David P. Luna v. State of Texas; City of Houston, Texas; and Transit Authority of Houston, Texas--Appeal from 200th District Court of Travis County

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-96-00555-CV
David P. Luna, Appellant
v.
State of Texas; City of Houston, Texas; and Transit Authority of
Houston, Texas, Appellees
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 200TH JUDICIAL DISTRICT
NO. 95-08290, HONORABLE PETER M. LOWRY, JUDGE PRESIDING
PER CURIAM

This is an appeal of a summary judgment in favor of appellees the State of Texas, City of Houston, Texas, and Transit Authority of Houston (collectively referred to as the "State") based on deemed admissions. The State sought recovery of sales taxes allegedly due from DDC, Inc., f/d/b/a Crossmark, a corporate entity, and from appellant David P. Luna as an officer and director of DDC. (1) Luna complains that the district court abused its discretion in refusing to grant his motion to withdraw the deemed admissions. Luna also objects to the court's granting summary judgment based on the admissions. We will affirm the judgment of the district court.

 
PROCEDURAL HISTORY

The State sued DDC, a corporate taxpayer and David P. Luna, an officer and director of the corporation for unpaid taxes, penalties, and interest totaling $50,609.57 in addition to attorney fees. Tex. Tax Code Ann. 111.010 (West 1992). In support of Luna's individual liability, the State relies on two alternative theories of liability: (1) common law conversion; and (2) statutory liability under section 111.016 of the Tax Code. In November 1995, the State filed a motion for summary judgment against DDC and Luna. Luna filed a response and an affidavit opposing the motion. The hearing was passed on the State's motion. On February 1, 1996, the district court entered an interlocutory default judgment against DDC.

In March 1996, the State served requests for admissions on Luna. When Luna failed to answer the request for admissions or move for more time to answer, the admissions were deemed admitted by operation of Texas Rule of Civil Procedure 169. In June, the State once again sought summary judgment. This second motion was based in part upon the deemed admissions of Luna. Luna filed a motion to withdraw the admissions and to substitute his late responses. At a hearing on July 25, 1996, the district court granted the State's motion for summary judgment and denied Luna's motion to withdraw the deemed admissions. Further, the court entered an order striking the affidavit that Luna had filed in response to the first summary judgment motion.

 
ANALYSIS

Withdrawing the Deemed Admissions

In his first two points of error, Luna asserts that the district court erred in denying his motion to withdraw the deemed admissions because he demonstrated "good cause" for his failure to timely respond and that the court abused its discretion by failing to provide a basis for the denial.

Texas Rule of Civil Procedure 169 governs requests for admissions. After thirty days from the date of service, and in the absence of a motion to extend time for filing a response, the admissions are automatically deemed admitted and the trial court has no discretion to deem, or refuse to deem the admissions admitted. Curry v. Clayton, 715 S.W.2d 77, 79 (Tex. App.--Dallas 1986, no writ); Tex. R. Civ. P. 169. However, the trial court has broad discretion to permit or deny the withdrawal of deemed admissions when the nonanswering party presents sufficient evidence to establish "good cause" for his failure to make timely answers to the requested admissions. (2) Boone v. Texas Employers' Ins. Ass'n, 790 S.W.2d 683, 688 (Tex. App.--Tyler 1990, no writ). In exercising this discretion, the court must also find that the withdrawal can be ordered without causing undue prejudice to the party relying on the admissions and that the presentation of the merits of the action will be served by the withdrawal. Id. at 688; see Tex. R. Civ. P. 169(2). An abuse of discretion occurs when a court acts without reference to guiding rules or principles or acts arbitrarily or unreasonably. See Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241 (Tex. 1985); Fibreboard Corp. v. Pool, 813 S.W.2d 658, 683 (Tex. App.--Texarkana 1991, writ denied). We will set aside the decision of the trial court only if, after searching the record, it is clear that the court abused its discretion. Simon v. York Crane & Rigging Co., Inc., 739 S.W.2d 793, 795 (Tex. 1987); North River Ins. Co. v. Greene, 824 S.W.2d 697, 700 (Tex. App.--El Paso 1992, writ denied).

In the instant case, the State filed and served a request for admissions on March 28, 1996, for David P. Luna, by and through his attorney of record. Counsel for Luna contends that due to a clerical error "discovery served by the State was not date stamped when received" in his office. On July 25, 1996, eighty-seven days after the thirty-day reply period had expired, and one day after the State filed its second motion for summary judgment, Luna filed his responses. Because the responses were filed late, the requested admissions were automatically deemed admitted. See Curry, 715 S.W.2d at 79; Tex. R. Civ. P. 169. The day before filing his responses, Luna filed a motion to withdraw the deemed admissions. The record shows that the district court held a hearing on the State's motion for summary judgment on July 25, 1996, at which time Luna's attorney appeared. Thereafter the trial court granted summary judgment in favor of the State.

Because he brings no statement of facts of the hearing held on July 25, 1996, Luna is not entitled to rely on the evidence presented at such hearing to prove that the district court committed a clear abuse of discretion. Tex. R. App. P. 50(d); Ruiz v. Nicolas Trevino Forwarding Agency, 888 S.W.2d 86, 89 (Tex. App.--Houston [14th Dist.] 1992, writ denied); Cherry v. North Am. Lloyds of Texas, 770 S.W.2d 4, 5 (Tex. App.--Houston [1st Dist.] 1989, writ denied). Moreover, Luna's motion to withdraw the admissions fails to state "good cause" for his failure to answer timely. If in fact Luna did move at the summary judgment hearing to withdraw the admissions, it was incumbent upon him to present evidence that (1) he had good cause for not serving the plaintiffs' attorney with answers to the requests for admissions, (2) the withdrawal of the deemed admissions would not unduly prejudice the other side, and (3) the presentation of the merits would be served by such withdrawal. Tex. R. Civ. P. 169(2). Without having any such evidence, we cannot say that the trial court abused its discretion in refusing to withdraw the deemed admissions. We must presume that the evidence before the trial court was adequate to support its decision. In The Matter of A.R.A., 898 S.W.2d 14, 16 (Tex. App.--Austin 1995, no writ); see Ramsey v. Criswell, 850 S.W.2d 258, 260 (Tex. App.--Texarkana 1993, no writ). Consequently, we overrule appellant's first and second points of error.

 

Motion for Summary Judgment

In his third and fourth points of error, Luna argues that the trial court erred in granting the summary judgment because the State failed to demonstrate that it was entitled to judgment as a matter of law and because a genuine issue of material fact existed on the issue of Luna's individual liability.

To obtain summary judgment, the State must prove that there is no material issue of fact as to its cause of action and that it is entitled to judgment as a matter of law. Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548-49 (Tex. 1985). In reviewing the granting of summary judgment, we must take as true all evidence favorable to the non-movant, Luna, and resolve any doubt and indulge every reasonable inference in his favor. Id. See also Bayouth v. Lion Oil Co., 671 S.W.2d 867, 868 (Tex. 1984). Furthermore, since the State has advanced two alternative theories of individual liability, and the district court has not specified on which ground the summary judgment was granted, we must affirm if either of the movant's grounds will support the judgment. Malooly Bros., Inc. v. Napier, 461 S.W.2d 119, 121 (Tex. 1970); N.S. Sportswear, Inc. v. State, 819 S.W.2d 230, 232 (Tex. App.--Austin 1991, no writ).

In support of its motion, the State offered the comptroller's certificates of tax delinquency, Luna's deemed admissions, and the State's affidavit establishing attorney fees. In response, Luna filed a motion to withdraw the deemed admissions. His motion referenced an affidavit filed earlier in the course of the same litigation. Luna attached his responses to the requests for admission as an exhibit to his motion. The district court granted the State's motion, holding both defendants jointly and severally liable for the full amount of the corporate tax liability set forth in the comptroller's certificates.

The State claims that the comptroller's certificates of delinquency established the amount of tax liability. Section 111.013 of the Tax Code provides that these certificates, when admitted, are prima facie evidence of their contents. Tex. Tax Code Ann. 111.013 (West 1992). If unrebutted, they are sufficient to establish as a matter of law, the amount the taxpayer owes. Baker v. Bullock, 529 S.W.2d 279 (Tex. Civ. App.--Austin 1975, writ ref'd n.r.e.). The district court rendered judgment against DDC in the amount stated in the comptroller's certificates and DDC does not complain of that fact on appeal. These certificates alone are not sufficient, however, to establish the amount of Luna's individual liability on either of the State's theories. See N. S. Sportswear, Inc., 819 S.W.2d at 232. We will consider the State's theories of Luna's individual liability.

 

Common-Law Liability

Conversion & Breach of Fiduciary Duty

The State's first theory is that Luna, as an officer and director of DDC, is individually liable because he authorized the payments of tax receipts actually collected in the name of DDC to entities other than the State. The State asserts that Luna committed the torts of conversion and breach of fiduciary duty by wrongfully assuming and exercising dominion over the tax money collected to the exclusion of the State and in a manner inconsistent with the State's rights in the property. At common law, a corporate officer may be held individually liable for the tortious acts of the corporation if he directed, participated in, or had knowledge of or assented to, the wrongful conduct. Leyendecker & Assoc., Inc. v. Wechter, 683 S.W.2d 369, 375 (Tex. 1984); Earthman's, Inc. v. Earthman, 526 S.W.2d 192, 206 (Tex. Civ. App.--Houston [1st Dist.] 1975, no writ).

While the comptroller's certificates alone do not establish the amount actually converted through Luna, the State also offers Luna's deemed admissions in support of its motion for summary judgment. Our review of the summary judgment evidence reveals that Luna admitted (1) that he was an officer and director of DDC during the relevant liability period (3) and that there existed a trust relationship existed between him and the State; (2) that he had actual knowledge and approved of the collection of the tax money; (3) that he or DDC employees controlled or supervised by him, deposited the tax money which was collected into DDC's bank account; (4) that the tax funds were not segregated into a separate DDC account; (5) that he was the only person authorized to draw checks from DDC's bank account; (6) that the sales tax collected was paid out of the account to entities other than the comptroller; (7) and that he personally authorized these payments to entities other than the State. In an affidavit submitted with his motion to withdraw the deemed admissions, Luna expressly denies that the amount of the tax liability is correct. However, because the affidavit contradicts the deemed admissions, the trial court properly struck it from the record and it is not before us for consideration. See Cherry v. North Am. Lloyds of Texas, 770 S.W.2d at 6 (affidavit offered to oppose motion for summary judgment was properly not considered because it contradicted deemed admissions); see also Marshall v. Vise, 767 S.W.2d 699 (Tex. 1989) (admission in response to request for admissions is judicial admission and not controvertible). Furthermore, because the district court did not permit the deemed admissions to be withdrawn, the affidavit was not properly before the court. The proof submitted by the State is sufficient to establish Luna's liability for the full amount of the corporate tax at issue. We conclude that there is no genuine issue of material fact with regard to damages on the State's theory of conversion and the record supports Luna's liability as a matter of law. Appellant's third and fourth points of error are overruled. Because we have concluded that the State's theory of conversion supports the judgment, we need not consider Luna's challenges to the State's theory of statutory liability.

 
CONCLUSION

The judgment of the district court is affirmed.

 

Before Chief Justice Carroll, Justices Aboussie and B. A. Smith

Affirmed

Filed: June 19, 1997

Do Not Publish

1. The charter of the corporate taxpayer, DDC, Inc. was forfeited prior to commencement of the underlying action and DDC did not appear in the proceeding.

2. In order to establish good cause, a party must show legal or equitable excuses for his failure to answer. Eckman v. Centennial Sav. Bank, 757 S.W.2d 392, 396 (Tex. App.--Dallas 1988, writ denied); Burnet v. Cory Corp., 352 S.W.2d 502, 507 (Tex. Civ. App.--Dallas 1961, writ ref'd n.r.e.).

3. The definition attached to the requests for admissions defined "liability period" as the period beginning April 1, 1989 and ending September 30, 1992 and the period beginning April 1, 1993 and ending May 30, 1993. This is the period reflected on the Comptroller's certificates as "8904 through 9209" and "9304 through 9305."

t, however, to establish the amount of Luna's individual liability on either of the State's theories. See N. S. Sportswear, Inc., 819 S.W.2d at 232. We will consider the State's theories of Luna's individual liability.

Common-Law Liability

Conversion & Breach of Fiduciary Duty

The State's first theory is that Luna, as an officer and director of DDC, is individually liable because he authorized the payments of tax receipts actually collected in the name of DDC to entities other than the State. The State asserts that Luna committed the torts of conversion and breach of fiduciary duty by wrongfully assuming and exercising dominion over the tax money collected to the exclusion of the State and in a manner inconsistent with the State's rights in the property. At common law, a corporate officer may be held individually liable for the tortious acts of the corporation if he directed, participated in, or had knowledge of or assented to, the wrongful conduct. Leyendecker & Assoc., Inc. v. Wechter, 683 S.W.2d 369, 375 (Tex. 1984); Earthman's, Inc. v. Earthman, 526 S.W.2d 192, 206 (Tex. Civ. App.--Houston [1st Dist.] 1975, no writ).

While the comptroller's certificates alone do not establish the amount actually converted through Luna, the State also offers Luna's deemed admissions in support of its motion for summary judgment. Our review of the summary judgment evidence reveals that Luna admitted (1) that he was an officer and director of DDC during the relevant liability period (3) and that there existed a trust relationship existed between him and the State; (2) that he had actual knowledge and approved of the collection of the tax money; (3) that he or DDC employees controlled or supervised by him, deposited the tax money which was collected into DDC's bank account; (4) that the tax funds were not segregated into a separate DDC account; (5) that he was the only person authorized to draw checks from DDC's bank account; (6) that the sales tax collected was paid out of the account to entities other than the comptroller; (7) and that he personally authorized these payments to entities other than the State. In an affidavit submitted with his motion to withdraw the deemed admissions, Luna expressly denies that the amount of the tax liability is correct. However, because the affidavit contradicts the deemed admissions, the trial court properly struck it from the record and it is not before us for consideration. See Cherry v. North Am. Lloyds of Texas, 770 S.W.2d at 6 (affidavit offered to oppose motion for summary judgment was properly not considered because it contradicted deemed admissions); see also Marshall v. Vise, 767 S.W.2d 699 (Tex. 1989) (admission in response to request for admissions is judicial admission and not controvertible). Furthermore, because the district court did not permit the deemed admissions to be withdrawn, the affidavit was not properly before the court. The proof submitted by the State is sufficient to establish Luna's liability for the full amount of the corporate tax at issue. We conclude that there is no genuine issue of material fact with regard to damages on the State's theory of conversion and the record supports Luna's liability as a matter of law. Appellant's third and fourth points of error are overruled. Because we have concluded that the State's theory of convers