194376-in-united-states-currency-thirty-one-31-8-liner-machines ( 2009 )


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  •                      COURT OF APPEALS
    SECOND DISTRICT OF TEXAS
    FORT WORTH
    NO. 2-07-021-CV
    NO. 2-07-023-CV
    $1,943.76 IN UNITED STATES                             APPELLANT
    CURRENCY; THIRTY ONE (31)
    “8 LINER” MACHINES; TWELVE
    (12) ARIZOLA RESTAURANT
    GIFT CARDS; NINETEEN (19) QUICK
    TRIP GIFT CARDS; SIXTY NINE
    (69) WAL-MART SHOPPING CARDS;
    ONE ARMI TANFOGLIO GIUSEPPE
    .25 PISTOL AND AMMUNITION;
    ONE NORINCO MODEL 54 PISTOL
    AND AMMUNITION; ONE (1) HP
    PAVILLION 6830; ONE MAXELL
    3.5 FLOPPY DISK; MISCELLANEOUS
    NOTEBOOKS, CHECK BOOKS, AND
    ENUMERATED ITEMS
    V.
    THE STATE OF TEXAS                                      APPELLEE
    ------------
    FROM CRIMINAL DISTRICT COURT NO. 3 AND THE
    396TH DISTRICT COURT OF TARRANT COUNTY
    ------------
    ------------
    MEMORANDUM OPINION 1
    ------------
    Appellant Billy Joe Farrell, Jr. appeals from the trial court’s determination
    with respect to his property seized under a search warrant. In three issues,
    Appellant argues that the machines and other property seized were not
    gambling devices as defined by Texas Penal Code section 47.01(4)(B), that the
    retroactive application of the Supreme Court of Texas’s decision in Hardy v.
    State 2 is an improper application of law, and that the trial court committed
    reversible error by failing to return the property. Because we hold that the trial
    court did not err by determining that the “eight liners” at issue here are
    gambling devices, we affirm the trial court’s judgments.
    In 2002, Appellant owned and operated a gaming business. As part of
    his business, Appellant owned “eight liner” gaming machines.               After a
    successful play on one of the machines, a player would be awarded points that
    could be redeemed for restaurant or retail gift cards or for credit for further play
    on the machines. In July 2002, Fort Worth police raided the business and
    1
    … See Tex. R. App. P. 47.4.
    2
    … Hardy v. State, 
    102 S.W.3d 123
    (Tex. 2003).
    2
    seized the machines (as well as other items) pursuant to a search warrant. The
    police also searched, pursuant to a search warrant, the home of one of the
    gaming room’s employees.
    The State brought a gambling promotion charge against Appellant but
    later dismissed it. Appellant then moved for the release of the seized property
    under article 18.18 of the code of criminal procedure.3 The presiding judge of
    the 396th District Court heard the motion while sitting as the 396th District
    Judge and as the judge for Criminal District Court Number Three and denied
    relief, after which Appellant brought these appeals.
    In its brief, the State argues that this court does not have jurisdiction over
    this appeal. Because we may not reach the merits of the case if we do not
    have jurisdiction, we must address this argument.4
    Article 18.18(b) orders magistrates to take certain actions with respect
    to confiscated property, and it neither expressly provides for nor abrogates the
    3
    … Tex. Code Crim. Proc. Ann. art. 18.18(b) (Vernon 2005).
    4
    … See Grunewald v. Technibilt Corp., 
    931 S.W.2d 593
    , 597 (Tex.
    App.—Dallas 1996, writ denied) (holding that because the court lacked subject
    matter jurisdiction, it had no authority other than to dismiss the appeal);
    Protestants v. Am. Pubs, Inc., 
    787 S.W.2d 111
    , 113 (Tex. App.—Houston [1st
    Dist.] 1990, writ denied) (stating that a court must dismiss a case if it becomes
    apparent that the court has no authority to adjudicate it).
    3
    right of appeal from magisterial determinations under that article.5 A forfeiture
    proceeding is in rem and is civil in nature.6 We have jurisdiction over appeals
    in civil matters arising from district courts.7 But the State argues that we do
    not have jurisdiction over this civil matter because the district court was acting
    as   a       magistrate   and   appellate   courts   do   not have   jurisdiction   over
    determinations by magistrates under article 18.18.
    We disagree.       Under the Texas Constitution, district courts have
    jurisdiction over forfeiture proceedings. 8 The Supreme Court of Texas has held
    that because the legislature cannot take away the jurisdiction given to a district
    court by the constitution, “the most that the Legislature could constitutionally
    accomplish in [a]rticle 18.18(b)-(f)[] was to grant concurrent jurisdiction to a
    court . . . that was not also a district court.” 9 Thus, article 18.18 allows for
    courts in addition to district courts to preside over forfeiture proceedings.
    Because the district court had jurisdiction over the forfeiture proceedings by
    5
    … See Tex. Code Crim. Proc. Ann. art. 18.18(b).
    6
    … 
    Hardy, 102 S.W.3d at 126
    –27.
    7
    … See Tex. Civ. Prac. & Rem. Code Ann. § 51.012 (Vernon 2008).
    8
    … See Tex. Const. art. V, § 8.
    9
    … State v. Dugar, 
    553 S.W.2d 102
    , 105 (Tex. 1977).
    4
    virtue of the constitutional powers granted to district courts 10 or the statutory
    powers granted to courts acting as magistrates,11 we have jurisdiction over this
    appeal.12 We overrule the State’s jurisdictional challenge.
    We now turn to the merits of the appeal. In Appellant’s first issue, he
    argues that the machines and other property seized were not gambling devices
    as that term is defined by Texas Penal Code section 47.01(4)(B). In Appellant’s
    brief, however, he limits his argument to error as to the forfeiture of his “eight
    liner” machines.     Appellant makes no argument as to why the other items
    seized are not gambling devices or not otherwise subject to forfeiture under
    article 18.18.13 We therefore affirm the trial court’s judgments as to the other
    10
    … See Tex. Const. art. V, § 8.
    11
    … See Tex. Code Crim. Proc. Ann. art. 18.18(b)–(f); State ex rel.
    Holmes v. Salinas, 
    784 S.W.2d 421
    , 424 (Tex. Crim. App. 1990) (orig.
    proceeding) (holding no jurisdictional defect and that district court held position
    of magistrate “solely through his office of district judge” and therefore his
    “authority to act in the capacity of magistrate [was] dependent upon his
    office.”
    12
    … See Tex. Civ. Prac. & Rem. Code Ann. § 51.012; see also Brown v.
    Barlow, 
    685 S.W.2d 406
    , 407 (Tex. App.—San Antonio 1985, no writ) (noting
    that the Supreme Court of Texas has implicitly held that rulings by magistrates
    under article 18.18 are appealable).
    13
    … See Tex. Code Crim. Proc. Ann. art. 18.18(b) (Vernon Supp. 2008)
    (providing for the forfeiture of any seized “gambling device or equipment,
    altered gambling equipment or gambling paraphernalia, gambling proceeds,
    prohibited weapon, obscene device or material, child pornography, scanning
    device or re-encoder, criminal instrument, or dog-fighting equipment” unless
    5
    property seized and limit our analysis of his issues to the “eight liners.” 14
    Article 18.18 provides that after a person is convicted for possession of
    a gambling device, “the court entering the judgment of conviction shall order
    that the . . . device . . . be destroyed or forfeited to the state.” 15 But if no
    prosecution or conviction results from the seizure, “the magistrate to whom the
    return was made shall notify in writing the person found in possession of the
    alleged gambling device . . . to show cause why the property seized should not
    be destroyed.” 16
    If the person appears to show cause, the magistrate must conduct a
    hearing, but “[u]nless the person proves by a preponderance of the evidence
    that the property . . . is not . . . [a] gambling device . . . and that he is entitled
    to possession, the magistrate shall dispose of the property.” 17          The article
    incorporates the penal code definition of gambling device. 18
    cause is shown why it should not be forfeited).
    14
    … See Pat Baker Co., Inc. v. Wilson, 
    971 S.W.2d 447
    , 450 (Tex. 1998)
    (“It is axiomatic that an appellate court cannot reverse a trial court’s judgment
    absent properly assigned error.”).
    15
    … Tex. Code Crim. Proc. Ann. art. 18.18(a).
    16
    … 
    Id. art. 18.18(b).
          17
    … 
    Id. art. 18.18(f).
          18
    … 
    Id. art. 18.18(g)(2).
    6
    Penal code section 47.01 defines the term “gambling device” as “any
    electronic, electromechanical, or mechanical contrivance . . . that for a
    consideration affords the player an opportunity to obtain anything of value, the
    award of which is determined solely or partially by chance, even though
    accompanied by some skill, whether or not the prize is automatically paid by the
    contrivance.” 19 The definition expressly excludes devices that would otherwise
    fall within the statutory definition if they reward players “exclusively with
    noncash merchandise prizes, toys, or novelties, or a representation of value
    redeemable for those items,” where the noncash prizes have a value under a
    certain amount.20 No one disputes that the “eight liners” at issue here meet the
    general definition of “gambling device.” But Appellant argues that at the time
    the devices were seized, they came within the exception under section
    47.01(4)(B), in that players were rewarded with noncash merchandise, and no
    player was awarded a prize from a single play having a wholesale value more
    than the statutorily proscribed amount.
    In June 2001, both the Waco and Austin Courts of Appeals handed down
    decisions reaching different conclusions as to whether a gambling device that
    19
    … Tex. Penal Code Ann. § 47.01(4) (Vernon 2003).
    20
    … 
    Id. § 47.01(4)(B)
    (emphasis added).
    7
    awarded points redeemable for gift certificates fell within the statutory
    exception in section 47.01(4)(B).21 The Supreme Court of Texas decided this
    issue in Hardy and held that these devices are gambling devices. 22 In Hardy,
    the devices at issue awarded tickets redeemable either for gift certificates or for
    cash for further play on the machines. The court held that gift certificates are
    a money equivalent, and therefore the machines did not award tickets
    redeemable exclusively for noncash prizes and thus did not fit the exclusion
    under section 47.01(4)(B).     The “eight liners” owned by Appellant likewise
    awarded points that could be redeemed for retail or restaurant gift certificates
    or for further play on the machines either at that time or some time in the
    future. Thus, because Appellant’s gambling devices did not reward players
    exclusively with noncash prizes, under Hardy, they do not meet the exclusion
    and are prohibited gambling devices.
    Appellant points to the Amarillo Court of Appeal’s decision in Twenty-
    Nine (29) Gambling Devices v. State 23 and argues that the court there
    21
    … Compare State v. One Super Cherry Master Video 8-Liner Mach., 
    55 S.W.3d 51
    , 55 (Tex. App.—Austin 2001), rev’d, 
    102 S.W.3d 132
    (Tex. 2003),
    with Hardy v. State, 
    50 S.W.3d 689
    , 697 (Tex. App.—Waco 2001), aff’d, 
    102 S.W.3d 123
    (Tex. 2003).
    22
    … 
    Hardy, 102 S.W.3d at 131
    .
    23
    … 
    110 S.W.3d 146
    (Tex. App.—Amarillo 2003, no pet.).
    8
    “conceded” that before the supreme court’s Hardy decision, there was a
    conflict between the Austin and Waco Courts of Appeals and that “if the
    Amarillo court cannot decide whether [the Austin Court of Appeals’ holding in
    Cherry Master] or [the Waco Court of Appeals’ holding in Hardy] prevails, how
    can Appellant determine if his business involves gaming and [not] gambling?”
    Appellant misconstrues the opinion. The Amarillo court noted that prior to
    Hardy, there was a split in the courts of appeals as to whether the State bore
    the burden of proof at an article 18.18 hearing. Regarding the appellant’s
    argument that the devices at issue fit the statutory exception because they
    awarded points redeemable for gift certificates and not cash, the court stated
    that this position was foreclosed by the supreme court’s decision in Hardy. 24
    We overrule Appellant’s first issue.
    The supreme court handed down the Hardy decision in 2003, after the
    State seized Appellant’s devices. In Appellant’s third issue, he argues that the
    trial court reversibly erred by failing to return the property because Hardy should
    not be applied retroactively. The supreme court has stated that “[a] decision
    of [that court] operates retroactively unless [that court] exercises its discretion
    24
    … 
    Id. at 151.
    9
    to modify that application.” 2 5   Here, the supreme court did not announce a
    limitation on the retroactive application of Hardy. On the same day it handed
    down that decision, it handed down another case relating to the same type of
    gambling devices, referred to Hardy as controlling on the issue, and did not
    discuss at all whether Hardy should be applied retroactively or prospectively.26
    But the supreme court has also said that although its decisions usually
    apply retroactively, “exceptions are recognized when considerations of fairness
    and policy dictate prospective effect only.” 27 The court adopted factors from
    the United States Supreme Court for determining when to apply a decision
    retroactively. The factors are:
    (1) whether the decision establishes a new principle of law by
    either overruling clear past precedent on which litigants may have
    relied or by deciding an issue of first impression whose resolution
    was not clearly foreshadowed; (2) whether prospective or
    retroactive application of the particular rule will further or retard its
    operation through an examination of the history, purpose, and
    effect of the rule; and (3) whether retroactive application of the rule
    could produce substantial inequitable results. 28
    Appellant argues that the first element is “easily met” because prior to the
    25
    … Bowen v. Aetna Cas. & Sur. Co., 
    837 S.W.2d 99
    , 100 (Tex. 1992).
    26
    … State v. One Super Cherry Master Video 8-Liner Machine, 
    102 S.W.3d 132
    , 133 (Tex. 2003).
    27
    … Elbaor v. Smith, 
    845 S.W.2d 240
    , 250 (Tex. 1992).
    28
    … 
    Id. 10 Hardy
    decision, courts of appeals had been split on the issue of whether these
    devices met the exception of 47.01(4)(B). We disagree. That at least one
    Texas appellate court had held that these devices did not meet the statutory
    exception should have indicated to Appellant that reasonable minds could reach
    the same conclusion, and because of the disagreement between the courts of
    appeals, one could foresee the likelihood that the supreme court would consider
    the issue.29 Thus, the first factor does not favor Appellant.
    On the second factor, Appellant’s argument is that he paid a permit tax
    through the city of Fort Worth and a license fee to the state comptroller. Thus,
    a retroactive application would put the State in the position of having charged
    taxes on illegal gambling equipment. He also raises the question of whether he
    would have a cause of action against those to whom he paid taxes and fees
    and argues that “[i]t would be difficult to see why any retroactive application
    of [Hardy] would do anything but hinder the Court’s opinion.” The rule at issue
    here is that because money prizes are prohibited by statute, monetary
    equivalents are also prohibited, and none of Appellant’s arguments persuade us
    29
    … Cf. 
    id. (determining that
    the case represented an issue of first
    impression whose resolution was not clearly foreshadowed because “only a
    couple of states [had] previously” reached the same holding and that “[t]he only
    Texas opinion which even hinted” at such a holding was one concurring
    opinion).
    11
    that a retroactive application of the rule would retard its operation.
    As for the third factor, Appellant argues that he bought the devices from
    the city of Waco, acquired a permit for his business and a license from the
    Texas comptroller, paid for a maintenance contract for a damaged device, paid
    amusement tax, purchased gift cards for prizes, purchased restaurant gift cards,
    obtained a bank loan to purchase the devices, and was forced to pay the loan
    after the devices were seized. He contends that the financial hardships he
    suffered because of the total collapse of his business after the seizure “when
    a reasonable person would cite [the Austin Court of Appeals’ opinion in Cherry
    Master30 ] as an authority to stay in business is pat[e]ntly unfair,” and he should
    be allowed to sell the machines in a jurisdiction where they are legal so as to
    recoup his losses. These results are not “substantial inequitable results.” A
    reasonable person would not have relied on an opinion from the Austin Court
    of Appeals as controlling in this district on an issue that this court had not yet
    determined.31 That is particularly true here when in the same month that the
    Austin Court of Appeals decided Cherry Master, the Waco Court of Appeals
    30
    … Cherry 
    Master, 55 S.W.3d at 55
    .
    31
    … See Eubanks v. Mullin, 
    909 S.W.2d 574
    , 576 n.1 (Tex. App.—Fort
    Worth 1995, no writ) (noting that the opinions of other courts of appeals are
    persuasive but not controlling).
    12
    reached the opposite conclusion.32 And Appellant’s evidence shows that he
    acquired the business permit and the license from the comptroller after the
    Waco court declared that machines awarding these types of prizes did not meet
    the statutory exception, so Appellant could not have reasonably relied on the
    Cherry Master holding in making his decision to run these machines in his
    business. We overrule Appellant’s third issue.
    Appellant in his second issue argues that with the Hardy decision, the
    supreme court “changed the rules” by deciding that gift cards are equivalents
    of money. He contends that a retroactive application of Hardy is an improper
    application of law because the federal and Texas constitutions prohibit ex post
    facto laws.
    Prohibitions against ex post facto laws “apply to civil statutes only when
    the statutory scheme is so punitive either in purpose or effect as to transform
    what was clearly intended as a civil remedy into a criminal penalty.” 33      A
    forfeiture proceeding under article 18.18 is civil in nature and is against the
    property and not the owner of the property and is therefore usually not
    32
    … See 
    Hardy, 50 S.W.3d at 697
    .
    33
    … Real Prop. Located at 4125 Blanton, Wichita Falls, Wichita County,
    Tex., With a Legal Description of Lot 1 Block 4 Univ. Park B1, Wichita County,
    Tex. v. State, 
    230 S.W.3d 476
    , 483 (Tex. App.—Fort Worth 2007, pet.
    denied).
    13
    punitive. 34 Thus, a retroactive application of Hardy does not constitute an ex
    post facto law.
    Appellant further argues that the seizure of the devices combined with the
    modification of the definition of gambling device under Hardy and the
    application of that definition to his case “completely impaired Appellant’s
    obligation with his contract with Azle Bank.” We infer this to be an argument
    that a retroactive application of Hardy would violate the Texas Constitution’s
    prohibition against the enactment of a retroactive law impairing the obligation
    of contracts.35 Appellant did not raise this argument in the trial court, and he
    may not raise it now for the first time on appeal. 36 We overrule his second
    issue.
    Finally, we address an issue raised during oral arguments in this case.
    The State seized Appellant’s property in July 2002. The case against Appellant
    34
    … See 
    id. (holding that
    civil forfeiture proceedings under chapter 59 of
    the code of criminal procedure “are civil, in rem proceedings against property
    rather than against the defendant and are not normally classified as
    punishment”); 
    Hardy, 102 S.W.3d at 126
    –27 (noting that forfeiture
    proceedings under article 18.18 are civil, in rem proceedings).
    35
    … See Tex. Const. art. I, § 16; Wessely Energy Corp. v. Jennings, 
    736 S.W.2d 624
    , 627 (Tex. 1987).
    36
    … See In re J.B.W., 
    99 S.W.3d 218
    , 225 (Tex. App.—Fort Worth 2003,
    pet. denied) (“There is no right to complain of unpreserved trial court error for
    the first time on appeal, except when the error is fundamental.”).
    14
    was dismissed in June 2004. No action was taken by the State under article
    18.18 after the dismissal, and Appellant filed a motion for a release of the
    property in October 2006, more than two years after the charges were
    dismissed.   Following oral arguments, the parties filed supplemental briefs
    addressing a question raised during argument as to how long the State may
    wait to bring a motion for forfeiture under article 18.18 before the motion is no
    longer “timely” under the statute and forfeiture is waived. 37 This issue was not
    raised in the trial court, however, and therefore we may not address it on
    appeal.38
    Having overruled all of Appellant’s issues, we affirm the trial court’s
    judgments.
    LEE ANN DAUPHINOT
    JUSTICE
    PANEL: DAUPHINOT and MCCOY, JJ.; and DIXON W. HOLMAN, J. (Senior
    Justice, Retired, Sitting by Assignment).
    DELIVERED: January 29, 2009
    37
    … See Tex. Code Crim. Proc. Ann. art. 18.18(b) (requiring law
    enforcement agency informed by the State that no prosecution will result from
    seizure to “timely” make motion for show cause hearing on forfeiture).
    38
    … See Tex. R. App. P. 33.1(a); Pat Baker 
    Co., 971 S.W.2d at 450
    (holding that appellate court may not reverse based on a complaint not raised
    in the trial court).
    15