### T E X A S C O U R T O F A P P E A L S , T H I R D D I S T R I C T , A T A U S T I N

NO. 03-10-00709- CV

Gr een Tre e Servic ing, L LC, as authorized servicing agent for Conseco F inan ce Ser vicing Corporat ion, App ellant

v. Travis County, et al., Appellees

F ROM TH E DISTRI CT COURT O F TRAVIS CO UNTY, 53RD J UDICIAL DI STRICT NO. D-1 -GV-0 5-0 0452 2, H ONO RAB LE LO RA J. LI VINGSTO N, JUDGE P RESIDING

M E M O R A N D U M O P I N I O N
Appellant Gr ee n T re e Servicing , L L C, as authorized servicing ag ent for Conseco
Financ e Servicing Corporation (“G ree n Tree ”) appea ls a po s t -answer defa ult judgme nt rende red
ag ainst it in a suit for ad va lorem taxes assessed on ten mobile home s by appellee s Travis County , the Austin I ndepende nt School District, the City of Austin, Austin Communi ty College , Pfluge rville
I ndepende nt School District, Del Valle I ndepende nt School District, and Travis County Emerg ency Service s District Nos. 2 and 11 (collec tively , “Tra vis County ”). We will revers e t he trial court’s judgme nt and re mand the ca use for a new trial.

F ACTUAL AND P ROCEDURAL BACK GR OUND
Travis County sued Conseco Financ e Servicing Corporation (“Consec o”) seeking to

rec over past due ad valore m taxes on 53 mobile homes for which Conseco was listed as the “owne r”in the tax appra isal rec ords. Conseco’s reg istered ag ent was serve d with citation in October 2005.

There afte r, Travis County lear ned that Conseco had filed for protec t i o n u n d er Chapter 11 of the
United States Ba

n k ru p t cy C ode and that the resulting reor g anization case was pending in fede ral
district court i n I l linois. Consequently , pursuant to section 362(a) of the bankruptc y code,
p ro ce ed i n gs ag ainst Conseco wer e stay ed. I n Marc h 2006, howeve r, Gre en Tree filed an answ er identify ing its el f as “Gr een Tree Servicing , L L C, F/K/A Conseco Financ e Servicing Corp,
Def endant,” appar ently acting as a succe ssor to Conseco. Gre en Tree ass er t ed, among other
defe nses, that it was not the owner of the proper ty taxed as of J anuar

y 1 of the y ear for which the tax

was imposed and that the taxi ng authorities had failed to rec ord some or all tax liens with the Texas Depa rtment of Housing and Communi ty Affa irs (TDHCA)

. Travis County amende d its petition to
name Gr een T ree as a de fenda nt in place of

Conseco.
Acc ording to Travis County , its attorney s and the attorney s repr esenting Gre en Tree
eng ag ed in informal dis cover y in an attempt t o identify individuals who owned the m obile homes

on the date the delinquent taxes acc rued. The parties exchang ed a sprea dsheet that display ed the 1 identify ing data for eac h mobile home, the owner ’s name as listed in the TDHCA rec ords, the rec ord lienholder, the date of any reposse ssion by Gre en Tree , the date of any resa le by Gre en Tre e of the
reposse ssed mobile home to a third party , and the name of any new owner
. Wit h this infor mation,
Travis County was able to ide ntify the owner s responsible for delinquent taxes owed on sever al of
the m obile homes and collected sever al of the delinquent tax acc ounts. Gre en Tree also admitted

Although Gree n Tree ’s appellate counsel wer e not re p re s enti ng Gre en Tree at this time, 1 they do not dispute Travis County ’s desc ription of the informal discove ry that took place.
2responsibility for the amounts due on eig ht of the m o b i l e h omes and paid them. Travis County

added as defe ndants the individuals who owed unpaid taxes on sever al other of the mobile homes.
I n its trial petition, Travis County named Gre en Tree as a defe ndant with respe ct to the taxes due on ten of the mobile homes.

Travis Count y reque sted and obtained a May 24, 2010 trial setting. On M ar ch 2 3 , counsel for eac h named defe ndant was sent a notice of the trial setting by cer tified mail, return

rec eipt reque sted. Travis County rec eived a return rec eipt confirming that the notice was rec eived
in the office s of Gre en Tree ’s attorney s on Marc h 24. Trial was held on May 24 befor e a tax master. Neither Gre en Tree nor its a ttorney s appea red at trial. Travis County offe red a s exhi bits a copy of
the consolidated tax rec ords for eac h of t h e m o b i l e homes still included in the suit and a printed

e-ma il messag e from Gre en Tree ’s attorney to which was attache d the sprea d s heet the parties exchang ed listi ng the information reg arding reposse ssion and resa le dates and curr ent owner ship of
the various mobile homes. Travis County char acte rizes the sprea dsheet it offe red as setting out “the

owner ’s name acc ording to the TDHCA rec ords, the [Green Tree ] acc ount number, the status of the

acc ount, [Green Tree ’s] reposse ssion date, any resa le date , t h e n am e of the buy er, [and] the delinquent tax y ear s claimed.” I n its brief, Travis County states that for eac h of t h e t en mobile
homes for which it soug ht to rec over unpaid taxes fr o m Gr ee n T ree , the sprea dsheet showed that
Gre en Tree “had reposse ssed the unit prior to J anuar y 1 of at least one of the y ear s for which taxes

wer e delinquent and had resold it afte r the beg inning of that y ear ” which, acc ording to Travis County , made Gre en Tree liable for the taxes imposed in that y ear
. The co n s o l i d ated tax rec ords

3admitted into evidenc e set forth the amount of delinquent tax Travis County contende d was due for

eac h mobile home along with calcula ted pena lties and interest, a ttorney ’s fe es, and c osts. The tax master recommende d entry of j udg ment ag ainst eac h of t he defenda nts for
the amount of delinquent tax, penalties and interest, at t o rn ey ’s fees, and costs associate d with the
mobile homes for which eac h defe ndant “was/were the owner of record .

. . or was/were claiming some rig ht, titl e, or interest there to” on J anuar y 1 of the y ear the tax was imposed. The tax master signe d a Master’ s Report making finding s of fac t, including the amounts due for eac h mobile home,
and rec ommended that the district court adopt a proposed judgme nt. The district court approve d and signe d the rec ommended judgme nt. The judgme nt found Gre en Tree liable for taxes owed on ten of
the mobile homes at issue in the suit. The judgme nt order ed that Travis C o u n t y re co ver from
Gre en Tree $19,374.21 as delinquent taxes, penalties and interest, attorney ’s fee s, an d co sts associate d with the ten mobile homes.

After rec eiving notice of the post-answe r defa ult judgme nt ag ains t i t , Gre en Tree timely filed a motion for new trial purporting to es t ab l i s h the three Craddock elements. See
Craddock v. Sunshine Bus Lines, Inc. , 133 S.W .2d 124, 126 (Tex. 1939). Att ache d to the m otion

was the aff

idavit of counsel for Gre en Tree , who aver red t h at s h e h ad rea d the motion for new trial and that “the facts st ated in it are within [her] persona l knowledg e and are true and corr ect.”
Gre en Tree filed no addit i o n al af fidavits in support of its motion. Travis County did not file a
response to the motion for new trial, which was never set for a hear ing and was o v erruled by
opera tion of law. This appe al followed.

4DISCUSSIO N
I n two issues, Gre en Tree contends that the trial court err ed in fa i ling to g rant its
motion for new trial and by allowing it to be overr uled by opera

tion of law. Trial courts have broad

2
discretion in ruling on motions for new t ri al

. See Limestone Constr., Inc. v. Summit Commercial Indus. Props ., Inc. , 143 S.W .3d 538, 542 (Tex. App.—Austin 2004, n o pet.). When a mot ion for

new trial is ove rrr

uled by opera tion of law, the issue is whether the trial court abused its discr etion
in allowing the motion to be overr uled. Id. (citing Bank One of Tex. N.A. v. Moody , 830 S.W .2d 81,
85 (Tex. 1992)). A trial court abuses its discretion if it does not g rant a motion for new trial seeking

to set aside a post-answe r defa ult judgme nt when the movan t h as satisfied the three -ele ment Craddock test. See Dolgencorp of Tex., Inc. v. Lerma , 288 S.W .3d 922, 926 (Tex. 2009). Under the
Craddock test, a defa

ult judg ment should be set aside and a ne w trial g rante d when the defa ulting party establishes that (1) the failure to appea r was n o t i n t en t i onal or the result of conscious
indiffer ence , but was the result of an acc ident or mistake, (2) t h e motion for new trial sets up a meritorious defe nse, and (3) g ranting the motion wi l l occa sion no delay or otherwise injure the

The first appellate issue states t hat the trial court “should have g rante d” Gre en Tree ’s 2 motion for new trial, and the second issue states that the trial court err ed in rend er i n g j udg ment ag ainst Gre en Tree b ecause it was a lienholder rathe r than an owner of the proper ty at issue and there fore could not be hel d l i able for proper ty taxes assessed on that proper ty

. Whil e the second appellate issue appea

rs to c halleng e the leg al basis for the judgme nt, G ree n Tree has not reque sted that this Court re nder judg ment in its favor due to the tria l court’s misapplication of the law. And in its brief Travis County disputes Gre en Tree ’s status as a lienholder. Consequently , we do not rea d the second appellate issue as an independe nt challeng e to the judgme nt. Rather, we rea d these issues toge t h er to complain that the trial court err ed in failing to g rant the motion for new trial despite Gre en Tree ’s having met the Craddock test, with the second issue explaining how Gre en Tree ’s moti o n for new trial “set up” a meritorious defe nse t o Travis Count y ’s claim that it was li able for taxes on the ten mobile homes.
5plaintiff. Id. at 925; Craddock , 133 S.W .2d at 126. When apply ing the Craddock test, the trial court

looks to the knowledg e and a cts of the defe ndant as contained in the rec ord befor e the court. Holt
Atherton Indus., Inc. v. Heine , 835 S.W .2d 80, 82 (Tex. 1992). I f the fact u al al l ega t ions in the
movant’s aff

idavits are uncontrove rted, it is sufficie nt that the motion for new tr i al and

acc ompany ing aff

idavits set forth fac ts which, if true, would satisfy the Craddock test. Id. Conclusory

alleg ations are insufficient. Id.

Consciou s indi

ffe rence I n deter mining whether the failure to appea r at trial was due to intentional disreg ard

or conscious indiffer ence , we look to the knowledg e and acts of t h e d ef en d an t

. I f the fac tual

asser tions i n t h e d efe ndant’s affidavit are not controve rted by the pl aintiff, the defe ndant s atisfies
the require ment if the aff idavit sets forth fac ts that, if true, neg ate intentional or consciously
indiffer ent conduct by the defe ndant. See Director, State Emps. W orkers’ Comp. Div. v. Evans , 889
S.W .2d 266, 269 (Tex. 1994). Proof of acc ident, mistake, justificat ion, or other rea sonable explanation neg ates intent or conscious indiffer ence
. Anderson v. Anderson , 282 S.W .3d 150, 153 (Tex. App.—El Paso 2009, no pet.). Gre en Tree ’s motion for new trial states that “Gr een Tree had appointed J ohnson & Silver, L L P as its new leg al repr ese n t at i o n , [ an d ] due to the switch in leg al
repr esenta tion J o h n son & Sil ver, L L P was unaware of t he tax trial schedule d for May 24, 2010.”
I n her aff idavit, J amie Silver aver s that this statement is w ithin her persona l know ledg e and is true
and corr ect. Gre en Tree ’s motion esta blishes tha t the law firm it reta ined to take over its case s did

not adequa tely handle the transfe r of litigation to its office and failed to rea liz e that there was a trial setting in one of the case s transfe rre d to it. This neg ates the possibili ty that Gre en Tree ’s failure to

6appea

r was intentional or the result of conscious indiffer ence
. S ee S t a te Farm Life Ins. Co.

v. Mosharaf

, 794 S.W .2d 578, 584 (Tex. App.—Houston [1st Dist.] 1990, writ denied) (first prong of Craddock test met when insura nce c ompany

made f iling mistake a

nd file neve r made it to rig ht person) ; Evans v. W

oodward , 669 S.W .2d 154, 155 (Tex. App.—Dallas 1984, no writ) (first prong of Craddock test met when failure to file answe r was due to confusion in attorney ’s office rathe r than
indiffer ence on defe ndant’s part). Mere neg lige nce does not am o u n t to conscious indiffer ence
. Levine v. Sha ck

elford, Melton & McKinley, L.L.P. , 248 S.W .3d 166, 169 (Tex. 2008) (“[T]he complete definition of conscious indiffer ence amounts to more t h an m er e neg lige nce.” ); Smith

v. Babcoc k & W

ilcox Constr. Co. , 913 S.W .2d 467, 468 (Tex. 1995). We conclude that Gre en Tree
satisfied the fir st prong of the Craddock test. 3

Meritoriou s defe nse

The second prong of the Craddock test require s Gre en Tree to “set up” a meritorious
defe nse in its motion for new trial. 133 S.W .2d at 16. The motion sets up a meritorious defe nse if
it alleg es fac ts which i n l aw wo u ld constitute a defe nse to the plaintiff’s cause of action and is supported by aff

idavits or other evidenc e providing prima fac ie proof that the defe ndant has such a

I n its brief, counsel for Gre en Tree elabora tes further on the reason i t fai l ed t o ap p ear at 3 trial stating that the no t i ce o f t h e trial setting was miscalenda red. Travis County asser ts that this statement contra dicts the fac ts as stated in the motion for new trial and there fore Gre en Tree ’s alleg ations reg arding mistake or acc ident, althoug h uncontrove rted by Trav is County , wer e controve rted by its brief and cannot be taken as true. Even if fac ts stated in an appellate brief could controve rt sworn all ega t i o ns in a motion for new trial, we do not ag ree that the statements are inconsistent. I n the motion for new trial, Gre en Tree alleg ed that its counsel was unawa re of the trial setting. This is not inconsistent with the statement in its brief that the rea son counsel was unawa re of the trial se tting wa s beca use of a mistake in cale ndaring the notice.

7defe nse. Dolgencorp , 288 S.W .3d at 928 (citing Ivy v. Carrell , 407 S.W .2d 212, 214 (Tex. 1966)).

Once such require ments are met, controve rting ev i d ence offe red by the nonmovant should

not be considere d. Id. Gre en Tree ’s motion for new trial , supported by the aff idavit of its
counsel confirming the truth of the asser tions made in the motion, raises the following defe nses : (1) Gre en Tree is not obliga ted to pay any taxes for tax y ear s in which Travis County failed to perf ect

a tax lien; (2) Travis County is not entitled to collect in the capa city in which it sued; (3) Gre en Tree
is not liable in the capa city in which it wa s s u ed ; an d (4) Gre en Tree is not the owner of the
manufa cture d homes in question and there fore is not subject to persona l liability for the taxes. I f any of these de fense s qualifies as a “mer itorious de fense ,” the second prong of Craddock is sa tisfied.

Gre en Tree ’s motion states that it is not the owne r o f the mobile homes and that “[o] nly owner s are liable for proper ty taxes, lienholders are not liable for proper ty taxes beca

use the

t er m owner does not encompa ss a lienholder.” See Tex. Tax Code Ann. § 32.07 (Wes t 2 0 0 8 ) (prope rty taxes are persona l obliga tion of person who owns or acquir es proper ty on J anuar

y 1 of y ear for which tax is imposed). Gre en Tree ’s counsel’s aff idavit aff irms that the fac ts stated in the motion, including the statement that Gre en Tree is not the owner of the mobile homes at issue in this

case , are within her persona l knowledg e and are true and corr ect. The “def ense” that Gre en Tree has
“set up” is that beca

use, as a matter of fac t, it is a lienholder rathe r t h an t h e o wner of the mobile homes it is not, as a matter of la w, liable for

the taxes.
We first consider Travis County ’s co ntention that the motion for new trial did not
meet the Craddock test beca use it was “base d on the asser tion that [Green Tree ] was not the owner of the mobile homes in question.” Acc ording t o Travis County , this “unsupported denial of

8owner ship is closely analog ous to the alleg ations asser ting owner ship ma de by the appellant in Ivy

v. Carrell , of which the [s] upreme [c] ourt said, ‘These are but alleg ations of conclusions.’” I n Ivy , the centr al issue b ei n g l i t i gat ed was the owner ship of a piece of land. The plaintiff soug ht a decla ration that a deed that had been executed and delivere d to Carre ll by I vy was in fac t a mortg ag e, there by removing a cloud on the title to the land descr ibed in the deed. The supreme court noted that
the only alleg ations in the motion for new trial that rela ted t o a d efe nse wer e the defe ndant’s

asser tions that he “had a valid deed to the land,” that he “had a meritorious defe nse,” and that he was “the fee simple owner ” of the land in question. Ivy , 407 S.W .2d at 215. The supreme court held that
these “alleg ations of conclusions” wer e insufficient to set up a meritorious defe nse. Id. I n Ivy , the
issue at trial was the owner ship of the proper ty , and I vy ’s bare asser

tions of owner ship did not contain fac ts which, if true, would establi s h a meritorious defe nse to a claim that Carre ll in fac t

o wned the proper

ty

. I n the prese nt case , the issue at trial was Gre en Tree ’s liability for the taxes assessed on the mobile homes. Gre en Tree ’s m o t i o n fo r new trial did not make the conclusory alleg ation that it was not liable for the taxes; rathe r it stated that it was not the owner of the mobile homes, a fac t which, if true, would constitute a d ef ense to the assessment of taxes ag ainst it. See
Tex. Tax Code Ann. § 32.07 (prope rty taxes are persona l obliga tion of person who owns or acquir es
proper ty on J anuar

y 1 of y ear for whic h tax i s imposed).
I n Ivy the supreme court a lso observed:

The defa ult judg ment was enter ed only afte r the trial c ourt had he ard the testimony of the plaintiff, his wife and a third person. Their testimony rela ted the details of the transac tion in which the deed was executed and clea rly compelled the conclusion that the deed was int ended as a mortgag e; and y et, t he defenda nt did not co n t ro vert the

9fac ts to which they testified by either allegations in his motion or his testimony in

support of the motion.

Ivy , 407 S.W .2d at 215. I n the prese nt case , the defa ult judgme nt was rende red afte r the trial court

was prese nted wit h evidence demonstrating that Gre en Tree had, during rele vant tax y ear s,
reposse ssed the mobile homes at issue and held them on J anuar y 1 of eac h tax y ear for which taxes

wer e assessed ag ainst them. Travis County relied on Gre en Tree ’s status as a fore closing lienholder

to support its claim that Gre en Tree was liable for the taxes. Gre en Tree had no rea son to controve rt 4
Travis County ’s asser

tion that it was a lienholder—in fac t, Gre en Tree ’s defe nse relies on that fac t.
C o n t ra ry t o t h e Ivy case , we are not here prese nted with a motion for new trial that is based on a conclusory alleg ation reg arding an issue centr al to the case
. Moreove r, Gre en Tree ’s motion did not fa i l to controve rt fac ts adduce d at trial that would undermine its defe nse. We conclu d e t h at
Gre en Tre e’s motion, supported by the affidavit, provides prima fac ie proof that it is a li enholder , rathe r than the owner , of the mobile homes. I f Gre en Tree is corr ect that a reposse ssing lienholder 5

I n its brief, Tra

vis County

states: 4
Plaintiff’s Ex hibit 2 showed that Appellant was not an o rd i n ary lienholder of the t en (10) mobile homes attributed to it in the J udg ment. The sprea dsheet included in the exhibi t showed that eac h of those mobile homes has been reposse ssed by Appellant prior to J anuar y 1 of at least one of the y ear s for which taxes wer e delinquent and that Appellant had resold the unit afte r the beg inning of that y ear
. So, the sprea dsheet confirme d that Appella n t was in possession or had the rig ht to possession of the mobile homes on J anuar y 1 of those delinquent y ear s, as re flec ted in the tax appraisal roll. Courts should liberally construe the ev i d en ce when passing on a motion for new trial 5 seeking to set aside a defa ult judgme nt. See Simmon s v. McKinney , 225 S.W .3d 706, 709 (Tex. App.—Amar il l o 2 0 0 7 , n o pet.) (citing Sexton v. Sexton , 737 S.W .2d 131, 133 (Tex. App.—San Antonio 198 7, no writ)). “The law pref ers that case s be disposed of on their merits wher ever 10is not liable under tax code section 32.07 for the taxes at issue in this case , it has “s et u p ” a

meritorious defe nse as r equire d to meet the Craddock test.
We next consider whether Gre en Tree ’s contention that it is a repose ssing lienholder
of the mobile homes, if true, means that it does not “own” them within the meaning of t ax code
section 32.07 and would not be liable fo r t h e taxes assessed. See Tex. Tax. Code Ann. § 32.07 (providing that proper

ty taxes are persona l obliga tion of one who owns or acquir es prope rty on J anuar y 1 of y ear tax is imposed). I n a thoroug h and well-re asoned opinion, t h e Dallas Court of Appea ls has addre ssed this issue and conc luded that the term “owne r,” as used in tax code se ction 32.07, does not encompa ss a lienholder who takes possession of persona l proper ty collater al for the purpose of sellin g i t p u rs u an t to a security ag ree ment. See Comerica Acceptance Corp. v. Dallas
Cent. Appraisal Dist. , 52 S.W .3d 4 9 5 , 497 (Tex. App.—Dallas 2001, pet. denied)

. The court’s holding resulted from i t s ap p l ication of principles of statutory construction and consideration of public policy implications. Tr avis County urg es this Court not to foll ow Comerica , but instead to
follow a decision from the Corpus Christi Court of Appea ls in which the court rea ched the opposite
result. S ee Gene ral Elec. Capital Corp. v. City of Corpus Christ i , 850 S.W .2d 596, 599 (Tex. App.—Corpus Christi 1993, writ denied)

. We decline to do so. We adopt both the analy sis and the
result re ache d in Comerica :

possible, rathe r than by

defa ult.” See G eneral Elec

. Capital Fin. Leasing Servs., Inc. v. Stanfield , 71 S.W .3d 351, 356 (Tex. App.—Ty ler 2001, pet. denied) ; see also Titan Indem

. Co. v. Old S. Ins. Group, Inc ., 221 S.W .3d 703, 708 (Tex. App.—San Antonio 2006, no pet.) (“The historical trend in defa ult judgme nt case s is toward the liberal g rant of new trials.”); Hock v. Salaices , 982 S.W .2d 591, 593 (Tex. App.—San Antonio 2006, no pet.) (“I t is a basic tenet of jurisprudenc e that the law abhors a def ault. . . . Equity

is rare ly serve d by

a def ault.”).
11We construe tax statutes strictly against the taxi ng authority and liberally in favor

of the taxpay er. See Dallas Cent. Appraisal Dist. v. Par k S t em mo n s, Ltd. , 948 S.W .2d 11, 13 (Te x
. Ap p
. — Dallas 1997, no writ). Fur thermore , when a term is not define d in a statute, we g ive it its ordinary meaning

. See Tex. Gov’t Code Ann. § 312.002 (West 1998); City of Dallas v. C ornerstone Bank , 879 S.W .2d 264, 270 (Tex. App.—Dallas 1994, no wr it).
I nterpre ting “owne r” to include a secur ed party in possession of pr o perty for purposes of selling it to rec over on a debt does not comport wi t h t h es e rul es of statutory construction. Simpl y stated, a lien-holder is not an “owner ” of the proper ty within the common meaning of that term. Ty pically the lienholder does not enjoy any of the common benef

its of ownership. A l ienholder o rdi narily has no leg al right to share in any acc retions to the collater al’s value, or a leg al obliga tion to bear any risk of lost value. A lienholder ordinarily has no rig ht to possession or use of the proper ty ; what rig ht it has to use and possession are only in the context of its rig ht to take possession of its collater al upon defa ult and sell it pursuant to the secur ity ag ree ment. Thus, to broade n the term “owne r” to include all lienholders in possession of collater al would require us to liberally construe the statute in favor of the taxi ng authority and ag ainst the taxpay er. Such an interpre tation would be contra ry to t he acc epted rules of construc tion.
True to the rules of construction rela ting to tax statutes, we employ a more common definition of “owne r.” Specifica lly , we construe the term “owne r,” as used in section 32.07 of the Texas Tax Code, as a person or entity holding leg al title to the proper ty , or holding an equitable rig ht to obtain leg al title to the proper ty

. See, e.g. , Tex. Tax Code Ann. § 152.001(9) (West Supp. 2001). This common definition of “owne r” would not encompa ss a lienholder who takes poss es s ion of persona l proper ty collater al for the purpose of selling it pursua

nt to a secur ity

ag ree ment. There are also public policy re as o n s opposing the District’s interpre tation. First, assessing ad valore m taxes ag ainst a lienho l d er in possession of the proper ty in anticipation of a fore closure sale could res u l t i n t ax ing the lienholder based on a value g rea ter than what the secur ed party could leg ally rec over from selling the proper ty

. Ad valore m taxes are g ener ally based on the marke t value o f p ersonal proper ty

. See id. § 23.01. Howeve r, a secur ed party who fore closes on proper ty may only reta in the amount of sales proce eds sufficie nt to satisfy the rema ining debt and cer tain expenses; any sales proce eds in excess of those amounts must be returne d to the debtor. See Tex. Bus. & Com. Code Ann. § 9.504(b) (West 1991). Thus, while the secur ed party could only leg ally reta in proce eds that may repr esent only a portion of the marke t value, the secur ed party would be assessed ad valore m taxes based on the entire marke t value of the proper ty

.
12Second, if the lienholde r in posse ssion r ece ives pay ment of the re maining a

mounts owed ag ainst the proper

ty , the lienholder must relinquish possession of the proper ty to the record owner. See id. § 9.506. There fore , if the secured party possessed the p roperty on J anuar

y 1, and the rec ord owner paid off the liability secur ed b y t h e proper ty on J anua

r y 2, under the District’s sug g ested interpre tation, the secur ed party wo u l d s till be liable for the ad valore m taxes on the persona l proper ty o wn ed , possessed, and e njoy ed by the re cord titleholder.

Comerica , 52 S.W .3d at 497-98.

By prese nting prima fac ie proof that it did not own the mobile homes at issue but
instead was a reposse ssing lienholder, Gre en Tree has set up a meritorious defe nse to its liability for
the taxes assessed. See Tex. Tax Code Ann. § 32.07; Comerica Acc eptance Corp. , 52 S.W .3d at 497 (term “owne r” in tax code 32.07 does not encompa ss l ienholder who takes possession of
persona l proper

ty collater al for purpose of selling it pursuant to secur ity ag ree ment). Consequently , Gre en Tre e has me t the second pr ong of the Craddock test.
Absence of de lay or inju ry to Travis Coun ty

As to the third Craddock prong , Gre en Tree asser ted in its motion for new trial that
g ranting a new trial would not de lay or prejudice Travis County beca use Gre en Tree was rea dy for
trial and willing to reimburse Trav i s C o u n t y for rea sonable costs and expenses it incurre d. Once
Gre en Tree alleg ed that g ranting a n ew trial would not injure Travis County , the burden of proof
shifted to Travis County to prove injury

. See Dolgencorp , 288 S.W .3d at 929 (citing Mathis

v. Lockwood , 166 S. W

. 3 d 7 4 3 , 7 44 (Tex. 2005), Director, State Emps. W orkers’ Comp. Div. v. Evans , 889 S.W .2d 266, 270 (Tex. 1994), and Estate of Pollack v. McM

urrey , 858 S.W .2d 388, 393 (Tex. 1993)). Travis County did not file a response to the motion for new trial, and the motion was

13not set for a hear ing. Travis County failed to car ry its burden of proving injury

. Consequently , Gre en Tre e has me t the third prong of the Craddock test.
Be cause Gre en Tree ’s motion for new trial satisfied all three elements of the
Craddock test, the trial court abused its discretion by failing to g rant the motion, and Gre en Tree is
entitled to a new tr ial.

CONCLUSION

Having conclude d that the trial court abused its discr etion by failing to g rant Gre en Tree ’s m otion for new t rial and by allowing it to be overruled by opera tion of l aw, we reverse the
trial court’ s judgme nt and re mand the ca use for a new trial.

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ J . Woodfin J ones, Chief Just ice
Be fore Chief J ustice Jones, J ustices Henson a nd Goodwin
Reverse d and Remande d Filed: Aug ust 31, 2011

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