Greg Abbott, Attorney General of Texas // State Bar of Texas v. State Bar of Texas// Cross-Appellee, Attorney General of Texas ( 2007 )

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-05-00810-CV
Anthony L. Martin, a/k/a Anthoney Levane Martin, Appellant
v.
The State of Texas, Appellee
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 53RD JUDICIAL DISTRICT
NO. GV402414, HONORABLE MARGARET A. COOPER, JUDGE PRESIDING
MEMORANDUM OPINION
Anthony L. Martin challenges the admissibility and sufficiency of evidence
supporting the trial court’s judgment finding him jointly and severally liable for expenses and
administrative fees incurred by the State of Texas in cleaning up an abandoned salt water disposal
facility. Martin was held liable as an officer of the defunct Texas corporation, Pathfinder Capital,
L.C. (“Pathfinder”), the corporation responsible for cleaning up the site. In order to be personally
liable for the expenses, Martin must have been an officer or director of Pathfinder pursuant to section
171.255 of the tax code. Martin argues on appeal that the State presented no evidence that he was
an officer or director of Pathfinder at the time the State incurred expenses to clean up the site. He
also contends that the State’s documentary evidence showing the amounts spent by the Commission
to clean up the site should have been excluded because they were summaries offered without
complying with the requirements of Texas Rule of Evidence 1006. The State responds that it offered
uncontroverted evidence that Martin was an officer of Pathfinder, citing two exhibits signed by
Martin reflecting his status as an officer, and that the damage evidence Martin objected to was
offered and admitted as a public record pursuant to Texas Rule of Evidence 803(8) rather than as a
summary under Rule 1006. We affirm.
After failing to pay its franchise taxes, Pathfinder forfeited its corporate privileges
and charter on May 16, 2002. Neither has been revived. Martin was listed as an officer of
Pathfinder on Commission Forms P-4 (titled “Transporter’s Transportation Authority and Certificate
of Compliance”) and P-5 (titled “Organizational Report”), which were signed by Martin and filed
in 1996 and 2002, respectively. An affidavit by the custodian of the Commission’s records indicated
that neither Pathfinder nor Martin had ever amended either of these filings.
Following the forfeiture of Pathfinder’s corporate privileges and corporate charter,
the Commission used state funds to clean up a salt water disposal site formerly operated by
Pathfinder. See Tex. Nat. Res. Code Ann. § 91.113(a) (West 2001) (authorizing Commission to use
state funds to clean up abandoned oil and gas waste sites). The Commission is entitled to have its
cleanup costs reimbursed by the responsible party. Id. § 91.113(f). The State filed suit to recover
administrative and civil penalties as well as cleanup costs, seeking recovery from Pathfinder as the
responsible company and against Martin individually, as the only named officer of Pathfinder. See
Tex. Tax Code Ann. § 171.255 (West 2002). Following a bench trial, the district court rendered a
final judgment in favor of the State jointly and severally against Pathfinder and Martin. The court
found that the Commission had expended $151,641.83 in costs and fees, and also awarded
prejudgment interest and attorneys’ fees. Neither party requested written findings of fact or
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conclusions of law. Without a request for findings of fact, we presume that all questions of fact were
determined in support of the judgment provided that the proposition is raised by the pleadings,
supported by the record, and sustainable on any reasonable theory consistent with the evidence and
applicable law. See Employers Cas. Co. v. Texas Ass’n of School Boards Workers’ Compensation
Self Ins. Fund, 886 S.W.2d 470, 473 (Tex. App.—Austin 1994, writ dism’d w.o.j.).
The trial court found Martin jointly and severally liable with Pathfinder for the State’s
cleanup expenses and administrative penalties under section 171.255(a) of the tax code, which
provides:
If the corporate privileges of a corporation are forfeited for the failure to file a report
or pay a tax or penalty, each director or officer of the corporation is liable for each
debt of the corporation that is created or incurred in this state after the date on which
the report, tax, or penalty is due and before the corporate privileges are revived. The
liability includes liability for any tax or penalty imposed by this chapter on the
corporation that becomes due and payable after the date of the forfeiture.
Tex. Tax Code Ann. § 171.255(a). Under section 171.255(a), officers and directors are personally
liable for corporate debts after the date when taxes, penalties, or tax reports are delinquent and result
in a forfeiture of corporate privileges. Jonnet v. State, 877 S.W.2d 520, 522-23
(Tex. App.—Austin 1994, writ denied). The statute has been described as a “Draconian provision
designed to encourage payment of the corporate franchise tax.” Williams v. Adams, 74 S.W.3d 437,
440 (Tex. App.—Corpus Christi 2002, pet. denied) (quoting Robert W. Hamilton, 19 Tex. Practice:
Business Organizations § 235, at 238 (1973)).
In this case, Martin argues that no evidence supported the court’s judgment that he
was an officer or director of Pathfinder at the time that the cleanup costs and administrative and civil
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penalties were incurred. Martin insists that Commission Form P-4 and Commission Form P-5 show
only that Martin was listed as an officer or director of Pathfinder at the time the forms were filed,
not that he was an officer or director when Pathfinder’s debt was created or incurred. Because the
commission forms are the only evidence relating to his status, Martin’s argument depends entirely
on his theory that the commission forms are insufficient evidence of his status at the time Pathfinder
became liable for the cleanup expenses and administrative penalties.
In reviewing the legal sufficiency of the evidence, we view the evidence in the light
most favorable to the verdict, crediting favorable evidence if it is reasonable to do so, and
disregarding contrary evidence unless it is unreasonable to do so. City of Keller v. Wilson,
168 S.W.3d 802, 807 (Tex. 2005). There is legally insufficient evidence or no evidence of a vital
fact when (a) there is a complete absence of evidence of a vital fact; (b) the court is barred by rules
of law or of evidence from giving weight to the only evidence offered to prove a vital fact; (c) the
evidence offered to prove a vital fact is no more than a mere scintilla; or (d) the evidence
conclusively establishes the opposite of the vital fact. Id. at 810; Merrell Dow Pharms.,
Inc. v. Havner, 953 S.W.2d 706, 711 (Tex. 1997). More than a scintilla of evidence exists when the
evidence supporting the finding, as a whole, rises to a level that would enable reasonable and fair-
minded people to differ in their conclusions. Havner, 953 S.W.2d at 711. If the evidence is so weak
as to do no more than create a mere surmise or suspicion of the fact’s existence, its legal effect is that
of no evidence. Haynes & Boone v. Bowser Bouldin, Ltd., 896 S.W.2d 179, 183 (Tex. 1995).
In reviewing whether evidence is factually insufficient, we examine all the evidence
presented at trial. Plas-Tex, Inc. v. U.S. Steel Corp., 772 S.W.2d 442, 445 (Tex. 1989). We will set
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aside a judgment for factual insufficiency only if it is so contrary to the overwhelming weight of the
evidence as to be clearly wrong and manifestly unjust. Cain v. Bain, 709 S.W.2d 175, 176
(Tex. 1989).
We hold that the evidence admitted at trial is both legally and factually sufficient to
support the trial court’s implicit finding that Martin was a director or officer of Pathfinder when the
cleanup expenses were incurred and when the administrative penalties were assessed. The
administrative code requires that companies “maintain a current organization report with the
Commission until all duties, obligations, and liabilities incurred [under specified rules and statutes]
are fulfilled.” 16 Tex. Admin. Code § 3.1(a)(3) (2006); see Morris v. State, 894 S.W.2d 22, 24
(Tex. App.—Austin 1994, writ dism’d w.o.j.). The identity of a corporation’s officers is one of the
items of information that must be included in the P-5. 16 Tex. Admin. Code § 3.1(a)(4)(c).
Organizations must file amended P-5 reports with the Commission within 15 days after a change in
any information required to be reported on the Form P-5. Id. § 3.1(a)(7). This Court previously has
held that Rule 3.1 creates a presumption that the officers are unchanged until the Form P-5 is
amended or all duties owed by a corporation to the State of Texas are fulfilled. Jonnet, 877 S.W.2d
at 524 (persons listed as officers on old forms were subject to individual liability for debts of
company when no evidence refuted their status as directors and officers). Pathfinder’s 2002 Form
P-5, signed by Martin, identifies Martin as Pathfinder’s sole primary officer, listing him as a
manager. Pathfinder’s 1996 Form P-4, also signed by Martin, lists Martin as the president of the
company. No amendments to these documents were filed showing that he was no longer an officer.
Under Jonnet, the unrebutted and dispositive presumption is that Martin continued as an officer of
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Pathfinder at all relevant times. The evidence is both legally and factually sufficient to support the
implicit finding that Martin was a Pathfinder officer and, thus, jointly and severally liable for the
costs incurred in clean up of the site. We overrule Martin’s first point of error.
Martin next asserts that the court erred by admitting documents showing the amount
of time and money spent by the State to clean up the site. We apply an abuse of discretion standard
when considering whether a district court erred in admitting or excluding evidence. City of
Brownsville v. Alvarado, 897 S.W.2d 750, 753 (Tex. 1995). We will reverse only when we find that
the trial court acted in an unreasonable or arbitrary manner or without regard for any guiding rules
or principles. Travis Cent. Appraisal Dist. v. Signature Flight Support Corp., 140 S.W.3d. 833, 843
(Tex. App.—Austin 2004, no pet.) (citing Owens-Corning Fiberglass Corp. v. Malone, 972 S.W.2d
35, 43 (Tex. 1998); Beaumont Bank, N.A. v. Buller, 806 S.W.2d 223, 226 (Tex. 1991)). “If any
legitimate basis exists to support a district court’s evidentiary ruling, then we must uphold the court’s
decision.” Signature Flight Support, 140 S.W.3d. at 843-44. The party seeking to reverse the
district court’s judgment based on an erroneous evidentiary ruling must show that the error probably
resulted in an improper judgment. Interstate Northborough P’ship v. State, 66 S.W.3d
213, 220 (Tex. 2001).
Martin complains that the court admitted documentary exhibits that were summaries
without proof that the underlying documents were voluminous and without the State making the
underlying documents available to him for examination. See Tex. R. Evid. 1006. The State argues
that the exhibits were offered and admitted as public records pursuant to Texas Rule of Evidence
803(8), not as summaries under Rule 1006. Martin objected at trial that the exhibits were not
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admissible as summaries under Rule 1006. He did not object to their admission as public records
under Rule 803(8). He contended in the trial court and contends here that several of the exhibits
reflect information generated by private contractors, filed with the Commission, and merely
summarized in the exhibits. While admitting Commission-prepared documents as public records,
the trial court sustained Martin’s objection to the admission of documents prepared by third parties.
Rule 803(8) permits admission of the following:
[r]ecords, reports, statements, or data compilations, in any form, of public offices or
agencies setting forth: (A) the activities of the office or agency; (B) matters observed
pursuant to duty imposed by law as to which matters there was a duty to report . . .
or (C) . . . factual findings resulting from an investigation made pursuant to authority
granted by law; unless the sources of information or other circumstances indicate lack
of trustworthiness.
Tex. R. Evid. 803(8). Under Rule 803(8), which is patterned after Federal Rule of Evidence 803(8),
the party opposing the admission of public records can do so by providing evidence that the public
records are untrustworthy. Beavers v. Northrop Worldwide Aircraft Servs., Inc., 821 S.W.2d 669,
675 (Tex App.—Amarillo 1991, writ denied); see also Moss v. Ole South Real Estate,
933 F.2d 1300, 1305 (5th Cir. 1991) (holding that “the party opposing the admission of the report
must prove the report’s untrustworthiness” under Federal Rule of Evidence 803(8)).
The challenged exhibits are documents setting out the amounts that the Commission
authorized to be paid for cleanup costs of a site over which Pathfinder had responsibility. They are
not summaries prepared for trial, but are documents prepared by and filed with the Commission
reporting and compiling the amounts paid. The sponsoring witness testified that the documents
show the amounts spent on cleanup and that the amounts were reasonable because the expenditures
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were approved by the Commission review process. There is no evidence that these public records
are unreliable concerning how much the State expended to clean up the site. The district judge did
not abuse her discretion in admitting these documents as public records showing amounts expended
as cleanup costs. Martin’s second point of error is overruled.
Affirmed.
G. Alan Waldrop, Justice
Before Justices Puryear, Pemberton and Waldrop
Affirmed
Filed: August 3, 2007
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