Hydrogeo, LLC, First Bank & Trust East Texas v. Quitman Independent School District

ACCEPTED
06-15-00007-CV
SIXTH COURT OF APPEALS
TEXARKANA, TEXAS
7/30/2015 1:24:45 PM
DEBBIE AUTREY
CLERK
CASE NO. 06-15-00007-CV
FILED IN
6th COURT OF APPEALS
IN THE COURT OF APPEALS TEXARKANA, TEXAS
FOR THE SIXTH JUDICIAL DISTRICT OF 7/30/2015 1:24:45 PM
TEXAS
TEXARKANA, TEXAS DEBBIE AUTREY
Clerk
HYDROGEO, LLC, ET AL., APPELLANTS
v.
QUITMAN INDEPENDENT SCHOOL DISTRICT, ET AL., APPELLEES
On Appeal from the 402nd Judicial District Court of Wood County, Texas,
Trial Court No. T-3625
APPELLEES’ BRIEF
LINEBARGER GOGGAN BLAIR
& SAMPSON, LLP
4828 Loop Central Drive, Suite 600
Houston, Texas 77081
(713) 844-3400 main phone
(713) 844-3504 fax
Edward J. (Nick) Nicholas
State Bar No. 14991350
Nick.Nicholas@LGBS.com
Anthony W. (Tony) Nims
State Bar No. 15031500
Tony.Nims@LGBS.com
ATTORNEYS FOR APPELEES
CASE NO. 06-15-00007-CV
HYDROGEO, LLC, ET AL., APPELLANTS
v.
QUITMAN INDEPENDENT SCHOOL DISTRICT, ET AL., APPELLEES
IDENTITY OF THE PARTIES AND COUNSEL
Appellants Counsel for Hydrogeo, LLC and
Hydrogeo, LLC (“Hydrogeo”) First Bank & Trust East Texas
and First Bank & Trust East
Texas (“First Bank”) J. Don Westbrook
(collectively “Appellants”) Michel E. Starr
Coghlan, Crowson, LLP
1127 Judson Road, Suite 211
P.O. Box 2665
Longview, Texas 75606-2665
DeBerry Operating Counsel for DeBerry 3 Operating
Company, LLC (“DeBerry”) 1 Company, LLC
Michael L. Dunn
Smead, Anderson & Dunn
2110 Horseshoe Lane
Longview, Texas 75606
Appellees Counsel for Appellees
Wood County, Upper Sabine
Waste Disposal District and Edward J. (Nick) Nicholas
Wood County Central Anthony W. (Tony) Nims
Hospital District Linebarger Goggan Blair & Sampson, LLP
(“Appellees”) 4828 Loop Central Drive, Suite 600
Houston, Texas 77081
1
DeBerry’s appeal was severed (06-15-00036-CV) and then dismissed on July 24, 2015.
i
Jim L. Lambeth
Alison Wylie
Linebarger Goggan Blair & Sampson, LLP
1517 W. Front Street, Suite 202
Tyler, Texas 75702
Appellee Counsel for Quitman Independent
Quitman Independent District School District
School District
(“Quitman ISD”) David Hudson
Perdue, Brandon, Fielder,
Collins & Mott, LLP
P.O. Box 2007
Tyler, Texas 75710
ii
TABLE OF CONTENTS
INDEX OF AUTHORITIES ............................................................................ v
STATEMENT OF THE CASE ........................................................................ 1
STATEMENT REGARDING ORAL ARGUMENT ....................................... 2
RE-STATEMENT OF THE ISSUES PRESENTED ........................................ 3
STATEMENT OF FACTS ................................................................................ 4
SUMMARY OF THE ARGUMENT ................................................................ 6
ARGUMENT AND AUTHORITIES ............................................................... 8
ISSUE NO. 1. THE TRIAL COURT DID NOT ERR WHEN
IT ADMITTED PLAINTIFF’S EXHIBIT A ~ THE UPDATED
TAX RECORDS – INTO EVIDENCE. ............................................. 8
A. Lack of Surprise Exception ...........................................8
B. Appellants Were Not Unfairly Surprised ......................9
C. The Trial Court Implicitly Found Good Cause by
Admitting the Updated Tax Records Into Evidence ......10
D. The Change Was Not Material ......................................12
E. The Trial Court’s Decision Should Be Upheld .............14
F. Admission of the Updated Tax Records Did Not
Result In An Improper Judgment ..................................14
ISSUE NO. 2. THE TRIAL COURT DID NOT ERR WHEN
IT RULED THE ENTIRE TAX LIEN ENFORCEABLE
AGAINST HYDROGEO AND FIRST BANK. ..............................16
A. The Judgment Only Forecloses on Real Property -
Not Personal Property ....................................................16
iii
B. Hydrogeo Admits that It Owns the Real Property ........18
C. The Updated Tax Records Prove the
Amounts Owed ..............................................................19
ISSUE NO. 3. APPELLANTS FAILED TO PROVE
ANY REVERSIBLE ERROR OCCURRED, OR THAT
THE TRIAL COURT ABUSED ITS DISCRETION. . ................... 23
CONCLUSION AND PRAYER FOR RELIEF ............................................... 25
CERTIFICATE OF COMPLIANCE ................................................................ 27
CERTIFICATE OF SERVICE.......................................................................... 27
iv
INDEX OF AUTHORITIES
Cases Page
Alvardo v. Farh Mfg. Co., 830 S.W.2d 911, 914 (Tex.1992) .......................... 10
Barnett v. County of Dallas, 175 S.W.3d 919, 924 (Tex.App.-
Dallas 2005, no pet.) .............................................................................. 10
Butnaru v. Ford Motor Co., 84 S.W.3d 198, 211 (Tex.2002) ......................... 24
Cano v. Nino’s Paint & Body Shop, No. 14-08-00033-CV, 2009
WL 1057622, at **3-4 (Tex.App.-Houston [14th Dist.],
2009, no pet.)(mem. op.) ................................................................... 11, 14
Cire v. Cummings, 134 S.W.3d 835, 838-39 (Tex.2004) ................................. 23
Davis v. City of Austin, 632 S.W.2d 331, 333 (Tex.1982) ........................... 20, 24
Exxon Corp. v. W. Tex. Gathering Co., 868 S.W.2d 299, 304 (Tex.1993) ..... 13
Felt v. Harris County; No. 14-12-00327-CV, 2013 WL 1738604.
at *3, (Tex. App.—Houston [(14th Dist], Apr. 23, 2013,
no pet.) (mem. op.) ................................................................................. 20
Gatlin v. Moore, No. 01-11-00738-CV, 2013 WL 655189, at *5
(Tex.App.-Houston [1st Dist.] Feb. 21, 2013, no pet.)
(mem. op.) ...................................................................................... 9, 11, 14
Graff v. Whittle, 947 S.W.2d 629, 639 (Tex.App.-Texarkana 1997,
writ denied) ............................................................................................ 10
Griffin Indus. Inc. v. Honorable Thirteenth Court of Appeals,
934 S.W.2d 349, 355 (Tex.1996) ........................................................... 23
In re Barber, 982 S.W.2d 364, 366 (Tex.1998) ............................................... 23
In re EPIC Holdings, Inc., 985 S.W.2d 41, 57 (Tex.1998) ........................ 23, 24
v
Marin v. IESI Tx Corp., 317 S.W.3d 314, 323 (Tex.App.-
Houston [1st Dist.] 2010, pet. denied) .............................................. 11, 14
Matador Prod. Co. v. Weatherford Artificial Lift Systems, Inc.,
450 S.W.3d 580, 595 (Tex.App.-Texarkana 2014, pet. denied) ............. 14
Maximum Medical Improvement, Inc. v. County of Dallas,
272 S.W.3d 832 (Tex. App.—Dallas, 2008, no pet.) ...................... 18, 19
Morrow v. H.E.B., Inc., 714 S.W.2d 297, 298 (Tex.1986) .............................. 14
National Medical Financial Services, Inc. v. Irving ISD,
150 S.W.3d 901, 906 (Tex. App.—Dallas, 2004, no pet.) .................... 21
Navistar Int’l Transp. Corp. v. Crim Truck & Tractor Co., 883
S.W.2d 687, 691 (Tex.App.-Texarkana 1994, writ denied) .................. 13
Nissan Motor Co. v. Armstrong, 145 S.W.3d 131, 144 (Tex.2004) ................ 14
Owens-Corning Fiberglas Corp. v. Malone, 972 S.W.2d 35, 43
(Tex.1998) .............................................................................................. 14
Perry Homes v. Cull, 258 S.W.3d 580, 602 (Tex.2008) .................................. 23
Pilgrim’s Pride Corp. v. Smoak, 134 S.W.3d 880, 902-3 (Tex.App.-
Texarkana 2004, pet. denied) ...................................................... 11, 12, 13
Ramos v. Champlin Petroleum Co., 750 S.W.2d 873, 877 (Tex.App.-
Corpus Christi 1998, pet. denied) .................................................... 11, 14
Reagan v. Vaughn, 804 S.W.2d 463, 464 (Tex.1990) ..................................... 11
Richards v. Tebbe, No. 14-13-00413-CV, 2014 WL 2936425, at *7
(Tex.App.-Houston [14th Dist.] June 26, 2014, no pet.)
(mem. op.) ........................................................................................ 9, 14
Sheffield, Tax Collector v. Hogg, 77 S.W.2d 1021, 1024 (Tex.1934) ............. 17
Unifund CCR Partners v. Villa, 299 S.W.3d 92, 97 (Tex.2009) ..................... 24
vi
Wal-Mart Stores, Inc. v. Tinsley, 998 S.W.2d 664, 671 (Tex.App.-
Texarkana 1999, pet. denied) ...................................................... 10, 11, 14
Will. v. County of Dallas, 194 S.W.3d 29, 33 (Tex.App.-
Dallas 2006, pet. denied) .............................................. 8, 9, 11, 13, 14, 15
Statutes, Regulations & Rules Page
TEX. R. APP. P. 9.4(i)(1) ................................................................................... 27
TEX. R. APP. P. 38.1(d) ..................................................................................... 1
TEX. R. APP. P. 38.1(g) ..................................................................................... 4
TEX. R. APP. P. 39 ............................................................................................. 2
TEX. R. APP. P. 44.1 .................................................................................... 14, 23
TEX. R. CIV. P. 193.6 ........................................................................................ 8
TEX. R. CIV. P. 193.6(a)(2) ............................................................................... 8
TEX. TAX CODE § 1.04(2)(D) ..................................................................... 16, 17
TEX. TAX CODE § 1.04(4) ................................................................................. 16
TEX. TAX CODE § 25.02(b) ............................................................................... 20
TEX. TAX CODE § 33.01 .............................................................................. 12, 13
TEX. TAX CODE § 33.42(a) ......................................................................... 10, 13
TEX. TAX CODE § 33.42(b) ......................................................................... 10, 15
TEX. TAX CODE § 33.47(a) .................................................................... 20, 22, 24
vii
STATEMENT OF THE CASE
Appellant’s Statement of the Case fails to comply with Rule 38.1(d), TEX. R.
APP. P. Accordingly, Appellees provide the following Statement of the Case.
On July 24, 2012, Appellees filed their Original Petition to recover ad valorem
taxes owed on real property for tax years 2009 through 2011 (“Tax Suit). (CR at 8-
14). On July 2, 2013, Appellees filed their First Amended Petition which added
Hydrogeo and First Bank as Defendants. (CR at 36-43). On August 8 and 14, 2013,
respectively, Hydrogeo and First Bank filed their First Amended Answers. (CR 54-
57 and 58-60). On March 6, 2014, Appellees filed their Second Amended Petition.
(CR 164-69). On September 18, 2014, the case was tried before the Honorable G.
Timothy Boswell, Presiding Judge of the 402nd Judicial District Court of Wood
County, Texas. (RR Vol. 2, p. 7-119). On January 14, 2015, the Trial Court entered
a Judgment against Hydrogeo, First Bank and others, and in favor of Appellees and
Quitman ISD. (CR 199-203). On February 4 and 26, 2015, the Trial Court issued
identical Findings of Fact and Conclusions of Law. (CR 217-21 and 227-31,
respectively). On January 21, 2015, Appellants filed their Notice of Appeal. (CR
204-05). Appellants’ Brief was filed on July 2, 2015.
1
STATEMENT REGARDING ORAL ARGUMENT
Appellees do not believe that oral argument would significantly aid the
decisional process, but if the Court grants oral argument, then the customary time
limits should apply. Rule 39, TEX. R. APP. P.
2
RE-STATEMENT OF THE ISSUES PRESENTED
ISSUE NO. 1
THE TRIAL COURT DID NOT ERR WHEN IT
ADMITTED PLAINTIFFS’ EXHIBIT A ~ THE UPDATED
TAX RECORDS ~ INTO EVIDENCE.
ISSUE NO. 2
THE TRIAL COURT DID NOT ERR WHEN IT HELD
THE ENTIRE TAX LIEN ENFORCEABLE AGAINST
HYDROGEO AND FIRST BANK.
ISSUE NO. 3
APPELLANTS FAILED TO PROVE ANY REVERSIBLE
ERROR OCCURRED, OR THAT THE TRIAL COURT
ABUSED ITS DISCRETION.
3
STATEMENT OF FACTS
Because it fails to “state concisely and without argument the facts pertinent”
to this appeal, Appellant’s Statement of Facts violates Rule 38.1(g), TEX.R.APP.P.
(Brief at 1-5). Therefore Appellees object to Appellant’s Statement of Facts in its
entirety, and provide the following Statement of Facts in the alternative.
On July 24, 2012, Appellees filed the Tax Suit to recover delinquent taxes on
four Tracts of real property for tax years 2009 through 2011. (CR at 8-14).
Subsequently, Appellees’ Second Amended Petition limited the Tax Suit to two
Tracts of real property:
Tract 1 is a 0.833335 Interest in the White Denton Lease #154550,
Abstract 588, the D Townsend Survey; and
Tract 2 is a 0.875 Working Interest in the IE Robinson Lease #133400,
Abstract 588, the D Townsend Survey.
(collectively “Real Property”) (CR at 164-169). The case was tried on September
18, 2014, and a Judgment was entered on January 14, 2015. (CR at 199-203). The
Judgment was against Hydrogeo, First Bank and others, and in favor of Appellees
and Quitman ISD. (Id.). The Trial Court also entered Findings of Fact and found
that, as of the day of trial:
(a) Taxes, penalties and interest in the amount of $82,403.87 were due
and owing on the two Tracts,
4
(b) Hydrogeo and DeBerry owned Tract 1 and First Bank was a
lienholder on Tract 1, and
(c) Hydrogeo owned Tract 2 and First Bank was a lienholder on Tract
2.
(CR at 217-221, Findings of Fact, ¶¶ 1, 8-9, and 17-18 and 227-31, Findings of Fact,
¶¶ 1, 8-9, and 17-18).
The Trial Court then concluded that Appellees were entitled to recover: (a) an
in rem Judgment from Hydrogeo and First Bank on the Real Property, (b) a Judgment
foreclosing the tax liens attached to the Real Property, and (c) an Order of Sale. (CR
at 217-221, Conclusions of Law, ¶¶ 6-7, 10 and 12, and 227-31, Conclusions of Law,
¶¶ 6-7, 10 and 12).
5
SUMMARY OF THE ARGUMENT
Appellants argue that the Trial Court erred when it admitted Plaintiffs’ Exhibit
A into evidence. However, Plaintiffs’ Exhibit A 2 is a tax record which was just
updated to include the taxes, penalties and interest which had accrued since a prior
production. Moreover, Appellants could not have been surprised by the change
because Appellees, in their Petitions and discovery responses, had provided
Appellants advance notice that they would seek all taxes that became delinquent
subsequent to the filing of the lawsuit, up to the day of judgment. Moreover, the
Updated Tax Records did not contain a material change from the previous tax record,
and therefore did not require supplementation, and could not have resulted in an
improper Judgment because the TEX. TAX CODE (“TAX CODE”) requires the taxing
authority to seek, and the Judgment to award, all taxes, penalties and interest due
and owing as of trial. Therefore, because the Updated Tax Records did not constitute
an unfair surprise, and could not have resulted in an improper Judgment, the Trial
Court had a legitimate basis for implicitly finding good cause and admitting the
Updated Tax Records.
2
The document which Appellants identify as Plaintiff’s Exhibit A is Appellees’ “Certified
Copy of Tax Records” dated August 22, 2014. (RR Vol. 3, Exhibit A, hereafter “Updated Tax
Records”).
6
Appellants also argue that the Trial Court erred when it found the entire tax
lien enforceable against Appellants. However, the tax lien forecloses on Real
Property - not Appellants’ personal property, and the Judgment is supported by: (a)
Hydrogeo’s admissions that it owns the Real Property, (b) Appellees’ prima facie
case establishing the amount of delinquent taxes, penalties and interest owed, (c) the
testimony of Wood County’s Tax Assessor-Collector on both of these topics, and
(d) the Appellants’ failure to offer any evidence challenging the amounts listed in
the Updated Tax Records.
In addition, Appellants failed to prove that any reversible error occurred, or
that the Trial Court abused its discretion.
Accordingly, the Trial Court’s Judgment should be affirmed in its entirety.
7
ARGUMENT AND AUTHORITIES
ISSUE NO. 1
THE TRIAL COURT DID NOT ERR WHEN IT
ADMITTED PLAINTIFFS’ EXHIBIT A ~ THE
UPDATED TAX RECORDS ~ INTO EVIDENCE.
Appellants claim that, pursuant to Rule 193.6, TEX. R. CIV. P., the Trial Court
erred when it admitted the Updated Tax Records because they had not been produced
prior to trial. (Brief at 7-11). Moreover, Appellants claim that Rule 193.6
automatically requires exclusion in such cases. (Id.). However, Rule 193.6(a)(2)
does not require exclusion when the complaining party will not be unfairly surprised
by the admission.
A. Lack of Surprise Exception
Rule 193.6(a)(2) states that a party who fails to produce or supplement
evidence may not introduce the evidence that was not timely disclosed, unless “the
failure to timely make, amend, or supplement, the discovery response will not
unfairly surprise or unfairly prejudice the other parties.” In a case virtually identical
to this case, Williams v. County of Dallas, 194 S.W.3d 29, 33 (Tex.App.-Dallas
2006, pet. denied), the Court held that, because the taxing units provided notice that
they would be seeking recovery of all unpaid taxes, the taxing unit’s failure to
produce a tax statement would not unfairly surprise the taxpayer:
8
It is not disputed that the taxing units did not disclose the tax statement
in response to Williams’ request for disclosure. However, it is clear
Williams was given notice that the taxing units were attempting to
collect all unpaid taxes assessed against the property, not just unpaid
taxes through 1999. In their original petition, the taxing units
described the property against which the taxes were assessed; stated
they sought delinquent taxes, penalties, interest, and costs owed
against the property; attached a copy of the taxes delinquent through
1999; and gave notice the lawsuit included all claims for taxes
becoming delinquent on the property after the lawsuit was filed and
up to the day of judgment.
The court concluded that a lack of unfair surprise “was a legitimate basis for the trial
court to admit the delinquent tax statement in evidence.” Id. See also, Richards v.
Tebbe, No. 14-13-00413-CV, 2014 WL 2936425, at *7 (Tex.App.-Houston [14th
Dist.] June 26, 2014, no pet.)(mem. op.) (Appellant was not unfairly surprised when
he knew the evidence existed and he had equal access to it); Gatlin v. Moore, No.
01-11-00738-CV, 2013 WL 655189, at *5 (Tex.App.-Houston [1st Dist.] Feb. 21,
2013, no pet.)(mem. op.)(no abuse of discretion when Appellant was not unfairly
surprised by the admitted evidence).
B. Appellants Were Not Unfairly Surprised
Appellants were not unfairly surprised by the Updated Tax Records because
Appellees’ Original, First Amended and Second Amended Petitions expressly state:
Claims for all taxes becoming delinquent on said property at any time
subsequent to the filing of this suit, up to the day of judgment, including
all penalties, interest, attorney’s fees, and costs on same, are
9
incorporated in this suit, and Plaintiff(s) is entitled to recover the same,
upon proper proof, without further citation or notice.
(CR at 9, ¶ II, at 37, ¶ II; at 165, ¶ II).
Furthermore, Appellees disclosed, in their Responses to Appellants’
discovery requests 3, that they were seeking taxes pursuant to the TAX CODE, which
includes §§ 33.42(a) (“a taxing unit shall include all delinquent taxes due the unit
on the property”), and 33.42(b) (“the court shall include the amount of the tax and
any penalty and interest in its judgment.” )(emphasis added). Moreover, Appellants
had equal access to the information because tax records are public records 4.
Accordingly, Appellants could not have been surprised by the Updated Tax Records.
C. The Trial Court Implicitly Found Good Cause by Admitting
the Updated Tax Records into Evidence
The Trial Court has discretion to determine whether the offering party has
shown good cause to admit the evidence. Wal-Mart Stores, Inc. v. Tinsley, 998
S.W.2d 664, 671 (Tex.App.-Texarkana 1999, pet. denied), citing, Alvardo v. Farh
3
See: (a) Appellees’ Response to Hydrogeo’s Request for Disclosure (CR at 69-72 and more
specifically at 70, ¶¶ 3-4, p. 2) and attached documents (CR at 73-77), and (b) Appellees’
Responses to Appellants’ Request for Admissions, Interrogatories and Request for Production (CR
at 78-87 and specifically Appellees’ answers to Interrogatories No. 12 and 13, at 82-83, and
responses to Requests for production No. 7 and 8, at 85) and attached documents (CR at 88-163
and more specifically 143-63)
4
See Barnett v. County of Dallas, 175 S.W.3d 919, 924 (Tex.App.-Dallas 2005, no pet.)
(court did not abuse discretion by denying motion to compel county to produce public record);
Graff v. Whittle, 947 S.W.2d 629, 639 (Tex.App.-Texarkana 1997, writ denied) (public records
not considered in possession of any party).
10
Mfg. Co., 830 S.W.2d 911, 914 (Tex.1992). Moreover, the Trial Court can implicitly
find good cause just by admitting the evidence:
The trial court ruling ‘does not expressly state that Tinsley
demonstrated good cause in failing to supplement … We find,
however, that the trial court implicitly found good cause’.
Wal-Mart, 998 S.W.2d at 671, citing, Ramos v. Champlin Petroleum Co., 750
S.W.2d 873, 877 (Tex.App.-Corpus Christi 1998, pet. denied) 5 (“The trial court
implicitly found good cause when it allowed Steve Surface to testify.”).
Texas courts have found good cause to be shown by information contained in:
(a) pleadings6, (b) discovery responses 7, and even (c) discussions between counsel 8.
In this case, good cause is shown by:
(a) Appellees providing Appellants notice, more than a year before
trial, that they are seeking “all taxes becoming delinquent on said property at any
time subsequent to the filing of this suit, up to the day of judgment”. (See Original,
First Amended and Second Amended Petitions, CR at 9, ¶ II; at 37, ¶ II; and at 165,
¶ II, respectively);
5
Abrogated on other grounds, Reagan v. Vaughn, 804 S.W.2d 463, 464 (Tex.1990).
6
Gatlin, 2013 WL 655189, at *5; Marin v. IESI Tx Corp., 317 S.W.3d 314, 323 (Tex.App.-
Houston [1st Dist.] 2010, pet. denied); Cano v. Nino’s Paint & Body Shop, No. 14-08-00033-CV,
2009 WL 1057622, at **3-4 (Tex.App.-Houston [14th Dist.] 2009, no pet.)(mem. op.); and
Williams, 194 S.W.3d at 33.
7
Gatlin, 2013 WL 655189, at *5; Marin, 317 S.W.3d at 323.
8
Pilgrim’s Pride Corp. v. Smoak, 134 S.W.3d 880, 902-3 (Tex.App.-Texarkana 2004, pet.
denied) (change in evidence was discussed at pretrial conference).
11
(b) Appellees providing Appellants the same notice9 in Appellees’
Response to Hydrogeo’s Request for Disclosure10, and Appellees’ Responses to
Appellants’ Request for Admissions, Interrogatories and Request for Production 11;
and
(c) prior to admitting the Updated Tax Records, the Trial Court
verified that the Updated Tax Records were simply an update of the previously
produced tax records:
The Court: So this is simply the updated tax rolls?
Mr. Lambeth: Yes, Your Honor.
The Court: The Court recognizes there is a duty to supplement,
but given the nature of this, I’m going to overrule
the objections and admit it.
(RR Vol. 2, p. 9, l. 2-7). Clearly the Trial Court implicitly found good cause when
it admitted the Updated Tax Records into evidence.
D. The Change Was Not Material
The change between the tax records that were produced in 2013 and the
Updated Tax Records was not material, and therefore it was admissible without
supplementation. Pilgrim’s, 134 S.W.3d at 902 (The change was not a material
9
Appellants were also provided the August 2013 tax records (CR at 73-77) which contained
the information necessary to calculate the amounts that would be due and owing on the date of
trial per § 33.01, TAX CODE.
10
CR at 69-72 and more specifically at 70, ¶¶ 3-4, p. 2.
11
CR at 78-87 and specifically Appellees’ answers to Interrogatories No. 12 and 13, at 82-
83, and response to Requests for production No. 7 and 8, at 85.
12
change, “[t]he only difference was a change to the post-accident wages variable.
This falls somewhere between a refinement in calculations, (citation omitted), and
an expansion of an already disclosed subject, (citation omitted), both of which are
admissible without the need for supplementation.”)12.
As applied, Appellants’ position would require Appellees to produce a new
tax statement every time additional taxes, penalties and interest are added to an
account - even if it is just 1 penny. However, Texas law does not require
supplementation when the change is not material. (Id.). Here, the only change was
the addition of taxes, penalties and interest that had accrued between the last
production date and the date of supplementation. (CR at 144-48 (November 5,
2013); RR Vol. 3, Exhibit A (August 22, 2014)). This change was not material
(approximately 6.032%), was required by the TAX CODE13, and was calculated
pursuant to the TAX CODE. 14 Accordingly, Appellees were not even required to
produce the Updated Tax Records, and therefore, the Trial Court did not err when it
admitted them into evidence.
12
The cases cited were Exxon Corp. v. W. Tex. Gathering Co., 868 S.W.2d 299, 304
(Tex.1993) and Navistar Int’l Transp. Corp. v. Crim Truck & Tractor Co., 883 S.W.2d 687, 691
(Tex.App.-Texarkana 1994, writ denied), respectively.
13
Williams, 194 S.W.3d at 33, citing, § 33.42(a), TAX CODE (“taxing unit shall include all
taxes due on property in suit to collect delinquent taxes.”).
14
§ 33.01, TAX CODE.
13
E. The Trial Court’s Decision Should Be Upheld
The Trial Court’s decision to admit the Updated Tax Records must be upheld
if there is any legitimate basis for the ruling. Marin, 317 S.W.3d at 322, citing,
Owens-Corning Fiberglas Corp. v. Malone, 972 S.W.2d 35, 43 (Tex.1998); Cano
2009 WL 1057622, at *2; Ramos, 750 S.W.2d at 877 (“Determination of good cause
is within the sound discretion of the trial court and can only be set aside if that
discretion was abused.”), citing, Morrow v. H.E.B., Inc., 714 S.W.2d 297, 298
(Tex.1986). Texas courts have repeatedly held that a lack of unfair surprise is a
legitimate basis for admitting evidence. Williams, 194 S.W.2d at 33, Richards, 2014
WL 2936425, at *7 and Gatlin, 2013 WL 655189, at *5. Accordingly, the Trial
Court’s decision to admit the Updated Tax Records should be upheld.
F. Admission of the Updated Tax Records Did Not Result
In An Improper Judgment
A Court of Appeals should “reverse only when the trial court’s error in
admitting or excluding evidence probably resulted in an improper judgment.”
Matador Prod. Co. v. Weatherford Artificial Lift Systems, Inc., 450 S.W.3d 580, 595
(Tex.App.-Texarkana 2014, pet. denied), citing, Nissan Motor Co. v. Armstrong, 145
S.W.3d 131, 144 (Tex.2004); Rule 44.1, TEX. R. APP. P.
Appellants claim that – because the Updated Tax Records were the only
evidence admitted, the admission had to result in an improper Judgment. (Brief at
14
11). However, the Updated Tax Records were supported by, inter alia, the testimony
of Ms. Carol Taylor, who testified: (a) she was Wood County’s Tax Assessor-
Collector, (b) the Updated Tax Records were records of her office and (c) that
Hydrogeo, as the owner of Tracts 1 and 2, owed the taxes listed in the Updated Tax
Records:
Q. There’s no taxes due, correct?
A. Taxes following the property, yes, sir, there are.
Q. [Referring to the Updated Tax Records] Do you see any of
those documents that says Hydrogeo owes taxes?
A. Based on the fact that Hydrogeo is now the owner of the
same decimal interest of the delinquent taxes, yes, sir.
(RR Vol. 2, (a) p. 79, l. 8-13, (b) p. 80, l. 4-11, and (c) p. 85, l. 24 through p. 86, l.
6).
Moreover, the Updated Tax Records did not result in improper Judgment
because Texas law requires that all post-filing amounts be included in the Judgment.
Williams, 194 S.W.3d at 33, citing, § 33.42(b) (If taxes become delinquent after suit
is filed, “the court shall include the amount of the tax and any penalty and interest
in its judgment.”). Therefore, the Trial Court would have erred if the Judgment did
not include the amounts contained in the Updated Tax Records.
Accordingly because there was a legitimate basis for the Trial Court’s
decision to admit the Updated Tax Records, and because that admission did not
result in an improper Judgment, this Court should find that the Trial Court did not
err when it admitted the Updated Tax Records into evidence.
15
ISSUE NO. 2
THE TRIAL COURT DID NOT ERR WHEN IT
RULED THE ENTIRE TAX LIEN
ENFORCEABLE AGAINST HYDROGEO AND
FIRST BANK.
Appellants argue that the Trial Court erred when it found them liable in rem
for the entire amount of taxes owed on the Real Property. However, the Trial Court
did not err because the Judgment forecloses a lien on Real Property – not personal
property, and because Appellees supplemented their prima facie evidence with
witness testimony.
A. The Judgment Only Forecloses On Real Property – Not Personal Property
Appellees’ Second Amended Petition (“Petition”) was the live pleading at
trial and it sought to foreclose a tax lien on two real property tax accounts. (CR at
164-69). As described in the Petition, Tracts 1 and 2 are identified as interests in a
mineral interest lease in Abstract 588 of the real property records of Wood County,
Texas. (Id.). Pursuant to the Tax CODE, “Real property” includes “a mineral in
place”, and “Personal property” is defined as “property that is not real property”. §§
1.04(2)(D) and (4), TAX CODE. Further, it has long been established in Texas that
an oil and gas lease “operates to invest the lessee with a determinable fee in oil and
gas in place”, and that it conveys an “interest in land, subject to taxation as such in
16
the counties in which the respective tracts of land are situated.” Sheffield, Tax
Collector v. Hogg, 77 S.W.2d 1021, 1024 (Tex.1934).
Appellants mistakenly cite to the Petition as proof that a portion of the
Judgment was due to Hydrogeo’s personalty, and that Appellees sought to foreclose
a lien against both personal and real property. (Brief at 16) (“Its petition states that
‘the value of any personal property that may be described above, and which the tax
lien is sought to be enforced, is in excess of FIVE HUNDRED AND NO
100/DOLLARS ($500.00)”. (emphasis added). However, the Petition is a form
petition and there is no personal property described above. (CR at 164-69, and
more specifically 165-67). The only property described in the Petition are Tracts 1
and 2 – which are Real Property. Id.; § 1.04(2)(D); Sheffield, 77 S.W.2d at 1024.
Nothing in the Petition, or the evidence introduced at trial, purports to foreclose a
lien on pipelines, tanks, equipment or any other personal property. More
importantly, the Judgment only forecloses the tax lien against Real Property (Tracts
1 and 2). (CR at 199-203, and more specifically 199-200).
As a result, the Appellants’ arguments that the tax lien should not attach to the
personal property, and/or that Hydrogeo bought the personal property as a buyer in
the ordinary course of business, are not relevant or applicable because the Appellees
only sought, and were only awarded, a Judgment against the Real Property - not the
personal property.
17
B. Hydrogeo Admits that It Owns the Real Property
Appellants also argue that the Updated Tax Records are insufficient to prove
ownership. (Brief at 12-13). However, Hydrogeo admitted at trial that it owns the
Real Property through the testimony of its owner, Mr. William Godsey, Jr. 15, and its
designated Landman, Ms. Loretta Ward 16. Accordingly, this testimony, standing
alone, proves that Hydrogeo owns the Real Property.
Moreover, Appellants reliance on Maximum Medical Improvement, Inc. v.
County of Dallas, 272 S.W.3d 832 (Tex. App.—Dallas, 2008, no pet.) is misplaced.
In Maximum Medical, the Court noted that the certified tax statement showed the tax
to be assessed against a party other than the defendant, that the defendant had raised
a denial of ownership in its pleadings, and concluded that Dallas County did not
introduce legally sufficient evidence to support its claim that MMI owned the
property. (Id., at 837). But Maximum Medical only applies when the taxpayer
denies ownership, and here Hydrogeo admits ownership. Moreover, Maximum
Medical involved a tax claim for personal liability on personal property. Here,
Appellees only sought to foreclose their tax lien in rem on Real Property. More
importantly, the Trial Court only awarded an in rem Judgment.
15
Mr. Godsey testified that Hydrogeo owns 50% in the Denton well (Tract 1) and 100% in
the Robinson well (Tract 2). (RR Vol. 2, p. 53, l. 3-7 and p. 54, l. 4-18).
16
Ms. Ward testified that she was a Petroleum Landman retained by Hydrogeo to research
Wood County records, and that Hydrogeo owned the Denton (Tract 2) and Robinson (Tract 1)
wells. (RR Vol. 2, p. 23, l. 16-24, p. 25, l. 14-21).
18
That [Quitman ISD and Appellees] … recover of and from the
following named Defendants, if any, an in rem judgment in the
amount of taxes, penalties, interest, attorneys fees, and costs shown
above: Hydrogeo, LLC; Deberry 3 Operation Company, LLC;
and First Bank & Trust East Texas;
(CR at 199-203, and more specifically 201) (first emphasis added, second emphasis
in Original). Therefore, Maximum Medical is not applicable to this case.
Accordingly, based on the testimony of Hydrogeo’s President and Landman,
coupled with the testimony of Wood County’s Tax Assessor-Collector and the
Updated Tax Records,17 the Trial Court had sufficient evidence to find that
Hydrogeo owns the Real Property.
C. The Updated Tax Records Prove the Amounts Owed
The Court admitted the Updated Tax Records which are certified tax
statements setting forth the amount of taxes, penalties and interest due on the subject
tax accounts. (RR Vol. 2, p. 9, l. 2-7). The TAX CODE provides that the certified tax
statements constitute prima facie evidence of, inter alia, the amounts of delinquent
taxes, penalties and interest owed by the taxpayer:
In a suit to collect a delinquent tax, the taxing unit’s current tax roll
and delinquent tax roll or certified copies of the entries showing the
property and the amount of the tax and penalties imposed and interest
accrued constitute prima facie evidence that each person charged with
a duty relating to the imposition of the tax has complied with the
17
(RR Vol. 2: (a) p. 53, l. 3-7 and p. 54, l. 4-18; (b) p. 23, l. 16-24 and p. 25, l. 14-21; (c) p.
85, l. 24 through p. 86, l. 6); and (d) RR Vol. 3, Exhibit A).
19
requirements of law and that the amount of tax alleged to be delinquent
against the property and the amount of penalties and interest due on
that tax as listed are the correct amounts.
Section. 33.47(a), TAX CODE.
Further, the Texas Supreme Court has held that a certified tax statement, by
itself, is prima facie evidence of every fact necessary for a taxing jurisdiction to
prevail:
Under these principles, the taxing authority established its prima facie
case as to every material fact necessary to establish the cause of action
when it introduced a copy of the delinquent tax record, certified by the
proper taxing authority to be true and correct with the amount stated
thereon to be unpaid.
Davis v. City of Austin, 632 S.W.2d 331, 333 (Tex.1982).
Appellants, however, argue that the Updated Tax Records do not prove the
amounts owed because the wrong owner is listed on the records. (Brief at 14). But
misidentification of the owner is only relevant to the question of ownership, it does
not affect the presumption in favor of the amounts due and owing:
[A] certified delinquent-tax statement is prima facie evidence of the
amount of penalties, tax and interest, and on those matters, and the
County relied solely on the presumption under section 33.47(a) that
these amounts are due, delinquent and unpaid. Felt offered no
evidence to rebut that presumption, which is not undermined by the
misidentification of the property’s owner.
Felt v. Harris County; No. 14-12-00327-CV, 2013 WL 1738604, at *3, (Tex. App.—
Houston [(14th Dist], Apr. 23, 2013, no pet.) (mem. op.) (emphasis added), citing,
TAX CODE § 25.02(b) (“A mistake in the name or address of an owner does not affect
20
the validity of the appraisal records, of any appraisal or tax roll based on them, or of
the tax imposed.”).
Once the prima facie case is established, “the burden then shifts to the
taxpayer to show, by introducing competent evidence, that he has paid the full
amount of taxes, penalties and interest, or that there is some other defense that
applies to his case.” National Medical Financial Services, Inc. v. Irving ISD, 150
S.W.3d 901, 906 (Tex. App.—Dallas, 2004, no pet.). As a result, the Appellants
bore the burden of proof on any challenge to the amounts listed in the Updated Tax
Records.
But Appellants did not offer any evidence regarding whether any portion of
the personal property’s value was included in the Real Property’s appraised value.
Although Hydrogeo’s President testified as to his “opinion as to the value of the
personalty”, and compares his opinion to the Real Property’s appraised value, he
does not testify as to what amount of the personalty’s value was – or should have
been – included in the Real Property’s appraised value. (RR Vol. 2, p. 59, l. 10-21,
p. 60, l. 5 – p. 61, l. 12). Moreover, Hydrogeo did not even ask Wood County’s
Chief Appraiser, Mr. Tracy Nichols, whether any amount of the personalty’s value
was included in the Real Property’s appraised value. (RR Vol. 2, p. 75, l. 5 – p. 76,
l. 9).
21
Accordingly, the only evidence of the Real Property’s value, and “the amount
of penalties, tax and interest ... [that] are due, delinquent and unpaid”, are the
Updated Tax Records and the testimony of Wood County’s Tax Assessor-Collector.
Therefore: (a) Appellees proved a prima facie case agai3nst the Appellants pursuant
to § 33.47(a), TAX CODE, but (b) Appellants failed to present any evidence
challenging the Updated Tax Records, and (c) Appellants failed to prove a sufficient
legal defense. Consequently, the Court should affirm the Trial Curt’s Judgment in
its entirety.
22
ISSUE NO. 3
APPELLANTS FAILED TO PROVE ANY
REVERSIBLE ERROR OCCURRED, OR THAT
THE TRIAL COURT ABUSED ITS
DISCRETION.
Pursuant to Rule 44.1, TEX. R. APP. P., no judgment may be reversed on appeal
unless “the error complained of: (1) probably caused the rendition of an improper
judgment; or (2) probably prevented the appellant from properly presenting the case
to the court of appeals.” First, Appellants do not contend that any alleged error
prevented them from properly presenting their case to this Court. Second, although
Appellants do assert that the Trial Court erred in admitting the Updated Tax Records,
and in finding them liable for the entire amount of taxes owed on the Real Property,
as demonstrated above the Trial Court did not err in admitting the evidence or in
issuing its Judgment.
Furthermore, Appellant failed to show that the Trial Court abused its
discretion. The test for an abuse of discretion is whether the trial court acted without
reference to any guiding rules or principles, or arbitrarily or unreasonably. Perry
Homes v. Cull, 258 S.W.3d 580, 602 (Tex.2008), citing, Cire v. Cummings, 134
S.W.3d 835, 838-39 (Tex.2004). However, “[a] trial court does not abuse its
discretion if it bases it decision on conflicting evidence and some evidence supports
its decision.” In re Barber, 982 S.W.2d 364, 366 (Tex.1998), citing, Griffin Indus.
Inc. v. Honorable Thirteenth Court of Appeals, 934 S.W.2d 349, 355 (Tex.1996); In
23
re EPIC Holdings, Inc., 985 S.W.2d 41, 57 (Tex.1998), Butnaru v. Ford Motor Co.,
84 S.W.3d 198, 211 (Tex.2002), Unifund CCR Partners v. Villa, 299 S.W.3d 92, 97
(Tex.2009). In this case, the Trial Court acted in accordance with guiding rules and
principles, i.e. § 33.47(a), TAX CODE, and Davis, and there is at least some evidence
– the Updated Tax Statements and Ms. Taylor’s testimony - to support the Trial
Court’s Judgment.
24
CONCLUSION AND PRAYER FOR RELIEF
Because Appellees provided advance notice that they would be seeking all
taxes, penalties and interest due as of the date of trial, the Appellants were not
unfairly surprised by the Updated Tax Records. Therefore, the Trial Court had a
legitimate basis to implicitly find good cause, and for its decision to admit the
Updated Tax Records. Moreover the Updated Tax Records, which simply updated
the tax records to include the taxes, penalties and interest which had accrued, did not
contain a material change, and the change was required by the TAX CODE. As a
result, admission of the Updated Tax Records did not, and could not, have resulted
in an improper Judgment.
Furthermore, the Updated Tax Records proved Appellees’ prima facia case as
to the amount of taxes, penalties and interest that Appellants owed on the Real
Property. In addition, the testimony of Wood County’s Tax Assessor-Collector, and
of Hydrogeo’s President and Landman, proved that Hydrogeo owns the Real
Property. Accordingly, the Trial Court did not err when it issued its Judgment
enforcing the entire tax lien against the Appellants.
Accordingly, and because Appellants failed to prove any reversible error
occurred or that the Trial Court abused its discretion, the Trial Court’s Judgment
should be affirmed in its entirety.
25
Respectfully submitted,
LINEBARGER GOGGAN
BLAIR & SAMPSON, LLP
Edward J. (Nick) Nicholas
State Bar No. 14991350
4828 Loop Central Drive, Suite
600
Houston, Texas 77081
(713) 844-3405 direct phone
(713) 844-3400 main phone
(713) 8454-3504 fax
ATTORNEYS FOR WOOD
COUNTY APPELLEES
26
CERTIFICATE OF COMPLIANCE
I certify that this document was produced on a computer using Microsoft
Word 2013 and contains 4,837 words, as determined by the computer software’s
word-count function, excluding the sections of the document listed in Rule 9.4(i)(1),
TEX. R. APP. P.
Edward J. (Nick) Nicholas
CERTIFICATE OF SERVICE
I certify that a copy of Wood Count Appellees’ Brief was served on the
following counsel of record via EFILE.TXCOURTS.GOV and electronic mail:
Mr. J. Don Westbrook dwestbrook@ccfww.com
Mr. Michael E. Starr mstarr@ccfww.com
Mr. Michael L. Dunn mdunn@smeadlaw.com
Mr. David Hudson dhudson@pbfcm.com
Edward J. (Nick) Nicholas
27