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Texas Supreme Court Dismisses Interlocutory Case Over ERCOT Sovereign Immunity As Moot Due To Trial Court Rendering Final Judgment, Separate Appeal

March 19, 2021

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Copyright 2010-21
Reporting by Paul Ring •

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The Supreme Court of Texas, in a 5-4 decision, has dismissed a case, brought on an interlocutory basis, concerning the question of ERCOT's sovereign immunity, as the Supreme Court found that the final judgment by a lower court rendered the interlocutory question moot, and that the proper avenue is an appeal of such final judgment (which has already occurred and is pending)

The interlocutory question stems from a suit filed by the Panda companies against ERCOT, as Panda alleged that ERCOT CDR reports which had forecasted a generation shortfall in certain years induced it to build new power plants, but subsequent CDR reports later showed a surplus of capacity. Panda alleged that this amounted to fraud and negligent misrepresentation

A court of appeals held that sovereign immunity applies to ERCOT and barred Panda’s claims

On an interlocutory basis, Panda filed writ of mandamus with the Supreme Court challenging the court of appeals’ holding that sovereign immunity bars Panda’s claims. ERCOT also filed a conditional petition for review with the Supreme Court challenging the court of appeals’ holding that ERCOT is not a governmental unit under the Tort Claims Act

However, while these questions were pending before the Supreme Court, a lower trial court implemented the court of appeals’ holding that sovereign immunity bars Panda’s claims and entered a final judgment dismissing Panda’s claims as the court of appeals had ordered. While Panda has stated that it intended to seek a stay of the court of appeals' order, ERCOT asserts that Panda failed to act expeditiously in such matter, which provided the time for the lower trial court to issue its final judgment.

Panda, in a separate proceeding ("Panda II"), has appealed the trial court's ruling, in a case currently before the court of appeals

The Supreme Court concluded, "The trial court’s entry of a final judgment rendered these causes arising from an interlocutory order moot. We therefore dismiss both the mandamus petition and the conditional petition for review for want of jurisdiction."

"Because the trial court’s interlocutory order (which gave rise to these consolidated causes) merged into the final judgment, the final judgment is on appeal in a separate proceeding in the court of appeals, and the trial court no longer has plenary jurisdiction over Panda’s claims against ERCOT, this Court cannot instruct the trial court to render a new judgment. Nor can we instruct the court of appeals how to resolve Panda II without issuing an advisory opinion, because that appeal is not yet before us. We are therefore unable to provide the relief the parties’ petitions seek, and any order by this Court would be without practical effect. Therefore, we are compelled to conclude that this proceeding is moot," the Supreme Court said

"Our mandamus power does not authorize us to decide moot cases or issues any more than our power of appellate review," the Supreme Court said

"And as we have said time and again, including quite recently, we will not exercise our mandamus jurisdiction if the parties have an adequate remedy by appeal," the Supreme Court said, noting that appeal in Panda II serves such purpose

The Supreme Court said, "our lack of jurisdiction over moot cases is a mandate of the constitution, not a matter of convenience. See Patterson, 971 S.W.2d at 442–43. Just as in Morrow and Delaney, we must respect our own constitutional limitations, however much we may prefer to resolve the issues here, because 'neither we nor the legislature can create jurisdiction the Constitution does not permit.'"

"[W]e cannot direct the court of appeals to set aside its 'order mandating dismissal of Panda’s claims' or direct it to order the trial court to reinstate its interlocutory order denying ERCOT’s jurisdictional plea because the trial court has already entered a final judgment to comply with the court of appeals’ order, and that judgment is pending on appeal in a separate appellate proceeding. Neither the trial court’s interlocutory order nor the court of appeals’ order directing the trial court to set aside that order have any remaining effect separate from the trial court’s final judgment ... We must conclude that the trial court’s entry of a final judgment rendered these causes procedurally moot, and the parties must seek final resolution of their pending controversies by appeal from the trial court’s final judgment," the Supreme Court said

"To be clear, the court of appeals cannot now set aside its order in Panda I and order the trial court to reinstate its earlier order denying ERCOT’s plea to the jurisdiction because that order no longer exists as a separate order. The order has been superseded by and has merged into the trial court’s final judgment dismissing Panda’s claims," the Supreme Court said

"Similarly, an order by this Court directing the court of appeals to set aside its order in Panda I could have no practical effect because the trial court has already complied with that order by entering its own final judgment. And this Court does not have the power to vacate the trial court’s final judgment in this proceeding because Panda is appealing that judgment in Panda II, which is currently pending in the court of appeals. Because the court of appeals abated Panda II, it has not yet entered a judgment addressing the trial court’s final judgment, so of course neither party has petitioned this Court for relief from any such judgment," the Supreme Court said

Chief Justice Nathan Hecht in a dissent said that the controversy remains live and the Court should have addressed the questions

"All agree -- the Court and the parties -- that the trial court’s dismissal of the case did not moot the parties’ controversy. The parties have the same real disagreement they have always had. Both insist they still want an answer. And as circumstances would have it, the issue has become more important to the public because of the damage caused by loss of power in the winter storm, which many blame on ERCOT. Whether ERCOT is immune from suit is not a moot issue, not to the parties, not to the public. But today the Court concludes that the case before us is something that it calls 'procedurally moot' because there is no mandamus relief that can cause the case to be reopened in the trial court if the court of appeals erred," Hecht wrote

"The court of appeals has already ruled on that issue. There is no reason for the court to reiterate its ruling in a second appeal. It is waiting on this Court to rule. The Court can resolve the parties’ dispute and grant relief, however it decides the immunity issue, but instead it chooses delay and wasting more of the parties’ and judicial system’s time and resource," Hecht wrote

In a separate dissent, Justice Eva Guzman wrote, "The Court abdicates its Constitutional duty in this case by declining to resolve the merits of a dispute the entire Court and both parties agree is live, legally cognizable, and of escalating importance to the parties and the public."

Links to opinion, dissents:

Majority opinion


Hecht dissent

Guzman dissent

Cases 18-0781, 18-0792

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