The Texas Supreme Court has unveiled a change to Texas Rule of Appellate Procedure 28.3 to implement recent legislation requiring the state’s 14 intermediate appellate courts to explain themselves when denying petitions for permissive appeal. The amendment increases the importance of permissive appeals in Texas and will enhance their ability to impact outcomes in civil litigation.

Overview

With certain statutory exceptions, only final judgments are appealable. Section 51.014(d) of the Civil Practice & Remedies Code provides a remedy by permissive appeal when: (1) a case turns on a controlling question of law; (2) about which a reasonable difference of opinion could exist; and (3) resolution by an appellate court “may materially advance the ultimate termination of the litigation.” The idea is to conclude lawsuits earlier by resolving potentially dispositive but unsettled legal questions, thus sparing the parties significant litigation costs.

Although Texas has allowed permissive appeals for many years, built-in limitations have caused them to be underutilized. For instance, permissive appeals were formerly conditioned on both the trial court’s permission and the opposing party’s agreement to appeal. The latter requirement was removed in 2011 — potentially reducing friction in the process — but the same amendment reinstituted an earlier rule that the appellate court must give its permission to appeal. The net effect was to give already-busy appellate courts discretionary jurisdiction over permissive appeals with little incentive to hear them.

Copy-Paste Errors and an Unsatisfactory Escape Hatch

Denials were so routine in one appellate court that its opinions used exactly the same language — including a typographical error — in case after case. Although a plurality of the Texas Supreme Court criticized this practice in Industrial Specialists, LLC v. Blanchard Refining Co., another appellate court later repeated the same mistake, signaling that courts were failing to heed the exhortation in Industrial Specialists and elsewhere that they should not sidestep permissive appeals.

The intermediate court’s all-too-common approach to permissive appeals led the Texas Supreme Court to sometimes open an “escape hatch” in important cases a lower court had refused to decide. The Court recognized in Sabre Travel Int’l, Ltd. v. Deutsche Lufthansa AG that courts of appeals have discretion to accept or deny permissive appeals, but it rejected the suggestion that denial forecloses Supreme Court review. In their concurrence in Duke Inc. v. Fuentes, Justices Brett Busby and Evan Young described the increased use of this fail-safe as “deeply unsatisfactory,” explaining that courts already disinclined to grant permissive appeals would feel even less pressure to do so if they knew the Supreme Court would just take the appeal and review the trial court’s decision itself.

From the litigants’ perspective, those concerns and limitations inherent in the Supreme Court’s discretionary docket meant one thing: When an appellate court declined to hear a permissive appeal without explanation, the parties often had to defer meaningful review of a dispositive legal question until after a costly trial.

A Legislative Solution Leads to a New Procedural Rule

In the last regular session, the Texas Legislature amended the interlocutory appeal statute in a way Justices Busby and Young concluded will “fundamentally change [and] largely resolve the current morass.”

First, the amendment requires courts of appeals to provide the specific reason for finding that a permissive appeal is unwarranted. Second, the amendment permits the Supreme Court to direct an intermediate appellate court to accept a permissive appeal if, on the Supreme Court’s de novo review, it concludes that Section 51.014(d) is satisfied.

The amendment to Rule 28.3 implements the legislature’s directive as of Sept. 1. Subject to further revision after a comment period, the rule now includes this new provision:

When Petition Denied. If the court of appeals denies the petition, the court must explain in its decision the specific reasons for its finding that an appeal is not warranted. On petition for review, the Supreme Court may review the court of appeals’ denial de novo, and, if the Supreme Court concludes that the statutory prerequisites for a permissive appeal are met, the Supreme Court may direct the court of appeals to grant permission to appeal.

Looking Ahead

This change should help realize the promise of Texas’s permissive-appeal process. Before, a party could incur substantial fees pursuing a permissive appeal only to have it denied without ever learning why. Now, a court of appeals will have no discretion to deny a petition for permissive appeal without justifying its decision. And if the Supreme Court isn’t satisfied with the explanation, it can override the denial and direct the court of appeals to reach the merits when it determines review is warranted.

Clients who value efficiency in litigation should welcome this change and consider pursuing permissive appeals in the right circumstances. A permissive appeal could be far more cost-effective than enduring the expense and uncertainty of a trial before confirming how the appellate court would decide a controlling question of law.