John M. Bacsik, III, Charlie Michel Bacsik, and Emily Bacsik v. Tax Rescue II, LLC ( 2024 )

In the
Court of Appeals
Second Appellate District of Texas
at Fort Worth
___________________________
No. 02-23-00374-CV
___________________________
JOHN M. BACSIK, III, CHARLIE MICHEL BACSIK, AND EMILY BACSIK,
Appellants
V.
TAX RESCUE II, LLC, Appellee
On Appeal from the 67th District Court
Tarrant County, Texas
Trial Court No. 067-325569-21
Before Kerr, Birdwell, and Bassel, JJ.
Memorandum Opinion by Justice Kerr
MEMORANDUM OPINION
After Appellants John M. Bacsik III, Charlie Michel Bacsik, and Emily Bacsik
(collectively, the Bacsiks) failed to comply with the terms of a Rule 11 settlement
agreement, the trial court signed a “Final Judgment for Foreclosure of Tax Liens and
Order of Sale” in Appellee Tax Rescue II, LLC’s favor. The Bacsiks have appealed
and raise three points: (1) the judgment “is not founded on a valid lien claim”; (2) the
Rule 11 settlement agreement “was not an agreement upon which judgment could be
granted”; and (3) “the judgment was an improper remedy to enforce any claimed
agreement.” We will affirm.
I. Background
This case arises out of two property-tax loans secured by tax liens on 1117
Harrison Avenue in Arlington, Texas (the Property), that were transferred pursuant to
Section 32.06 of the Texas Tax Code.1 See Tex. Tax Code Ann. § 32.06. Tax Rescue is
the current servicer and holder of the loans, which are in default.
The Property was owned by John Bacsik Jr., who had authorized the tax-lien
transfers and is now deceased. His children—John M. Bacsik III and Charlie Michel
1
For a discussion of property-tax loans and tax-lien transfers, see Ovation
Services, LLC v. Richard, 624 S.W.3d 610, 616–18 (Tex. App.—Tyler 2021, no pet.), and
1901 NW 28th Street Trust v. Lillian Wilson, LLC, 535 S.W.3d 96, 100 (Tex. App.—Fort
Worth 2017, no pet.). See Tex. Tax Code Ann. §§ 32.06 (“Property Tax Loans;
Transfer of Tax Lien”), .065 (“Contract for Foreclosure of Tax Lien”). “Tax transfer
lenders facilitate loans to property owners to pay off due or delinquent property taxes
when the property owner cannot pay.” Ovation Servs., 624 S.W.3d at 613.
2
Bacsik—and his ex-wife Emily Bacsik sued Tax Rescue to stop it from foreclosing on
the tax liens at a foreclosure sale noticed for June 1, 2021. See Tex. R. Civ. P.
736.11(a). The Bacsiks alleged that Tax Rescue had failed to comply with Texas
Property Code notice provisions. The Bacsiks also asserted a breach-of-contract claim
against Tax Rescue and sought a declaratory judgment declaring void any substitute
trustee’s deeds executed pursuant to any substitute trustee’s sales. They also sought
statutory damages and attorney’s fees. Tax Rescue answered and counterclaimed for a
judicial-foreclosure judgment and an order of sale.
Just before the December 2022 trial, the parties settled the lawsuit, and their
attorneys signed a Rule 11 Agreement that was filed with the trial court. The Rule 11
Agreement provided as follows:
This will confirm that the Parties have reached an agreement to settle
the . . . lawsuit pursuant to the following terms:
1. Tax Rescue will arrange to have the subject loans re-financed
through [a] conventional mortgage with a Deed of Trust securing the
note with a corporate entity under its control to be designated at its
discretion.
2. The terms of such financing will be the balance of the two tax
loans as of the closing date plus 2022 taxes at 11.99% per annum for 10
years. This loan shall close on or before January 6, 2023. The Lender
shall escrow for taxes and insurance.
3. The (new) Borrowers shall make a $5,000 payment prior to
January 6, 2023. Such amount shall be applied first toward closing costs
(recording costs, etc[.]), the setting up of an escrow account for taxes
and insurance (estimated 2 months for each), and principal as noted
above.
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4. The (new) Borrowers shall provide a one[-]year casualty policy
on the property naming the designated lender as mortgagee prior to
closing.
5. The Parties shall agree to Judgment establishing fee[-]simple
ownership of the property and/or provide documentation to establish
the present ownership of the property[2] and removing all substitute
trustee’s deeds from the chain of title to the property. All designated
owners must be Parties to the subject loan.
6. The financing will include language confirming subrogation of
the subject tax liens.
7. The Parties will enter into a detailed Release [that] includes
confidentiality and non-disparagement provisions [that] shall release all
claims through the date of its execution. Tax Rescue’s counsel will draft
the closing documents at its expense.
8. The pending claims of the Parties shall be dismissed with
[p]rejudice upon closing of the transaction.
9. Finally, if the insurance policy and $5,000 provided for above
have not been paid on or before January 6, 2023, the Parties will agree to
the entry of a Judgment providing for judicial tax sale based upon the
amounts owed on the two loans as of 12/31/22 and the interest rate in
Paragraph 2 above.
Tax Rescue secured a lender and provided the new lender’s name to the
Bacsiks. But despite Tax Rescue’s several requests, the Bacsiks failed to provide Tax
Rescue with the information and documentation necessary to complete the
2
According to Tax Rescue, the Property’s ownership was unclear after the
original borrower, John Bacsik Jr., died intestate: “This lawsuit was brought by the
deceased’s children and ex-wife, Emily Bacsik. The Property was designated as the
deceased’s separate property in the divorce, so it is unclear the interest of the various
Plaintiffs.”
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transaction and failed to make the $5,000 payment and secure the casualty insurance
policy on the Property.
As a result of the Bacsiks’ defaulting on the Rule 11 Agreement, Tax Rescue
moved for entry of judgment in February 2023. The Bacsiks did not respond to the
motion.
The trial court held a hearing on Tax Rescue’s motion in March 2023 at which
both the Bacsiks and Tax Rescue were present, but the court postponed ruling on the
motion. The trial court heard the motion again in June 2023; this time, the Bacsiks did
not appear. After that hearing, the trial court signed a “Final Judgment for
Foreclosure of Tax Liens and Order of Sale” against the Bacsiks in rem. The Bacsiks
timely moved for a new trial, which the trial court denied after a hearing in October
2023. The Bacsiks timely appealed and challenge the trial court’s rendering the
foreclosure judgment based on the Rule 11 Agreement.
II. Standard of Review and Applicable Law
We review a trial court’s decision enforcing a Rule 11 agreement for an abuse
of discretion. See Mantas v. Fifth Ct. of Appeals, 925 S.W.2d 656, 659 (Tex. 1996) (orig.
proceeding); Harrison v. Freehill, No. 03-21-00249-CV, 2022 WL 12069261, at *4 (Tex.
App.—Austin Oct. 21, 2022, no pet.) (mem. op.). A trial court abuses its discretion if
it acts without reference to any guiding rules or principles—that is, if its act is
arbitrary or unreasonable. Low v. Henry, 221 S.W.3d 609, 614 (Tex. 2007); Cire v.
Cummings, 134 S.W.3d 835, 838–39 (Tex. 2004). An appellate court cannot conclude
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that a trial court abused its discretion merely because the appellate court would have
ruled differently in the same circumstances. E.I. du Pont de Nemours & Co. v. Robinson,
923 S.W.2d 549, 558 (Tex. 1995); see also Low, 221 S.W.3d at 620.
Rule 11 is “an effective tool for finalizing settlements by objective
manifestation so that the agreements ‘do not themselves become sources of
controversy.’” Knapp Med. Ctr. v. De La Garza, 238 S.W.3d 767, 768 (Tex. 2007)
(quoting Kennedy v. Hyde, 682 S.W.2d 525, 530 (Tex. 1984)). A Rule 11 agreement is
enforceable if it is (1) in writing, (2) signed, and (3) filed in the trial court’s record. See
Tex. R. Civ. P. 11 (“Unless otherwise provided in these rules, no agreement between
attorneys or parties touching any suit pending will be enforced unless it be in writing,
signed and filed with the papers as part of the record, or unless it be made in open
court and entered of record.”). A Rule 11 settlement agreement must contain all the
essential settlement terms. See Padilla v. LaFrance, 907 S.W.2d 454, 460 (Tex. 1995).
Essential terms are those terms that the parties “would reasonably regard as vitally
important elements of their bargain,” including “payment terms and release of
claims.” Innovative Vision Sols., LLC v. Kempner, No. 01-20-00195-CV, 2022 WL
868130, at *6 (Tex. App.—Houston [1st Dist.] Mar. 24, 2022, no pet.) (mem. op.)
(citations omitted). Courts construe Rule 11 settlement agreements as they do
contracts. Id.“A trial court has a ministerial duty to enforce a valid Rule 11 agreement.”
ExxonMobil Corp. v. Valence Operating Co., 174 S.W.3d 303, 309 (Tex. App.—Houston
6
[1st Dist.] 2005, pet. denied) (op. on reh’g) (citing EZ Pawn Corp. v. Mancias, 934
S.W.2d 87, 91 (Tex. 1996); and then citing Fed. Lanes, Inc. v. City of Houston, 905 S.W.2d
686, 690 (Tex. App.—Houston [1st Dist.] 1995, no writ)). But a Rule 11 agreement
cannot serve as a basis for an agreed judgment if a party withdraws its consent before
the trial court has rendered judgment. Padilla, 907 S.W.2d at 461–62; Henry v. City of
Fort Worth, No. 2-09-065-CV, 2010 WL 598594, at *4 (Tex. App.—Fort Worth Feb.
18, 2010, pet. denied) (mem. op.). Although a trial court is not precluded from
enforcing a Rule 11 agreement once it has been repudiated by one of the parties, an
action to enforce a Rule 11 agreement to which consent has been withdrawn must be
based on proper pleading and proof. See Padilla, 907 S.W.2d at 462; Quintero v. Jim
Walter Homes, Inc., 654 S.W.2d 442, 444 (Tex. 1983). In other words, a party seeking to
enforce a Rule 11 agreement after the other party has revoked its consent “must
pursue a separate breach-of-contract claim, which is subject to the normal rules of
pleading and proof.” Mantas, 925 S.W.2d at 658. “However, once the trial court
renders judgment based on a rule 11 settlement agreement, the parties cannot revoke
their consent to the agreement.” Henry, 2010 WL 598594, at *4 (citing Alcantar v. Okla.
Nat’l Bank, 47 S.W.3d 815, 821 (Tex. App.—Fort Worth 2001, no pet.)).
III. Analysis
In three points, the Bacsiks argue that the trial court abused its discretion by
rendering the foreclosure judgment because (1) the judgment was based on an invalid
lien claim; (2) the Rule 11 Agreement was unenforceable; and (3) Tax Rescue could
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enforce the Rule 11 Agreement only by pursuing a separate breach-of-contract claim.3
We address these points in reverse order because doing so aids in our disposition of
this appeal.
In their third point, the Bacsiks assert that the trial court abused its discretion
by rendering the foreclosure judgment “because the judgment was an improper
remedy to enforce any claimed agreement.” The Bacsiks argue that because they
revoked their consent to the Rule 11 Agreement, Tax Rescue could enforce the Rule
11 Agreement only by pursuing a separate breach-of-contract claim. The Bacsiks
In the “Statement of the Case” section of their brief, the Bacsiks state that
3
This is a most unusual case, where the trial court did not dismiss [the]
Bacsik[s’] claims but merely granted Tax Rescue the right to foreclose tax
liens on what is properly [the] Bacsik[s’] real property. . . . After further
review of the Judgment, undersigned counsel believes it is at minimum
very arguable that the Judgment is not in fact final and appealable, since
it addresses none of the claims of [the] Bacsik[s] in the suit, but merely
contains the formulaic recitation that the Judgment is final and
appealable. [Footnotes omitted.]
The judgment here states, “This judgment finally disposes of all claims and all
parties and is appealable.” It is thus a final judgment. See, e.g., In re Elizondo, 544
S.W.3d 824, 826 (Tex. 2018) (orig. proceeding); Lehmann v. Har-Con Corp., 39 S.W.3d
191, 206 (Tex. 2001). If the Bacsiks mean to argue that the judgment is erroneously
final, cf. G & H Towing Co. v. Magee, 347 S.W.3d 293, 298 (Tex. 2011) (“When a trial
court grants more relief than requested and, therefore, makes an otherwise partial
summary judgment final, that judgment, although erroneous, is final and appealable.”),
this is the only place in their brief that they raise this argument. It is not a subsidiary
question that is fairly included in their points presented, see Tex. R. App. P. 38.1(f),
and the Bacsiks make no argument or cite any supporting authority, see Tex. R. App.
P. 38.1(i). We thus overrule this issue, to the extent it is one, as inadequately briefed.
See Huey v. Huey, 200 S.W.3d 851, 854 (Tex. App.—Dallas 2006, no pet.) (stating that
the “[f]ailure to cite applicable authority or provide substantive analysis waives an
issue on appeal”).
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contend that they revoked their consent to the Rule 11 Agreement because they “did
not agree to entry of a consent judgment, in particular at the original hearing of March
24, 2023, where [the] Bacsik[s] objected to entry and the trial court did not act.”
A party reserves the right to revoke its consent to a Rule 11 agreement at any
time before judgment is rendered. See Quintero, 654 S.W.2d at 444. But “[a] withdrawal
of consent must be effectively communicated to the trial court.” Baylor Coll. of Med. v.
Camberg, 247 S.W.3d 342, 346 (Tex. App.—Houston [14th Dist.] 2008, pet. denied).
Here, we have no reporter’s record of the March 2023 hearing.4 When a reporter’s
record is necessary for appellate review of an issue and we do not have a reporter’s
record, we presume the missing record supports the trial court’s judgment. See B.F. v.
A.F., No. 02-16-00133-CV, 2017 WL 2375767, at *1 (Tex. App.—Fort Worth June 1,
2017, no pet.) (mem. op.); see also Tex. R. App. P. 37.3(c). In fact, the trial-court judge
had a different recollection of the March 2023 hearing: during the October 2023
hearing on the Bacsiks’ new-trial motion, the trial-court judge explained that he had
postponed ruling on Tax Rescue’s enforcement motion at the March 2023 hearing
4
Based on the court reporter’s invoice that the Bacsiks filed with us to prove
that they had paid for the preparation of the reporter’s record, it appears that the
Bacsiks asked the court reporter to prepare transcripts of the June 22, 2023 and
October 5, 2023 hearings but not of the March 24, 2023 hearing. See Tex. R. App. P.
13.1(d), 34.6(a)(1), (b), 35.3(b). The Bacsiks have not complained that the court
reporter filed an incomplete record, nor have they sought to supplement the record.
See Tex. R. App. P. 34.6(d); cf. Christiansen v. Prezelski, 782 S.W.2d 842, 843 (Tex. 1990)
(“The burden is on the appellant to see that a sufficient record is presented to show
error requiring reversal.”).
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because the parties were still “trying to work it out.” This does not indicate that the
Bacsiks had affirmatively withdrawn their consent to the Rule 11 Agreement. At no
time during that hearing did the Bacsiks communicate to the trial court that they had
revoked their consent to the Rule 11 Agreement, and there is no evidence in the
record indicating that the Bacsiks had done so before the trial court rendered the
foreclosure judgment. See Gonzalez v. Wells Fargo Bank, N.A., 441 S.W.3d 709, 714
(Tex. App.—El Paso 2014, no pet.) (“Appellants fail to point us to anything in the
record—beyond the failure of Appellants’ counsel to sign the Agreed Judgment—
indicating that they affirmatively withdrew their consent to the Agreed Judgment and
conveyed this withdrawal to the trial court prior to rendition of judgment, as is
required for Rule 11 settlement agreements.”); Clanin v. Clanin, 918 S.W.2d 673, 677
(Tex. App.—Fort Worth 1996, no writ) (“[I]n this case, there is no evidence
whatsoever in the record of appellant’s objection or any other evidence present in the
record that appellant made known to the court that he was withdrawing his consent to
the [Rule 11] agreement. Appellant’s contention that he objected at the hearing on
Appellee’s motion for judgment is not supported by the record.”). Because the
Bacsiks did not withdraw their consent to the Rule 11 Agreement, Tax Rescue was
not required to pursue a separate breach-of-contract claim to enforce the agreement.
We overrule the Bacsiks’ third point.
In their second point, the Bacsiks argue that the trial court abused its discretion
by rendering the foreclosure judgment because the Rule 11 Agreement was
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unenforceable. They offer two reasons to support this contention. First, they argue
that the Rule 11 Agreement lacked the “elements of contract applicable to the
circumstances of the parties in the instant suit,” specifically “a definitive closing date”
and “a definitively identified lender.” Second, they contend that Tax Rescue did not
comply with its obligations under the Rule 11 Agreement because it never tendered
closing documents to the Bacsiks and because “[t]he purported agreement extends to
removal of the Trustee’s Deed from the record of title to the Property . . . but the
Judgment does not address the Trustee’s Deed.”
In its enforcement motion, which was supported by attached evidence, Tax
Rescue explained that
The terms of the settlement agreement provided that the subject
loans would be refinanced by a third party designated by Tax
Re[s]cue II, LLC, and the title issues would be resolved via [an]
Agreed Judgment. The funding and closing of the loan were to
have occurred on or before January 6, 2023. Due to the holiday
season, the closing did not occur, and the undersigned suggested
that the closing be extended for two weeks and requested
information necessary to prepare documentation and close the
transaction. From January 6, 2023, until [February 24, 2023,] on at
least 5 occasions, the undersigned requested the necessary
information and documentation to close the transaction from
opposing counsel. . . .
The required information included the names of the
Borrowers, the parties in whom title to the property would vest,
and a casualty insurance policy which was required in the
settlement agreement. The policy was needed in order to ascertain
the escrow accounting on the loan and, as such, the final principal
amount. Final preparation of the settlement documents and loan
documents could not occur without this information.
11
To date, this information has not been provided and the
proposed initial payment of the settlement, $5,000, has not been
received. As such, pursuant to the settlement agreement, Tax
Rescue II, LLC, requests that this Court enter Judgment providing
for judicial tax sale foreclosure of the subject property at the
amounts agreed upon. . . .
Although Tax Rescue secured a new lender and provided that lender’s name to
the Bacsiks, the Bacsiks failed to provide Tax Rescue with the information it needed
to prepare the loan and settlement documents. Moreover, the Bacsiks failed to make
the $5,000 payment and to secure a one-year casualty insurance policy on the
Property. Because the Rule 11 Agreement provided that if the Bacsiks did not make
that payment and secure the insurance policy, the parties “will agree to the entry of a
Judgment providing for [a] judicial tax sale,” the trial court did not abuse its discretion
by rendering the foreclosure judgment. We overrule the Bacsiks’ second point.
The Bacsiks argue in their first point that the trial court abused its discretion by
rendering the foreclosure judgment because the judgment was based on an invalid lien
claim. According to the Bacsiks, “no valid sale can now occur” under the judgment
because an August 2017 substitute trustee’s deed conveying the Property to an entity
named 2012 Casita, LLC is in the Property’s chain of title and has not been removed
because “[t]he attempted rescission of the [t]rustee’s [d]eed by Tax Rescue and its
affiliate, 2012 Casita, LLC” was ineffective.
The Bacsiks’ argument, however, refers to and is based on documents that
were not before the trial court and that are outside of the record. Because those
12
documents are not in the record, we cannot consider them. See Sharma v. Chadha, No.
02-15-00033-CV, 2015 WL 5766901, at *2 (Tex. App.—Fort Worth Oct. 1, 2015, no
pet.) (mem. op.) (explaining that we cannot consider documents that are outside of
the record or statements about them); Greystar, LLC v. Adams, 426 S.W.3d 861, 865
(Tex. App.—Dallas 2014, no pet.) (“It is well-established an appellate court may not
consider matters outside the record, which includes documents attached to a brief as
an exhibit or an appendix that were not before the trial court.”); see also Tex. R. App.
P. 34.1 (stating that appellate record consists of clerk’s record and, when necessary,
reporter’s record). Moreover, the Bacsiks do not explain how these alleged chain-of-
title issues affect the validity of Tax Rescue’s tax liens and Tax Rescue’s ability to
foreclose on them. See Tex. Tax Code Ann. §§ 32.06, .065. Accordingly, we overrule
the Bacsiks’ first point.
IV. Conclusion
Having overruled the Bacsiks’ three points, we affirm the trial court’s judgment.
/s/ Elizabeth Kerr
Elizabeth Kerr
Justice
Delivered: July 11, 2024
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