First American Title Ins. Co. v. Strayhorn

• Decision Date: 03 June 2005
• Docket Number: No. 03-04-00342-CV.,03-04-00342-CV.
• Citation: 169 S.W.3d 298
• Parties: FIRST AMERICAN TITLE INSURANCE COMPANY and Old Republic National Title Insurance Company, Appellants v. Carole Keeton STRAYHORN, Comptroller of Public Accounts of the State of Texas and Gregg Abbott, Attorney General of the State of Texas, Appellees.
• Court: Texas Supreme Court

169 S.W.3d 298

FIRST AMERICAN TITLE INSURANCE COMPANY and Old Republic National Title Insurance Company, Appellants v. Carole Keeton STRAYHORN, Comptroller of Public Accounts of the State of Texas and Gregg Abbott, Attorney General of the State of Texas, Appellees.

No. 03-04-00342-CV.

Court of Appeals of Texas, Austin.

June 3, 2005.

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Ron K. Eudy and Patricia Otto, Sneed, Vine & Perry, PC, Austin, Matthew J. Zinn and Steven Reed, Steptoe & Johnson, LLP, Washington, DC, for Appellants.

Christine Monzingo, Asst. Atty. Gen., Austin, for Appellees.

Before Justices B.A. SMITH, PURYEAR and PEMBERTON.

OPINION

DAVID PURYEAR, Justice.

First American Title Insurance Company and Old Republic National Title Insurance Company sell title insurance in Texas but are incorporated in other states. They are seeking to recover taxes they argue were unlawfully imposed upon them. Texas imposes a tax on the amount of premium collected from title insurance policies. In addition, foreign title insurance companies, like First American and Old Republic, are required to pay an additional tax if their states of origin impose financial burdens on Texas insurance companies selling title insurance in the foreign states that are higher than the financial burdens Texas imposes upon foreign insurance companies selling title insurance here. This additional tax is called a retaliatory tax.

Previously title insurance companies have been allowed to include 100% of the total premium tax paid as part of their imposed financial burden for the purpose of determining whether a retaliatory tax needs to be paid. However, the Comptroller changed this previous interpretation and concluded that, because insurance companies pay only 15% of the premium tax, insurance companies should include only 15% of the premium tax as part of their total imposed financial burden. Under this new interpretation, foreign title insurance companies will be required to pay significantly more in retaliatory taxes.

First American and Old Republic contend that the Comptroller's new interpretation is wrong and seek to recover taxes they claim were unlawfully assessed under the Comptroller's new interpretation.¹ The district court granted summary judgment in favor of the Comptroller, and we will affirm the judgment.

FACTUAL AND PROCEDURAL BACKGROUND

First American is a California-based title insurance company, and Old Republic is a Minnesota-based title insurance company. Title insurance companies ("insurers") are responsible for issuing title insurance policies, for insuring title risks, and for paying claims and providing defenses to claims if necessary. Both First American and Old Republic engage in title insurance business within the State of Texas.

First American issues title policies through title agents and through direct operations. Old Republic issues title policies through title agents alone. Title agents are legal entities, such as corporations, that are separate from insurers and that are licensed to close real estate title insurance transactions on behalf of one or more insurers. Title agents may be affiliated with an insurer or may be completely independent. If an insurer becomes licensed as a direct operator, then it may close insurance transactions on its own without an agent.

Article 9.59 of the insurance code ("the premium tax statute") requires title insurers to remit to the state a tax on insurance premiums collected while engaged in business in Texas. See Tex. Ins.Code Ann. art. 9.59 (West Supp.2004-05), repealed by Act of April 30, 2003, 78th Leg., R.S., ch. 1274, § 26(b)(4), 2003 Tex. Gen. Laws 3611, 4139 (effective April 1, 2005). In addition, article 21.46 of the insurance code ("the retaliatory tax statute") requires the imposition of an additional tax on foreign insurers doing business within Texas if the foreign state imposes financial burdens on Texas-based insurers doing business in the foreign state that are higher than the financial burdens Texas places on the foreign state's insurers doing business here. See Tex. Ins.Code Ann. art. 21.46 (West Supp.2004-05), repealed by Act of April 30, 2003, 78th Leg., R.S., ch. 1274, § 26(b)(4), 2003 Tex. Gen. Laws 3611, 4139 (effective April 1, 2005). The principal purpose of a retaliatory tax law is to facilitate the ability of insurers to conduct business across state lines by deterring states from enacting discriminatory or excessive taxes against foreign insurers. See Western & S. Life Ins. Co. v. State Bd. of Equalization of Cal., 451 U.S. 648, 668, 101 S.Ct. 2070, 68 L.Ed.2d 514 (1981).

In the late 1990s, the Comptroller took the position that the premium tax statute required title insurance agents to pay a portion of the premium taxes due and that the payment of title insurance premium taxes is not solely the obligation of insurers. Previously, insurers had been allowed to include 100% of the premium tax paid as the insurers' tax burden for the purposes of determining whether a retaliatory tax would be imposed on an insurer. Under the new calculation method, an insurer may only count 15% of the premium tax as its financial burden when determining the amount of retaliatory taxes due, if any.

After auditing First American's 1998-2001 insurance tax reports, the Comptroller assessed a fee of $175,383.77 in retaliatory taxes and interest against First American for the 2001 tax year,² which First American paid in March 2003 under protest. In addition, First American paid, under protest, $1,257,196.99 in retaliatory taxes for 2002. Similarly, after an audit, the Comptroller assessed retaliatory taxes against Old Republic. Old Republic paid, under protest, $219,626.40 as retaliatory taxes for 2002.

PROCEDURAL HISTORY

Appellants filed separate lawsuits against the Comptroller and the Attorney General of Texas (cumulatively the "Comptroller") to recover what they claim were unlawfully assessed retaliatory taxes that were paid under protest. The appellants and the Comptroller both filed cross-motions for summary judgment in the separate cases, which the trial court heard simultaneously. The trial court granted summary judgment in favor of the Comptroller in both cases. Both appellants appealed the decision of the trial court, and the two cases were consolidated into this appeal.

STANDARD OF REVIEW

The standards for review of a traditional summary judgment are well established: the movant must show that there is no genuine issue of material fact 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, the court must take evidence favorable to the nonmovant as true, and the court must indulge every reasonable inference in favor of the nonmovant and resolve any doubts in the nonmovant's favor. Sergeant Enters., Inc. v. Strayhorn, 112 S.W.3d 241, 245 (Tex.App.-Austin 2003, no pet.) (citing Cathey v. Booth, 900 S.W.2d 339, 341 (Tex.1995); Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548-49 (Tex.1985)). We review the trial court's decision to grant summary judgment de novo. Id. (citing Natividad v. Alexsis, Inc., 875 S.W.2d 695, 699 (Tex.1994)).

Generally, a party cannot appeal the denial of a motion for summary judgment because it is an interlocutory order and, thus, not appealable. Id. (citing Cincinnati Life Ins. Co. v. Cates, 927 S.W.2d 623, 625 (Tex.1996)). However, when both parties move for summary judgment and the district court grants one motion and denies the other, the unsuccessful party may appeal both the grant of the prevailing party's motion and the denial of its own. Id. (citing Holmes v. Morales, 924 S.W.2d 920, 922 (Tex.1996)). In such a case, we will review the summary judgment evidence offered by both sides, determine all questions presented, and render the judgment the trial court should have rendered. Id. (citing FM Props. Operating Co. v. City of Austin, 22 S.W.3d 868, 872 (Tex.2000); Commissioners Court v. Agan, 940 S.W.2d 77, 81 (Tex.1997)). Because the district court did not state the basis for granting summary judgment, the appellants must negate all grounds that support the judgment. Id. (citing State Farm Fire & Cas. Co. v. S.S., 858 S.W.2d 374, 381 (Tex.1993)). However, if the appellants fail to negate each ground on which the judgment may have been rendered, we must uphold the summary judgment. Id. (citing Carr, 776 S.W.2d at 569).

This case involves interpreting the title insurance premium tax statute and the retaliatory tax statute, and, therefore, we apply a de novo standard. Lopez v. Texas Workers' Comp. Ins. Fund, 11 S.W.3d 490, 494 (Tex.App.-Austin 2000, pet. denied) (citing Johnson v. City of Fort Worth, 774 S.W.2d 653, 656 (Tex.1989)). When construing a statute, the court must construe the statute as written and must, if possible, determine the legislature's intention from the language that was used in the statute. Del Indus., Inc. v. Texas Workers' Comp. Ins. Fund, 973 S.W.2d 743, 745 (Tex.App.-Austin 1998), aff'd, 35 S.W.3d 591 (Tex.2000). When determining legislative intent, the entire act, not isolated portions of the act, must be considered. Jones v. Fowler, 969 S.W.2d 429, 432 (Tex.1998). Courts should first look to the plain meaning of the words in the statute and, if the meaning is unambiguous, interpret the statute so that it comports with the plain meaning expressed. City of San Antonio v. City of Boerne, 111 S.W.3d 22 25 (Tex.2003). Every word, phrase, and expression used in a statute should be read as if it were deliberately used. See Gables Realty Ltd. P'ship v. Travis Cent. Appraisal Dist., 81 S.W.3d 869, 873 (Tex.App.-Austin 2002, pet. denied). If two statutes are in pari materia or address the same subject, then an effort should be made to harmonize and give effect to both statutes. Breeding v. State, 762 S.W.2d 737, 739 (Tex.App.-Amarillo 1988, pet. ref'd) (citing Cheney v. State, 755 S.W.2d 123 (Tex.Crim....