Ayeni v. State

• Decision Date: 20 February 2013
• Docket Number: No. 03–11–00604–CV.,03–11–00604–CV.
• Citation: 440 S.W.3d 707
• Parties: Alhaji Isa Adegori AYENI, Appellant v. The STATE of Texas; The City of Houston, Texas; and The Transit Authority of Houston, Texas, Appellees.
• Court: Texas Court of Appeals

440 S.W.3d 707

Alhaji Isa Adegori AYENI, Appellant

v.The STATE of Texas; The City of Houston, Texas; and The Transit Authority of Houston, Texas, Appellees.

No. 03–11–00604–CV.

Court of Appeals of Texas, Austin.

Feb. 20, 2013.

Tina Lin, Jorge Romero, Matthew G. Wylie, Matthew G. Wylie, P.C., Houston, TX, for Appellant.

John C. Adams, Assistant Attorney General, Cristina M. Nahidi, Bankruptcy & Collections Division, Austin, TX, for Appellees.

Before Justices PURYEAR, PEMBERTON and HENSON.

MEMORANDUM OPINION

BOB PEMBERTON, Justice.

This is an appeal from a final summary judgment in a sales tax deficiency case. We will affirm the judgment.

BACKGROUND

Appellant Ayeni operated a convenience store out of his residence in Houston, Texas. The Comptroller conducted a sales-tax audit of Ayeni's business for the period covering January 1, 2004, through December 31, 2006. Ayeni acknowledges that he “did not keep a good record of his business documents,”¹ and in the absence of such records, the Comptroller resorted to estimating Ayeni's sales and tax liability from records of Ayeni's beer purchases obtained from certain of his vendors and industry sales averages.² Through these calculations, the Comptroller determined that Ayeni owed the appellee taxing authorities³ approximately $48,000 in unpaid sales taxes for the audit period, penalties, and interest.

After Ayeni failed to pay the determination, the Comptroller issued a certificate of tax delinquency to the Attorney General's office for collection. The Attorney General subsequently sued Ayeni on appellees' behalf to recover the delinquent sales taxes, penalties, and interest as set forth in the Comptroller's certificate of deficiency, plus attorney's fees. Ayeni filed a general denial, later amended to a verified denial. Appellees filed a traditional motion for summary judgment on all of their claims, attaching as evidence the Comptroller's certificate and an affidavit from appellees' counsel averring that they had incurred $7,500 in attorney's fees in the proceeding. Ayeni filed a response to appellees' motion and a supplement, presenting affidavits from himself and his bookkeeper in which each disputed the accuracy of the Comptroller's tax calculations and underlying estimates of Ayeni's beer sales. In further support, Ayeni attached numerous receipts that purported to reflect actual beer purchases by Ayeni. Ayeni also presented an affidavit from his counsel attempting to controvert appellees' attorney's fees affidavit.

Following a hearing, the district court granted partial summary judgment that Ayeni was liable for the deficiency in the certified amount. However, it denied appellees' motion on their claim for attorney's fees.

Ayeni filed a motion to reconsider the partial summary judgment, attaching additional documents from the Comptroller reflecting the Comptroller's methodology in estimating the sales taxes Ayeni owed. Following a hearing, the district court denied the motion for reconsideration by written order. To ensure “a clear appellate record,” the order further specified that the district court had ultimately considered the entirety of the evidence and arguments Ayeni had filed in the case in its summary-judgment ruling.

Subsequently, the district court signed a final judgment incorporating its earlier partial summary judgment and awarding appellees $2,000 in attorney's fees.⁴ It is from this final judgment that Ayeni now appeals.

ANALYSIS

Ayeni seeks reversal of the district court's judgment in four issues that claim error in the summary-judgment ruling. In his first two issues, Ayeni asserts that he presented summary-judgment evidence of his tax liability that controverted the Comptroller's certificate and raised a fact issue that precluded summary judgment for appellees. In his third issue, Ayeni insists that the district court erred or abused its discretion by granting partial summary judgment when appellees had instead sought a final summary judgment. In his fourth issue, Ayeni argues that the Comptroller's certificate of delinquency could not support summary judgment in appellees' favor in the face of Ayeni's verified denial.

Standard of review

The standards of review for summary judgments are well established. We review the summary-judgment motion and response, if any, de novo to determine if the competent summary-judgment evidence included with those pleadings shows that there is no genuine issue as to any material fact and the movant is entitled to summary judgment as a matter of law. See Tex.R. Civ. P. 166a(c) ; Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex.2005). We take as true all evidence favorable to the non-movant, and we indulge every reasonable inference and resolve any doubts in the non-movant's favor. See Valence, 164 S.W.3d at 661.

Where, as here, the movant relies on the “traditional” summary-judgment standard, the movant has the initial burden of demonstrating that there is no genuine issue of material fact and that he or she is entitled to judgment as a matter of law. See M.D. Anderson Hosp. & Tumor Inst. v. Willrich, 28 S.W.3d 22, 23 (Tex.2000) (per curiam). Assuming this burden is met, and only if it is, the burden shifts to the non-movant to present evidence raising a genuine issue of material fact as to the movant's claims. See id. If the non-movant's evidence raises a fact issue, summary judgment is not appropriate. See id.

Verified denial

We begin with Ayeni's fourth issue because it logically precedes the others—it amounts to a challenge to whether appellees' summary-judgment proof was sufficient to meet their initial burden of showing the absence of a genuine issue of material fact and entitlement to judgment as a matter of law. See id. To meet their burden as to Ayeni's sales tax liability, appellees relied solely on the Comptroller's certificate of delinquency. As Ayeni acknowledges, subsection (a) of tax code section 111.013 makes the Comptroller's certificate—

... prima facie evidence of:

(1) the stated tax or amount of the tax, after all just and lawful offsets, payments, and credits have been allowed;

(2) the stated amount of penalties and interest;

(3) the delinquency of the amounts; and

(4) the compliance of the comptroller with the applicable provisions of this code in computing and determining the amount due.

Tex. Tax Code Ann. § 111.013(a) (West 2008). Consequently, it is well established that a Comptroller's certificate of delinquency suffices to meet a taxing authority's initial summary-judgment burden in a sales-tax deficiency suit, shifting the burden to the taxpayer to raise a fact issue in order to avoid summary judgment. See N.S. Sportswear, Inc. v. State, 819 S.W.2d 230, 232 (Tex.App.-Austin 1991, no writ) (“If unrebutted, [Comptroller's certificates of deficiency] are sufficient to establish, as a matter of law, the amount of tax the taxpayer owes.” (citing Baker v. Bullock, 529 S.W.2d 279, 281 (Tex.Civ.App.-Austin 1975, writ ref'd n.r.e.) )). But Ayeni argues that his verified denial of appellee's claims served to rebut or join issue with the Comptroller's certificate, such that its prima facie or presumptive validity effectively disappeared, returning appellees to their status quo ante—and leaving appellees lacking in any summary-judgment proof to meet their initial burden. We disagree that Ayeni's verified denial had this effect.

Ayeni emphasizes subsection (b) of tax code section 111.013, which states:

The defendant may not deny a claim for taxes, penalties, or interest unless the defendant timely files a sworn written denial that specifically identifies the taxes, penalties, and interest the defendant asserts are not due and the amounts of tax, penalties, and interest that are not due.

Tex. Tax Code Ann. § 111.013(b). Ayeni suggests that subsection (b), read together with subsection (a)'s provisions describing the prima facie effect of the Comptroller's certificate, means that the filing of a verified denial under subsection (b) rebuts or negates the prime facie effect of a Comptroller's certificate under subsection (a), much like a verified denial in a suit on sworn account. See Tex.R. Civ. P. 185 ; Rizk v. Financial Guardian Ins. Agency, Inc., 584 S.W.2d 860, 862 (Tex.1979) (“It is settled ... that a defendant's verified denial of the correctness of a plaintiff's sworn account in the form required by Rule 185 destroys the evidentiary effect of the itemized account attached to the petition and forces the plaintiff to put on proof of his claim.”). However, unlike the rules governing suits on sworn accounts, nothing in section 111.013 says that subsection (b)'s verified denial has any impact on the operation and effect of subsection (a)'s Comptroller's certificate. Cf. Tex.R. Civ. P. 185 (providing affidavit on sworn account is “prima facie evidence [of the account], unless the party resisting such claim shall file a written denial, under oath”). Nor can Ayeni point to any Texas court that has said it does.

Neither subsection (a) or (b) references the other, and we can only conclude that both provisions must be given the effect the Legislature prescribes within each. Subsection (b) is in the nature of a pleading requirement with which defendants in sales-tax deficiency cases must comply in order to join issue with the taxing authority's petition; otherwise, the taxpayer loses by default.See Noorani Gas & Convenience, Inc. v. State, No. 03–06–00463–CV, 2008 WL 1827605, at *5 (Tex.App.-Austin Apr. 24, 2008, no pet) (mem. op.). In contrast, subsection (a) speaks to the evidence on which the taxing authority may rely to meet its burden of proof if and when its pleadings are placed at issue by a verified denial. And the Legislature in subsection (a) has made Comptroller's certificates of deficiency prima facie evidence without preconditions. See Tex. Tax Code Ann. § 111.013(a). Accordingly, Ayeni's verified denial does not affect the prima facie evidentiary nature of the Comptroller's certificate of deficiency in ...