Highway Contractors, Inc. v. West Texas Equipment Co., Inc.

• Decision Date: 29 May 1981
• Docket Number: No. 9226,9226
• Citation: 617 S.W.2d 791
• Parties: HIGHWAY CONTRACTORS, INC., Appellant, v. WEST TEXAS EQUIPMENT COMPANY, INC., Appellee.
• Court: Texas Court of Appeals

Page 791

617 S.W.2d 791

HIGHWAY CONTRACTORS, INC., Appellant, v. WEST TEXAS EQUIPMENT COMPANY, INC., Appellee.

No. 9226.

Court of Civil Appeals of Texas, Amarillo.

May 29, 1981.

Culton, Morgan, Britain & White, W. H. Brian, Jr., Amarillo, for appellant.

Gibson, Ochsner & Adkins, Marvin W. Jones, Amarillo, for appellee.

COUNTISS, Justice.

This is an appeal from a summary judgment awarding appellee West Texas Equipment Company, Inc. (hereafter "West Texas") recovery against appellant Highway Contractors, Inc. (hereafter "Highway Contractors") for uncollected sales tax, attorney's fees, interest and costs. The appeal presents questions of judicial estoppel and limitations. Having concluded that there is a material disputed fact question, we reverse and remand.

West Texas is a lessor and seller of heavy duty equipment. On October 17, 1973, it sold a Caterpillar wheel loader to Highway Contractors. At the time of the sale, West Texas did not collect the Texas sales tax ¹ on the transaction because it was not certain the tax was applicable. The Comptroller of the State of Texas subsequently ruled, however, that the transaction was taxable. On July 22, 1977, West Texas paid the sales tax and on May 23, 1978, filed this suit seeking reimbursement for the tax and ancillary relief from Highway Contractors. ²

Both parties moved for summary judgment. West Texas' motion, supported by affidavit, was based on its pleaded cause of action. Highway Contractors' motion, supported by certified copies of prior judicial proceedings, was based on defenses of judicial estoppel and the four-year statute of limitations. The trial court denied Highway Contractors' motion and granted partial summary judgment to West Texas on its primary claim. After further proceedings, ³ attorney's fees were also awarded and the judgment in question here was rendered.

In this court, Highway Contractors presents three points of error. By points one and two, it contends the trial court erred in overruling its motion for summary judgment because the tax claim is barred by judicial estoppel and the four-year statute of limitations. Under its final point, it contends the trial court erred in granting West Texas' motion for summary judgment because there were material fact questions to be resolved in connection with the judicial estoppel defense, if it was not established as a matter of law. We will first resolve points one and three.

Highway Contractors' judicial estoppel argument is grounded on the following facts. Highway Contractors' exhibits establish that, prior to filing the suit now before the court, West Texas sued an entity named J. R. Adams, Inc. (hereafter "Adams") for reimbursement of sales tax West Texas had been required to pay on various equipment sales to Adams. In its sworn petition in that suit, West Texas listed the Caterpillar wheel loader in question here as one of the items of equipment sold to Adams. On October 28, 1977, the trial court signed a judgment reciting that all matters in controversy had been settled and dismissing the suit against J. R. Adams, Inc. "with prejudice to the right of Plaintiff herein to refile the same as to said Defendant...."

By responsive affidavits, West Texas stated that the Caterpillar wheel loader was included in the suit against Adams "by virtue of mistake or inadvertent error." After settlement with Adams, West Texas learned that Adams had not paid the tax on the Caterpillar wheel loader and contacted Adams. The response from Adams indicated that Highway Contractors, not Adams, had purchased the wheel loader. Subsequently, West Texas sued Highway Contractors for the sales tax on the wheel loader.

Highway Contractors contends, first, that West Texas is judicially estopped as a matter of law from collecting the tax because it included the same request for relief, growing out of the same transaction, in its suit against Adams and the suit was dismissed with prejudice. Alternatively, it contends that there is at least a material fact question on the defense of judicial estoppel.

The Supreme Court opinion in Long v. Knox, 155 Tex. 581, 291 S.W.2d 292 (1956), sets out the basic principles of judicial estoppel in Texas. In a prior suit to enjoin a judgment creditor, Knox, the judgment debtor, and his wife had sworn under oath that certain property upon which a creditor was seeking to levy execution was the separate property of Mrs. Knox. The district court temporarily restrained the sheriff from selling the property and the creditor's attorney, concluding he could not prevail, did not pursue the execution. After Mr. Knox's death, his daughter sued Mrs. Knox seeking to establish that the property in question was community property instead of Mrs. Knox's separate property. The Supreme Court applied the doctrine of judicial estoppel, stating (291 S.W.2d at 295):

The doctrine of judicial estoppel is not strictly speaking estoppel at all but arises from positive rules of procedure based on justice and sound public policy.

"Under the doctrine of judicial estoppel, as distinguished from equitable estoppel by inconsistency, a party is estopped merely by the fact of having alleged or admitted in his pleadings in a former proceeding under oath the contrary to the assertion sought to be made."

It has likewise been held that it is not necessary that the party invoking this doctrine should have been a party to the former proceeding.

Although the injunction suit was dismissed and the restraining order expired, the purpose of the affiant was accomplished as thoroughly as if a judgment had been entered in favor of the plaintiffs in that suit. The creditor was convinced and abandoned further efforts. Knox gained the advantage of preventing the property from being sold. Having thus sworn under oath in this judicial proceeding that his wife owned the property in her separate right he would not be heard now to maintain a contrary position in the absence of proof that the averment was made inadvertently or by mistake or by fraud or duress. There was not only no proof of this character but rather the evidence shows conclusively that the affidavit was made voluntarily, with full knowledge of all the facts and with the intention to prevent satisfaction of the judgment against him. (Emphasis added).

See also Metroflight, Inc. v. Shaffer, 581 S.W.2d 704, 709 (Tex.Civ.App. Dallas 1979, writ ref'd n. r. e.), and Aetna Life Ins. Co. v. Wells, 557 S.W.2d 144, 147 (Tex.Civ.App. San Antonio 1977), writ ref'd n. r. e., 566 S.W.2d 900 (Tex.1978).

The rule may be summarized as follows: A party is judicially estopped in a subsequent proceeding by having alleged or admitted in pleadings in a former proceeding, under oath, the contrary of the assertion sought to be made in the subsequent proceeding, in the absence of proof that the averment in the former proceeding was made inadvertently or by mistake, fraud or duress.

Analyzing the summary judgment evidence in accordance with the foregoing principles, we disagree with Highway Contractors' contention that it established judicial estoppel as a matter of law, but agree that fact questions exist in the matter. If Highway Contractors' exhibits had been uncontroverted, they would have established the defense as a matter of law. The assertion under oath by West Texas that J. R. Adams, Inc. is responsible for the sales tax on the Caterpillar wheel loader is contrary to the assertion being made under oath in this proceeding that Highway Contractors, Inc. is responsible for the sales tax on the same item.

West Texas controverted the exhibits, however, and stated under oath that the claim was included in the suit against J. R. Adams, Inc. because of "mistake or inadvertent error, on the erroneous belief that Defendant J. R. Adams, Inc. was one and the same as Highway Contractors, Inc." The responsive affidavits also state that the suit against J. R. Adams, Inc. was settled and dismissed, that the tax on the wheel loader was not paid, and that West Texas' attorney corresponded with J. R. Adams about the matter after West Texas...