Opinion

02-11-285-CV

COURT OF APPEALS

SECOND DISTRICT OF TEXAS

FORT WORTH

NO. 02-11-00285-CV

Gregory Earl Reed d/b/a Hit City Records &

Tapes

APPELLANT

V.

County of Tarrant, Tarrant County Hospital

District, Tarrant County Community College District, City of Forest Hill, and

Fort Worth Independent School District

APPELLEES

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FROM THE 236th

District Court OF Tarrant COUNTY

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MEMORANDUM

OPINION [1]

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I. I ntroduction

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. B ackground

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 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. S ervice U pon R onald

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.

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.—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.

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 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.

IV. S ervice E ffective U pon H it C ity

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 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 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. D ue P rocess

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 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. C onclusion

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

[1] See Tex. R. App. P. 47.4.