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First Savings & Loan Ass'n of Borger v. Vandygriff

Court of Appeals of Texas
605 S.W.2d 740, 1980 Tex. App. LEXIS 3920 (1980)
ELI5:

Rule of Law:

The statutory prohibition against ex parte communications with an agency decision-maker in a contested case extends to communications that occur between the final denial of an application and the subsequent refiling of a nearly identical application, when the two proceedings can be characterized as a single, ongoing matter.


Facts:

  • Organizers for a proposed Citizens Security Savings and Loan Association filed a charter application with the Texas Savings and Loan Commissioner.
  • The Commissioner heard the application and entered an order denying it in August 1978.
  • In early September 1978, five of the organizers met privately with the Commissioner without the opposing party's counsel present.
  • During the meeting, the organizers presented new information about positive economic conditions in the Borger area, including new shopping centers and the expansion of Phillips Petroleum Company.
  • In October 1978, the organizers refiled the charter application for the same association in the same location.
  • For the second application, the organizers used the same capital funds and stock subscription forms that had been submitted with the first application.
  • One of the organizing directors later agreed that he viewed the entire process 'as just one ongoing application.'

Procedural Posture:

  • The Savings and Loan Commissioner initially denied a charter application from the organizers of Citizens Security Savings and Loan Association.
  • Following an ex parte meeting, the organizers refiled their application, and the Commissioner entered an order granting the charter.
  • First Savings and Loan Association of Borger appealed the Commissioner's order to the district court of Travis County.
  • The district court sustained the Commissioner's order, affirming the grant of the charter.
  • First Savings and Loan Association of Borger (appellant) appealed the district court's judgment to the Court of Appeals, with the proposed association and the Commissioner as appellees.

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Issue:

Does an ex parte communication between charter applicants and the Savings and Loan Commissioner, which occurs after the Commissioner's final denial of their first application but before they refile what is substantively the same application, violate the statutory prohibition against such communications in a contested case?


Opinions:

Majority - Shannon, Justice

Yes. An ex parte communication between charter applicants and an agency decision-maker violates the statutory prohibition against such communications when it occurs between two successive applications that are functionally 'one ongoing application.' Although no formal case was pending at the time of the meeting, the court found that the first and second proceedings were, in effect, a single continuous matter. The applicants sought a charter for the same entity in the same location, used the same capital funds and forms, and one organizer admitted viewing it as an ongoing process. Such ex parte communications discredit the administrative process and undermine public confidence. The burden is not on the complaining party to show harm from the communication; harm is presumed, and subsequent disclosure of the meeting at a hearing does not cure the misconduct.



Analysis:

This decision significantly clarifies the scope of the prohibition against ex parte communications in administrative law. It prevents parties from circumventing the rule by strategically timing communications to occur in a procedural gap between a denial and a swift refiling. The court's focus on the substantive continuity of the applications, rather than their formal separation, establishes a precedent that courts will look beyond procedural technicalities to protect the integrity of the adjudicative process. This ruling strengthens due process protections for all parties in contested administrative cases by making it clear that harm is presumed when such improper contact occurs.

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