### TEXA S C OU R T OF A PPEAL S, THIR D DIST R ICT , AT AU STIN

NO. 03-03-00431- CV
Appellan ts, Alon USA, LP and Alon USA GP , Inc.//Cross-Appellant, Th e State of T exas
v. Appellee, The State of Texas//Cross-Appellees, Alon USA, LP and Alon USA GP , Inc.

F ROM THE DISTRICT CO URT OF TRAVIS COUNTY , 250TH JUDICIAL DISTRICT NO. GV102519 , HO NORAB LE SCOTT H. JENKI NS, JUDGE PRESI DING

O P I N I O N Appellants, Alon USA, L P and Alon USA GP, appea l from the trial c ourt’s judg ment
awa rding the State of Te x as dama g es for unpaid motor fuel tax es for the m onths of De cembe r 2000 and January

2001. The lawsuit involved unpaid fuel taxes for the months of September, O ctober , and De cembe r 2000, and January 2001. Appellee , the State of Texas, c ross-appe als the trial cour t’s denial of da

mages fo r t h e fi rs t two months at issue. W e will aff irm that part of the trial court judgme nt awa

rding damag es t o the S tate for the m onths of Decembe r 2000 and J anuar y 2001, and
reve rse a nd render judg ment awa rding damag es to the State for the months of September a nd October 2000.
I. BACKG ROUND Although A lon USA L P, Alon USA GP, I nc. (c ollectively Alon), and the State of Te xas are the on ly pa

rt ie s to the laws uit , se ve ra l a c tor s we re inv olv e d in the tr ans a c tio ns g ivi ngri se2

to the suit. Appellant Alon USA, L P is a Texas li mited partner ship in the business of ref ining a nd selling motor f

uel in the s tate of Texas under the Fina brand. I t also provides cr edit car d proce ssing and collec tion services to g as stations operating under t he Fina brand. Appellant Alon USA GP, I nc., is a T e xa s c o r

p o r a ti o n an d A lo n ’ s g e n e r a l p artn e r . V is ta St o r e s L L C ( “ V is ta ” ) is a T exas lim ited partne rship that lease d fifty -three g as st ations in the Dallas/For t Worth Metroplex are a, selling motor fuel unde r the F ina bra

nd. Vista was the pa

rent c ompany o f Ak ard Stree t Fuels L P (“Aka rd”) , a Texas limi ted par

tnership enga g ed in the bus iness of buy ing motor fuel from Alon for resale to Vista. During the liability period, Alon had a dual role, acting both as a g asoline distributor and a pr ovider of cr edit car d proce ssing a nd collection ser

vices. Alon, Vista, a

nd Akar d followed
a bu sin e ss m od e l wh e re Ak ard wo uld buy ta x-f re e g a so lin e fr om A lon

on c re dit and re se ll t o V ist a
on a ta x-pa id ba sis
. Al on pr ov ide d c re dit

c ard pr oc e ssi ngse rv ic e s to Vi sta and , a s a re su lt, wo uld owe Vista mone y

ever y time a customer pa id with a cre dit c ard at a Vista g as station. Alon thus had a rig ht to rece ive pay

ment from Akard for Akar d’s purchases of fuel and Vista had a rig ht to rece ive pa y me nt f or Al on fo r c re dit c ard purc ha se s a t V ist a g a s st a tio ns . Ins te a d o f f or wa rd ingthe se c re dit
car d pay ments to Vista and demanding pay ment from Akard, Alon adopted the prac tice of se tting of f t he se pa y me nts a g a ins t ea c h othe r. I ns te a d of paying Vi sta , it wo uld iss ue c re dit

me mos a g a ins t Akar d’s fue l debt. After

Vista and Akar d decla

red bankruptc y , the State sued Alon for pa y ment of Akar d’s past due g asoline taxes. A full understandi n g of the tra nsactions and the ba sis for the laws uit re qu ir e s a

c hr on olo g ic a l de pic tio n o f t he fa c ts. Th e fa c ts i n th is c a se are no t in dis pu te
. I n De c e mbe r 19 98 , V ist a a c qu ir e d le a se ho ld interests in fifty -three Fina br anded c onvenienc e store g as stations from FinaServe, I nc., a subsidiar yTh e mot or fu e ls c ha pte r o f the Te xas Tax Co de , Ch a pte r 1 53 , in

e ff e c t du ri ngthe e ve nts 1 at i ssue i n this appea l, was repea led effec tive Dec ember 31, 2003. See Ac t of

June 10 , 2 00 3, 78 th L eg ., R.S., ch. 199, § 1, 2003 Tex. Gen. L aws 199 (e nactingnew C h ap t er 1 6 2 of the Tax Code pe rt a ini ngto mot or fu e l taxe s)
. Th e ta x c oll e c tio n sch e me g ivi ngri se to t he e ve nts a t is su e in t

his case was re place d by a sy stem requiring tax collec tion at the terminal ra ck. See , e.g. , § 162.101 of the new motor fuel tax provision. For purposes of convenie nce, we will re fer to the former

Chapter 153 as “Tax Code § 153 .” 3 of F ina. Vista and F ina also enter ed into a B rande d Contract, re quiring Vista to purcha se g asoline exclusively

from F ina and operate the g as stations unde r the Fina logo a nd trade mark. The contra ct
a lso re qu ir e d V ist a

to p ur c ha se a t le a st 5 ,0 00 ,0 00 g a llo ns of g a so lin e e a c h mo nth . F ina , thro ug h it s bundle of e quipment and servic es kno wn as F inaNet, would pr ovide Vista with cre dit card
a c c e pta nc e , a uth or iza tio n, and

oth e r s e rv ic e s n e c e ssa

ry to a c c e pt pa

y me nts by c re dit

c ard . F ina

a lso offe re d Vi s t a customers its own private labe l cre dit card ( “F ina ca rd”) . Customers at Vista g as stations c ould use their Fina Cards or any other major cre dit c ard (“ba nk car d s ”)
. T h e B randed Contract also e stablished that Fina w ould provide c redit ca rd collec tion services to Vista f or a f ee, and that all of Vista' s cre dit car d sales would be transferr ed and assig ned to Fina. As a re sult, under the B ra nd e d Co ntr a c t, F ina

op e rate d b oth

a s V ist a ' s e xclu siv e su

pp lie r of g a so lin e and

Vi sta ' s so le pr ov ide r o f c re dit

c ard se rv ic e s. Under this ar ra n gem ent, Vis ta oper ated a s a “D eale r,” the “oper ator of a service station or other re tail outlet and who deliver s motor fuel int o the fuel supply tanks of motor vehic les or motorboats.” Te x . Tax Code Ann. § 153.001(4). Fina operated as a “Distributor,” a

person who 1 “re g ularly makes sal es o r di stributions of ga soline that are not into the fuel supply tanks of motor vehicles, motorboats, or airc raf t.” Id . § 153.001(9)( a)
. A d i s t ri butor must obtain a distributor’s permit. Id
. § 153.107. A t ax of 20 cents per gallon i s imposed on the first sale or use of g asoline.For illust ration purpose s only , we will assume that F ina so l d gas o l i n e at $1 per g allon. 2 Since Fina and Vista transac ted on a tax-paid ba sis, F ina would add the g asolin e t ax t o t h e price, char g ing V ista $1.20 per g allon. I f Vista orde red 100 g allons, it would owe Fina $120. We will buil d upon the previous example in which Vista purc hased 100 g allons of g asoline 3 from Fin a

f o r $ 1
. 2 0 p e r

g a ll o no na

tax- p a id b a s is in c u r

r in g $ 1 2 0 in

li a b il it y to F in a . A s s uming Vista' s price struc ture include d only an additional $.10 per

g al l o n t o cover

operational costs and profit, Vista would cha

rg e its customer s $ 1.30 per g allon. I f a c ustomer purc hased 50 g allons of g asoline at $1.30 pe r g allon char g ing the whole purcha se on her Fina cre dit c ard, f or a total of $65, Fi n a would simply

show a $65 e ntry

on its bi-weekly

statement to Vista and c redit the whole $65 amount ag ainst Vista' s g asoline liability . At t h e en d o f t he tra nsaction, F ina' s books would show Vista' s liabilit y

at $55, with its original liability of $120 reduced by the $65 cr edit. I t is worthy of notice that, in this process, F ina cre dited Vista' s fuel liability , which consisted only of the c ost of fuel plus the g asoline tax ($60 for the 50 g allons purcha sed by the customer) , with the full amount c ha rg e d b y Vi sta to its cu sto me rs , whi c h inc lud e d not onl y the c os t of fu e l and g a so lin e ta x, bu t a lso the amount adde d by Vista to c over its ope ratingcosts and prof it ($65). I f the c ustomer, in addition to purcha sing g asoline, had a lso purchase d other items at Vista' s co n v en i ence stores, the total purcha se would be c redited to Vista' s fuel liability , even though it included non-ga soline items. Not 4 Id . § § 1 53 .1 01 (a ), 15 3. 10 2( a ). A dis tr ibutor is e xemp t f

ro m c oll e c tin g the g a so lin e ta x whe n it se lls to another distributor, but must include the tax wh en it sells to dealers. Id . § § 1 53 .1 04 (3 ). As a result, all sales of

g asoline fr om Fina ( the distributor) to Vista (the de aler ) had to be executed on a tax-paid basis, with Fina cha rg ing V ista the g asoline tax at the statutory rate of 20 cents per g allon. The tax would ultimately be passed on to the consumer, a s Vista char g ed the state g asoline tax at the pump. Be cause g asol i n e wa s sold on a tax-paid basis, Fina wa s responsible for remitting the
a p p r o p r i a t e g a s o l i n e t a x t o t h e t a x i n g a u t h o r i t y. 2 Although the Br anded Contra ct re quired F ina to provide Vista with credit ca rd
c oll e c tio n s e rv ic e s f

or a fe e , in pr a c tic e Vi sta ' s c re dit

c ard re ve nu e s were us e d a s a c re dit a g a ins t Vi sta ' s li a

bil ity fo r g a so lin e purc ha se s. F ina wo uld pr ov ide Vis ta

wi th b i- we e kly

state me nts , sh ow ingmatur e d cr e dit c ard re c e ipt s of Vis ta ' s sal e s of g a so lin e and no n- g a so lin e ite ms a s a

c re dit
a g a ins t V ist a ' s g a so lin e purc ha se s. 3surp ri sin g ly , V ist a op e ratio ns we re ne ve r c on sis te ntl y pr of ita ble . Si nc e F ina

wa s th e pa

rt y u l t imate ly re sp on sib le fo r r e mittin g the a pp ro pr iate g a so lin e ta x to th e ta xinga uth or ity , th e se tax -p a id transac tions are not the ba sis for the issues pre sented in this case
. As a hy p o t h et i ca l transac tion, we will assume Akar d purcha sed 100 g allons of g asoline 4 from F ina for $1.00 pe r g allon on a tax-fre e basis incur ring $100 in liability

to Fina. Aka

rd then ad d ed the $.20 pe r g allon to the g asoline price and passe d it on to Vist a at $1.20 pe r g allon. Assuming Vista' s price struc tu re included only an additional $.10 per

g allon to cover

operational costs and prof

it, Vista would charg e its customers $1.30 per g allon. I f a c ustomer purc hased 50 g allons o f gas o l i n e at $1.30 per g allon char g ing the whole purc hase on he r F ina cr edit car d, for a t o t al o f $6 5 , Fi n a wo u l d cr ed i t t h e wh o l e $6 5 am o u n taga i n s tAk ar d 's gas o l i n e l i ab i l i t y , ev en t h o u gh Akar d' s liability consisted only of the g asoline cost. At the end of the transac ti o n , Fi n a's b o oks 5 Th e dis tr ibutor

makin g the fi rs t taxab le sa le or us e of the g a so lin e is a llo we d to re ta in the tax on two perce nt of the taxable g allons of g asoline it sells to compensate it “f or the e x penses of collec ting, a c counting for, r eporting , and re mitti ng the tax collected and f or kee ping r ecor ds.” Tax Code § 153.105(e) . The distributor makes mone y not only by keepingthe two pe rc en t statutory dis c ount b ut a lso by re ta ini ng the a mou nt it re c e ive s fr om de a le rs fo r 25- 55 da y s unti l it mus t r e mit th e tax to th e Co mp tr o ll e r o n th e 2 5 th o f th e f o ll o w in g month. See id . § 153.118. Howeve r, a distributor ca n n o t s i m u l taneously operate as a

deale r. Id . § 153.001(9)( A). In order to take
a dv anta g e of

the statut or

y dis c ounts and

pa y me nt sc he du le s all ow e d dist ri bu tor s, Vi sta

c re a te d it s own distributor, Akard. Akar d obtained a distributor' s permit enabling it to buy g asoline fr om Fina on a tax-fre e basis, ef

fec tive J uly

1, 1999. Fina’ s contrac t was only with Vista; Fina wa s under no obligation to sell g asoline t o Akar d. Howeve r, F ina started to se ll ga soline to Akard on a tax-free basis. Fina c ease d to include the g asoline tax on its pric e to A kard but continued to apply Vista’s
c re dit c ard re ve nu e s a s a c re dit to A ka rd ’s lia bil ity fo r g a so lin e purc ha se s. F ina a lso c on tin

ue d to provide Vista with bi- we ek l y statements, showing matured c redit ca rd re ceipts of Vista’ s sales of g a so lin e and

no n- g a so lin e ite ms a s a

c re dit a g a ins t A ka

rd ’s g a so lin e purc ha se s. 4wo uld

sh owAk ard ' s li a

bil ity at $35, wi th i ts o ri g ina l li a bil ity of $1 00 re du c e d b y

the $6 5 c re dit
. Akar d, as the distributor, would kee p its s t at u t o ry discount of two per cent a nd owe the tax ing authority $18 in tax es. Assuming another customer pur chase d 10 g allons of g asoline fr om Vista at $1.30 per g allon and also $20 in c onvenienc e store g oods, char g ing a total of $33 on his credit ca

rd, F ina wo uld c re dit the wh ole $3 3 amou

nt t o A ka rd ' s f ue l a c c ount. Al o nad v an ce d

gas o l i n e c re d i tt o Ak ar d i nt h e a m o u n to f t h e t o t al cr ed i tca rdch ar ge 5 eff ectuated by

the customer at a Vista conve nience store g as station, les s p ro ce ssing c harg es, by issuing a cr edit memo ag ainst rec eivables due from Aka rd. Howe ver, the amount customers c harg ed on their cr edit car ds at Vista stations was nec essar ily g reater than A kard' s tax -fr ee g asoline purc hases 6 Akar d basica lly

operat ed as a vehic le to allow Vista to purcha se g asoline tax-free fr o m Fi n a. Ak ar d

p u rc h as edgas o l i n e e x cl u s i v el y fr o m Fi n a a n d

s o l d i tex cl u s i v el y

t o Vi s t a. Ak ar d 's
acc ounting r esults were consolidated with those of V ista, its o n l y "cu s t o mer." Akar d did have a separ ate ba

nking ide ntity , but its bank acc ount was a zero ba lance acc ount linked to V ista' s so that
ever y pay ment item was covered by funds pul led from Vista' s acc ount. I n substance, Fina tre ated A k ar d a s t h e s a m e e n t i t y

a s V i s t a a n d d i d n o tm o d i f y i t s B r an d e d

C o n t r a c tt o i n c l u d e A k ar d
. It si mp ly con si dere d Ak ard as a nam e chan ge, oft en referri ng to th e new com pan y as "Ak ard/ Vi st a". I n Aug ust 2000, Alon acquir ed Fina' s distributor network in Tex as, Oklahoma , and Ne w M e xico , a lon g wi th F ina ' s r e fi ne ry in B igSpr ing , T e xas a

nd F ina ' s p ipe lin e ne tw or

k in the se states. As a r esult of the ac quisiti on, Fina c onvey ed its interest in the B rande d Contract to Alon.

Alon was unde r no oblig ation to continue to sell g asoline to Akar d since the B rande d Con tr a c t w a s o nly

be tw e e n V ist a

and Al on , as F ina ' s suc c e sso r in i nte re st. Ho we ve r, Al on c ho se to
c on tin ue F ina ' s pr a c tic e of se lli ng g a so lin e to Ak ard on a ta x-f re e ba sis and a

pp lying Vi sta ' s c re dit
c ard re ve nu e s a s a

c re dit to A ka rd ' s li a bil ity fo r g a so lin e purc ha se s. Al on , a s F in a did be fo re it, provided Vista with bi-we ekly statements, showing matured c redit ca rd re ceipts of Vista' s sales of g a so lin e and

no n- g a so lin e ite ms a s a

c re dit a g a ins t A ka

rd ' s g a so lin e purc ha se s. 5fr o m Al o n , b ec au s e V i s t a p as s edo nt o t h e c u s t o m er t h e $

. 2 0 p er

gal l o ngas o l i n e t ax , Vi s t a's operational costs and Vista' s profit. Customer char g es also i ncluded c redit ca rd purc hases of non-g asoline items at V ista' s convenie nce store s. As an example, assume a customer pur chase d 10 g allons of g asoline at $1.30 pe r g allon plus $30 in ciga re ttes for a total cre dit card c harg e of $43. W i t h i n2 d ay s o f t h at ch ar ge, Al o nwo u l d ad v an ce t o Ak ar d

t h e $ 4 3 i ngas o l i n e c re d i tm i nu s Al o n 's p r o c e s s in g f

e e . Wh e nth e c u s to me r

f in a ll y p a id h e r $ 4 3 c r e d it

c ar d b il l, th e f

in an c ia l i nstitut ion would remit the whole $43 to Alon be cause , under the Br anded Contra ct, Vista cr edit car d sales we re tr ans fe rr e d a

nd a ssi g ne d to F ina

and , th us , to Al on

a s F ina ' s su c c e sso r i n in te re st. One of the conditions Fina orig inally imposed on Vista, in or der to se cure cre dit for fue l 6 purcha ses, was a

deposit of $200,000 in an escrow account. Alon continued thi s prac tice. This was no t a se pa rate ba nk a c c ount b ut j us t an e sc ro w a c c ount o n A lon ’s bo ok s. Al on , h ow e ve r, g ra du a lly incre ased the require d deposit by continuously withholding Vista’s c redit ca rd re ceipts. This eve rincre asing escr ow ac count re ache d $919,315 in Febr uary 2001, when Vista sue d Alon and obtained a te mpo ra ry re str a ini ngor de r a llo wi ngAk ard to hav e g a so lin e purc ha se s c re dit e d a g a ins t th is a mou nt. Ak ard su

bs e qu e ntl y dr e w do wn on the e sc ro w a c c ount by makin g g a so lin e purc ha se s unti l it had a zero ba lance
. 7

I n Augus t 20 00 , A ka

rd sta rt e d ha vin g dif

fi c ult ie s p ayingits g a so lin e ta x obli g a tio ns . As of Dec ember 6, 2000, it owe d the state $2.5 milli on in g asoline tax, re prese nting past due taxes for August, S eptember , and October 2000. On t his date, Alon's credit m anag er notified Vista byema il that he wa s awa

re of the ta x defi c ie nc y . A t th e tim e , A lon wa s h old ing$4 32 ,0 00 a s a c a sh de po sit to c ov e r f

utu re fu e l purc ha se s. Th e de po sit wa s c re a te d b y

wi thh old ingc re dit

c ard c re dit s due Vista. As of January 5, 2001, the cash deposit had incre ased to $659,000 a nd Alon intended 6 to continue withholding c redit c ard credits due V ista until t he sec urity deposit totaled $1 milli on. As of January

25, 2001, the sec urity deposit had incre ased to a pproxi mately $880,000, and to over $900,000 as of F ebrua

ry 9, 2001. On Fe bruar

y 9, 2001, Vista sued Alon for a tempora

ry restra ining order to allow Vista to use the deposit to buy g asoline. The te mporary

restra ining or der w as g rante d, all o wi ng Vista to char g e g asoline purc hases a g ainst the deposit, up to $942,783. Akard took8

advanta g e of the temporar y restra ining or der be fore it was dissolved th e followingwee k, pulling $7 70 ,0 00 in f

ue l. A lon a pp lie d th e re ma ind e r o f t

he de po sit

to A ka rd ' s a c c ount. The Comptroller suspende d Akar d' s distributor's permit on Fe bruar y 2, 2001. At the time, A k ar d o we d t h e st ate pa st due taxes for the months of September , October , and De cembe r 2000, and January

2001 (" the liability

period" ). The State of T exas sued Alon under thre e theor ies of l i ab i l i t y : (1) a s a statutory trustee unde r section 111.016(a) of t he Tex as Tax Code for rece iving or collecting a tax or money
re pr e se nte d to be a

ta x in th e fo rm

of c re dit c ard pa y me nts at gasol in e ou tle ts o pe ra te d b y Vi sta during the liability

period; (2) as a tortfea sor i n the conve rsion of trust funds; and (3) as a tortf easor fo r b re a c h o f fi du c iary du ty re g ard ing tr us t fu nd s. Th e tr ia l c ourt

awa rd e d ju dg me nt f

or the State in the amount of $548,129.88, re prese nting g asoline tax rece ived or collecte d by Alon on cre dit card sales tra nsac t i o n s occur

ring in the months of Dece mber 2000 a nd J anuar y 2001 at the Vista g as statio ns , to g e the r w ithstatut or y pe na lty and int e re st, plu s c ourt

c os ts a nd $5 0, 00 0 in

a tto rn e y ' s f

e e s. The court denied r ecove ry for the months of Septembe r and O ctober 2000. Alon appea ls the trial court' s awa

rd. The State cross-a

ppeals the tria l court' s denial of r ecove ry for the months of September a

nd October

2000.
II. DI SCU SSIO N Alon prese nts seven issues on appe al: (1) Alon c ould not be liable as a statutory trustee be cause it ne ver rec eived or collecte d a tax or money repr esente d to be a tax pursuant to Tax Code section 111.016(a ); (2) even if Alon rec eived or collecte d a tax or m oney repr esente d to be a tax, t here is no evidence of the a ctual amount of taxes collecte d; (3) the opinion testi mony and re port9

of t he S tate' s damag es ex pert a re unr eliable a

nd inadmissible as a matter of law, and the ref

ore, a re no evidenc e of da

mag es; (4) the re is no "tr ansfe r" of t rust proper ty in the Fina car d transac tions and,
as a r esult, the trial cour

t erre d as a matter of law

in finding that a “wr ong ful transfe r” ha s occur red; (5) ther e is no “wr ong ful transfe r” a s a matter of law in the context of bank ca rd transa ctions; (6) there is no evidenc e of damag es because the State' s damag es evide nce doe s not disti ng uish betwee n bank ca rd and F ina ca

rd transa ctions; and (7) the o n l y m o n t h i n which Alon eve n arguably had
rea son to believe Aka

rd wa s not paying its g asol i n e t ax wa s J anuar y 2001 and, as a

result, in the
a lte rn a tiv e , A lon

is e nti tle d to a

re mittit ur of $3 40 ,0 37 .3 5 p lus pe na lty and int e re st.
A. Liab ility as a Statutory Trustee 1. Rece iving or collecting a tax or m oney repre sented to be a tax Alon argues that it was not a statutory trustee be cause it never rece ived or c ollected
a tax o r mo n e y r e p r e s e n te d

to b e a tax: Any person who rec eives or collects a tax or any money repr esente d to be a tax from another person holds the amount so collected in trust for the bene fit of the state a nd is liable to the state for the full amount collecte d plus any accru ed p en al t i es and interest on the amount collected.
Tex. Tax Code Ann. § 111.016(a ) (West 2002).

Al on c on te nd s th a t th e a

pp lic a tio n of se c tio n 1 11 .0 16 (a ) t o A lon or oth e r t hir d- pa rt y
cre dit card pr ocessor s does not fa l l wi thin the letter of the statute and flies in the f ace of prope r statutory construction. Matters of statutory construction are questions of law, subjec t to reviewde

novo . State Dep’ t of H

i g h w ays &Pub. Transp. v. Payne , 8 3 8 S
. W
. 2 d 2 3 5 , 2 3 8 ( T e x . 1 9 9 2 )
. “ In10

interpre ting a

statute, a court shall diligently attempt to asce rtain leg islative intent and shall consider at all times the old law, the e vil, and the reme dy .” Tex. Gov’ t Code Ann. § 312.005 (West 2002). Th e sta rt ingpo int

is t o lo ok

to t he pla in a nd c omm on me anin g of

the statut e’s wor ds , vi e wi ngits terms in context and giving them full eff ect. Liberty Mut. Ins. Co. v. Garrison Contractors, Inc. , 966 S.W .2d 482, 484 (Tex. 1998). Be cause canons of statutory construction may

be cited to support conflic ti n g in te r

p r e tati o n s o f a d is p u te d s tatute , w e mu s t a ls o c o n s id e r th e g o o d s e n s e of the situation, using a simple construc tion of the ava ilable languag e. Ga ble s R e alt yL.P . v . Trav is C

e nt. Ap prais al D ist
. , 81 S.W.3 d 869 , 873 (T e x. Ap p. —Aus tin 20 02 , p e t. d e nie d) . We c on sid e r a statut e
as a w hole and do not c onsider its provisions in isolation. Continental C as. Ins. Co. v. Downs , 81 S.W. 3d 803, 80 5 (Tex . 2 00 1) ; Helena Che m. Co. v. W ilkins , 47 S.W .3d 486, 493 (Tex. 2001). Statutes imposi ng a tax must be st rictly construed ag ainst the t axing authority and libera lly

construed in favor of

the taxpay er. Gables Realty L.P. , 81 S.W .3d at 872. The trust languag e of se ction 111.016(a) , added e ffe ctive Jul y 21, 1987, clar ified the status of collec ted g asoline tax re ceipts beca use the Texas T ax Code provisions de aling in ge nera l with the collection of g asoline taxes do not cont ai n t ru s t fund l anguag e. See , e.g. , Tax Code § 153.105 (imposing a

n obligation on any

person makinga sale or use of g asoline on which the tax has not bee n previousl y p ai d t o ad d the tax to t he selling price and collec t it from the purcha ser)
. Th e le g isl a tiv e int e nt i n e na c tin g se c tio n 1 11 .0 16 (a ) w a s thus to make cle ar t hat c oll e c te d taxes, including g asoline taxes, are trust funds. The tax wa s i n i t ially imposed to ge nerate funds for the
s t at e's use, and thus the state is the benef iciary of the tax, not the distribut or, the de aler , or other pa rt ie s in the su pp ly c ha in t hat a c t a s th e int e rm e dia

ry sa le s tax co lle c tor s.11 The g asoline tax statute recog nizes that, although m u l t i p l e ac tors may be involved in the su pp ly c ha in, the c on sume r is ult imate ly re sp on sib le fo r pa ying the ta x, a s e xpre ssl y state d in section 153.105(a ):
I n eac h subsequent sale of g asoline on which the tax has be en collec ted, the amount of the tax shall be added to the selling price so that the tax is paid ultimately by the person using or consuming the g asoline for the purpose of propelling a vehicle upon the public hig hway s of this state. Tax Code § 153.105(a) ( West 2002).

Readingsections 111.016 and 153.1 0 5 (a ) t og ether , when a consumer pa

y s for g asoline purc hased f

o r t h e p urpose of

propelling a vehic le upon the public hig hway s of this state, the selling price includes the g asoline tax a nd any person who rec eives or collects that pa y ment from th e c o n s u me r h o ld s th e a mo u n t s o c o ll e c te d in tr u s t f o r th e b e n e f

it o f th e s tate an d

is liable to the state for the full amount of g asoline tax c o l l ec t ed p l u s any acc rued pe nalties and intere st on the amount of g asoline tax collected.

A distributor can se ll to another distributor on a tax-fre e basis but must include the tax w h e n s e ll in g to a

d e a le r . T a x Co d e § 1 5 3
. 1 0 4 ( 3 )
. A k ar d ( th e d is tr ib u to r ) p u r c h a s e d g a s o li n e taxfre e fr om Alon ( in its role as a distributor). Vista (the deale r) purcha sed g asoline fr om Akard ( the distributor) on a tax-paid ba sis a nd then added the g asoline tax to the price it charg ed consume rs at the pump, a s r e qu ir e d b y

se c tio n 153 .1 05 (a ). Th e g a so lin e se lli ngpr ic e thu s h a d tw o c omp on e nts , the cost of the g asoline and the g asoline tax. W hen a co n s u m er pa y s for g asoline with ca sh, the
a mo u n t p a id

c o n s is ts o f

th e s e s a me tw o c o mp o n e n ts , th e c o s t of th e g a s o li n e an d th e g a s o li n e tax. When Vista rec eives the c ash pay ment from the consumer, it holds the amount correspondingto the12

g asoline tax in t rust for the benef it of the state a

nd is liable to the state for the g asoline tax amount
c oll e c te d p lus any

a c c ru e d p e na lti e s and

int e re st. When a consumer pay s for ga soline by char g ing the selling price on a cre dit card, the amount char g ed consists of the same t wo components a s in a ca sh transac tion, the cost of the g asoline and the g asoline tax. The total char g e the c onsumer later sees in his cre dit card bill, eve n if li s te d a s a c o n s o li d a te d

a mo u n t, is s ti ll c o mp r is e d o f th e c o s t of th e g a s o li n e an d th e g a s o li n e tax. When the consumer pa

y s his credit ca

rd bill, the amount paid for the g asoline purc hase c ontains the same two c omponents. J ust like the deale r in a c ash transaction, when the cre dit card pr ovider
re c e ive s th e pa

y me nt fr om the c on sume r, it hol ds the a mou nt co rr e sp on din g to t

he g a so lin e ta x in trust for the be nefit of the state.

I n our case, Alon had a dual role, operating not only as Aka rd’s g asoline distributor b u tal s o as Vi s t a’ s cr ed i t ca rd p ro ce s s i n g an d co l l ec t i o ns erv i ce s p ro v i d er . As a r es u l t , Al o n , t h ro u gh its fi na nc ia l ne tw or

k k n o wn a s F i n a Ne t, w ou ld u lti mate ly

re c e ive the c on sume rs ’ p ay me nts fo r c re dit
c ard purc ha se s at V ist a

g a s st a tio ns . T he a mou

nt c or re sp on din g to t

he g a so lin e ta x wou ld c on sti tut e trust funds for the be nefit of the State.

Al on arg ue s th a t th e se c re dit c ard

tr ans a c tio ns did

no t c on sti tut e tr

us t f un ds be c a us e (1) Alon was liable to V ista for c redit ca rd purc hases at Vista stations reg ardle ss of whethe r or not the c on sume r a c tua lly pa id his c re dit c ard bil l and (2 ) Al on , un de r the B ra nd e d Con tr a c t, ow e d V ist a only day s after

the purc hase, longbefor e Alon ultimately collecte d from the c onsumer. Howe ver, when the c redit ca

rd provider

assumes the re sponsibili ty to pa y the deale r befor e it c ollects from the consumer, a s Alon did in thi s case , the amount owed to the dealer that corr esponds to the g asolineAl on a lso argue s th a t, s inc e it o ffs et Aka rd ’s lia bil ity a g a ins t pa

y me nts du e to V ist a 7 reg ardle ss of whethe r the c ustomer paid i t s cr ed i t car d char g es, the funds in que stion cannot c on sti tut e tr

us t f un ds . T his argume nt i s in a pp lic a ble in t his c a se , s inc e the State on ly so ug ht t o re c ov e r fu

nd s a c tua lly c oll e c te d by Al on fr om Vi sta c us tom e rs and the e xpe rt c a lc ulatio ns c on ta in de du c tio ns fo r u

nc oll e c te d amou

nts
. Cus tom e rs c ha

rg e d th e ir purc ha se s at V ist a

g a s st a tio ns us ingthe F ina c ard and ba nk c ard s. 8 Howeve r, under

the B rande d Contract, all of Vi sta’s cr edit car d sales we re a ssigne d to Alon and there is no differe nce, f

or the purpose s of this analy sis, whether c ustomers used a Fina car d or a bank car d. 13 tax constitutes trust f

unds for the benef

it of the state, even if it will only later be collecte d from the
consumer. 7
2. Setoff as a def

ense to liabili ty as a statutory trustee Al on argue s th a t it

ne ve r c oll e c t e d

a ny ta xes b e c a

us e , w he n a

c on sume r p a id h is c re dit
c ard bil l for g a s p ur c ha se s c ha rg e d o n a c re dit c ard a t a Vi sta g a s st a tio n, Al on

(i n it s r ole a s a

c re dit 8
c ard pr ov ide r) ha d a lr e a dy

“ pr e pa id” Vi sta (t

he de a le r) the a mou

nt c ha rg e d b y iss uin g a c re dit me mo ag ainst Akar d ’ s ( th e d is tr ib u to r ) tr a d e d e b t t o A lo n( in it s r o le a s a

d is tr ib u to r ) f

o r g a s o li ne purcha ses. Alon asser

ts that, as a result, even if any trust f unds wer e involved, they would have be en fully transfe rre d to Akard by

means of the setoff. The que stion we must resolve is thus whether the
cr ed i t m em o i s s u ed aga i n s t Ak ar d ’s ac co u n tre l i ev edAl o no f l i ab i l i t y fo r t h e t ax es co l l ec t edt h ro u gh the c re dit c ard re c e iva ble s. I n order to deter

mine whether Alon’s credit memos issued ag ainst Akard’ s acc ount constituted a prope r setoff we must consider (a) the mutuality of oblig ations and (b) the trust fund
natur e of the fu nd s.14

(a ) The Mutu ali ty of Ob lig ations A claim of right t o withhold pay ment and apply it ag ainst a debt ha s traditionally been treated as a

setoff. United States v. Isthmian S.S. Co. , 359 U.S. 314 , 318 (1959) ( superse ded by statute on other grounds as stated in Hornbec k Offshore Operators v. Oce an Line , 849 F. Supp. 434, 449 (E.D. Va . 1994)). However , in order for one demand to be se t off ag ainst another, both de mands must mut ually

exis t betwee n the same pa rties. Dallas/Fort W

orth Airport Bank v . Dallas Bank & Trust Co. , 6 6 7 S
. W
. 2 d

5 7 2 , 5 7 5 (T ex . A p p . — Da l l as 1 9 8 4 , n o wr i t ) ( ci t i n g W estern Shoe Co. v

. Amarillo Nat ’l Bank, 94 S.W .2d 125, 128 (Tex. 1936)).

I n Conoco, Inc. v. Amarillo Nat ’l Bank, 14 S.W .3d 325 (Tex. App.—Amarillo 2000, no pet.), Conoco a cted both as a supplier and a

provider of

cre dit card pr o ce s s i n g and collection service s to Centerg as, a w holesaler and reta iler of pe troleum products. Conoco se t off the amount it owe d Ce n te r g a s f

o r c r e d it c ar d s a le s a g a in s t Ce n te r g a s ’ s d e b t to Co n o c o f o r th e p u r c h ase of inventory
. Id . at 32 7. As pa rt of a loa n a g re e me nt, Am ari llo Natio na l B ank ha d ta ke n a se c ur ity interest in Centerg as’s a ccounts re ceiva ble, which wa s duly

perf ecte d and continued. Id . Aft er Centerg as filed f

or bankruptcy , the bank broug ht an action ag ainst Conoco, alleg ing conver sion of
acc ounts rece ivable in the for m o f the c redit ca

rd proc eeds that were part of the bank’s c ollatera l under the loan ag ree ment with Centerg as. Id. On appe al, the cour t held that t h e b ank’s suit was barr ed by the statute of limitations because the bank knew, or should have known, that Conoco had been of fsetting acc ounts rece ivable ag ainst Centerg as’ de bt. Id . at 329. The c ourt did not question Con oc o’ s a

bil ity to a pp ly a se tof f a g a ins t Ce nte rg a s’ de bt s inc e the mut ua lity of ob lig a tio ns c le arl y15

exis ted in this c ase: the demand Conoco had ag ainst Centerg as for pur chase s of inventory matched,
a t th e tim e of

se tof f, the de mand

Ce nte rg a s h a s a g a ins t Co no c o f or c re dit c ard re c e iva ble s. I n contra st, the demand whic h Alon held ag ainst Akard in this ca se was not matched, at the time of setof

f, by any demand Aka

rd had a g ainst Alon. Vista, not Akard, ha d a rig ht to rece ive a pay ment from Alon as a

result of cre dit c ard purcha ses at Vista g as stations. Sim ilarly , the debt related to fuel purc hases c onstitut ed a r ight of Alon to rec eive a

pay ment from Aka

rd, not Vista. Duringthe l iability period, Vista never purcha sed fuel from Alon. All fuel purc hases we re ma de by A k ar d an d t h e d e b t a c c o u n t r e f

l e c t e d A k ar d ’ s d e b t f

o r t h e s e p u r c h a s e s , n o tV i s t a ’ s . C o n s e qu e n t l y, Vista did not have a

debt ac count with Alon capa ble of be ing se toff ag ainst Vista’s rig ht to rece ive pay ment from Alon, as V ista’s cre dit card pr ocessingand collec tions provider, for cre dit c ard purc ha se s at V ist a

g a s st a tio ns . I t is un dis pu te d that Vist a c re a te d Aka rd a s a se pa

rate e nti ty in o rd e r t o o pe rate a s a dis tr ibutor

and purc ha se g a so lin e ta x-f

re e , th e re by

takin g a dv ant age o f the 2% statut or y dis c ount. Alon, h o we ver, ne ver ha d a contr act with Aka rd and w as under

no obligation to sell t o Akar d. Al on ’s c on tr a c tua l ob lig a tio n w a s to se ll g a so line to Vi st a. B e c a us e Vi sta is a de a le r, no t a distributor, Alon could only do so on a tax-paid ba sis. Alon would have inc urre d no liability if it had operated i n this way , as established in its contra ct. Howe ver, A lon decided to tre at Vista and A kard
a s se pa rate e nti tie s f

or the purp os e of

se lli ngg a so lin e ta x-f

re e to Ak ard bu t tre a t the m as the same entity for pur poses of the se toff. This appr oach is inhere ntly inconsistent and setoff was inappropriate bec ause the re w as no mutuality of oblig ations.16

(b) The Trust F

und Natu re of the Funds Additionally , setoff is not per mitted if th e fu nds involved are trust funds. Citi zens First Nat'l Bank of Tyle r v. Cinco Explorati o n Co. , 5 40 S.W. 2d 29 2, 29 5 ( Te x.19 76 ); Texas Mortgage Serv. Corp. v. Guadalupe Sav. &Loan Ass’n , 761 F.2d 1068 (5th Cir. 1985) ; S ou th C e nt. Livestock D ealers, Inc . v. Sec urity State Bank of Hedle y, 551 F.2d 1346, 1350-51 (5th Cir. 1977). I n the context of financ ial transac tions, it is se ttled that a bank with knowledg e of the trust char acte r of money deposited in a

n acc ount c annot use the trust f unds to of fset the depositor’s debt. National Indem . Co. v. Spring Branch State Bank, 348 S.W .2d 528, 5 2 9 (Tex. 1961); First Nat ’l Bank v

. Arrow Oil & Gas, Inc. , 81 8 S.W. 2d 15 9, 16 1 ( Te x. Ap p. —A mari llo 19 91 , n o w ri t) ; S e c ur ity Sta te Bank v . Valley W

ide Elec

. , 752 S.W .2d 661, 665 (Tex. App.—Corpus Chri s t i 1988, writ denied)
. I n a dd iti on , it

is the ba nk ’s du ty to segregate th e fu

nd s in a mixe d a c c ount b e fo re a

pp lyingany

to overdr af ts. Security State Bank

, 7 5 2 S
. W
. 2 d

at 6 6 5 (c i t i n g Steerev. Stock yards Nat’l Bank, 256 S.W. 58 6, 59 1 ( Te x. 19 23 ); Allied Bank W est Loop, N.A. v. C.B.D. & Assoc., Inc

. , 728 S.W .2d 49, 58 (T e x. Ap p. —H ou sto n [1s t D ist .] 19 87 , w ri t r e f' d n .r .e .) ; First Nat’l Bank v . W inkler , 146 S.W .2d 201, 205 (Tex. Civ. App.—Austin 1940 ), aff’d , 16 1 S.W. 2d 10 53 (T e x.19 42 )) ; City State Bank v. National Bank of Commerc e , 261 S.W .2d 749, 752 (Tex. Civ. App.—Fort W orth 1953, writ re f’d
n. r. e .) . I f a

ba nk kn ow s th at a ll o r p art of fu nd s dep os ite d with it may c on sti tut e tr us t f un ds and wi th
su c h k no wl e dg e a

pp lie s “ the wh ole of

su c h f un ds to t he dis c ha rg e of the de po sit or ' s d e bt t o it , it there by become s a par

ty to the misapplication there of as ag ainst the fiduciar ies, and c an no long er
asser t immuni ty

from liability

for its wrong ful ac t.” First Nat ’l Ban k o f Schulenburg, Tex., v

. W inkler , 146 S.W .2d 201, 205 (Tex. Civ. App.—Austin 1940), aff’d , 1 6 1 S. W. 2 d 1 0 5 3 , 1 9 4 2 ( T e x.17

19 42 ); Can

y on Lak e Ba nk v . Ne w Brau nfe ls U

til s , 638 S.W .2d 944, 947 (Tex. App.—Austin 1982, no writ). I n U. S. Fi de lit y & Gu aran ty

Co. v . A do ue& Lob it , 137 S.W . 648, aff’d on reh’g , 138 S.W . 383 (Tex. 1911), the cour t decla red that a bank rec eiving a deposit in the depositor’s na me as “g uardia n” had notice of the trust char acte r of the funds, as a matter of law, and c ould not apply the trust f unds to the depositor’s individual indebte dness. Adoue , 137 S.W . at 652. In Ree d v. Valley F e d

. S a v s. & Loan Co. , 655 S.W .2d 259 (Tex. App.—Corpus Christi 1983), the court, re ly ing on Adoue , ruled that a

cer tificate of deposit in the name of “ [t rustee’ s name], Minor, by [guar dian’s
name ], Gua

rd ian” pla c e d the ba

nk on no tic e of the tr

us t c ha ra c te r o f t he fu nd s a nd the ba nk c ou ld neither a pply the funds to re pay

ment of the guardia

n’s p er s o n al d eb t to the bank nor re turn the balanc e of the funds to the g uardia n individually without incur ring liability
. Ree d , 655 S.W .2d at 263-64. I n th e pr e se nt ca se , Alo n o pe ra te d b oth a s a fu e l di str ibutor

and a s a pr ov ide r o f c re dit
car d proce ssing a

nd collection ser

vices. This business structure place d Alon in the same position as the fina ncial instituti ons in the case s above and made it subject to the same re strictions on setoff. Consequently , Alon should be liable if it acte d with notice of the trust fund nature of the funds.

Alon had notice that it was dealingwith funds that included taxes and there fore
c onst it ut ed tru st f

un ds . I t kn e w that F ina , it s p re de c e sso r i n in te re st, so ld t o V ist a on a ta x-pa id basis. I t k n ew Vi s t a operated g as stations and included the g asoline tax in t he amount it char g ed
consumers at the pump, whether they paid with cash or

cre dit card. In addition, Alon’s own contra ct wi th i ts c re dit

c ard pr oc e sso r e xpre ssl y

state s th a t th e am ount c ha rg e d b y the c us tom e r u sin g its18

cre dit c ar d , t h e “ aggr ega t e c h ar ge s l i p am o u n t , ” i n cl u d es “a l l ch ar ges , d el i v ery co s t s , ap p l icable ta

x es and other fee s.” Alon itself direc tly owned 150 g as stations in West Texas and could not have been
unawa re of the impositi on of g asolin e t ax o n s al es of g asoline in the state. As a result, Alon had notice that taxes were included in cre dit car d transac tions and thus had notice of the trust fund nature of the c harg es, espe cially since it also oper ated suc h a lar g e number of g as stations of its own. We overrule appellants’ f irst issue.
B. Evi de nc e of t he Ac tu al A m ountof Ta xe s C oll e c te d

I n its second poi nt of err or, Alon ar g ues that, eve n if it rece ived a tax or money repr esente d to be a tax, there is no evide nce of the actual amount of such taxes as a matter of la w. Alon claims the ac tual amount of g asoline taxes c an be deter mined only by

evidenc e of the amount of fu e l sa le s b y

c re dit c ard a t th e Vi sta

Sto re s a nd that su c h e vid e nc e do e s n ot e xist.
1. Stan dard of Revie w

I n revi ew i n g the leg al suffic iency of the e vidence , we must consider all of the
e vid e nc e in t

he lig ht m os t f

a vo ra ble to t he pr e va ili ngpa

rt y and mus t in du lg e e ve ry

re a so na ble infere nce in favor of t he pre vailing pa rty
. Associated Inde m. Corp. v. CAT Cont racting, Inc. , 964 S.W .2d 276, 285-86 (Te x . 1998). W e wi l l sustain a no-e vidence point of err or if: (1) the rec ord dis c los e s a

c omp le te a

bs e nc e of e vid e nc e of

a vit a l f a c t; ( 2) the c ourt is ba

rr e d by ru le s of

law o r r ule of e vi d e n c e f

r o m g i v i n g w e i g h t t o t h e o n l y e v i d e n c e o f f e r e d t o p r o v e a v i t a l f

a c t ; (3 ) t he on ly evidenc e off

ere d to prove a

vital fac t is no more than a mer e scintilla; or (4) the evidenc e esta blishes19

conclusively

the opposite of the vital fa ct. Uniroyal Goodrich Tire Co . v. Martinez , 977 S.W .2d 328, 334 (Tex. 1998).
2. Sufficiency of

the Evidence Alon provided Vista with point -of- sale sy stems and equipment that e nabled Vista’ s
cu s t o m er s t o p ay

fo r p u rc h as es u s i n g cr ed i tca rd s . Al o nal l ege s t h at , o n ce a c u s t o m er p ai d u s i n g a
cre dit card, only

the total amount char g ed for the sale was rec orded and, thus, there is no recor d of how much of the s ale c onstitut ed g asoline, g asoline taxes, items purchase d at the conve nience store, sales taxes, or other items. In other words, even though Alon was providingcre dit card pr ocessing service s to ga s stations and even thoug h it knew that g asoline taxes were usually included in the total
a m o u n t c h a r g e d

b y c u s t o m e r s o nt h e i r

c r e d i tc ar d s a tV i s t a

g a s s t a t i o n s , i tc h o s e t o k e e p o n l y a consolidated re cord of

th e t otal amount char g ed. In addition, even thoug h it knew the funds
c oll e c te d f

ro m c us tom e rs to p ay

fo r t he purc ha se s c ha

rg e d o n c re dit

c ard a t V ist a g a s st a tio ns us ua lly
c on ta ine d p ay

me nt f or the g a so lin e ta xes, it c ho se to c omm ing le tho se fu nd s and a pp ly th em as a setoff to Aka

rd’s liability

to Alon for fue l purcha s es . I t n o w claims that, since the re is no dire ct
re c or d ind ic a tin g ho w muc h o f t he tot a l amou

nt c ha rg e d b y c us tom e rs on

the ir c re dit c ard s at V ist a g as stations corr esponded to ga soline taxes, there is no evidenc e of the amount of tax es collec ted by Alon. Ho we ve r, a de te rm inatio n s uc h a s th e on e ma de by the State in thi s c a se is e xpre ssl y
a uth or ize d und e r s e c tio n 1 11 .0 08 (a ), wh ic h r e a ds :

I f t he c omp tr oll e r i s n ot s a tis fi e d w itha ta x re po rt

or the a mou nt o f t a x re qu ir e d to be paid to the state by

a per so n , t he comptroller may compute and de termine the20

amount of tax to be pa id f rom information contained in the repor t or from any

other information ava ilable to the comptroller.
Tex. Tax Code Ann. § 111.008(a ) (West 2002).

Th e Com ptr oll e r m ay

de te rm ine or re de te rm ine the a mou nt o f t a x re qu ir e d to be pa id by any pe rs on on the ba sis of

any inf or matio n w ith in h is p os se ssi on . T e xas C omp tr oll e r o f P ub lic Acc ounts, Decision No. 10,210 (1981) . Where the pe rson’s own a cts or fa i l u re s cause the Com ptr oller to be witho ut g oo d o r a de qu a te inf or matio n, the n th e Com

ptr oll e r i s ju sti fi e d in estimating the tax due on such information as is available. Id. Al low ingpa rt ie s to e sc a

pe lia bil ity simply by alleg ing that no direc t rec ord of the ta x es wa s kept would in fac t discourag e businesses fr om k e e pin g a

pp ro pr iate re c or ds
. I n other case s, the courts have approve d various estimates a nd found them suffic ient if the method used wa s rea sonably calc ulated to ref lect the taxes due. Un ite d S tates v . F ior D’ It ali a , 536 U.S. 238 (2002) (estimate of F I CA tax liability for unr eporte d tips determined by applying a

n
a ve ra g e pe rc e nta g e tip to a ll s a le s) ; Maganini v. Qu i nn , 221 P.2d 241 (Cal. Ct. App. 1950) (total number of dr inks sold, records ke pt on cash re g ister t ape, established price for e ach br and applied to inventory

sold); Fillichio v. Department of Re venue , 1 5 5 N
. E
. 2 d 3 ( I l l
. 1 9 5 8 ) ( g r o s s re c e ipt s de te rm ine d a c c or din g to b e st j ud g me nt a nd inf or matio n) ; W

. T. Grant Co. v . Joseph , 140 N.E.2d 244 (N.Y. 1957) (estimate of taxes on total numbe r of sales wher e taxpay er had no rec ord of individual sales). Alon cites seve ra l ca ses wher e the e vidence prese nted by the State was c onsidered insufficient to establish the amount of tax es collec ted. He rre ra v . S tate , N o . 0 3

- 0 1

- 0 0 1 0 1 , 2 0 0 2 T e x.These c ases a lso consider whe ther the c ash or a ccru al method was used. Such 9 considerations are not applica ble her e bec ause the data r efe r to amounts actua lly rec eived by Alon and the method or igina lly used by Vista or Aka

rd to repor

t its t ax es i s i rre levant. In addition, the gasoline tax was collecte d at the pump at the time of sa le and the c ash or a ccr ual method is not applicable
. Gh as him v . S tate , 104 S.W .3d 184, 187 (Tex. App.—Austin 2003, no pet.).

21 Ap p. L EX I S 95 1 ( Te x. Ap p. —Aus tin , F e b. 7, 20 02 , n o p e t.) (n ot d e sig nate d f or pu bli c a tio n) ; Parker

v . S t a te , 40 S.W. 3d

55 5 ( Te x. Ap p. —Aus tin 20 01 , n o p e t.) ; N.S

. S po rts we ar

, I nc . v . S tate , 819 S.W. 2d 23 0 ( Te x. Ap p. —Aus tin

19 91 , no wr it)
. Th e se c a se s ar e dis tin g uis ha ble be c a us e the State had re lied solely

on a ce rtificate , assessment, or r eport iss ued by the Comptroller establishing the
a mou nt o f t a xes d

ue , w ith ou t any

c on sid e ratio n o f t

he a mou nt a c tua lly

c oll e c te d f

ro m c us tom e rs . 9 I n th is c a se , th e State did c on sid e r t

he a mou nt o f g a so lin e ta xes A lon a c tua lly collecte d from customer s and did not rely solely on the Comptroller’s ce rtificate showing how much g asoline tax Vista owed. The State obta ined from Vista’ s acc ountants actua l fig ures f or, among other data, total sales and total cash sales. I t then s ubtrac ted t he amount of actual cash sales from the total sales to obtain the amount of cr edit car d sales. The se we re a ctual sale s fig ures f rom Vista’s
acc ounting r ecor ds for the pe riods in question, not collection avera g es or e stimates. The State then applied the pe rce ntag e of c redit ca rd sale s to the g allons of g asoline sold for e ach month to ar rive at how many

g allons of g asoline wer e purcha sed with c redit car ds eac h month. The perc entag e of
cr ed i tca rds al es yi el d edb y s u ch ca l cu l at i o nv ar i e d f r o m a l o w o f 2 1 % f

o r J an u ary

2 0 0 1 t o a h i gh of 28% f or Decembe r 2000. These fig ures are very conser vative in contra st with other testimony at trial, including testimony from Vista’s Chief Financ ial Offic er, w ho testified that cr edit car d sales
m ad e u p 35-50% of

Vista’s re venue a

nd g asoline sales a

mounted to 69% of re venues. V ista’sAlon had pre viously rec eived a copy of t he same income st atements presented at trial when 10 it entere d into neg otiations to acquire a n interest in Vista. B y

the last quarte r of 2000, Vista w as operating at a loss on both a net incom e and cash flow basis. The re w as alre ady arr ear ag e on the gas o l i n e t ax co rr es p o n d i n g t o t h e mo n t h o f S ep t em b er 2 0 0 0
. Vi s t a a n d

Al o ns t ar t edn ego t i at i n g a deal throug h which Vista would be restruc tured unde r a ne w entity , VistaDF WL ocs, L L C, with Alon contributing $6 milli on to purcha se a por tion of the owner ship of the new entity . Most of the money would g o to pay down Vis ta' s long term debt. I n October 2000, Vista' s president met with the CEO of Alon' s pare nt company to discuss the plan. Vista followed throug h with its part o f t h e dea l by tr ans fe rr ingits le a se ho ld i nte re st o n th e F ina br and e d g a s statio ns to the ne w e nti ty , V ist a DF WL oc s, L L C. Vista also assig ned its intere st in the Br anded Contract to A kard. The deal ne eded to be done quickly beca use Vista wa s running out of money . Neg otiations continued up until Vist a ' s bankruptcy filing in June 2001. Howeve r, Alon neve r executed the transfe r of Vista' s leasehold inter est or the a ssi g nme nt o f t

he B ra nd e d Co ntr a c t. 22 income stateme nts fo r t h e p eriod c onfirmed the f igur es provided by

Vista’s CFO. The amount

10
corr esponding to the g asoline tax was calculated by applying the g asoline tax of 20 cents per g allon to t he numbe r o f g a llo ns purc ha se d with c re dit c ard s ea c h mont h. Duri ngdis c ov e ry , A lon wa s a ble to introduce its own information re g arding“cha rg ebac ks,” amounts Alon did not actually collect beca use the cre dit c ard used was a stolen one, or the re w as some other mecha nical proble m in the
cre dit process whic h preve nted t he cardholder ’s pay ment. The S tate deducted the charg ebac ks from the g asoline tax amount. The S tate thus relied not on the Comptroller’s asse ssment, which amounted to over $4 million in taxes owed during the liabilit y period, but instead pr oduced a rea sonable a

nd
conser vative estimate pla cing the amount ac tually collecte d by

Alo n a t a bout $919,000. This amount
was c alculate d using a ctual sale s fig ures f or the pe riod in question and deducting any amounts Alon alleg ed it could not collect f rom customers. The re is suff icient evidence in the re cord to show that t h e S t a t e ’ s m e t h o d

w a s r e a s o n a

b l e an d t h e a m o u n t o f t a x e s c o l l e c t e d w a s n o te x c e s s i v e o r

ar b i t r ar y. Whe n a n admin istrativ e bo dy , ch arg e d with the du ty of e nf or c ing the ta x laws , a do pts
a fo rm ula to d e te rm ine the ta x in si tuatio ns su c h a s th is, the c ourt s sh ou ld p re sume the fo rm ula is23

calc ulated to re ach a re asonable result. Sm ith v . S tate , 4 18 S.W. 2d

89 3, 89 6 ( Te x. Ap p. —A us tin 1967, no writ). Where the ta x cannot be deter mined with rea sonable mathe matical ce rtainty from the ava ilable records, and the t axing authority decla res the tax due from all information available that it deems reasona

ble, t he burden to show that the determination was unre asonable , excessive, or that it was rea ched c apric iously or ar bitrarily , shifts to the complainant. Id
. (c i t i n g Sm ith v . S tate , 391 P.2d 718, 728 (Wash. 1964)).

Once the State pre sented its estimate for the amount of taxes collecte d, Alon had the burden to show that the de termination was unr easona ble, excessive, or th at i t was re ache d
ca p ri ci o u s ly

or ar bitrarily
. Sm ith , 418 S.W .2d at 896. To over turn the amount established by the State, Alon was re quired to show by competent e vidence that the estimate wa s arbitra ry or illeg al and that it was excessive. City of Arlington v. Cannon , 271 S.W .2d 414, 418 (Tex. 1954). The bur den
was a lso on Alon to show that the method or formula used by the State was f

undamentally

wrong and that it s application substantially injured Alon. Sta te v . W

hit te nb ur g , 2 6 5 S. W. 2 d

5 6 9 , 5 7 3 ( T e x. 1954). Proving me rely

that a tax was imposed is not sufficient to show a substantial injury ; Alon must also show that the tax was unjust. Sm ith , 418 S.W .2d at 897.

After a ca ref ul reviewof the re cord, w e conc lude that Alon did not present a ny evidenc e challeng ing the State’s assessment of t ax liability . We overrule appellants’ se cond issue.
C. Re lia bili tyand A dm iss ibil it y o f Expe r t T e st im ony

I n t h ei r t h ird issue, appe llants argue that the opinion testimony and re port of the State' s damag es expert ar e unrel i able a nd inadmissible as a matter of law and the ref

ore a re no
e vid e nc e of

dama g e s.24

1. Stan dard of Revie w

We reviewerr ors in the admissibilit y of ex pert testim ony for an abuse of discretion. Reliable Consultants, Inc. v. Jaqu ez , 25 S.W .3d 336, 345 (Tex. App.—Austin 2000, pet. denied). A tri a l c ourt

a bu se s it s d isc re tio n if

it a c ts w ith ou t r e fe re nc e to a ny g uid ingru le s and

pr inc ipl e s. Downer v. Aquam arine Operators, Inc

. , 701 S.W .2d 238, 241-42 (Tex. 1985)
. We ma y reve rse a trial court' s judgme nt based on a n err or in the admiss ion of evide nce only if we c onclude that ( 1) the tr ia l c ourt did in f a c t c omm it e rr or

and (2 ) t he e rr or wa s r e a so na

bly c a lc ulate d to c a

us e and pr ob a bly did cause rendition of an imprope r judg ment. See Te x. R. A pp . P. 44 .1 (a ); Ge e v . Li be rty Mu t. F ire Ins. Co. , 765 S.W .2d 394, 396 (Tex. 1989).
2. Exp e rt T

esti mony For an expert’s testimony

to be compete nt, it mus t be shown that he is tra ined in the scienc e about whic h he testifies or has knowledg e of the subject matter of the fac t issue in que stion. Reliable Consultants, Inc. , 25 S.W .3d at 345. The undisputed evide nce in the r ecor d shows that the State’s expert wi t n es s , Comptroller Auditor Charles Hobbs, ha d at least 27 y ear s of profe ssional
e xpe ri e nc e w o r

k i n g a s ana

u d i t o r w i t h t h e C o mp t r o l l e r , p e r f o r m i n g m an y

g a s o l i n e t a x a

u d i ts involving conve nience store g as stations. He a udited major oil companies who, like A lon, issued their own c redit card. He held a Master of B usiness Administration deg ree and had be en a Ce rtified Public Accountant f

or over 20 y ear s. On the basis of these qualifications a nd using a ctual figures from Vi s t a’ s ac co u n t i n g re co rd s , fi n an ci al s t at em en t s , an d charg ebac k information provided by Alon, he ca lculated the ta x Alon collecte d on cre dit card sa les of g asoline at Vista g as stations.25 Mr. Hobbs testimony

was re levant and was even corr oborate d by other e vidence on the re c or d, su c h a s th e te sti mony fr om V ist a ’s CFO . T he re a ft e r, it w a s f or the tr ie r- of

-f a c t to consider the expert testimony , along with all the other evidence , and to determine the ultimate issues of lia bil ity and dama g e s. We f

ind the State ’s e xpe rt

te sti mony

re lia ble c o n s i de ri nghis qu a lif

ic a tio ns . I n admitting it, the trial cour t did not act unrea sonably or without reg ard to a

ny g uidin g rul es and principles. Having deter

mined that the trial court did not abuse its discr etion, we ne ed not conduc t a har m analy sis. W e over

rule a ppellants’ third issue.
D. Liab ility as a Transf ere e I n their for

th issue, appellants arg ue that, to t he extent the trial court’ s decision was b as ed o n the ana ly sis of Texas trust law in In re Am ber’s Stores, Inc

. , 205 B.R. 828, 831 (B ankr. N.D. Te x . 1997), there is no "tra nsfer " of trust property

i n t h e Fina c ard tra

nsactions and,
acc ording ly , there can be no “wr ong ful transfe r.”

A mb er’s Stores is factua lly dissimi lar to this case . I n Amber’ s Stores , th e s tores g ather ed all their daily rec eipts and deposited them into an acc ount. In re Am ber’s Stores , 2 05 B .R. at 830. All the funds in that a ccount wer e tra nsfer red da ily to a ce ntral ac count controlled by a bank, which then applied the funds towar ds Amber’ s Stores’ debt. Id. Unlike the pre sent ca se, the money paid by the customers to A mber’s Stores was first put under the dominion and c ontrol of the store, which then de posited the funds into the bank a ccount. As a result , t h e co u rt in Amber’ s Stores proper ly char acte rized the bank as a transfe ree and not a statutory trustee f or the purpose s of sec tion 111.016(a)
. Id. at 831.26 I n the present case , Vista neve r had a chanc e to exercise dominion and c ontrol over its credit ca

rd pay ments. I nstead, Alon rema ined in c ontrol of the funds at all times a nd cannot be vie we d a s a

tr ans fe re e . E ve n w he n V ist a de mand e d th e a

pp ro xima te ly

$9 19 ,0 00 held

by Al on in
e xce ss o f A ka

rd ’s fu e l de bt a s a

de po sit in a n e sc ro w ac c ount, it wa s n e c e ssa ry fo r V ist a to o bta in a tempora ry restra ining or der a llowing Akar d to dr aw fuel purcha ses ag ainst such funds. I t is clear from the r ecor d that Alon never transfe rre d dominion and control over the cre dit car d pay ments for both the Fina car ds and bank car ds to e ither Vista or Akar d. As a result, the trust f und s rema ined in Alon’s possession at all t i m es an d Alon is liable not as a tra nsfer ee but, a s shown in section A above, a s a statutory

trustee. We over

rule a ppellants’ for

th issue. Sin c e Al on ’s fif

th a nd sixthpo int s o f e rr or

are ba se d o n A lon ’s lia bil ity a s a transfe ree , there is no need to re ach the se ar g uments beca use Alon is liable not as a tra nsfer ee but as a statutory

trustee. Alon’s s eventh point of error, that the only month in which Alon even a rg uably had
rea son to believe Aka

rd wa s not paying its gasoline tax was January 2001, is also based on Alon’s li a b il it y a s a tr an s f

e r e e b e c a u s e it is o n ly in th e c o n te xt o f a tr an s f e r o f tr u s t f u n d s th a t the transfe ree ’s knowledg e that taxes were owed by the transfe ror at the moment of the transf er be comes rele vant. In this case, Alon is liable a s a statutory trustee a nd such knowledg e is not require d, as discussed in section A.3.b a bove.
E. Cross-A ppeal

I n its c ross-appe al, appellee argues that the trial court e rre d in not awar ding judg ment to the State and ag ainst Alon for the a moun t o f t ax , penalty , and intere st due for Septe mber a nd27

Oc tob e r 2 00 0. Ap pe lle e ba se s its argume nt on thr e e the or ie s of lia bil ity : ( 1) sta

tut or y tr us te e lia bil ity pursuant to se ction 111.016 of the Texas T ax Code, (2) common law conver sion, a nd (3) brea ch of fiduciar y duty
. Be cause we concluded, in section A above, that Alon is liable as a statutory trustee under se ction 111.016 of the Te x as Tax Co d e, we a g ree that the trial cour t erre d in not awar ding jud g me nt t o t h e S t a t e f

o r t h e m o n t h s o f

S e p t e mb e r

an d O c t o b e r 2 0 0 0
. A c c o r d i n g l y , w e s u s ta in appellee ’s cross-point. We r ever se the trial court judgme nt de nying damag es for Septem b er and October 2000. Having g iven the State all the r elief r equeste d in its cross-appe al, we ne ed not re ach the issues of whe ther Alon would a lso be liable under theories of common law conve rsion or bre ach
o f f i d u c i ar y d u t y.
III . C ON CL USI ON We conclude that A lon is liable a s a statutory trustee unde r Texas Tax Code section 111.016(a) . The trial c ourt improperly considere d liability

under se ction 111.016 to r equire notice that tax pay

me nts we re ou tst and ing . H ow e ve r, the pla in l angua g e of se c tio n 111 .0 16 c re a te s a tr us t whene ver a

ny one re ceive s or collec ts a tax or money repr esente d to be a tax and imposes no knowledg e or notice require ment. Alon’s application of Vista’s cr ed i t ca rd rec eipts as a se toff ag ainst Ak ar d ’s fu el purcha ses is not a defe nse to tax l iability beca use there was no mutuality of ob ligatio ns and , mo re imp or tantl y , b e c a

us e Al on ha d n oti c e of

the tr us t f un d n a tur e of

the fu nd s. As the provider of cre dit c ard proce ssing and collection service s for Vista g as station s , Al o n had notice of the trust fund nature of a por tion of the cre dit card r ece ipts it came to hold and ina pp ro pr ia te ly

a pp lie d s uc h tr

us t f un ds a s se tof

f. Th e re wa s eno ug h e vid e nc e fo r t he State to
a c c ur a te ly

c a lc ulate the a mou

nt o f t a xes a c tua lly

c oll e c te d b y

Al on . Th e tr ia l c ourt did

no t a bu se its28

discretion in admitting the te stimony of the State’s e x pert. We, there fore , aff irm that part of the trial court judgme nt a

war ding da

mag es to the State for

the months of Dec ember

2000 and January

2001, including inter est, attorney ’s fe es, and c ourt costs. We r ever se that part de nying judg ment for the months of September 2000 and October 2000 and, based on the finding s of fa ct on the re cord, r ender judgme nt ag ainst Alon for the sum of $680,274.18 ($544,371.28 i n Texas Gasoline Tax, $54,437.13 in penalties pursua

nt to section 111.061, and $81,465.77 in interest).

W. Kenneth L aw, Chief Justice Be fore Chief J ustice L aw, Justi ces Patter son and Pury ear Affir med in Part; Reverse d and Rende red in Part Filed: May

26, 2005