A recent Texas appeals court decision calls to mind an oft-quoted remark by Albert Einstein: “Many of the things you can count, don’t count.” Commentators have speculated that he meant in science you can calculate distance, speed, time, energy, etc., but you can't count or measure love, freedom, happiness – the truly meaningful things in life. In setting aside a civil penalty judgment and an award of attorney’s fees, the appellate panel ruled that the State could not simply add up the calendar days in a more-than-ten-year span to prove that an offender continuously violated the law during that time period. Many of those days possibly don’t count.
Needing a yard for the vehicles and equipment Villarreal Paving & Demolition uses and the materials it handles on a daily basis, Juan Martin Villarreal purchased, in 2003, a 41-acre parcel of real estate in Mission, Texas (“Site”) together with some equipment. The sellers were El Chore Pit, Inc., Raul Salinas, Jr. and Leticia Salinas. As part of the deal, Villarreal agreed that Raul Salinas would have access to the land until the note on the equipment purchase was paid off.
In 2006, the Texas Commission on Environmental Quality (“TCEQ”) accused Villarreal of allowing Raul Salinas to dump municipal solid waste on the property – a problem that allegedly occurred both before and after the 2003 transaction. To resolve the matter, state officials presented Villarreal with an agreed order, effective May 25, 2007, which he signed. (“2007 Order”).
The 2007 Order included express acknowledgments that Villarreal is the owner and operator of an unauthorized facility that manages or managed municipal solid waste and that in July 2006, TCEQ staff observed Villarreal allowing the disposal of municipal solid waste “equivalent [to] ten 40-cubic-yard containers, and consist[ing] of brush, plastic sheeting, plastic piping, metal, rebar, and construction and demolition debris." The 2007 Order assessed $6,500 in administrative fees and required Villarreal to "immediately cease accepting any additional waste at the Site without proper authorization," to ensure that all solid waste at the Site be removed and disposed of by July 2007, and to submit written certification of compliance.
A TCEQ investigator, in 2008, conducted a compliance status evaluation, including entrance and exit interviews with the Site office manager. As described in the investigation report, the Site consisted of an office, a workshop, and an active sand pit. The investigator photographed two trucks – one of them registered to Villarreal – unloading waste consisting of "a mixture of brush, yard waste, inert material and solid waste." The investigator noted and documented with photographs that the Site was being “filled with fill material that consisted of inert material, [municipal solid waste,] and including but not limited to construction or demolition waste, solid waste, brush, wood scrap, metal scrap, wooden pallets, scrap tires, [PVC] piping, plastic planters, rubbish and yard waste,” and that "at least 5-8 scrap tires were at least fully or partially visible at the time of the investigation." The investigator also noted that heavy machinery was present at the site “which was used to move the waste and cover it up with soil," and that "[t]he operation at the site resembled disposal operations at a permitted landfill where waste would be accepted and placed in an area and covered with soil."
The investigator estimated that the disposal area embraced three to five acres, but he could not determine the volume of waste at the site "because the aforementioned types of waste . . . are mixed and have been covered with soil, dirt, brick, inert material and concrete with reinforcing steel." In his exit interview with the office manager, the investigator explained that "the sand pit could not be filled in with any municipal solid waste"; that "inert material could be accepted at the pit including non-putrescible materials such as soil, dirt, clay, sand, gravel, brick, glass, concrete with reinforcing rebar, and rock" but "may not be used to cover up unauthorized waste"; and that all municipal solid waste would need to be removed pursuant to the 2007 Order. The investigation report recommended referral to the Attorney General for further action.
In 2009, the State sued Villarreal and El Chore Pit, Inc. in Travis County District Court, seeking an injunction and civil penalties plus attorney's fees and costs. Based on the 2008 investigation, the State alleged a "continuous violation" of the Texas Water Code, TCEQ rules, and the 2007 Order. The petition essentially charged Villarreal with unlawfully storing, processing, removing, dumping and disposing of solid waste. Villarreal answered with a general denial of any wrongdoing. Going after Villarreal could not have been a priority for TCEQ officials. Court records show little activity in the lawsuit until February, 2018, when the State amended its petition with additional allegations of violations observed in a 2012 investigation and a 2017 investigation.
Supported by photographs, the 2012 investigation report noted that "the pit was still operating as fresh tire tracks were observed, and green brush wastes in the form of palm fronds were observed inside the pit area"; that "additional construction or demolition wastes (concrete, cinder blocks and bricks) had been disposed since the last on-site investigation"; that "[p]lastic bags containing household wastes were observed in areas outside the pit"; that "[deteriorating bags containing used clothing wastes inside the pit were also observed"; that a motorboat and a "pile of 50 vehicle and equipment scrap tires" were observed in the pit; and that one photo "shows possible groundwater seeping to the ground surface."
The report concluded that "more than 226 cubic yards of household waste, 103 cubic yards of brush wastes, 50 scrap tires, construction or demolition wastes, PVC piping, and an inboard motorboat were observed" during the investigation and that "the compliance status of the site remains unchanged from [the 2008 investigation]."
With documented photographic evidence, the 2017 investigation report stated, "Based on the investigation findings, the regulated entity is in violation of the Agreed  Order." The investigator noted that "the site was in full operation (waste accepted, unloaded, sorted, and compacted)" and that she "observed dump trucks and trucks with trailers entering and leaving the site," "onsite operators sorting and compacting the waste piles using a front end loader," "onsite operators compacting and covering the waste piles using the dirt/gravel," and operators unloading and sorting inert material and construction and demolition material. During her investigation she also "observed municipal solid waste which consisted of asphalt, comingled concrete material, comingled brush piles, brush, treated lumber, a large pit of municipal solid waste; household waste, plastics, treated lumber, insulation material, buried tires, shingles, construction and demolition waste," and "bags labeled asbestos." With precision some might find incomprehensible, the report calculated a total of 539,466.85 cubic yards of waste onsite.
In July 2018, the State filed a motion for summary judgment in its favor, supported by: the 2007 Order; the 2008, 2012, and 2017 investigation reports; an attorney's fee affidavit requesting $17, 000; an invoice for $2,700 in outstanding administrative penalties related to the 2007 Order; and a negative certification that TCEQ has not found any records authorizing the storage, processing, or disposal of municipal solid waste at the Site. (Summary judgment is a procedural device in civil litigation to expeditiously dispose of a case without a trial when there is arguably no dispute as to the relevant facts and circumstances. A motion for summary judgment is typically supported by affidavits, answers to interrogatories, deposition transcripts, and documents, and the presiding judge hears oral arguments from the attorneys.)
Addressing the applicable statutory civil penalties, the State took the position that the ongoing violations began on July 24, 2007, when, as stipulated in the 2007 Order, Villarreal was to have removed all municipal solid waste from the Site, and ended when the amended petition was filed – a total of 3,849 days. To avoid a question about the appropriate daily penalty amount, the State requested only the minimum statutory penalty of $50 per day. On that basis, the State requested a summary judgment for $192,450 in civil penalties and a permanent injunction.
Villarreal responded to the State's motion for summary judgment with affidavits from him and his daughter, landfill receipts, a report and affidavit from an asbestos building inspector, and a burn permit. His affidavit explained that when he demolishes buildings, "the landfill will not accept our materials straight from the demolition site either because the items are too mixed, or too heavy to cover up"; that he therefore "bring[s] the items back to [the Site] in order to sort them for the landfill"; and that "[o]nce the items are separated, [he] bring[s] the items which [h]e cannot keep to the landfill." He conceded that some of the pictures attached to the State's investigative reports "show trucks dumping materials onto the ground" but explained that “[t]his is where we would sort the materials for the landfill in order to bring it to the landfill."
His affidavit further recited that "[t]he . . . piping, fencing, trailers, wood framing stored in the pit are all used for my business and are not waste"; "[t]he brush on the property is properly burned" under the burn permit attached to his response; "[a]ny . . . trash . . . on the property was the result of [dumping by] trespassers" and "[w]e have called the police" and "remove the trash when we discover it"; and "we stack [worn tires] until we have at least 350, . . . but [t]he recycling center truck will not come unless we have at least 350 tires."
By affidavit, his daughter, who has worked as a Site supervisor for 15 years, stated that she and her father "intend to construct improvements" at the Site and that "[w]e are currently filling the pit with inert material such as concrete, rock, dirt, and bricks so that we can build an office on the pit and use it as an automobile junkyard." Finally, the asbestos building inspector's report stated, among other things, that "[t]he pit appeared clean and clear of debris that would demonstrate current use of any kind of landfill." Consequently, as Villarreal saw it, a genuine dispute existed about what was going on at the Site and when it had occurred, and thus the State was not entitled to summary judgment.
After a hearing, District Judge Charles R. Ramsay granted the State's motion for summary judgment. Fully accepting the State’s calculations, he awarded judgment against Villarreal as follows: $192,450 in statutory civil penalties; $2,700 in unpaid administrative penalties; and
$17,000 in attorney's fees. Judge Ramsay also granted a permanent injunction requiring Villarreal to cease accepting any additional waste at the Site, to remove all waste from the Site within 120 days, and to provide certification of compliance within 150 days.
On appeal, Villarreal raised four issues. First, he argued that the trial court wrongly granted summary judgment because he was filling his pit with permissible materials and therefore did not violate Texas law or the 2007 Order. Second, the evidence to support the penalty award of $50 per day for 3,849 days was legally insufficient. His third and fourth issues attacked the award of attorney's fees and injunctive relief which were tied to a wrongfully granted summary judgment. Villarreal did not contest the $2,700 award for back penalties.
“Villarreal does not dispute that he lacks authorization or a permit for [municipal solid waste or other solid waste],” the appellate panel stated. “Moreover, Villarreal admits in his affidavit that he transports demolition materials that are ‘too mixed’ straight from the demolition site and that he ‘bring[s] the items back to [his] property in order to sort them for the landfill.’ He then separates and later brings to the landfill those ‘items which we cannot keep’ and keeps the receipts. Such items constitute ‘construction or demolition waste’ and would be classified as solid waste or municipal solid waste.”
Concluding that Villarreal did not meet statutory and regulatory requirements, the appeals court upheld the summary judgment ruling and the injunction based on those violations. The court rejected Villarreal’s argument that he complied with state law because he “set aside all inert materials – such as concrete, soil, dirt, clay, sand, gravel, brick, glass and rock – which he used to fill the pit located on the Property" thereby making the land suitable for the construction of surface improvements.
“Villarreal's affidavit does not raise a genuine issue of material fact as to whether he violated [state law] and in fact establishes the opposite,” the court continued. “By transporting municipal solid waste from his demolition sites to the Site – even to ‘sort [the materials] for the landfill’ – Villarreal is ‘disposing" of solid waste . . . in violation of [state law]. * * * Villarreal's affidavit establishes that the materials are taken after his commercial business . . . demolishes buildings at other demolition sites, not at the Site. Additionally, such activity would constitute an [unlawful] act of storage.”
Villarreal had better luck with his second issue. The appeals court determined that the State failed to prove it is entitled to $192,450 in statutory civil penalties. State law provides that "[a] person who causes, suffers, allows, or permits a violation of a statute, rule, order, or permit relating to any other matter within the commission's jurisdiction to enforce . . . shall be assessed for each violation a civil penalty not less than $50 nor greater than $25,000 for each day of each violation" and that "[e]ach day of a continuing violation is a separate violation."
The State claimed that it established a continuing violation over a 3,849-day period by the following: (1) its affidavit certifying that Villarreal never submitted documentation certifying the removal of solid waste from the Site as required by the 2007 Order; (2) his acknowledgment in the 2007 Order that he did not prevent the disposal of solid waste at his Site, the volume of which "approximated the equivalent of ten, forty cubic yard containers and consists of brush, plastic sheeting, plastic piping, metal, rebar, and construction and demolition debris"; and (3) its 2008, 2012, and 2017 investigation reports with photographic documentation demonstrating a substantial increase in the volume of municipal solid waste at the Site. However, the State conceded that its evidence did not depict a violation for each of the 3,840 days. Nonetheless, it insisted that continuous violations can be proved based on observations that occurred on a few, but not all, of the days alleged in a petition. The appellate panel roundly disagreed.
“There was no testimony or evidence . . . as to the consistency of the Site's appearance during the time period at issue or what went on during the intervening time periods between investigations,” the opinion said. “The State has not identified – and we have not found – any authority that would support concluding that on this record these three investigations with four to five years between each investigation can conclusively establish . . . that Villarreal was continuously violating a statute every day of the more than ten year period.”
Villarreal testified by affidavit that "[i]n the pit area, we store concrete, brick, asphalt, rebar, brush, soil, dirt, clay, sand, and gravel," and his daughter’s affidavit referred to such inert material as the underpinning for a future office. Under state regulations, the material is exempt from classification as “solid waste.” The State argued that Villarreal did not provide any documents, such as building plans or evidence of progress, to support his daughter's statement that they plan to construct improvements upon the pit. “Villarreal does not need to prove his position, he only needs to raise a genuine issue as to any material fact,” said the appeals court. “The State has not controverted Villarreal's evidence and conclusively established either that Villarreal does not intend ‘to make the land suitable for the construction of surface improvements’ or that the pit was filled with solid materials that were not inert.”
“[T]here may have been solid waste . . . on the Site at least on the three days on which the investigations were conducted of the 3,849 day time period – and likely more than just three days, given Villarreal's admission regarding his sorting practices following demolitions,” noted
the panel. “Nevertheless, we indulge the reasonable inference from Villarreal's testimony that there may have been at least some of the 3,849 days where he would have brought the solid waste and from the Site to the landfill, and a genuine issue of material fact therefore exists as to whether any solid waste . . . was on the Site on all of those days.”
Allowing for the stipulated $50-per-day assessment, the appeals court determined that the State had not met its burden to conclusively establish that it was entitled to $192,450 in civil penalties based on a continuous violation for 3,849 days. On the contrary, Villarreal's summary judgment evidence introduced the distinct possibility that, on some of the 3,849 days, there did not exist on the Site any solid waste subject to regulation. “We therefore sustain Villarreal's second issue, reverse the summary judgment order as to the award of $192,450 in statutory civil penalties, and remand the issue of the amount of statutory civil penalties for further proceedings,” the opinion said.
By statute, the State was entitled to an award of attorney’s fees, court costs and reasonable investigative expenses incurred as a “prevailing party” in the proceeding – that is, a party in whose favor a judgment is rendered. However, the appeals court said, “when damages are reduced, [a] trial court’s determination of attorney’s fees should be retried because factors governing assessment of ‘reasonableness’ include consideration of results obtained.” Accordingly, the panel likewise remanded the award of attorney’s fees to the trial court for reconsideration.
Villarreal v. State of Texas, No. 03-18-00752-CV, Tex. Ct. App., 3d Dist., Nov. 10, 2020.