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Ranna & Company, LLC v. Texas Commission on Environmental Quality

Court of Appeals of Texas, Third District, Austin

May 24, 2018

Ranna & Company, LLC, Appellant
Texas Commission on Environmental Quality, Appellee


          Before Justices Puryear, Bourland, and Shannon [*]


          Bob E. Shannon, Justice

         This is an appeal from the judgment of the district court of Travis County in a suit for judicial review of a decision of the Executive Director (the Director) of the Texas Commission on Environmental Quality (the Agency). Appellant is Ranna & Company, LLC (Ranna). This Court will affirm the judgment of the district court.

         By Agency rule a municipal utility district must obtain the Director's approval before spending tax revenue to reimburse a developer for acquisition of facilities. See 30 Tex. Admin. Code § 293.83(b) (2018) (Texas Comm'n on Envt'l Quality, District Use of Surplus Funds for Any Purpose and Use of Maintenance Tax Revenue for Certain Purposes). In 2009, Fort Bend County Municipal Utility District No. 2 (the District) sought approval to use up to $800, 000 in tax revenue to obtain either an easement or fee simple title to a 4-acre detention pond lying within a 28-acre tract.

         The Agency received material from both the District and the landowner, Ranna. After review, the application was approved in the sum of $37, 551 as payment either for an easement on the pond or for fee ownership. Displeased with the sum approved, Ranna sought review of the Director's decision in the district court of Travis County. After hearing, the district court rendered judgment affirming the decision of the Director.

         In 1994, Jamal Nickmard bought the involved 28-acre tract from the Federal Deposit Insurance Corporation for $80, 000. In making the purchase, Nickmard was acting for his mother, Alam Tajgardoun, pursuant to a statutory durable power of attorney. After the purchase, he transferred title to his mother. Over the next several years, Nickmard, acting for his mother, sold six parcels from the tract varying in size from over five acres to just under one acre. Finally, only two parcels remained, a twelve-acre tract and the four-acre detention pond.

         After a potential sale of the twelve-acre tract fell through, Nickmard decided to try to develop the tract by his own efforts. Lacking capital, he turned to a family friend, a business associate and a man of means, Jessie Sanusi. Not experienced in the business of subdividing land, Sanusi had no taste for taking on the project alone. He wavered until Nickmard agreed to work with him as a "development consultant." Sanusi then committed himself and his funds to the project. Sanusi formed Ranna in 2000 to acquire the tract and develop it into what became "Riverway Estates."

         The District's detention requirements for the Riverway Estates included the four-acre pond. Ranna's proof was that Nickmard, acting for his mother, agreed to sell the four-acre pond to Ranna for $800, 000. In September 2003, Ranna executed a promissory note payable to Tajgardoun, secured by a deed of trust. Shortly after the closing, there was a flurry of transactions substituting other collateral to secure the $800, 000 purchase-money loan.

         Nickmard became much more than a "development consultant" to Sanusi and Ranna in the purchase of the detention pond. He was also the attorney and agent for his mother Tajgardoun, the seller of the property. He was the person who conducted the negotiations for both the buyer and the seller in the transactions. Nickmard was the consultant that Ranna used in all of its dealing with his mother.

         From 2003 forward, Nickmard was vice-president, secretary, and treasurer of Ranna as well as the majority owner of the company. In a deposition in a lawsuit then pending, Nickmard was asked if his mother had received any payments from Ranna for the sale of the detention pond. Nickmard responded that she had received no money to date, but that she would be paid.

         Sanusi testified on deposition in the lawsuit that there was nothing in writing obligating Ranna to make payments of any dollar amount to Tajgardoun for purchase of the pond. He answered, "It's verbal [sic] . . . I can't think of any written." Sanusi testified further that there was nothing in writing setting out the terms of the oral agreement between Ranna and Tajgardoun. Sanusi later filed an affidavit with the Director recanting this testimony.

         In this Court, Ranna asserts by its first issue that the district court erred in conducting a substantial-evidence review of the case. Ranna advances three arguments in support of the issue, the first being, "De novo review applies to construction of statutes/rules." In support of its assertion, Ranna cites several cases and the Code Construction Act setting out stock rules of construction.

         More to the point, the Agency agrees that statutes and agency rules are reviewed de novo by the court in the sense that the term describes the court's authority to substitute its legal judgment for that of the agency's on the proper construction of statutes or rules. See, e.g., Railroad Comm'n v. Texas Citizens for a Safe Future & Clean Water, 336 S.W.3d ...

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