City of Clarksville, Clarksville Independent School District, Red River County, and Langford Creek Water Conservation District v. Drilltech, Inc. ( 2011 )

In The
Court of Appeals
Sixth Appellate District of Texas at Texarkana
______________________________
No. 06-11-00054-CV
______________________________
CITY OF CLARKSVILLE, CLARKSVILLE INDEPENDENT
SCHOOL DISTRICT, RED RIVER COUNTY, AND LANGFORD
CREEK WATER CONSERVATION DISTRICT, Appellants
V.
DRILLTECH, INC., Appellee
On Appeal from the 6th Judicial District Court
Red River County, Texas
Trial Court No. CV02249
Before Morriss, C.J., Carter and Moseley, JJ.
Opinion by Justice Carter
OPINION
The City of Clarksville, Clarksville Independent School District, Red River County, and
Langford Creek Water Conservation District (hereinafter collectively referred to as the Taxing
Units), appeal the trial court’s grant of a summary judgment in favor of landowner Drilltech, Inc.,
finding that all tax liens after its purchase of property in November 2008 were forfeited or
extinguished. We affirm the trial court’s judgment.
I. Factual and Procedural Background
This appeal focuses on the application of Section 31.08 of the Texas Tax Code, which
reads:
(a) At the request of any person, a collector for a taxing unit shall issue
a certificate showing the amount of delinquent taxes, penalties, interest, and any
known costs and expenses under Section 33.48 due the unit on a property according
to the unit’s current tax records. If the collector collects taxes for more than one
taxing unit, the certificate must show the amount of delinquent taxes, penalties,
interest, and any known costs and expenses under Section 33.48 due on the
property to each taxing unit for which the collector collects the taxes. . . .
(b) Except as provided by Subsection (c) of this section, if a person
transfers property accompanied by a tax certificate that erroneously indicates that
no delinquent taxes, penalties, or interest are due a taxing unit on the property or
that fails to include property because of its omission from an appraisal roll as
described under Section 25. 21,1 the unit’s tax lien on the property is extinguished
1
Section 25.21 reads:
(a) If the chief appraiser discovers that real property was omitted from an appraisal
roll in any one of the five preceding years or that personal property was omitted from an appraisal
roll in one of the two preceding years, he shall appraise the property as of January 1 of each year that
it was omitted and enter the property and its appraised value in the appraisal records.
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and the purchaser of the property is absolved of liability to the unit for delinquent
taxes, penalties, or interest on the property or for taxes based on omitted property.
The person who was liable for the tax for the year the tax was imposed or the
property was omitted remains personally liable for the tax and for any penalties or
interest.
TEX. TAX CODE ANN. § 31.08(a), (b) (West 2008).
Jason R. Petty and Beth Ann Petty sold a 16.374-acre tract of land situated in Red River
County to Drilltech, Inc., on November 7, 2008. On November 4, 2008, Gooding Title Company
ordered tax certificates from Red River County and the County Appraisal District. Specifically,
Red River County was asked to ―check your records for tax suit on this property,‖ with the
property description being ―10.019 acres, 6.282 acres & .73 acres; Wade H. Vining Survey, Abst.
#878.‖
After describing the property as ―A0878 Vining, W.H.,‖ both certificates list the land
market value as $15,330.00, and represent that improvements have a ―0‖ value. The tax
certificate issued on November 4, 2008, by the Red River Appraisal District located in Clarksville,
Texas, indicates the request was made by Gooding Title and certifies that ―after a careful check of
the tax record of this office, the following current/delinquent taxes, penalties and interest are due‖
to Clarksville ISD. It showed a total amount of $1,158.48 owed for years 2006–2008, all of
which were paid from the proceeds of the sale at closing. The County Tax Office issued a
(b) The entry shall show that the appraisal is for property that was omitted from an
appraisal roll in a prior year and shall indicate the year and the appraised value for each year.
TEX. TAX CODE ANN. § 25.21 (West 2008).
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certification that total taxes due from 2006 through November 2008 were $468.90, which were
also paid at closing.
In December 2009, Drilltech received a notice of intent to sue from the City of Clarksville
and Clarksville ISD for collection of delinquent taxes prior to Drilltech’s purchase of the property.
Drilltech sought declaratory judgment that the certificates indicated that no taxes were due, and
thus, that the liens were forfeited under Section 31.08(b) of the Texas Tax Code.2 The City and
Clarksville ISD answered the suit and filed a cross-claim seeking foreclosure of the property for
delinquent taxes in 2007 and 2008, along with penalties and interest, as well as a personal
judgment against the Pettys.3 Drilltech filed a motion for summary judgment urging the trial
court to apply Section 31.08.
The Taxing Units filed a cross-motion for summary judgment and countered with the
affidavit of Jan Tinsley, chief appraiser for Red River County. After stating that she is ―the
custodian of all appraisal district records and all tax records, both current and delinquent, for said
school district and city,‖ Tinsley explained that two taxing accounts were created for the same
property. According to Tinsley, Capital Appraisal Group, LLC, appraised complex properties,
such as the one at issue, for the district. She stated, ―Because the appraisal district’s staff
2
Following the trial court’s grant of Drilltech’s motion for summary judgment, Drilltech’s cause of action against the
Taxing Units was severed from their causes of action against the Pettys. The judgment in this case became final when
the Taxing Units nonsuited their cross-claims against the Pettys on October 11, 2011.
3
Clarksville ISD claimed $1,255.67 for 2007, and $1,352.00 for 2008. The City claimed $1,027.00 was owed in both
2007 and 2008, and Clarksville ISD sought $1,255.67 for 2007 and $1,352.00 for 2008. The penalties and interest
amount to $2,995.17, for an aggregate delinquency of $7,656.84.
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routinely appraises the land itself in-house, it is administratively convenient to maintain two
separate tax accounts, one for the land appraised by the district and identified by its own unique
account number, and another account for the improvements situated thereon.‖ As proof, Tinsley
attached a contract for appraisal services between the Appraisal District and Capital Appraisal
Group, LLC.4 A ―Tax Year 2008 Industrial Property File‖ demonstrated that Capital Appraisal
had appraised improvements at $130,000.00 when the property was owned by the Pettys.
Urging that the appraisal value of the land was only $15,330.00 ―because the
improvements situated upon the land were separately appraised and assessed under another
account number as is customary in the case of industrial properties . . . , and the improvement
account is indeed delinquent for tax years 2007 and 2008,‖ the City and Clarksville ISD argued
that Drilltech should have known additional taxes were due. They further argued that the only
certificates produced showed delinquent taxes owing and that Section 31.08 did not apply. Red
River County and Langford Creek Water Conservation District intervened in the suit, seeking
$3,266.13 for 2007 and 2008 taxes, and filed their own motion for summary judgment to recover
taxes upon the improvements on the land, seeking personal judgment against the Pettys and
foreclosure of their liens.
Drilltech responded to the cross-motion for summary judgment by attaching summary
judgment evidence that the county routinely attached tax certificates containing figures in the
4
The contract attached was entered into on June 9, 2010, but there is some evidence that Capital Appraisal Group
assessed the property’s value prior to this date.
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section for land and improvements for commercial properties in response to Gooding’s requests.
They attached the affidavit of Kay Witmer, Escrow Officer for Gooding for eight years, which
stated the following:
One of my duties at Gooding Title Co. is to place orders for tax certificates
with Red River Appraisal District and Red River County Tax Collector in
connection with sales and/or mortgages of real property in Red River County,
Texas, in which Owner’s and/or Loan Title Polices are ordered.
In placing these orders for tax certificates, I use a form, . . . filled in by me
and either faxed or e-mailed to the above taxing entities.
....
The orders for tax certificates placed by me with the taxing entities are
intended by me to cover taxes for both the land described in the order and
permanent improvements attached to such land.
Only the land is described in the order, and I have never placed a separate
order for tax certificates on the permanent improvements, which I understand to be
a component part of the land. Neither taxing entity has ever requested that I place
a separate order for the land and the improvements.
The taxing entities respond to my orders by issuing a tax certificate on the
land, and where permanent improvements are attached to the land, permanent
improvements are included on the tax certificate.
....
In response to our orders, each taxing entity furnishes Gooding Title Co. a
tax certificate showing what, if any, taxes, penalties and interest are due and owing
on the land and improvements (if any) which are the subject of the order. . . .
....
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Except for the omitted taxes on the improvements in the Petty-Drilltech
sale, which resulted in this suit, I have no knowledge of either the Red River
Appraisal District or the Red River County Tax Collector making a claim for taxes,
penalties and interest allegedly due on improvements permanently attached to a
particular tract of land and which taxes, penalty and interest were omitted from the
tax certificate ordered and received by Gooding Title Co.
I have never been advised by either taxing entity that land and permanent
improvements are customarily carried on a separate account on industrial
property.5
The trial court found that ―all tax liens on the real property‖ were forfeited or extinguished,
and found that Drilltech would not be personally liable for any taxes owed.
II. Standard of Review
The standard for reviewing a traditional motion for summary judgment is well established.
See Sysco Food Servs., Inc. v. Trapnell, 890 S.W.2d 796, 800 (Tex. 1994); Nixon v. Mr. Prop.
Mgmt. Co., 690 S.W.2d 546, 548–49 (Tex. 1985). We review de novo a summary judgment to
determine whether a party’s right to prevail is established as a matter of law. Dickey v. Club
Corp. of Am., 12 S.W.3d 172, 175 (Tex. App.—Dallas 2000, pet. denied). A party moving for
5
The Taxing Units objected to the following portions of Witmer’s affidavit on the bases that her intent and/or
knowledge were not controvertible or competent summary judgment evidence: (1) that her requests ―are intended by
me to cover taxes for both the land described in the order and permanent improvements attached to such land‖; (2) her
statement that she had no knowledge of the Taxing Units ―making a claim for taxes, penalties and interest allegedly
due on improvements permanently attached to a particular tract of land and which taxes, penalty and interest were
omitted from the tax certificate ordered and received by Gooding‖; and (3) that ―in most cases, no one who owns or
works for Gooding Title Co. knows what, if any, improvements are attached to the land on which the certificates are
ordered.‖ With respect to the third statement, the Taxing Units also objected that Witmer failed to demonstrate
personal knowledge of what other employees would know. Last, they complained that Witmer’s statements that she
understood the permanent improvements to be a component part of the land and that Gooding considers all taxes
owing are to be shown on the tax certificate, were conclusory. The Taxing Units separately appeal the trial court’s
overruling of all objections to Witmer’s affidavit. We find that the trial court’s application of Section 31.08
dispositive of the appeal, without regard to Witmer’s affidavit. Therefore, we do not address the admission or
exclusion of the affidavit.
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traditional summary judgment is charged with the burden of establishing that there are no genuine
issues of material fact and it is entitled to judgment as a matter of law. TEX. R. CIV. P. 166a(c);
M.D. Anderson Hosp. & Tumor Inst. v. Willrich, 28 S.W.3d 22, 23 (Tex. 2000) (per curiam). A
matter is conclusively established if ordinary minds could not differ as to the conclusion to be
drawn from the evidence. Triton Oil & Gas Corp. v. Marine Contractors & Supply, Inc., 644
S.W.2d 443, 446 (Tex. 1982). ―When both sides move for summary judgment, as they did here,
and the trial court grants one motion and denies the other, reviewing courts consider both sides’
summary-judgment evidence, determine all questions presented, and render the judgment the trial
court should have rendered.‖ Gilbert Tex. Constr., L.P. v. Underwriters at Lloyd’s London, 327
S.W.3d 118, 124 (Tex. 2010) (citing Embrey v. Royal Ins. Co. of Am., 22 S.W.3d 414, 415–16
(Tex. 2000)).
III. The Trial Court Properly Granted Summary Judgment
Both parties argue about the meaning of the phrase ―indicat[ing] that no delinquent taxes,
penalties, or interest are due.‖ TEX. TAX CODE ANN. § 31.08(b). On the certificates, the
property was described by location, description, and situs address and contained a space for
valuation for improvements. Because the improvement valuation was listed as ―0,‖ Drilltech
argued that the tax certificates showed no taxes owing. The Taxing Units argue that the tax
certificate itself must contain a statement that no delinquent taxes, penalties, or interest are due.
8
A tax bill for real property must include the appraised value and taxable value of the
property and the amount of taxes imposed on the property by the unit. TEX. TAX CODE ANN.
§ 31.01(c)(11)(A), (C) (West Supp. 2011). Real property in the Tax Code specifically includes
improvements made on the land. TEX. TAX CODE ANN. § 1.04(2)(B) (West 2008). Before an
executory contract is signed by the purchaser of property, the seller is required to provide the
purchaser with a tax certificate from the collector to ensure proper disclosure of tax payments.
TEX. PROP. CODE ANN. § 5.070(a)(1) (West 2004). Section 9.3040 of the Texas Administrative
Code requires the following affirmation to accompany the list of delinquent taxes, penalties, and
interest, and any known costs and expenses on the tax certificate: ―a careful check of the tax
records of the office has been made on the specified property and the tax certificate indicates the
amount of delinquent taxes.‖ 34 TEX. ADMIN. CODE § 9.3040 (2011) (Comptroller of Pub.
Accounts, Tax Record Requirements). The definition of ―property‖ in the Texas Tax Code
includes ―any matter or thing capable of private ownership.‖ TEX. TAX CODE ANN. § 1.04(1)
(West 2008). Section 31.08(a) reads that ―[a]t the request of any person, a collector for a taxing
unit shall issue a certificate showing the amount of delinquent taxes, penalties, interest, and any
known costs and expenses under Section 33.48 due the unit on a property according to the unit’s
current tax records.‖ Gooding Title specifically requested that tax certificates be issued on the
―property,‖ and provided the property address. Thus, the Taxing Units were required to issue a
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tax certificate showing the sums due according to the current tax records for both the value of the
land and the improvements.
The tax certificates specifically certified and guaranteed that only the amounts listed were
due ―for the above described property‖ and ―on the described property.‖ No indication of
delinquent taxes owing for any improvements were shown. Therefore, the certificates
―erroneously indicate[d] that no delinquent taxes, penalties, or interest [were] due‖6 with respect
to any improvements. TEX. TAX CODE ANN. § 31.08(b). Therefore, we find Drilltech proved its
entitlement to summary judgment as a matter of law.
6
This language in Section 31.08(b) has been revised several times. The 1953 predecessor of the statute, Vernon
Annotated Civil Statutes Article 7258a, stated: ―When any certificate so issued shows all taxes, interest, penalty and
costs on the property therein described to be paid in full to and including the year therein stated, the said certificate
shall be conclusive evidence of the full payment of all taxes, interest, penalty and costs due on the property described
in said certificate for all years to and including the year stated therein.‖ Int’l Paper Co. v. State, 380 S.W.2d 18,
19–20 (Tex. Civ. App.—Texarkana 1964, writ ref’d n.r.e.). In 2005, the Legislature revised the statute from ―if a
person transfers property accompanied by a tax certificate erroneously showing that no delinquent taxes, penalties, or
interest are due‖ to ―if a person transfers property accompanied by a tax certificate that erroneously indicates that no
delinquent taxes, penalties, or interest are due.‖ Act of May 23, 2005, 79th Leg., R.S., ch. 846, § 2, 2005 Tex. Gen.
Laws 2888, 2888–89 (current version at TEX. TAX CODE ANN. § 81.08(b) (West 2008)). In Int’l Paper Co., we found
that the purpose of Article 7258a was remedial. ―It gives the citizens of Texas a conclusive right to believe in and rely
upon the acts of their officers. . . . The purpose of the statute was to relieve the purchasers of property from the secret
tax liens upon property for which they have purchased and paid, or obligated themselves to pay for. This relieves the
purchaser of the responsibility of buying property and later having a tax lien forced upon the same and requiring him to
pay off the tax lien in order to keep his property.‖ Id. at 22.
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IV. Conclusion
We affirm the judgment of the trial court.
Jack Carter
Justice
Date Submitted: October 12, 2011
Date Decided: November 15, 2011
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