Court Opinion

ID: 3112699
Source: CourtListenerOpinion
Date Created: 2015-10-16 07:08:12.54447+00
Date Added: 2024-06-11T12:46:59.529890
License: Public Domain

COURT OF APPEALS
                       SECOND DISTRICT OF TEXAS
                            FORT WORTH

                           NO. 02-11-00285-CV

GREGORY EARL REED D/B/A HIT                        APPELLANT
CITY RECORDS & TAPES

                                    V.

COUNTY OF TARRANT, TARRANT                         APPELLEES
COUNTY HOSPITAL DISTRICT,
TARRANT COUNTY COMMUNITY
COLLEGE DISTRICT, CITY OF
FOREST HILL, AND FORT WORTH
INDEPENDENT SCHOOL
DISTRICT

                                 ----------

        FROM THE 236TH DISTRICT COURT OF TARRANT COUNTY

                                 ----------

                      MEMORANDUM OPINION1

                                 ----------

    1
     See Tex. R. App. P. 47.4.
                                 I. INTRODUCTION

      Appellant Gregory Earl Reed d/b/a Hit City Records & Tapes appeals the

trial court’s order denying his equitable bill of review challenging a default

judgment for delinquent property taxes, foreclosure of a tax lien, and a tax-

foreclosure sale in favor of Appellees County of Tarrant, Tarrant County Hospital

District, Tarrant County Community College District, City of Forrest Hill, and Fort

Worth Independent School District. We will affirm.

                                 II. BACKGROUND

      Appellees sued Hit City in March 2004 to recover delinquent ad valorem

taxes for property owned at 3354 Mansfield Highway in Forrest Hill. The return

of citation indicates that Gregory’s brother, Ronald Reed, the “Registered Agent”

for Hit City, was served with citation and a copy of the original petition on

August 30, 2004. Several years later, in May 2008, Appellees obtained a default

judgment against Hit City for $17,846.12.       The property was later sold in

accordance with the Texas Tax Code, and the proceeds were used to satisfy the

judgment for delinquent taxes.

      In January 2009, Gregory filed a bill of review against Appellees.        He

alleged that neither he nor Ronald “were ever served with citation or with any

pleading or with any other notice of the lawsuit” for delinquent taxes and that

even if Ronald had been served, “such service would have been ineffective

service upon” Gregory.     Gregory prayed for a new trial and that the default

                                        2
judgment be set aside and vacated. After a hearing, the trial court denied the bill

of review and entered several findings of fact, including the following:

      11. Court records indicate that Ronald Reed as a partner in Hit
      City Records & Tapes [was] served with legal process in connection
      with Defendants’ tax suit on August 30, 2004.

The trial court entered the following conclusions of law, among others:

      4.    Plaintiff Hit City Records & Tapes was served with process by
      serving its named partner, Ronald Reed, in person on August 30,
      2004, an appropriate return of citation having been filed with the
      Court on September 1, 2004, signed by the Constable.

      5.    At the time of service, Ronald Reed was a registered partner
      in the partnership known as Hit City Records & Tapes, no
      modification of the partnership having been appropriately filed.

      6.    Defendants, having served a named partner of the
      partnership, gave sufficient due process and notice to Plaintiff to
      proceed to judgment.

             ....

      11. Plaintiff, at trial in testimony on a bill of review, failed to
      provide corroborating evidence sufficient to overcome the
      presumption that Plaintiff was served.

                            III. SERVICE UPON RONALD

      In his first issue, Gregory argues that the trial court abused its discretion by

denying the bill of review. He acknowledges that “the citation appears to contain

all the elements of a valid return of citation,” but he contends that the evidence is

factually insufficient to show that Ronald was served because the evidence

sufficiently corroborated Ronald’s testimony that he was not served.

                                          3
       A bill of review is an equitable proceeding to set aside a judgment that is

no longer appealable or subject to a motion for new trial. Transworld Fin. Servs.

Corp. v. Briscoe, 722 S.W.2d 407, 407 (Tex. 1987). The bill of review petitioner

must ordinarily plead and prove (1) a meritorious defense to the cause of action

supporting the judgment (2) that he was prevented from making by the fraud,

accident, or wrongful act of the opposing party (3) unmixed with any fault or

negligence of his own. Id. at 407–08. But when the petitioner alleges that he did

not receive proper service of citation, he need only prove a lack of proper service

to be entitled to a new trial. Ross v. Nat’l Ctr. for the Emp’t of the Disabled, 197
S.W.3d 795, 797 (Tex. 2006); Caldwell v. Barnes, 154 S.W.3d 93, 96–97 (Tex.

2004) (stating that proof of non-service will conclusively establish third element of

bill of review).

       We review the denial of a bill of review for an abuse of discretion. Davis v.

Smith, 227 S.W.3d 299, 302 (Tex. App.—Houston [1st Dist.] 2007, no pet.). To

determine whether a trial court abused its discretion, we must decide whether the

trial court acted without reference to any guiding rules or principles; in other

words, we must decide whether the act was arbitrary or unreasonable. Low v.

Henry, 221 S.W.3d 609, 614 (Tex. 2007); Cire v. Cummings, 134 S.W.3d 835,

838–39 (Tex. 2004). Under the abuse of discretion standard, challenges to the

sufficiency of the evidence are not independent grounds of error but are relevant

factors in assessing whether the trial court abused its discretion. See Edwards v.

Mid-Continent Office Distribs., L.P., 252 S.W.3d 833, 835 n.6, 836 (Tex. App.—

                                         4
Dallas 2008, pet. denied); El Paso Cnty. Hosp. Dist. v. Gilbert, 64 S.W.3d 200,

203–04 (Tex. App.—El Paso 2001, pet. denied).

       The return of citation states that Ronald was personally served at 11:57

a.m. on August 30, 2004. The recitations in the return are prima facie evidence

of the facts recited in the return. See Primate Constr. v. Silver, 884 S.W.2d 151,

152 (Tex. 1994). Ronald, however, testified that he was never served with the

citation.   In and of itself, Ronald’s testimony is insufficient to establish non-

service because the recitations in the return “carry so much weight that they

cannot be rebutted by the uncorroborated proof of the moving party.” See id.;

see also Caldwell, 154 S.W.3d at 97 n.3 (“At trial, the testimony of a bill of review

plaintiff alone, without corroborating evidence, is insufficient to overcome the

presumption that the plaintiff was served.”).

       Gregory argues that he corroborated Ronald’s testimony with evidence

elicited from Morris Carrejo. Carrejo testified that like Ronald, he is employed as

a code enforcement supervisor for the City of Fort Worth and that Ronald was “in

the office” on August 30, 2004, because “[b]eing a Monday, that’s a catch-up

day, and you usually stay in the office for sure and [Ronald] has lunch pretty

much on Mondays there at the office.” But Carrejo clarified on cross-examination

that he was testifying about what he normally knows to be the routine at work.

He explained that he had no recollection of Monday, August 30, 2004, and that

he could not account for Ronald’s whereabouts that day.

                                         5
      The trial court also admitted a document evidencing Ronald’s “Individual

Record of Absence from Duty,” which sets out the dates that Ronald was absent

from work and for how long.      Gregory appears to argue that the document

corroborated Ronald’s testimony about lack of service because it did not show

that Ronald was out of the office on August 30, 2004, and, therefore, amenable

to service away from work. Although non-service may certainly be corroborated

by circumstantial evidence, see Sanders v. Harder, 148 Tex. 593, 597, 227
S.W.2d 206, 209 (1950), Carrejo explained that the document reflected Ronald’s

absences for personal reasons only; it did not account for those times when

Ronald was out of the office for a business-related activity.     Indeed, Ronald

acknowledged that his job requires him to be out of the office from time to time,

that he takes lunch breaks, and that he could not account for his whereabouts on

August 30, 2004. In addition to this testimony, Ronald testified that he used to be

one of the partners in Hit City; and Gregory explained that in August 2004,

several teenagers, one being his daughter, Ronald’s niece, ran Hit City. The

return of citation does not identify where Ronald was served, although Hit City’s

address is handwritten on the citation, but it does indicate that Ronald was

served at 11:57 a.m. In light of all of this, the trial court could have reasonably

concluded that the document evidencing Ronald’s absences from work did not

corroborate his testimony of non-service on August 30, 2004.

      Gregory argues that additional corroboration evidence consists of his

testimony that he made arrangements to pay for delinquent business personal

                                        6
property taxes when he received notice that they were overdue. According to

Gregory, he “had a history of taking responsibility for payment of taxes,

suggesting his awareness of the risk of ignoring a tax suit in that it might lead to

the tax sale of the Mansfield Highway property.” Gregory’s testimony that he

paid past-due business taxes is circumstantial evidence that he pays taxes when

they are overdue, not evidence, circumstantial or otherwise, that Ronald was not

served in the underlying delinquent tax suit.

      The evidence that Gregory relies upon to demonstrate corroboration either

circumstantially corroborated some fact relevant to a matter other than non-

service upon Ronald or was simply no evidence of corroboration. An abuse of

discretion does not occur when the trial court bases its decisions on conflicting

evidence and some evidence of substantive and probative character supports its

decision. Unifund CCR Partners v. Villa, 299 S.W.3d 92, 97 (Tex. 2009); Butnaru

v. Ford Motor Co., 84 S.W.3d 198, 211 (Tex. 2002). We hold that the trial court

could reasonably have concluded that Gregory did not present sufficient

corroborating evidence that Ronald was not served in the tax suit. Accordingly,

we hold that the trial court did not abuse its discretion by denying Gregory’s bill of

review. We overrule Gregory’s first issue.

      Having determined that Gregory failed to corroborate Ronald’s testimony

about non-service, we also overrule Gregory’s third issue, in which he argues

that the trial court abused its discretion by denying his bill of review on the basis

of estoppel.

                                          7
                       IV. SERVICE EFFECTIVE UPON HIT CITY

      In his second issue, Gregory argues that even if we overrule his first issue,

service upon Ronald “would not have bound [Gregory] with the underlying

judgment in the tax suit” because by August 2004, Ronald was no longer a

partner of Hit City nor affiliated with the business in any capacity.

      Ronald acknowledged that a warranty deed filed of record in Tarrant

County showed that Hit City—a Texas general partnership comprised of Gregory

and Ronald—took ownership of the property at 3354 Mansfield Highway in June

1994. However, Ronald and Gregory testified that Ronald “gave” his partnership

interest in Hit City to Gregory at some point before August 2004, and Gregory

testified that Hit City was now a sole proprietorship.         Nevertheless, Ronald

agreed that a records search to determine who owned the property at 3354

Mansfield Highway would reveal that the property is owned by the Hit City

partnership, which, according to the deed, included Gregory and Ronald. Thus,

the issue is whether service upon Ronald, a former partner in Hit City, was

sufficient to authorize the judgment against Hit City because the deed filed of

record for the property located at 3354 Mansfield Highway identified Ronald as a

partner of Hit City, the owner of the property.

      Appellees filed the underlying suit against Hit City to recover delinquent

ad valorem taxes. An ad valorem tax is a tax on property at a certain rate based

on the property’s value. Tex. Mun. League Intergovernmental Risk Pool v. Tex.

Workers’ Comp. Comm’n, 74 S.W.3d 377, 387 (Tex. 2002).                  Determining

                                          8
ownership of property is a pivotal issue in a suit to recover delinquent taxes,

whether the taxing unit seeks personal liability, foreclosure of a tax lien, or both.

See Tex. Tax Code Ann. § 33.41(a) (West 2008) (“At any time after its tax on

property becomes delinquent, a taxing unit may file suit to foreclose the lien

securing payment of the tax, to enforce personal liability for the tax, or both.”).

For example, property taxes are “the personal obligation of the person who owns

or acquires the property on January 1 of the year for which the tax is imposed.”

Id. § 32.07(a) (West 2008).       Moreover, a petition initiating suit to collect

delinquent property taxes is sufficient if it alleges that the person sued owned the

property on January 1 of the year for which the tax was imposed if the suit seeks

to enforce personal liability, or that the person sued owns the property when the

suit is filed if the suit seeks to foreclose a tax lien. Id. § 33.43 (a)(7), (8) (West

2008).   Also, in a suit to recover delinquent taxes, the tax code permits a

defendant to raise the affirmative defense of non-ownership of the subject

property. Id. § 42.09(b)(1) (West 2008).

      Here, Ronald may have transferred his partnership interest in Hit City to

Gregory at some point before August 2004, but the deed filed of record continued

to show (even at the time of trial) that Ronald was a partner in Hit City, the record

owner of the property located at 3354 Mansfield Highway. Gregory offered no

evidence that he somehow noticed or even otherwise documented the

dissolution of the Hit City partnership such that Appellees could ever have

discovered the change in the partnership’s status. That being the case, just as a

                                           9
party who performs a search of property records is entitled to rely on the

recitations contained in those records when purchasing a property, we must

conclude that Appellees—taxing units seeking to recover delinquent ad valorem

taxes from Hit City, the record owner of the property located at 3354 Mansfield

Highway—were entitled to rely upon the recitations contained in the deed filed of

record, indicating that Ronald was a partner in Hit City, when attempting to

determine ownership of the property for purposes of effecting service of process.

As citation served on one member of a partnership authorizes a judgment

against the partnership, see Tex. Civ. Prac. & Rem. Code Ann. § 17.022 (West

2008), we hold that service upon Ronald was effective to authorize a judgment

against Hit City. We overrule Gregory’s second issue.

                                V. DUE PROCESS

      Citing Jones v. Flowers, 547 U.S. 220, 126 S. Ct. 1708 (2006), Gregory

argues in his fourth issue that he was denied due process because Appellees

failed to provide him with appropriate notice of the tax delinquency and tax sale.

In Jones, the Supreme Court held that when notice of a tax sale is mailed to the

owner and returned undelivered, the State must take additional reasonable steps

to provide notice before taking the owner’s property. Id. at 223, 234, 126 S. Ct.

at 1718. Jones is inapposite because the taxing entity there knew that its notice

to Jones that his taxes were delinquent and that his property was subject to

public sale had been returned unclaimed. Id. at 223–24, 126 S. Ct. at 1712. The

Court explained that “we have never addressed whether due process entails

                                       10
further responsibility when the government becomes aware prior to the taking

that its attempt at notice has failed.” Id. at 227, 126 S. Ct. at 1714. In this case,

service of process was successfully effected upon Ronald, and Appellees

subsequently took a default judgment against Hit City, as they were entitled to

do.   See Tex. R. Civ. P. 107, 239.       Thus, unlike the taxing entity in Jones,

Appellees had no indication that their notice had failed. We overrule Gregory’s

fourth issue.

                                  VI. CONCLUSION

      Having overruled all of Gregory’s dispositive issues, we affirm the trial

court’s order denying Gregory’s petition for equitable bill of review.

                                                    BILL MEIER
                                                    JUSTICE

PANEL: LIVINGSTON, C.J.; MEIER and GABRIEL, JJ.

DELIVERED: May 24, 2012

                                         11