Indus. Specialists, LLC v. Blanchard Ref. Co.

• Docket Number: 20-0174
• Decision Date: 10 June 2022
• Citation: 652 S.W.3d 11
• Parties: INDUSTRIAL SPECIALISTS, LLC, Petitioner, v. BLANCHARD REFINING COMPANY LLC and Marathon Petroleum Company LP, Respondents
• Court: Texas Supreme Court

652 S.W.3d 11

INDUSTRIAL SPECIALISTS, LLC, Petitioner,

v.BLANCHARD REFINING COMPANY LLC and Marathon Petroleum Company LP, Respondents

No. 20-0174

Supreme Court of Texas.

Argued February 1, 2022

OPINION DELIVERED: June 10, 2022

Matthew H. Frederick, Lehotsky Keller LLP, Austin, Scott Keller, Lehotsky Keller LLP, Dallas, for Amici Curiae The American Petroleum Institute, The National Association of Manufacturers, American Fuel & Petrochemical Manufacturers, The Texas Oil & Gas Association.

Dylan B. Russell, Hoover Slovacek LLP, Houston, for Amici Curiae Mosaic Baybrook One, L.P., Mosaic Baybrook Two, L.P.

R. L. Michael Northrup, Dallas, Pro Se.

Michael A. Golemi, James T. Kittrell, Jody M. Schisel-Meslin, Liskow & Lewis, Houston, Shelly White, Wright Brown & Close, LLP, Houston, Michael A. Choyke, Jessica Zavadil Barger, Brian J. Cathey, Wright Close & Barger, LLP, Houston, for Petitioner.

Joel Zane Montgomery, Jonathan Bruce Smith, Zachary Alex Rodriguez, Amy Douthitt Maddux, Shipley Snell Montgomery LLP, Houston, for Respondents.

Justice Boyd announced the Court's judgment and delivered an opinion in which Justice Devine and Justice Huddle joined.

After denying the parties’ competing summary-judgment motions, the trial court entered an order permitting an interlocutory appeal. The court of appeals, however, refused the application for permissive appeal, stating that the application failed to establish the statutory requirements. Both parties contend the court of appeals abused its discretion, both by refusing the permissive appeal and by failing to adequately explain its reasons. We disagree with both arguments and affirm.

I.

Background

Blanchard Refining Company¹ hired Industrial Specialists to provide turnaround services at Blanchard's refinery in Texas City. Three years into the five-year contract, a fire occurred in a regenerator vessel, injuring numerous Industrial Specialists employees and one employee of another contractor. The employees sued Blanchard and all of its other contractors, but they did not sue Industrial Specialists.² Blanchard demanded a defense and indemnity from Industrial Specialists pursuant to an indemnity provision in the parties’ contract. Industrial Specialists rejected the demand.

Blanchard and the other contractors ultimately settled all the employees’ claims for $104 million. Blanchard paid $86 million of that total. Blanchard then filed this suit against Industrial Specialists, seeking to enforce the indemnity provision. Blanchard and Industrial Specialists filed competing summary-judgment motions. The trial court denied both without explaining its reasons but granted Industrial Specialists’ unopposed motion to pursue a permissive interlocutory appeal under section 51.014(d) of the Texas Civil Practice and Remedies Code.

The court of appeals denied Industrial Specialists’ petition for permissive appeal. 634 S.W.3d 760, 760 (Tex. App.—Houston [1st Dist.] 2019). In a one-page memorandum opinion, the court concluded that "the petition fail[ed] to establish each requirement" for a permissive appeal. Id. (citing TEX. R. APP. P. 28.3(e)(4) ). We granted Industrial Specialists’ petition for review.

II.

Permissive Interlocutory Appeals

Since at least as early as the federal Judiciary Act of 1789, American law has generally permitted appeals only from "final decrees and judgments."³ We have honored this final-judgment rule in Texas, recognizing that it promotes "[c]onsistency, finality, and judicial economy" and ensures that courts decide cases expediently and on a full record. Sabre Travel Int'l, Ltd. v. Deutsche Lufthansa AG , 567 S.W.3d 725, 730 (Tex. 2019).

The final-judgment rule, however, has its exceptions.⁴ The Texas Legislature has created numerous exceptions through the years, first allowing interlocutory appeals in a few narrow circumstances as early as 1892.⁵ In 1985, the legislature enacted section 51.014(a) of the Texas Civil Practice and Remedies Code, gathering into one subsection the four types of then-existing interlocutory appeals by right.⁶ By 2001, those original four had doubled to eight, prompting then- JUSTICE HECHT to observe a "recent and extensive legislative expansion of the jurisdiction of the courts of appeals over a wider variety of interlocutory orders." Wagner & Brown, Ltd. v. Horwood , 53 S.W.3d 347, 350 (Tex. 2001) ( HECHT , J., dissenting) (citing TEX. CIV. PRAC. & REM. CODE §§ 15.003, 51.014(a)(7), (8) ).

That same year, however, we continued to characterize the final-judgment rule as "the general rule, with a few mostly statutory exceptions." Lehmann v. Har-Con Corp. , 39 S.W.3d 191, 195 (Tex. 2001). But the legislature continued to create additional exceptions, expanding section 51.014(a) by 2019 to permit appeals from fourteen different types of interlocutory orders. We acknowledged the shifting legal landscape that year, observing that the practice of "[l]imiting appeals to final judgments can no longer be said to be the general rule." Dall. Symphony Ass'n, Inc. v. Reyes , 571 S.W.3d 753, 759 (Tex. 2019). In 2021, the legislature amended section 51.014(a) to authorize interlocutory appeals in three additional circumstances, increasing the total to seventeen.⁷

In addition to authorizing appeals from specific types of interlocutory orders, the legislature added a broader exception in 2011, authorizing permissive appeals from interlocutory orders that are "not otherwise appealable." TEX. CIV. PRAC. & REM. CODE § 51.014(d). Subsection (d) says trial courts "may" permit an appeal from an interlocutory order that is not otherwise appealable if (1) the order "involves a controlling question of law as to which there is a substantial ground for difference of opinion," and (2) "an immediate appeal from the order may materially advance the ultimate termination of the litigation." Id. And subsection (f) provides that, if a trial court permits such an appeal, the court of appeals "may" accept the appeal if the appealing party timely files "an application for interlocutory appeal explaining why an appeal is warranted under Subsection (d)." Id. § 51.014(f).

We enacted two new procedural rules in 2011 to accommodate this new permissive-appeal exception. First, we enacted rule 168 of the Texas Rules of Civil Procedure, requiring that trial-court orders authorizing permissive appeals "identify the controlling question of law as to which there is a substantial ground for difference of opinion" and "state why an immediate appeal may materially advance the ultimate termination of the litigation." TEX. R. CIV. P. 168. We then enacted rule 28.3 of the Texas Rules of Appellate Procedure, addressing the procedural requirements for perfecting a permissive appeal in the courts of appeals. See TEX. R. APP. P. 28.3. Subsection (e) of rule 28.3 requires that a petition for permission to appeal must "argue clearly and concisely why the order to be appealed" meets those two requirements. TEX. R. APP. P. 28.3(e)(4).

In this case, the trial court granted Industrial Specialists’ unopposed motion for permission to appeal, and the parties do not dispute that the court's order complied with rule 168. The court of appeals, however, declined to accept the appeal and issued a memorandum opinion stating its conclusion "that the petition fails to establish each requirement of Rule 28.3 [ ](e)(4)." 634 S.W.3d at 760. In this Court, Industrial Specialists argues (and Blanchard agrees) that the court of appeals abused its discretion by refusing to accept the appeal and by failing to adequately explain its reasons for that decision. Based on the plain language of section 51.014(f) and the applicable rules, we disagree.

A. Discretion to Refuse a Permissive Appeal

As explained, section 51.014(d) provides that a trial court "may ... permit an appeal from an order that is not otherwise appealable if " the two requirements are met, and section 51.014(f) provides that a court of appeals "may accept" such an appeal "if the appealing party" timely files an application "explaining why an appeal is warranted under Subsection (d)." TEX. CIV. PRAC. & REM. CODE § 51.014(d), (f) (emphases added). Similarly, the rules this Court enacted to implement subsections (d) and (f) provide that "a trial court may permit" a permissive appeal, TEX. R. CIV. P. 168 (emphasis added), and an appeal "is deemed" filed "[i]f" the court of appeals grants the petition, TEX. R. APP. P. 28.3(k).

We recently reviewed these provisions for the first time in Sabre Travel. We held in a unanimous opinion that the use of the phrase "may accept" in section 51.014(f) "convey[s] a discretionary function in the court of appeals," and the phrase "may ... permit" in subsection (d) grants similar discretion to the trial court. 567 S.W.3d at 731. Based on the statute's unambiguously permissive language, we held that "courts of appeals have discretion to accept or deny permissive interlocutory appeals certified under section 51.014(d)," and added that "[o]ur procedural rules make that clear." Id. at 732.

Nevertheless, Industrial Specialists argues that the court of appeals abused its discretion by refusing this permissive appeal because the trial court concluded that the two requirements are satisfied and both parties agree with that conclusion. Arguing that the court of appeals’ discretion "cannot be unlimited," Industrial Specialists insists that the court's actions were "arbitrary and unreasonable" because, as both parties agree, "this case falls squarely within" subsection (d)’s requirements "and is precisely the type of case for which [the permissive-appeal] process was designed."

We agree that section 51.014 limits courts’ discretion when addressing permissive appeals. But the limits section 51.014 imposes restrict the permitting and accepting—not the denial or refusal—of an interlocutory appeal. A trial court may permit an appeal only "if" subsection (d)’s two requirements are met, and the court of appeals "may accept" the appeal only if the application...