## Facts

- A group of organizers sought a Texas savings-and-loan charter for Citizens Security Savings and Loan Association (Citizens) to be located in Borger, Texas.
- In 1978, the Texas Savings and Loan Commissioner, L. Alvis Vandygriff, held a contested administrative hearing on the organizers’ first application and denied it.
- After the Commissioner overruled the organizers’ motion for rehearing in August 1978, five organizers traveled to Austin in September 1978 and met privately with the Commissioner.
- First Savings & Loan Association of Borger, Texas (First Savings & Loan), an existing local association that had participated as an interested party in the first charter proceeding, received no notice of the September meeting and had no representative present.
- In the private meeting, the organizers discussed the Borger-area economy and attempted to give the Commissioner a different view of economic conditions than that reflected in the order denying the first application.
- In October 1978, the organizers filed a second charter application, keeping the capital funds from the first application on deposit and reusing some supporting materials and documentation from the first effort; at least one organizer described the second filing as a continuation of the first.
- In March 1979, the Commissioner granted the charter to Citizens. The Commissioner’s order acknowledged that the September meeting had occurred and stated that the charter decision was based only on the administrative record.
- First Savings & Loan sought judicial review in state district court, arguing that the September meeting was an unlawful ex parte communication that tainted the charter approval.
- The district court upheld the Commissioner’s order. First Savings & Loan then pursued further review in the court of appeals.

## Issues

1. Whether the organizers’ private September 1978 meeting with the Savings and Loan Commissioner—covering economic facts relevant to the charter—was a prohibited ex parte communication under Texas APTRA § 17 when it was connected to a contested charter proceeding.
2. If so, whether the ex parte contact required setting aside the Commissioner’s March 1979 order granting the charter to Citizens, despite the order’s acknowledgment of the meeting and statement that the decision rested on the record.

## Decision

- The court of appeals reversed the district court’s judgment.
- The court set aside the Commissioner’s order granting Citizens a charter.
- The court treated the September meeting as an improper, one-sided communication on merits-related factual matters tied to a contested case, and concluded that the violation invalidated the resulting charter order.

## Legal Principles

- In Texas administrative adjudication, the APTRA prohibition on ex parte communications bars private, off-the-record contacts with the decision-maker by one side concerning issues of fact or law connected to a contested case.
- A party cannot avoid the ex parte bar through formal timing arguments when the communication is functionally connected to a continuing effort to obtain agency approval, including where a second filing closely follows a denied first application and reuses capital and materials from the first.
- Merits-related economic information offered privately to the ultimate agency decision-maker is the kind of communication the statute is designed to prevent because it is not tested through notice, participation, and cross-examination by opposing or interested parties.
- An agency head’s disclosure that an ex parte meeting occurred, and a statement that the final decision was based only on the record, does not automatically cure a statutory ex parte violation where the contact concerned central factual grounds for the agency action and excluded other affected parties.
- When a prohibited ex parte communication taints a contested-case decision, the proper remedy may be to vacate or set aside the final agency order.

## Conclusion

First Savings & Loan Association v. Vandygriff held that Citizens’ organizers engaged in an unlawful ex parte contact when they privately met with the Savings and Loan Commissioner to discuss economic conditions tied to a charter decision while a related contested matter was effectively ongoing. Because the meeting involved substantive, outcome-related facts outside the noticed record and excluded First Savings & Loan, the court of appeals reversed the district court and set aside the Commissioner’s charter approval.


First Savings & Loan Association v. Vandygriff, 605 S.W.2d 740 (1980)