source: Caselaw Access Project

author: MACK KIDD, Justice.

license: Public Domain

text:
    BEXAR METROPOLITAN WATER DISTRICT, Appellant, v. CITY OF BULVERDE, Texas; Guadalupe-Blanco River Authority; City of Boerne; and City of Fair Oaks Ranch, Appellees.
    No. 03-04-00367-CV.
    Court of Appeals of Texas, Austin.
    Nov. 18, 2004.
    Rehearing Overruled Jan. 12, 2005.

      Paul M. Terrill, Hazen & Terrill, E. Lee Parsley, E. Lee Parsley, P.C., Austin, for Appellant.
    Jonathan H. Hull, Reagan, Burrus, Dierksen, Lamon & Bluntzer, P.C., New Braunfels, for City of Boerne and City of Fair Oaks Ranch.
    Molly Cagle, David P. Blanke, Spencer F. Smith, Vinson & Elkins, LLP, Roger P. Nevóla, Law Offices of Roger P. Nevóla, Austin, for Guadalupe-Bianco River Authority.
    C. Robert Heath, Sydney W. Falk Jr., Bruce E. Wasinger, Bickerstaff, Heath, Smiley, Pollan, Kever & McDaniel, LLP, Austin, Frank J. Garza, Davidson & Troilo, P.C., San Antonio, for City of Bulverde, Texas.
    Before Justices KIDD, PATTERSON and PURYEAR.
   OPINION

MACK KIDD, Justice.

The City of Bulverde (“Bulverde”) and the Guadalupe-Bianco River Authority (“GBRA”) sought declaratory judgments in the Comal County District Court. They asked the trial court to determine Bexar Metropolitan Water District’s (“Bexar-Met”) boundaries, to determine if Bexar-Met can provide water-utility services outside its boundaries, and to determine whether BexarMet has the authority to expand its territory outside of the boundaries defined in BexarMet’s enabling act. In response, BexarMet filed a plea to the jurisdiction arguing that the district court did not have subject-matter jurisdiction over the controversy, in question. The district court denied BexarMet’s plea to the jurisdiction, and BexarMet appeals that decision. See Tex. Civ. Prac. & Rem.Code Ann. § 51.014(a) (West Supp.2004-05). On appeal, BexarMet contends that the Texas Water Code prohibits Bulverde and GBRA from contesting its boundaries, that Bul-verde and GBRA do not have standing to file the claims in question, that the Texas Commission on Environmental Quality (“the Commission”) has exclusive and primary jurisdiction over the claims in question, and that GBRA cannot bring a cause of action under the Uniform Declaratory Judgment Act (“UDJA”) because it does not qualify as a “person” entitled to bring the suit. We will affirm the district court’s denial of BexarMet’s plea to the jurisdiction.

FACTUAL AND PROCEDURAL BACKGROUND

Water districts are created by statute and can only exercise powers clearly given to them by the legislature. Tri-City Fresh Water Supply Dist. No. 2 of Harris County v. Mann, 135 Tex. 280, 142 S.W.2d 945, 948 (1940). The boundaries of water districts are defined by statute. See Harris County Water Control & Imp. Dist. No. 58 v. City of Houston, 357 S.W.2d 789, 796 (Tex.Civ.App.-Houston 1962, writ ref d n.r.e.).

Some water-district enabling acts provide that water districts may sell or distribute water only within their boundaries. See, e.g., Act of May 29, 1965, 59th Leg., R.S., ch. 557, § 2(a), 1965 Tex. Gen. Laws 1207, 1208 (amending Act of May 20, 1937, 45th Leg., R.S., ch. 454, § 2(a), 1937 Tex. Gen. Laws 1128, 1128) (District may “sell ... within the boundaries of the District”). Other enabling acts allow a water district to distribute or sell water within or without the district’s boundaries. See, e.g., Act of May 4, 1961, 57th Leg., R.S., ch. 114, § 5(f), 1961 Tex. Gen. Laws 217, 220 (District may “sell ... water within or without the boundaries of the district”).

In 1947, the Texas Attorney General released an opinion stating that a specific water district could not sell water outside of its boundaries because its enabling statute limited sale of water to within the district. Op. Tex. Att’y Gen. No. V-319 (1947). The attorney general concluded that if a district was not authorized to sell or distribute water outside of its boundaries, the legislature must have intended that the water only be sold or distributed within the water district’s boundaries. Id.

BexarMet was created in 1945 and was given the authority of a “governmental agency, a body politic and corporate, and a municipal corporation.” Act of May 9, 1945, 49th Leg., R.S., ch. 306, § 2, 1945 Tex. Gen. Laws 491, 492 (“BexarMet Act”). BexarMet’s original enabling act stated that BexarMet’s district was within Bexar County, Texas. Id. § 5, 1945 Tex. Gen. Laws at 494. The original enabling act allowed BexarMet to annex territory and expand its boundaries. Id. § 6, 1945 Tex. Gen. Laws at 496. In addition, Bexar-Met’s boundaries were extended automatically to any territory that was annexed into the City of San Antonio. Id. § 6a, 1945 Tex. Gen. Laws at 497.

On several occasions, BexarMet has expanded its territory to areas outside the territory defined in its original enabling act. However, rather than annexing territory as provided for in the original enabling act, BexarMet has, over the years, enlarged its territory by obtaining certificates of convenience and necessity (“CCNs”) from the Commission in order to serve the water needs of cities and rural areas throughout the state.

The controversy in question began in 2000 when BexarMet and Bulverde both filed applications with the Commission asking for a CCN to provide water service to part of southwestern Comal County. In its application, Bulverde informed the Commission that in order to fulfill its water service requirements under the CCN, it would be relying on an agreement with GBRA to provide Bulverde with water.

The competing applications of BexarMet and Bulverde were referred to the State Office of Administrative Hearings. The administrative law judge recommended that BexarMet’s CCN application be granted and Bulverde’s be denied. Bul-verde and GBRA objected to the proposal for decision, and the Commissioners reversed the decision of the administrative law judge and awarded CCN No. 12864 to Bulverde. BexarMet appealed the decision of the Commissioners to the Travis County District Court.

In 2003, after the Commissioners awarded the CCN to Bulverde, the legislature passed Senate Bill 1494, which amended BexarMet’s enabling act. Act of May 28, 2003,. 78th Leg., R.S., ch. 375, 2003 Tex. Gen. Laws 1593 (“BexarMet Amendment”) (amending BexarMet Act, 1945 Tex. Gen. Laws 491). The amendment added the words “within the District” to statutory language describing BexarMet’s ability to develop, transport, deliver, distribute, store, and treat water. BexarMet Amendment, § 2, 2003 Tex. Gen. Laws at 1593 (amending BexarMet Act § 3(a), 1945 Tex. Gen. Laws at 492). The amendment also added two new provisions that granted BexarMet new powers, but the language limited the authority to act to “within” BexarMet’s district. BexarMet Amendment, § 2, 2003 Tex. Gen. Laws at 1595. In addition, the amendment defined Bexar-Met’s boundaries. The boundaries included not only Bexar County but also the territory that had been certificated to Bex-arMet in prior CCNs issued by the Commission and described in CCN Nos. 10675, 12759, and 12760. BexarMet Amendment, § 3, 2003 Tex. Gen. Laws at 1596. When Senate Bill 1494 passed, CCN Nos. 10675, 12759, and 12760 identified areas in Bexar, Comal, Medina, and Atascosa counties as part of BexarMet’s territory.

Bulverde and GBRA assert that the addition of “within” to the enabling act provisions evidences an intention by the legislature to limit the activities of BexarMet to within its own territory. Bulverde and GBRA also insist that, after the amendment inserted within into BexarMet’s enabling act, BexarMet does not have the authority to provide water service to areas outside of its boundaries including the areas in Comal County that were certificated to Bulverde by CCN No. 12864. Finally, Bulverde and GBRA contend that the amendment limits BexarMet’s boundaries to those areas described in the amended enabling act and prevents BexarMet from expanding its boundaries.

In response, BexarMet asserts that the amendment to its enabling act does not prevent it from expanding its service areas or its boundaries through CCNs granted by the Commission. BexarMet concedes that the amendment repealed sections 6 and 6a of the original enabling act, which had given BexarMet the power to annex territory and had automatically extended BexarMet’s boundaries when San Antonio’s city limits were extended, but contends that the amendment does not prevent BexarMet from annexing territory through CCNs issued by the Commission. See BexarMet Amendment, § 5(b), 2003 Tex. Gen. Laws at 1596 (amending Bexar-Met Act, §§ 6, 6a, 1945 Tex. Gen. Laws at 496). As proof of this assertion, BexarMet points to a letter written by the sponsor of Senate Bill 1494 to the Commission’s executive director stating that Senate Bill 1494 repealed portions of BexarMet’s enabling act that were inconsistent with a federal court decision regarding voting rights in BexarMet elections, but it states that Senate Bill 1494 did not restrict BexarMet’s ability to expand its boundaries or obtain CCNs.

After the legislation was enacted, Bul-verde and GBRA filed suit in Comal County District Court in order to prevent Bex-arMet from expanding into Comal County. In their suit, Bulverde and GBRA asked for declaratory judgments regarding Bex-arMet’s statutory boundaries, BexarMet’s authority to annex territory outside its statutory boundaries, and BexarMet’s authority to provide water-utility services outside of its statutory boundaries. Specifically Bulverde and GBRA wanted the court to declare the following: (1) Bexar-Met’s boundaries include only the territory listed in its current enabling statute, (2) BexarMet does not have the authority to annex territory outside of its boundaries, (3) BexarMet cannot provide water-utility services to areas outside its boundaries including areas in Comal County not already awarded to BexarMet, and (4) Bul-verde, not BexarMet, has the exclusive right to provide water-utility service to the areas in Comal County listed in CCN No. 12864.

In response, BexarMet filed a motion to transfer venue to Travis County, a plea to the jurisdiction, and a plea in abatement. The district court denied all of BexarMet’s requests. BexarMet files this interlocutory appeal from the denial of its plea to the jurisdiction.

STANDARD OF REVIEW

A person may file an interlocutory appeal from either the granting or the denial of a plea to the jurisdiction brought by a governmental unit. Tex. Civ. Prac. & Rem.Code Ann. § 51.014(a)(8). A plea to the jurisdiction contests the trial court’s authority to adjudicate the subject matter of the cause of action. Texas Dep’t. of Transp. v. Jones, 8 S.W.3d 636, 638 (Tex.1999). In reviewing the grant or denial of a plea to the jurisdiction, we do not review the merits of the case. Chocolate Bayou Water Co. and Sand Supply v. Texas Natural Res. Conservation Com’n, 124 S.W.3d 844, 849 (Tex.App.-Austin 2003, pet. denied) (citing Rylander v. Caldwell, 23 S.W.3d 132, 135 (Tex.App.-Austin 2000, no pet.)).

Because the statute authorizing interlocutory appeals is a narrow exception to the general rule that only final judgments and orders are appealable, we must give it a strict construction. See City of Austin v. L.S. Ranch, Ltd., 970 S.W.2d 750, 753 (Tex.App.-Austin 1998, no pet.); America Online, Inc. v. Williams, 958 S.W.2d 268, 271 (Tex.App.-Houston [14th Dist.] 1997, no pet.); Tober v. Turner of Tex., Inc., 668 S.W.2d 831, 835 (Tex.App.-Austin 1984, no writ). Thus, we will limit our discussion to the narrow issue that is before us, the question of whether the trial court erred in denying BexarMet’s plea to the jurisdiction.

We review a district court’s ruling on a plea to the jurisdiction de novo. State ex rel. Dep’t. of Highways & Pub. Transp. v. Gonzalez, 82 S.W.3d 322, 327 (Tex.2002). Our task is to take the facts pled in the petitions as true and determine if subject-matter jurisdiction is present. City of Mission v. Cantu, 89 S.W.3d 795, 800 (Tex.App.-Corpus Christi 2002, no pet.). Unless the face of the petition affirmatively demonstrates a lack of jurisdiction, the allegations in the petition will be liberally construed in favor of jurisdiction. Beacon Nat’l Ins. Co. v. Montemayor, 86 S.W.3d 260, 266 (Tex.App.-Austin 2002, no pet.).

DISCUSSION

BexarMet contends that the Comal County court does not have jurisdiction to hear Bulverde’s and GBRA’s claims. On appeal, BexarMet raises the following claims: (1) only the attorney general, not Bulverde or GBRA, may file a suit contesting a water district’s boundaries; (2) Bul-verde and GBRA lack standing to file this lawsuit; (3) the Commission has primary or exclusive jurisdiction over the subject matter of this lawsuit; and (4) GBRA does not qualify as a person entitled to bring this suit under the UDJA. We will address BexarMet’s claims in order.

Only the Attorney General may File Suit

In its first issue on appeal, Bexar-Met contends that section 49.066 of the Texas Water Code prohibits Bulverde’s and GBRA’s suit because the provision prohibits' third-party challenges to a water district’s boundaries. See Tex. Water Code Ann. § 49.066 (West 2000). Bexar-Met asserts that challenges to a water district’s boundaries can only be brought by the attorney general in a quo warranto proceeding.

A writ of quo warranto is an ancient common-law writ that gave the king an action against a person who claimed or usurped any office, franchise, or liberty, to inquire by what authority that person supported the claim to hold office. State ex rel. City of Colleyville v. City of Hurst, 519 S.W.2d 698, 700 (Tex.Civ.App.-Fort Worth 1975, writ refd n.r.e.). In the modern context, the state may use a quo warranto action to challenge the authority to engage in certain practices specifically enumerated by statute. See Tex. Civ. Prac. & Rem. Code Ann. § 66.001 (West 1997). A quo warranto proceeding may be instituted by the attorney general or by a district or county attorney. See Tex. Const. art. IV, § 22; Tex. Civ. Prac. & Rem.Code Ann. § 66.002 (West 1997).

Section 49.066 states “no suit may be instituted in any court of this state contesting: (1) the validity of the creation and boundaries of a district created under this code.” Tex. Water Code Ann. § 49.066(d). However, the water code does allow the attorney general to file a suit contesting either the 'validity of the creation of a water district or the validity of the boundaries of a water district enacted by the legislature. BexarMet claims that the suit filed by Bulverde and GBRA impermissi-bly contests BexarMet’s boundaries. To support this assertion, BexarMet points to language in the trial court pleadings in which Bulverde and GBRA describe their suit as one involving a dispute over Bexar-Met’s boundaries. BexarMet also points to language in Bulverde’s and GBRA’s amended pleadings and motions that repeatedly refer to BexarMet’s boundaries.

However, we do not interpret section 49.066 to prohibit all third-party suits involving a water district’s boundaries. The third-party prohibition only applies to claims attacking the validity of a legislative act creating a water district’s boundaries. Id.; see Walling v. North Cent. Tex. Mun. Water Auth, 162 Tex. 527, 348 S.W.2d 532 (Tex.1961) (writ of quo warranto appropriate remedy when alleging statute not followed when establishing territory limits); La Salle County Water Improvement Dist. No. 1 v. Guinn, 40 S.W.2d 892 (Tex.Civ.App.-San Antonio 1931, writ ref'd) (writ of quo warranto required to contest legality of 85,000 acre water district reduced from 200,000 acres).

The third-party prohibition does not apply in this case because Bulverde and GBRA are not attacking the validity of BexarMet’s boundaries as defined by the legislature. Here, Bulverde and GBRA are asking the district court to determine what BexarMet’s boundaries are after Senate Bill 1494 amended BexarMet’s enabling statute. In addition, Bulverde and GBRA are seeking a court declaration determining whether BexarMet has the power to both expand its boundaries through a CCN and provide water-utility services outside its boundaries under BexarMet’s amended enabling act. Requesting a declaration regarding the location of a district’s boundaries and the district’s authority to provide service and expand its boundaries is not the same as challenging the validity of those boundaries. Such determinations are not prohibited by section 49.066.

Because section 49.066 of the Texas Water Code does not prohibit Bulverde and GBRA from filing their claims before the Comal County District Court, we overrule BexarMet’s first issue.

Standing

In its second issue on appeal, BexarMet urges that Bulverde and GBRA lack standing to file the suit in question for the following three reasons: (1) only the attorney general can file boundary contests; (2) competitors of BexarMet cannot file suit to limit BexarMet’s ability to act; and (3) Bulverde and GBRA do not have an underlying cause of action necessary to confer standing for a UD JA claim.

As for point number one, we have already explained that a quo warranto proceeding is not necessary to pursue Bul-verde’s and GBRA’s claims and that it is not necessary for the attorney general to file these claims because Bulverde and GBRA are not attacking the validity of the creation of BexarMet’s boundaries.

As for BexarMet’s second point, although there are cases suggesting that a competitor, without more, lacks standing to challenge the actions of its competitor, this prohibition does not apply here. See, e.g., English v. Landa Motor Lines, 166 S.W.2d 721, 723 (Tex.Civ.App.-Austin 1942, writ refd w.o.m.). BexarMet contends that, as competitors, Bulverde and GBRA may not challenge BexarMet’s actions because only parties interested in a corporation or the state may challenge a corporation’s actions. See Southwestern Pub. Serv. Co. v. Public Util. Comm’n, 578 S.W.2d 507, 513 (Tex.Civ.App.-Austin 1979, writ refd n.r.e.) (Southwestern, as a competitor, lacked justiciable interest to challenge competitors actions; “whether a corporation has acted in excess of its lawful powers can be raised only by a party interested in the corporation or in a direct proceeding brought by the state.”); Mulcahy v. Houston Steel Drum Co., 402 S.W.2d 817, 819-20 (Tex.Civ.App.-Austin 1966, no writ) (attorney general can file quo warranto action to prevent corporation from engaging in behavior prohibited by law).

However, in this case, GBRA is not merely a competitor of BexarMet. Bexar-Met has filed with the Commission a petition to compel raw water commitment from GBRA. The petition would require GBRA to provide BexarMet with 3,000 acre-feet of water per year. GBRA, therefore, has a larger stake in the outcome of this case than as a mere competitor.

In addition, Bulverde and GBRA are claiming that BexarMet is acting beyond the authority granted to it by statute. Bulverde and GBRA insist that after Senate Bill 1494 amended BexarMet’s enabling act, BexarMet lacks the authority to annex territory outside its boundaries and does not have the authority to provide or seek to provide retail water-utility service to areas outside its boundaries including the areas certificated to Bulverde.

If a water district acts beyond its statutory powers, its actions are void. Tri-City, 142 S.W.2d at 947; see also Mobil Oil Corp. v. Matagorda County Drainage Dist. No. 3, 597 S.W.2d 910, 913 (Tex.1980) (holding that drainage district’s attempt to annex lands was beyond its statutory power and therefore null). If a governmental authority’s actions are void, as opposed to voidable, the actions can be challenged by affected persons. See City of Irving v. Callaway, 363 S.W.2d 832, 834 (Tex.Civ.App.-Dallas 1962, writ ref'd n.r.e.) (quo warranto proceeding necessary where actions are voidable, but quo warranto proceeding not necessary and claim may be brought by private citizens affected by action when annexation ordinance attacked on grounds alleging action void).

Bulverde and GBRA seek declarations that actions undertaken by BexarMet are beyond the scope of its statutory authority and, therefore, void. In addition, both Bulverde and GBRA are parties affected by the actions of BexarMet. Bulverde and BexarMet are seeking to provide water-utility services in the same area, while GBRA could be forced to provide water to BexarMet. Because Bulverde and GBRA are alleging that BexarMet’s actions are beyond the scope of its statutory authority and because both are parties affected by the actions of BexarMet, Bulverde and GBRA have standing to seek a declaratory judgment.

In its third standing point, Bexar-Met contends that Bulverde and GBRA lack standing to bring suit against Bexar-Met because they do not have an underlying common-law, statutory, or constitutional cause of action. BexarMet asserts that the UDJA does not enlarge a court’s jurisdiction and that a claimant pursuing a declaratory judgment must have an underlying cause of action.

However, suits under the UDJA are not limited to cases where the parties have a cause of action separate and apart from the UDJA. City of Waco v. Texas Natural Res. Conservation Comm’n, 83 S.W.3d 169, 177 (Tex.App.-Austin 2002, pet. denied). The UDJA provides a basis for a claimant to obtain a declaration of rights, status, or other legal relations under a writing or statute. See Tex. Civ. Prac. & Rem.Code Ann. § 37.004 (West 1997); City of Waco, 83 S.W.3d at 177. The legislature intended the UDJA to be remedial, to settle and afford relief from uncertainty and insecurity with respect to rights, and to be liberally construed. Tex. Civ. Prac. & Rem.Code Ann. § 37.002 (West 1997); Bonham State Bank v. Beadle, 907 S.W.2d 465, 467 (Tex.1995); City of Waco, 83 S.W.3d at 177.

Declaratory-judgment actions are intended to determine the rights of parties when a controversy has arisen, before any wrong has actually been committed, and are preventative in nature. Montemayor v. City of San Antonio Fire Dept., 985 S.W.2d 549, 551 (Tex.App.-San Antonio 1998, pet. denied). Historically, challengers to improper governmental action have sought declaratory relief. Frasier v. Yanes, 9 S.W.3d 422, 427 (Tex.App.Austin 1999, no pet.); see Chenault v. Phillips, 914 S.W.2d 140, 141 (Tex.1996). A person seeking a declaratory judgment need not have incurred actual injury. City of Waco, 83 S.W.3d at 175; Texas Dept. of Banking v. Mount Olivet Cemetery Ass’n, 27 S.W.3d 276, 282 (Tex.App.-Austin 2000, pet. denied). The UDJA may be used to clarify the meaning of statutes. Frasier, 9 S.W.3d at 427. Courts have also issued declaratory judgments construing a statute before the statute is violated. See The Pea Picker, Inc. v. Reagan, 632 S.W.2d 674, 677 (Tex.App.-Tyler 1982, writ refd n.r.e.) (trial court had power to construe Open Meetings Act and determine whether notice must be given and when meeting is required to be open).

Bulverde and GBRA have standing under the UDJA and have the right to have the courts interpret BexarMet’s amended enabling act to determine what Bexar-Met’s boundaries are, whether BexarMet can expand its territory through CCNs, and whether BexarMet has the authority to provide water-utility service outside its boundaries. See Frasier, 9 S.W.3d at 427; Pea Picker, 632 S.W.2d at 677. The allegations of Bulverde and GBRA are sufficient to confer jurisdiction on the district court.

BexarMet also insists that boundary disputes cannot be litigated under the UDJA. See Martin v. Amerman, 133 S.W.3d 262, 267-68 (Tex.2004). However, as previously discussed, Bulverde and GBRA are not disputing the validity of BexarMet’s boundaries, and therefore, this prohibition does not deny Bulverde and GBRA standing. Because we have concluded that Bul-verde and GBRA have standing to file their claims, we overrule BexarMet’s second issue.

Whether the Commission has Exclusive or Primary Jurisdiction

In its next issue on appeal, BexarMet contends that the Commission has exclusive jurisdiction or primary jurisdiction over the issues raised in this appeal. An administrative agency has exclusive jurisdiction when the legislature gives the agency the sole authority to make an initial determination in a dispute. Subaru of Am., Inc. v. David McDavid Nissan, Inc., 84 S.W.3d 212, 221 (Tex.2002) (citing Cash Am. Int’l, Inc. v. Bennett, 35 S.W.3d 12, 15 (Tex.2000)). An agency has exclusive jurisdiction if there is a pervasive regulatory scheme that indicates the legislature wanted the regulatory process to be the exclusive manner of resolving problems the regulation addresses. Id. Statutory interpretation is used to determine if an administrative agency has exclusive jurisdiction. Id. In determining whether an agency has exclusive jurisdiction, an appellate court uses a de novo standard. Id. at 222.

BexarMet insists that the legislature created a pervasive regulatory scheme for managing surface water in Texas and gave the Commission exclusive jurisdiction to decide the issues raised in this case and that Bulverde and GBRA must exhaust all administrative remedies available to them before seeking judicial review. See id. at 221. BexarMet contends that because Bulverde and GBRA have not exhausted all administrative remedies available, the trial court does not have subject-matter jurisdiction to hear this case. See id. (“Typically, if an agency has exclusive jurisdiction, a party must exhaust all administrative remedies before seeking judicial review of the agency’s action,” citing Cash Am., 35 S.W.3d at 15).

However, the relevant issues in this case involve a determination of what Bexar-Met’s boundaries are, whether BexarMet may provide water-utility service outside its boundaries, and whether BexarMet may expand its territory through CCNs issued by the Commission now that Senate Bill 1494 has passed. Unlike other cases finding an agency has exclusive jurisdiction, the determination of these issues will depend on the construction of a statute.

Trial courts have general jurisdiction. Id. at 220. Unless a contrary-showing is made, trial courts presumably have subject matter jurisdiction over a dispute. Id. Administrative agencies, by contrast, are not presumed to have the authority to resolve a dispute and may only exercise powers that are given to them by statute by express and clear language. Id.

Courts have the authority to determine what a statute means. Amarillo Indep. Sch. Dist. v. Meno, 854 S.W.2d 950, 955 (Tex.App.-Austin 1993, writ denied). Statutory construction is a question of law and for the court to decide. Johnson v. City of Fort Worth, 774 S.W.2d 653, 656 (Tex.1989). Construing a statute is an inherently judicial function, and courts are not deprived of their jurisdiction unless a statute explicitly grants an administrative agency exclusive jurisdiction. Public Utils. Bd. of City of Brownsville v. Central Power & Light Co., 587 S.W.2d 782, 788 (Tex.Civ.App.-Corpus Christi 1979, writ ref'd n.r.e.).

In this case, there is no statute giving the Commission the exclusive authority to determine what a water district’s enabling statute means. The Comal County District Court is not deprived of jurisdiction to determine what BexarMet’s boundaries are under its amended enabling act, whether BexarMet may expand its territory by obtaining CCNs, and whether Bex-arMet may provide water services outside the boundaries established by its enabling statute.

BexarMet also asserts that the Commission has primary jurisdiction over the claims in question. Primary jurisdiction is a prudential doctrine. Subaru, 84 5.W.3d at 220. Primary jurisdiction occurs when both the courts and administrative agencies have the authority to make initial determinations in a dispute. Id. at 221. If a trial court and an administrative agency have the authority to decide an initial issue, trial courts should allow an administrative agency to make the decision when: (1) an agency has experts trained in handling the issue; and (2) great benefit is derived from an agency interpreting its laws, rules, and regulations. Id.

Statutory interpretation or construction is not something that needs to be left to the Commission to decide. The Commission has no expertise that is greater than the courts in determining what a statute means. The Commission has neither exclusive jurisdiction nor primary jurisdiction over the issues raised in this case. We overrule BexarMefs third issue on appeal.

Person under the UDJA

In its final claim of error, Bexar-Met contends that GBRA cannot bring a cause of action under the UDJA because it does not qualify as a person entitled to bring a UDJA claim. The UDJA creates a remedy for “persons ... whose rights, status, or other legal relations are affected by a statute, municipal ordinance, contract, or franchise.” Tex. Civ. Prac. & Rem.Code Ann. § 37.004(a) (West 1997).

BexarMet asserts that if the UDJA had not defined a “person” in its statute, the Code Construction Act’s definition of a “person” would apply. Because the Code Construction Act’s definition of a person includes governmental entities and political subdivisions of the state, BexarMet argues GBRA would be a “person” under the Code Construction Act. Tex. Gov’t Code Ann. § 311.005(2) (West 1998); see also City of LaPorte v. Barfield, 898 S.W.2d 288, 294 (Tex.1995) (under Code Construction Act, person includes governmental entities). However, BexarMet insists that the definition of a “person” under the UDJA is narrower than the definition given under the Code Construction Act and does not include upper level government entities like GBRA.

The definition of a person under the UDJA includes a “corporation of any character.” Tex. Civ. Prac. & Rem.Code Ann. § 37.001 (West 1997). GBRA’s enabling act declares that GBRA is “a governmental agency and body politic and corporate.” Act of Oct. 12, 1933, 43d Leg., 1st C.S., ch. 75, § 1, 1933 Tex. Gen. Laws 198, 198. Because GBRA is a corporation, it qualifies as a person under the UDJA. Therefore, GBRA has a cause of action under the UDJA, and we overrule BexarMet’s final issue on appeal.

CONCLUSION

Because we overrule all of BexarMet’s issues on appeal, we affirm the district court’s denial of BexarMet’s plea to the jurisdiction.

      . For convenience, we will refer to both the Commission and its predecessor, the Texas Natural Resource Conservation Commission, as the Commission.

      . BexarMet, through the CCN process, has expanded its service to areas in Atascosa, Comal, and Medina counties.

      . Section 100.001 of the Texas Civil Practice and Remedies Code includes agencies and water districts as part of the definition of governmental unit. Tex. Civ. Prac. & Rem. Code Ann. § 100.001 (West Supp.2004-05).

      . See Howell v. Texas Workers’ Comp. Comm’n, 143 S.W.3d 416, 435 (Tex.App.-Austin 2004, no pet.) (finding Workers' Compensation Commission had "sole authority to make an initial determination of a medical fee or a medical necessity dispute”); Burgess v. Gallery Model Homes, Inc., 101 S.W.3d 550, 558 (Tex.App.-Houston [1st Dist.] 2003, pet. denied) (holding that provisions of the tax code provide "the exclusive means of obtaining a refund on an improperly collected sales tax”).

      . See In re Entergy Corp., 142 S.W.3d 316, 322-23 (Tex.2004) (court found Public Utility Commission was given exclusive jurisdiction because Public Utility Regulatory Act stated its purpose was to "establish a comprehensive and adequate regulatory system" and stated "the Commission has exclusive original jurisdiction over the rates, operations, and services of an electric utility,” citing Tex. Util. Code Ann. §§ 31.001(a), 32.001(a) (West 1998)).

      . See Williams v. Houston Firemen’s Relief and Ret. Fund, 121 S.W.3d 415, 427 (Tex.App.-Houston [1st Dist.] 2003, no pet.) (statute gave agency power to interpret its organic statute, which gave agency exclusive jurisdiction); Subaru of Am., Inc. v. David McDavid Nissan, Inc., 84 S.W.3d 212, 223 (Tex.2002) (vehicle board has exclusive jurisdiction when statute said board had exclusive jurisdiction).


author: BOB PEMBERTON, Justice.

text:
    BUDDY GREGG MOTOR HOMES, INC.//Cross-Appellant, Marathon Coach, Inc., d/b/a Marathon Coach of Texas, Appellant, v. MOTOR VEHICLE BOARD OF The TEXAS DEPARTMENT OF TRANSPORTATION and Marathon Coach, Inc., d/b/a Marathon Coach of Texas//Cross-Appellees, Motor Vehicle Board of the Texas Department of Transportation and Buddy Gregg Motor Homes, Inc., Appellees.
    No. 03-03-00543-CV.
    Court of Appeals of Texas, Austin.
    Dec. 16, 2004.

      James A. Ellis Jr., Prescott W. Smith, Carrington, Coleman, Sloman & Blumen-thal, LLP, Dallas, for Buddy Gregg Motor Homes, Inc.
    Nancy Elizabeth Olinger, Asst. Atty. Gen., Austin, for Motor Vehicle Division of the Texas Department of Transportation.
    Carroll Martin, Steve McConnico, Scott, Douglass & McConnico, L.L.P., Susan G. White, David R. Sapp, Russell Harding, Sapp & White, P.C., Austin, for Marathon Coach, Inc. d/b/a Marathon Coach of Texas.
    Before Justices KIDD, B.A. SMITH and PEMBERTON.
   OPINION

BOB PEMBERTON, Justice.

As the Administrative Law Judge below described it, “This is a case about million-dollar buses — massive, opulent vehicles that begin as hollow shells and end as the earthbound equivalent of a corporate jet.” The issues on appeal concern, first, the decision of the Motor Vehicle Board of the Texas Department of Transportation that it had incorrectly licensed Marathon Coach of Texas, a corporation that transforms hollow bus shells into luxury motor coaches, and, second, what actions the Board was required to take against Marathon for having operated under the wrong licenses. Marathon contends that the Board erred in its reconsideration of its licensing determination and in permitting a competitor, Buddy Gregg Motor Homes, to participate in the proceedings before the Board. Buddy Gregg separately challenges the Board’s decision to grant Marathon twelve months to restructure its licenses, contending that the Board was obligated to assess civil penalties against Marathon or to issue a cease-and-desist order. Buddy Gregg also argues that the Board was required to make specific findings of fact and conclusions of law that Marathon violated the motor vehicle code. For the reasons stated below, we affirm the Board’s oi'der.

BACKGROUND

Because the dispute in this case arises within the framework of Texas’s motor vehicle regulatory system, we begin with an overview of the statutes regulating motor vehicle manufacture, distribution, and sale. See Tex. Oce.Code Ann. §§ 2301.001-.806 (West 2004). The overarching goal of this regulatory regime is to “ensure a sound system of distributing and selling motor vehicles” in our state. Id. § 2301.001. It defines several categories of businesses involved in the trade of motor vehicles and requires each type of business to obtain a corresponding license to conduct business in this state. See generally id. § 2301.002. These categories include “manufacturers” (persons who manufacture or assemble new motor vehicles), “dealers” (retail sellers of motor vehicles), or “franchised dealers” (dealers with a franchise agreement with a manufacturer of motor vehicles). See id. § 2301.002(7), (16), (19). A “franchised dealer” licensee receives a license “for the make of new motor vehicle being bought, sold or exchanged.” Id. § 2301.252(a)(1).

Any person who acts as a “converter” must also be licensed. A “converter” is a person who “before the retail sale of a motor vehicle: (A) assembles, installs, or affixes a body cab, or special equipment to a chassis; or (B) substantially adds, subtracts from, or modifies a previously assembled or manufactured motor vehicle other than a motor home.” Id. § 2301.002(6). A “conversion” occurs when a motor vehicle “has been substantially modified by a person other than the manufacturer or distributor of the chassis of the motor vehicle” and “has not been the subject of a retail sale.” Id. § 2301.002(5)(A), (B). Although “chassis” remains undefined in the code, a “chassis manufacturer” is defined as a “person who manufactures and produces the frame on which the body of a motor vehicle is mounted.” Id. § 2301.002(4). For these purposes, the make of a conversion is “that of the chassis manufacturer.” Id. § 2301.252(b)(1).

The legislature requires a person to obtain the appropriate license from the Board before engaging in the business activities corresponding to each definition. Id. §§ 2301.251(a), .252-.254. Licenses are valid for one year. Id. §§ 2301.301, .303. The Board must measure each license application against statutory factors. See id. §§ 2301.257 (information required in dealer’s license application), .258 (general requirements for application for manufacturer’s, distributor’s, converter’s, or representative’s license), .259 (manufacturer’s license), .260 (distributor’s license), .261 (vehicle lessor’s license), .262 (vehicle lease facilitator’s license).

The legislature has also regulated the business conduct of each licensee category. For dealers, the code imposes various consumer-protection mandates, see generally id. §§ 2301.351-.352, .354, but also protects dealers from market entry by potentially competing dealers. See, e.g., id. § 2301.257 (licensing requirements). For example, the Board may deny an application to establish a dealership if, following a protest, the applicant fails to establish “good cause” for establishing the dealership, taking into account (1) whether the manufacturer or distributor of the same line-make of new motor vehicle “is being adequately represented as to sales and service”; (2) whether the protesting franchised dealer representing the same line-make is in substantial compliance with the dealer’s franchise agreement; (3) “the desirability of a competitive marketplace”; (4) “any harm to the protesting franchised dealer”; and (5) “the public interest.” Id. § 2301.652(a); see also BMW of N. Am., LLC v. Motor Vehicle Bd., 115 S.W.3d 722, 724-25 (Tex.App.-Austin 2008, pet. denied). Importantly, the legislature has prohibited manufacturers from acting as dealers and from owning or controlling an interest in a dealership. Tex. Occ.Code Ann. § 2301.476. In the industry, this is known as a prohibition on vertical integration. The legislature has not prohibited vertical integration by converters.

To summarize the findings of fact made by the ALJ after receiving evidence, Marathon produces luxury motor coaches that contain such amenities as living and sleeping areas, kitchens equipped with refrigerators and cooking facilities, and bathrooms with running water. Marathon purchases coach “shells” from Prevost Car, Inc., for $300,000 to $470,000 each. These shells are operationally functional, and each of their interiors comes equipped with a driver’s seat, steering wheel, and a full set of dashboard instruments. Otherwise, the passenger compartment is completely empty. Delivery from Prevost to Marathon is made by driving the unit from the Prevost manufacturing facility in Quebec to Marathon’s Oregon facility. At that point, Marathon installs luxury interiors and amenities into the shells, often customizing them to a customer’s specifications. The customization process typically takes three to five months and can add more than $1 million in value to the vehicle. The finished coaches retail from between $1.3 million and $1.7 million. Marathon then sells the coaches to purchasers nationwide through its retail dealerships. Before March 2002, Marathon had two retail dealerships, one in Oregon and one in Florida.'

The present dispute arises from Marathon’s efforts to obtain the necessary licenses to open a retail dealership to sell and service its coaches in the Dallas area. Starting in 1997, Marathon had wanted to open a retail and service facility in Texas. In 2000, it began to explore the possibility of obtaining a Texas dealer’s license. It recognized that, because of the statutory prohibition on vertical integration, it could not receive a dealer’s license if the Board classified it as a manufacturer of its coaches. However, it could obtain that license if the Board were to classify it as a converter of the coaches. Thus, it initiated a series of conversations with Board staff concerning its operations and the work it performs on the coaches in order to assure the Board staff that a converter’s license would be appropriate. After consultation, the director of licensing for the Board issued a non-binding informal opinion advising Marathon that it was a converter and should be licensed accordingly. See 16 Tex. Admin.Code § 101.4 (2004). Marathon thus applied for both a converter’s license and a franchised dealer’s license (as a Prevost dealer), which the Board issued in January 2002. Marathon began operating under its licenses in March.

Immediately before it began operation, Marathon issued a press release announcing the opening of its “factory owned” sales and service facility in Grand Prairie. The release noted that Marathon’s facility was located on a 4.3-acre lot, paved for use as a coach display area and for customer coach parking, and on which was constructed a’-12,500 square foot building to house its “Texas sales and service staff.” It also installed electrical “hookups” for customer’s coaches.

Buddy Gregg, a motor home dealer in Lewisville that sells motor homes manufactured by Monaco Corporation and Country Coach, Inc., saw the press release and complained to the Board that Marathon was not a “converter” but a “motor home manufacturer,” and therefore should not be allowed to operate a dealership in Texas. Buddy Gregg first wrote to the Board on March 19 advising of its concerns and that it believed “these matters warrant an investigation and subsequent action by the Board.” Two days later, it requested that the Board issue a cease and desist or other injunctive order to prevent Marathon from opening its facility. It added that Buddy Gregg’s Lewisville location was “in close proximity” to the proposed Marathon facility and that, if the Board permitted Marathon to open a competing factory-owned sales and service facility, Buddy Gregg’s business would be irreparably harmed.

The Board declined this request and explained that it had previously reviewed Marathon’s licensing status and the other issues Buddy Gregg had raised. It advised Buddy Gregg, however, that Buddy Gregg could challenge the issuance of Marathon’s converter’s license and franchise dealer’s license “by filing and prosecuting an official complaint with the [Board].” Buddy Gregg replied with a letter re-urging its arguments, purporting to initiate a “formal contest of a licensing matter,” and submitted a $200 “filing fee.” See Tex. Occ.Code Ann. § 2301.712(a)(2).

Relying, in part, on its general enforcement powers, the Board set the matter on a contested case docket for hearing before an ALJ. See Tex. Occ.Code Ann. § 2301.703. It communicated to Buddy Gregg and to Marathon that it would consider only three questions in the proceeding: (i) whether Marathon products are motor homes or conversions; (ii) whether the Board issued Marathon its dealer and converter licenses in error; and (in) whether the Board should impose sanctions and penalties, as now provided for in sections 2301.651 to 2301.654, section 2301.153, and sections 2301.801 to 2301.802 of the occupations code. It also imposed a statutory stay. See id. § 2301.803. Marathon then unsuccessfully challenged the Board’s jurisdiction and Buddy Gregg’s standing to bring the complaint. See id. § 2301.652(b). After a contested hearing, the ALJ made findings of fact, including a finding that Marathon had sold three coaches by the time of the hearing. The ALJ also made the following conclusions of law:

1. Disposition of this case is a matter within the jurisdiction of the Motor Vehicle Board.
2. The Prevost coach shells delivered to Marathon’s Oregon plant are motor vehicles.
3. Marathon is not a motor home manufacturer.
4. Marathon has been lawfully licensed as a motor vehicle converter.
5. Marathon has been lawfully licensed as a franchised dealer.
6. The complaint in this docket should be dismissed.

(internal citations omitted) (Emphasis added). The Board, in an order joined by three of its five members, rejected Conclusions of Law 2, 4, 5 and 6; modified 3 to read “Marathon is a motor home manufacturer”; and ordered that Marathon “has up to 12 months from the date this order is final to restructure its licenses in accordance with the above findings and conclusions.” (emphasis added).

Both Marathon and Buddy Gregg filed motions for rehearing, each of which the Board overruled on June 6, 2003. Both parties then appealed the Board’s decision to the district court. See Tex. Occ.Code Ann § 2301.751(a)(1). The district court consolidated the two causes, and Buddy Gregg removed the consolidated case directly to this Court. See id. § 2301.751(b). We now consider this appeal from the Board’s final order. See id.

DISCUSSION

On appeal, Buddy Gregg presents five issues. It urges that the Board lacked legal authority to grant Marathon twelve months to restructure its licenses and in failing to give reasons for granting that twelve-month window; and that the Board erred in failing to issue a cease-and-desist order, in failing to bring suit against Marathon, and in failing to assess civil penalties. It also asserts that the Board'was required to make specific findings of fact and conclusions of law that Marathon violated provisions of the motor vehicle code. Buddy Gregg contends that the Board is required to make these findings and conclusions pursuant to the “hybrid claims resolution process” described by the supreme court in Subaru of America, Inc. v. David McDavid Nissan, Inc., 84 S.W.3d 212, 222-26 (Tex.2002).

On cross-appeal, Marathon presents four issues in which it argues that the Board erred in applying the statutory definition of motor home manufacturer, that the Board’s classification of Marathon as a motor home manufacturer is not supported by substantial evidence, that the Board lacked subject-matter jurisdiction to review the issued licenses because Buddy Gregg lacked standing to initiate a contested case hearing on Marathon’s licenses, and that Buddy Gregg lacks standing to seek judicial review of the Board’s order. We will first address Marathon’s arguments and will then turn to those of Buddy Gregg.

Review of the Board’s decision

In its first two issues, Marathon argues that the Board erred in classifying it as a “motor home manufacturer,” thereby triggering the statutory prohibitions against vertical integration. Specifically, in its first issue, Marathon argues that the Board’s interpretation of “converter” and “motor home manufacturer” conflict with the statutory definitions. Thus, it urges us to review the Board’s decision de novo, and it argues that we must reverse the order of the Board as a result. In its second issue, Marathon argues that, even if the substantial-evidence rule controls in this case, the Board’s decision is not supported by substantial evidence. Because we are not bound by erroneous legal conclusions when conducting a substantial-evidence review, we will consider both issues together. See Tex. Gov’t Code Ann. § 2001.174 (West 2000); H. G. Sledge v. Prospective Inv. & Trading, 36 S.W.3d 597, 602 (Tex.App.-Austin 2000, pet. denied).

Construction of a statute by an agency charged with its enforcement is entitled to serious consideration, as long as the construction is reasonable and does not contradict the plain language of the statute itself. Tarrant Appraisal Dist. v. Moore, 845 S.W.2d 820, 823 (Tex.1993); Steering Comms. for Cities v. Public Util. Comm’n, 42 S.W.3d 296, 300 (Tex.App.-Austin 2001, no pet.). This is particularly true when the statute involves a complex subject matter. Steering Comms. for Cities, 42 S.W.3d at 300. Courts, however, “do not defer to administrative interpretation in regard to questions which do not lie within administrative expertise, or deal with a nontechnical question of law.” Rylander v. Fisher Controls Int'l, Inc., 45 S.W.3d 291, 302 (Tex.App.-Austin 2001, no pet.). When an issue is a mixed question of law and fact, we look to the factual grounds that formed the basis of the Board’s decision. See Railroad Comm’n v. Broussard, 755 S.W.2d 951, 955 (Tex.App.-Austin 1988, pet. denied). By statute, we conduct this review under the substantial-evidence rule. Tex. Occ.Code Ann. § 2301.751.

Thus, we review the Board’s legal conclusions for errors of law and its findings of fact for support by substantial evidence. Tex. Gov’t Code Ann. § 2001.174; H.G. Sledge, 36 S.W.3d at 602. Our review ensures that an agency does not act arbitrarily or without regard to the facts. Tex. Gov’t Code Ann. § 2001.174(f). We determine if the evidence in its entirety is sufficient that reasonable minds could have reached the conclusion the agency did. Texas State Bd. of Dental Exam’rs v. Sizemore, 759 S.W.2d 114, 116 (Tex.1988). This is a reasonableness test or a rational-basis test. State v. Public Util. Comm’n, 883 S.W.2d 190, 203 (Tex.1994). We are to consider the reasonableness of the Board’s order rather than the correctness of the order. Id. Although substantial evidence is more than a mere scintilla, the evidence in the record may actually preponderate against the decision of the Board and nonetheless amount to substantial evidence. Id. at 204. The findings, inferences, conclusions, and decisions of the Board are presumed to be supported by substantial evidence, and the burden is on the contestant to prove otherwise. Id.; Imperial Am. Res. Fund, Inc. v. Railroad Comm’n, 557 S.W.2d 280, 286 (Tex.1977).

Under the code, a “motor home” is:
a motor vehicle which is designed to provide temporary living quarters and that:
(A) is built on a motor vehicle chassis as an integral part of or a permanent attachment to the chassis; and
(B) contains at least four of the following independent life support systems that are permanently installed and designed to be removed only for repair or replacement and meets the standard of the American National Standards Institute, Standards for Recreational Vehicles:
(i) a cooking facility with an on-board fuel source;
(ii) a gas or electric refrigerator;
(iii) a toilet with exterior evacuation;
(iv) a heating or air conditioning system with an on-board power or fuel source separate from the vehicle engine;
(v) a potable water supply system that includes at least a sink, a faucet, and a water tank with an exterior service supply connection;
(vi) a 110-112 volt electric power supply-

Tex. Occ.Code Ann. § 2801.002(21). The code defines “motor home manufacturer,” in turn, as “a person other than the manufacturer of the chassis of a motor vehicle who, prior to the retail sale of the motor vehicle, performs modifications on the chassis that result in the finished product being classified as a motor home.” Id. § 2301.002(22). A “converter,” on the other hand, is “a person who before the retail sale of a motor vehicle: (A) assembles, installs, or affixes a body, cab, or special equipment to a chassis; or (B) substantially adds, subtracts from, or modifies a previously assembled or manufactured motor vehicle other than a motor home, ambulance, or fire-fighting vehicle.” Id. § 2301.002(6). A “conversion,” then, is “a motor vehicle, other than a motor home, ambulance, or fire-fighting vehicle, that: (A) has been substantially modified by a person other than the manufacturer or distributor of the chassis of the motor vehicle; and (B) has not been the subject of a retail sale.” Id. § 2301.002(5). Finally, a “motor vehicle” has “as its primary purpose the transport of a person or persons, or property.” Id. § 2301.002(23).

Marathon suggests that it cannot be considered a “motor home manufacturer” because it performs its processes on operational motor vehicles — the bus shells — not on mere chassises. However, the essence of the applicable code definitions is that the independent life support systems that characterize a motor home must be installed or built on the chassis of the motor vehicle, not, as Marathon suggests, that the process originates solely with a chassis. See id. §§ 2301.002(23), (24). Significantly, nothing in the statutory definitions prohibits the Board from deciding that a motor home manufacturer might initiate its manufacturing process on an already operational motor vehicle as long as the modifications are made on the chassis of that vehicle. In fact, the statutory definitions contemplate as much, explicitly excluding a “motor home” from the definition of a “conversion.” See id. § 2301.002(5).

Turning to the facts of this case, we note that Marathon performs work on an operational coach. The interior contains a driver’s seat, a steering wheel, and a full dashboard. The coach may be driven — in fact, delivery from Canada to Marathon is .by driver. However, it is also undisputed that the shells that Marathon buys are manufactured with the purpose of ultimately becoming motor coaches, and the shells themselves do not have as their primary purpose the transportation of a person, persons, or property. Rather, their primary purpose is to be a component of a motor coach. See id. § 2301.002(23)(A). The interior of the coaches delivered to Marathon at its plant are empty save a driver’s seat, steering wheel and dash board instruments. Marathon designs and installs the interiors into the shells and at that time installs the life support systems that make the finished products “motor homes” under the statutory definition. This process adds the bulk of the value to the finished product — Marathon buys the shells for prices ranging from $300,000 to $470,000 and sells the finished motor homes for $1,300,000 to $1,700,000 each. As well, the life support systems that Marathon builds inside the Prevost coach shells are permanent fixtures.

Given this record, we find that the Board had substantial evidence on which to base its conclusion that Marathon is a manufacturer of motor homes. See Public Util. Comm’n, 883 S.W.2d at 203. We cannot hold in light of all the evidence that the Board’s conclusion was unreasonable or irrational. See id. This is exactly the kind of technical issue that should be left to the discretion of the Board. See Steering Comms. for Cities, 42 S.W.3d at 300. We overrule Marathon’s first and second issues.

Board’s jurisdiction

We now turn to Marathon’s third issue, in which it argued that the Board lacked subject-matter jurisdiction to review Marathon’s licenses based on Buddy Gregg’s complaint because Buddy Gregg lacked standing. Administrative agencies are created by statute and have no inherent authority. Subaru of America, 84 S.W.3d at 220; Public Util. Comm’n v. GTE-Southwest, Inc., 901 S.W.2d 401, 406 (Tex.1995); Sexton v. Mount Olivet Cemetery Ass’n, 720 S.W.2d 129, 137 (Tex.App.-Austin 1986, writ ref d n.r.e.). Therefore, agencies may only exercise those specific powers that the law confers in clear and express language. Subaru of America, 84 S.W.3d at 220; Texas Bldg. Owners & Managers Ass’n v. Public Util. Comm’n, 110 S.W.3d 524, 531 (Tex.App.-Austin 2003, pet. denied). An agency may also exercise powers necessarily implied from the statutory authority granted or the duties expressly given or imposed. Public Util. Comm’n v. City Pub. Serv. Bd., 53 S.W.3d 310, 316 (Tex.2001); Texas Bldg. Owners & Managers Ass’n, 110 S.W.3d at 532. However, the agency may not, on a theory of necessary implication from a specific power, function, or duty expressly delegated, exercise a new or additional power or a power that contradicts the statute. Sexton, 720 S.W.2d at 137-38. Nor may the agency exercise a new power solely for administrative purposes of expediency. Id. at 138.

When considering the scope of an agency’s delegated power, we must examine the language of the statute. See Texas Bldg. Owners & Managers Ass’n, 110 S.W.3d at 531-32. Statutory construction is a question of law, which we review de novo. Johnson v. City of Fort Worth, 774 S.W.2d 653, 656 (Tex.1989). The primary rule of statutory interpretation is to look at the intent of the legislature and construe the statute so as to give effect to that intent. Fleming Foods, 6 S.W.3d at 284; Union Bankers Ins. Co. v. Shelton, 889 S.W.2d 278, 280 (Tex.1994). Texas courts are to consider, among other factors, the language of the statute, legislative history, the nature and object to be obtained, and the consequences that would follow from alternative constructions, even when a statute is not ambiguous on its face. Tex. Gov’t Code Ann. § 311.023 (West 1998); Helena Chem. Co. v. Wilkins, 47 S.W.3d 486, 493 (Tex.2001); Union Bankers Ins. Co., 889 S.W.2d at 280.

The Board has exclusive original jurisdiction to regulate aspects of the distribution, sale, or lease of motor vehicles that are governed by the code. Tex. Occ.Code Ann. § 2301.151(a). It may take any action designated or implied in the code, including any action “necessary or convenient to the exercise” of its delegated power and jurisdiction. Id. § 2301.151(b). In particular, it may receive and act on written complaints. See id. § 2301.202-.203.

The Board has subject-matter jurisdiction to address an issue when exercising its own enforcement powers. See American Honda, 47 S.W.3d at 624. In American Honda, we considered a situation where the sole basis for the Board’s assertion of jurisdiction was a protest filed by a private party. Id. at 617-18, 624-25. We held that the Board lacked jurisdiction where the legislature revoked the statutory basis for the private party’s protest. Id. We specifically noted that the ALJ in that case found that the Board did not give notice of its investigation or intent to impose civil penalties and that the matter had not been referred to the enforcement authorities. Id. at 625-26. In contrast to American Honda, the Board’s notice of hearing in this case specifically referred to its enforcement powers and noted that civil penalties and cease-and-desist orders were among the possible outcomes. See id. at 625-26.

We also note that we decided American Honda before the legislature granted the Board exclusive jurisdiction over code-related matters. Compare Tex. Occ.Code Ann. § 2301.151, with Act of May 22, 1997, 75th Leg., R.S., ch. 639, § 11, 1997 Tex. Gen. Laws 2185, 2191 (former Tex.Rev.Civ. Stat. art. 4413(36), § 3.01(a)). Furthermore, the legislature has granted the Board wide discretion to fashion the procedural mechanisms through which it exercises its jurisdiction. See Tex. Occ.Code Ann. § 2301.153(1) (power to investigate and conduct proceedings, investigations and hearings), (7) (power to “specify and govern appearance, practice, and procedures before the board”). In light of these broad delegations of power and the wording of the hearing notice in this case, we conclude that the Board had subject-matter jurisdiction through its enforcement powers to determine Marathon’s status as a converter or manufacturer and that it had discretion to permit Buddy Gregg to participate in the proceedings. We overrule Marathon’s third issue.

Buddy Gregg’s issues

We begin with Buddy Gregg’s third and fourth issues, in which it asserts that the Board acted outside its authority in granting Marathon twelve months to restructure its licenses and in failing to give reasons in its order for doing so.

The Board has exclusive, original jurisdiction to regulate the marketing of motor vehicles. Pretzer v. Motor Vehicle Bd., 138 S.W.3d 908, 910 (Tex.2004); Tex. Occ.Code Ann. § 2301.151(a). To that end, the legislature has given the Board broad powers. Pretzer, 138 S.W.3d at 910; Tex. Occ.Code Ann. § 2301.151(b), .152. In determining whether an agency abuses its discretion by a particular act or omission, a reviewing court must ascertain whether the agency based its decision on legally irrelevant factors or failed to consider legally relevant factors. See Kawasaki Motors Corp. v. Texas Motor Vehicle Comm’n, 855 S.W.2d 792, 795 (Tex.App.-Austin 1993, no writ); Consumers Water, Inc. v. Public Util. Comm’n, 774 S.W.2d 719, 721 (Tex.App.-Austin 1989, no writ).

In this case, Marathon first approached Board staff to solicit advice concerning which licenses would most appropriately correspond to its business plan. After presenting much information to Board staff, including a detailed accounting of the work it planned to perform on the coaches and bringing a completed coach to Austin for inspection by Board staff, Marathon received an informal opinion from the staff indicating that the work it would perform on the coaches would be conversions rather than manufacturing operations. Marathon then applied for and received a converter’s license. As a result of the Board’s enforcement proceedings, the ALJ reviewed a large amount of evidence and agreed that Marathon converted Prevost coaches. On review, the Board agreed with the ALJ’s factual findings but found instead that Marathon manufactured the coaches. Even the Board, however, was not in full agreement — only three of the five Board members voted to reject the ALJ’s determination. Given the Board’s disagreement with the ALJ and with its own staff, and given the division within the Board itself, the proper characterization of Marathon’s operations was evidently a difficult question. Noting Marathon’s apparently good-faith efforts to obtain the correct license and the close nature of the proper determination in this case, we find that the Board acted within its authority in fashioning a remedy that included granting Marathon twelve months to restructure its licenses. In addition, because the Board adopted the ALJ’s extensive factual findings, we decide that the Board offered more than sufficient reasons for its decision. We overrule Buddy Gregg’s third and fourth issues.

In its fifth issue, Buddy Gregg insists that the Board erred in failing to issue a cease-and-desist order and in failing to assess civil penalties against Marathon. See Tex. Occ.Code Ann. §§ 2301.801, .802. However, Marathon was operating under a valid license before Buddy Gregg presented its complaint to the Board. In addition, we have found that the Board acted appropriately in giving Marathon twelve months to restructure its licenses. In other words, the Board has affirmed that Marathon may function under its issued licenses during the twelve-month restructuring period. By operating under those licenses during the twelve-month period, Marathon is not violating the Board’s order. See id. §§ 2301.801, .802. Therefore, civil penalties or a cease-and-desist order would be inappropriate under the terms of the Board’s order. See id. §§ 2301.801, .802. We overrule Buddy Gregg’s fifth issue.

In its first two issues, Buddy Gregg complains that the Board erred by failing to make required findings of fact and conclusions of law.

An order of the Board must include a separate finding of fact with respect to each specific issue the Board is required by law to consider and must set forth additional findings on which the decision or order is based. Tex. Occ.Code Ann. § 2301.711(a)(1), (2). Findings are not required on matters on which the Board did not rely for support of its ultimate decision. Meier Infiniti Co. v. Motor Vehicle Bd., 918 S.W.2d 95, 99 (Tex.App.-Austin 1996, writ denied). In addition, the Board has latitude in how it states findings and conclusions:

There is no precise form for an agency’s articulation of underlying facts, and courts will not subject an agency’s order to some “hypertechnical standard of review.” What is important is that the findings serve the overall purpose evi- . dent in the requirement that they be made — i.e., they should inform the parties and the courts of the basis for the agency’s decision so that the parties may intelligently prepare an appeal and so that the courts may properly exercise their function of review. We have also articulated the following more specific guidelines for underlying findings: (1) they must be more than mere recitals of testimony; (2) they should be stated as the agency’s findings; and (3) they should relate to the ultimate statutory findings.

Goeke v. Houston Lighting & Power Co., 797 S.W.2d 12, 15 (Tex.1990) (citations omitted); see also Gene Hamon Ford, 997 S.W.2d 298, 311 (Tex.App.-Austin 1999, pet. denied).

Buddy Gregg contends on appeal that the Board is independently obligated to make its requested findings in- a manner that will serve as the predicate for a private suit for damages, as contemplated by Subaru of America v. David McDavid Nissan. See 84 S.W.3d 212, 223-25 (Tex.2002). However, Buddy Gregg did not argue to the Board that it was seeking findings for this purpose or that Subaru imposed any obligations on the Board to make these findings. A party may not raise an issue for the first time on appeal. Dreyer v. Greene, 871 S.W.2d 697, 698 (Tex.1993). When an agency or board has not had the opportunity to consider claims or arguments, they are waived on appeal. See Amaral-Whittenberg v. Alanis, 123 S.W.3d 714, 719 n. 4 (Tex.App.-Austin 2003, no pet.). Because the Board never had the opportunity to consider the requirements of Subaru, Buddy Gregg has waived its arguments concerning whatever findings that case might require.

In addition, Buddy Gregg does not claim that the Board’s findings are mere recitals of testimony or that they are-unrelated to the statutory elements of good cause; it argues only that the Board did not draft conclusions finding statutory violations in Buddy Gregg’s requested language. Under the standard set out in Goeke, Buddy Gregg’s attack on the Board’s findings must fail. The Board’s findings clearly inform the parties and courts of its determination and gives reasons for its conclusion. We overrule Buddy Gregg’s first and second issues.

CONCLUSION

We have decided that the Board had jurisdiction in this case under its general enforcement powers to address the licenses it issued to Marathon. We have also decided that the Board did not err either in granting Marathon twelve months to restructure its licenses or in refusing to assess civil penalties or issue a cease-and-desist order and that the Board’s decision that Marathon is a motor home manufacturer is supported by substantial evidence. Finally, we have found that the Board’s order satisfied applicable requirements regarding findings and conclusions. We affirm the Board’s order.

      . The Board adopted the ALJ’s fact findings in their entirety.

      . The press release noted that the Marathon facility would be located less than five miles from an existing Prevost service facility.

      . Sections 2301.651 to 2301.654 permit the Board to revoke, suspend, and deny licenses; sections 2301.801 to 2301.802 allow the Board to assess civil penalties and to issue cease and desist orders; and section 2301.153 grants the Board a broad range of enforcement powers, including those already described. Tex. Occ.Code Ann. §§ 2301.153, .651-654, .801-.802.

      . In a signed but undated stipulation of facts that is in the record as part of a "Supplemental Administrative Record,” Marathon stated that it "intends to continue operating its Texas dealership in Grand Prairie, Texas, so long as it maintains a valid franchised new motor vehicle license” issued by the Board.

      . Although Marathon argues extensively in its brief that we ought to apply a de novo standard of review in this case, under the substantial-evidence rule we are not bound by erroneous legal conclusions. For this reason, and because we are to give agencies due deference in interpreting their own statutes, we see little practical difference between a de novo statutory-construction analysis and substantial-evidence review in this case.

      . In its third issue, Marathon also asserts that Buddy Gregg lacked standing to challenge Marathon's licenses. Because we have determined that the Board properly exercised jurisdiction under its general enforcement powers, we need not address this argument.

      . There is no evidence that Marathon acted in bad faith in applying for the converter's license. As well, Buddy Gregg does not complain that Marathon acted in bad faith or that it misled the Board’s staff.

      . In particular, Buddy Gregg requested the following findings of fact:
      a. Since March 25, 2002, Marathon has been acting continuously in the capacity of a dealer of Marathon make motor homes in Grand Prairie, Texas.
      b. Marathon intends to continue acting in the capacity of a motor home dealer in Texas.
      c. Since March 25, 2002, Marathon has been acting continuously as a motor home manufacturer, without having any Texas license to do so.
      d. Since March 25, 2002, Marathon has been acting continuously in the capacity as a motor home dealer in Grand Prairie, Texas, without having any motor home dealer's license.
      It also sought the following conclusions of law:
      a. Since March 25, 2002, Marathon’s intentional actions have been in violation of Code Section [2301.476].
      b. Unless stopped by order, Marathon will continue to act in the capacity of a motor home dealer in Texas in violation of Code Section [2301.476].
      c. Since March 25, 2002, Marathon’s intentional actions have been in violation of Code Sections [2301.251 and 2301.252],
      d. Unless stopped by order, Marathon will continue to operate without a lawful license, in violation of Code Sections [2301.251 and 2301.252],


author: PEMBERTON, Justice.

text:
    In re Bryan JAMAIL.
    No. 03-04-00037-CV.
    Court of Appeals of Texas, Austin.
    Dec. 16, 2004.

      Brian W. Bishop, Gray & Becker, P.C., Austin, for Relator.
    Henry J. Novak, Austin, for Respondent.
    Before Justices KIDD, B.A. SMITH and PEMBERTON.
   OPINION

PEMBERTON, Justice.

In this original proceeding, we determine whether the district court abused its discretion in denying Jamah’s motion to cancel a lis pendens filed against three lots in a subdivision he owns. We conditionally grant a writ of mandamus directing the district court to cancel the lis pendens.

BACKGROUND

In late 1998, Bryan Jamail purchased thirty acres off Highway 290 in southwestern Travis County. In June 2001, he entered into a contract to sell a section of the property (“Section 4”), subdivided into twenty-seven lots, to PIB. Upon Jamail’s “substantial completion” of contract terms, PIB was to purchase all the lots constituting Section 4 over a period of time at a price of $70,000 each. If Jamail failed to “substantially complete” the subdivision improvements by September 1, 2001, PIB was allowed to unilaterally terminate the contract. If not “substantially complete” by March 15, 2002, Jamail could unilaterally terminate the contract.

Jamail admits that he did not substantially complete the improvements by September 1, 2001. However, PIB did not immediately exercise its right to terminate the contract. Instead, between September 1, 2001, and February 13, 2002, PIB submitted house plans to the subdivision architectural control board, moved its sales trailer onto a lot in Section 4, and began marketing lots. However, on February 13, 2002, PIB faxed Jamail a letter in an attempt to terminate the contract. On May 14, Jamail filed suit in district court, seeking specific performance.

After discovery began, the parties entered into settlement negotiations, which resulted in a written settlement agreement, titled “Rule 11 Agreement.” See Tex.R. Civ. P. 11. According to the Rule 11 agreement, PIB would purchase three lots of the remaining eighteen then available in Section 4 from Jamail “at Jamail’s current marketing prices.” PIB would select the three lots “from Jamail’s current price list for Section 4 lots, a copy of which is attached hereto as Exhibit A.” Closing would occur on February 27.

After the Rule 11 agreement was filed with the district court, a dispute arose concerning the prices of lots PIB was to purchase. During a trial concerning the enforceability and price terms of the Rule 11 agreement, PIB developed evidence showing that on November 22, 2002, Ja-mail conveyed to a couple, Mark Lind and Sonja Franklin, nineteen of Section 4’s twenty-seven lots by special warranty deed. Apparently, the parties intended to convey only one lot. This deed was filed with the Travis County Clerk. Sometime in February 2003, the title company, Chicago Title, attempted to correct the deed by filing with the Travis County Clerk an identical copy of the special warranty deed containing handwritten changes. This “corrected” deed is not signed by Jamail, Lind, or Franklin. According to Jamail’s trial testimony, the conveyance of nineteen lots to Lind and Franklin was a result of Chicago Title’s clerical error and his own failure to read the original deed. In addition, he testified that Chicago Title became aware of the mistake because Lind notified them of it.

After the conclusion of the bench trial, the district court entered judgment in favor of Jamail ordering PIB to purchase three lots according to the terms of the filed Rule 11 agreement and awarding Ja-mail attorney’s fees. PIB appealed, the merits of which we decide today in a separate opinion. See Partners in Bldg., Inc. v. Jamail, No. 03-04-00709-CV, 2004 WL 2900475 (Tex.App.-Austin Dec. 16, 2004, no pet. h.). However, on October 23, 2003, PIB filed a notice of lis pendens with the Travis County Clerk, communicating that it had elected to purchase Lots 4, 5, and 6 in Block A of Section 4, in compliance with the judgment of the district court, and stating that it was giving notice that any person who may purchase those lots “shall purchase such lots subject to the right of purchase vested” in PIB as a result of the judgment. See Tex. Prop.Code Ann. § 12.007 (West 2004). PIB did not actually purchase those lots; it only sought to preserve its right to purchase those particular lots should its appeal on the merits fail. In response, on October 30, Jamail filed a motion to cancel the lis pendens, which the district court denied. Jamail filed a petition for writ of mandamus, alleging that the court’s refusal to cancel the lis pendens was an abuse of discretion.

DISCUSSION

Lis pendens is a mechanism to give constructive notice to all those taking title to the property that the claimant is litigating a claim against the property. Tex. Prop.Code Ann. §§ 12.007, 13.004 (West 2004); Garza v. Pope, 949 S.W.2d 7, 8 (Tex.App.-San Antonio 1997, orig. proceeding); Khraish v. Hamed, 762 S.W.2d 906, 913 (Tex.App.-Corpus Christi 1988, no writ). It is proper to file a lis pendens when the litigation involves the establishment of an interest in real property. See Tex. Prop.Code Ann. § 12.007(a). However, only a party to the action who is seeking affirmative relief may file a lis pendens. Id. If only collateral questions are involved which might ultimately affect the interest of the parties to property, lis pendens is not available. Garza, 949 S.W.2d at 8; Khraish, 762 S.W.2d at 909; Lane v. Fritz, 404 S.W.2d 110, 111-12 (Tex.Civ.App.-Corpus Christi 1966, no writ). Where lis pendens is improper and the trial court has refused to cancel it, mandamus may he to obtain relief. Garza, 949 S.W.2d at 8; see also, e.g., Flores v. Haberman, 915 S.W.2d 477, 478 (Tex.1995); Helmsley-Spear of Tex., Inc. v. Blanton, 699 S.W.2d 643, 645 (Tex.App.-Houston [14th Dist.] 1985, orig. proceeding).

In reviewing a lis pendens, courts look only to the petition to determine whether the action comes within the provisions of the lis pendens statute. Hughes v. Houston Northwest Med. Ctr., 647 S.W.2d 5, 6 (Tex.App.-Houston [1st Dist.] 1982, writ dism’d w.o.j.); see also Flores, 915 S.W.2d at 478. To qualify as a claim for affirmative relief, a defensive pleading must allege a cause of action, independent of the plaintiffs claim, on which the defendant could recover, even though the plaintiff may abandon or fail to establish its own cause of action. General Land Office v. OXY U.S.A., Inc., 789 S.W.2d 569, 570 (Tex.1990).

In this case, PIB admits that it was not seeking affirmative relief in its pleadings. In fact, it was not asserting any direct interest in any of the lots. Rather, it sought only to void its obligations under the Rule 11 agreement. An attempt to void an obligation to buy three lots from a group of eighteen cannot be construed as an action involving “the establishment of an interest in real property.” See Tex. Prop.Code Ann. § 12.007(a). If PIB ultimately prevails on the merits of its appeal, it would establish that it had no interest in any real property. Conversely, upon failure of its appeal, it would still have no interest in any real property until it performed according to the Rule 11 agreement. Thus, PIB had no statutory basis for filing the lis pendens. We agree -with Jamail that the trial court abused its discretion in failing to cancel it.

Nevertheless, PIB urges us to consider what it views as the equities rather than the statutory language and treat the judgment ordering specific performance of the Rule 11 agreement as satisfying the affirmative-relief requirement because the judgment granted PIB the right to choose three from among the eighteen lots then available. ■ Otherwise, PIB asserts, it would be bound by the Rule 11 agreement while Jamail would be able to sell all but three of the lots during the pendency of the appeal and leave it with no choice of which three lots to purchase.

We are not free to rewrite the statute in the manner that PIB suggests. The legislature has provided that lis pendens is available only to a party who is seeking affirmative relief. Tex. Prop.Code Ann. § 12.007(a). Moreover, the purpose of a statutory lis pendens notice is to put those interested in a particular tract of land on inquiry as to the facts and issues involved in a suit or action concerning that particular tract. Kropp v. Prather, 526 S.W.2d 283, 286 (Tex.Civ.App.-Tyler 1975, writ refd n.r.e.); see also Taliaferro v. Smith, 804 S.W.2d 548, 550 (Tex.App.-Houston [14th Dist.] 1991, no writ); Prappas v. Meyerland Cmty. Improvement Ass’n, 795 S.W.2d 794, 795 (Tex.App.-Houston [14th Dist.] 1990, writ denied). Lis pendens may have the effect of protecting a party’s property rights during the pendency of an action by dissuading third parties from purchasing the affected properties. However, its primary purpose is to give protection to innocent purchasers who under the common law otherwise might have remained ignorant of another’s superior property rights. See City Nat’l Bank v. Craig, 233 S.W. 631, 631 (Tex.Civ.App.— San Antonio 1921), aff'd, 113 Tex. 375, 257 S.W. 210 (1923). Those concerns do not exist in this case because PIB would have had no superior property right to assert over an innocent subsequent purchaser regardless of the outcome of- its appeal on the merits.

Under these circumstances, the trial court abused its discretion when it failed to cancel the lis pendens. Jamail’s petition for writ of mandamus is conditionally granted. If the trial court has not' issued an order cancelling the lis pendens on or before December 30, 2004, writ will issue.

      . The conveyance included lots one through ten of Block A and lots one through nine of Block B.

        . Jamail also asked the district court to enforce the judgment and to find PIB in contempt.

      . The property code provides in relevant part:
      After the plaintiff’s statement in an eminent domain proceeding is filed or during the pendency of an action involving title to real property, the establishment of an interest in real property, or the enforcement of an encumbrance against real property, a party to the action who is seeking affirmative relief may file for record with the county clerk of each county where a part of the property is located a notice that the action is pending.
      Tex. Prop.Code Ann. § 12.007(a) (West 2004).

      . Under the common law, the filing of a suit was notice of lis pendens. See City Nat’l Bank v. Craig, 233 S.W. 631, 631 (Tex.Civ.App.-San Antonio 1921), aff'd, 113 Tex. 375, 257 S.W. 210 (1923). The legislature created the lis pendens statute to give potential purchasers more readily accessible notice of legal proceedings involving property. Id.


author: BRIAN QUINN, Justice.

text:
    BANK OF AMERICA, N.A., Appellant, v. AMARILLO NATIONAL BANK, Appellee.
    No. 07-03-0406-CV.
    Court of Appeals of Texas, Amarillo.
    Dec. 20, 2004.

      Eric Lipper, Michael D. Conner, Michael F. Hord Jr., Hirsch & Westheimer, P.C., Houston, for Appellant.
    Eric. D. Pearson, Sayles & LIDJI, P.C., Dallas, for Appellee.
    Before JOHNSON, C.J., and QUINN and REAVIS, JJ.
   Opinion

BRIAN QUINN, Justice.

Bank of America (BOA) appeals from a final summary judgment awarding Amarillo National Bank (ANB) damages. The damages purportedly arose from BOA’s alleged breach of a warranty accompanying the presentation of a check. It is undisputed that the instrument presented to and paid by ANB was counterfeit or a forgery. Five issues are before us; however, we need only consider the first and last for they are dispositive of the appeal. And, through them, we must determine whether a counterfeit or fake check is an altered instrument for purposes of the warranties encompassed in § 4.208 of the Texas Business and Commerce Code. We conclude that it is not, reverse the summary judgment, and remand the cause for further proceedings.

Background

A check in the amount of $500,000 purportedly drawn by Western Builders and made payable to Robert L. Surber was deposited into Surber’s account at BOA. At the time, Western maintained an account with ANB. Furthermore, it is undisputed that someone other than personnel at Western created and signed the Surber instrument. Indeed, it was of a different size than Western’s checks. So too was the paper on which it was printed different than that of Western’s. Nonetheless, Western’s account number with ANB appeared on the item, as did Western’s name. Additionally, ANB contended that it was a copy of an actual check numbered 036830, issued by Western, dated 4/15/99, and made payable to Megadoor, Inc., in the amount of $522,000. The face of the copy reflected a check numbered 36830, payable to R.L. Surber in the amount of $500,000, and dated 4/27/99.

Once Surber deposited the check, BOA forwarded it to ANB, and the latter paid it. When Western obtained its bank statement, it noted the $500,000 debit and informed ANB that the Surber check was a forgery. ANB then credited Western’s account for the $500,000 and attempted to obtain an equal sum from BOA and Sur-ber. Only $324,096.33 was recovered, however. Thereafter, ANB sued BOA, contending that BOA breached its presentment warranty under §§ 3.417 and 4.208 of the Uniform Commercial Code.

Issue was joined, and both parties moved for summary judgment. The trial court granted that of ANB.

Issue One — Alteration

In its first issue, BOA contends that because the check was not altered, it could not have breached any warranty imposed by § 4.208 of the Code. Thus, ANB was not entitled to summary judgment; instead, BOA was. We sustain the issue.

The Law and Its Application

Both traditional and no evidence motions for summary judgment were filed by the parties. The standards applicable to reviewing each are well settled and need not be reiterated. Instead, we cite the parties to Kimber v. Sideris, 8 S.W.3d 672, 674-75 (Tex.App.-Amarillo 1999, no pet.) for their explanation. Additionally, when both sides move for summary judgment and the trial court grants one motion and denies the other, we review the evidence presented by both movants and determine all dispositive questions presented. Bradley v. State ex rel. White, 990 S.W.2d 245, 247 (Tex.1999).

Next, according to § 4.208 of the Business and Commerce Code,

... If an unaccepted draft is presented to the drawee for payment ... and the drawee pays .... the draft, (i) the person obtaining payment ..., at the time of presentment, and (ii) a previous trans-feror of the draft, at the time of transfer, warrant to the drawee that pays ... the draft in good faith that:
* * *
(2) the draft has not been altered....

Tex. Bus. & Com.Code Ann. § 4.208(a)(2) (Vernon 2002). ANB contended that BOA breached this warranty because the Surber check altered the original check payable to Megadoor. BOA asserted otherwise. Our task is to determine the meaning of “altered” for if the Surber item was not an alteration of the Megad-oor check, § 4.208(a)(2) is irrelevant.

According to the Business and Commerce Code, an “alteration” consists of 1) “an unauthorized change in an instrument that purports to modify in any respect the obligation of a party” or 2) “an unauthorized addition of words or numbers or other change to an incomplete instrument relating to the obligation of a party.” Id. § 8.407(a)(1) & (2). As can be readily seen, the idea of altering an instrument presupposes the existence of an instrument. Charter Bank Northwest v. Evanston Ins. Co., 791 F.2d 379, 383 (5th Cir.1986). Without a preexisting instrument, there can hardly be something to change or complete.

So too does this definition connote a change to, or on, that preexisting document. Not only is this evinced through the interpretation accorded the word “alteration” by such legal publications such as Black’s Law Dictionary but also by judicial opinion. Under the former, an alteration is “[a]n act done to an instrument, after its execution, whereby its meaning or language is changed.” Blaok’s Law Dictionary 85 (8th ed.2004) (emphasis added). If change is being done “to an instrument,” reason suggests that the physical instrument itself undergo change, not some other document. For instance, there is but one “Mona Lisa.” While it may be subject to alteration, one does not do so by making a copy of the masterpiece and then changing the confident smile of the woman appearing in the copy. Moreover, this very idea lay at the heart of the opinions in Charter Bank Northwest v. Evanston Ins. Co., 791 F.2d 379 (5th Cir.1986) and Firstar Bank, N.A. v. Wells Fargo Bank, N.A., No. 02-C-186, 2004 WL 1323942, 2004 U.S. Dist. Lexis 10767 (N.D. Ill. June 14, 2004). In each, the court rejected the argument that creating a document equated the alteration of it. Charter Bank Northwest v. Evanston Ins. Co., 791 F.2d at 383; Firstar Bank, N.A. v. Wells Fargo Bank, N.A., 2004 WL 1323942, at *7, 2004 U.S. Dist. Lexis 10767 at 21-22.

Given the foregoing authorities, we conclude that before § 4.208(a)(2) applies, any alteration must appear or be made on the body of the original instrument, as opposed to appearing simply on a copy of the original. Yet, here, the check presented by Surber to BOA was not an actual check issued by Western. No one disputes that. Rather, it was one created by Surber or someone else and made to look like a Western check. So, because we deal with a different physical document (and even though it may look like another) our situation likens to that before the courts in Charter Bank and Firstar Bank. That is, a preexisting document is not being physically modified or completed, but rather, a new one is being made that contains different terms.

In short, and akin to the “Mona Lisa,” there was but one check issued by Western, numbered 036830, and made payable to Megadoor, Inc., in the amount of $522,000. Neither Surber nor his compatriot (if any) altered it by copying the item and then changing the terms appearing on the face of the copy. He or they simply made another, separate instrument. And, in making a separate check, the individual who created the fake item did not alter the original, as contemplated by § 3.417 or § 4.208 of the Business and Commerce Code. Consequently, and as a matter of law, BOA could not have been held liable for breaching warranties that arise when passing an altered check.

Issue Five — Summary Judgment on Counterclaim

In the final issue that we need to address, i.e. issue five, BOA contends that the trial court erred in disposing of its counterclaim sua sponte. We sustain the issue.

Neither party moved for summary judgment on the counterclaim filed by BOA against ANB. Since the trial court cannot enter summary judgment upon a claim which was not encompassed by the motion for summary judgment and that occurred here, see Kimber v. Sideris, 8 S.W.3d at 675 (stating that all theories in support of or in opposition to a motion for summary judgment must be presented to the trial court in writing), the trial court erred.

Having sustained issues one and five, it is unnecessary for us to address the others. Accordingly, we reverse the summary judgment of the trial court, enter judgment declaring that ANB take nothing from BOA upon its claim of breached warranty under § 4.208 of the Business and Commerce Code, and remand the cause for further proceedings.

      . Of note is that ANB also honored the $522,000 check payable to Megadoor. So, both Surber and Megadoor were paid.

      . Though ANB mentioned both §§ 3.417 and 4.208 of the Business and Commerce Code in its live pleading, only 4.208 was mentioned in its motion for summary judgment.