accordingly, dissent from the Court’s opinion affirming the
district court’s order granting a new trial in this case.
__________________________________________
Thomas J. Baker, Justice
Before Chief Justice Rose, Justices Baker and Triana
Filed: December 18, 2020
6