W. E. (Bill) Burgess v. State of Texas ( 1991 )

burgessIV v. state IN THE COURT OF APPEALS, THIRD DISTRICT OF TEXAS,

AT AUSTIN









NO. 3-90-174-CV





W. E. (BILL) BURGESS,

APPELLANT

vs.





THE STATE OF TEXAS,

APPELLEE

FROM THE DISTRICT COURT OF TRAVIS COUNTY, 299TH JUDICIAL DISTRICT

NO. 462,397, HONORABLE JEANNE MEURER, JUDGE

This is an appeal from a summary judgment. The State of Texas sued Rinks Oil Company ("Rinks Oil"), and its employee, W. E. (Bill) Burgess, for failure to pay collected but unremitted gasoline and diesel fuel taxes. The State moved for, and the court granted, summary judgment against Burgess and Rinks Oil. Burgess alone brings this appeal. ⁽¹⁾ We will reverse the trial court's summary judgment.

Burgess was an officer and director of Rinks Oil when Rinks Oil collected but failed to remit gasoline and diesel fuel taxes to the State. During discovery, the State served Burgess with request for admissions to which Burgess partially replied. The State later moved to determine the sufficiency of the responses to the request for admissions, to compel discovery and to impose sanctions. Burgess failed to attend the hearing on these motions, believing that Chapter Seven bankruptcy proceedings had been instituted on his behalf. The court deemed the following requests admitted:

21. The gasoline and diesel fuel taxes at issue in this lawsuit was [sic] actually collected by Rinks Oil Company, from its vendees when sales were made to such vendees.

22. W. E. (Bill) Burgess, or other individuals employed by Rinks Oil Company, and answerable to W.E. (Bill) Burgess, deposited the gasoline and diesel fuel taxes at issue herein into the bank account of Rinks Oil Company.

23. Only W. E. (Bill) Burgess authorized the drawing of checks or other withdrawals from the account of Rinks Oil Company.

24. Only W. E. (Bill) Burgess was authorized to sign checks on the account of Rinks Oil Company.

25. Gasoline and diesel fuel taxes receipts were not segregated into a separate account of Rinks Oil Company.

26. W. E. (Bill) Burgess, in his capacity as officer or director of Rinks Oil Company, authorized the payment of tax receipts collected by Rinks Oil Company to entities other than Plaintiff.

One other request, not relevant to this appeal, was deemed admitted.

As to Burgess, the State moved for summary judgment on two grounds: (1) Burgess was individually liable to the State for the unremitted tax, penalties and interest because he is a "person" within the meaning of Tex. Tax. Code Ann. § 111.016 (Supp. 1991); and (2) Burgess was jointly and severally liable as a corporate agent who knowingly converted the unremitted taxes. See Dixon V. State, 808 S.W.2d 721 (Tex. App. 1991, no writ).

In his response to the motion for summary judgment, Burgess denied liability, asserting that the United States Bankruptcy Court for the Northern District of Texas had issued an order discharging his debts on March 15, 1990. As summary judgment proof Burgess submitted a copy of the discharge order and his own affidavit stating that the State failed to file a proof of claim or obtain a determination from the bankruptcy court that the debt was not dischargeable. Before the summary judgment hearing Burgess amended his answer to include the affirmative defense that his debts had been discharged. The court granted summary judgment in favor of the State.

In his second point of error, Burgess complains that the court erred in granting summary judgment for the State because the bankruptcy court order discharged any liability he might have had for the taxes. The discharge order states:

1. [Burgess] is released from all personal liability for debts existing on the date of commencement of this case, or deemed to have existed on such date. . . [October 30, 1989]

2. Any existing judgment or any judgment which may be obtained in any court with respect to debts described in paragraph 1 is null and void as a determination of personal liability of the debtor, except: (a) Debts determined nondischargeable by the Bankruptcy Court pursuant to Section 523(a)(2), (4), and (6) of the Bankruptcy Code; and (b) Debts which are nondischargeable pursuant to [Section] 523(a)(1), (3), (5), (7), (8), and (9) of the Bankruptcy Code. (Emphasis added.)

3. This order does not affect any pending complaint to have a debt declared nondischargeable pursuant to Section 523(a)(2), (4), and (6) of the Bankruptcy Code, nor does it prohibit filing a complaint under section 523(a)(1), (3), (5), (7), (8), and (9) of the Bankruptcy Code.

In his affidavit, Burgess states, "[d]uring the bankruptcy proceedings, the State of Texas was listed as a creditor and no proof of claim or other evidence was filed by the State of Texas in regard to the taxes for which they now seek collection." The State neither objected to the form or competency of his affidavit nor offered controverting evidence.

Before it could obtain a summary judgment as a matter of law, the State had the burden of showing that no material issue of fact existed as to its cause of action. Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548-49 (Tex. 1985). We must take as true all evidence favorable to Burgess, the non-movant. Id. Additionally, we must resolve any doubts and indulge every reasonable inference in the non-movant's favor. Id.; Bayouth v. Lion Oil Co., 671 S.W.2d 867, 868 (Tex. 1984).

Burgess presented summary judgment proof that his debts, unless they were excepted from discharge pursuant to Bankruptcy Code section 523, had been discharged. The order and uncontroverted affidavit raise a reasonable inference that the debt to the State had been discharged. The State offered no summary judgment proof that the debt in issue qualified for an exception under section 523. This fact issue precluded the State's entitlement to judgment as a matter of law.

In its pleadings, the State contends that Burgess is individually liable for the taxes as a "person" under section 111.016 of the Texas Tax Code. Sworn pleadings do not constitute summary judgment proof. Hidalgo v. Surety Sav. & Loan Assoc., 462 S.W.2d 540, 545 (Tex. 1971); Sorrells v. Giberson, 780 S.W.2d 936, 938 (Tex. App. 1989, writ denied). The State then argues that because Burgess owes a liability for "taxes," the debt qualifies as an exception to discharge in bankruptcy. 11 U.S.C.A. § 523(a)(1) (West Supp. 1991). We decline to address the State's argument, finding that this issue may be part of the proceedings upon remand of this cause.

The trial court did not state on which of the two grounds it granted summary judgment for the State. We note that the procedure for proving an exception to discharge for damages owed for conversion varies from the statutory provision for proving an exception to discharge for taxes owed individually. See 11 U.S.C.A. §§ 523(a)(1) and 523(a)(6) (1984 and Pamph. 1991). We conclude that the discharge issue is relevant to both of the State's grounds for summary judgment; therefore, neither basis will support the summary judgment.

We will sustain Burgess' second point of error, holding that the court erred in granting the summary judgment in favor of the State because the record reflects that Burgess had raised a fact issue as to his liability for the debt. We do not hold that the debt was discharged, but only that further proceedings are required to determine this issue.

Because we resolve this cause on the second point of error, we will not address Burgess' first point of error. See Tex. R. App. P. Ann. 90(a) (Pamph. 1991). We reverse the trial court's judgment and remand for further proceedings.

Bea Ann Smith, Justice

[Before Chief Justice Carroll, Justices Jones and B. A. Smith]

Reversed and Remanded

Filed: August 28, 1991

[Do Not Publish]

1. Because Rinks Oil does not appeal the judgment at this time we will discuss the facts and pleadings of this case as they apply to Burgess only.