Davis v. State, 3-92-279-CV

• Decision Date: 20 January 1993
• Docket Number: No. 3-92-279-CV,3-92-279-CV
• Citation: 846 S.W.2d 564
• Parties: James W. DAVIS, Appellant, v. STATE of Texas, Appellee.
• Court: Texas Court of Appeals

Page 564

846 S.W.2d 564

James W. DAVIS, Appellant, v. STATE of Texas, Appellee.

No. 3-92-279-CV.

Court of Appeals of Texas Austin.

Jan. 20, 1993.

Tom C. Ingram, Jr., Dallas, for appellant.

Dan Morales, Atty. Gen., Robert P. Nunis II, Asst. Atty. Gen., Austin, for appellee.

Before CARROLL, C.J., and JONES and KIDD, JJ.

PER CURIAM.

This is a franchise tax case. Ad Agency, Inc. (the corporation) was a Texas corporation. Appellant James W. Davis was the corporation's sole shareholder, president, and director. On September 6, 1990, the State of Texas ¹ filed suit against the corporation and Davis seeking to recover franchise taxes, ² penalties, and interest incurred in the corporation's name. The State sought to hold Davis individually liable for the franchise debt alleging, alternatively: (1) that the corporation was Davis' alter ego; (2) that Davis operated the corporation as a sham to perpetrate a fraud on its creditors; and (3) that Davis, as an officer and director of the corporation, was liable for the tax debt pursuant to Tex.Tax Code Ann. § 171.255 (West 1992). Davis filed a general denial and pleaded limitations as an affirmative defense. The corporation did not answer. After limited discovery, both the State and Davis filed motions for summary judgment. The trial court issued an order denying Davis' motion for summary judgment. The trial court rendered a separate final judgment granting the State's motion for summary judgment and awarding the State the amount of $4,599.78 from the corporation and Davis, jointly and severally. In three points of error, Davis complains that the trial court erred both in granting the State's motion for summary judgment and in denying his motion for summary judgment. ³ We will reverse the trial court's final judgment as to Davis.

DISCUSSION

Standard of Review

The movant for summary judgment has the burden of showing that no genuine issue of material fact exists and that it is entitled to judgment as a matter of law. In deciding whether there is a disputed material fact issue precluding summary judgment, evidence favorable to the nonmovant will be taken as true. This Court must indulge every reasonable inference in favor of the nonmovant and resolve any doubts in its favor. Nixon v. Mr. Property Mgt. Co., 690 S.W.2d 546, 548-49 (Tex.1985).

The State's Motion for Summary Judgment

In his third point of error, Davis asserts that the trial court erred in granting the State's motion for summary judgment because the motion did not state the specific grounds on which it is based. Tex.R.Civ.P. 166a(c). However, the failure of a motion for summary judgment to specify grounds is a defect of form that is waived unless excepted to before rendition of judgment. Westchester Fire Ins. Co. v. Alvarez In his first point of error, Davis asserts that the trial court erred in granting the State's motion for summary judgment. First, Davis argues that he is not liable for the corporation's franchise taxes because there is no summary judgment proof that the corporation was his alter ego or that he operated the corporation as a sham to perpetrate a fraud. In its brief, the State admits that its motion for summary judgment is not based on alter-ego or sham-to-perpetrate-a-fraud "causes of action." The trial court may not grant summary judgment on a theory not addressed in the motion for summary judgment. Chessher v. Southwestern Bell Tel. Co., 658 S.W.2d 563, 564 (Tex.1983). The only remaining theory the State pleaded as a basis for Davis' personal liability for the franchise taxes and penalties is statutory liability based on section 171.255.

576 S.W.2d 771, 773 (Tex.1978). Davis has waived his complaint because he did not except to the alleged defect in the trial court. Point of error three is overruled.

Section 171.255 provides, in pertinent part:

If the corporate privileges of a corporation are forfeited for the failure to file a report or pay a tax or penalty, each director or officer of the corporation is liable for each debt of the corporation that is created or incurred in this state after the date on which the report, tax, or penalty is due and before the corporate privileges are revived. The liability includes liability for any tax or penalty imposed by this chapter on the corporation that becomes due and payable after the date of the forfeiture.

Tex.Tax Code Ann. § 171.255(a) (West 1992) (emphasis added). ⁴

Davis argues that section 171.255 does not impose liability on officers or directors of a corporation for franchise taxes that become due before the date of forfeiture of corporate privileges. Although Davis did not specifically raise this complaint in his response to the State's motion for summary judgment, he did assert that the State failed to show that he was individually liable for franchise taxes. We will, therefore, construe Davis' complaint to assert that the State did not show as a matter of law that Davis was individually liable for the franchise taxes, penalties, and interest pursuant to section 171.255. See State Bd. of Ins. v. Westland Film Indus., 705 S.W.2d 695, 696 (Tex.1986) (nonmovant must expressly present to trial court any reasons for avoiding movant's right to summary judgment; absent response raising such reasons, these matters may not be raised for first time on appeal); O'Neil v. Mack Trucks, Inc., 542 S.W.2d 112, 114 (Tex.1976) (rule of liberal construction applies to points in appellant's brief; merits of error will be ruled on in light of statement and arguments). It is the State's burden, then, to show that, as a matter of law, the franchise taxes, penalties, and interest for which it seeks to hold Davis liable were imposed by chapter 171 and were due after the date the corporate privileges were forfeited.

The Summary-Judgment Proof

When both parties move for summary judgment, the trial court may consider the combined summary-judgment evidence to decide how to rule on the motions. Woods v. Applemack Enter., 729 S.W.2d 328, 331 (Tex.App.--Houston [14th Dist.] 1987, no writ); River Oaks Shopping Ctr. v. Pagan, 712 S.W.2d 190, 193 (Tex.App.--Houston [14th Dist.] 1986, writ ref'd n.r.e.). The summary-judgment proof includes the State's and Davis' answers to interrogatories and exhibits attached to the parties' respective motions for summary judgment and responses.

The State relies on Davis' motion for summary judgment to establish the date the corporate privileges were forfeited. In his motion for summary judgment, Davis alleges that the corporate privileges were forfeited on June 24, 1985. Assertions of fact in live pleadings of a party not The State's exhibit "A" attached to its motion for summary judgment is the comptroller's "Certified Claim for Texas Franchise Tax" ("comptroller's claim"). ⁵ The comptroller's claim recites, in pertinent part, that the corporation was incorporated on October 20, 1982; the corporation's corporate privileges were forfeited "for failure to pay franchise tax and/or failure to file franchise tax report(s) required by Tex.Tax Code Ann. ch. 171, and the corporation's corporate privileges have not been revived"; the corporation is liable for franchise tax, penalty, and interest computed through May 22, 1991; and the officers and directors are liable for tax, penalty, and interest for a 1983-86 audit that accrued after the corporation's corporate privileges were forfeited. ⁶ The comptroller's claim then recites that the tax summary is for the year 1986, and is for tax, penalty, and interest calculated through June 18, 1991. The comptroller's claim does not recite the date that the franchise taxes were due. The State relies on a notice attached to its response to Davis' motion for summary judgment to establish the date the franchise taxes were due. We conclude that the State is not entitled to summary judgment because the summary-judgment proof does not conclusively establish the date the franchise taxes were due.

pleaded in the alternative are regarded as formal judicial admissions and are conclusively established without the necessity of other evidence. While it is a well-settled rule in summary-judgment proceedings that pleadings may not constitute proof, facts alleged in those pleadings may constitute judicial admissions; judicial admissions are not proof, but a waiver of proof. Galvan v. Public Utilities Board, 778 S.W.2d 580, 583 (Tex.App.--Corpus Christi 1989, no writ). We hold that Davis' motion for summary judgment establishes that the corporate privileges were forfeited on June 24, 1985. Accordingly, in order for the State to prevail on its motion for summary judgment, it had to show that, as a matter of law, the franchise taxes, penalties, and interest were due after June 24, 1985. Tex.Tax Code Ann. § 171.255 (West 1992).

Although the comptroller's claim recites that director and officer liability for the taxes, penalties, and interest "accrued after the corporation's corporate privileges were forfeited," it also recites that the tax summary is for the year 1986. The term "1986" is susceptible to more than one meaning because portions of two regular annual tax periods are included within the calendar year 1986. ⁷ The first tax period is the regular annual tax period beginning on May 1, 1985, and ending on April 30, 1986. The franchise tax due date for this tax period is March 15, 1985. ⁸ The corporate The second tax period is the regular annual tax period beginning on May 1, 1986, and ending on April 30, 1987. The franchise tax due date for the second tax period is March 15, 1986, ⁹ which is after the date the corporate privileges were forfeited. Thus, pursuant to section 171.255, Davis may be held personally liable for taxes for the second tax period. ¹⁰ Since it cannot be determined from the comptroller's claim whether "1986" includes the first, second, or both tax periods, the comptroller's claim is ambiguous and there is a genuine issue of material fact concerning whether, or what portion of,...