Tex. Dept. of Ins. v. Reconveyance Services

• Decision Date: 31 August 2007
• Docket Number: No. 03-06-00313-CV.,03-06-00313-CV.
• Citation: 240 S.W.3d 418
• Parties: TEXAS DEPARTMENT OF INSURANCE, Appellant, v. RECONVEYANCE SERVICES, INC., Appellee.
• Court: Texas Court of Appeals

240 S.W.3d 418

TEXAS DEPARTMENT OF INSURANCE, Appellant, v. RECONVEYANCE SERVICES, INC., Appellee.

No. 03-06-00313-CV.

Court of Appeals of Texas, Austin.

August 31, 2007.

Maureen Powers, Asst. Atty. Gen., Financial Litigation Division, Austin, for Appellant.

Peter A. Nolan, Winstead Sechrest & Minick, P.C., Austin, for Appellee.

Before Justices PATTERSON, PEMBERTON and WALDROP.

OPINION

BOB PEMBERTON, Justice.

Concerned that the Texas Department of Insurance ("TDI"), without statutory authority to do so, had taken regulatory actions that effectively prevented it from doing business in Texas, Reconveyance Services, Inc. ("Reconveyance") sought declaratory relief under the Uniform Declaratory Judgments Act ("UDJA"). See Tex. Civ. Prac. & Rem.Code Ann. §§ 37.001.011 (West 1997 & Supp.2006). TDI challenged the district court's subject-matter jurisdiction, contending that separation-of-powers principles forbade the judicial branch from granting Reconveyance its requested relief and that Reconveyance's claim is not justiciable. The district court denied TDI's plea to the jurisdiction. TDI appeals the district court's order. See id. § 51.014(a)(8) (West Supp.2006). We affirm.

STANDARD AND SCOPE OF REVIEW

The subject matter jurisdiction of a trial court may be challenged through a plea to the jurisdiction. See Texas Dep't of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 225-26 (Tex.2004); Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 554 (Tex.2000). The determination of whether a trial court has subject matter jurisdiction begins with the pleadings. See Miranda, 133 S.W.3d at 226. The pleader has the initial burden of alleging facts that affirmatively demonstrate the trial court's jurisdiction to hear the cause. Id. (citing Texas Ass'n of Bus. v. Texas Air Control Bd., 852 S.W.2d 440, 446 (Tex.1993)). Whether the pleader has met this burden is a question of law that we review de novo. Id. We construe the pleadings liberally and look to the pleader's intent. Id.

If the pleadings do not contain sufficient facts to affirmatively demonstrate the trial court's jurisdiction but do not affirmatively demonstrate incurable defects in jurisdiction, the issue is one of pleading sufficiency and the plaintiffs should be afforded the opportunity to amend. Id. at 226-27; Elgin Indep. Sch. Dist. v. R.N., 191 S.W.3d 263, 272 (Tex. App.-Austin 2006, no pet.). If the pleadings affirmatively negate the existence of jurisdiction, then a plea to the jurisdiction may be granted without allowing the plaintiffs an opportunity to amend. Miranda, 133 S.W.3d at 227.

A defendant may also challenge the jurisdictional facts alleged by the plaintiff through the summary-judgment-like processes described in Miranda. Hendee v. Dewhurst, 228 S.W.3d 354, 368 (Tex. App.-Austin 2007, pet. denied); see Miranda, 133 S.W.3d at 227 (citing Bland, 34 S.W.3d at 555). "When a plea to the jurisdiction challenges the existence of facts alleged by the pleader to establish the trial court's subject matter jurisdiction, the trial court must consider relevant evidence submitted by the parties." Hendee, 228 S.W.3d at 366 (citing Miranda, 133 S.W.3d at 227). Here, TDI has not challenged the jurisdictional facts alleged by Reconveyance, nor did it introduce jurisdictional evidence. It disputes only whether Reconveyance's pleadings are sufficient to affirmatively establish the district court's subject matter jurisdiction. Consequently, we assume the truth of the factual allegations contained in Reconveyance's pleadings. Miranda, 133 S.W.3d at 226.

Additionally, because Reconveyance introduced jurisdictional evidence in response to TDI's plea to the jurisdiction, we may consider this evidence in resolving the jurisdictional challenges TDI has raised. Bland, 34 S.W.3d at 555 ("[A] court deciding a plea to the jurisdiction is not required to look solely to the pleadings but may consider evidence and must do so when necessary to resolve the jurisdictional issues raised.").

PLEADINGS AND JURISDICTIONAL EVIDENCE

Reconveyance pleads¹ that it is a Washington corporation that provides what it terms "post-closing mortgage release services" in various states that, to date, have not included Texas. It describes these services as follows:

When a residential property buyer purchases a home with an existing mortgage, the current lender has no incentive to provide a release of that mortgage prior to closing. To do so in a transaction that does not ultimately close would create significant problems for the lender. The new lender is not willing to accept a title commitment that indicates it is in a second lien position. Therefore, the buyer and seller proceed with their closing without the formal filing of a release. After the closing of the transaction, the knowledgeable buyer may enlist the help of a service provider like Reconveyance Services, outside of closing the transaction, to ensure the timely release of the prior existing mortgage after closing.

Reconveyance desires to offer its services in Texas. "To inform the most buyers of the need to have these releases filed," Reconveyance "planned on having title insurance companies list the service as an optional service with an optional charge." In its jurisdictional evidence, Reconveyance introduced an affidavit from Jan Hollenbeck in which she elaborates that "[a]s it does in other states, [Reconveyance] planned in Texas to have title insurance companies list its service as an optional additional service for buyers, for which [Reconveyance] would charge a $15 fee."

To understand Reconveyance's further allegations regarding the nature of its dispute with TDI, it is helpful to note some basic features of the statutes regulating the Texas title insurance industry. The legislature enacted the Texas Title Insurance Act² with the express intent "to completely regulate the business of title insurance, including the direct issuance of policies and the reinsurance of any assumed risks, to (1) protect consumers and purchasers of title insurance policies; and (2) provide adequate and reasonable rates of return for title insurance companies and title insurance agents." Tex. Ins. Code Ann. § 2501.002 (West 2006). To that end, the legislature has delegated to the insurance commissioner power to "fix and promulgate the premium rates to be charged by a title insurance company or by a title insurance agent for title insurance policies or for other forms prescribed or approved by the commissioner." Id. § 2703.151(a) (West 2006); see generally id. §§ 2703.152-.208 (West 2006) (procedures for setting premium rates). "Premium," in turn, is defined by the legislature as "the premium rates promulgated by the commissioner ... and includes a charge for (A) title examination and closing the transaction ...; and (B) issuing the policy." Id. § 2501.003(8) (West 2006). Of particular importance here is the "closing the transaction" component of the "premium." The Act defines "closing the transaction" as follows:

(a) For purposes of this title, "closing the transaction" describes the investigation that is made:

(1) on behalf of a title insurance company, title insurance agent, or direct operation before the title insurance policy is issued; and

(2) to determine proper execution, acknowledgment, and delivery of all conveyances, mortgage papers, and other title instruments necessary to consummate a transaction.

(b) Closing the transaction includes a determination that:

(1) all delinquent taxes have been paid;

(2) in the case of an owner title insurance policy, all current taxes, based on the latest available information, have been properly prorated between the purchaser and seller;

(3) the consideration has been passed;

(4) all proceeds have been properly disbursed;

(5) a final search of the title has been made; and (6) all necessary papers have been filed for record.

Id. § 2501.006 (West 2006).

Pursuant to these statutory delegations, the insurance commissioner has established a schedule of "basic premium rates" for title insurance policies, which "include the charge for title insurance, title examination, and closing the transaction." 28 Tex. Admin. Code § 9.1 (2007) (adopting Basic Manual of Rules, Rates and Forms for the Writing of Title Insurance in the State of Texas [hereinafter Basic Manual] as amended effective January 20, 2006, available at www.tdi.state.tx.us/company/ titleman.html Rule R-1); see Basic Manual Procedural Rule P-1(w) (defining "premium" as "including the charges of title examination and for closing the transaction ... and for issuance of a policy").³

The gravamen of Reconveyance's allegations is that nothing in these statutes and regulations gives TDI the authority to prohibit title insurers and agents from offering Reconveyance's post-closing release services to consumers for a fee in addition to premium, yet TDI is nonetheless purporting to do so. Reconveyance pleads that its "[p]ost closing mortgage release services" are not covered by the "premium" because they "are clearly not title insurance," "title examination," or "closing the transaction." "`[C]losing a transaction,'" it asserts, is:

the investigation that is made ... to determine proper execution, acknowledgment and delivery of all conveyances, mortgage papers, and other title instruments necessary to consummate a transaction, [and it] includes a determination that: (1) all delinquent taxes have been paid; (2) in the case of an owner title insurance policy, all current taxes, based on the latest available information, have been properly prorated ...; (3) the consideration has been passed; (4) all proceeds have been properly disbursed; (5) a final search of the title has been made; and (6) all necessary papers have been filed for record.

See Tex. Ins.Code Ann. § 2501.006; see also Basic Manual Procedural Rule P-1(f). "Accordingly," Reconveyance alleges, "closing the transaction does not contemplate affirmative efforts to secure a release from the...