Opinion issued December 22, 2015

                                       In The

                                Court of Appeals
                                      For The

                           First District of Texas
                              ————————————
                               NO. 01-15-00583-CV
                             ———————————
           THE HONORABLE MARK HENRY, COUNTY JUDGE
                 OF GALVESTON COUNTY, Appellant
                              V.
  THE HONORABLE LONNIE COX, JUDGE OF THE 56TH DISTRICT
          COURT OF GALVESTON COUNTY, Appellee

                     On Appeal from the 56th District Court
                           Galveston County, Texas
                        Trial Court Case No. 15CV0583

                    CONCURRING AND DISSENTING OPINION

      I concur with the Court’s judgment on issues one, two, and four raised in

County Judge Mark Henry’s appeal. I disagree with its disposition of the third issue

and therefore its affirmance of that portion of the district court’s temporary

injunction order that required County Judge Henry to order the County Treasurer to

pay Bonnie Quiroga the same salary as she received in her old position—a position

that no longer exists. I believe the district court erred in setting a specific salary;
                                          1
instead, it should have instructed the commissioners court to set a new—and

reasonable—salary for Quiroga’s new positon. Not only did the district court’s

injunction improperly invade the province of the commissioners court to determine

compensation for its employees, but it also erroneously ordered a single

commissioner to take action that only the commissioners court as a whole could take.

                                     Background

      This unfortunate dispute between two branches of the Galveston County

government originates out of a series of events that began twenty years ago. The

events were uncontroversial at the time but unwittingly provided a toehold for the

current controversy. In 1995, the Galveston County commissioners, at the

suggestion of the county’s trial judges, created a position, “Director of Court

Administration,” to aid the judges in docket management. But the position was not

restricted to assisting the trial judges; it also provided services to the County Judge,

who is a member of the commissioners court.1 The new position formally reported

to the County Judge. But because the position was originally created at the request

of, and primarily for, the trial judges, it also informally reported to the Galveston

County Administrative Judge. Five years after the position was created and at the

1
      The judicial administration position was not created under the procedure set forth
      in Section 151.001 of the Local Government Code. TEX. LOC. GOV’T CODE ANN. §
      151.001 (West 2008).

                                           2
“recommendation” of the trial judges, the commissioners court agreed to hire Bonnie

Quiroga as the Director of Judicial Administration.2

      Eventually the two groups for whom Quiroga worked disagreed about the

quality of her performance. In June 2014, the commissioners, who had been

dissatisfied with her work, fired her.3 The trial judges strongly disagreed with the

decision and took a number of steps to retain Quiroga. The Office of Court

Administration (OCA) proposed a compromise to split the duties between those

reporting to the trial judges and those reporting to the County Judge. After a series

of discussions between the trial judges and the county commissioners, in May 2015,

the trial judges suggested the adoption of OCA’s compromise, which was pursuant

to section 74.103 of the Government Code. TEX. GOV’T CODE ANN. § 74.103 (West

2013) (“The courts may appoint appropriate staff and support personnel according

to the needs in each county.”).

      The trial judges’ offer of compromise requested that the commissioners create

a new position for an employee whose sole responsibility would be to assist with

court administration and who would have a slight change in title, Director of Court

2
      The “Director of Judicial Administration” is the same position as the “Director of
      Court Administration.” During the past 20 years, the position’s title has changed.
3
      To be precise, County Judge Henry initially fired her. He testified that he knew at
      the time that a number of the commissioners were also dissatisfied with her
      performance. The commissioners court shortly thereafter ratified that decision.
                                           3
Administration (which was the original title of Quiroga’s position). In effect, the

trial judges were requesting that the former department known as Justice

Administration, which used to fall partly under the judiciary and partly under the

County Judge and commissioners court, be split and a new position be created that

reported solely to the judiciary.

      The trial judges set out the proposed job’s “essential duties” in 30 bullet

points, none of which corresponded to the duties previously performed for County

Judge Henry under the earlier arrangement. In addition to having fewer duties, this

new position would also supervise fewer employees. All agreed that the trial judges

would be responsible for hiring and supervising this new position.

      While the position was new, the trial judges’ candidate for the position was

known to all of the public officials involved in the controversy: Bonnie Quiroga, the

person who had served as Director of Judicial Administration for thirteen years and

whose performance had been the subject of the earlier disagreement.

      A few weeks after the trial judges submitted their request, on June 9, 2015,

the commissioners court issued an order with findings of fact. The order

acknowledged that the trial judges need staff to assist them with certain tasks such

as:

      coordinating requests for visiting judges for the courts from the regional
      administrative judge, arranging substitute court coordinators and
      reporters, supervising case flow management of the courts, preparing
      administrative judicial orders and documents, assisting with the
                                          4
      preparation of daily jail docket, assisting with the processing of attorney
      fee vouchers, [and] maintaining a database of eligible court appointed
      attorneys.

      The commissioners court order approved the appointment of the new position,

with the duties covered by the trial judges’ proposed job description but with a new

title of “Court Manager.”4 The commissioners court approved a salary grade of 225

(with 30 being the highest grade a county position could be classified) with a salary

step ranging from A to E (with salary steps in the county ranging from A to Z within

the grades).6 Based on the range specified, the new position could pay between

$57,705 and $63,695 annually. If the salary step had been assigned a higher range,

the position could have paid more.

      The County offered little explanation of why the salary step for the new

position was limited to an “E.” County Judge Henry explained that the County has

a policy of assigning positions at grade 20 and above at an initial salary step not to

exceed E. He testified, “A new hire is A through E” while a higher step is reserved

4
      For simplicity, I hereinafter refer to this position as the Court Manager position and
      to the former position, the Director of Judicial Administration, as the Court Director.
5
      For grade 22, the salary range is $57,000 through “the 80,000s” with a step range
      from A to R.
6
      According to the June 9 order by commissioners court, salary grade in Galveston
      County “correlates to the market range of salaries for a particular position. Salary
      step . . . correlates to pay differentials within the market range affected by such
      factors as experience, education, or training of the employee.”

                                             5
“for more tenured people. . . . [T]he county policy says you can hire in new

[personnel] between 22A and E.” The County assigned Quiroga “the maximum

22E.” The County applied this policy knowing that Quiroga was not a new County

hire—she had worked there for over 30 years—and had spent over 13 performing

all of the functions of the new position plus more.

      Shortly after issuing its order, the commissioners court met in two separate

executive sessions to further discuss the trial judges’ request. Following the first

executive session, the commissioners approved the creation of new administrative

positions to report to the Court Manager. Following the second executive session,

the commissioners approved a budget amendment for the employees’ pay.

      But one dispute remained: the salary for the new Court Manager position. The

trial judges requested a salary of $85,000 to $120,000 based on an informal survey

they conducted from six other counties in Texas where salaries ranged from $49,720

to $149,448. The trial judges’ survey did not include internal comparisons with

salaries paid to other Galveston County employees. Nor did the trial judges’ survey

compare the responsibilities and necessary qualifications of the Court Manager

position with the responsibilities and necessary qualifications of other Galveston

County positions.

      According to testimony from District Judge Lonnie Cox, County Judge Henry

stated that he would never pay a salary in the range suggested by the trial judges for

                                          6
this new position. Henry then ordered a salary survey to be performed by a county

employee. This study, which also compared the proposed position’s salary to salaries

for positions in other counties, did not look at census data to compare per capita

income in the counties.7

      Neither side hired a salary consultant or specialist or person with experience

in setting the salary for comparable positions to resolve this dispute.

      With no reliable method suggested by either side to resolve this salary dispute,

District Judge Cox8 sued County Judge Henry,9 seeking injunctive relief. The district

court agreed with the trial judges on the salary dispute. It granted a temporary

injunction, reemploying Quiroga in the new Court Manager position with the same

salary as she had been paid in her former position, $113,000 annually.

                    The district court’s unchallenged findings

7
      One of the counties used for comparative purposes had not yet filled a recently-
      created, similar position.
8
      Judge Cox sued “in his official capacity as judge of the 56th District Court of
      Galveston County, Texas.” He did not sue as the administrative law judge. County
      Judge Henry does not raise any issue regarding Cox’s standing to bring this suit. See
      generally Cty. Comm’rs Court of Dallas Cty. v. Williams, 638 S.W.2d 218, 219
      (Tex. App.—Eastland 1982), writ ref’d n.r.e. sub nom. Williams v. Comm’rs Court
      of Dallas Cty., 655 S.W.2d 206 (Tex. 1983) (holding practicing attorney had
      standing to bring challenge against commissioners court for arbitrarily allocating
      courtroom space).
9
      The petition does not state that Henry is sued only in his official capacity.

                                             7
      In its third issue, the County10 argues that the district court did not validly

exercise its general supervisory jurisdiction over the county commissioners court

under Article V, section 8 of the Texas Constitution. TEX. CONST. art. V, § 8

(granting district courts “appellate jurisdiction and general supervisory control over

the County Commissioners Court”). A district court exercising its limited

supervisory authority may determine that a commissioners court has acted

arbitrarily. Griffin v. Birkman, 266 S.W.3d 189, 195 (Tex. App.—Austin 2008, pet.

denied). The district court found that the County did act arbitrarily.

      In its fact findings, the district court stated that the County used a salary survey

process that “was arbitrary and designed to orchestrate the salary of the replacement

administrator for the courts at the lowest possible level . . . .” It further found that

Henry “used the ability to set the salary for the new position at a sufficiently low

salary to continue to control the hiring process.” The district court also found that

County Judge Henry knew that the trial judges considered the salary level set by the

commissioners court to be “arbitrarily low.” Notably, the County does not contend

that the district court abused its discretion because of a lack of evidence to support

10
      Because County Judge Henry and the majority of the commissioners court are
      aligned, I refer to Henry as the County when referring to his arguments.

                                           8
these findings.11 Instead, it argues that the district court abused its discretion by

“telling the commissioners court what salary to adopt.” I turn to that issue next.

     The district court’s order that Quiroga be paid the same “salary scale”
                      as she was paid in her former position

     1. Legal error

       While this Court’s opinion correctly observes the importance of the

judiciary’s inherent authority to ensure that the judicial branch receives essential

staffing and facilities, I believe the district court had neither the statutory authority

nor the inherent constitutional authority to set the Court Manager’s salary.

       a. Supervisory authority

       I agree with the Court that the district court’s supervisory authority permitted

it to find that the commissioners court acted arbitrarily in setting Quiroga’s salary.

11
       An appellate court’s role in an appeal from a temporary injunction, which will only
       be in effect until the trial and final judgment, is limited because a district court has
       broad discretion in denying or granting a temporary injunction and we do not review
       the merits of the underlying case. Conlin v. Haun, 419 S.W.3d 682, 686 (Tex.
       App.—Houston [1st Dist.] 2013, no pet.). The issue on appeal is not whether we
       agree with the district court’s finding. Downer v. Aquamarine Operators, Inc., 701
       S.W.2d 238, 242 (Tex.1985) (stating in review of whether trial court abused its
       discretion in striking the defendant’s answer, “[t]he mere fact that a trial judge may
       decide a matter within his discretionary authority in a different manner than an
       appellate judge in a similar circumstance does not demonstrate that an abuse of
       discretion has occurred.”); De Mino v. Sheridan, 176 S.W.3d 359, 373 (Tex. App.—
       Houston [1st Dist.] 2004, no pet.) (quoting Downer in affirming temporary
       injunction).

                                              9
But I disagree that the district court’s supervisory authority permits it to set

Quiroga’s salary.12

      The Texas Constitution grants a district court “appellate jurisdiction and

general supervisory control over the County Commissioners Court.” TEX. CONST.

art. 5, § 8. A relatively new section in the Government Code provides that

commissioners courts “set” a “salary range” for a court administrator.13 Under that

statute, the court administrator is “entitled to reasonable compensation, as

determined by the judges served and in the salary range for the position, as set by

the commissioners court.” TEX. GOV’T CODE ANN. § 75.401(d) (West Supp. 2015).

      The commissioners court’s approval of budget is a legislative function.

Comm’rs Court of Caldwell Cty. v. Criminal Dist. Attorney, Caldwell Cty., 690

S.W.2d 932, 936–38 (Tex. App.—Austin 1985, writ ref’d n.r.e.). Setting the “salary

range” for a court administrator is a “discretionary duty” of the commissioners court:

“the fiscal policy of the county is the discretionary responsibility of the

12
      The Texas Supreme Court’s analysis of statutory supervisory authority provides a
      useful paradigm for approaching the limits of a court’s inherent authority, which I
      discuss in further detail in the following section.
13
      This section was approved by the Legislature and signed by the Governor before the
      hearing on the temporary injunction but was not effective until September 1, 2015.
      Both parties have argued the case based on the premise that the law applies to this
      dispute because the commissioners meeting on June 9 was “in anticipation of” the
      effective date of the statute. The June 9 commissioners court order specially refers
      to this bill and is effective as of September 1. Henry also testified that the County’s
      order setting the position and salary would be effective on September 1, 2015.

                                            10
Commissioners Court.” Hooten v. Enriquez, 863 S.W.2d 522, 532 (Tex. App.—El

Paso 1993, no writ); see Comte v. Smith Cty. Comm’rs’ Court, No. 06-14-00086-

CV, 2015 WL 6521198, at *5 (Tex. App.—Texarkana Oct. 28, 2015, no pet. h.)

(mem. op.) (setting court appointed attorney’s salaries was discretionary duty of

commissioners court).

      “While a district court may enjoin an act of the commissioners court that is

beyond [its] authority or otherwise performed arbitrarily, capriciously, collusively,

fraudulently, or in abuse of its discretion, the district court has no authority to direct

a public official in how to perform a discretionary act.” Hooten, 863 S.W.2d at 532;

Weber v. City of Sachse, 591 S.W.2d 563, 566 (Tex. Civ. App.—Dallas 1979, writ

dism’d); cf. Mauzy v. Legislative Redistricting Bd., 471 S.W.2d 570, 573, 575 (Tex.

1971) (holding that enactment of invalid statute attempting apportionment of state

into representative districts did not “rob[] the Board of jurisdiction to apportion the

state into such districts” and stating “mandamus never lies to control official

discretion of a state board”). A district court may not order the commissioners court

to pay a certain salary “or direct a particular county commissioner to cast his or her

vote in a particular manner. . . . [T]he district court was only empowered to adjudge”

the salary “as being improper and thus void.” Hooten, 863 S.W.2d at 533. A district

court’s supervisory authority is limited and “is not used to substitute the discretion

of the district court for that of the public official.” Vondy v. Comm’rs Court of

                                           11
Uvalde Cty., 620 S.W.2d 104, 109 (Tex. 1981); see also Hooten, 863 S.W.2d at 532–

33 (judiciary cannot “substitute[] its own judgment for that of the Commissioners

Court”). When a district court reviews a government official’s statutory

discretionary duty, it may find that the official acted arbitrarily, but it must not read

the official’s discretion out of the statute.

       The limits of a district court’s supervisory authority have been repeatedly

recognized by Texas courts. In Ector County v. Stringer, a constable brought suit

contending that the commissioners court was not paying him a reasonable salary.

843 S.W.2d 477 (Tex. 1992). The trial court determined a salary that it deemed to

be reasonable. Id. at 478. The Texas Supreme Court held that the district court did

not have jurisdiction to make this salary determination. Id. at 479. While the district

court had general supervisory control over the county commissioners court, that

authority could only be invoked when the commissioners court “acts beyond its

jurisdiction or clearly abuses the discretion conferred on it by law.” Id. (quoting

Tarrant Cnty. v. Shannon, 104 S.W.2d 4, 9 (Tex. 1937)). When the commissioners

court abuses its discretion, “the district court may order the commissioners court to

. . . set a reasonable salary,” but it “cannot substitute its discretion for that of the

commissioners by making that determination itself.” Id. A district court’s role in

reviewing the commissioners court’s fiscal decisions “is necessarily a limited one.”

Id.

                                            12
      [A] court has no right to substitute its judgment and discretion for the
      judgment and discretion of the governing body upon whom the law
      visits the primary power and duty to act. Of course, if such governing
      body acts illegally, unreasonably, or arbitrarily, a court of competent
      jurisdiction may so adjudge, but there the power of the court ends.

Id. (quoting Lewis v. City of Fort Worth, 89 S.W.2d 975, 978 (Tex. 1936)). The

Court concluded that while “the district court may order the commissioners court to

exercise its discretion,” it “cannot tell the commissioners what decision to make.”

Stringer, 843 S.W.2d at 479.

      Similarly, in another case, the appellate court held that the trial court did not

err in refusing to dictate to the commissioners court an amount “as to what is a

reasonable salary” and instead ordering the commissioners court to set a reasonable

salary, after finding that the commissioners court had set an unreasonable salary for

a justice of the peace. White v. Comm’rs Court of Kimble Cty., 705 S.W.2d 322, 326

(Tex. App.—San Antonio 1986, no writ); see also Cty. of Dallas v. Blankenship,

No. 05-98-01630-CV, 2001 WL 1184062, at *2 (Tex. App.—Dallas Oct. 9, 2001,

pet. denied) (mem. op., not designated for publication) (citing Stringer for

proposition that trial court may review commissioners court salary decision to

determine whether it is arbitrary “but may not substitute its discretion for that of the

commissioners[] court”).

      Nor can a county executive official set an employee’s salary when that

discretion is granted to the commissioners court. Caldwell Cty., 690 S.W.2d at 935.

                                          13
Caldwell County involved a statute that provided that salaries in the prosecutor’s

office are “fixed” by the prosecuting attorney, “subject to the approval of the

commissioners court.” Id. (quoting 1973 Tex. Gen. Laws, ch. 127, at 275). The

Austin court held that the prosecutor could propose a budget for these salaries but

that the commissioners court retained discretion to set the budget and salaries.

      Caldwell County explained the policy rationale behind the rule that only the

Legislature can set a position’s salary. A contrary result would “assure a troubled

and unworkable state of affairs in county government.” Id. at 937. It would also

undermine “the public debate, the political-adjustment process, the public-interest

evaluation, the taxpayer-interest consideration, and the mandatory correlation of

county revenue and expenditure estimates which comprise the legislative process.”

Id. at 938. The court explained:

      Of what use are public hearings, public debate, and so forth if the
      amounts “fixed” by the prosecuting attorney are not open to change by
      the only body authorized to raise the revenue to pay them and make the
      other legislative determinations referred to above? If they are not open
      to change, there is no practical reason for them to be discussed or
      subjected to the political and legislative process. They are outside such
      process and the result of dictation by a single officer of the executive
      branch, an anomaly in any governmental budget-making process.

Id. at 938. The court also observed that a dispute between the prosecutor’s office and

the county commissioners would be difficult to resolve by permitting district courts

to decide the reasonableness of the requested salary because that would involve the

judiciary in an essentially legislative function of determining “‘reasonableness’ . . .
                                          14
in complex circumstances.” Id. If the commissioners court retained this discretionary

authority under the statute in Caldwell County, it surely must exist under the newly-

enacted statute which expressly requires that the salary range be set by the

commissioners court. TEX. GOV’T CODE ANN. § 75.401 (West Supp. 2015).14

      b. Inherent authority

      The Court states that the district court’s temporary injunction was proper

because its inherent power “alone” grants it authority to do so. The temporary

injunction order, however, does not rely on the judiciary’s inherent authority.15 In

any event, in my opinion, the judiciary’s inherent authority does not provide

authority under these facts for the district court to set Quiroga’s salary.

      Courts have “inherent power to act to protect and preserve the proper

administration of the judicial system. . . . The judicial system of this state cannot

function properly if those officials who are responsible for carrying out certain duties

in that process are not properly compensated.” Vondy, 620 S.W.2d at 109–10. Thus,

14
      It is different when the Legislature expressly grants the judiciary authority to set the
      salary for certain employees. See Mays v. Fifth Court of Appeals, 755 S.W.2d 78,
      79 (Tex. 1988). Although the new statute allows the judges for whom the court
      administrator works to set the administrator’s salary within the range approved by
      the commissioners court, the judges are not allowed to set that salary range.
15
      An amended petition filed after the close of the evidence at the temporary injunction
      contends, for the first time, that injunctive relief is needed “to avoid interference
      with distinctly judicial functions under the Separation of Powers” and that County
      Judge Henry violated “the independence of” the court and the “inherent powers” of
      the judiciary. The clerk’s record does not contain any order granting a trial
      amendment.
                                             15
courts have “inherent power to hire and require salaries be paid for” certain judicial

employees performing tasks of judicial administration. Id. at 110.

      But this inherent authority is not unlimited. Dist. Judges of 188th Judicial

Dist. v. Cty. Judge, 657 S.W.2d 908, 909 (Tex. App.—Texarkana 1983, writ ref’d

n.r.e.). For example, inherent authority does not allow judges to set their own

salaries. The Texas Constitution provides that “the Legislature shall provide for the

. . . compensation of Justices and Judges of the Appellate Courts and District and

Criminal District Courts”—not the judicial branch. TEX. CONST. art. V, §1-a(1).

      The Texas Supreme Court in Vondy stated that, while the judiciary has the

inherent power to require the commissioners court to adequately compensate certain

court-appointed positions that the judiciary views as necessary for the proper

administration of justice, the determination of the amount that constitutes a

“reasonable salary” is a matter of “determination for the commissioners court.” 620

S.W.2d at 108–09. Determining what is a reasonable salary in light of budgetary

considerations falls within the legislative function performed by the commissioners

court. See Harris Cty. v. Nagel, 349 S.W.3d 769, 794 (Tex. App.—Houston [14th

Dist.] 2011, pet. denied) (“Under Texas law, the principal organ of county

government is the commissioners court. Its powers and duties include aspects of

legislative, executive, administrative, and judicial functions. In creating the county,

the commissioners court performs a legislative function. The allocation of county

                                          16
funds is a policymaking determination.” (internal citations and quotation marks

omitted)). The Vondy Court concluded that the district court should have compelled

the commissioners court to set a reasonable salary for the office in question. 620

S.W.2d at 104–05, 109; see also Comm’rs Court of Titus Cty. v. Agan, 940 S.W.2d

77, 80 (Tex. 1997) (“[I]n reviewing a Commissioners Court judgment for abuse of

discretion, the district court has no right to substitute its judgment and discretion for

that of the Commissioners Court. The district court may order the Commissioners

Court to exercise its discretion, but cannot tell the Commissioners what decision to

make” (internal citations omitted)).

      In re El Paso County Commissioners Court dealt with a dispute between the

El Paso County commissioners court and the El Paso County judges over a

courthouse expansion project. 281 S.W.3d 16, 18–22 (Tex. App.—El Paso 2005, no

pet.). Relying on the judiciary’s inherent power to require the legislative branch to

provide facilities for the judiciary, the district court froze $22 million previously

allocated for the project until the dispute could be resolved. Id. at 21. The El Paso

court stated that “sound public policy considerations demand that when the judiciary

seeks to use its inherent power to overcome the legislative prerogative, it must be

held to a high standard and must assume the burden of showing that the funds sought

to be compelled are essential” to its judicial functions. Id. at 28. Thus, while a district

court’s inherent authority “arguably” would permit it to order additional courtroom

                                            17
space, it would not allow the judiciary to dictate “the amount which must be

expended” on the facilities. Id. at 28 n.8.

      Under Vondy and El Paso County Commissioners Court, the district court’s

inherent authority does not reach so far as to allow a district court to bypass the

commissioners court and set Quiroga’s salary itself.

      The Court instead relies heavily on Justice Spears’s concurring opinion in

Mays. Justice Spears stated that “a court has the inherent power to compel the

expenditure of those public funds which are reasonably necessary for the court to

efficiently fulfill its constitutional function.” Mays, 755 S.W.2d at 80.

      The weight to be given to the “reasonably necessary” standard articulated in

the Mays concurrence is questionable for three reasons. First, Justice Spears’s

concurring opinion, although it was joined in by four other members of the Court,

was dicta because all nine members of the Court agreed on the result on statutory

grounds. Noting that “the inherent powers doctrine has not been used in Texas to

compel funding of specific salary amounts,” a Texas Attorney General Letter

Opinion has since refused to follow the concurring opinion in Mays because “it was

dicta” and, therefore, “cannot control our decision”; it instead followed the reasoning

of District Judges of 188th Judicial District as I do. Tex. Att’y Gen. Op. LO-92-44

(1992). Second, it is unclear whether the “reasonably necessary” standard in the

concurrence is the same as an “essential” or “necessary” standard. See Ted Z.

                                              18
Robertson & Christa Brown, The Judiciary’s Inherent Power to Compel Funding: A

Tale of Heating Stoves and Air Conditioners, 20 ST. MARY’S L.J. 863, 879 (1989)

(“As a practical matter, whether there is any real difference between what is

‘reasonably necessary’ and what is ‘essential’ is not clear.”). But even under a

“reasonably necessary” standard, the inherent powers doctrine “is, in a sense, a ‘last

ditch’ doctrine.” Id. Former Texas Supreme Court Justice Robertson helpfully notes,

“The very conception of inherent power carries with it the implication that its use is

for     occasions      not     provided        for    by     established      methods

. . . . When, however, these methods fail . . . then and not until then does occasion

arise for the exercise of the inherent power.” Id.at 880 n. 91 (quoting State ex rel.

Hillis v. Sullivan, 137 P. 392, 395 (Mont. 1913)).

      Third, the Mays concurrence concludes by specifically noting that the

Legislature had granted statutory authority to the district judges to set the salary of

the challenged employee:

      The judiciary’s power to compel funding is not dependent on legislative
      authority. However, in this particular instance, the district judges did
      act pursuant to an express statutory mandate in setting the court
      reporters’ salaries. TEX. GOV’T CODE ANN. § 52.051 [ ]. They acted
      entirely within the scope of that statute, and the statute does not require
      that the county commissioners court be provided with notice and
      hearing.

                                          19
Mays, 755 S.W.2d at 83 (Spears, J., concurring); see TEX. GOV’T CODE ANN.

§ 52.051 (West 2013) (“An official district court reporter shall be paid a salary set

by the order of the judge of the court.”).

      There are good reasons for a high necessity threshold before a court invokes

its inherent authority. See Geoffrey C. Hazard, Jr., et. al., Court Finance and Unitary

Budgeting, 81 YALE L.J. 1286, 1287–88 (1972) (“Substantial reliance upon the

doctrine [of inherent power] . . . may be shortsighted and unwise.”); see also Dist.

Judges of 188th Judicial Dist., 657 S.W.2d at 910 (stating that salary decisions left

to legislative branch have “a presumption of validity” and that the “drastic” step of

departing from separation-of-powers constitutional mandate “should be taken only

on the basis of a detached and objective finding of essentiality”). Two particular

problems are created when the judiciary sets compensation for judicial employees.

First, the judiciary “usurps the appropriation power vested in the legislature.”

Andrew W. Yates, Using Inherent Judicial Power in a State-Level Budget Dispute,

62 DUKE L.J. 1463, 1466 (2013); see id. at 1483 (“When the judiciary’s use of

inherent power ‘diminishes the rights and powers of a coordinate and equal branch,’

the power ‘ceases to act as a check on the other branches and begins to encroach on

their dominion.’”) (quoting Howard B. Glaser, Wachtler v. Cuomo: The Limits of

Inherent Power, 14 PACE L. REV. 111, 137 (1994)); see also Bd. of County Comm’rs

of Weld Cty. v. Nineteenth Judicial Dist., 895 P.2d 545, 548 (Colo. 1995) (“While

                                             20
the separation of powers doctrine prevents another branch of government from

encroaching upon the judiciary, the same principle bars a court from intruding into

the affairs of the legislative or executive branches”); In re Salary of the Juvenile

Dir., 552 P.2d 163, 170 (Wash. 1976) (noting that checks by one branch must not

“undermine the operation of another branch”); Michael Buenger, Of Money and

Judicial Independence: Can Inherent Powers Protect State Courts in Tough Fiscal

Times, 92 KY. L.J. 979, 1031–32, 1038–39 (2004) (“[T]the judiciary must be

exceedingly careful in using its inherent powers, lest it be accused of invading the

province of the legislature and thereby risk undermining public support. . . . Courts

must respect the authority of the legislative branch to set policy through the use of

its appropriation authority, and must, unless faced with exigent circumstances, avoid

the use of inherent powers to countermand legislative funding decisions.”). Courts,

generally, even when relying on inherent authority in making funding-related

decisions, “have relied at least partially on express or implied provisions of state

constitutions and statutes for their arguments. It seems safe to assume that the

decisions are often made with a fairly clear idea of legislative sentiment on the issue

of judicial funding,” thereby avoiding “a direct confrontation with their co-equal

partner                    in                    state                    government

. . . .” Hazard, 81 YALE L.J. at 1288. Here, if we were to apply this principle and

                                          21
look to the express provisions of the statute directly on point, we would allow the

commissioners court to set the salary range.

       “Second, an inherent-power order of this type moves a portion of the state

budget outside the political arena. In bypassing the political process, courts threaten

their public support and popular legitimacy.” Yates, 62 DUKE L.J. at 1466, 1484

(“[W]hen a court wades into a debate about state funding priorities, whatever

supposedly disinterested decision it renders becomes a political issue. In addition,

courts diminish their legitimacy by removing a portion of the state budget from

public debate. The budget process gives the public, through its representatives, a

voice in the distribution of public resources.”); Buenger, 92 KY. L.J. at 1040 (“The

use of inherent power to compel funds can be viewed as antidemocratic, not only

creating a potentially volatile situation vis-a-vis the legislature, but also impugning

the judiciary’s credibility in the eyes of the public.”); id. at 1045 (“The idea of courts’

‘ordering’ the expenditure of public funds for their operations—as if they were

rendering a final judgment in a disputed case—is at odds with the give-and-take of

the legislative process, whose primary actors must balance competing and often

amorphous interests and demands in shaping public policy.”); Hazard, 81 YALE L.J.

at 1289–90 (“A judicial requisition of funds from a taxing agency, such as a county

or city, is in essence a judicial arrogation of discretion conferred, for better or worse,

on the popularly-elected branches of government. . . . No important function of

                                            22
government can be maintained over the long run without public debate, political

commitment, and the exercise of community responsibility as expressed by bodies

dependent on popular assent.”).

      The Stringer rule of allowing a district court to find that the commissioners

court acted arbitrarily and then return the issue to the commissioners court to act

within its discretion (instead of replacing the commissioners court’s discretion with

its own) allows the legislature—the branch of government best suited to determine

priorities and balance interests as part of the budget process—to correct itself and

reinforces the necessity threshold. While Stringer did not address a court’s inherent

authority, its rule is a wise limitation on a court’s inherent authority, at least at this

stage of the preceding when the commissioners have “gotten it wrong” the first time.

      Other states have recognized the caution that must be exercised when the

judiciary relies on its inherent authority in funding disputes with a legislative body.

See. e.g., In re Alamance Cty. Court Facilities, 405 S.E.2d 125, 127 (N.C. 1991).

There, a trial court argued that the county commissioners did not provide sufficient

funds for court facilities. The court issued an order requiring the commissioners

court to “immediately take steps to provide adequate facilities” and outlined exactly

which facilities the commissioners had to improve. Id. at 127–28. The North

Carolina Supreme Court vacated the order. In so doing, it reasoned, “[e]ven in the

name of its inherent power, the judiciary may not arrogate a duty reserved by the

                                           23
constitution exclusively to another body . . . . [D]oing what is ‘reasonably necessary

for the proper administration of justice’ means doing no more than is reasonably

necessary.” Id. at 132. When the judicial branch uses its inherent authority to

preserve its power, “[t]he inherent power of the court must be exercised with as much

concern for its potential to usurp the powers of another branch as for the usurpation

it is intended to correct.” Id. at 133. If a court must use its inherent authority and

enter into areas typically reserved to another branch, it “must proceed with a cautious

and cooperative spirit into those areas . . . . ” Id. at 133; see Mays, 755 S.W.2d at 83

(Spears, J., concurring) (stating that “a spirit of mutual cooperation is unquestionably

the people’s best guarantee of a constitutional government”). To minimize the

encroachment on the legislature’s authority, the judiciary must “not only recogniz[e]

any explicit, constitutional rights and duties belonging uniquely to the other branch,

but also seek[] the least intrusive remedy.” In re Alamance Cty. Court Facilities, 405

S.E.2d at 133.

      The Supreme Court of Iowa has similarly required the judiciary to exercise

caution in asserting its inherent authority to require the Legislature to provide

funding: “courts should be cognizant it is not the judicial department which

historically allocates available government funds. An unreasoned demand for

budgetary consideration is a threat to the image of and public support for the courts.”

Webster Cty. Bd. of Sup’rs v. Flattery, 268 N.W.2d 869, 874 (Iowa 1978). Noting

                                          24
that inherent authority is a power “‘which must be borne responsibly’” and

“‘cautiously,’” the court went on to state, “it is incumbent upon a court invoking

inherent power to secure indispensable goods, facilities or services to do so in a

manner which clearly communicates and demonstrates to the public the grounds for

the court’s action.” Id. (quoting O’Coin’s, Inc. v. Treasurer of Worcester, 287

N.E.2d 608, 615 (Mass. 1972)). To “legally invoke[]” its inherent authority, the

judiciary must show that its actions are necessary “for the immediate, necessary,

efficient and basic functioning of the court.” Id. at 877.

      As the Washington Supreme Court noted in a case where a trial court erred

when it directed the county commissioners to increase the salary of the County

Director of Juvenile Services:

      By its nature, litigation based on inherent judicial power to finance its
      own functions ignores the political allocation of available monetary
      resources by representatives of the people elected in a carefully
      monitored process . . . . The unreasoned assertion of [courts’] power to
      determine and demand their [courts’] own budget is a threat to the
      image of and public support for the courts. In addition, such actions
      may threaten, rather than strengthen, judicial independence since
      involvement in the budgetary process imposes upon the courts at least
      partial responsibility for increased taxes and diminished funding for
      other public services.

In re Salary of Juvenile Dir., 552 P.2d 163, 172–73 (Wash. 1976).16

16
      The court therefore held that the judiciary in that situation bears the “highest burden
      of proof” of demonstrating that (1) the funds “are reasonably necessary” and (2)
      other methods for resolving the funding dispute have failed. Id. at 173–74. The proof

                                            25
       Based on these authorities, I believe that we should apply an “essential”

standard to determine whether the district court could set a reasonable salary for the

Court Manager position. But even under the less stringent “reasonably necessary”

standard used in Justice Spears’s concurring opinion in Mays, the trial judges did not

meet their “heavy burden” to demonstrate that it is reasonably necessary to pay the

Court Manager $113,000 annually for four main reasons.

       First, the trial judges made no effort to hire anyone at the new salary; indeed,

there is no evidence whether Quiroga would accept the new position—with its

reduced duties—for the correspondingly reduced salary. Second, the trial judges did

not present any evidence of whether the new Court Manager duties require a full-

time employee or a part-time employee. It may be reasonable for the County in

allocating scarce resources to pay $113,000 for the work previously performed by

one person but refuse to pay roughly $178,000 for two people to perform these

functions.17 Third, the commissioners court has taken steps to provide assistance to

       must be “clear, cogent, and convincing.” Id. at 174. The court concluded that there
       was no “clear, cogent and convincing showing [that] respondent’s determination
       that the salary paid to the Director of Juvenile Services was so inadequate that the
       court [could] not fulfill its duties.” Id. at 175. Therefore, the mandamus order setting
       the employee’s compensation “imposed an improper check on the function of the
       legislative branch of government.” Id.
17
       $178,000 is the sum of the salaries for two positions: (1)$113,000, which is the
position’s former salary and salary selected by the district court, plus (2) $65,000, which
is the amount paid for another county employee subsequently hired to perform some
administrative duties for the County Judge that are no longer Quiroga’s responsibility. The
County’s expense would also be increased by providing employee benefits to two
employees instead of one.
                                              26
the trial judges by creating the Court Manager position with the job description

requested by the trial judges and agreeing that the Court Manager be hired by, report

to, and be supervised solely by the trial judges. Finally, and significantly, we are not

addressing a situation in which the district court has found that a commissioners

court has, multiple times, acted arbitrarily in setting the salary of an employee whose

services are necessary to carry out the judiciary’s responsibilities and, thereby,

attempted to evade review of its decision.

      To the extent the commissioners court acted arbitrarily in refusing to set a

reasonable salary range, it has done so only once. Giving credence to the

constitutional directive that the branches of government not encroach on each other’s

functions, the district court should have returned the issue of setting Quiroga’s salary

to the commissioners court to be determined in accordance with its legislative

functions, rather than performing that function itself. In other words, it was not

“reasonably necessary,” at this stage of the proceeding, for the district court to set

the Court Manager’s salary; it should have first allowed the commissioners court an

opportunity to correct its mistake and set a reasonable salary. See Vondy, 620 S.W.2d

at 109; cf. Yates, 62 DUKE L.J. at 1463 (arguing state courts should invoke inherent

power against state legislatures in budget disputes “only under a standard of absolute

necessity to perform the duties required by federal and state constitutional law”

because such “standard respects the separation of powers and preserves the

                                          27
judiciary’s public legitimacy”). Presenting this opportunity to the commissioners

court, which did make an effort—albeit an unsuccessful one—to set a reasonable

salary for the Court Manager position, would show the caution the judicial branch

should take before encroaching on traditional legislative functions.18

      In conclusion, when the district court concluded that the commissioners court

arbitrarily set too low of a salary for the new Court Manager position, it should have

ordered the commissioners court to perform its statutory duty and set a new—and

reasonable—salary range for the position. Cf. Douthit v. Ector Cty, 740 S.W.2d 16,

18 (Tex. App.—El Paso 1987, writ denied) (ordering trial court to mandate

commissioners court to establish reasonable amount of compensation for elected

constable when commissioners court abused discretion by paying $1 annual salary).

18
      Evidence was presented at the temporary injunction hearing that the “Court Systems
      continued to operate” for many months without the Court Manager position being
      filled. This testimony arguably provides some support for the County’s position that
      the Court Manager role was not “reasonably necessary” for the efficient operation
      of the judiciary.

      The trial judges, who bore the burden of proof, failed to offer any testimony
      regarding whether the courts were operating efficiently without anyone filling this
      role, the judicial process was significantly slowed, or other judicial tasks were not
      being accomplished because the position was unfilled. Nevertheless, the County
      itself recognized the necessity of the position when it agreed to the trial judges’
      request twenty years ago and again more recently to fill this position. Thus, while
      the “continued to operate” testimony presents some evidence that the Court
      Manager position was not reasonably necessary, the district court was free to
      disregard it in ordering the County to re-establish the position. The trial judges’
      failure to present any testimony regarding court inefficiencies, however, supports
      my conclusion that it was not necessary to set the Court Manager’s salary at this
      time.
                                           28
By setting what it believed was a reasonable salary, the district court “substituted

its own judgment” on the “fiscal policy of the county” for that of the commissioners

court. Hooten, 863 S.W.2d at 532–33. Such an attempt exceeds a court’s statutory

supervisory authority and is not supported by the judiciary’s inherent power.

   2. Abuse of Discretion

         In addition to this legal error, the district court abused its discretion in setting

the Court Manager’s salary as the same salary as the Court Director’s based on the

facts.

         As the applicants for a temporary injunction, the trial judges bore the burden

of proof to establish a “‘probable right of recovery,’ sometimes referred to as

‘likelihood of success on the merits.’” Intercontinental Terminals Co., LLC v. Vopak

N. Am., Inc., 354 S.W.3d 887, 897 (Tex. App.—Houston [1st Dist.] 2011, no pet.).

Thus, in seeking an order of reinstatement to a different position than previously

existed, the trial judges had to show, not only that the salary set by the commissioners

court for this new positon was arbitrary, but also that the previous salary of $113,000

was the reasonable salary for this new position. The trial judges offered no such

evidence except for the salary survey they performed. But that survey did not reach

any conclusion regarding what would be a reasonable salary.

         The trial judges argue that the district court issue did not err in setting this

salary because the temporary injunction was preserving the status quo. I disagree for

                                              29
two reasons. First, the injunction did not preserve the status quo; it created a new

position with new duties. The temporary injunction implemented two changes in

Quiroga’s position: first, during the pendency of the suit, Quiroga would be

supervised only by the Local Administrative Judge and second, she would no longer

perform “any duties relating to the law library, pretrial release, or recovering

costs.”19

      The new job, therefore, involves considerably less responsibility than the old

job. According to County Judge Henry, the Court Manager’s position handles

approximately 40% of the (old) Court Director’s duties and supervises 25% of the

employees. Drummond, Henry’s chief of staff, testified that these responsibilities

“were a significant portion of her job” before that role was split and retitled Court

Manager. Commissioner Ryan Dennard also testified that her responsibility for

collections was a “core duty” and one in which Quiroga’s performance was

deficient. The trial judges did not controvert this testimony. The staff structure also

suggests that the job responsibilities were significantly reduced. In her prior position,

Quiroga had 16 direct reports; in the new position, she would have 4 or 5, with the

remainder reporting to the commissioners.

19
      Quiroga’s prior job description states that she was to exercise direct supervision
      over an Administrative Coordinator, Law Library Coordinator, Court Services
      Coordinator, Pretrial Release Supervisor, and Court Communications Coordinator,
      as well as supervise all department employees.
                                           30
       The district court’s appointment of Quiroga to act in what I have called the

Court Manager position (the Judicial Adminstration Director position less the

responsibilities discussed above) did not preserve the status quo. She had not

occupied that position for almost a year at the time of the injunction. Whatever the

merits of the old salary for the position’s old responsibilities, the district court altered

those responsibilities without altering the compensation. Under the district court’s

order, Quiroga would get all of the pay for only part of the work.

       Because of the reduction in the Court Manager’s duties and supervisory role,

the district court abused its discretion by ordering County Judge Henry to direct the

County Treasurer to pay Quiroga her prior salary in this new role and thereby

substituting its salary opinion for that of the commissioners court.

       For these reasons, I would reverse the district court’s order that Quiroga be

paid the same salary as her last date of employment in the old position.

                                 Indispensable Parties

       While I agree that a district court generally may issue a temporary injunction

in the absence of otherwise indispensable parties, I have some concerns about

applying that principle to a governmental body. But, because the parties at this time

are only disputing one issue—Quiroga’s salary—and the County did not raise the

indispensable-parties issue in the district court, it is unnecessary to decide if this

                                            31
general rule applies here, given that I have already concluded that the portion of the

order setting her salary was invalid.

      I do want to emphasize that the Court’s opinion does not address whether the

other commissioners are indispensable parties before the trial on the merits and the

request for a permanent injunction.20 Nor does the Court address the enforceability

of the injunction by contempt.

      Any permanent injunction granted without naming the other commissioners

as parties may create difficulties in enforcement and constitutional problems because

each county commissioner is independently elected and independently votes on the

budget. The injunction orders not only County Judge Henry, but, all those “acting in

concert” with him, to reemploy Quiroga and to direct the treasurer to pay Quiroga

her prior salary. It also orders County Judge Henry to provide a copy of the

injunction “to each County Commissioner.” But County Judge Henry is only one of

five commissioners and cannot unilaterally act for the entire court except in those

aspects in which he has authority to do so. The trial judges have not presented any

evidence or legal authority suggesting that County Judge Henry has the unilateral

20
      See Vondy, 620 S.W.2d at 105 (noting that, in mandamus proceeding brought by
      elected constable against commissioners court, absence of one member of court was
      not fundamental error when no objection was made to his absence in trial court
      because majority of commissioners were made parties individually and
      commissioners court itself was named party).

                                          32
authority to take either action. The Court does not address whether the district court’s

order can compel all of the commissioners to vote in any particular way under the

guise of “acting in concert” with County Judge Henry.

                                      Conclusion

      The Court, quoting from Justice Spears’ concurring opinion in Mays, correctly

observes that the legislative and judicial branches need to cooperate in determining

the amount of funding necessary to operate the courts. Slip op. at 75 (quoting Mays,

755 S.W.2d at 82–83 (Spears, J., concurring)); see also Dist. Judges of 188th

Judicial Dist., 657 S.W.2d at 909 (stating our system of checks and balances requires

“harmonious cooperation” among three branches of government). Arbitrarily

denying necessary resources to the judiciary equally weakens the public’s support

and the legitimacy of those holding the purse strings as do excessive demands by the

judiciary made under the umbrella of inherent authority. See 62 DUKE L.J. at 1466,

1484. Cooperation is imperative under our system of equal branches of government.

      Here, that cooperation ceased when the parties could not agree on a salary for

an employee that the trial judges wished to retain while the commissioners

questioned her competency. But the issue—and what all parties should have been

focused on—was the relatively straightforward question of a reasonable salary for

the specified list of duties that would be assigned to this new position, a list of duties

that both sides had already approved.

                                           33
      Rather than taking steps to resolve the disagreement with objective data, such

as, perhaps, retaining a qualified expert to evaluate pay for similar positions in other

areas, each side offered selective data, accumulated using methods that would never

come close to satisfying a standard of reliability under Daubert and its progeny. See

Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579 (1993); E.I. du Pont de Nemours

& Co. v. Robinson, 923 S.W.2d 549 (Tex. 1995). And a stand-off ensued.

      Corporate boards—both for-profit and non-profit—routinely rely on outside,

objective experts to determine compensation for certain corporate employees to

ensure that the board complies with its fiduciary responsibilities. The cost of such a

study—or even two if both sides cannot agree on an independent expert—would

probably be less than the attorney’s fees that will be generated in this dispute. More

importantly, the cooperation needed for the judiciary to operate effectively for the

public good requires, at a minimum, that a simple employment issue not result in

turf wars and waste of public funds when common ground abounds. Admittedly, the

issue of what is a reasonable salary for compensating employees in government

service is more complicated than it is in the private sector because of issues

surrounding tax revenue and spending priorities, but absent some revenue issue, this

dispute should be resolved expeditiously in the spirit of cooperation called for by the

Court. Failing that, the commissioners court should be given another opportunity to

determine a reasonable salary for the new positon requested by the trial judges.

                                          34
                                             Harvey Brown
                                             Justice

Panel consists of Justice Jennings, Higley, and Brown.

Brown, J., concurring and dissenting

                                        35


624 F.2d 193
Schneiderv.Campbell
78-2607
UNITED STATES COURT OF APPEALS Ninth Circuit
6/30/80

1
S.D.Cal.

REVERSED AND REMANDED


185 Ariz. 104 (1995)
912 P.2d 1333
Denise MIEL, Plaintiff-Appellee/Cross-Appellant,
v.
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, an Illinois corporation; Cindy Hoekstra, an Arizona resident, Defendants-Appellants/Cross-Appellees.
1 CA-CV 93-0191.
Court of Appeals of Arizona, Division 1, Department B.
September 12, 1995.
Review Granted March 19, 1996.
*106 The Langerman Law Offices, P.A. by Richard W. Langerman, Phoenix, for Plaintiff-Appellee/Cross-Appellant.
O'Connor, Cavanagh, Anderson, Westover, Killingsworth & Beshears, P.A. by Ralph E. Hunsaker and Christopher Robbins, Phoenix, for Defendants-Appellants/Cross-Appellees.
OPINION
KLEINSCHMIDT, Judge.
Denise Miel was injured in an automobile accident caused by Greg McKenzie's negligence. McKenzie was insured by State Farm Mutual Automobile Insurance Company. State Farm failed to settle the case for the policy limits, exposing McKenzie to a judgment in excess of those limits. Miel, as McKenzie's assignee, sued State Farm for bad faith after it failed to settle her claim. The jury returned a verdict in favor of Miel on her bad faith claim, and State Farm has appealed, contesting various rulings of the trial court. Miel has cross-appealed, seeking review of the trial court's dismissal of her negligence claim against State Farm and its claim representative. We reverse because the trial court failed to instruct the jury that mistake alone would not constitute bad faith and because the trial judge did not allow the insurance company to question why the Plaintiff and her attorney insisted on adhering to the settlement deadline. On the cross-appeal, we hold that the careless handling of the claim did not give rise to a cause of action against the insurance company for negligence.
FACTS AND PROCEDURAL HISTORY
The accident involving Miel and McKenzie occurred in December 1988. Shortly thereafter, State Farm assigned a claims representative to handle Miel's liability claims against McKenzie. By January 1989, Miel had retained an attorney to represent her. Miel's attorney advised State Farm that she was representing Miel, and informed State Farm that she would be in contact once the matter had been evaluated. Miel's attorney also requested that State Farm separate Miel's property damage claim from her bodily injury claim. State Farm honored this request, assigning the claims representative to handle just the bodily injury claim. By this time the claims representative had determined that McKenzie was 100% liable.
In April 1989, Miel's attorney wrote to State Farm to inquire about the policy limits on McKenzie's policy. Enclosed with the letter was a report from Miel's doctor showing that Miel had a permanent hearing loss as the result of the injury. The letter stated, "If we are dealing with a minimal limits claim, you can expect to receive a policy limit demand immediately."
Upon receipt of this letter, the claims representative's supervisor authorized her to inform counsel of the $25,000/$50,000 policy limits, noting in the file that, "If this is a limits case, just as well get it out in the open and conclude it." The supervisor also raised the reserves to $25,000.
On May 1, 1989, the claims representative spoke with Miel's attorney and disclosed the limits of McKenzie's policy. Counsel informed the claims representative that Miel would be sending a policy limit demand in the near future. On May 4, 1989, Miel's attorney did send State Farm a letter containing an "offer of settlement." The letter required several things of State Farm. First, State Farm had to confirm that the policy limits were $25,000/$50,000. Second, State Farm had to obtain an affidavit from McKenzie stating that no additional insurance was available to cover the accident. Third, State Farm was required to provide a sworn statement from McKenzie regarding his financial condition. Finally, State Farm was required to tender the policy limits upon the request of Miel. The letter also set a time limit, requiring State Farm to comply with the four conditions no later than May 19, 1989.
The claims representative received this letter on May 8, 1989, and on May 11, 1989, she *107 sent Miel's attorney a letter acknowledging "receipt of your May 4 policy limit demand." The claims representative responded that she would be in contact with counsel regarding an offer as soon as she had reviewed the information submitted by Miel. She did not ask for or indicate that additional time was needed to respond to Miel's offer.
When the claims representative received the May 4 letter, she was aware that policy limit demands for settlement should be immediately referred to her supervisor for consideration, and that the insured must be kept informed of such offers. However, the claims representative neither referred the file to her supervisor nor contacted McKenzie about the settlement offer or the information needed from him.
Instead of doing these things, the claims representative misplaced the file for a period of time, and did not review it again until May 25, 1989, while she was working at home over the Memorial Day holiday. At this time, the claims representative testified that she reviewed only the information submitted with the May 4 letter; she did not refer to the letter itself and the time limitation set forth therein until either Tuesday, May 30, 1989, or Wednesday, May 31, 1989, after she had returned to the office.
The claims representative took the file to her superintendent on May 31, 1989, and received authorization to offer the $25,000 policy limits in return for settlement of Miel's claims and a full and complete release of any claims against State Farm or McKenzie. The claims representative called counsel's office and left a message to that effect. Miel's attorney did not respond to the message, but instead filed a complaint on Miel's behalf against McKenzie on that same day. The attorney had never attempted to contact the claims representative after sending the May 4 letter.
The claims representative received a copy of the complaint on June 1, 1989. She again contacted Miel's attorney and advised her that State Farm was willing to settle the claim for the $25,000 policy limits. The claims representative admitted that she had not yet contacted McKenzie or obtained the requested information from him regarding his financial condition and the lack of other available insurance.
Miel's attorney rejected the offer, and told the claims representative that further negotiations would have to be through defense counsel. Thereafter, McKenzie entered into a Damron agreement with Miel, in which he agreed to permit a judgment to be entered against him for an amount in excess of his policy limits and to assign any bad faith claim he may have had against State Farm to Miel in exchange for her covenant not to execute on the judgment against him. A trial was held on damages, and the judge determined that Miel had sustained $75,000 in damages. A judgment was entered against McKenzie for that amount.
Miel subsequently filed a complaint against State Farm and the claims representative, alleging breach of contract, negligence and breach of the duty of good faith and fair dealing. State Farm and the claims representative admitted that they had made a mistake by misplacing the time limit demand letter and not acting on it. However, they affirmatively alleged that negligence was not grounds for suit against them, that such a mistake did not rise to bad faith, and that Miel had deliberately set them up for a bad faith claim.
Thereafter, State Farm moved for summary judgment on Miel's complaint. Miel then moved for partial summary judgment for the purpose of precluding discovery regarding her conduct and the motivation of her attorney in this case. She also moved for partial summary judgment on her negligence claim. State Farm responded to her motion for partial summary judgment on the negligence claim by again moving to dismiss that count. State Farm also filed a supplemental motion for summary judgment arguing that McKenzie had breached his duty to cooperate by entering into the Damron agreement with Miel, thereby relieving State Farm of its obligations to him under the policy.
*108 The trial court: (1) denied Miel's motion for partial summary judgment on the negligence claim, and granted State Farm's motion to dismiss that count; (2) denied State Farm's motion for summary judgment on the bad faith and punitive damages claims; (3) granted Miel's motion for partial summary judgment regarding the conduct and motives of Miel and her attorney; and (4) denied State Farm's supplemental motion for summary judgment. Miel then sought special action relief from this Court and filed a petition for review with the supreme court regarding the dismissal of her negligence claim. Both courts denied review. Miel v. Superior Court, No. 1 CA-SA 91-0239; Miel v. Superior Court, No. CV 91-0413-PR.
The matter proceeded to trial before a jury. After both parties rested, the trial court directed a verdict dismissing the complaint against the claims representative, but denied State Farm's motion for a directed verdict on the bad faith and punitive damages claims. The jury returned a verdict in favor of Miel on the bad faith claim, awarding her the $50,000 in excess liability incurred by McKenzie. However, the jury found in State Farm's favor on the punitive damages claim.
State Farm then moved for a new trial. The trial court denied this motion, and State Farm filed this appeal, contesting various rulings by the trial court. Miel has cross-appealed from the dismissal of her negligence claim, asking us to review that issue in the event we reverse on any issue raised on appeal.
THE TRIAL COURT PROPERLY ADMITTED NEWSLETTERS AND A PORTION OF STATE FARM'S GENERAL CLAIMS MANUAL
The trial court admitted into evidence two articles from State Farm's in-house newsletter, which discussed the handling of excess liability claims. The court also admitted a portion of State Farm's General Claims Manual which discussed the handling of such claims. State Farm argues that this evidence bore no relevance to the facts of this case, and that even if it did, such relevance was substantially outweighed by its prejudicial effect.
The articles were relevant because they addressed the company's approved policies and procedures for handling such claims  policies and procedures which the claims representative admits she did not follow. The manual, like the articles, notes that the failure to keep an insured informed of settlement offers can constitute bad faith.
We do not believe the evidence was particularly prejudicial because the claims representative admitted that she had failed to follow established State Farm procedures in handling this case. When viewed from another perspective, the articles and manual are helpful to State Farm. Arguably, they demonstrate that the company had gone to considerable trouble to be sure its employees dealt with insureds and injured persons in good faith. The trial court did not abuse its discretion in admitting them into evidence.
THE QUESTION POSED BY MIEL'S ATTORNEY TO STATE FARM'S REPRESENTATIVE ABOUT OTHER BAD FAITH CASES WAS PROPER
At trial, State Farm objected on the ground of immateriality to a question posed by Miel's attorney to one of its representatives concerning other bad faith cases against the company.
Q: And you're aware that there have been other cases where State Farm has been held responsible for excess liability judgments following the failure to pay a policy limit demand?
A: Yes, I'm aware of it.
This question was material to Miel's proposition that State Farm's failure to pay the policy limit demand in this case was not an isolated incident, but rather one of several such incidents. Hawkins v. Allstate Ins. Co., 152 Ariz. 490, 498, 733 P.2d 1073, 1081 (1987) (evidence of prior similar claims is relevant in *109 a bad faith case). Although it does not appear that any foundation was laid to establish the similarity of the other cases to Miel's case, State Farm failed to raise a foundational objection, thereby waiving any such objection. Hawkins, 152 Ariz. at 496, 733 P.2d at 1079.
In addition, the admission of this one statement does not appear to have harmed State Farm. Had the jury accepted Miel's contention that State Farm engaged in a pattern of misconduct in handling claims against its insureds, it would likely have assessed punitive damages against State Farm. Yet, no such damages were awarded. The jury limited its award to the excess liability imposed against McKenzie for Miel's damages.
THE TRIAL COURT ERRED IN FAILING TO INSTRUCT THE JURY THAT MERE NEGLIGENCE IS NOT SUFFICIENT TO ESTABLISH BAD FAITH
State Farm claims it is entitled to a new trial because the trial court refused to give two proposed instructions to the effect that mistake and inadvertence alone cannot constitute bad faith. State Farm's Requested Jury Instruction No. 4 provided:
Negligence or mistake in performance or judgment such as misfiling or losing paperwork on the part of an insurance company resulting in a failure to settle litigation against its insured is not sufficient to impose liability and the plaintiff must prove the insurer acted in bad faith in order to recover.
State Farm's Requested Jury Instruction No. 5 provided:
As long as an insurance company acts honestly on adequate information and gives equal consideration to the interests of its own and its insured, it is not liable because of a mistake or negligence.
We will affirm the trial court's instructions if, taken as a whole, they provide the jury with the proper rules for making its decision. Andrews v. Fry's Food Stores of Arizona, 160 Ariz. 93, 95, 770 P.2d 397, 399 (App. 1989). Here, pursuant to the parties' stipulation, the trial court did instruct the jury on bad faith with Recommended Arizona Jury Instructions 2d (Civil) Bad Faith Instruction No. 8. This instruction states:
There is an implied duty of good faith and fair dealing in every insurance contract. Plaintiff claims that defendant breached this duty. The duty of good faith and fair dealing requires an insurance company to give the same consideration to its insured's interest as it gives to its own when it considers a settlement offer.
The test for evaluating whether an insurance company has given equal consideration to the interests of its insured is whether a prudent insurer without policy limits would have accepted the settlement offer.
In determining whether defendant breached its duty of good faith and fair dealing, you may consider the following:
1. The strength of the injured claimant's case on the issues of liability and damages;
2. Whether the insurer attempted to induce its insured to contribute to the settlement;
3. Whether the insurer failed to properly investigate the circumstances of the claim in order to ascertain the evidence against its insured;
4. Whether the insurer rejected the advice of its attorneys or other agents;
5. Whether the insurer failed to inform its insured of a compromise offer;
6. The amount of financial risk to which each party would be exposed in the event of a refusal to settle;
7. Whether the insured was at fault in inducing the insurer's rejection of the compromise offer by misleading the insurer about the facts; and
8. Any other factors tending to establish or eliminate bad faith on the part of the insurer.
*110 There are two elements to the tort of bad faith: (1) that the insurer acted unreasonably toward its insured, and (2) that the insurer acted knowing that it was acting unreasonably or acted with such reckless disregard that such knowledge may be imputed to it. Trus Joist Corp. v. Safeco Ins. Co. of America, 153 Ariz. 95, 104, 735 P.2d 125, 134 (App. 1986). Mere mistake and inadvertence are not sufficient to establish a claim for bad faith. Id.; Rawlings v. Apodaca, 151 Ariz. 149, 157, 726 P.2d 565, 573 (1986). In Rawlings, our supreme court stated:
[W]e believe the culpable conduct is an intentional act by which the insurer fails to provide the insured with the security and protection from calamity which is the object of the relationship.
The "intent" required here is an "evil hand"  the intent to do the act. Mere negligence or inadvertence is not sufficient  the insurer must intend the act or omission and must form that intent without reasonable or fairly debatable grounds.
Id. at 160, 726 P.2d at 576 (citations and footnotes omitted) (emphasis added).
It is the duty of the trial court to instruct the jury on all legal theories presented which are supported by the evidence. Kauffman v. Schroeder, 116 Ariz. 104, 106, 568 P.2d 411, 413 (1977). In this case, it is true that the jury was clearly instructed with regard to the "equal consideration" standard. See Clearwater v. State Farm Mut. Ins. Co., 164 Ariz. 256, 260, 792 P.2d 719, 723 (1990) (key consideration in third-party claim is whether insurer considered insured's interest equally with its own). That instruction, however, is geared more to a case in which the issue is the insurer's considered decision not to pay a claim than it is to a case like this one, in which the insurer admits that its negligence resulted in an untimely acceptance of a settlement offer. Thus, the instruction was incomplete and not specific to the facts of this case. The jury was not told that mere negligence or inadvertence could not constitute bad faith and that the insurer had to "intend the act or omission and must form that intent without reasonable or fairly debatable grounds." Rawlings, 151 Ariz. at 160, 726 P.2d at 576.
The possibility that harm resulted from a failure to give a complete and specific instruction was greatly enhanced when counsel for Miel argued to the jury that:
The one person you never heard say "mistake" was Judge Dairman. He gave you a list of factors that the law says you should consider in evaluating whether the insurance company was in bad faith. Mistake isn't on that list.
For this reason, we reverse the decision of the trial court and remand this case for a new trial.
THE TRIAL COURT ERRED IN REFUSING TO ALLOW STATE FARM TO INQUIRE ABOUT WHY MIEL AND HER ATTORNEY SET A SHORT DEADLINE AND REFUSED TO EXTEND IT RETROACTIVELY
State Farm contends that the trial court erred in refusing to allow testimony regarding Miel's motives, or the motives of her attorney, in setting a time limit in her settlement demand, and then refusing State Farm's acceptance of the demand when it was only twelve days late. We acknowledge that a person injured by an insurer's policy-holder occupies no contractual or fiduciary relationship with the insurer and may set a time limit for acceptance of a settlement offer, even if it is arbitrary or unreasonable. Martin v. Hartford Accident and Indem. Co., 228 Cal. App.2d 178, 185, 39 Cal. Rptr. 342 (1964). On the other hand, an insurer that allows such a time limit to expire does not necessarily act in bad faith. Id.
The length of time that lapsed after the deadline before State Farm accepted the demand, and the reasons the Plaintiff adhered to the deadline are relevant to whether the insurer acted unreasonably. What is reasonable on the part of the insurer, however, must be judged in light of all the facts surrounding the demand. Even though *111 State Farm does not claim that the deadline was so short that it could not have been met, the reasons for a specific deadline may be relevant to whether the claimant has "set up" the insurer for a claim of bad faith. See Borland v. Safeco Ins. Co. of America, 147 Ariz. 195, 200-02, 709 P.2d 552, 557-59 (App. 1985). We find that the trial court erred in refusing to allow testimony regarding Miel's motives in setting a time limit in her settlement demand, and on remand such testimony should be allowed.
THE CROSS-APPEAL
THE TRIAL COURT DID NOT ERR IN RULING THAT AN INSURER MAY NOT BE SUED FOR NEGLIGENCE IN THE CLAIMS HANDLING PROCESS
Since we grant a new trial, we must decide the issue presented in the cross-appeal. Miel argues that the trial court erred in ruling that an insured or the assignee of an insured may not sue an insurance company for a separate and independent claim of negligence in the way it handled the claim. As the supreme court recognized in Rawlings v. Apodaca, 151 Ariz. 149, 160 n. 6, 726 P.2d 565, 576 n. 6 (1986), this question has never been decided in Arizona.
An insurance company's duty to its insured, or to its insured's assignee, is defined by the terms of the policy and the implied covenant of good faith and fair dealing. See id. at 154, 726 P.2d at 570. If the company breaches its duty, its insured or the assignee may recover compensatory damages for breach of contract, or damages in tort if the insurer's actions rise to the level of bad faith. See id. at 158-60, 726 P.2d at 574-76 (discussing differences between action sounding in tort and action sounding in contract). In discussing the precise question of whether mishandling a claim could give rise to a claim for negligence, the Florida Court of Appeals observed that "a cause of action based solely on negligence which does not rise to the level of bad faith does not lie." DeLaune v. Liberty Mut. Ins. Co., 314 So.2d 601, 603 (Fla. Dist. Ct. App. 1975).[1]
Miel relies on Darner Motor Sales, Inc. v. Universal Underwriter's Ins. Co., 140 Ariz. 383, 682 P.2d 388 (1984), and Continental Life & Acc. Co. v. Songer, 124 Ariz. 294, 603 P.2d 921 (App. 1979), for the proposition that an insurer's mishandling of a claim can give rise to an independent cause of action for negligence. However, emphasis on these cases is misplaced. Darner dealt with a cause of action for an agent's negligent misrepresentation about the scope of the insurance policy, and Songer dealt with negligence in processing an application for insurance. Darner, 140 Ariz. at 385-86, 682 P.2d at 390-91; Songer, 124 Ariz. at 302, 603 P.2d at 929. Neither was a case where the claimant was suing after an insurance contract  an agreement which by its own terms created reciprocal rights and duties  had come into existence. We conclude that it is the contractual relationship which governs the conduct of the parties. Thus, no cause of action for mere negligence exists in a case like this one.
Miel argues that the right to sue in negligence is protected by Article 18 section 6 of the Arizona Constitution which forbids the abrogation of the right to recover damages for injuries. Since no cause of action has ever been recognized for negligence in a case like this one, the court's ruling did not violate the constitution.
The judgment of the trial court is reversed and this matter is remanded for a new trial.
*112 McGREGOR, P.J., and DRUKE, J.,[2] concur.
NOTES
[1]  This does not necessarily mean, however, that there is no adequate recompense for an insurer's inadvertent mishandling of a claim. If the insurer's mishandling results in a breach of contract which leads to an excess judgment against the insured, the insured might be able to recover consequential damages to compensate for the excess judgment. See Lawton v. Great Southwest Fire Ins. Co., 118 N.H. 607, 392 A.2d 576, 579-80 (1978); Jerry, Remedying Insurers' Bad Faith Contract Performance: A Reassessment, 18 Conn. L.Rev. 271 (1986). This point, however, was neither briefed nor argued in this case, and we do not decide it.
[2]  Chief Judge, Arizona Court of Appeals, Division Two.