Texas Professional License Defense Lawyer Blog

When the applicable licensing agency refuses to back down sometimes the only avenue for relief available for a Texas professional is through the filing of a declaratory judgment action in District Court. This is an extraordinary remedy as it involves significant time and money on the part of the professional and their attorneys; however, in certain cases it could be the only way to obtain a favorable result. This frequently occurs when the relevant state licensing agency / board is exercising its jurisdiction in a manner that is not authorized by their enacting statute.

A prime example of this scenario recently occurred in connection with my firm's representation of a licensed real estate salesperson before the Texas Real Estate Commission. Through a misunderstanding of the renewal process, my client failed to timely renew his license. After subsequently filing for late renewal with TREC, his background check yielded a previously undisclosed, but minor, misdemeanor from several years prior. Based on this criminal matter and my client's failure to disclose the same, TREC initiated a disciplinary investigation and refused to renew his license pending a final determination.

Knowing, however, that the salesperson would be unable to work until his license was renewed, TREC presented him with an unreasonable settlement offer which would have placed his license on probation for five years, required him to notify all employees of the existence and reason for the Order, and restricted his ability to apply for a broker's license. In the meantime, my client's broker terminated his employment and refused to pay substantial sums owed to him based on their argument that according to TREC he was not a licensed salesperson at the time the transactions occurred and therefore was not entitled to the money.

Thus pressed to the wall by TREC's unreasonable offer and simultaneous refusal to renew his license absent his acceptance, my firm filed a declaratory judgment action in District Court challenging the legality of TREC's actions. Under both the Administrative Procedure Act (an overarching statute applying to most state licensing agencies) and the Texas Real Estate Act it was clear that TREC was not allowed to refuse to renew a license when the salesperson renewed within one year of the expiration date and paid the applicable statutory late fee. The Texas Attorney General's Office, the state entity charged with defending state licensing agencies in District Court, tacitly agreed when, on behalf of TREC, they consented to retroactively renew my client's license and drop the original disciplinary action in exchange for a non-suit and waiver of attorney's fees. In addition to regaining his salesperson license, my client is now in an excellent position to reclaim the money originally denied him by his broker.

The declaratory judgment action is an extraordinary remedy. Although a successful claimant is eligible to win attorney's fees from the losing party, it is still a potentially costly and time consuming process. Nevertheless, as I believe this case illustrates, in certain situations a professional licensee may have little choice but to go forward and challenge illegal agency action in District Court.

A little known but potentially very helpful facet of Chapter 411 of the Texas Government Code is its provisions regarding access by the Texas Real Estate Commission and Texas Department of Insurance to criminal records that are subject to an Order of Non-Disclosure. Simply put, the Texas Department of Public Safety- the state agency which serves as the central repository of criminal records in Texas- is prohibited from providing criminal history information subject to an Order of Non-Disclosure to either TREC or TDI when either agency conducts a background check with DPS.

Section 411.081 of the Texas Government Code is the provision specifically addressing who is eligible for an Order of Non-Disclosure and which state agencies are allowed to receive such information as part of a background check with DPS. Although there are specific exceptions, generally speaking a person is entitled to an Order of Non-Disclosure if: 1) they have a criminal matter which was resolved through their placement on deferred adjudication community supervision, and 2) they have successfully completed the terms of their supervision. Tex. Gov't Code § 411.081(d). This is beneficial to the insurance agent, adjuster, broker, real estate salesperson, and other individuals licensed by the Texas Real Estate Commission (TREC) and Department of Insurance (TDI) as once the Order is in place only those agencies specifically listed in subpart (i) of the statute have access to the covered criminal records. Id. at § 411.081(i). Neither TREC or TDI are included on this list. Id.

During my extensive practice as a professional licensing attorney before TREC and TDI, I have found this to be particularly helpful in the cases of licensees coming up for renewal or who are originally applying for a license. A timely Order of Non-Disclosure can prevent either TREC or TDI from obtaining the non-disclosed records through the fingerprint background checks routinely requested as part of their licensing and renewal procedures. This can be a relatively inexpensive and prudent way to prevent unnecessary delay and even disciplinary action as a result of the charges that led to the licensee being placed on deferred adjudication.

Unfortunately, the Non-Disclosure statute does not prevent TDI or TREC from using criminal history record information already in their possession even if the licensee has subsequently had an Order of Non-Disclosure entered a the court. This is because an Order of Non-Disclosure only affects what may disclosed by DPS to state agencies following a request for a criminal background check. It does not prevent state agencies like TREC or TDI from utilizing criminal history already in their possession.

Any professional licensed by the Texas Department of Insurance or Texas Real Estate Commission who has successfully completed a period of deferred adjudication for a criminal offense of which neither of the agencies is already aware should strongly consider contacting a professional license defense attorney to help decide whether an Order of Non-Disclosure could be beneficial. An experienced administrative law attorney can give valuable advice as to whether the pursuit of a Non-Disclosure Order would be a prudent prophylactic measure to prevent undue hassle with TDI or TREC prior to applying for renewal or submitting an original application for licensure.