Hydrogeo, LLC, First Bank & Trust East Texas v. Quitman Independent School District

ACCEPTED
06-15-00007-CV
SIXTH COURT OF APPEALS
TEXARKANA, TEXAS
7/30/2015 1:24:45 PM
DEBBIE AUTREY
CLERK

CASE NO. 06-15-00007-CV

FILED IN
6th COURT OF APPEALS
IN THE COURT OF APPEALS TEXARKANA, TEXAS
FOR THE SIXTH JUDICIAL DISTRICT OF 7/30/2015 1:24:45 PM
TEXAS
TEXARKANA, TEXAS DEBBIE AUTREY
Clerk

HYDROGEO, LLC, ET AL., APPELLANTS
v.
QUITMAN INDEPENDENT SCHOOL DISTRICT, ET AL., APPELLEES

On Appeal from the 402nd Judicial District Court of Wood County, Texas,
Trial Court No. T-3625

APPELLEES’ BRIEF

LINEBARGER GOGGAN BLAIR
& SAMPSON, LLP

4828 Loop Central Drive, Suite 600
Houston, Texas 77081
(713) 844-3400 main phone
(713) 844-3504 fax
Edward J. (Nick) Nicholas
State Bar No. 14991350
Nick.Nicholas@LGBS.com
Anthony W. (Tony) Nims
State Bar No. 15031500
Tony.Nims@LGBS.com

ATTORNEYS FOR APPELEES
 CASE NO. 06-15-00007-CV

HYDROGEO, LLC, ET AL., APPELLANTS
v.
QUITMAN INDEPENDENT SCHOOL DISTRICT, ET AL., APPELLEES

IDENTITY OF THE PARTIES AND COUNSEL

Appellants Counsel for Hydrogeo, LLC and
Hydrogeo, LLC (“Hydrogeo”) First Bank & Trust East Texas
and First Bank & Trust East
Texas (“First Bank”) J. Don Westbrook
(collectively “Appellants”) Michel E. Starr
Coghlan, Crowson, LLP
1127 Judson Road, Suite 211
P.O. Box 2665
Longview, Texas 75606-2665

DeBerry Operating Counsel for DeBerry 3 Operating
Company, LLC (“DeBerry”) 1 Company, LLC

Michael L. Dunn
Smead, Anderson & Dunn
2110 Horseshoe Lane
Longview, Texas 75606

Appellees Counsel for Appellees
Wood County, Upper Sabine
Waste Disposal District and Edward J. (Nick) Nicholas
Wood County Central Anthony W. (Tony) Nims
Hospital District Linebarger Goggan Blair & Sampson, LLP
(“Appellees”) 4828 Loop Central Drive, Suite 600
Houston, Texas 77081

1
DeBerry’s appeal was severed (06-15-00036-CV) and then dismissed on July 24, 2015.

i
 Jim L. Lambeth
Alison Wylie
Linebarger Goggan Blair & Sampson, LLP
1517 W. Front Street, Suite 202
Tyler, Texas 75702

Appellee Counsel for Quitman Independent
Quitman Independent District School District
School District
(“Quitman ISD”) David Hudson
Perdue, Brandon, Fielder,
Collins & Mott, LLP
P.O. Box 2007
Tyler, Texas 75710

ii
 TABLE OF CONTENTS

INDEX OF AUTHORITIES ............................................................................ v

STATEMENT OF THE CASE ........................................................................ 1

STATEMENT REGARDING ORAL ARGUMENT ....................................... 2

RE-STATEMENT OF THE ISSUES PRESENTED ........................................ 3

STATEMENT OF FACTS ................................................................................ 4

SUMMARY OF THE ARGUMENT ................................................................ 6

ARGUMENT AND AUTHORITIES ............................................................... 8

ISSUE NO. 1. THE TRIAL COURT DID NOT ERR WHEN
IT ADMITTED PLAINTIFF’S EXHIBIT A ~ THE UPDATED
TAX RECORDS – INTO EVIDENCE. ............................................. 8

A. Lack of Surprise Exception ...........................................8

B. Appellants Were Not Unfairly Surprised ......................9

C. The Trial Court Implicitly Found Good Cause by
Admitting the Updated Tax Records Into Evidence ......10

D. The Change Was Not Material ......................................12

E. The Trial Court’s Decision Should Be Upheld .............14

F. Admission of the Updated Tax Records Did Not
Result In An Improper Judgment ..................................14

ISSUE NO. 2. THE TRIAL COURT DID NOT ERR WHEN
IT RULED THE ENTIRE TAX LIEN ENFORCEABLE
AGAINST HYDROGEO AND FIRST BANK. ..............................16

A. The Judgment Only Forecloses on Real Property -
Not Personal Property ....................................................16

iii
 B. Hydrogeo Admits that It Owns the Real Property ........18

C. The Updated Tax Records Prove the
Amounts Owed ..............................................................19

ISSUE NO. 3. APPELLANTS FAILED TO PROVE
ANY REVERSIBLE ERROR OCCURRED, OR THAT
THE TRIAL COURT ABUSED ITS DISCRETION. . ................... 23

CONCLUSION AND PRAYER FOR RELIEF ............................................... 25

CERTIFICATE OF COMPLIANCE ................................................................ 27

CERTIFICATE OF SERVICE.......................................................................... 27

iv
 INDEX OF AUTHORITIES

Cases Page

Alvardo v. Farh Mfg. Co., 830 S.W.2d 911, 914 (Tex.1992) .......................... 10

Barnett v. County of Dallas, 175 S.W.3d 919, 924 (Tex.App.-
Dallas 2005, no pet.) .............................................................................. 10

Butnaru v. Ford Motor Co., 84 S.W.3d 198, 211 (Tex.2002) ......................... 24

Cano v. Nino’s Paint & Body Shop, No. 14-08-00033-CV, 2009
WL 1057622, at **3-4 (Tex.App.-Houston [14th Dist.],
2009, no pet.)(mem. op.) ................................................................... 11, 14

Cire v. Cummings, 134 S.W.3d 835, 838-39 (Tex.2004) ................................. 23

Davis v. City of Austin, 632 S.W.2d 331, 333 (Tex.1982) ........................... 20, 24

Exxon Corp. v. W. Tex. Gathering Co., 868 S.W.2d 299, 304 (Tex.1993) ..... 13

Felt v. Harris County; No. 14-12-00327-CV, 2013 WL 1738604.
at *3, (Tex. App.—Houston [(14th Dist], Apr. 23, 2013,
no pet.) (mem. op.) ................................................................................. 20

Gatlin v. Moore, No. 01-11-00738-CV, 2013 WL 655189, at *5
(Tex.App.-Houston [1st Dist.] Feb. 21, 2013, no pet.)
(mem. op.) ...................................................................................... 9, 11, 14

Graff v. Whittle, 947 S.W.2d 629, 639 (Tex.App.-Texarkana 1997,
writ denied) ............................................................................................ 10

Griffin Indus. Inc. v. Honorable Thirteenth Court of Appeals,
934 S.W.2d 349, 355 (Tex.1996) ........................................................... 23

In re Barber, 982 S.W.2d 364, 366 (Tex.1998) ............................................... 23

In re EPIC Holdings, Inc., 985 S.W.2d 41, 57 (Tex.1998) ........................ 23, 24

v
Marin v. IESI Tx Corp., 317 S.W.3d 314, 323 (Tex.App.-
Houston [1st Dist.] 2010, pet. denied) .............................................. 11, 14

Matador Prod. Co. v. Weatherford Artificial Lift Systems, Inc.,
450 S.W.3d 580, 595 (Tex.App.-Texarkana 2014, pet. denied) ............. 14

Maximum Medical Improvement, Inc. v. County of Dallas,
272 S.W.3d 832 (Tex. App.—Dallas, 2008, no pet.) ...................... 18, 19

Morrow v. H.E.B., Inc., 714 S.W.2d 297, 298 (Tex.1986) .............................. 14

National Medical Financial Services, Inc. v. Irving ISD,
150 S.W.3d 901, 906 (Tex. App.—Dallas, 2004, no pet.) .................... 21

Navistar Int’l Transp. Corp. v. Crim Truck & Tractor Co., 883
S.W.2d 687, 691 (Tex.App.-Texarkana 1994, writ denied) .................. 13

Nissan Motor Co. v. Armstrong, 145 S.W.3d 131, 144 (Tex.2004) ................ 14

Owens-Corning Fiberglas Corp. v. Malone, 972 S.W.2d 35, 43
(Tex.1998) .............................................................................................. 14

Perry Homes v. Cull, 258 S.W.3d 580, 602 (Tex.2008) .................................. 23

Pilgrim’s Pride Corp. v. Smoak, 134 S.W.3d 880, 902-3 (Tex.App.-
Texarkana 2004, pet. denied) ...................................................... 11, 12, 13

Ramos v. Champlin Petroleum Co., 750 S.W.2d 873, 877 (Tex.App.-
Corpus Christi 1998, pet. denied) .................................................... 11, 14

Reagan v. Vaughn, 804 S.W.2d 463, 464 (Tex.1990) ..................................... 11

Richards v. Tebbe, No. 14-13-00413-CV, 2014 WL 2936425, at *7
(Tex.App.-Houston [14th Dist.] June 26, 2014, no pet.)
(mem. op.) ........................................................................................ 9, 14

Sheffield, Tax Collector v. Hogg, 77 S.W.2d 1021, 1024 (Tex.1934) ............. 17

Unifund CCR Partners v. Villa, 299 S.W.3d 92, 97 (Tex.2009) ..................... 24

vi
Wal-Mart Stores, Inc. v. Tinsley, 998 S.W.2d 664, 671 (Tex.App.-
Texarkana 1999, pet. denied) ...................................................... 10, 11, 14

Williams v. County of Dallas, 194 S.W.3d 29, 33 (Tex.App.-
Dallas 2006, pet. denied) .............................................. 8, 9, 11, 13, 14, 15

Statutes, Regulations & Rules Page

TEX. R. APP. P. 9.4(i)(1) ................................................................................... 27
TEX. R. APP. P. 38.1(d) ..................................................................................... 1
TEX. R. APP. P. 38.1(g) ..................................................................................... 4
TEX. R. APP. P. 39 ............................................................................................. 2
TEX. R. APP. P. 44.1 .................................................................................... 14, 23
TEX. R. CIV. P. 193.6 ........................................................................................ 8
TEX. R. CIV. P. 193.6(a)(2) ............................................................................... 8
TEX. TAX CODE § 1.04(2)(D) ..................................................................... 16, 17
TEX. TAX CODE § 1.04(4) ................................................................................. 16
TEX. TAX CODE § 25.02(b) ............................................................................... 20
TEX. TAX CODE § 33.01 .............................................................................. 12, 13
TEX. TAX CODE § 33.42(a) ......................................................................... 10, 13
TEX. TAX CODE § 33.42(b) ......................................................................... 10, 15
TEX. TAX CODE § 33.47(a) .................................................................... 20, 22, 24

vii
 STATEMENT OF THE CASE

Appellant’s Statement of the Case fails to comply with Rule 38.1(d), TEX. R.

APP. P. Accordingly, Appellees provide the following Statement of the Case.

On July 24, 2012, Appellees filed their Original Petition to recover ad valorem

taxes owed on real property for tax years 2009 through 2011 (“Tax Suit). (CR at 8-

14). On July 2, 2013, Appellees filed their First Amended Petition which added

Hydrogeo and First Bank as Defendants. (CR at 36-43). On August 8 and 14, 2013,

respectively, Hydrogeo and First Bank filed their First Amended Answers. (CR 54-

57 and 58-60). On March 6, 2014, Appellees filed their Second Amended Petition.

(CR 164-69). On September 18, 2014, the case was tried before the Honorable G.

Timothy Boswell, Presiding Judge of the 402nd Judicial District Court of Wood

County, Texas. (RR Vol. 2, p. 7-119). On January 14, 2015, the Trial Court entered

a Judgment against Hydrogeo, First Bank and others, and in favor of Appellees and

Quitman ISD. (CR 199-203). On February 4 and 26, 2015, the Trial Court issued

identical Findings of Fact and Conclusions of Law. (CR 217-21 and 227-31,

respectively). On January 21, 2015, Appellants filed their Notice of Appeal. (CR

204-05). Appellants’ Brief was filed on July 2, 2015.

1
 STATEMENT REGARDING ORAL ARGUMENT

Appellees do not believe that oral argument would significantly aid the

decisional process, but if the Court grants oral argument, then the customary time

limits should apply. Rule 39, TEX. R. APP. P.

2
 RE-STATEMENT OF THE ISSUES PRESENTED

ISSUE NO. 1

THE TRIAL COURT DID NOT ERR WHEN IT
ADMITTED PLAINTIFFS’ EXHIBIT A ~ THE UPDATED
TAX RECORDS ~ INTO EVIDENCE.

ISSUE NO. 2

THE TRIAL COURT DID NOT ERR WHEN IT HELD
THE ENTIRE TAX LIEN ENFORCEABLE AGAINST
HYDROGEO AND FIRST BANK.

ISSUE NO. 3

APPELLANTS FAILED TO PROVE ANY REVERSIBLE
ERROR OCCURRED, OR THAT THE TRIAL COURT
ABUSED ITS DISCRETION.

3
 STATEMENT OF FACTS

Because it fails to “state concisely and without argument the facts pertinent”

to this appeal, Appellant’s Statement of Facts violates Rule 38.1(g), TEX.R.APP.P.

(Brief at 1-5). Therefore Appellees object to Appellant’s Statement of Facts in its

entirety, and provide the following Statement of Facts in the alternative.

On July 24, 2012, Appellees filed the Tax Suit to recover delinquent taxes on

four Tracts of real property for tax years 2009 through 2011. (CR at 8-14).

Subsequently, Appellees’ Second Amended Petition limited the Tax Suit to two

Tracts of real property:

Tract 1 is a 0.833335 Interest in the White Denton Lease #154550,
Abstract 588, the D Townsend Survey; and

Tract 2 is a 0.875 Working Interest in the IE Robinson Lease #133400,
Abstract 588, the D Townsend Survey.

(collectively “Real Property”) (CR at 164-169). The case was tried on September

18, 2014, and a Judgment was entered on January 14, 2015. (CR at 199-203). The

Judgment was against Hydrogeo, First Bank and others, and in favor of Appellees

and Quitman ISD. (Id.). The Trial Court also entered Findings of Fact and found

that, as of the day of trial:

(a) Taxes, penalties and interest in the amount of $82,403.87 were due
and owing on the two Tracts,

4
 (b) Hydrogeo and DeBerry owned Tract 1 and First Bank was a
lienholder on Tract 1, and

(c) Hydrogeo owned Tract 2 and First Bank was a lienholder on Tract
2.

(CR at 217-221, Findings of Fact, ¶¶ 1, 8-9, and 17-18 and 227-31, Findings of Fact,

¶¶ 1, 8-9, and 17-18).

The Trial Court then concluded that Appellees were entitled to recover: (a) an

in rem Judgment from Hydrogeo and First Bank on the Real Property, (b) a Judgment

foreclosing the tax liens attached to the Real Property, and (c) an Order of Sale. (CR

at 217-221, Conclusions of Law, ¶¶ 6-7, 10 and 12, and 227-31, Conclusions of Law,

¶¶ 6-7, 10 and 12).

5
 SUMMARY OF THE ARGUMENT

Appellants argue that the Trial Court erred when it admitted Plaintiffs’ Exhibit

A into evidence. However, Plaintiffs’ Exhibit A 2 is a tax record which was just

updated to include the taxes, penalties and interest which had accrued since a prior

production. Moreover, Appellants could not have been surprised by the change

because Appellees, in their Petitions and discovery responses, had provided

Appellants advance notice that they would seek all taxes that became delinquent

subsequent to the filing of the lawsuit, up to the day of judgment. Moreover, the

Updated Tax Records did not contain a material change from the previous tax record,

and therefore did not require supplementation, and could not have resulted in an

improper Judgment because the TEX. TAX CODE (“TAX CODE”) requires the taxing

authority to seek, and the Judgment to award, all taxes, penalties and interest due

and owing as of trial. Therefore, because the Updated Tax Records did not constitute

an unfair surprise, and could not have resulted in an improper Judgment, the Trial

Court had a legitimate basis for implicitly finding good cause and admitting the

Updated Tax Records.

2
The document which Appellants identify as Plaintiff’s Exhibit A is Appellees’ “Certified
Copy of Tax Records” dated August 22, 2014. (RR Vol. 3, Exhibit A, hereafter “Updated Tax
Records”).

6
 Appellants also argue that the Trial Court erred when it found the entire tax

lien enforceable against Appellants. However, the tax lien forecloses on Real

Property - not Appellants’ personal property, and the Judgment is supported by: (a)

Hydrogeo’s admissions that it owns the Real Property, (b) Appellees’ prima facie

case establishing the amount of delinquent taxes, penalties and interest owed, (c) the

testimony of Wood County’s Tax Assessor-Collector on both of these topics, and

(d) the Appellants’ failure to offer any evidence challenging the amounts listed in

the Updated Tax Records.

In addition, Appellants failed to prove that any reversible error occurred, or

that the Trial Court abused its discretion.

Accordingly, the Trial Court’s Judgment should be affirmed in its entirety.

7
 ARGUMENT AND AUTHORITIES

ISSUE NO. 1

THE TRIAL COURT DID NOT ERR WHEN IT
ADMITTED PLAINTIFFS’ EXHIBIT A ~ THE
UPDATED TAX RECORDS ~ INTO EVIDENCE.

Appellants claim that, pursuant to Rule 193.6, TEX. R. CIV. P., the Trial Court

erred when it admitted the Updated Tax Records because they had not been produced

prior to trial. (Brief at 7-11). Moreover, Appellants claim that Rule 193.6

automatically requires exclusion in such cases. (Id.). However, Rule 193.6(a)(2)

does not require exclusion when the complaining party will not be unfairly surprised

by the admission.

A. Lack of Surprise Exception

Rule 193.6(a)(2) states that a party who fails to produce or supplement

evidence may not introduce the evidence that was not timely disclosed, unless “the

failure to timely make, amend, or supplement, the discovery response will not

unfairly surprise or unfairly prejudice the other parties.” In a case virtually identical

to this case, Williams v. County of Dallas, 194 S.W.3d 29, 33 (Tex.App.-Dallas

2006, pet. denied), the Court held that, because the taxing units provided notice that

they would be seeking recovery of all unpaid taxes, the taxing unit’s failure to

produce a tax statement would not unfairly surprise the taxpayer:

8
 It is not disputed that the taxing units did not disclose the tax statement
in response to Williams’ request for disclosure. However, it is clear
Williams was given notice that the taxing units were attempting to
collect all unpaid taxes assessed against the property, not just unpaid
taxes through 1999. In their original petition, the taxing units
described the property against which the taxes were assessed; stated
they sought delinquent taxes, penalties, interest, and costs owed
against the property; attached a copy of the taxes delinquent through
1999; and gave notice the lawsuit included all claims for taxes
becoming delinquent on the property after the lawsuit was filed and
up to the day of judgment.

The court concluded that a lack of unfair surprise “was a legitimate basis for the trial

court to admit the delinquent tax statement in evidence.” Id. See also, Richards v.

Tebbe, No. 14-13-00413-CV, 2014 WL 2936425, at *7 (Tex.App.-Houston [14th

Dist.] June 26, 2014, no pet.)(mem. op.) (Appellant was not unfairly surprised when

he knew the evidence existed and he had equal access to it); Gatlin v. Moore, No.

01-11-00738-CV, 2013 WL 655189, at *5 (Tex.App.-Houston [1st Dist.] Feb. 21,

2013, no pet.)(mem. op.)(no abuse of discretion when Appellant was not unfairly

surprised by the admitted evidence).

B. Appellants Were Not Unfairly Surprised

Appellants were not unfairly surprised by the Updated Tax Records because

Appellees’ Original, First Amended and Second Amended Petitions expressly state:

Claims for all taxes becoming delinquent on said property at any time
subsequent to the filing of this suit, up to the day of judgment, including
all penalties, interest, attorney’s fees, and costs on same, are

9
 incorporated in this suit, and Plaintiff(s) is entitled to recover the same,
upon proper proof, without further citation or notice.

(CR at 9, ¶ II, at 37, ¶ II; at 165, ¶ II).

Furthermore, Appellees disclosed, in their Responses to Appellants’

discovery requests 3, that they were seeking taxes pursuant to the TAX CODE, which

includes §§ 33.42(a) (“a taxing unit shall include all delinquent taxes due the unit

on the property”), and 33.42(b) (“the court shall include the amount of the tax and

any penalty and interest in its judgment.” )(emphasis added). Moreover, Appellants

had equal access to the information because tax records are public records 4.

Accordingly, Appellants could not have been surprised by the Updated Tax Records.

C. The Trial Court Implicitly Found Good Cause by Admitting
the Updated Tax Records into Evidence

The Trial Court has discretion to determine whether the offering party has

shown good cause to admit the evidence. Wal-Mart Stores, Inc. v. Tinsley, 998

S.W.2d 664, 671 (Tex.App.-Texarkana 1999, pet. denied), citing, Alvardo v. Farh

3
See: (a) Appellees’ Response to Hydrogeo’s Request for Disclosure (CR at 69-72 and more
specifically at 70, ¶¶ 3-4, p. 2) and attached documents (CR at 73-77), and (b) Appellees’
Responses to Appellants’ Request for Admissions, Interrogatories and Request for Production (CR
at 78-87 and specifically Appellees’ answers to Interrogatories No. 12 and 13, at 82-83, and
responses to Requests for production No. 7 and 8, at 85) and attached documents (CR at 88-163
and more specifically 143-63)
4
See Barnett v. County of Dallas, 175 S.W.3d 919, 924 (Tex.App.-Dallas 2005, no pet.)
(court did not abuse discretion by denying motion to compel county to produce public record);
Graff v. Whittle, 947 S.W.2d 629, 639 (Tex.App.-Texarkana 1997, writ denied) (public records
not considered in possession of any party).

10
Mfg. Co., 830 S.W.2d 911, 914 (Tex.1992). Moreover, the Trial Court can implicitly

find good cause just by admitting the evidence:

The trial court ruling ‘does not expressly state that Tinsley
demonstrated good cause in failing to supplement … We find,
however, that the trial court implicitly found good cause’.

Wal-Mart, 998 S.W.2d at 671, citing, Ramos v. Champlin Petroleum Co., 750

S.W.2d 873, 877 (Tex.App.-Corpus Christi 1998, pet. denied) 5 (“The trial court

implicitly found good cause when it allowed Steve Surface to testify.”).

Texas courts have found good cause to be shown by information contained in:

(a) pleadings6, (b) discovery responses 7, and even (c) discussions between counsel 8.

In this case, good cause is shown by:

(a) Appellees providing Appellants notice, more than a year before

trial, that they are seeking “all taxes becoming delinquent on said property at any

time subsequent to the filing of this suit, up to the day of judgment”. (See Original,

First Amended and Second Amended Petitions, CR at 9, ¶ II; at 37, ¶ II; and at 165,

¶ II, respectively);

5
Abrogated on other grounds, Reagan v. Vaughn, 804 S.W.2d 463, 464 (Tex.1990).
6
Gatlin, 2013 WL 655189, at *5; Marin v. IESI Tx Corp., 317 S.W.3d 314, 323 (Tex.App.-
Houston [1st Dist.] 2010, pet. denied); Cano v. Nino’s Paint & Body Shop, No. 14-08-00033-CV,
2009 WL 1057622, at **3-4 (Tex.App.-Houston [14th Dist.] 2009, no pet.)(mem. op.); and
Williams, 194 S.W.3d at 33.
7
Gatlin, 2013 WL 655189, at *5; Marin, 317 S.W.3d at 323.
8
Pilgrim’s Pride Corp. v. Smoak, 134 S.W.3d 880, 902-3 (Tex.App.-Texarkana 2004, pet.
denied) (change in evidence was discussed at pretrial conference).

11
 (b) Appellees providing Appellants the same notice9 in Appellees’

Response to Hydrogeo’s Request for Disclosure10, and Appellees’ Responses to

Appellants’ Request for Admissions, Interrogatories and Request for Production 11;

and

(c) prior to admitting the Updated Tax Records, the Trial Court

verified that the Updated Tax Records were simply an update of the previously

produced tax records:

The Court: So this is simply the updated tax rolls?
Mr. Lambeth: Yes, Your Honor.
The Court: The Court recognizes there is a duty to supplement,
but given the nature of this, I’m going to overrule
the objections and admit it.

(RR Vol. 2, p. 9, l. 2-7). Clearly the Trial Court implicitly found good cause when

it admitted the Updated Tax Records into evidence.

D. The Change Was Not Material

The change between the tax records that were produced in 2013 and the

Updated Tax Records was not material, and therefore it was admissible without

supplementation. Pilgrim’s, 134 S.W.3d at 902 (The change was not a material

9
Appellants were also provided the August 2013 tax records (CR at 73-77) which contained
the information necessary to calculate the amounts that would be due and owing on the date of
trial per § 33.01, TAX CODE.
10
CR at 69-72 and more specifically at 70, ¶¶ 3-4, p. 2.
11
CR at 78-87 and specifically Appellees’ answers to Interrogatories No. 12 and 13, at 82-
83, and response to Requests for production No. 7 and 8, at 85.

12
change, “[t]he only difference was a change to the post-accident wages variable.

This falls somewhere between a refinement in calculations, (citation omitted), and

an expansion of an already disclosed subject, (citation omitted), both of which are

admissible without the need for supplementation.”)12.

As applied, Appellants’ position would require Appellees to produce a new

tax statement every time additional taxes, penalties and interest are added to an

account - even if it is just 1 penny. However, Texas law does not require

supplementation when the change is not material. (Id.). Here, the only change was

the addition of taxes, penalties and interest that had accrued between the last

production date and the date of supplementation. (CR at 144-48 (November 5,

2013); RR Vol. 3, Exhibit A (August 22, 2014)). This change was not material

(approximately 6.032%), was required by the TAX CODE13, and was calculated

pursuant to the TAX CODE. 14 Accordingly, Appellees were not even required to

produce the Updated Tax Records, and therefore, the Trial Court did not err when it

admitted them into evidence.

12
The cases cited were Exxon Corp. v. W. Tex. Gathering Co., 868 S.W.2d 299, 304
(Tex.1993) and Navistar Int’l Transp. Corp. v. Crim Truck & Tractor Co., 883 S.W.2d 687, 691
(Tex.App.-Texarkana 1994, writ denied), respectively.
13
Williams, 194 S.W.3d at 33, citing, § 33.42(a), TAX CODE (“taxing unit shall include all
taxes due on property in suit to collect delinquent taxes.”).
14
§ 33.01, TAX CODE.

13
E. The Trial Court’s Decision Should Be Upheld

The Trial Court’s decision to admit the Updated Tax Records must be upheld

if there is any legitimate basis for the ruling. Marin, 317 S.W.3d at 322, citing,

Owens-Corning Fiberglas Corp. v. Malone, 972 S.W.2d 35, 43 (Tex.1998); Cano

2009 WL 1057622, at *2; Ramos, 750 S.W.2d at 877 (“Determination of good cause

is within the sound discretion of the trial court and can only be set aside if that

discretion was abused.”), citing, Morrow v. H.E.B., Inc., 714 S.W.2d 297, 298

(Tex.1986). Texas courts have repeatedly held that a lack of unfair surprise is a

legitimate basis for admitting evidence. Williams, 194 S.W.2d at 33, Richards, 2014

WL 2936425, at *7 and Gatlin, 2013 WL 655189, at *5. Accordingly, the Trial

Court’s decision to admit the Updated Tax Records should be upheld.

F. Admission of the Updated Tax Records Did Not Result
In An Improper Judgment

A Court of Appeals should “reverse only when the trial court’s error in

admitting or excluding evidence probably resulted in an improper judgment.”

Matador Prod. Co. v. Weatherford Artificial Lift Systems, Inc., 450 S.W.3d 580, 595

(Tex.App.-Texarkana 2014, pet. denied), citing, Nissan Motor Co. v. Armstrong, 145

S.W.3d 131, 144 (Tex.2004); Rule 44.1, TEX. R. APP. P.

Appellants claim that – because the Updated Tax Records were the only

evidence admitted, the admission had to result in an improper Judgment. (Brief at

14
11). However, the Updated Tax Records were supported by, inter alia, the testimony

of Ms. Carol Taylor, who testified: (a) she was Wood County’s Tax Assessor-

Collector, (b) the Updated Tax Records were records of her office and (c) that

Hydrogeo, as the owner of Tracts 1 and 2, owed the taxes listed in the Updated Tax

Records:

Q. There’s no taxes due, correct?
A. Taxes following the property, yes, sir, there are.
Q. [Referring to the Updated Tax Records] Do you see any of
those documents that says Hydrogeo owes taxes?
A. Based on the fact that Hydrogeo is now the owner of the
same decimal interest of the delinquent taxes, yes, sir.

(RR Vol. 2, (a) p. 79, l. 8-13, (b) p. 80, l. 4-11, and (c) p. 85, l. 24 through p. 86, l.

6).

Moreover, the Updated Tax Records did not result in improper Judgment

because Texas law requires that all post-filing amounts be included in the Judgment.

Williams, 194 S.W.3d at 33, citing, § 33.42(b) (If taxes become delinquent after suit

is filed, “the court shall include the amount of the tax and any penalty and interest

in its judgment.”). Therefore, the Trial Court would have erred if the Judgment did

not include the amounts contained in the Updated Tax Records.

Accordingly because there was a legitimate basis for the Trial Court’s

decision to admit the Updated Tax Records, and because that admission did not

result in an improper Judgment, this Court should find that the Trial Court did not

err when it admitted the Updated Tax Records into evidence.

15
 ISSUE NO. 2

THE TRIAL COURT DID NOT ERR WHEN IT
RULED THE ENTIRE TAX LIEN
ENFORCEABLE AGAINST HYDROGEO AND
FIRST BANK.

Appellants argue that the Trial Court erred when it found them liable in rem

for the entire amount of taxes owed on the Real Property. However, the Trial Court

did not err because the Judgment forecloses a lien on Real Property – not personal

property, and because Appellees supplemented their prima facie evidence with

witness testimony.

A. The Judgment Only Forecloses On Real Property – Not Personal Property

Appellees’ Second Amended Petition (“Petition”) was the live pleading at

trial and it sought to foreclose a tax lien on two real property tax accounts. (CR at

164-69). As described in the Petition, Tracts 1 and 2 are identified as interests in a

mineral interest lease in Abstract 588 of the real property records of Wood County,

Texas. (Id.). Pursuant to the Tax CODE, “Real property” includes “a mineral in

place”, and “Personal property” is defined as “property that is not real property”. §§

1.04(2)(D) and (4), TAX CODE. Further, it has long been established in Texas that

an oil and gas lease “operates to invest the lessee with a determinable fee in oil and

gas in place”, and that it conveys an “interest in land, subject to taxation as such in

16
the counties in which the respective tracts of land are situated.” Sheffield, Tax

Collector v. Hogg, 77 S.W.2d 1021, 1024 (Tex.1934).

Appellants mistakenly cite to the Petition as proof that a portion of the

Judgment was due to Hydrogeo’s personalty, and that Appellees sought to foreclose

a lien against both personal and real property. (Brief at 16) (“Its petition states that

‘the value of any personal property that may be described above, and which the tax

lien is sought to be enforced, is in excess of FIVE HUNDRED AND NO

100/DOLLARS ($500.00)”. (emphasis added). However, the Petition is a form

petition and there is no personal property described above. (CR at 164-69, and

more specifically 165-67). The only property described in the Petition are Tracts 1

and 2 – which are Real Property. Id.; § 1.04(2)(D); Sheffield, 77 S.W.2d at 1024.

Nothing in the Petition, or the evidence introduced at trial, purports to foreclose a

lien on pipelines, tanks, equipment or any other personal property. More

importantly, the Judgment only forecloses the tax lien against Real Property (Tracts

1 and 2). (CR at 199-203, and more specifically 199-200).

As a result, the Appellants’ arguments that the tax lien should not attach to the

personal property, and/or that Hydrogeo bought the personal property as a buyer in

the ordinary course of business, are not relevant or applicable because the Appellees

only sought, and were only awarded, a Judgment against the Real Property - not the

personal property.

17
B. Hydrogeo Admits that It Owns the Real Property

Appellants also argue that the Updated Tax Records are insufficient to prove

ownership. (Brief at 12-13). However, Hydrogeo admitted at trial that it owns the

Real Property through the testimony of its owner, Mr. William Godsey, Jr. 15, and its

designated Landman, Ms. Loretta Ward 16. Accordingly, this testimony, standing

alone, proves that Hydrogeo owns the Real Property.

Moreover, Appellants reliance on Maximum Medical Improvement, Inc. v.

County of Dallas, 272 S.W.3d 832 (Tex. App.—Dallas, 2008, no pet.) is misplaced.

In Maximum Medical, the Court noted that the certified tax statement showed the tax

to be assessed against a party other than the defendant, that the defendant had raised

a denial of ownership in its pleadings, and concluded that Dallas County did not

introduce legally sufficient evidence to support its claim that MMI owned the

property. (Id., at 837). But Maximum Medical only applies when the taxpayer

denies ownership, and here Hydrogeo admits ownership. Moreover, Maximum

Medical involved a tax claim for personal liability on personal property. Here,

Appellees only sought to foreclose their tax lien in rem on Real Property. More

importantly, the Trial Court only awarded an in rem Judgment.

15
Mr. Godsey testified that Hydrogeo owns 50% in the Denton well (Tract 1) and 100% in
the Robinson well (Tract 2). (RR Vol. 2, p. 53, l. 3-7 and p. 54, l. 4-18).
16
Ms. Ward testified that she was a Petroleum Landman retained by Hydrogeo to research
Wood County records, and that Hydrogeo owned the Denton (Tract 2) and Robinson (Tract 1)
wells. (RR Vol. 2, p. 23, l. 16-24, p. 25, l. 14-21).

18
 That [Quitman ISD and Appellees] … recover of and from the
following named Defendants, if any, an in rem judgment in the
amount of taxes, penalties, interest, attorneys fees, and costs shown
above: Hydrogeo, LLC; Deberry 3 Operation Company, LLC;
and First Bank & Trust East Texas;

(CR at 199-203, and more specifically 201) (first emphasis added, second emphasis

in Original). Therefore, Maximum Medical is not applicable to this case.

Accordingly, based on the testimony of Hydrogeo’s President and Landman,

coupled with the testimony of Wood County’s Tax Assessor-Collector and the

Updated Tax Records,17 the Trial Court had sufficient evidence to find that

Hydrogeo owns the Real Property.

C. The Updated Tax Records Prove the Amounts Owed

The Court admitted the Updated Tax Records which are certified tax

statements setting forth the amount of taxes, penalties and interest due on the subject

tax accounts. (RR Vol. 2, p. 9, l. 2-7). The TAX CODE provides that the certified tax

statements constitute prima facie evidence of, inter alia, the amounts of delinquent

taxes, penalties and interest owed by the taxpayer:

In a suit to collect a delinquent tax, the taxing unit’s current tax roll
and delinquent tax roll or certified copies of the entries showing the
property and the amount of the tax and penalties imposed and interest
accrued constitute prima facie evidence that each person charged with
a duty relating to the imposition of the tax has complied with the

17
(RR Vol. 2: (a) p. 53, l. 3-7 and p. 54, l. 4-18; (b) p. 23, l. 16-24 and p. 25, l. 14-21; (c) p.
85, l. 24 through p. 86, l. 6); and (d) RR Vol. 3, Exhibit A).

19
 requirements of law and that the amount of tax alleged to be delinquent
against the property and the amount of penalties and interest due on
that tax as listed are the correct amounts.

Section. 33.47(a), TAX CODE.

Further, the Texas Supreme Court has held that a certified tax statement, by

itself, is prima facie evidence of every fact necessary for a taxing jurisdiction to

prevail:

Under these principles, the taxing authority established its prima facie
case as to every material fact necessary to establish the cause of action
when it introduced a copy of the delinquent tax record, certified by the
proper taxing authority to be true and correct with the amount stated
thereon to be unpaid.

Davis v. City of Austin, 632 S.W.2d 331, 333 (Tex.1982).

Appellants, however, argue that the Updated Tax Records do not prove the

amounts owed because the wrong owner is listed on the records. (Brief at 14). But

misidentification of the owner is only relevant to the question of ownership, it does

not affect the presumption in favor of the amounts due and owing:

[A] certified delinquent-tax statement is prima facie evidence of the
amount of penalties, tax and interest, and on those matters, and the
County relied solely on the presumption under section 33.47(a) that
these amounts are due, delinquent and unpaid. Felt offered no
evidence to rebut that presumption, which is not undermined by the
misidentification of the property’s owner.

Felt v. Harris County; No. 14-12-00327-CV, 2013 WL 1738604, at *3, (Tex. App.—

Houston [(14th Dist], Apr. 23, 2013, no pet.) (mem. op.) (emphasis added), citing,

TAX CODE § 25.02(b) (“A mistake in the name or address of an owner does not affect

20
the validity of the appraisal records, of any appraisal or tax roll based on them, or of

the tax imposed.”).

Once the prima facie case is established, “the burden then shifts to the

taxpayer to show, by introducing competent evidence, that he has paid the full

amount of taxes, penalties and interest, or that there is some other defense that

applies to his case.” National Medical Financial Services, Inc. v. Irving ISD, 150

S.W.3d 901, 906 (Tex. App.—Dallas, 2004, no pet.). As a result, the Appellants

bore the burden of proof on any challenge to the amounts listed in the Updated Tax

Records.

But Appellants did not offer any evidence regarding whether any portion of

the personal property’s value was included in the Real Property’s appraised value.

Although Hydrogeo’s President testified as to his “opinion as to the value of the

personalty”, and compares his opinion to the Real Property’s appraised value, he

does not testify as to what amount of the personalty’s value was – or should have

been – included in the Real Property’s appraised value. (RR Vol. 2, p. 59, l. 10-21,

p. 60, l. 5 – p. 61, l. 12). Moreover, Hydrogeo did not even ask Wood County’s

Chief Appraiser, Mr. Tracy Nichols, whether any amount of the personalty’s value

was included in the Real Property’s appraised value. (RR Vol. 2, p. 75, l. 5 – p. 76,

l. 9).

21
 Accordingly, the only evidence of the Real Property’s value, and “the amount

of penalties, tax and interest ... [that] are due, delinquent and unpaid”, are the

Updated Tax Records and the testimony of Wood County’s Tax Assessor-Collector.

Therefore: (a) Appellees proved a prima facie case agai3nst the Appellants pursuant

to § 33.47(a), TAX CODE, but (b) Appellants failed to present any evidence

challenging the Updated Tax Records, and (c) Appellants failed to prove a sufficient

legal defense. Consequently, the Court should affirm the Trial Curt’s Judgment in

its entirety.

22
 ISSUE NO. 3

APPELLANTS FAILED TO PROVE ANY
REVERSIBLE ERROR OCCURRED, OR THAT
THE TRIAL COURT ABUSED ITS
DISCRETION.

Pursuant to Rule 44.1, TEX. R. APP. P., no judgment may be reversed on appeal

unless “the error complained of: (1) probably caused the rendition of an improper

judgment; or (2) probably prevented the appellant from properly presenting the case

to the court of appeals.” First, Appellants do not contend that any alleged error

prevented them from properly presenting their case to this Court. Second, although

Appellants do assert that the Trial Court erred in admitting the Updated Tax Records,

and in finding them liable for the entire amount of taxes owed on the Real Property,

as demonstrated above the Trial Court did not err in admitting the evidence or in

issuing its Judgment.

Furthermore, Appellant failed to show that the Trial Court abused its

discretion. The test for an abuse of discretion is whether the trial court acted without

reference to any guiding rules or principles, or arbitrarily or unreasonably. Perry

Homes v. Cull, 258 S.W.3d 580, 602 (Tex.2008), citing, Cire v. Cummings, 134

S.W.3d 835, 838-39 (Tex.2004). However, “[a] trial court does not abuse its

discretion if it bases it decision on conflicting evidence and some evidence supports

its decision.” In re Barber, 982 S.W.2d 364, 366 (Tex.1998), citing, Griffin Indus.

Inc. v. Honorable Thirteenth Court of Appeals, 934 S.W.2d 349, 355 (Tex.1996); In

23
re EPIC Holdings, Inc., 985 S.W.2d 41, 57 (Tex.1998), Butnaru v. Ford Motor Co.,

84 S.W.3d 198, 211 (Tex.2002), Unifund CCR Partners v. Villa, 299 S.W.3d 92, 97

(Tex.2009). In this case, the Trial Court acted in accordance with guiding rules and

principles, i.e. § 33.47(a), TAX CODE, and Davis, and there is at least some evidence

– the Updated Tax Statements and Ms. Taylor’s testimony - to support the Trial

Court’s Judgment.

24
 CONCLUSION AND PRAYER FOR RELIEF

Because Appellees provided advance notice that they would be seeking all

taxes, penalties and interest due as of the date of trial, the Appellants were not

unfairly surprised by the Updated Tax Records. Therefore, the Trial Court had a

legitimate basis to implicitly find good cause, and for its decision to admit the

Updated Tax Records. Moreover the Updated Tax Records, which simply updated

the tax records to include the taxes, penalties and interest which had accrued, did not

contain a material change, and the change was required by the TAX CODE. As a

result, admission of the Updated Tax Records did not, and could not, have resulted

in an improper Judgment.

Furthermore, the Updated Tax Records proved Appellees’ prima facia case as

to the amount of taxes, penalties and interest that Appellants owed on the Real

Property. In addition, the testimony of Wood County’s Tax Assessor-Collector, and

of Hydrogeo’s President and Landman, proved that Hydrogeo owns the Real

Property. Accordingly, the Trial Court did not err when it issued its Judgment

enforcing the entire tax lien against the Appellants.

Accordingly, and because Appellants failed to prove any reversible error

occurred or that the Trial Court abused its discretion, the Trial Court’s Judgment

should be affirmed in its entirety.

25
 Respectfully submitted,

LINEBARGER GOGGAN
BLAIR & SAMPSON, LLP

Edward J. (Nick) Nicholas
State Bar No. 14991350
4828 Loop Central Drive, Suite
600
Houston, Texas 77081
(713) 844-3405 direct phone
(713) 844-3400 main phone
(713) 8454-3504 fax

ATTORNEYS FOR WOOD
COUNTY APPELLEES

26
 CERTIFICATE OF COMPLIANCE

I certify that this document was produced on a computer using Microsoft

Word 2013 and contains 4,837 words, as determined by the computer software’s

word-count function, excluding the sections of the document listed in Rule 9.4(i)(1),

TEX. R. APP. P.

Edward J. (Nick) Nicholas

CERTIFICATE OF SERVICE

I certify that a copy of Wood Count Appellees’ Brief was served on the

following counsel of record via EFILE.TXCOURTS.GOV and electronic mail:

Mr. J. Don Westbrook dwestbrook@ccfww.com
Mr. Michael E. Starr mstarr@ccfww.com
Mr. Michael L. Dunn mdunn@smeadlaw.com
Mr. David Hudson dhudson@pbfcm.com

Edward J. (Nick) Nicholas

27