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Click here for the full text of this decision FACTS:The appellant, Hartford Casualty Insurance Co., contends that since the statutory grant of authority regarding administrative penalties found in Texas Finance Code �153.402(c) is discretionary, its constitutional right to procedural due process entitles it as a surety to notice and opportunity for a hearing before it can be held liable for an administrative penalty assessed against its principal. The state argues that it would have been useless to provide Hartford with notice and a hearing because Hartford was not a target of the administrative penalty. The district court held that the penalty may be collected from Hartford. HOLDING:Reversed and rendered. Hartford contends that assessing an administrative penalty against a surety without affording it notice and an opportunity for a hearing deprives it of a property right without the constitutionally guaranteed due process of law. Finance code �153.402(c) is silent regarding the procedural due process rights of a surety. If possible, the court construes a statute in a manner that renders it constitutional. Additionally, Hartford was entitled to party status under the APA. Thus, the court holds that the due process guarantees of notice and opportunity for a hearing are implied into finance code �153.402(c). Because there is no dispute that Hartford has a property interest in the $37,200 penalty assessed, the court decides whether, under these circumstances, that interest was sufficiently protected. The state argues that Hartford received all of the due process to which it was entitled under Texas law. The state argues that 1. its interpretation of finance code section 153.402 does not violate Hartford’s due process rights; 2. Hartford’s presence at the administrative hearing would have been meaningless; 3. when a surety agrees to be liable for a particular judgment, notice is not necessary; and 4. Hartford’s substantive due process rights were satisfied. The state contends that the language of the bond, read in conjunction with finance code ��153.109 and 153.402, provided Hartford with adequate notice that it was within the Commissioner’s authority to collect the administrative penalty assessed against Airport Exchange from the bond proceeds. The word “may” creates a discretionary authority or grants permission or a power. Here, Hartford was on notice that the Commissioner could collect the penalty from the bond, but it had no knowledge that the Commissioner would attempt to do so in this case. It was known by all parties that Hartford was the surety for Airport Exchange, yet no one notified Hartford of the administrative hearing. This lack of notice deprived Hartford of the opportunity to address the amount of the bond and to argue that, based on the facts of this case, the penalty should not be collected from Hartford. Therefore, the court concludes that �153.402(c) does not by itself or in conjunction with the bond agreement provide Hartford with adequate notice to protect its interest in the $37,200 sought by the state. The state contends that Hartford’s presence at the administrative hearing would have been meaningless because the hearing concerned Airport Exchange’s appeal of the cease and desist order, as well as the Commissioner’s imposition of an administrative penalty. Therefore, the state suggests that Hartford’s presence at the hearing was useless because the statute imposed the administrative penalty without regard to the surety’s wrongdoing. The state’s argument fails to address the discretion afforded to the Commissioner by the statute: Should an administrative penalty be assessed when it is clear that only the surety, not the wrongdoer, will have to pay, and if so, in what amount? Hartford contends that because the Commissioner had the discretion not to collect the penalty from the bond, Hartford was entitled to notice and an opportunity to advocate that position. The court agrees that the lack of notice deprived Hartford of an opportunity to protect its interest in the $37,200 sought by the state. The state relies on Howze v. Surety Corp. of Am., 584 S.W.2d 263 (Tex. 1979), to contend that Hartford was not entitled to notice of suits involving Airport Exchange. In Howze, the supreme court discussed the general rule in Texas that when a surety agrees to be liable for a particular judgment, then no notice need be given. “However, when a surety contracts to be generally liable for all the undertakings of the principal, the surety must be given notice and an opportunity to defend the case before it is bound by the judgment.” The state claims that the bond in this case is a particular judgment bond and consequently, Hartford was not entitled to notice. Applying Howzeto this case undermines the purpose of the general rule distinguishing particular judgment bonds from general undertaking bonds, the court states. The court is not persuaded that Howzecontrols this dispute. The court concludes that notice and an opportunity to be heard were required before the Commissioner could collect the administrative penalty from Hartford. Failing that, Hartford’s right to procedural due process was violated. OPINION:Bea Ann Smith, J.; Law, Smith and Pemberton, JJ.

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