Court Opinion

ID: 2857099
Source: CourtListenerOpinion
Date Created: 2015-09-04 19:29:13.8062+00
Date Added: 2024-06-11T13:27:46.563392
License: Public Domain

COURT OF APPEALS
                     SECOND DISTRICT OF TEXAS
                          FORT WORTH

                         NO. 2-07-021-CV
                         NO. 2-07-023-CV

$1,943.76 IN UNITED STATES                             APPELLANT
CURRENCY; THIRTY ONE (31)
“8 LINER” MACHINES; TWELVE
(12) ARIZOLA RESTAURANT
GIFT CARDS; NINETEEN (19) QUICK
TRIP GIFT CARDS; SIXTY NINE
(69) WAL-MART SHOPPING CARDS;
ONE ARMI TANFOGLIO GIUSEPPE
.25 PISTOL AND AMMUNITION;
ONE NORINCO MODEL 54 PISTOL
AND AMMUNITION; ONE (1) HP
PAVILLION 6830; ONE MAXELL
3.5 FLOPPY DISK; MISCELLANEOUS
NOTEBOOKS, CHECK BOOKS, AND
ENUMERATED ITEMS

                                  V.

THE STATE OF TEXAS                                      APPELLEE

                             ------------

          FROM CRIMINAL DISTRICT COURT NO. 3 AND THE
           396TH DISTRICT COURT OF TARRANT COUNTY

                             ------------
                                     ------------

                         MEMORANDUM OPINION 1

                                     ------------

      Appellant Billy Joe Farrell, Jr. appeals from the trial court’s determination

with respect to his property seized under a search warrant. In three issues,

Appellant argues that the machines and other property seized were not

gambling devices as defined by Texas Penal Code section 47.01(4)(B), that the

retroactive application of the Supreme Court of Texas’s decision in Hardy v.

State 2 is an improper application of law, and that the trial court committed

reversible error by failing to return the property. Because we hold that the trial

court did not err by determining that the “eight liners” at issue here are

gambling devices, we affirm the trial court’s judgments.

      In 2002, Appellant owned and operated a gaming business. As part of

his business, Appellant owned “eight liner” gaming machines.               After a

successful play on one of the machines, a player would be awarded points that

could be redeemed for restaurant or retail gift cards or for credit for further play

on the machines. In July 2002, Fort Worth police raided the business and

      1
          … See Tex. R. App. P. 47.4.
      2
          … Hardy v. State, 102 S.W.3d 123 (Tex. 2003).

                                          2
seized the machines (as well as other items) pursuant to a search warrant. The

police also searched, pursuant to a search warrant, the home of one of the

gaming room’s employees.

      The State brought a gambling promotion charge against Appellant but

later dismissed it. Appellant then moved for the release of the seized property

under article 18.18 of the code of criminal procedure.3 The presiding judge of

the 396th District Court heard the motion while sitting as the 396th District

Judge and as the judge for Criminal District Court Number Three and denied

relief, after which Appellant brought these appeals.

      In its brief, the State argues that this court does not have jurisdiction over

this appeal. Because we may not reach the merits of the case if we do not

have jurisdiction, we must address this argument.4

      Article 18.18(b) orders magistrates to take certain actions with respect

to confiscated property, and it neither expressly provides for nor abrogates the

      3
          … Tex. Code Crim. Proc. Ann. art. 18.18(b) (Vernon 2005).
      4
        … See Grunewald v. Technibilt Corp., 931 S.W.2d 593, 597 (Tex.
App.—Dallas 1996, writ denied) (holding that because the court lacked subject
matter jurisdiction, it had no authority other than to dismiss the appeal);
Protestants v. Am. Pubs, Inc., 787 S.W.2d 111, 113 (Tex. App.—Houston [1st
Dist.] 1990, writ denied) (stating that a court must dismiss a case if it becomes
apparent that the court has no authority to adjudicate it).

                                         3
right of appeal from magisterial determinations under that article.5 A forfeiture

proceeding is in rem and is civil in nature.6 We have jurisdiction over appeals

in civil matters arising from district courts.7 But the State argues that we do

not have jurisdiction over this civil matter because the district court was acting

as   a       magistrate   and   appellate   courts   do   not have   jurisdiction   over

determinations by magistrates under article 18.18.

         We disagree.       Under the Texas Constitution, district courts have

jurisdiction over forfeiture proceedings. 8 The Supreme Court of Texas has held

that because the legislature cannot take away the jurisdiction given to a district

court by the constitution, “the most that the Legislature could constitutionally

accomplish in [a]rticle 18.18(b)-(f)[] was to grant concurrent jurisdiction to a

court . . . that was not also a district court.” 9 Thus, article 18.18 allows for

courts in addition to district courts to preside over forfeiture proceedings.

Because the district court had jurisdiction over the forfeiture proceedings by

         5
             … See Tex. Code Crim. Proc. Ann. art. 18.18(b).
         6
             … Hardy, 102 S.W.3d at 126–27.
         7
             … See Tex. Civ. Prac. & Rem. Code Ann. § 51.012 (Vernon 2008).
         8
             … See Tex. Const. art. V, § 8.
         9
             … State v. Dugar, 553 S.W.2d 102, 105 (Tex. 1977).

                                              4
virtue of the constitutional powers granted to district courts 10 or the statutory

powers granted to courts acting as magistrates,11 we have jurisdiction over this

appeal.12 We overrule the State’s jurisdictional challenge.

      We now turn to the merits of the appeal. In Appellant’s first issue, he

argues that the machines and other property seized were not gambling devices

as that term is defined by Texas Penal Code section 47.01(4)(B). In Appellant’s

brief, however, he limits his argument to error as to the forfeiture of his “eight

liner” machines.     Appellant makes no argument as to why the other items

seized are not gambling devices or not otherwise subject to forfeiture under

article 18.18.13 We therefore affirm the trial court’s judgments as to the other

      10
           … See Tex. Const. art. V, § 8.
      11
         … See Tex. Code Crim. Proc. Ann. art. 18.18(b)–(f); State ex rel.
Holmes v. Salinas, 784 S.W.2d 421, 424 (Tex. Crim. App. 1990) (orig.
proceeding) (holding no jurisdictional defect and that district court held position
of magistrate “solely through his office of district judge” and therefore his
“authority to act in the capacity of magistrate [was] dependent upon his
office.”
      12
        … See Tex. Civ. Prac. & Rem. Code Ann. § 51.012; see also Brown v.
Barlow, 685 S.W.2d 406, 407 (Tex. App.—San Antonio 1985, no writ) (noting
that the Supreme Court of Texas has implicitly held that rulings by magistrates
under article 18.18 are appealable).
      13
        … See Tex. Code Crim. Proc. Ann. art. 18.18(b) (Vernon Supp. 2008)
(providing for the forfeiture of any seized “gambling device or equipment,
altered gambling equipment or gambling paraphernalia, gambling proceeds,
prohibited weapon, obscene device or material, child pornography, scanning
device or re-encoder, criminal instrument, or dog-fighting equipment” unless

                                        5
property seized and limit our analysis of his issues to the “eight liners.” 14

      Article 18.18 provides that after a person is convicted for possession of

a gambling device, “the court entering the judgment of conviction shall order

that the . . . device . . . be destroyed or forfeited to the state.” 15 But if no

prosecution or conviction results from the seizure, “the magistrate to whom the

return was made shall notify in writing the person found in possession of the

alleged gambling device . . . to show cause why the property seized should not

be destroyed.” 16

      If the person appears to show cause, the magistrate must conduct a

hearing, but “[u]nless the person proves by a preponderance of the evidence

that the property . . . is not . . . [a] gambling device . . . and that he is entitled

to possession, the magistrate shall dispose of the property.” 17          The article

incorporates the penal code definition of gambling device. 18

cause is shown why it should not be forfeited).
      14
         … See Pat Baker Co., Inc. v. Wilson, 971 S.W.2d 447, 450 (Tex. 1998)
(“It is axiomatic that an appellate court cannot reverse a trial court’s judgment
absent properly assigned error.”).
      15
           … Tex. Code Crim. Proc. Ann. art. 18.18(a).
      16
           … Id. art. 18.18(b).
      17
           … Id. art. 18.18(f).
      18
           … Id. art. 18.18(g)(2).

                                          6
      Penal code section 47.01 defines the term “gambling device” as “any

electronic, electromechanical, or mechanical contrivance . . . that for a

consideration affords the player an opportunity to obtain anything of value, the

award of which is determined solely or partially by chance, even though

accompanied by some skill, whether or not the prize is automatically paid by the

contrivance.” 19 The definition expressly excludes devices that would otherwise

fall within the statutory definition if they reward players “exclusively with

noncash merchandise prizes, toys, or novelties, or a representation of value

redeemable for those items,” where the noncash prizes have a value under a

certain amount.20 No one disputes that the “eight liners” at issue here meet the

general definition of “gambling device.” But Appellant argues that at the time

the devices were seized, they came within the exception under section

47.01(4)(B), in that players were rewarded with noncash merchandise, and no

player was awarded a prize from a single play having a wholesale value more

than the statutorily proscribed amount.

      In June 2001, both the Waco and Austin Courts of Appeals handed down

decisions reaching different conclusions as to whether a gambling device that

      19
           … Tex. Penal Code Ann. § 47.01(4) (Vernon 2003).
      20
           … Id. § 47.01(4)(B) (emphasis added).

                                        7
awarded points redeemable for gift certificates fell within the statutory

exception in section 47.01(4)(B).21 The Supreme Court of Texas decided this

issue in Hardy and held that these devices are gambling devices. 22 In Hardy,

the devices at issue awarded tickets redeemable either for gift certificates or for

cash for further play on the machines. The court held that gift certificates are

a money equivalent, and therefore the machines did not award tickets

redeemable exclusively for noncash prizes and thus did not fit the exclusion

under section 47.01(4)(B).     The “eight liners” owned by Appellant likewise

awarded points that could be redeemed for retail or restaurant gift certificates

or for further play on the machines either at that time or some time in the

future. Thus, because Appellant’s gambling devices did not reward players

exclusively with noncash prizes, under Hardy, they do not meet the exclusion

and are prohibited gambling devices.

      Appellant points to the Amarillo Court of Appeal’s decision in Twenty-

Nine (29) Gambling Devices v. State 23 and argues that the court there

      21
       … Compare State v. One Super Cherry Master Video 8-Liner Mach., 55
S.W.3d 51, 55 (Tex. App.—Austin 2001), rev’d, 102 S.W.3d 132 (Tex. 2003),
with Hardy v. State, 50 S.W.3d 689, 697 (Tex. App.—Waco 2001), aff’d, 102
S.W.3d 123 (Tex. 2003).
      22
           … Hardy, 102 S.W.3d at 131.
      23
           … 110 S.W.3d 146 (Tex. App.—Amarillo 2003, no pet.).

                                         8
“conceded” that before the supreme court’s Hardy decision, there was a

conflict between the Austin and Waco Courts of Appeals and that “if the

Amarillo court cannot decide whether [the Austin Court of Appeals’ holding in

Cherry Master] or [the Waco Court of Appeals’ holding in Hardy] prevails, how

can Appellant determine if his business involves gaming and [not] gambling?”

Appellant misconstrues the opinion. The Amarillo court noted that prior to

Hardy, there was a split in the courts of appeals as to whether the State bore

the burden of proof at an article 18.18 hearing. Regarding the appellant’s

argument that the devices at issue fit the statutory exception because they

awarded points redeemable for gift certificates and not cash, the court stated

that this position was foreclosed by the supreme court’s decision in Hardy. 24

We overrule Appellant’s first issue.

      The supreme court handed down the Hardy decision in 2003, after the

State seized Appellant’s devices. In Appellant’s third issue, he argues that the

trial court reversibly erred by failing to return the property because Hardy should

not be applied retroactively. The supreme court has stated that “[a] decision

of [that court] operates retroactively unless [that court] exercises its discretion

      24
           … Id. at 151.

                                        9
to modify that application.” 2 5   Here, the supreme court did not announce a

limitation on the retroactive application of Hardy. On the same day it handed

down that decision, it handed down another case relating to the same type of

gambling devices, referred to Hardy as controlling on the issue, and did not

discuss at all whether Hardy should be applied retroactively or prospectively.26

      But the supreme court has also said that although its decisions usually

apply retroactively, “exceptions are recognized when considerations of fairness

and policy dictate prospective effect only.” 27 The court adopted factors from

the United States Supreme Court for determining when to apply a decision

retroactively. The factors are:

      (1) whether the decision establishes a new principle of law by
      either overruling clear past precedent on which litigants may have
      relied or by deciding an issue of first impression whose resolution
      was not clearly foreshadowed; (2) whether prospective or
      retroactive application of the particular rule will further or retard its
      operation through an examination of the history, purpose, and
      effect of the rule; and (3) whether retroactive application of the rule
      could produce substantial inequitable results. 28

      Appellant argues that the first element is “easily met” because prior to the

      25
           … Bowen v. Aetna Cas. & Sur. Co., 837 S.W.2d 99, 100 (Tex. 1992).
      26
      … State v. One Super Cherry Master Video 8-Liner Machine, 102
S.W.3d 132, 133 (Tex. 2003).
      27
           … Elbaor v. Smith, 845 S.W.2d 240, 250 (Tex. 1992).
      28
           … Id.

                                         10
Hardy decision, courts of appeals had been split on the issue of whether these

devices met the exception of 47.01(4)(B). We disagree. That at least one

Texas appellate court had held that these devices did not meet the statutory

exception should have indicated to Appellant that reasonable minds could reach

the same conclusion, and because of the disagreement between the courts of

appeals, one could foresee the likelihood that the supreme court would consider

the issue.29 Thus, the first factor does not favor Appellant.

      On the second factor, Appellant’s argument is that he paid a permit tax

through the city of Fort Worth and a license fee to the state comptroller. Thus,

a retroactive application would put the State in the position of having charged

taxes on illegal gambling equipment. He also raises the question of whether he

would have a cause of action against those to whom he paid taxes and fees

and argues that “[i]t would be difficult to see why any retroactive application

of [Hardy] would do anything but hinder the Court’s opinion.” The rule at issue

here is that because money prizes are prohibited by statute, monetary

equivalents are also prohibited, and none of Appellant’s arguments persuade us

      29
       … Cf. id. (determining that the case represented an issue of first
impression whose resolution was not clearly foreshadowed because “only a
couple of states [had] previously” reached the same holding and that “[t]he only
Texas opinion which even hinted” at such a holding was one concurring
opinion).

                                      11
that a retroactive application of the rule would retard its operation.

      As for the third factor, Appellant argues that he bought the devices from

the city of Waco, acquired a permit for his business and a license from the

Texas comptroller, paid for a maintenance contract for a damaged device, paid

amusement tax, purchased gift cards for prizes, purchased restaurant gift cards,

obtained a bank loan to purchase the devices, and was forced to pay the loan

after the devices were seized. He contends that the financial hardships he

suffered because of the total collapse of his business after the seizure “when

a reasonable person would cite [the Austin Court of Appeals’ opinion in Cherry

Master30 ] as an authority to stay in business is pat[e]ntly unfair,” and he should

be allowed to sell the machines in a jurisdiction where they are legal so as to

recoup his losses. These results are not “substantial inequitable results.” A

reasonable person would not have relied on an opinion from the Austin Court

of Appeals as controlling in this district on an issue that this court had not yet

determined.31 That is particularly true here when in the same month that the

Austin Court of Appeals decided Cherry Master, the Waco Court of Appeals

      30
           … Cherry Master, 55 S.W.3d at 55.
      31
       … See Eubanks v. Mullin, 909 S.W.2d 574, 576 n.1 (Tex. App.—Fort
Worth 1995, no writ) (noting that the opinions of other courts of appeals are
persuasive but not controlling).

                                        12
reached the opposite conclusion.32 And Appellant’s evidence shows that he

acquired the business permit and the license from the comptroller after the

Waco court declared that machines awarding these types of prizes did not meet

the statutory exception, so Appellant could not have reasonably relied on the

Cherry Master holding in making his decision to run these machines in his

business. We overrule Appellant’s third issue.

      Appellant in his second issue argues that with the Hardy decision, the

supreme court “changed the rules” by deciding that gift cards are equivalents

of money. He contends that a retroactive application of Hardy is an improper

application of law because the federal and Texas constitutions prohibit ex post

facto laws.

      Prohibitions against ex post facto laws “apply to civil statutes only when

the statutory scheme is so punitive either in purpose or effect as to transform

what was clearly intended as a civil remedy into a criminal penalty.” 33      A

forfeiture proceeding under article 18.18 is civil in nature and is against the

property and not the owner of the property and is therefore usually not

      32
           … See Hardy, 50 S.W.3d at 697.
      33
       … Real Prop. Located at 4125 Blanton, Wichita Falls, Wichita County,
Tex., With a Legal Description of Lot 1 Block 4 Univ. Park B1, Wichita County,
Tex. v. State, 230 S.W.3d 476, 483 (Tex. App.—Fort Worth 2007, pet.
denied).

                                      13
punitive. 34 Thus, a retroactive application of Hardy does not constitute an ex

post facto law.

         Appellant further argues that the seizure of the devices combined with the

modification of the definition of gambling device under Hardy and the

application of that definition to his case “completely impaired Appellant’s

obligation with his contract with Azle Bank.” We infer this to be an argument

that a retroactive application of Hardy would violate the Texas Constitution’s

prohibition against the enactment of a retroactive law impairing the obligation

of contracts.35 Appellant did not raise this argument in the trial court, and he

may not raise it now for the first time on appeal. 36 We overrule his second

issue.

         Finally, we address an issue raised during oral arguments in this case.

The State seized Appellant’s property in July 2002. The case against Appellant

         34
       … See id. (holding that civil forfeiture proceedings under chapter 59 of
the code of criminal procedure “are civil, in rem proceedings against property
rather than against the defendant and are not normally classified as
punishment”); Hardy, 102 S.W.3d at 126–27 (noting that forfeiture
proceedings under article 18.18 are civil, in rem proceedings).
         35
      … See Tex. Const. art. I, § 16; Wessely Energy Corp. v. Jennings, 736
S.W.2d 624, 627 (Tex. 1987).
         36
         … See In re J.B.W., 99 S.W.3d 218, 225 (Tex. App.—Fort Worth 2003,
pet. denied) (“There is no right to complain of unpreserved trial court error for
the first time on appeal, except when the error is fundamental.”).

                                         14
was dismissed in June 2004. No action was taken by the State under article

18.18 after the dismissal, and Appellant filed a motion for a release of the

property in October 2006, more than two years after the charges were

dismissed.   Following oral arguments, the parties filed supplemental briefs

addressing a question raised during argument as to how long the State may

wait to bring a motion for forfeiture under article 18.18 before the motion is no

longer “timely” under the statute and forfeiture is waived. 37 This issue was not

raised in the trial court, however, and therefore we may not address it on

appeal.38

      Having overruled all of Appellant’s issues, we affirm the trial court’s

judgments.

                                                 LEE ANN DAUPHINOT
                                                 JUSTICE

PANEL: DAUPHINOT and MCCOY, JJ.; and DIXON W. HOLMAN, J. (Senior
Justice, Retired, Sitting by Assignment).

DELIVERED: January 29, 2009

      37
        … See Tex. Code Crim. Proc. Ann. art. 18.18(b) (requiring law
enforcement agency informed by the State that no prosecution will result from
seizure to “timely” make motion for show cause hearing on forfeiture).
      38
         … See Tex. R. App. P. 33.1(a); Pat Baker Co., 971 S.W.2d at 450
(holding that appellate court may not reverse based on a complaint not raised
in the trial court).

                                       15