author: BEA ANN SMITH, Justice.

text:
    Hydi WALL, Appellant, v. TEXAS DEPARTMENT OF FAMILY AND PROTECTIVE SERVICES, Appellee.
    No. 03-04-00716-CV.
    Court of Appeals of Texas, Austin.
    Aug. 25, 2005.

      Holly E. Taylor, Asst. Dist. Atty., Austin, for Appellee.
    Cheryl Hindera, The Hindera Law Firm, Austin, for Appellant.
    Veronica Juarez, Austin, for Ad Litem.
    Before Chief Justice LAW, Justices B.A. SMITH and PEMBERTON.
   OPINION

BEA ANN SMITH, Justice.

Hydi Wall appeals a judgment terminating the parent-child relationship with her children W.C.C. and T.C. In four issues, she contends that the district court erred by failing to strictly construe the language of her affidavit relinquishing her parental rights in a manner that would permit her to revoke the relinquishment; by refusing to hear evidence that her affidavit of relinquishment was obtained by fraud, duress, undue influence, or coercion; and by failing to set a hearing on her motion for new trial. Because the district court erred by failing to conduct a hearing pursuant to section 263.405(d) of the family code, we abate the appeal and instruct the district court to conduct a hearing consistent with the statute and our opinion.

Procedural History

Although the issues raised by Wall do not require a discussion of the allegations supporting the department’s petition, a brief chronology of the litigation is useful. On November 6, 2003, the department filed a suit affecting the parent-child relationship seeking termination of the parent-child relationship between Wall and her children W.C.C. and T.C. After Wall’s retained counsel was permitted to withdraw, the district court appointed counsel to represent Wall. In September 2004, Wall filed a request for a jury trial. On October 15, Wall and her counsel attended a mediation with the department, and Wall signed a document entitled “Mother’s Affidavit of Relinquishment of Parental Rights to the Texas Department of Protective and Regulatory Services.” This is a three-page document in which Wall states that she has decided that termination of her parental rights is in the best interest of her children, that she voluntarily and permanently relinquishes those rights, and that she would like the department to place the children for adoption. Wall and the department also entered into a rale 11 agreement in which the department agreed to “place the children with the first of three friends or family members named by Wall who completes a positive home study.” Under the agreement, if none of the individuals named by Wall qualified to adopt the children, the department would place the children elsewhere. The agreement begins by reciting that:

HYDI WALL is signing today an Irrevocable Affidavit of Relinquishment to the children [W-C.CJ and [T.C.], naming the Department of Family and Protective Services (“the Department”) Sole Managing Conservator of the children.

Within hours of signing the affidavit and rale 11 agreement, Wall contacted her attorney and expressed her desire to revoke the relinquishment of her parental rights.

The following day, Wall filed an affidavit attempting to revoke the relinquishment of her parental rights and a motion to vacate the rale 11 agreement. The affidavit does not explain Wall’s motivation in revoking the relinquishment of her parental rights but simply states that it is her “desire” to do so. Wall’s motion to vacate the rule 11 agreement is not in the record but is reflected on the district court’s docket sheet. Wall’s request to vacate the rule 11 agreement and revoke the relinquishment of her parental rights was denied at a hearing on October 22. An order terminating the parent-child relationship was signed by the district court on November 1.

Wall timely filed a motion for new trial but encountered some difficulty setting the motion for a hearing. She filed a petition for a writ of mandamus on January 5, 2005, raising essentially the same issues as in this appeal. The petition for a writ of mandamus was denied.

Discussion

In her first and second issues, Wall contends that the district court erred by refusing to allow her to revoke the relinquishment of her parental rights. Section 161.103(e) of the family code governs when an affidavit of relinquishment may be revoked:

The relinquishment in an affidavit that designates the Department of Protective and Regulatory Services or a licensed child-placing agency to serve as the managing conservator is irrevocable. A relinquishment in any other affidavit of relinquishment is revocable unless it expressly provides for a stated period of time not to exceed 60 days after the date of its execution.

Tex. Fam.Code Ann. § 161.103(e) (West Supp.2004-05); see also Martinez v. Texas Dep’t of Protective and Regulatory Servs., 116 S.W.3d 266, 271-72 (Tex.App.-El Paso 2003, pet. denied) (designation of department as managing conservator effectively waives right of revocation). Wall points to language in her affidavit in which she designates the department “to care for the Children and to place the Children for adoption.” She argues that the language of her affidavit and the statute should be strictly construed, that her affidavit does not explicitly designate the department “managing conservator,” and therefore, her affidavit is revocable under the statute. See Tex. Fam.Code Ann. § 161.103(e).

We agree that termination proceedings should receive strict scrutiny and that the statutes governing such proceedings are to be strictly construed in favor of the parent. See Holick v. Smith, 685 S.W.2d 18, 20-21 (Tex.1985). However, we will not categorically ignore the irrevocable nature of a relinquishment of parental rights to the department simply because an affidavit lacks the magic words “managing conservator.” We strictly scrutinize the language of Wall’s affidavit to determine whether it reflects her intent to designate the department managing conservator of her children. Wall’s affidavit clearly and repeatedly states that Wall is permanently relinquishing her rights to her children and that the department “will assume responsibility for [the] Children,” “care for the Children,” and “place the Children for adoption.” Only as managing conservator would the department have the authority to place the children for adoption. The affidavit also recites that the department was already the temporary managing conservator of the children before the relinquishment. Viewing the affidavit as a whole, the only meaningful construction is that Wall intended to designate the department as managing conservator. This intent is further reflected by the language of the rule 11 agreement that Wall “is signing today an Irrevocable Affidavit ... naming the [department] Sole Managing Conservator of the children.” Because we hold that Wall designated the department as managing conservator in her affidavit, she effectively waived her right to revoke the relinquishment of her parental rights. See Tex. Fam.Code Ann. § 161.103(e); Martinez, 116 S.W.3d at 271-72. Wall’s first and second issues are overruled.

In her third issue, Wall contends that Judge Covington failed or refused to hear proffered evidence that Wall’s relinquishment of her parental rights was obtained through fraud, duress, undue influence, or coercion. Wall does not cite any portion of the record in support of her claim, and she has not included the motion accompanying her affidavit revoking her relinquishment of parental rights in the record. Having carefully reviewed the record, including the six-page transcript of the hearing on Wall’s motion, we find no attempt by Wall to offer evidence of fraud duress, undue influence, or coercion. Wall’s only contention at that hearing was that her affidavit was revocable because it did not contain precise language designating the department as managing conservator. Because the record does not support Wall’s eviden-tiary contention, we overrule her third issue.

In her fourth and final issue, Wall contends that the district court erred by failing or refusing to hold a hearing on her motion for new trial. See Tex. Fam.Code Ann. § 263.405(d) (West 2002). As such, the district court did not make the required determinations of (1) whether Wall’s motion for new trial should be granted, (2) whether her claim of indigence should be sustained, and (3) whether her appeal is frivolous. See id.

We first note that the failure to comply with section 263.405 does not deprive this Court of jurisdiction over the appeal. See In re T.A.C.W., 143 S.W.3d 249, 250-51 (Tex.App.-San Antonio 2004, no pet.); In re S.J.G., 124 S.W.3d 237, 243 (Tex.App.-Fort Worth 2003, pet. denied); In re M.G.D., 108 S.W.3d 508, 516 (Tex.App.-Houston [14th Dist.] 2003, no pet.); In re T.C., No. 07-03-0077-CV, 2003 WL 21658314, at *2, 2003 Tex.App. LEXIS 6012, at *5 (Tex.App.-Amarillo July 15, 2003, no pet.) (not designated for publication). We also cannot conclude that Wall has waived this issue by failing to obtain a setting on her motion. It is apparent from the record that Wall’s counsel contacted several members of the court administrator’s staff, requesting a setting on the motion both by phone and facsimile correspondence. This was all that was required under the Travis County District Court local rules. See generally Travis County Civ. Dist. Ct. Loc. R. ch. 2.

The language of section 263.405(d) of the family code makes a hearing on a motion for new trial mandatory in a termination case. See Tex. Fam.Code Ann. § 263.405(d) (“trial court shall hold a hearing”); In re M.G.D., 108 S.W.3d at 516. But the statute does not say what should happen when a trial court fails to comply with this mandatory provision. In re M.G.D., 108 S.W.3d at 516. The department contends that the district court’s failure to hold a hearing resulted in Wall’s motion for new trial being overruled by operation of law. It cites Maddox v. Department of Protective and Regulatory Services, 45 S.W.3d 210, 214 (Tex.App.-El Paso 2001, no pet.), for the proposition that a motion for new trial under section 263.405 of the family code may be overruled by operation of law. Importantly, Maddox involved a motion for new trial filed by the department, and section 263.405 is not discussed in the opinion. See id. at 212. It is not at all clear that section 263.405 applies to a motion for new trial filed by the department or that the rules of civil procedure generally governing motions for new trial apply to motions filed under this specific family code provision. However, we need not decide whether Wall’s motion was overruled by operation of law because Wall’s contention is limited to the trial court’s failure to hold a hearing. See Tex. Fam.Code Ann. § 263.405(d).

The San Antonio court of appeals recently decided a similar issue in In re T.A.C.W., 143 S.W.3d 249. In that case, a father timely filed a motion for new trial challenging a judgment terminating his parental rights. Id. at 250. The father did not file his statement of points of appeal within the statutory fifteen-day deadline as required by section 263.405(b) of the family code. Id. A hearing was held on the motion for new trial, but the district court did not make any determinations regarding the motion for new trial, indigence, or whether the points of appeal were frivolous. Id. The court of appeals observed that “it appears from the record that the trial court questioned its jurisdiction to make a ruling under section 263.405(d) because of the untimeliness of [the father’s] statement of points on appeal.” Id. The court of appeals held that the trial court did have jurisdiction and should have made the statutory determinations pursuant to section 263.405(d) of the family code. Id. at 251. Accordingly, the court abated the appeal and remanded the case so that the trial court could make the statutory determination of whether the father’s appeal was frivolous. Id. (citing Tex. Fam. Code Ann. § 268.405(d)(3)).

The issue raised by Wall is that the district court should have held a hearing on her motion for new trial. See Tex. Fam.Code Ann. § 268.405(d)(1). We agree that the hearing was mandatory and that the trial court erred by fading to hold a hearing. See id; In re T.A.C.W., 143 S.W.3d at 251; In re M.G.D., 108 S.W.3d at 516.

In her brief, Wall asks that we reverse the judgment and order the district court to set the underlying case for trial. We do not conclude that the failure to hold a hearing on a motion for new trial should result in the reversal of the judgment itself. Our opinion in an analogous criminal appeal provides some guidance. In Mas-singill v. State, we held that a defendant was deprived of his constitutional right to counsel during the time in which he was to file motions for new trial challenging his conviction in two separate causes. 8 S.W.3d 733, 737 (Tex.App.-Austin 1999, pet. ref'd). Citing prior case law and rule of appellate procedure 44.4, we held that the appropriate remedy was to abate the proceeding for the district court to hold a hearing on the defendant’s motions for new trial. Id. at 738. We explained that the appeal was abated and the case remanded to the district court for a hearing on the motions:

If the district court grants the motions, appellant’s appeals will be dismissed. If the motions are overruled, the record will be supplemented and the parties will be permitted to brief any issues relating to the overruling of the motions.

Id. at 738-39 (omitted).

We must not affirm or reverse a district court’s judgment if the district court’s error (1) prevents the proper presentation of the case to the court of appeals, and (2) the district court can correct its action or failure to act. Tex.R.App. P. 44.4(a). Under these circumstances, we must direct the trial court to correct the error and then proceed as if the error had not occurred. Id. at 44.4(b). As in Massingill, the appropriate remedy for the district court’s failure to hold a hearing on Wall’s motion for new trial is to abate the appeal and instruct the district court to hold a hearing pursuant to section 263.405(d). See Tex.R.App. P. 44.4(b); Massingill, 8 S.W.3d at 738-39; see also In re T.A.C.W., 143 S.W.3d at 251. The district court is directed to set a hearing for a date no later than 45 days after the date of this opinion. At this hearing, the district court will permit Wall to introduce evidence, if any, that the relinquishment of her parental rights to W.C.C. and T.C. was not voluntary. If the district court grants Wall’s motion for new trial, Wall’s appeal will be dismissed. If the trial court overrules the motion, the record will be supplemented and the parties will be permitted to brief any issues relating to the hearing and the determinations made by the district court pursuant to section 263.405(d). The supplemental record and any briefing by the parties shall be filed with the court no later than 45 days after the date of the hearing.

Conclusion

We overrule Wall’s first three issues. Because the district court erred by failing to hold a hearing pursuant to section 263.405(d), we sustain Wall’s fourth issue. The appeal is abated and the case remanded to the district court for further proceedings consistent with section 263.405(d) and our opinion.

      . Although Judge Dietz signed the final judgment in this case, Judge Covington presided over the hearing on Wall’s motion and affidavit revoking her relinquishment of her parental rights.

      . An order granting a motion for new trial is generally not reviewable on appeal. See Wilkins v. Methodist Health Care Sys., 160 S.W.3d 559, 563 (Tex.2005).


source: Caselaw Access Project

author: DAVID PURYEAR, Justice.

license: Public Domain

text:
    ACADEMY OF ORIENTAL MEDICINE, L.L.C., Quianzi Wu and Xiaotian Shen, Appellants, v. Eve ANDRA, Appellee.
    No. 03-04-00396-CV.
    Court of Appeals of Texas, Austin.
    Aug. 26, 2005.

      L. Cullen Moore, Nathan M. Rymer, Debra I. Mayfield, Rymer, Moore, Jackson & Echols, P.C., Houston, for appellants.
    Michael A. Josephson, Hartley Hampton, Fibich, Hampton, & Leebron, LLP, Houston, Mike Davis, Slack & Davis, L.L.P., Austin, for appellee.
    Before Justices KIDD, PATTERSON and PURYEAR.
   OPINION

DAVID PURYEAR, Justice.

Appellants, Academy of Oriental Medicine, L.L.C. and Drs. Quianzi Wu and Xiaotian Shen, are defendants in a medical negligence suit brought by their former patient, appellee Eve Andra. Appellee filed an “expert report” from her family practitioner, Dr. Holme, that purports to state the standard of care for an acupuncturist treating asthma by topical application of a mustard paste. Appellants in two issues appeal the district court’s denial of their motion to strike Holme’s report, arguing that he is not qualified to testify regarding traditional Chinese medicine and that the report is insufficient as a matter of law. Because we do not have jurisdiction to hear an interlocutory appeal of the denial of the relief sought, we do not reach the merits of appellants’ issues and dismiss this appeal for lack of jurisdiction.

DISCUSSION

Where, as here, there is not a final and appealable order, the Court only has jurisdiction to hear interlocutory appeals as authorized by statute. See Stary v. DeBord, 967 S.W.2d 352, 352-53 (Tex.1998); Majeski v. Estate of Majeski, 163 S.W.3d 102, 105 (Tex.App.-Austin 2005, no pet.). We construe statutes to determine and effectuate the legislature’s intent. Texas Dep’t of Transp. v. Needham, 82 S.W.3d 314, 318 (Tex.2002). Ordinarily we begin with the statute’s plain and common meaning but give defined terms their statutorily-defined meanings. Id. The meaning of a term that is not specifically defined is determined primarily by how that term is used throughout the act as a whole and should be interpreted consistently in every part of an act. Id. We consider disputed provisions in context, not in isolation. Gonzalez v. Tippit, 167 S.W.3d 536, 540 (Tex.App.-Austin 2005, no pet. h.); see Fitzgerald v. Advanced Spine Fixation Sys., 996 S.W.2d 864, 866 (Tex.1999). Moreover, we read every word, phrase, and expression in a statute as if it were deliberately chosen and presume the words excluded from the statute are done so purposefully. See Gables Realty Ltd. P’ship v. Travis Cent. Appraisal Dist., 81 S.W.3d 869, 873 (Tex.App.-Austin 2002, pet. denied).

The civil practice and remedies code provides for interlocutory appeals of certain orders regarding expert reports in health care liability claims. See Tex. Civ. Prac. & Rem.Code Ann. §§ 51.014(a)(9)-(10) (West Supp.2004-05) (authorizing certain interlocutory appeals from section 74.351 orders); 74.351 (West 2005) (requirements of expert reports in health care liability claims). Specifically, section 51.014(a)(9) allows interlocutory appeal of an order that “denies all or part of the relief sought by a motion under Section 74.351(b), except that an appeal may not be taken from an order granting an extension under Section 74.351.” Id. § 51.014(a)(9). Section 51.014(a)(10) allows interlocutory appeal of an order that “grants relief sought by a motion under Section 74.351G).” Id. § 51.014(a)(10). Because section 51.014’s authorizing of interlocutory appeals is a narrow exception to the general rule that only final judg-merits and orders are appealable, we must strictly construe it. Bally Total Fitness Corp. v. Jackson, 53 S.W.3d 352, 355 (Tex.2001); Bexar Metro. Water Dist. v. City of Bulverde, 156 S.W.3d 79, 85 (Tex.App.Austin 2005, no pet. h.).

Appellants argue that the order they appeal from was a denial of all or part of the relief sought by a motion under section 74.351(b) and that we therefore have jurisdiction. We disagree. Section 74.351(b) reads as follows:

If, as to a defendant physician or health care provider, an expert report has not been served within the period specified by Subsection (a), the court, on the motion of the affected physician or health care provider, shall, subject to Subsection (c), enter an order that:
(1) awards to the affected physician or health care provider reasonable attorney’s fees and costs of court incurred by the physician or health care provider; and
(2) dismisses the claim with respect to the physician or health care provider, with prejudice to the refiling of the claim.

Tex. Civ. Prac. & Rem.Code Ann. § 74.351(b).

Appellants’ motion requested that the report be stricken because Holme was not qualified to opine as to the standard of care and because the report was not adequate as an expert report in that it failed to comply with the statutory requirements of an expert report in section 74.351(r)(6). Appellants requested that the trial court strike the report but did not request the relief outlined in section 74.351(b), dismissal with prejudice and attorney’s fees. It also did not assert that no expert report had been timely filed because, as the deadline had not run at the time appellants filed the motion, appellee might still timely file a report or reports that would satisfy the requirements of an expert report: “The issue of timeliness is not addressed in this objection since it is unclear if Dr. Holme’s letter is intended to be the report. This issue will ripen when the deadline expires in June.” See id. § 74.351(1) (expert report requirements may be satisfied by one or series of reports from one or more experts addressing different issues).

Appellants’ motion, therefore, is more accurately characterized as a motion for relief under section 74.351(i). Under that section, “[a] court shall grant a motion challenging the adequacy of an expert report only if it appears to the court, after hearing, that the report does not represent a good faith effort to comply with the definition of an expert report in Subsection (r)(6).” Id. § 74.351(7). Appropriately, appellants’ motion challenging the adequacy of appellee’s expert report addresses sections 74.351(1) and (r) but does not mention (b).

Appellants argue for the broad reading of the term “relief’ in section 51.014(a)(9) as any relief, which would include a declaration that appellee’s report was statutorily deficient and therefore not timely filed. This reading would require us to view the term “relief’ in isolation. Instead, we examine the language in section 51.014 in context. Gonzalez, 167 S.W.3d at 540. Section 51.014(a)(9) allows interlocutory appeal of a denial of “all or part of the relief sought by a motion under § 74.351(b),” while (a)(10) allows appeal of an order that “grants relief sought by a motion under Section 74.351(1).” Tex. Civ. Prac. & Rem.Code Ann. § 51.014(a)(9)-(10) (emphasis added). The relief available under section 74.351(b) is explicitly set out. If an expert report is not served within the relevant period, the trial court must grant the following relief: (1) award the defendant health care providers reasonable attorney’s fees and costs, and (2) dismiss the claim with prejudice. See id. § 74.351(b). Conversely, the relief available under section 74.351(1) is not so clearly enumerated; that section directs a court to grant a motion challenging the adequacy of an expert report if that report does not represent a good faith effort to comply with the definition of an expert report in (r)(6). Id. § 74.351(1). A motion challenging the adequacy of an expert report that does not request the relief set out in section 74.351(b) is a motion for relief under 74.351(1). Trial court orders regarding section 74.351(1) can also be the subject of interlocutory appeals. See id. § 51.014(a)(10). However, that grant of jurisdiction is limited to the appeal of an order that “grants relief sought by a motion under Section 74.351(1).” Id. (emphasis added). The order on appeal here was a denial of relief sought by a motion under that section and therefore cannot be appealed under section 51.014(a)(10). We must presume that the legislature deliberately chose this language distinguishing the appeal of a denial of “the relief’ under section 74.351(b) and the appeal of a grant of “relief’ under section 74.351(1). See Gables Realty Ltd. P’ship., 81 S.W.3d at 873. In accordance with that language, we cannot exercise jurisdiction over an appeal of this order because it is neither an order denying the relief sought by a motion under 74.351(b) nor one granting relief sought by a motion under section 74.351(1).

Appellees argue, however, that section 51.014(a)(9) was intended to be read broadly to include other forms of relief. That section includes an exception: “an appeal may not be taken from an order granting an extension under Section 74.351.” Tex. Civ. Prac. & Rem.Code Ann. § 51.014(a)(9). Pointing out that an extension is not among the enumerated relief in section 74.351(b), they reason that the legislature must have intended to allow interlocutory appeals of orders denying other relief than that listed. Otherwise the legislature need not have included language excepting an order granting an extension. Our examination of the relevant sections precludes this interpretation.

It is true that section 74.351(b) does not include an extension under subpoints (1) and (2), which list the aforementioned relief — dismissal with prejudice and attorney’s fees and costs. See id. § 74.351(b). However, section 74.351(b) does explicitly subject each of these forms of relief to section 74.351(c), the provision allowing the court to grant a 30-day extension to cure deficiencies in an expert report. See id. § 74.351(b), (c). Thus, the relief a court grants under (b) is always “subject to Subsection (c),” which allows a trial court to deny a defendant’s motion to dismiss with fees and costs and instead grant a 30-day extension even where “an expert report has not been served within the period specified ... because elements of the report are found deficient.” Id. § 74.351(b),(c). Therefore we cannot infer from section 51.014(9)’s exception of an appeal for an extension that the legislature intended to allow orders denying motions for relief other than dismissal, fees, and costs under section 74.351(b) to be the subject of an interlocutory appeal.

Moreover, appellants’ contrary interpretation squarely contradicts the legislature’s limited grant of jurisdiction in section 51.014(a)(10). Section 51.014(a)(10) confers jurisdiction exclusively over interlocutory appeals of orders that grant relief under section 74.351(7). Id. If we were to read section 51.014(a)(9) as a grant of jurisdiction over an interlocutory appeal of an order denying a motion for any relief regarding a deficient expert report or an eventual dismissal we would in this case be exercising jurisdiction over their appeal of the trial court’s denial of their motion challenging the adequacy of the expert report under section 74.351(l). The legislature has addressed interlocutory appeals of orders regarding the adequacy of expert reports under section 74.351(7) in section 51.014(a)(10). If it had intended to allow an interlocutory appeal from an order that denies relief sought by a motion under section 74.351(7), surely it would not have only used the word “grants.” See id. § 51.014(10); Gables Realty Ltd. P’ship, 81 S.W.3d at 873 (when construing statutes we must presume legislature purposefully excluded words not appearing in statute). Following appellants’ suggested interpretation would render useless the provisions of section 51.014(a)(10). This we decline to do.

Because this appeal challenges an order that is neither an order denying the relief sought by a motion under 74.351(b) nor one granting relief sought by a motion under section 74.351(0, we lack jurisdiction to hear it. See Stary, 967 S.W.2d at 352-53 (statutory list of instances when jurisdiction permitted over interlocutory appeal exclusive).

CONCLUSION

We dismiss the appeal for want of jurisdiction.

Justice KIDD Not Participating.

      . "In a health care liability claim, a claimant shall, not later than the 120th day after the date the claim was filed, serve on each party ... one or more expert reports...." Tex. Civ. Prac. & Rem.Code Ann. § 74.351(a) (West 2005).

      . Section (c) permits a trial court to grant a 30-day extension to cure a deficiency where an expert report has not been served within 120 days because elements of the report are found deficient. Id. § 74.351(c).

      . An expert report is
      a written report by an expert that provides a fair summary of the expert's opinions as of the date of the report regarding applicable standards of care, the manner in which the care rendered by the physician or health care provider failed to meet the standards, and the causal relationship between that failure and the injury, harm, or damages claimed.
      Tex. Civ. Prac. & Rem.Code Ann. § 74.35l(r)(6).

      .Because appellee filed her suit on February 19th, the 120-day time period did not expire until June 18th. The trial court set the hearing for appellants’ objections to the expert report after the deadline had run, at which time it could determine exactly what documents constituted her expert report. The court dated its ruling the same day, June 24th.

      . It is true that a report can be deemed not timely filed under subsection (a) if the report is deficient but served before the 120-day deadline. See Tex. Civ. Prac. & Rem.Code Ann. § 74.351(c) (addressing circumstance where report "has not been served within the period specified by Subsection (a) because elements of the report are found deficient”); see generally In re Woman’s Hosp. of Tex., Inc., 141 S.W.3d 144 (Tex.2004) (Owen, J„ concurring and dissenting) (discussing various cases in which, under former and current expert report statutes, trial courts were required to dismiss health care liability claims because expert reports were deficient). Therefore, if the report had been held deficient or stricken and, at the expiration of 120 days after the claim was filed, no sufficient expert reports had been filed, appellants would have been entitled to move for and receive the relief under section 74.351(b). However, appellants never moved for such relief; their motion challenging the adequacy of the expert report did not also request dismissal or fees and costs for lack of a timely report as any such request would have been premature before the running of the time period.

      . See Tex. Civ. Prac. & Rem.Code Ann. § 74.351(c) ("... the court may grant one 30-day extension to the claimant in order to cure the deficiency.”).

      . When a trial court grants a 30-day extension under (c), it does not dismiss or award fees or costs. In such cases, even where there is no timely expert report because the report or reports filed were found deficient and where the defendant moves for dismissal, fees, or costs, the trial court may deny the motion. Tex. Civ. Prac. & Rem.Code Ann. § 74.351(c) (West 2005). The grant of an extension to the plaintiff can be a denial of a defendant’s motion under 74.351(b). Section 51.014(a)(9) generally makes such denials the proper subject of an interlocutory appeal. Id. § 51.104(a)(9) (West Supp.2004-05). Rather than inviting us to assume jurisdiction over interlocutory appeals of denials of motions other than motions for relief under section 74.351(b), the exception in 51.014(9) clarifies that an interlocutory appeal is only available when the court had denied a defendant’s motion but had not granted the plaintiff additional time to cure deficiencies. See id. §§ 51.014(9); 74.351(b),(c).


author: Opinion by Justice GARZA. Justice CASTILLO.

text:
    In re WASHINGTON MUTUAL FINANCE, L.P., Fela Cavazos, David Gonzalez, Carmen Gonzalez, Rey Gonzales, and Adelaido Gonzales.
    No. 13-05-277-CV.
    Court of Appeals of Texas, Corpus Christi-Edinburg.
    Aug. 26, 2005.

      Melissa A. Prentice, Craig T. Enoch, Winstead, Sechrest & Minick, P.C., Austin, Brian T. Morris, Winstead, Sechrest & Minick, Dallas, Mike Mills, Atlas & Hall, McAllen, for relators.
    James P. Grissom, Edinburg, for real parties in interest Garcia and Flores.
    Israel Ramon, Jr., Law Office of Israel Ramon, Jr., McAllen, for real party in interest Fela Cavazos.
    Manuel Guerra III, McAllen, for real party in interest Carmen Gonzalez.
    Adelaido Gonzales, Harlingen, pro se.
    Rey Gonzales, Harlingen, pro se.
    Before Justices RODRIGUEZ, CASTILLO, and GARZA.
   OPINION

Opinion by Justice GARZA.

Washington Mutual Finance, L.P. and David Gonzalez (collectively ‘Washington Mutual”) have filed a petition for writ of mandamus, seeking to compel Judge Jay Palacios of the County Court at Law Number Two of Hidalgo County to vacate his order of February 18, 2005, denying Washington Mutual’s motion to compel arbitration, order arbitration under the Federal Arbitration Act (“FAA”), and stay the underlying proceedings. We conclude that the trial court abused its discretion by sustaining a defense to arbitration without holding an evidentiary hearing to determine disputed issues of material fact. We therefore instruct the trial court to vacate its order of February 18, 2005, denying Washington Mutual’s motion to compel arbitration, and conditionally issue a writ of mandamus in the event the trial court does not comply with this opinion.

This original proceeding arises from a suit filed against Washington Mutual and other defendants by Ignacio and Gloria Garcia and Carlos and Esmeralda Flores (the “plaintiffs”), in which the plaintiffs allege that they were fraudulently induced into obtaining loans from Washington Mutual. In response to the suit, Washington Mutual filed a motion to compel arbitration based on arbitration agreements signed by the plaintiffs at the time of their loans.

In a brief filed in opposition to the motion to compel arbitration, the plaintiffs conceded the existence of the arbitration agreements but contended that arbitration could not be compelled because (1) there was unequal bargaining strength between Washington Mutual and the plaintiffs, (2) Washington Mutual did not explain the arbitration agreements to the plaintiffs, and (3) the plaintiffs did not understand the arbitration agreements because their reading fluency and comprehension is at an elementary school or junior high level. Attached to the plaintiffs’ brief were test results for each of the plaintiffs, arguably establishing their below-average “reading fluency and comprehension,” as well as a transcript of a deposition of Carmen Gonzalez, a defendant in the underlying action.

The trial court held a hearing on Washington Mutual’s motion to compel on May 3, 2004. At the hearing, the trial court heard arguments from both sides, but it did not hear testimony or admit other evidence into the record. Washington Mutual argued that the evidence attached to the plaintiffs’ brief was inadmissible because it was not properly proven-up by affidavits or otherwise verified. Washington Mutual also argued that because the proceeding was summary in nature, the trial court was required to grant its motion to compel based on the uncontroverted evidence in the record, which established that the plaintiffs had signed arbitration agreements covering the claims they presently asserted. For their part, the plaintiffs conceded that they had signed the arbitration agreements. They urged the trial court to find the agreements to be unconscionable based on the evidence attached to their brief. The trial court did not rule on Washington Mutual’s motion to compel, and it did not state whether it was admitting or excluding the evidence attached to the plaintiffs’ brief.

On May 5, 2004, the plaintiffs filed a motion to supplement the record and for an evidentiary hearing. Attached to the motion were four affidavits, one from each of the plaintiffs. The plaintiffs’ motion argued, “If the affidavits offered above are permitted to supplement the record ...., further hearing is necessary to determine disputed facts.” Washington Mutual filed a response in opposition to the plaintiffs’ motion, arguing that the motion was untimely and that the plaintiffs’ evidence was immaterial. On January 7, 2005, the parties received notice from the trial court setting a hearing for the plaintiffs’ motion to supplement and for an evidentiary hearing on January 31, 2005.

At the hearing on the plaintiffs’ motion, the trial court heard arguments from both sides but did not hear testimony or admit other evidence. Counsel for the plaintiffs briefly mentioned his motion to supplement the record and for an evidentiary hearing but spent the bulk of his time arguing a different motion, in which he asked the trial court to strike the affidavits filed by Washington Mutual in support of its motion to compel. In concluding his argument, counsel for the plaintiffs stated to the court, “I’m asking you to strike the affidavits of David Gonzalez and Fela Ca-vazos, which are in support of their motion to compel arbitration, and alternatively to allow the Plaintiffs to supplement the record with their affidavits and if — if the Court decides that it still wants to hear further evidence on this matter, then we’re — we’re prepared to put on evidence today.”

In response, counsel for Washington Mutual argued that the affidavits challenged by the plaintiffs were perfectly admissible. He explained that the affidavits had been on file with the court for almost a year with no complaint from the plaintiffs. Counsel further explained that the only purpose the affidavits served was to prove that the plaintiffs signed the arbitration agreements, a fact which the plaintiffs conceded at the hearing on May 3, 2004, as well as in their brief in opposition to the motion to compel arbitration. According to counsel, even if the court were to strike the affidavits, Washington Mutual would be entitled to arbitration based on these admissions. Counsel then objected to the plaintiffs’ motion to supplement the record and for an evidentiary hearing.

The trial court advised the parties that it would review the motions and issue a ruling in the near future. It also stated, “If I need to hear any other additional testimony or evidence, I will ... advise both offices.... ” Without conducting an evidentiary hearing or requesting additional evidence, the trial court denied Washington Mutual’s motion to compel on February 18, 2005. No ruling was issued on either the plaintiffs’ motion to strike or its motion to supplement the record and for an evidentiary hearing. This original proceeding ensued.

If a trial court erroneously denies a party’s motion to compel arbitration under the FAA, the movant has no adequate remedy at law and is entitled to a writ of mandamus. In re FirstMerit Bank, N.A., 52 S.W.3d 749, 753 (Tex.2001) (orig.proeeeding). The trial court may summarily decide whether to compel arbitration on the basis of affidavits, pleadings, discovery, and stipulations; however, the trial court does not have discretion to determine disputed material facts without holding an evidentiary hearing. See Jack B. Anglin Co. v. Tipps, 842 S.W.2d 266, 269 (Tex.1992).

As discussed above, there was no dispute before the trial court regarding the existence of arbitration agreements, which, if enforceable, would invoke the FAA and cover the plaintiffs’ claims. Once a party seeking to compel arbitration establishes that an agreement exists under the FAA and that the claims raised are within the agreement’s scope, the trial court has no discretion but to compel arbitration and stay its proceedings pending arbitration. Cantella & Co. v. Goodwin, 924 S.W.2d 943, 944 (Tex.1996) (orig.proceeding) (per curiam). Under such circumstances, the trial court may deny a motion to compel arbitration only if it concludes that the party opposing arbitration carried its burden of proving a defense to arbitration. See In re FirstMerit Bank, N.A., 52 S.W.3d at 756 (“[S]ince the law favors arbitration, the burden of proving a defense to arbitration is on the party opposing arbitration.”). In this case, Washington Mutual established by its evidence and by the plaintiffs’ admissions that multiple arbitration agreements existed under the FAA and that the plaintiffs’ claims fell within the scope of the agreements. The burden thus shifted to the plaintiffs to prove a valid defense to arbitration. See id.

As noted above, the plaintiffs contended that the arbitration agreements were procedurally unconscionable, an issue which is reserved for judicial review. See In re Oakwood Mobile Homes, Inc., 987 S.W.2d 571, 573 n. 3 (Tex.1999) (orig.proeeeding). The plaintiffs also contended that the trial court needed to hold an evidentiary hearing to determine disputed fact issues related to their defense. The plaintiffs maintained throughout their motion to supplement and for an evidentiary hearing that, if the trial court supplemented the record with their affidavits, the affidavits would succeed only in raising issues of material fact, which would require the court to conduct an evidentiary hearing. The trial court never held such an eviden-tiary hearing and never admitted any of the plaintiffs’ evidence. It therefore had no basis to sustain the plaintiffs’ defense to arbitration. We are fully aware that Washington Mutual opposed the plaintiffs’ motion to supplement the record and for an evidentiary hearing, but we do not view such opposition as an invitation for the trial court to summarily resolve disputed issues of material fact without providing both sides a fair opportunity to present evidence. We certainly do not construe it as an invitation for the trial court to resolve issues of material fact without considering any evidence at all.

For these reasons, we conclude that the trial court abused its discretion by sustaining the plaintiffs’ defense to Washington Mutual’s motion to compel arbitration. Accordingly, this Court conditionally issues a writ of mandamus compelling the trial court to vacate its order denying Washington Mutual’s motion to compel arbitration. The trial court is instructed to conduct an evidentiary hearing on any disputed issues of material fact related to the plaintiffs’ defense to arbitration. The writ will issue only if the trial court refuses to vacate its order.

Dissenting Opinion by Justice ERRLINDA CASTILLO.

Dissenting Opinion by

Justice CASTILLO.

In this original mandamus proceeding, relators request that we direct the trial court to vacate the order denying their motion to compel arbitration (1) on the merits or, alternatively, (2) on grounds that the trial court failed to convene an evidentiary hearing. Granting relief on relators’ alternative ground, the majority concludes that the trial court abused its discretion (1) by sustaining a defense to arbitration (2) without holding an eviden-tiary hearing (3) to determine disputed issues of material fact. For the reasons that follow, I respectfully dissent.

Mandamus Relief

Although the writ of mandamus is a discretionary remedy, its use is subject to certain conditions. Johnson v. Fourth Court of Appeals, 700 S.W.2d 916, 917 (Tex.1985). We may issue writs of mandamus “agreeable to the principles of law regulating those writs.” See id. (citing Tex. Gov’t.Code Ann. § 22.221(b) (Vernon 2004)). Mandamus issues only to correct a clear abuse of discretion or the violation of a duty imposed by law when there is no other adequate remedy by law. Id. (citing State v. Walker, 679 S.W.2d 484, 485 (Tex.1984); Walker v. Packer, 827 S.W.2d 833, 839 (Tex.1992)). We, therefore, act in excess of our writ power when we grant mandamus relief absent these circumstances. See Johnson, 700 S.W.2d at 917 (citing Ginsberg v. Fifth Court of Appeals, 686 S.W.2d 105, 108 (Tex.1985)).

When the writ of mandamus is sought to correct a clear abuse of discretion by the trial court, the judicial function should be limited to an inquiry as to whether there was any controversy over the facts or conditions on which the judge acted or which he could properly consider. Bush v. Vela, 535 S.W.2d 803, 805 (Tex.Civ.App.-Corpus Christi 1976, no writ) (citing Maresca v. Marks, 362 S.W.2d 299, 301 (Tex.1962)). If there is a reasonable doubt concerning the existence or nonexistence of facts or conditions on which the action was predicated, we are powerless to revise or disturb the action. See id. On the other hand, if the fact situation is such in which there is no room for the exercise of discretion, the action of the trial court is subject to control by mandamus. Id.

The Record

The trial court convened two hearings on relators’ motion to compel arbitration. During the first hearing on May 3, 2004, the trial court heard arguments of counsel on the merits and did not issue a ruling. Subsequently, real-parties-in-interest filed a motion to supplement the record and a motion for an evidentiary hearing, asserting, among other things, unconscionability. Relators filed responses opposing both motions. The trial court convened a second hearing on January 31, 2005, on both motions. At that hearing, relators argued that (1) the motion to compel was “fully heard” and “fully considered” at the first hearing held in May, (2) “everything was before the Court in May on this summary proceeding,” and (3) the hearing was a “[sjummary proceeding under the law.” Stating that it would take the matter under advisement, the trial court pronounced, “If I need to hear any other additional testimony or evidence, I will let-advise both offices and you’ll have a ruling in reference to this by Friday at 5:00.... ” Neither party objected. Subsequently, the trial court denied the motion to compel arbitration by written order. This original proceeding ensued.

Analysis

Declining to address relators’ ground on the merits of the motion to compel arbitration, the majority concludes that the trial court abused its discretion because it sustained the real-parties-in-interest’s defense to arbitration without providing an eviden-tiary hearing. See Jack B. Anglin Co. v. Tipps, 842 S.W.2d 266, 269 (Tex.1992). The majority grants mandamus relief and orders “an evidentiary hearing on any disputed issues of material fact related to the defense” to arbitration real-parties-in-interest advanced. By its writ, the majority grants relief on relators’ alternate ground before us-a ground they argued to the trial court was unnecessary, untimely, and unavailable to the real-parties-in-interest below. On this record, an evidentiary hearing that was argued as not mandatory to an arbitration opponent below has become mandatory to an arbitration proponent by virtue of mandamus relief.

Respectfully, I would hold that, by its ruling, the trial court implicitly agreed with relators that it need not hear additional testimony or evidence. Thus, by its ruling, the trial court implicitly agreed with relators that an evidentiary hearing was unnecessary and proceeded to rule on the merits of relators’ motion to compel arbitration. The trial court denied the motion but, implicitly, granted relators’ motion to proceed “as a matter of law.”

Respectfully, I would honor the basic tenets that require (1) a party to present a complaint to the trial court first before seeking appellate relief, see e.g. Tex.R.App. P. 33.1, and (2) that the grounds for relief before the appellate court comport to the complaint raised to the trial court. See id. Because the majority expressly grants relief on relators’ alternative grounds not requested below, respectfully, I conclude we are powerless to grant mandamus relief. Bush, 535 S.W.2d at 805. Because I conclude we are powerless to grant relief on grounds not expressly requested first to the trial court, I respectfully dissent.

      . Carmen Gonzalez is not a party to this mandamus proceeding.

      . This Court has requested a response from the plaintiffs, but to date, the plaintiffs have not filed any response to Washington Mutual’s petition for writ of mandamus. See Tex R.App. P. 52.4.

      . A trial court clearly abuses its discretion if it reaches a decision so arbitrary and unreasonable as to amount to a clear and prejudicial error of law. Walker v. Packer, 827 S.W.2d 833, 839 (Tex.1992). This standard, however, has different applications in different circumstances. Id. With respect to resolution of factual issues or matters committed to the trial court’s discretion, for example, the reviewing court may not substitute its judgment for that of the trial court. Id. The relator must establish that the trial court could reasonably have reached only one decision. Id. at 840. On the other hand, review of a trial court’s determination of the legal principles controlling its ruling is much less deferential. Id. A trial court has no "discretion” in determining what the law is or applying the law to the facts. Id. Thus, a clear failure by the trial court to analyze or apply the law correctly will constitute an abuse of discretion, and may result in appellate reversal by extraordinary writ. Id.

      . On the day of the hearing, the real-parties-in-interest filed a motion to strike the affidavits attached to relators’ motion to compel based, in part, on grounds that the affidavits were "not based on personal knowledge,” were conclusory and self-serving and, thus, not competent evidence to support the motion to compel. Relators countered that the "affidavits have been on file for almost a year.”

      . Relators asserted in their response that, even if the trial court accepted the affidavits filed in support of the motion filed by the real-parties-in-interest attesting to unconscionability, the motion to compel should be granted as "a matter of law.”

      . In short, the trial court could have concluded that, among other things, the relators’ motion and evidence were insufficient as a matter of law to prove that the FAA applied or that the claims fell within the scope of the agreements. See Jack B. Anglin Co., 842 S.W.2d at 269; Prudential Sec. v. Banales, 860 S.W.2d 594, 597 (Tex.App.-Corpus Christi 1993, no writ) (orig.proceeding) (requiring summary disposition on the merits after finding that the opposing party’s failure to follow the first step of presenting proper controverting evidence denies him the right to proceed to the second step of an evidentiary hearing). If so, then the trial court could have concluded that relators failed in their burden and, thus, the burden, if any, never shifted to the real-parties-in-interest. See id. Without deciding the merits of the motion to compel, however, I conclude that a summary proceeding under those circumstances was proper. The record, however, does not establish the grounds on which the trial court denied arbitration.


author: Opinion by Justice BAIRD.

text:
    Johnny Joe DAVILA, Appellant, v. The STATE of Texas, Appellee.
    No. 13-03-491-CR.
    Court of Appeals of Texas, Corpus Christi-Edinburg.
    Aug. 31, 2005.

      S. Reese Rozzell, Rockport, for appellant.
    Michael Hess, Asst. Dist. Atty., Patrick L. Flanigan, Dist. Atty., Sinton, for state.
    Before Chief Justice VALDEZ and Justices HINOJOSA and BAIRD.

      . Former Texas Court of Criminal Appeals Judge Charles F. Baird assigned to this Court by the Chief Justice of the Supreme Court of Texas. See Tex. Gov’t Code Ann. § 74.003 (Vernon Supp.2004-05).

   OPINION

Opinion by Justice BAIRD.

Appellant was charged by indictment with the offense of aggravated assault. Pursuant to a plea bargain with the State, appellant pled guilty to the charged offense. The trial judge found appellant guilty and assessed punishment at ten years confinement in the Texas Department of Criminal Justice — Institutional Division and a fine of $1,000. However, the trial judge suspended imposition of the sentence and placed appellant on community supervision for a period of ten years. The State subsequently filed a motion to revoke appellant’s community supervision. After conducting a hearing, the trial judge granted the motion, revoked appellant’s community supervision, and assessed punishment at ten years confinement. We affirm.

The sole allegation in the State’s motion to revoke community supervision was that appellant committed the offense of capital murder. Appellant and his brother were charged with the same offense and tried jointly. Prior to the capital murder trial, the trial judge began the hearing on the State’s motion to revoke community supervision. Following appellant’s plea of not true, the trial judge recessed the hearing and stated that he would consider the motion while hearing the evidence admitted during the capital murder trial.

The alleged capital murder involved a double murder which occurred following a fight at a birthday party for appellant’s niece — the daughter of appellant’s brother, Gilbert Davila. The State’s theory of prosecution was that appellant left the party with the complainants who were seated in the front seat of Gilbert’s vehicle. Appellant and Gilbert returned a short time later, admitted to killing the complainants, bathed, burned their clothes, and altered the interior of the vehicle to remove evidence of the crime. The complainants’ bodies were found the following day beside the roadway. Appellant and Gilbert testified they had nothing to do with the murders. The jury accepted the State’s theory of prosecution, rejected the defensive testimony, and convicted appellant of capital murder. The evidence will be developed more fully below.

After that trial, the hearing on the State’s motion to revoke appellant’s community supervision resumed. The probation officer identified appellant as the person named in the motion to revoke community supervision. The trial judge granted the motion and assessed appellant’s punishment at ten years confinement.

Appellant’s two points of error challenge the legal and factual sufficiency of the evidence to support the revocation of his community supervision. In a proceeding to revoke community supervision, the burden of proof is on the State to show by a preponderance of the evidence that the probationer violated a condition of probation as alleged in the motion to revoke. Cobb v. State, 851 S.W.2d 871, 873 (Tex.Crim.App.1993). The State satisfies this burden when the greater weight of credible evidence before the court creates a reasonable belief that it is more probable than not that a condition of probation has been violated as alleged in the motion to revoke. Joseph v. State, 3 S.W.3d 627, 640 (Tex.App.-Houston [14th Dist.] 1999, no pet.).

In reviewing the legal sufficiency of the evidence to support the revocation, appellate courts review the evidence in the light most favorable to the judgment, giving deference to the trial court as the sole trier of facts, the credibility of the witnesses, and the weight to be given to the evidence presented. Russell v. State, 685 S.W.2d 413, 419 (Tex.App.-San Antonio 1985, pet. ref'd); see Jones v. State, 589 S.W.2d 419, 421 (Tex.Crim.App.1979). This review is conducted under the abuse of discretion standard. Naquin v. State, 607 S.W.2d 583, 586 (Tex.Crim.App.1980). When the standard of review is abuse of discretion, the record must simply contain some evidence to support the decision made by the trial court. Brumbalow v. State, 933 S.W.2d 298, 300 (Tex.App.-Waco 1996, pet. ref'd).

When a defendant challenges the factual sufficiency of the evidence to support the conviction, we apply the standard announced in Clewis v. State, 922 S.W.2d 126, 134 (Tex.Crim.App.1996), and refined in Santellan v. State, 939 S.W.2d 156, 164 (Tex.Crim.App.1997):(a) we assume the evidence is legally sufficient; (b) we then consider all of the record evidence, not just the evidence which supports the verdict; (c) we review the evidence weighed by the fact-finder which tends to prove the existence of the fact in dispute, and compare it to the evidence which tends to disprove that fact; and (d) we set aside the verdict only if it is so contrary to the overwhelming weight of the evidence as to be clearly wrong and unjust. See Santellan, 939 S.W.2d at 164.

Appellant asks us to apply this standard of review to the trial judge’s decision to revoke the community supervision. Several of our sister courts have determined that the Clewis line of cases does not apply to appellate review of the decision to revoke community supervision. Brooks v. State, 153 S.W.3d 124, 126 (Tex.App.-Beaumont 2004, no pet.); Pierce v. State, 113 S.W.3d 431, 436 (Tex.App.-Texarkana 2003, pet. ref'd); Cochran v. State, 78 S.W.3d 20, 27 (Tex.App.-Tyler 2002, no pet.); Becker v. State, 33 S.W.3d 64, 66 (Tex.App.-El Paso 2000, no pet.); Allbright v. State, 13 S.W.3d 817, 818 (Tex.App.-Fort Worth 2000, pet. ref'd); Johnson v. State, 943 S.W.2d 83, 85 (Tex.App.-Houston [1st Dist.] 1997, no pet.); Brumbalow v. State, 933 S.W.2d 298, 299-300 (Tex.App.-Waco 1996, pet. ref'd). Appellant does not challenge these holdings nor does he attempt to distinguish them from the instant case. We find these cases persuasive, and consequently, we hold appellant has no right to a factual sufficiency review of a trial judge’s decision to revoke community supervision. Accordingly, the second point of error is overruled.

We now turn to appellant’s legal sufficiency challenge. Joe Rendon testified that appellant admitted shooting the complainants. According to Rendon, appellant said he shot the male complainant once and shot the female complainant twice because the first shot went all the way through her into the dashboard. Ren-don’s testimony is corroborated by Dr. Ray Fernandez of the Nueces County Medical Examiner’s Office who testified the male complainant died from a single gunshot wound and the female complainant died as a result of two gunshot wounds to the head. One wound was described as a “perforating gunshot wound” which means the projectile “went in and out, through and through the body.”

When this evidence is viewed in the light most favorable to the prosecution, we find the State’s evidence was sufficient to create a reasonable belief that it is more probable than not that appellant violated the condition of community supervision as alleged in the motion to revoke, namely the offense of capital murder. Joseph, 3 S.W.3d at 640. Consequently, we hold the evidence is legally sufficient to support the revocation of appellant’s community supervision. Appellant’s first point of error is overruled.

The judgment of the trial court is affirmed.

      . The State did not seek the death penalty. The trial judge automatically assessed punishment at confinement for life.


author: W. KENNETH LAW, Chief Justice.

text:
    ENTERGY GULF STATES, INC., Appellant, v. PUBLIC UTILITY COMMISSION OF TEXAS; Office of Public Utility Counsel; Cities of Beaumont, Bridge City, Conroe, Groves, Nederland and Port Neches; and Texas Industrial Energy Consumers, Appellees.
    No. 03-03-00628-CV.
    Court of Appeals of Texas, Austin.
    Aug. 31, 2005.

      John F. Williams, Jay Breedveld, Clark, Thomas & Winters, L. Richard Wester-burg, Paula Cyr, Entergy Gulf States, Inc., Austin, for Appellant.
    Elizabeth R.B. Sterling, Steven Baron, Asst. Attys. Gen., Natural Resources Div., Austin, for Public Utility Commission of Texas.
    Eva King Andries, Suzette Ray McClellan, Assistant Public Counsel, Office of Public Utility Counsel, Austin, for Office of Public Utility Counsel.
    Daniel J. Lawton, The Lawton Law Firm, Austin, for Cities of Beaumont, et al.
    Rex D. VanMiddlesworth, Karen D. Whitt, Andrews Kurth, LLP, Austin, for Texas Industrial Energy Consumers.
    Before Chief Justice LAW, Justices B.A. SMITH and PEMBERTON.
   ON 1MOTION FOR REHEARING

OPINION

W. KENNETH LAW, Chief Justice.

To address concerns raised in the motion for rehearing of Appellant Entergy Gulf States, Inc., we withdraw our opinion and judgment issued on May 19, 2005, and substituted the following opinion in its place. We overrule the motion for rehearing.

This appeal originated as a suit for judicial review challenging the Public Utility Commission’s (Commission) order from a fuel reconciliation proceeding conducted under the Public Utility Regulatory Act (PURA). See Tex. UtiLCode Ann. § 36.203 (West 1998). Appellant Entergy Gulf States, Inc. (Entergy) claims that the Commission erred when it refused to permit Entergy to recover from retail customers approximately $4.2 million in costs Entergy incurred to purchase additional power from its own River Bend Nuclear Generating Station (River Bend) and from purchased power contracts. Entergy argues that the purchase of energy generated by the 30% interest in the River Bend power plant implicates the interstate wholesale energy market and that the Commission’s actions are preempted by federal law. Entergy also asserts that the Commission erred when it disallowed purchased power capacity charges. For the reasons stated below, we affirm the judgment of the trial court upholding the Commission’s order.

Background

During the summer of 1999, Entergy experienced an unanticipated power shortage that caused it to impose rolling blackouts on its retail customers. In response to regulatory criticism and fines, Entergy arranged to acquire more power from River Bend and from unaffiliated wholesale energy providers (purchased power) to adequately meet the anticipated energy needs of its customers.

Initially, Entergy owned a 70% interest in River Bend (River Bend 70%). The energy generated from the River Bend 70% is earmarked for regulated service. The rates Entergy charges its customers, which includes the costs of providing the River Bend 70% energy, are set by the Commission and are designed to permit Entergy to realize a reasonable profit in excess of the utility’s reasonable and necessary operating expenses associated with generating the River Bend 70% energy. See Tex. UtiLCode Ann. § 36.051 (West 1998).

Entergy subsequently acquired the remaining 30% of the River Bend power plant (River Bend 30%) as part of a bankruptcy settlement. It set aside the energy generated from the River Bend 30% for sale in the unregulated wholesale energy market. Thus, Entergy recovers its costs plus a regulated profit from the River Bend 70% energy but obtains wholesale market prices for its unregulated River Bend 30% energy.

During the 1999 blackout, Entergy sold its River Bend 30% energy on the wholesale market instead of making it available to satisfy its native load, even though Entergy realized it had made insufficient resources available for its retail customers. Entergy was criticized and fined by the Commission for the blackout and decided to make the River Bend 30% energy available to retail customers for summer 2000 as part of a comprehensive plan to avoid another blackout. To this end, Entergy Services, Inc. filed a contract for the sale of the River Bend 30% energy with the Federal Energy Regulatory Commission (FERC) on May 8, 2000 (May 2000 Tariff). The filing contemplates the sale of the River Bend 30% energy between two En-tergy affiliates, Entergy as the proposed seller and Entergy Services, Inc. as the proposed buyer. The FERC approved the River Bend 30% transaction and set a rate for the sale of the wholesale energy. The May 2000 Tariff became effective June 1 of that same year.

Entergy used the River Bend 30% energy and purchased power to supplement its native load, ensuring that its customers would not experience another energy shortage. Entergy sought reimbursement for nearly $583 million in additional energy expenses by instituting a fuel reconciliation proceeding. See Tex. UtiLCode Ann. § 36.203 (West 1998).

The Commission permitted Entergy to recover its eligible fuel reconciliation costs, including the cost of the nuclear fuel associated with generating the River Bend 30% energy. The Commission disallowed nearly $4.2 million of non-fuel costs associated with the River Bend 30% energy and associated with capacity costs that were embedded in the purchased power contracts. It is these two categories of disallowed costs to which Entergy objects.

Entergy disagreed with the Commission’s decision and the Commission referred the matter to the State Office of Administrative Hearings (SOAH) for a hearing. Several parties, including the cities that Entergy serves (Cities) and the Office of Public Utility Counsel (OPC) intervened.

At the SOAH hearing, Entergy discussed the July 1999 blackout and its decision to use the unregulated River Bend 30% energy to prevent future energy shortfalls. Entergy claimed that the Commission erred when it disallowed the recovery of the River Bend 30% energy costs because the River Bend 30% energy transaction was an interstate wholesale energy transaction and subject to the rate set forth in FERC’s May 2000 Tariff. Thus, according to Entergy, federal preemption precludes the Commission’s discretion in determining the rate Entergy should recover in the fuel reconciliation; the Commission was required to honor the May 2000 Tariff rate and permit Entergy to recover all of its River Bend 30% costs.

The Cities and OPC disagreed with En-tergy and claimed that the River Bend 30% energy sale was the product of an affiliate transaction and, thus, the Commission acted properly when it disallowed nonfuel-related costs, including the affiliate profit Entergy realized on the sale of its River Bend 30% energy to itself. The Cities and OPC also offered evidence that suggested Entergy impermissibly included capacity charges in the other purchased power costs for which it sought reimbursement. Based on these two assertions, the Cities and OPC recommended that the ALJ disallow the non-fuel costs associated with the River Bend 30% energy transaction and disallow the capacity charge component embedded in the price of the purchased power contracts.

The ALJ found that the River Bend 30% energy acquisition was an affiliate transaction that violated the Commission’s cost-of-service rules, which prohibit recovery of additional profit for an affiliate sale. The ALJ indicated that there might have been some impermissibly embedded capacity costs in the purchased power contracts but declined to calculate and impute the precise amount of ineligible costs.

The Commission rejected the ALJ’s recommendations regarding the affiliate sale and embedded capacity cost issues and remanded the case to SOAH to determine the portion of Entergy’s claimed reimbursable expenses that was a profit Entergy realized on the sale of Entergy’s River Bend 30% energy to itself, and to determine the capacity costs reflected in the claimed eligible fuel costs. On remand, the ALJ determined that the transaction was not an affiliate transaction and that all of the costs should be reimbursed.

The Commission disagreed with the ALJ’s subsequent conclusions, stating that the River Bend 30% energy was not part of a purchased power transaction, but, if anything, was an affiliate transaction. Moreover, the Commission found that there was no purchase or sale in connection with the River Bend 30% energy transaction because there was no transfer of title from Entergy to Entergy Services, Inc., and because Entergy did not “buy back” the power from Entergy Services Inc. The Commission’s Final Order stated, “An internal corporate transfer between Entergy’s unregulated and regulated business activities does not amount to a sale.” The Commission explained that it was unreasonable for Entergy to recover a profit and ineligible costs associated with the “purchase” of its own wholesale electricity and to record the transaction as a “sale” in its accounting system, when En-tergy merely used its own, albeit unregulated, generation. Pursuant to the administrative code, the Commission reimbursed Entergy for the River Bend 30% energy fuel costs in the fuel reconciliation and disallowed the non-fuel costs and profit Entergy realized on the affiliate sale of the River Bend 30%. See 16 Tex. Admin. Code § 25.236(a)(1) (2004).

The Commission also found that the purchased power included capacity charges embedded in the contract price, even though the contracts did not separately state capacity charges. Because capacity charges are ineligible for reimbursement in a fuel reconciliation proceeding, the Commission disallowed 24% of the contract price, which was the percentage Entergy admitted was a reasonable estimate of the proper capacity charge. See id. § 25.236(a)(4). Accordingly, the Commission allowed Entergy to recover its purchased power costs, less the disallowed capacity charges. The Commission noted that the proper forum for Entergy to recover the disallowed capacity and demand costs is through a rate case proceeding, not an interim fuel reconciliation proceeding. See Tex. UtiLCode Ann. § 36.051 (West 1998).

Entergy appealed the decision to the district court seeking a reversal of the Commission’s final order and seeking a declaratory judgment to address similar subsequent purchase power agreements. The district court denied all relief requested by Entergy. This appeal followed.

DISCUSSION

Entergy challenges the trial court’s decision in three issues: (1) whether the Commission’s discretion to disallow the costs associated with the River Bend 30% energy purchase is preempted by federal law, and whether the order violates PURA and the Commission’s own previous orders, and constitutes an abuse of discretion; (2) whether the Commission’s order disallowing imputed capacity costs associated with other purchased power is preempted by federal law, violates the fuel rule, constitutes an arbitrary ad hoc amendment to the fuel rule, and was disallowed in the absence of substantial evidence; and (3) whether the district court erred in refusing to grant a declaratory judgment that Entergy’s similarly situated power purchases are subject to the requirements of the filed rate doctrine.

State and Federal Regulatory Overview

A brief review of the relevant state and federal law and regulations will be helpful to our discussion. Under PURA, a regulated electric utility such as Entergy may not automatically pass its actual fuel costs through to its customers. Tex. Util.Code Ann. § 36.201 (West Supp. 2004-05); Nucor Steel v. Public Util. Comm’n, 26 S.W.3d 742, 744 (Tex.App.-Austin 2000, pet. denied). Instead, the Commission conducts a full rate hearing to determine the base rate a utility may charge its customers for its energy. See Entergy Gulf States, Inc. v. Public Util. Comm’n, 112 S.W.3d 208, 215 (Tex.App.Austin 2003, pet. denied). The base rate is prospective, and is set at a level that will permit the utility to realize a reasonable profit and reimburse the utility’s projected reasonable and necessary operating costs. Tex. UtiLCode Ann. § 36.051 (West 1998). A fuel factor component is also incorporated in the rates, and takes into account projected fuel costs. Id. § 36.203. A fuel reconciliation, as distinguished from a base rate case, is an interim “true-up” proceeding, where the Commission periodically adjusts the utility’s fuel factor to correct for the variance between the anticipated fuel costs and fuel costs actually incurred. Id.; Nucor Steel, 26 S.W.3d at 744.

A fuel reconciliation is a narrow inquiry that aims only to adjust the fuel factor for the anomalies that result from actual, fluctuating fuel prices that occur in between rate hearings. See G.T.E. S.W., Inc. v. Public Util. Comm’n, 978 S.W.2d 161, 168 (Tex.App.-Austin 1998, pet. denied) (Powers, J., dissenting). “The obvious intention of the legislature was to avoid the time and expense of a full-scale rate case, both to the public and to the utility, when the issue involves only a single item of what are indisputably operating expenses — fuel costs....” Id. at 168-69. If the Commission determines that an adjustment to the fuel factor is in order, a refund or a surcharge to customers will result. 16 Tex. Admin. Code § 25.236(e) (2004). In a fuel reconciliation hearing, the utility bears the burden of demonstrating that its actual fuel-related expenses were “reasonable and necessary” and eligible for recovery. Id. § 25.236(d).

Eligible fuel reconciliation expenses are those expenses properly recorded in the utility’s general ledger accounts 501, 503, 518, 536, 547, 555 and 565, under the FERC Uniform System of Accounts. Id. § 25.236(a). The FERC rules provide that account 555 shall include purchased power expenses that are incurred when a utility purchases wholesale electricity for resale. See 18 C.F.R. § 101 (2004). The fuel rule prohibits a utility from recovering purchased power capacity costs in a fuel reconciliation. 16 Tex. Admin. Code § 25.236(a)(4) (2004). Capacity charges and other operating expenses may be recovered in a full rate case hearing. See Tex. UtiLCode Ann. § 36.051 (West 1998).

Utilities are also prohibited from charging customers for an additional profit realized from the sale of energy from an affiliate of the utility to itself. 16 Tex. Admin. Code § 25.236(a)(1) (2004). “The electric utility may not recover [a] ... profit for an affiliate of the electric utility, regardless of whether the affiliate incurs or charges the ... profit before or after the fuel is delivered to the generating plant site.” Id.

The FERC regulates the sale of electricity at wholesale in interstate commerce. 16 U.S.C. § 824(b); Entergy La., Inc. v. Louisiana Pub. Serv. Comm’n, 539 U.S. 39, 41, 123 S.Ct. 2050, 156 L.Ed.2d 34 (2003). Under the filed rate doctrine, interstate power rates filed with the FERC or fixed by the FERC must be given binding effect by state utility commissions determining intrastate rates. Nantahala Power & Light Co. v. Thornburg, 476 U.S. 953, 963, 106 S.Ct. 2349, 90 L.Ed.2d 943 (1986). When the FERC sets a rate between a purchaser and seller of wholesale power, a state may not exercise its jurisdiction over retail sales to prevent the seller from recovering the FERC-ap-proved rate, impermissibly “trapping” costs. Mississippi Power & Light Co. v. Mississippi ex rel. Moore, 487 U.S. 354, 372, 108 S.Ct. 2428, 101 L.Ed.2d 322 (1988). A state agency’s failure to give binding effect to a FERC-approved wholesale power rate is a violation of the FERC’s exclusive jurisdiction and therefore is preempted by federal law. Id. at 371, 108 S.Ct. 2428. A fuel reconciliation is a ratemaking proceeding. Southwestern Pub. Serv. Co. v. Public Util. Comm’n, 962 S.W.2d 207, 219 (Tex.App.-Austin 1998, pet. denied); G.T.E. S.W., Inc., 978 S.W.2d at 166.

The River Bend 30% Transaction

In its first issue, Entergy asserts that it was error for the Commission to disallow the River Bend 30% energy non-fuel costs. Entergy argues that because the transaction was an interstate sale of wholesale electricity, the filed rate doctrine requires the Commission to permit Enter-gy to recover all of its River Bend 30% energy costs, as provided for in the May 2000 Tariff rate. Thus, according to En-tergy, the Commission’s regulation of the River Bend 30% energy costs, i.e., disallowing its non-fuel expenses, is preempted by federal law. Entergy also complains that the Commission’s disallowance of the River Bend 30% energy non-fuel costs contradicted the Commission’s previous orders and constitutes an abuse of discretion.

We begin our discussion by setting forth our analytical framework. We confine our inquiry to whether the Commission properly disallowed ineligible costs in evaluating the Commission’s actions in the fuel reconciliation. See Tex. UtiLCode Ann. § 36.203 (West 1998). Pursuant to the fuel reconciliation hearing, the Commission permitted Entergy to recover its River Bend 30% energy nuclear fuel costs but disallowed certain non-fuel expenses En-tergy wanted to charge through to its retail customers, including the profit Enter-gy realized on the sale of its wholesale energy to itself, and other ineligible operating expenses. Entergy asserts that the filed rate doctrine applies and thus the Commission must permit Entergy to recover all of its River Bend 30% energy costs as allowed by the May 2000 Tariff. See Nantahala Power and Light Co., 476 U.S. at 963, 106 S.Ct. 2349. We disagree.

Texas law prohibits a utility from charging customers for an additional profit realized from the sale of energy from an affiliate of the utility to itself. 16 Tex. Admin. Code § 25.236(a)(1) (2004). The May 2000 Tariff contemplated the sale of the River Bend 30% energy from Entergy to Enter-gy Services, Inc., then a sale from Entergy Services, Inc. back to Entergy to supplement its native load.

In its effort to avoid affiliate sale fuel reconciliation deductions, Entergy proved that in fact no sale occurred. The evidence in the record shows that the proposed sales transaction was never executed as structured in the May 2000 Tariff. James Kenney, Vice President of Energy Management for Entergy Services, Inc., testified at the SOAH hearing that Enter-gy, not Entergy Services, Inc., acquired the River Bend 30% energy. He asserted that “regardless of the contract and the filing at the FERC, this is strictly a transaction from Entergy to itself.” Kenney averred that the unregulated River Bend 30% energy was dedicated to regulated retail service for a limited period of time, and that the energy never left Entergy.

Furthermore, under the terms of the System Agreement, it would have been impossible for Entergy to sell the River Bend 30% energy to the Entergy System. During the summer of 1999, while Entergy was experiencing the energy shortfall that led to the blackout and its regulatory discipline, Entergy sold its River Bend 30% to a third party instead of using the River Bend 30% energy to address Entergy’s native load demands. Entergy was informed by both the Texas and Louisiana energy regulatory commissioners that it should use the River Bend 30%’ energy to supplement its anticipated energy needs for the summer of 2000. Under the System Agreement, an operating company, like Entergy, may only sell energy it produces in excess of its needs. Because Entergy needed the River Bend 30% energy to satisfy its native load, Entergy, by the terms of the System Agreement, was never in the position to sell the River Bend 30% to the Entergy System and to repurchase the energy, as structured under the May 2000 Tariff.

The Commission also found that no purchase or sale occurred because there was no transfer of title from Entergy to Enter-gy Services, Inc., nor did Entergy “buy back” the power from Entergy Services, Inc. Obtaining approval from the FERC for a transaction is not tantamount to consummating the transaction. Thus the sale to Entergy Services, Inc. contemplated in the FERC filing never took place.

Entergy argues that an intra-corporate transfer under Public Serv. Comm’n v. Mid-La. Gas Co., 463 U.S. 319, 103 S.Ct. 3024, 77 L.Ed.2d 668 (1983) is considered a “sale.” In Midr-La. Gas Co., the U.S. Supreme Court found that under federal statutes regulating the sales of natural gas, an intra-corporate transfer could be considered a “first sale.” Id. at 326, 103 S.Ct. 3024. The Supreme Court examined the legislative history of the Natural Gas Policy Act and determined that Congress intended for pipeline production to receive first sale pricing. Id. at 338, 103 S.Ct. 3024. The Supreme Court’s Mid-La. Gas Co. decision was narrowly tailored to address the question of “first sales” under the Natural Gas Policy Act; it did not hold that all utility intra-corporate transfers are “sales.” See Southern Ca. Edison Co. v. Southern Ca. Gas Co., 80 F.E.R.C. ¶ 61, 390, 1997 WL 598491 (1997).

Because the May 2000 Tariff sale never took place and because under these circumstances the intra-corporate transfer is not considered a “sale,” the filed rate doctrine does not apply and the Commission’s discretion to disallow non-fuel costs in the fuel reconciliation is not preempted by federal law. A fuel reconciliation is a narrow inquiry about the fluctuation of actual fuel costs. Tex. Util.Code Ann. § 36.203 (West 1998); see G.T.E. S.W., Inc., 978 S.W.2d at 168. We hold that the Commission’s treatment of the River Bend 30% transaction is not preempted by federal law and does not violate the filed rate doctrine. The Commission properly disallowed the non-fuel components of the River Bend 30% energy costs. See Tex. Util.Code Ann. § 36.051 (West 1998).

Entergy also complains that if the filed rate doctrine does not apply, Enter-gy’s non-fuel costs will be theoretically trapped because these costs are not already included in Entergy’s base rate and Entergy claims that it cannot otherwise recover these costs. See Mississippi Power and Light Co., 487 U.S. at 372, 108 S.Ct. 2428. We disagree.

Entergy has not shown that it failed to recover its non-fuel rates through its base rate due to the additional electricity it sold during the summer of 2000. Entergy’s base rates were set based on the expectation that it would sell a certain amount of electricity at retail, and the base rates were frozen after the rate case proceeding. During the Summer of 2000, Entergy sold more electricity at retail than had been expected when the base rates were set. Thus with each incremental unit sold at retail, Entergy may very well have recovered more in its base rates than it and the Commission had expected Entergy to recover. To show that non-fuel costs were trapped, Entergy would have to show that the non-fuel related costs were not recovered in the additional revenue Entergy realized through base rates. Entergy made no such showing.

Entergy also complains that the Commission’s disallowance of the River Bend 30% energy non-fuel costs was an abuse of discretion because it contradicted the Commission’s previous orders by treating the River Bend 30% energy as a regulated asset for the purpose of the fuel reconciliation.

A state agency decision may be found to be arbitrary and capricious when it fails to reflect consideration of statutory factors and when it reflects an unreasonable result, even if the agency purports to review pertinent factors. E.g., City of El Paso v. Public Util. Comm’n, 883 S.W.2d 179, 184 (Tex.1994).

The Commission had previously treated the River Bend 30% energy as a wholesale generation asset. It did not include any of the River Bend 30% energy non-fuel related costs in the base rates Entergy charges its customers because Entergy insisted on selling the River Bend 30% energy on the wholesale energy market. Entergy elected to use its own River Bend 30% wholesale energy to comply with the Commission’s mandate to secure additional power to satisfy the needs of its retail customers. Because a portion of the costs for which Entergy seeks reimbursement are ineligible non-fuel expenses, the Commission disallowed the ineligible costs, consistent with the guidelines set forth in the Texas Administrative Code. See 16 Tex. Admin. Code § 25.236(a) (2004). Thus the Commission’s decision was not arbitrary or capricious. We overrule Entergy’s first issue.

Imputed Capacity Charges

In its second issue, Entergy asserts that the Commission improperly imputed capacity charges from the additional power Entergy purchased from external wholesalers. Entergy argues that the filed rate doctrine preempts the Commission’s actions and that the Commission violated the federal interpretation of the System Agreement. Entergy also challenges the Commission’s disallowance of imputed capacity costs because this treatment violates the fuel rule, is not supported by substantial evidence, and constitutes an arbitrary ad hoc amendment to the fuel rule.

The Commission asserts that Entergy waived its federal preemption argument by failing to raise it in its motion for rehearing. Entergy argues that case law permits Entergy to raise an issue of federal preemption at any time. See Gorman v. Life Ins. Co. of North Am., 811 S.W.2d 542, 545 (Tex.1991).

In administrative proceedings, a party must timely file a motion for rehearing as a prerequisite to appeal. Tex. Gov’t Code Ann. § 2001.145 (West 2000). The motion for rehearing must be sufficiently definite to allow the agency to cure the error or defend the order. Ray v. State Bd. of Pub. Accountancy, 4 S.W.3d 429, 433 (Tex.App.-Austin 1999, no pet.); Four Stars Food Mart, Inc. v. Texas Alcoholic Beverage Comm’n, 923 S.W.2d 266, 270 (Tex.App.-Fort Worth 1996, no writ). To preserve the issue for review, the party must state in the motion for rehearing the particular issue the party asserts was error and the legal basis upon which the claim rests. Id.

In Gorman, a widow sued her husband’s employer and its insurer to recover work-related death benefits she claimed the insurance company improperly denied. See Gorman, 811 S.W.2d at 544. The defendants contended that the widow\s causes of actions were preempted by ERISA because they “related to” an employee benefit welfare plan organized pursuant to the authority and requirements of ERISA. Id. The supreme court recognized that it had to clarify the extent of the ERISA preemption. Id. “At the heart of the present dispute is whether, given the facts of this case, ERISA preemption implicates the subject matter jurisdiction of the court or merely affects which law is to be used in the case.” Id. A preemption argument that affects forum rather than choice of law cannot be waived and may be raised on appeal. Id. However, an argument that affects choice of law can be waived. See id.

Entergy claims that federal law preempts the Commission’s actions because the filed rate doctrine mandates that the Commission apply wholesale power rates fixed by the FERC. Thus, Entergy asserts a choice of law argument as to which rules, federal or state, the Commission should have applied in this case. En-tergy does not assert a preemption argument attacking the competency of the Commission or the courts to hear the case. Thus, Gorman does not support Entergy’s argument. Because Entergy did not preserve the choice of law issue in its motion for rehearing, Entergy has waived the right to argue this issue on appeal. Ray, 4 S.W.3d at 433.

Entergy also asks us to decide whether the Commission’s treatment of capacity costs violates the fuel rule, whether the Commission’s decision is supported by substantial evidence, and whether the Commission’s actions constitute an arbitrary ad hoc amendment to the fuel rule.

The fuel rule prevents a utility from recovering capacity costs through the fuel factor as part of purchased power. 16 Tex. Admin. Code § 25.236(a)(4) (2004). In determining whether substantial evidence exists to support an agency’s decision, the reviewing court may decide only whether the record demonstrates some reasonable basis for the agency’s action. Mireles v. Texas Dep’t of Pub. Safety, 9 S.W.3d 128 (Tex.1999). The court may not substitute its judgment for that of the agency, and the court does not determine whether the agency’s decision was correct. Id. Courts must affirm administrative findings in contested cases if there is more than a scintilla of evidence to support them. Id. An administrative decision may be sustained even if the evidence preponderates against it. Id.

A state agency must promulgate new rules through formal rulemaking procedures, which include giving notice of a proposed new rule, soliciting public comment, submitting to legislative review, and entering an order to adopt the new rule. See Tex. Gov’t Code Ann. §§ 2001.023; 2001.029; 2001.032-.033 (West 2000).

Entergy claims that the Commission violated the fuel rule because it disallowed capacity charges that were not explicitly stated separately as line items. In essence, Entergy argues that the fuel rule requires the Commission to pass through to retail customers the entire cost of purchased power unless the contract explicitly states capacity charges. In other words, Entergy argues the Commission cannot look beyond the stated “energy only” purchased power contract terms to determine whether the contract in fact includes embedded capacity charges.

The plain language of the fuel rule prohibits a utility from recovering capacity charges associated with purchased power. See 16 Tex. Admin. Code § 25.236(a)(4) (2004). The rule is not stated in terms of segregated electricity and capacity charges, but in terms of total capacity charges. The expert testimony in the record shows that the contracts provided capacity benefits by offering system-wide reliability and firmness of supply, even though the contracts did not separately state a capacity charge. Entergy did not advance its own estimate of the imputed capacity charge, but conceded that the expert’s estimate of 24% of the contract price was reasonable. Furthermore, Entergy testimony corroborated Entergy’s desire to acquire through purchased power the power and capacity it required to avoid another energy shortfall in 2000. We hold that the Commission properly excluded the imputed capacity charges and that there is substantial evidence to support the Commission’s decision.

Last, Entergy asserts that the Commission illegally modified the fuel rule when it disallowed the embedded capacity charges associated with the purchased power. Entergy claims that this practice departed from previous applications of the fuel rule and that the ad hoc modification is unlawful because the Commission did not engage the formal rulemaking process to modify the fuel rule. See Tex. Gov’t Code Ann. §§ 2001.023; 2001.029; 2001.032-.033 (West 2000). In January 2005, the Commission solicited comments on proposed amendments to the fuel rule regarding eligible purchased power expenses. See 30 Tex. Reg. 335-36 (2005) (proposed January 10, 2005).

Entergy asserts that the Commission’s decision departed from its fuel reconciliation policy and rules and suggests that this request for public comment is tantamount to the Commission admitting that it must engage the formal rulemaking process to modify the fuel rule to permit the Commission to impute capacity charges. We disagree.

The proposed modification for which the Commission seeks public comment will facilitate the identification and calculation of imputed energy charges in purchased power contracts when no capacity charge is separately stated. See id. The modification does not seek to establish whether the Commission may impute charges.

Furthermore, the Commission may consider a matter in a contested case before adopting a rule later. See City of El Paso, 883 S.W.2d at 189 (“ad hoc adjudication may be preferable to formal rulemaking proceeding where ‘the agency may not have had sufficient experience with a particular problem to warrant rigidifying its tentative judgment into a hard and fast rule.’ ”).

We hold that the Commission’s treatment of the imputed capacity costs was proper under the fuel rule and was supported by substantial evidence, and that the Commission’s decision to disallow imputed capacity charges did not constitute an ad hoc amendment to the fuel rule. We overrule Entergy’s second issue.

Declaratory Judgment

In its last issue, Entergy asserts that the district court erred in refusing to grant a declaratory judgment that Entergy’s similarly situated future power purchases are subject to federal preemption and the filed rate doctrine. Because we hold that the transactions at issue in this case are not subject to the filed rate doctrine, we need not reach the declaratory judgment issue.

CONCLUSION

We hold that the Commission properly disallowed the non-fuel costs associated with the River Bend 30% energy transaction and properly disallowed the purchased power contracts’ imputed capacity costs in the fuel reconciliation. We affirm the judgment of the district court, affirming the Commission’s actions.

      . Entergy is one of five public utilities that comprise the Entergy System, a single integrated electric system that operates under the Entergy System Agreement (System Agreement). The System Agreement is a separate Federal Energy Regulatory Commission tariff that controls how electricity and the total costs of generating power on the system are allocated among the corporate siblings. Entergy La., Inc. v. Louisiana Pub. Serv. Comm’n, 539 U.S. 39, 123 S.Ct. 2050, 156 L.Ed.2d 34 (2003). A sale under the System Agreement can occur only when a subsidiary has energy in excess of its own needs. In any given hour, a subsidiary can be buying from or selling to the Entergy Energy Exchange, a pool of surplus energy generated by other subsidiaries.

      . Entergy characterizes the River Bend 30% asset as "unregulated.” Although the term "unregulated asset” is not defined, for our purposes we assume that the term means an asset whose generated energy is sold in the wholesale market and whose costs are not recovered in the base rate charged to retail ratepayers.

      . "Native load” refers to the collective energy needs of Entergy’s retail customers.

      . Entergy Services, Inc. is a subsidiary of Entergy Corporation and is a service company affiliate of the Entergy utility subsidiaries. It acts as their agent in the execution and administration of certain contracts.

      .The proposed sale would be executed according to the System Agreement.

        . The Supreme Court recognized a limited "prudence review” exception to the scope of the FERC's jurisdiction and filed rate doctrine. Gulf States Utils. Co. v. Public Util. Comm’n, 841 S.W.2d 459, 469 (Tex.App.-Austin 1992, writ denied). Federal preemption does not preclude a state utility commission's review of a utility’s prudence in contracting to purchase a quantity of energy capacity in light of its projected needs and considering its alternative power sources. Id. The prudence review exception is not at issue in this case.

      . This issue only concerns power purchased from outside energy wholesalers and not the River Bend 30% transaction.

      . Capacity charges may be recovered in a full rate case hearing. See Tex. Util.Code Ann. § 36.051 (West 1998).