The Court issued opinion in four cases with today’s orders list. It granted review in six cases in a special orders list released Wednesday (post about the grants).

Whether the Railroad Commission can approve a utility rate that will vary over time, without additional hearings for each adjustment

The gas utility submitted, and the Railroad Commission approved, a rate schedule that included a clause allowing the utility to raise (or in theory lower) the rates over time, without the need for additional hearings each time. This clause, which they called a “cost of service adjustment” (COSA), required the utility to do similar calculations to what it might do when submitting proposed rates to a regulator, and then to show its work by making a public filing.

The challenge in the Texas Supreme Court was whether the Commission had the authority to approve such a clause. The court of appeals held that it did, and the Texas Supreme Court agreed.

Readers that are not deeply immersed in utility law might prefer to skip to the footnotes, particularly footnote 16 about agency deference. The footnote acknowledges that the Texas Supreme Court has previously talked about giving an agency’s view of a rule “serious consideration.”

Relying on these holdings, the court of appeals in this case decided to “defer” to the Commission’s construction [of its statute]. The parties and certain amici disagree whether such deference was appropriate in this case, and some urge that we use this case as an opportunity to add clarity to the so-called agency deference doctrine. Because we independently conclude that [the Commission had authority], we need not “defer to” the Commission’s construction or give it “serious consideration,” and we do not agree that this is an appropriate case to provide any clarity that may be needed.

This is hardly a warm embrace of “the so-called agency deference doctrine.” But any clarification of how agency deference squares with the form of textual analysis preferred by the Texas Supreme Court will wait for another case.

A contractor who promises to work in a “good and workmanlike manner” does not forfeit CGL coverage

The Court accepted a certified question from the Fifth Circuit about Commercial General Liability (CGL) insurance policies (previous post).

Today, it answers this question:

Does a general contractor that enters into a contract in which it agrees to perform its construction work in a good and workmanlike manner, without more specific provisions enlarging this obligation, “assume liability” for damages arising out of the contractor’s defective work so as to trigger the Contractual Liability Exclusion.

The Court answered no.

The dispute here is whether the insurance covers certain legal claims being made against the contractor, such that the insurer will pay for a defense or ultimately pay the claims. Reading the policy is a study in double negatives. The Court focuses on an exclusion which is, in turn, limited by an exception. The exclusion is for certain contract claims, including those one is “obligated to pay … by reason of the assumption of liability in a contract or agreement.” The exception carved out of that exclusion is for obligations they insured would have owed regardless of the contract or those specified in an “insured contract.”

Applying the framework from GILBERT TEXAS CONSTRUCTION, L.P. v. UNDERWRITERS AT LLOYD'S LONDON, No. 08-0246 , the Court held that a provision in which a contractor promised to do work “in a good and workmanlike manner” did not trigger the exclusion at all (and thus need not fit into an exception). That is because the language “did not add anything to the obligation [the contractor] has under general law to comply with the contract’s terms and to exercise ordinary care in doing so.” Thus, the insurer could not invoke this exclusion to deny coverage.

With this issue of Texas law resolved, the case returns to the Fifth Circuit.

Tax exemptions for community housing development organizations

No, your eyes aren’t failing you. That is indeed an “07” docket number. This case was argued in January 2008. It was abated while still pending in August 2009, because one of the corporate entities involved filed for bankruptcy. With today’s orders, the Court both reinstates the case to its active docket and announces its judgment.

This case involves how property-tax exemptions apply to community housing development organizations (CHDOs). While this case was pending, the Court decided AHF-ARBORS AT HUNTSVILLE I, LLC AND AHF-ARBORS AT HUNTSVILLE II, LLC v. WALKER COUNTY APPRAISAL DISTRICT, No. 10-0714 , which resolved one of the issues here: It is sufficient if the CHDO holds equitable title to the property; formal legal title is not required.

The other issue was whether the application for an exemption here had been timely. On the facts of this case, that timing issue actually relates to the issue of legal versus equitable title. Because the CHDO applied for a tax exemption within 30 days of acquiring its equitable title, the Court holds that it was timely under the statute.

Permissible evidence for parental termination

The facts here, as in most parental-termination cases, are unfortunate. The mother’s age is not listed in the opinion, but her name (like the child’s) is also rendered as initials, suggesting that she, too, might be a minor.

The trial court heard evidence of the mother’s “status as a prostitute” and some previous relationships involving domestic violence. The court of appeals held, however, that the broader record did not support removal for “abuse or neglect” because it did not support an inference that the mother (whose rights were being terminated) had been the cause. It reasoned that “[e]vidence relating to past abuse or neglect of children other than the removed child is not relevant [under the statute].”

Applying its recent decision in IN THE INTEREST OF E.C.R., A CHILD, No. 12-0744 , the Texas Supreme Court disagreed and reversed. The Court quoted its language from In re E.C.R. stating that the concept of abuse under the statute is broader and “necessarily includes the risks or threats of the environment in which the child is placed.”