                                                                                         ACCEPTED
                                                                                     03-15-00019-CV
                                                                                             5459336
                                                                          THIRD COURT OF APPEALS
                                                                                     AUSTIN, TEXAS
                                                                                5/28/2015 4:23:15 PM
                                                                                   JEFFREY D. KYLE
                                                                                              CLERK
                            NO: 03-15-00019-CV
__________________________________________________________________
                                                                     FILED IN
                  IN THE THIRD COURT OF APPEALS               3rd COURT OF APPEALS
                                                                  AUSTIN, TEXAS
                                                              6/1/2015 4:18:15 PM
                           AT AUSTIN, TEXAS                     JEFFREY D. KYLE
                                                                      Clerk

                         JEFF KAISER, P.C. and
                      JEFFERY BENEDICT KAISER

                                                 Appellants
                                     V.


                         THE STATE OF TEXAS

                                                 Appellee

               On Appeal from the 98th Judicial District Court
        of Travis County, Texas, the Honorable John Wisser Presiding
                  Trial Court Cause No. D-1-GV-13-000790


      APPELLANTS’ BRIEF ON THE MERITS

                                 George F. May
                                 State Bar No. 24037050
                                 TWOMEY | MAY, PLLC
                                 2 Riverway, 15th Floor
                                 Houston, Texas 77056
                                 (713) 659-0000 Telephone
                                 (832) 201-8485 Facsimile
                                 george@twomeymay.com

                                 Attorney for Appellants, Jeff Kaiser, P.C. and
                                 Jeffery Benedict Kaiser

                    ORAL ARGUMENT REQUESTED
            IDENTITY OF PARTIES AND COUNSEL

APPELLANTS AND COUNSEL:   Jeff Kaiser, P.C. and Jeffery Benedict Kaiser

                          Appellate Counsel – Attorney in Charge:

                          George F. May
                          State Bar No. 24037050
                          TWOMEY | MAY, PLLC
                          2 Riverway, 15th Floor
                          Houston, Texas 77056
                          (713) 659-0000
                          (832) 201-8485 – Facsimile
                          george@twomeymay.com

                          Appellate Co-Counsel and Trial Co-Counsel:

                          Jeffery B. Kaiser
                          State Bar No. 11079300
                          Enterprise Bank Building
                          2211 Norfolk, Suite 528
                          Houston, Texas 77098
                          (713) 571-8000
                          (713) 571-8002 - Facsimile
                          Email: jkaiser@kaiser-law.com

                          Trial counsel:

                          Harold “Hap” May
                          State Bar No. 13264800
                          Attorney at Law
                          Two Riverway, 15th Floor
                          Houston, Texas 77056
                          (281) 407-5609 office
                          (832) 201-7675 Facsimile
                          HapMay@outlook.com




                            2
APPELLEE AND COUNSEL:   The State of Texas

                        Appellate Counsel:

                        Sean O’Neill
                        Assistant Attorney General
                        Bankruptcy & Collections Division
                        P.O. Box 12548, MC 008
                        Austin, Texas 78711-2548
                        (512) 475-4255
                        (512) 936-1409 – Facsimile
                        Sean.Oneill@texasattorneygeneral.gov

                        Trial counsel:

                        John C. Adams
                        State Bar No.
                        Office of the Attorney General
                        300 W. 15th Street, Floor 8
                        Austin, Texas 78701
                        (512) 463-2173
                        (514) 482-8341 - Facsimile
                        John.adams@texasattorneygeneral.gov




                          3
                                       TABLE OF CONTENTS
                                                                                                            Page

IDENTITY OF PARTIES AND COUNSEL ........................................................4

INDEX OF AUTHORITIES ..................................................................................6

STATEMENT OF THE CASE ..............................................................................9

ISSUES PRESENTED ..........................................................................................13

ISSUE 1:              Is the State’s claim barred by the statute of
                      limitations?

ISSUE 2:              Did the trial court err in finding the Comptroller’s
                      certification afforded the State the presumption when
                      the State itself introduced evidence contradicting the
                      certificate’s presumed correctness and in concluding
                      that there was no fact issue to be decided because the
                      presumption was unrebutted?

ISSUE 3:              Did the trial court err in awarding attorney’s fees
                      because the State failed to carry its evidentiary
                      burden to establish the right to attorney’s fees or the
                      amount of reasonable and necessary attorney’s fees?

STATEMENT OF FACTS ...................................................................................15

SUMMARY OF ARGUMENT .............................................................................17

ARGUMENT ........................................................................................................20

I.      Burden of Proof and Standard of Review .................................................20

II.     The statute of limitations bars the State’s claims .....................................21

III.    The State’s own evidence contradicted the Comptroller’s certification
        the presumption was lost or, at the very least, a question of fact was
        raised requiring the trial court to weigh the evidence ...............................34


                                                         4
IV.     The trial court erred in awarding attorney’s fees .......................................38

CONCLUSION & PRAYER ................................................................................ 39

CERTIFICATE OF COMPLIANCE ................................................................... 44

CERTIFICATE OF SERVICE.............................................................................. 45


APPENDIX:               Tab 1 (Final Judgment)

                        Tab 2 (Findings of Fact and Conclusions of Law)




                                                   5
                                   INDEX OF AUTHORITIES
Cases:

Ayeni v. State, 440 S.W.3d 707 (Tex. App.—Austin 2013, no pet.) ...... 21 n. 4, 36

Baker v. Bullock, 529 S.W.2d 279
(Tex. Civ. App.—Austin 1975, writ ref’d n.r.e.) ...................................................35

Barclay v. Burge, 245 S.W.2d 1021
(Tex. Civ. App.—Beaumont 1952, no writ) ..........................................................20

BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789 (Tex. 2002) .............21

Cain v. Bain, 709 S.W.2d 175 (Tex. 1986) ...........................................................22

City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) ..........................................21

Dallas Merchant’s & Concessionaire’s Ass’n v. City of Dallas,
852 S.W.2d 489 (Tex. 1993) ..................................................................................31

Dodson v. Watson, 110 Tex. 355, 220 S.W. 771 (1920) .......................................34

Dow Chem. Co. v. Francis, 46 S.W.3d 237 (Tex. 2001) .......................................22

El Apple I, Ltd. v. Olivas, 370 S.W.3d 757 (Tex. 2012) ............................ 38-39, 41

Ford Motor Co. v. Ridgway, 135 S.W.3d 598 (Tex. 2004) ...................................22

General Motors Corp. v. Saenz, 873 S.W.2d 353 (Tex. 1993) ...................... 20, 35

Hensley v. Eckerhart,
461 U.S. 424, 437, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983)....................................38

Marcus Cable Assocs. v. Krohn, 90 S.W.3d 697 (Tex. 2002) ...............................29

Ortiz v. Jones, 917 S.W.2d 770 (Tex. 1996) .........................................................21

Pace Corp. v. Jackson, 284 S.W.2d 340 (Tex. 1955)............................................20



                                                       6
Panhandle State Bank of Borger, 278 S.W.2d 622
(Tex. Civ. App.—Amarillo 1954, no writ) ............................................................31

Parker v. State, 40 S.W.3d 555 (Tex. App.—Austin 2001, no pet.) .....................37

Ragsdale v. Progressive Voters League, 801 S.W.2d 880 (Tex. 1990) ................38

Southland Life Ins. Co. v. Greenwade, 143 S.W.2d 648
(Tex. Civ. App.—Waco 1940), reversed by 159 S.W.2d at 858 ............. 21 n. 4, 36

Sundance Oil Co. v. Aztec Pipe & Supply Co.,
576 S.W.2d 780 (Tex. 1978) ........................................................................... 20, 35

Tex. Workers’ Comp. Ins. Fund v. Del Indus., Inc.,
35 S.W.3d 591 (Tex. 2000) ....................................................................................29

TracFone Wireless, Inc. v. Commission on State Emergency Commc’ns,
397 S.W.3d 173 (Tex. 2013) ..................................................................................32

Wilson v. State, 272 S.W.3d 686 (Tex. App.—Austin 2008, pet. denied) ............30

Statutes and Rules

Tex. Bus. Orgs. Code Ann. § 1.002(22) (West Supp. 2014) ....................... 24 n. 13

Tex. Bus. Orgs. Code Ann § 11.001(4)(B) (West Supp. 2014)................... 24 n. 13

Tex. Bus. Orgs. Code Ann § 11.001(5) (West Supp. 2014) ........................ 24 n. 13

Tex. Civ. Prac. & Rem. Code § 16.004(a)(3) .................................................. 33-34

Tex. Civ. Prac. & Rem. Code § 16.051 ................................................. 33, 33 n. 21

Tex. Tax Code Ann § 111.008 (West 2015) .................................. 17, 23-25, 29-30

Tex. Tax Code Ann. § 111.013 (West 2015) ....................................... 12, 20, 34-37

Tex. Tax Code Ann. § 111.022 (West 2015) ................................. 17, 23-24, 29-30

Tex. Tax Code Ann. § 111.201 (West 2015) .............23-24, 25 n. 17, 29-30, 32-33
                                                        7
Tex. Tax Code Ann. § 111.204 (West 2015) .........................................................22

Tex. Tax Code Ann. § 111.205(a)(2) (West 2015)............... 22-23, 30 n. 20, 30-31

Tex. Tax Code Ann. § 171.302 (West 2015) ............................................... 24 n. 13

Tex. Tax Code Ann. § 171.309 (West 2015) ............................................... 24 n. 13

Tex. Tax Code Ann. § 171.152 (West 2015) .................................................. 22, 30




                                                  8
                             STATEMENT OF THE CASE

        Appellants seek review of an erroneous final judgment in a franchise tax

collection lawsuit. Trial was to the bench. The parties entered into stipulation of

limited facts prior to trial, but the stipulation that “[t]he franchise taxes delinquent

from Jeff Kaiser, P.C. are accurately stated and quantified in Exhibit B to Plaintiffs

Original Petition in this case” was withdrawn without objection. (2 RR 32-34);1 (3

RR at Joint Ex. 1, unnumbered page 26, at stipulation 12). Exhibit B to the

Plaintiff’s Original Petition, which purported to be a certified claim for Texas

Franchise Tax, was never offered or entered into evidence.

        The State failed to either initiate its lawsuit or file a lien within the statute of

limitations. Appellants plead and argued at trial that the State’s lawsuit was time

barred. (CR 11);2 (2 RR 7, 13, 38-40). The State argued that it did not have to file

a lien within the limitations period; arguing that the State had an unlimited time to

file a lien, and therefore the State effectively had an eternal right to initiate a




1
    “MR. ADAMS: So No. 12, Your Honor, they want to withdraw No. 12. That's fine with me.

  THE COURT: All right. Stipulation of fact agreement No. 12, the joint motion has been
withdrawn.”
2
   Defendant’s Original Answer, para. 2 asserting the affirmative defense that “Plaintiff’s claims
are barred in whole or in part by the applicable statute of limitations.”


                                                9
lawsuit. (2 RR 41-42).3 The State itself rebutted the Comptroller’s certificate of

delinquency by introducing, as Plaintiff’s Exhibit 4, Appellant Kaiser, P.C.’s

franchise tax reports that were processed by the Comptroller. (2 RR 21); 3 RR Ex.

4, pp. 10, 14, 17, 21). The Comptroller’s office had interlineated “zero” dollars as

the tax liability on the reports. (2 RR 26);4 (3 RR Ex. 4, lines 41 on pp. 10, 14, 17,

21). The State’s sole fact witness testified that she had reviewed but no personal

knowledge of the statements made in the Comptroller’s certificate, and admitted

that the Comptroller’s office had altered the tax reports to put “zero” as the tax due

without explanation. (2 RR 26-27).5 Although the State’s witness did not know

who in the Comptroller’s office had changed the amount due to “zero”, she

3
   The State argued to the trial that “whenever the comptroller's office files a lien, even if it is
some years after returns were filed, or some years after a deficiency determination was made,
that that lien commences the running of the statute of limitation.” (2 RR 42, lns 6-10).
4
    From the cross-examination of the State’s witness from the Comptroller’s office:

      Q: And so you have submitted and testified to tax returns that someone at the
comptroller's he lines has put a zero under "amount due"; is that correct?

        A: Yes.

(2 RR 26).
5
    From the re-direct examination of the State’s witness from the Comptroller’s office:

        Q: So the only thing the comptroller's office has done is mark through the lines of
        amount due and put zero, with no further explanation?

        A: Correct.

(2 RR 26-27).


                                                10
speculated that whoever had done so might have meant to indicate “zero” payment

rather than “zero” amount due, but admitted that there was nothing on the altered

forms to indicate that her speculation was correct. (2 RR 26) (“Q: It does not note

that anywhere on this form, does it?            A: No, it doesn't.”).   The State thus

introduced evidence rebutting the Comptroller’s certificate and the presumption of

correctness was lost.     The State introduced no other evidence to support the

correctness of the statements in the Comptroller’s certificate, did not explain the

contradictory evidence, and failed to carry its burden of proof. The burden never

shifted to Appellants.

      At the very least, if the burden did shift, a fact issue was raised. The trial

court failed to weigh the evidence and treated the Comptroller’s certificate,

rebutted by the State itself, as conclusive.

      The trial court issued findings of fact and conclusions of law including, inter

alia, that the statute of limitations did not bar the State’s claims and that the

Comptroller’s certificate was conclusive and no fact issues required a finding of

fact regarding a delinquency.      Appellants challenge the following findings or

conclusions, which are asserted to be findings of fact by the trial court:

          8.   The Texas Comptroller of Public Accounts has certified to the
               Texas Attorney General that Franchise Taxes are delinquent
               from Jeff Kaiser, P.C.




                                           11
             9.   On October 27, 2014, the date of trial of this case, the sum of
                  $34,776.53 in franchise taxes, penalties and interest was due
                  from Jeff Kaiser, P.C.

             13. The franchise taxes delinquent from Jeff Kaiser, P.C. are
                 accurately stated and quantified in Exhibit B to Plaintiffs
                 Original Petition in this case, a Certified Claim for Texas
                 Franchise Tax from the Texas Comptroller of Public
                 Accounts.6

(CR 84-85). Appellants challenge the following findings or conclusions, which are

asserted to be conclusions of law by the trial court:

             4.   The State’s recording of its tax lien on April 15, 2013,
                  commenced the running of the statute of limitation in this
                  case.

             5.   The State’s filing of suit on August 2, 2013 was timely under
                  Texas Tax Code § 111.202. The State’s cause of action for
                  recovery of delinquent franchise taxes is not barred by the
                  statute of limitation.

             9.   Pursuant to Texas Tax Code §111.013, the Texas
                  Comptroller’s Certified Claim for Texas Franchise Tax
                  constitutes 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.

             10. Neither Defendant Jeff Kaiser, P.C. nor Defendant Jeffery

6
    Exhibit B was not introduced as evidence at trial.


                                                 12
                 Benedict Kaiser, a/k/a Jeffrey B. Kaiser offered evidence
                 sufficient to overcome the statutory presumptions in favor of
                 the State’s Certified Claim for Texas Franchise Tax.

(CR 86-87). The trial court found or held (contrary to this Court’s jurisprudence)

that the statute of limitations was effectively nullified by the State’s ability to file a

lien whenever it wished. Despite the conflicting evidence regarding the existence

and amount of any delinquency, which was introduced by the State itself, the trial

court did not engage in any weighing of the evidence.

      The State’s evidence on attorney’s fees consisted entirely of general, non-

specific and non-particularized testimony of one attorney, who acknowledged that

specific billing records existed, were requested, but were not produced nor offered

into evidence.

                               ISSUES PRESENTED

ISSUE 1:          The State is subject to a three year statute of limitations in
                  initiating a lawsuit for delinquent franchise tax liabilities.
                  The State must initiate a lawsuit within three years of the
                  date the taxes were due. If the State files a lien against the
                  taxpayer within the limitations period, then the State has
                  three years from the date the lien was filed to initiate a
                  lawsuit. The franchise tax reports at issue, for the tax years
                  2004 through 2007, were filed on December 22, 2008. The
                  State filed a lien on April 15, 2013, after the time period
                  allowed to initiate a lawsuit and only for the tax year 2004.
                  The State initiated this lawsuit on August 2, 2013, well past
                  the deadlines to initiate such a lawsuit.

                  Are the State’s claims barred by the statute of limitations?

ISSUE 2:          The State has the burden to prove the amount a franchise
                                           13
           taxpayer owes and that the amount is unpaid. The State
           may shift the burden by filing a certificate of delinquency,
           which generally constitutes prima facie evidence of the
           delinquency raising a presumption of correctness. But such
           presumption is lost when contradicting evidence is
           introduced by the State. The burden never shifted and the
           State failed to meet its burden. At the very least, the
           State’s contradictory evidence raised fact issues requiring a
           weighing of the evidence, which the trial court did not do.

           Did the trial court err in finding the Comptroller’s
           certification afforded the State the presumption when the
           State itself introduced evidence contradicting the
           certificate’s presumed correctness and in concluding that
           there was no fact issue to be decided because the
           presumption was unrebutted?


ISSUE 3:   Regardless of the method used to prove attorney’s fees, the
           attorney’s testimony must be substantive, specific and
           detailed. Proof of fees requires time records or other
           documentary evidence or an attorney’s recollection of such
           records. Attorneys relying on recollection must refer to some
           type of record or documentation. If the attorney does not
           keep contemporaneous billing records, the attorney must
           reconstruct the work to provide enough information for the
           trial court to perform a meaningful review. In this case, the
           attorney testifying for the State admitted that billing records
           were kept, that they were requested by Appellant, and that
           the records were not provided. The attorney’s testimony
           was general, non-specific and did not provide the required
           reconstruction of the work.

           Did the trial court err in awarding attorney’s fees because
           the State failed to carry its evidentiary burden to establish
           the right to attorney’s fees or the amount of reasonable and
           necessary attorney’s fees?




                                    14
                             STATEMENT OF FACTS

      Jeffrey Kaiser was an officer and director of Jeff Kaiser, P.C., which

forfeited its corporate charter on August 22, 2003. (3 RR Joint Ex., unnumbered

pp. 25-26, stipulations 6, 11). The franchise tax reports at issue are those of Jeff

Kaiser, P.C. for the years 2004, 2005, 2006, and 2007. (CR 3-10). The reports

filed by Jeff Kaiser, P.C. stated the amount of franchise tax owed as: 2004 -

$3,264; 2005 - $5,242; 2006 - $3,905; and 2007 - $11,905. (3 RR Ex. 4, pp. 10,

14, 17, 21). Each report calculated interest and penalties as well. The reports for

each of these years were filed on December 22, 2008.                  (3 RR Joint Ex.,

unnumbered p. 25, stipulation 7).      Four years, three months, and twenty-two days

later, on April 15, 2013, the State filed a lien in the amount of $5,628.35 for only

the 2004 tax period claiming the same tax due amount as stated in the report as

filed by Jeff Kaiser, P.C. plus additional penalties and interest. (Id., stipulation

11); (3 RR Ex. 2, unnumbered p. 8). There was no evidence offered of any liens

filed by the State for tax years 2005 through 2007.

      There was no evidence offered of a determination of delinquency or a

jeopardy determination within the limitations period.7

      The State initiated the instant lawsuit on August 2, 2013 seeking judgment


7
   The State attached to its petition as Exhibit B a document entitled “Certified Claim for
Franchise Tax” but this document was never offered or admitted into evidence.


                                            15
for tax years 2004 through 2007. (CR 3-10). This lawsuit came five years after

the reports for each year were filed and outside the limitations period.8 The State

argued that the limitations statute allowed the State to sue within three years of

filing a lien and that the State’s ability to file a lien was not subject to any

limitations period. (2 RR 41-42). Thus, under the State’s theory, the State’s filing

of a lien for the 2004 tax year vitiated the limitations statute—apparently not just

for 2004 but for all tax years.

         The Comptroller’s office received the filed reports and marked out the tax

due amount and interlineated by hand a “zero” as the amount due on each report.

(2 RR 26); (3 RR Ex. 4, lines 41 on unnumbered pp. 10, 14, 17, 21). On January 8,

2014, 5 years and 17 days after Jeff Kaiser, P.C. filed its reports, the Comptroller

filed a document entitled “TEXAS CERTIFICATE TO ATTORNEY GENERAL

OF FEE DELINQUENCY - FRANCHISE TAX” and “TRIAL CERT”. (3 RR Ex.

1, unnumbered p. 1).

         The State’s sole fact witness testified that she had reviewed but no personal

knowledge of the statements made in the Comptroller’s certificate, and admitted

that the Comptroller’s office had altered the tax reports to put “zero” as the tax due

without explanation. (2 RR 26-27). The State offered no other evidence.



8
    Even the lien filed for 2004 taxes does not rescue the State’s claim for 2004. The lien was


                                                 16
        There was a stipulation of facts entered into by the parties but stipulation 12,

regarding the existence and correctness of a document attached to the State’s

petition purporting to be a “Certified Claim for Franchise Tax”, but which was

never offered or entered into evidence, was ordered withdrawn after the State told

the trial court that it did not object to the stipulation being withdrawn. (2 RR 32-

34);9 (3 RR at Joint Ex. 1, unnumbered page 26, at stipulation 12). The State never

sought to introduce evidence of any assessment by the Comptroller’s office other

than the January 8, 2014 “trial cert”.

                           SUMMARY OF THE ARGUMENT

        The statute of limitations had passed when the State initiated this lawsuit.

The State had four years to assess taxes if it did not agree with the tax due as stated

in the filed reports. The State did not challenge or disagree with the tax due

amounts as stated in the reports filed, and there is no record of the State making

any jeopardy determination under Section 111.008 of the Texas Tax Code or a

deficiency determination under Section 111.022.

        Thus, the State had three years from the date the taxes were due to file either


filed over four years after the 2004 report was filed; outside the limitation period.
9
    “MR. ADAMS: So No. 12, Your Honor, they want to withdraw No. 12. That's fine with me.

  THE COURT: All right. Stipulation of fact agreement No. 12, the joint motion has been
withdrawn.”



                                                 17
a lien or a lawsuit. Because the reports were filed on December 22, 2008, the State

had until December 22, 2011 to file a lien or institute an action. If the State had

filed a lien within this limitation period then it would have had three years from the

date of the lien to initiate a lawsuit. On April 15, 2013, the State filed an untimely

lien for only the tax year 2004. The State’s lawsuit was not filed within the

limitations period. The State’s argument that it can file a lien anytime it wishes to,

and thus have eternity to sue a taxpayer, is without merit and is contrary to this

Court’s prior decisions. Because there is no evidence of liens filed for the tax

years 2005, 2006, or 2007, even under the State’s “eternity to sue” theory the

State’s claims only apply to 2004. The judgment should be reversed and judgment

rendered for Appellants because the State’s claims are barred by limitations.

      Even if the State’s claims were not barred by limitations, the judgment

should be reversed because the Court impermissibly relieved the State of its burden

of proof. The State introduced into evidence a Comptroller’s “trial cert” dated

January 8, 2014. A certificate from the Comptroller is prima facie evidence of the

amount of an alleged delinquency. The certificate raises a rebuttable presumption

of correctness. However, in this case the State presented evidence that contradicts,

or could be reasonably interpreted as contradicting, the correctness of the

statements in the certificate. In such a case, the presumption is lost and the State

must meet its burden through other evidence and may not rely solely upon the


                                         18
presumption. In this case, the State did not introduce any evidence other than the

certificate and relied entirely upon the presumption. The burden never shifted and

the State failed to meet its burden of proof. Even if the burden did shift, there was

a fact issue for the trier of fact and the trial court did not engage in a weighing of

evidence. The State itself introduced evidence and testimony that the Comptroller

marked out the amount due on the filed tax reports and wrote “zero” on the tax due

line of the reports. This evidence and testimony is in conflict with the statements

in the certificate. In this circumstance, as with a sworn account, the certificate is

deprived of its presumption of correctness.

      The State offered no evidence other than the “trial cert”. The trial court

accepted the certificate as conclusive evidence and erred in finding that the State

had met its burden of proof without presenting any evidence other than the

certificate. The trial court’s findings and conclusions show that the trial court did

not engage in any weighing of evidence. The evidence was thus legally and

factually insufficient to support the trial court’s findings and to support the

judgment.

      The State failed to carry its burden to prove that it was entitled to attorney’s

fees. The attorney testifying for the State admitted that billing records were kept,

that they were requested by Appellants, and that the records were not provided.

The State did not offer its attorney’s billing records into evidence.     The State’s


                                         19
attorney’s testimony was general, non-specific, and did not provide the required

reconstruction of the work. The evidence was factually and legally insufficient to

support an award of attorney’s fees.

                                  ARGUMENT

I.    Burden of Proof and Standard of Review.

      The burden of proof is on the State as the plaintiff. See Pace Corp. v.

Jackson, 284 S.W.2d 340, 350 (Tex. 1955) (stating that the person asking for

action from the court has the burden of proof); Barclay v. Burge, 245 S.W.2d 1021,

1023 (Tex. Civ. App.—Beaumont 1952, no writ) (stating that usually the plaintiff

has the burden of proof). The State may provide prima facie evidence in the form

of a certificate from the Comptroller showing a delinquency to raise a rebuttable

presumption sufficient to shift the burden to the taxpayer.       Tex. Tax Code §

111.013. However, when contradicting evidence that supports no delinquency is

contained in, or attached in support of, the certificate by the Comptroller, then the

certificate cannot support a presumption and is not prima facie burden-shifting

evidence. See General Motors Corp. v. Saenz, 873 S.W.2d 353, 359 (Tex. 1993)

(“Once . . . evidence contradicting the presumption has been offered, the

presumption disappears.”); see also Sundance Oil Co. v. Aztec Pipe & Supply Co.,

576 S.W.2d 780, 780-81 (Tex. 1978) (sworn account deficient and not prima facie




                                         20
evidence of debt when movant’s own pleadings and exhibits raise fact question).10

       The Court reviews a trial court’s conclusions of law de novo. BMC Software

Belgium, N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002). The Court reviews a

trial court’s findings of fact for legal and factual sufficiency of the evidence by the

same standards applied to a jury verdict. Ortiz v. Jones, 917 S.W.2d 770, 772 (Tex.

1996).

       In a legal sufficiency challenge, the Court reviews the evidence in the light

most favorable to the finding, crediting favorable evidence if a reasonable fact-

finder could and disregarding contrary evidence unless a reasonable fact-finder

could not. City of Keller v. Wilson, 168 S.W.3d 802, 807 (Tex. 2005). A legal

sufficiency challenge should be sustained if the record reveals: (1) the complete

absence of a vital fact; (2) the court is barred by rules of law or evidence from

giving weight to the only evidence offered to prove a vital fact; (3) the evidence

offered to prove a vital fact is no more than a mere scintilla; or (4) the evidence


10
    It appears that a Comptroller’s certificate that is insufficient to give rise to the presumption
can be some evidence of a deficiency if the insufficient certificate is entered into evidence. See
Southland Life Ins. Co. v. Greenwade, 143 S.W.2d 648, 650-51 (Tex. Civ. App.—Waco 1940),
reversed by 159 S.W.2d at 858 (evidence insufficient to give rise to legal presumption could still
be considered and weighed by the fact-finder); see also Ayeni v. State, 440 S.W.3d 707, 715-16
(Tex. App.—Austin 2013, no pet.) (J. Pemberton, concurring) (analyzing Southland Life to
Comptroller’s certificate of deficiency in franchise tax case). However, in this case the trial
court was the finder of fact and entered conclusions of law and findings of fact making clear that
the judgment was based upon the presumption alone and not a weighing of evidence. (C.R. 84-
87) (trial court’s finding number 8 and conclusion number 9).




                                                21
conclusively establishes the opposite of the vital fact. Id. at 810. More than a

scintilla of evidence exists if the evidence rises to a level that would enable

reasonable and fair-minded people to differ in their conclusions. Ford Motor Co. v.

Ridgway, 135 S.W.3d 598, 601 (Tex. 2004).

      For a factual sufficiency challenge, the Court considers and weighs all the

evidence in the record, both supporting and against the finding, to decide whether

the finding should be set aside. See Dow Chem. Co. v. Francis, 46 S.W.3d 237,

242 (Tex. 2001). If the finding is so against the great weight and preponderance of

the evidence as to be clearly wrong and unjust then the judgment should be set

aside. Id.; Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986).

II.   The statute of limitations bars the State’s claims

      The limitations period began on December 22, 2008, when the reports for

the tax years at issue were filed. Pursuant to sections 111.204, 171.512, and

111.205(a)(2) of the tax code, the late filing date began the period of limitations:

             BEGINNING OF PERIOD OF LIMITATION. In determining
             the beginning date for a period of limitation provided in this
             title, the date that a tax is due and payable is the day after the
             last day on which a payment is required by the chapter of this
             title imposing the tax.

Tex. Tax Code Ann. § 111.204. The “the day after the last day on which a

payment is required by the chapter of this title imposing the tax” is May 16—for

example, 2004 taxes are due and payable May 15, 2005. Id. § 171.152 (“DATE

                                          22
ON WHICH PAYMENT IS DUE. [ . . . ]              (c) Payment of the tax covering the

regular annual period is due May 15, of each year after the beginning of the regular

annual period.”). In the case at bar, however, because the reports were filed late,

the limitations period began when the reports were filed—December 22, 2008. Id.

§ 111.205(a)(2) (assessment limitation tolled until report is filed).

      Under section 111.201 of the tax code, the State has only four years from the

date that the taxes becomes due and payable to make a tax assessment. Id. §

111.201 (“No tax imposed by this title may be assessed after four years from the

date that the tax becomes due and payable.”). The franchise taxes for tax years

2004 through 2007 became due and payable when Jeff Kaiser, P.C. filed its reports

on December 22, 2008. The State had until December 22, 2012 to assess taxes but

there is no evidence that the State did so.

      Under section 111.202, the State must bring an action to collect delinquent

taxes, penalties, and interest within three years after a delinquency or jeopardy

determination has become due and payable. Id. § 111.202. There is no evidence

of a delinquency or jeopardy determination.         Id. § 111.008 (requirements for

jeopardy determination); § 111.022 (requirements for deficiency determination).

      Other than Jeff Kaiser, P.C.’s franchise tax reports, there is no evidence of a

deficiency or jeopardy determination or assessment by the Comptroller with four




                                          23
years.11 Tex. Tax Code § 111.201 (West 2013) (4 year limitation to assess); §

111.008 (requirements for jeopardy determination); § 111.022 (requirements for

deficiency determination).

        The State did not file a lien or this action within three years.12 Id. § 111.202

(action must be filed within 3 years of lien or deficiency or jeopardy

determination).

        The record on appeal demonstrates the following facts, which establish that

the State’s claims are time barred:

        (1)     On August 22, 2003 the Texas Secretary of State forfeited Jeff Kaiser,
                P.C.’s corporate charter, making Jeff Kaiser, P.C. a “forfeited filing
                entity”.13

        (2)     On August 23, 2006, pursuant to Texas law, all claims by or against
                Jeff Kaiser, P.C. were extinguished.14

        (3)     On December 22, 2008, Jeff Kaiser, P.C. filed franchise tax reports
                for the tax years 2004, 2005, 2006, and 200715 showing the following

11
      The only evidence of any kind of a deficiency determination is a January 8, 2014
Comptroller’s “trial” certificate, which was filed 5 years and 17 days after the franchise tax
reports were filed. (3 RR Ex. 1, unnumbered p. 1).
12
     The State filed an untimely lien on tax year 2004 only. (3 RR Ex. 2, unnumbered p. 8).
13
    (3 RR at Joint Ex. 1, unnumbered page 26, at stipulation 8). Tex. Bus. Orgs. Code Ann. §
1.002(22) (West Supp. 2014), § 11.001(4)(B), (5); see also Tex. Tax Code Ann. §§ 171.302,
171.309 (West 2015).
14
   Tex. Bus. Orgs. Code Ann. § 11.356(a) (West 2012) (“[A]n existing claim by or against a
terminated filing entity is extinguished unless an action or proceeding is brought on the [existing]
claim not later than the third anniversary of the date of termination.”).
15
     (3 RR at Joint Ex. 1, unnumbered page 25, at stipulation 7).


                                                 24
                taxes, penalties, and interest due (rounded up to nearest dollar):

                Tax Year       Tax Due
                2004           $3,264
                2005           $5,242
                2006           $3,905
                2007           $11,905

                Total          $21,316

         (4)    The Comptroller’s office received the franchise tax reports and
                crossed out the total amount due on line 41 of each report and
                interlineated “zero” as the “total amount due and payable”.16

         (5)    The Comptroller did not audit, assess, or otherwise disagree with the
                tax due on the reports filed by Jeff Kaiser, P.C. The record shows no
                deficiency determination under Tex. Tax Code § 111.008 and no
                deficiency determination at all other than the Comptroller’s “trial”
                certification on January 8, 2014.17

         (6)    Instead, on April 15, 2013,18 the Comptroller filed a tax lien for 2004
                and subsequently filed this lawsuit. The tax lien filed for the 2004 tax
                year listed the amount of tax due as $3,263.81, which is the same
                amount of tax due as listed on Jeff Kaiser, P.C.’s 2004 report as filed.
                The lien also listed and penalties and interest through the date the lien
                was filed.19 No liens for tax years 2005, 2006, or 2007 were filed.

         (7)    On August 2, 2013, the State filed this lawsuit. In its lawsuit the State
                alleged the following deficiencies (rounded here into whole dollars):



16
     (2 RR 26); (3 RR Ex. 4, lines 41 on unnumbered pp. 10, 14, 17, 21).
17
    5 years, 17 days after Jeff Kaiser, P.C. filed reports for 2004 to 2007, which is well beyond
the 4-year limitation on assessment. Tex. Tax Code § 111.201.
18
     4 years, 3 months, 22 days after the 2004 report was filed.
19
     (3 RR P’s Ex. 2).


                                                 25
             Tax Year     Tax Due       Penalty & Interest      Total
             2004         $3,264        $2,321                  $5,585
             2005         $5,242        $3,431                  $8,673
             2006         $3,905        $2,254                  $6,159
             2007         $8,532        $4,168                  $16,699

             Total        $20,943       $12,174                 $37,116

             The tax due amounts for each year, as alleged in the State’s petition,
             were the same as the amounts as on the reports filed by Jeff Kaiser,
             P.C., indicating the State was agreeing with the calculation of the tax
             due stated on the reports as filed. The only exception is 2007, in
             which the State alleged that the tax due amount was less than the
             amount stated on the filed report. The record is silent as to the reason
             the State’s allegations gave a credit or reduction on the tax due
             amount as shown on the 2007 report as filed.

      (8)    On January 8, 2014, the Comptroller filed a “Texas Certificate to
             Attorney General of Fee Delinquency” with the Attorney General’s
             office as stipulated in Stipulation No. 8. This “trial” certification of
             delinquency provided only totals for the years 2004 to 2007 and did
             not provide a yearly breakdown. This certification listed the
             delinquency on January 8, 2014 as: Tax Due - $20,941.26, Penalty -
             $4,188.24, Interest - $9,142.28, for a total of $34,271.78. The Tax
             Due amount listed was the same as alleged by the State in its
             previously filed petition and consistent with the amount reported by
             Jeff Kaiser, P.C.

      The State accepted the tax due amounts listed on the filed reports. There

was no timely assessment of additional taxes, no jeopardy determination, and no

deficiency determination. There was no timely filed lien for the tax year 2004, and

no lien filed at all for tax years 2005, 2006, or 2007. The State did not timely file

this action and the State’s claims are barred by limitations.

      In an attempt to escape limitations, the State argued at trial that it had


                                          26
eternity to file a lien and, so long as the State then filed an action within 3 years of

the eternity it had to file a lien, its collection lawsuit was therefore timely.

Unfortunately for the State, this Court, citing the Texas Supreme Court, has

rejected similar “eternity” arguments because “[t]he three-year limitation granted

by the legislature would be extended indefinitely [. . .] rendering the statute

ineffective”. See Lawyers Surety Corp. v. State, 825 S.W.2d 803-04 (Tex. App.—

Austin 1992, no writ) (citing Hatcher v. State, 125 Tex. 84, 81 S.W.2d 499 (Tex.

1935)).

      The State’s “eternity” argument relies upon a misinterpretation of section

111.202, which reads as follows:

             SUIT LIMITATION. At any time within three years after a
             deficiency or jeopardy determination has become due and
             payable or within three years after the last recording of a lien,
             the comptroller may bring an action in the courts of this state,
             or any other state, or of the United States in the name of the
             people of the State of Texas to collect the amount delinquent
             together with penalties and interest.

Tex. Tax Code Ann. § 111.202. The State argues that there is no limitation on

when it can file a lien, thus the legislature’s 3-year limitation is rendered

ineffective because the State could delay for more than three years, in fact could

delay forever, filing a lien.    As described below, this “eternity” argument is

strikingly similar to the argument rejected by this Court, albeit for other reasons, in

Lawyers Surety Corp.
                                          27
      In Lawyers Surety Corp., as in this case, the parties agreed that the 3-year

statute of limitation in section 111.202 had run. However, the State argued that the

3-year limitations period did not apply because the State was suing the surety on

the bond and not the taxpayer directly. Thus, under the State’s theory, there was

no limitations period and it effectively had eternity to sue the surety. This Court

rejected the State’s “eternity” argument, stating the following principle:

          In this case, to allow recovery on the bond itself would effectively
          repeal § 111.202. If the State were able to initiate suit for taxes
          against the surety after the three-year limitation of § 111.202, the
          taxpayer would ultimately lose the statutory protection of this
          legislation because of the surety’s contractual right to recover on
          the bond itself. If the surety pays the debt which is at the time
          barred by limitation as against the principal, but is a valid
          obligation against the surety, such surety may recover against the
          principal. The three year limitation granted by the legislature
          would be extended indefinitely since the State could delay for
          more than three years before filing suit for the taxes against the
          sureties of these required bonds. The sureties would then pursue
          the principal taxpayer, rendering the statute ineffective. The
          principal would, in effect, be forced to defend a suit for these
          taxes more than three years after the final deficiency
          determination, which clearly violates the legislature’s language in
          § 111.202. Also, the surety itself would have no way of
          determining when its liability on these bonds expires.

          The three-year limitation granted by the legislature would be
          extended indefinitely since the State could delay for more than
          three years before filing suit for the taxes against the sureties of
          these required bonds. The sureties would then pursue the
          principal taxpayer, rendering the statute ineffective. The principal
          would, in effect, be forced to defend a suit for these taxes more
          than three years after the final deficiency determination, which
          clearly violates the legislature’s language in § 111.202.


                                          28
Lawyers Surety Corp., 825 S.W.2d at 803-04 (citations and internal quotation

marks omitted).

      Further, following the Texas Supreme Court’s guidance on construing a

statute, the State’s “eternity” argument in this case fails as it did in Lawyers Surety

Corp. In construing a statute the Court’s purpose is to determine the Legislature’s

intent. Marcus Cable Assocs. v. Krohn, 90 S.W.3d 697, 706 (Tex. 2002). “As a

starting point, we construe statutes as written and, if possible, ascertain intent from

the statutory language. We may also consider other factors, including the object the

statute seeks to obtain, legislative history, and the consequences of a particular

construction. Moreover, we must always consider a statute as a whole and attempt

to harmonize its various provisions.” Id. (citations omitted).

      Thus, section 111.202 (3-year limitation on bringing an action) should not be

read in isolation (as the State would have the Court read it in order to escape

limitations). Tex. Workers’ Comp. Ins. Fund v. Del Indus., Inc., 35 S.W.3d 591,

593 (Tex. 2000) (stating that Court is not to construe statutory language in

isolation but in the context of the entire statutory scheme). A section of a statute

must be read and harmonized with other sections. Id. In this case, section 111.202

(3-year limitation on bringing an action) must be read and harmonized in the

context of the entire statutory scheme, which would include sections 111.201 (4

year limitation to assess), 111.008 (requirements for jeopardy determination), and


                                          29
111.022 (requirements for deficiency determination).

       Under Section 111.202, “the Comptroller may bring an action to collect

delinquent taxes, penalties, and interest within three years after the deficiency has

become due and payable.” Wilson v. State, 272 S.W.3d 686, 689 (Tex. App.—

Austin 2008, pet. denied). But when franchise taxes are due and payable is a

moving target, depending upon the actions taken by the Comptroller and the State.

If the Comptroller does not disagree with the tax due amount on a franchise tax

report, the franchise tax becomes “due and payable” on the later of May 16 or the

day a late report is filed. Id. §§ 171.152 (taxes due and payable May 16; being the

day after report is due); 111.205(a)(2) (assessment limitation tolled until report is

filed). Thus, the limitations period ends 3-years after the later of May 16 or the

day the report is late-filed.

       But section 111.201 allows the Comptroller four years “from the date that

the tax becomes due and payable” to assess franchise taxes. Tex. Tax Code §

111.201.20 If the Comptroller does disagree with the tax due amount on the filed

franchise tax report, then it may, within 4-years of the later of May 16 or date the

report is filed, make a jeopardy or deficiency determination. Id. §§ 111.008,

111.022. In that case the franchise taxes then become “due and payable” upon the


20
    Under certain circumstances not relevant here, for example fraud or gross error, the
Comptroller can assess taxes beyond this 4-year period. Tex. Tax Code § 111.205.


                                          30
finality of that determination. Id. Thus, the limitations period ends 3-years after the

finality of the determination.

      In the case at bar, the State offered no evidence of a jeopardy or deficiency

determination within the 4-year assessment limitation that would extend the 3-year

limitations on filing an action.

      A lien must be filed during the time in which a tax may be assessed (being 4

years from when the taxes were due and payable) for the simple reason that, if the

State has no enforceable debt, then it has no right to file a lien. See Spicknall v.

Panhandle State Bank of Borger, 278 S.W.2d 622 (Tex. Civ. App.—Amarillo

1954, no writ) (“There can be no lien if there be no enforceable debt as a basis

therefor.”).

      The State’s “eternity” to file a lien theory would require the Court to ignore

the “due and payable” assessment limitation and the entire statutory scheme. In

particular, the language and effect of section 111.205, which lists the

circumstances under which the State may assess after the 4-year limitation (and

implicitly excluding all other circumstances including the State’s “eternity”

theory).       Tex. Tax Code § 111.205; see also Dallas Merchant’s &

Concessionaire’s Ass’n v. City of Dallas, 852 S.W.2d 489, 493 n. 7 (Tex. 1993)

(discussing the doctrine of expressio unius est exclusio alterius in the context of

statutory construction).


                                          31
        In this case the franchise taxes were “due and payable” on December 22,

2008. The State did not disagree with the tax due amount as stated on the franchise

tax reports as filed and did not make a jeopardy or deficiency determination, which

would have established a new “due and payable date”. In short, the State did not

assess taxes within the 4-year limitation period and so it did not extend the 3-year

limitation on bringing an action. The untimely filing of a lien on the 2004 taxes

does not restart the assessment limitations period. A lien must be filed within 4

years of the taxes being due and payable and in this case the State filed its lien too

late.

        To the extent that there may be any ambiguity in section 111.201, or

ambiguity in the interplay between it and the other tax code sections setting the

“due and payable” date, Appellants note that the 3-year limitation from December

22, 2008 is appropriate in this case under the second cardinal rule recently

reiterated by the Texas Supreme Court:

             Judicial construction of tax statutes eschews fuzzy math.
             Legislators must speak clearly, agencies heed assiduously,
             and courts review exactingly. Several cardinal, century-old
             principles dictate strictness in tax matters: (1) tax
             authorities cannot collect something that the law has not
             actually imposed; (2) imprecise statutes must be interpreted
             most strongly against the government, and in favor of the
             citizen; and (3) we will not extend the reach of an
             ambiguous tax by implication, nor permit tax collectors to
             stretch the scope of taxation beyond its clear bounds.

TracFone Wireless, Inc. v. Commission on State Emergency Commc’ns, 397
                                         32
S.W.3d 173, 183 (Tex. 2013), The State invites the Court to interpret an imprecise

statute in favor of the government, and against the citizen, which is the opposite of

the Texas Supreme Court’s cardinal rule. The Court’s exacting review should

apply the 3-year limitation period from section 111.202 to this case and all the

State’s claims should be barred by limitations.

       Alternatively, if the Court holds that the 3-year limitations period in section

111.201 is not applicable, the Court should still find the State’s claims subject to

the Texas Civil Practice and Remedies Code, section 16.004’s 4-year statute of

limitations on the collection of a debt or the 4-year residual statute of limitations in

section 16.051. Tex. Civ. Prac. & Rem. Code §§ 16.004(a)(3), 16.051.21 The

State’s cause of action accrued on December 22, 2008, the accrual (i.e. the “due

and payable” date) was not extended and, if section 111.201 does not apply, then

no provision of the tax code removes the State’s claims from the 4-year limitation

in section 16.004(a)(3).

       In the further alternatively, if the Court holds that the State’s April 15, 2013

lien filing for the 2004 tax year did extend the limitations period, the Court should

limit the judgment to the alleged deficiency for the year 2004.

       Finally, also in the further alternative, if the Court holds that the alleged


21
    Sec. 16.051 reads as follows: “RESIDUAL LIMITATIONS PERIOD. Every action for
which there is no express limitations period, except an action for the recovery of real property,


                                               33
deficiencies for each tax year are not barred by section 111.201 or section

16.004(a)(3), then the Court should limit the judgment to the amounts due as

reported by Jeff Kaiser, P.C. because of the Comptroller’s failure to assess

additional taxes within section 111.202’s 4-year assessment limitation period.

III.   The State’s own evidence contradicted the Comptroller’s certification
       the presumption was lost or, at the very least, a question of fact was
       raised requiring the trial court to weigh the evidence.

       Texas Tax Code, section 111.013(a) provides that:

       (a) In a suit involving the establishment or collection of a tax imposed under
       Title 2 or 3 of this code, a certificate of the comptroller that shows a
       delinquency is 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 § 111.013(a). Well established law holds that prima facie evidence

is sufficient to establish a fact unless contradicted by other evidence. See Dodson

v. Watson, 110 Tex. 355, 220 S.W. 771, 772 (1920) (“Prima facie evidence is

merely that which suffices for the proof of a particular fact until contradicted and



must be brought not later than four years after the day the cause of action accrues.” Tex. Civ.
Prac. & Rem. Code § 16.051.


                                              34
overcome by other evidence.”). This Court has long held that the Comptroller’s

certification of delinquency raises a presumption that, if unrebutted, is sufficient to

establish, as a matter of law, the amount of tax owed. Baker v. Bullock, 529

S.W.2d 279, 281 (Tex. Civ. App.—Austin 1975, writ ref’d n.r.e.).

      But when the party benefiting from a presumption introduces evidence

contrary to the evidence on which the presumption is based, the presumption is

lost. See General Motors Corp. v. Saenz, 873 S.W.2d 353, 359 (Tex. 1993)

(presumption disappears with introduction of contradictory evidence); see also

Sundance Oil Co. v. Aztec Pipe & Supply Co., 576 S.W.2d 780, 780-81 (Tex.

1978) (sworn account deficient and not prima facie evidence of the debt when the

movant’s own pleadings and exhibits raise a fact question of whether the

nonmovant was a party to the transaction).

      The State itself rebutted the Comptroller’s certificate of delinquency by

introducing into evidence Appellant Kaiser, P.C.’s franchise tax reports processed

by the Comptroller as Plaintiff’s Exhibit 2. The State’s sole fact witness testified

that she had reviewed but no personal knowledge of the statements made in the

Comptroller’s certificate, and admitted that the Comptroller’s office had altered the

tax reports to put “zero” as the tax due without explanation. (2 RR 26-27).

      The State relied entirely upon the presumption and introduced no other

evidence of a deficiency. The State failed to carry its burden and the burden never


                                          35
shifted to Appellants.

      Even if the burden did shift, a fact issue was raised by the State’s

introduction of evidence contrary to the certificate. There is a question of how

much evidence is sufficient to rebut the presumption that the certificate is correct.

See Ayeni v. State, 440 S.W.3d 707, 713 (Tex. App.—Austin 2013, no pet.) (J.

Pemberton concurring) (“[N]othing in section 111.013 purports to require

conclusive contrary evidence to rebut or join issue with a Comptroller’s

certificate.”) (emphasis in original). There is, however, no question that more than

a scintilla of rebuttable evidence raises a fact issue requiring a weighing of

evidence by the trier of fact—even if the weighing determines that the rebuttal

evidence does not to rise to the level of “conclusive”. See Southland Life Ins. Co.

v. Greenwade, 159 S.W.2d 854, 857 (Tex. 1942) (when contradicted evidence

raising presumption weighed against contradicting evidence by fact finder).

      In this case the State itself supplied more than a scintilla of rebuttal evidence

sufficient, at the very least, to raise a fact issue and require a weighing by the

finder of fact.     The State introduced evidence rebutting the Comptroller’s

certificate and raising a fact issue regarding a delinquency. Despite this conflicting

evidence regarding any delinquency, the trial court failed to weigh the evidence

and treated the Comptroller’s certificate, rebutted by the State itself, as conclusive.

      The trial court’s made no finding of fact concerning the evidence of


                                          36
delinquency.   Instead, the trial court, in its conclusions of law, stated that:

“Pursuant to Texas Tax Code §111.013, the Texas Comptroller’s Certified Claim

for Texas Franchise Tax constitutes 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.

(C.R. 87, conclusion 9). “Neither Defendant Jeff Kaiser, P.C. nor Defendant

Jeffery Benedict Kaiser, a/k/a Jeffrey B. Kaiser offered evidence sufficient to

overcome the statutory presumptions in favor of the State’s Certified Claim for

Texas Franchise Tax.” (C.R. 87, conclusion 10). The trial court did not consider

or weigh the contradicting evidence that the State itself entered into evidence. It

merely accepted the presumption as established and did not consider that the State

itself, rather than Appellants, had presented the contradictory evidence raising a

fact issue as to whether there was in fact a delinquency. The State’s evidence

raised an issue regarding taxes assessed and collected that was not addressed in the

certificate. See Parker v. State, 40 S.W.3d 555 (Tex. App.—Austin 2001, no pet.)

(certificate did not answer question of sales taxes collected from customers);

      The State introduced no evidence other than the Comptroller’s “trial”

certificate and relied solely upon the presumption. Because the presumption was

lost, the Court should reverse and render. Alternatively, the Court should reverse
                                         37
and remand for a new trial. At the very least a fact issue was raised by the State’s

contradictory evidence, the trial court did not weigh the evidence or make a factual

finding, and the evidence is legally and factually insufficient to support the trial

court’s findings.

IV.   The trial court erred in awarding attorney’s fees

      The award of attorney’s fees generally rests in the sound discretion of the

trial court. Ragsdale v. Progressive Voters League, 801 S.W.2d 880, 881 (Tex.

1990) (per curiam). But a party applying for an award of attorney’s fees under the

lodestar method bears the burden of documenting the hours expended on the

litigation and the value of those hours. Hensley v. Eckerhart, 461 U.S. 424, 437,

103 S.Ct. 1933, 76 L.Ed.2d 40 (1983); El Apple I, Ltd. v. Olivas, 370 S.W.3d 757,

761 (Tex. 2012).

      Regarding the State’s testimony and evidence (or lack thereof) supporting an

award of attorney’s fees, this case is strikingly similar to El Apple I, Ltd. v. Olivas.

In Olivas, the Texas Supreme Court reversed the award of attorneys’ fee award

because the plaintiff’s attorneys failed to provide sufficient details of the work they

actually performed. While the plaintiff’s attorneys presented testimony that they

spent 890 hours prosecuting the case, they based their fee request on generalities

did not introduce time records, billing statements, or invoices. They provided little

or no detail regarding which plaintiff’s attorney performed which task. As a result,


                                          38
the Texas Supreme Court held that there was insufficient information for the trial

court to provide a meaningful review of their fee application. The Supreme Court

noted that it had never explained the proof necessary for an award of attorneys’

fees, it remanded the case so that the attorneys would have another opportunity to

present evidence of their fees. In this case the State had the Supreme Court’s

guidance from Olivas yet failed in the exact same manner as the Olivas plaintiffs.

      The State failed to carry its burden to prove that it was entitled to attorney’s

fees. As in Olivas, in this case the State’s attorney’s testimony was general, non-

specific, and did not provide the required reconstruction of the work. (2 RR 27-31).

The case against an award of attorney’s fees is even stronger than it was in Olivas

because the attorney testifying for the State admitted that billing records were kept,

that they were requested by Appellants, and that the records were not provided. (2

RR 29-31). The State did not offer attorney’s billing records into evidence.

      The State failed to present sufficient information for the trial court to

provide a meaningful review of their fee application.         Following the Olivas

decision, the State has left the Court with little choice but to reverse and deny the

State’s attorney’s fee application. The evidence was simply insufficient, factually

and legally in light of Olivas.

                          CONCLUSION AND PRAYER

      The State’s claims are barred by limitations. The limitations period began


                                         39
when Appellant Jeff Kaiser, P.C. filed its franchise tax reports on December 22,

2008 and the taxes were due and payable. The State had until December 22,

2011, 3-years from when the taxes were due and payable, to initiate this lawsuit.

Even if the Tax Code did not contain this 3-year limitation, under the limitations

in the Civil Practice and Remedies Code, the State’s action would be barred after

December 22, 2012. The State initiated this action on August 2, 2013. And the

State failed to take advantage of the Tax Code giving the State the ability to get a

second bite at the apple. If the State had, before December 22, 2012, made an

assessment, deficiency, or jeopardy determination, or filed a lien, the State could

have extended the time it had to initiate this action by an additional 3 years.

There is no evidence that the State took any of these actions before December 22,

2012. The evidence shows that the only action the State took (besides filing this

lawsuit outside of the limitations period) was to file a lien on April 15, 2013,

which was beyond the 4-year assessment limitation. This late-filed lien covered

only the tax year 2004 but was not in time to extend even an action limited to

2004. The State’s theory that it can file a lien at any time, and thus effectively

have eternity to sue a taxpayer, would vitiate the statutory limitations scheme, is

contrary to this Court’s precedent, and contrary to the rules of statutory

construction.

      While a Comptroller’s certification of a delinquency is afforded the status


                                        40
of prima facie evidence raising a presumption of correctness, if the State itself

introduces evidence contrary to the evidence raising the presumption, then the

presumption is lost and the burden never shifts. The State relied entirely upon the

presumption and introduced no other evidence. In fact, the State’s fact witness

admitted having no knowledge of the facts of this case other than having read and

relied upon the Comptroller’s “trial” certification. Thus, the evidence is factually

and legally insufficient to support the trial court’s findings of fact and the

judgment. The Court should reverse and render.

      Even if the burden did shift, a fact issue was raised by the State’s

introduction of evidence contrary to the Comptroller’s certification and a

weighing of the evidence and a fact finding was required. The trial court did not

weigh the evidence and the Court should, alternatively, reverse and remand for a

new trial.

      Finally, the State failed to meet its burden of proof to establish its right to

attorney’s fees. The only evidence to support attorney’s fees was the general,

non-particularized testimony of one attorney, who admitted that billing records

existed, were sought by Appellants in discovery, were never produced, and were

never offered into evidence. Pursuant to the Texas Supreme Court’s guidance in

El Apple I, Ltd. v. Olivas, the State failed to present sufficient information for the

trial court to provide a meaningful review of their fee application. The Court


                                         41
should reverse and render judgment denying the State attorney’s fees or, in the

alternative, remand.

      WHEREFORE,         PREMISES        CONSIDERED,        Appellant    Jeff   Kaiser

respectfully requests that the Court of Appeals reverse and render judgment for

Appellants that the State take nothing on its limitations-barred claims.

Additionally or alternatively, Appellants request that the Court reverse the award

of attorney’s fees. Alternatively, Appellants request that the judgment be reversed

in part to limit the judgment to only the tax year 2004 or, in the further alternative,

limited to the amounts reported by Jeff Kaiser, P.C. on its filed reports. In the

further alternative, Appellants request that the judgment be reversed and remanded

for a new trial. Appellants pray for any further relief to which they are entitled.

      Respectfully submitted,

      /s/ George F. May/
      ________________________
      George F. May
      State Bar No. 24037050
      TWOMEY | MAY, PLLC
      2 Riverway, 15th Floor
      Houston, Texas 77056
      (713) 659-0000 - Telephone
      (832) 201-8485 - Facsimile
      george@twomeymay.com

      Attorneys for Appellant




                                          42
                       CERTIFICATE OF COMPLIANCE

     Pursuant to Tex. R. App. Pro. 9.4, the undersigned certifies this brief
complies with the type-volume limitation of Tex. R. App. Pro 9.4(i)(2)(3).

      1.    EXCLUSIVE OF THE EXEMPTION PORTIONS IN TEX. R.APP.
            PRO 9.4(I)(1), THE BRIEF CONTAINS(select one):

            A.     6,652 words, OR

            B.     ____ lines of text in monospaced typeface.

      2.    THE MOTION HAS BEEN PREPARED (select one):

            A.     in proportionally spaced typeface using:

                   Software Name and Version: Microsoft Word; P.C. 2013 in
                   Times New Roman 14, or

            B.     in monospaced (nonproportionally spaced) typeface using:

                   Typeface name and number of characters per inch:


                                                     /s/ George F. May/
                                                   ________________________
                                                   George F. May

                                                   Date: May 28, 2015




                                         43
                          CERTIFICATE OF SERVICE

As required by Texas Rule of Appellate Procedure 6.3 and 9.5(b), (d), (e), I certify
that I have served this document on all other parties, which are listed below on
May 28, 2015 as follows:


Mr. John C. Adams                        Texas E-File/ E-Mail
Office of the Attorney General
300 W. 15th Street, Floor 8
Austin, Texas 78701
E-Mail: John.adams@texasattorneygeneral.gov

Mr. Sean O’Neill
Assistant Attorney General
Bankruptcy & Collections Division
P.O. Box 12548, MC 008
Austin, Texas 78711-2548
Email: Sean.Oneill@texasattorneygeneral.gov

Attorney for The State of Texas

            By (check all that apply)
                                personal delivery
                                mail
                                commercial delivery service
                        X       fax, email, or electronic service

                                      /s/ George F. May/
                                            George F. May

                                                    Date: May 28, 2015




                                         44
                                APPENDIX


Tab 1 (Final Judgment)

Tab 2 (Findings of Fact and Conclusions of Law)




                                      45
APPENDIX
TAB 1
                                               DC                      BK14336 PG222
                                                                                                             Filed in The District Court
                                                                                                              Of ..,..,1-.·,v:,. r·o· •fit'-:1 ,
                                                                                                                        c;,,d"")v.....a.           Texas


                                          NO. D-1-GV-13-000790

     THE STATE OF TEXAS                                                                           IN THE DISTRICT COURT OF


     vs
                                                                                                  TRAVIS COUNTY. TEXAS

     JEFF KAISER, P.C. AND JEFFERY
     BENEDICT KAISER, A/K/A JEFFREY
     B. KAISER                                                                                    98TH JUDICIAL DISTRICT


                                           FINAL JUDGMENT

           BE IT REMEMBERED that on October 27, 2014, the above-entitled and numbered cause
    came before the Court for trial; and the Court proceeded to consider the pleadings and the
    evidence admitted at trial, and the arguments of counsel; and the Court found that judgment
    should be rendered for Plaintiff; it is therefore
           ORDERED that Plaintiff: THE STATE OF TEXAS, recover from Defendants JEFF
    KAISER, P.C. AND JEFFERY BENEDICT KAISER, AIKJA JEFFREY B. KAISER. jointly
    and severally, the sum of $34,776.53, which sum represents the franchise tax. penalties and
•
    interest, shown in the Comptroller's certificates admitted into evidence in this matter, plus
    interest at the statutory rate specified in Ch. 111.010 of the Texas Tax Code on those amounts
    from October 27. 2014 until paid; and it is further
•          ORDERED that Plaintiff: the State of Texas, recover from the Defendants JEFF
    KAISER, P.C. AND JEFFERY BENEDICT KAISER. AIKJA JEFFREY B. KAISER, jointly
    and severally, the sum of $2,500.00 as its reasonable and necessary attorney's fees; plus court
    costs herein incurred and court costs which may hereafter be incurred in the collection of this
    judgment if the same be necessary, for all of which execution and other process necessary to
    enforce this judgment may issue.
           This judgment finally disposes of all parties and all claims and is appealable.
                                  ;SI-                       ll               ·
           SIGNED this the ____ day           of_....!.ouc..a...L.r..z..:-r&::z....c.;h:..c_t,_
                                                                                            __




                                                                                                   81
TAB 2
                                                                        Filed in The District Court
                                                                         of Travis County, Texas   tf1J
                                                                              DEC 2 2 2014
                                    D-1-GV-13-000790                    At         0 '7.£i
                                                                                        1         ~M.
                                                                        Amalia Rodriguez-Mendoza, ferk

 THE STATE OF TEXAS                                   IN THE DISTRICT COURT OF



 vs.                                                       TRAVIS COUNTY, TEXAS



 JEFF KAISER, P .C. AND
 JEFFERY BENEDICT KAISER,                                 98TH JUDICIAL DISTRICT
 A/KIA JEFFREY B. KAISER

             FINDINGS OF FACT AND CONCLUSIONS OF LAW

       On the 2ih day of October 27 2014, came on to be heard the above numbered and styled
cause. Having heard the testimony, admitted exhibits into evidence, and entertained argument of
counsel the Court makes the following findings and conclusions:


                                      FINDINGS OF FACT
   1. Jeff Kaiser, P.C. was a Texas Professional Corporation.
   2. Jeff Kaiser, P.C. was incorporated on or about July 10, 2001 by filing Articles of
       Incorporation with the Texas Secretary of State.
   3. Jeff Kaiser was the initial director of Jeff Kaiser, P.C. listed m the Articles of
       Incorporation.
   4. Jeff Kaiser, P.C. did not file its first Franchise Tax/Public Information Report when due.
   5. On January 28, 2003 , the Texas Comptroller of Public Accounts forfeited the corporate
       privileges of Jeff Kaiser, P.C. because the corporation failed to file its first Franchise
       Tax/Public Information Report when that report was due.
   6. The Texas Secretary of State forfeited the corporate charter of Jeff Kaiser, P.C. on
       August 22, 2003 .
   7. On December 22, 2008, Jeff Kaiser, P.C. filed Franchise Tax Returns for calendar years
       2004, 2005, 2006, 2007 and 2008.




                                                                                                          84
8. The Texas Comptroller of Public Accounts has certified to the Texas Attorney General
   that Franchise Taxes are delinquent from Jeff Kaiser, P.C.
9. On October 27, 2014, the date of trial of this case, the sum of $34,776.53 in franchise
   taxes, penalties and interest was due from Jeff Kaiser, P.C.
10. Jeff Kaiser, listed as the initial director of Jeff Kaiser, P .C. is the same person as Jeffery
   Benedict Kaiser, a/k/a Jeffrey B. Kaiser, the named individual defendant in this lawsuit.
11. Jeff Kaiser was the sole officer and director of Jeff Kaiser, P.C.
12. On April 15, 2013 , the Texas Comptroller of Public Accounts filed a State Tax Lien
   against Jeff Kaiser, P.C. for the delinquent Franchise Taxes.
13. The franchise taxes delinquent from Jeff Kaiser, P.C. are accurately stated and quantified
   in Exhibit B to Plaintiffs Original Petition in this case, a Certified Claim for Texas
   Franchise Tax from the Texas Comptroller of Public Accounts.
14. Plaintiff brought suit against Defendants pursuant to Section 171 .255 of the Texas Tax
   Code.
15. On August 8, 2008, Defendant Jeffery Benedict Kaiser filed for bankruptcy under
   Chapter 7 of the United States Bankruptcy Code in the Houston Division of the United
   States Bankruptcy Court; Case No. 08-35261.
16. The Plaintiff entered no appearance, nor filed any Proof of Claim in the Bankruptcy case
   of Jeffery Benedict Kaiser.
17. On July 15, 2009, Defendant Jeffery Benedict Kaiser was granted an unrestricted general
   discharge in the bankruptcy case.
18. On April 15, 2013 , nine (9) years and eight (8) months after the forfeiture of the
   corporate charter of Jeff Kaiser, P.C.; and three (3) years and eight (8) months after
   Defendant Jeffery Benedict Kaiser' s Bankruptcy Discharge, the Texas Comptroller of
   Public Accounts filed a tax lien against Jeff Kaiser, P.C. for the taxes allegedly owed by
   Defendant Jeff Kaiser, P.C. for the tax years 2004, 2005 , 2006, and 2007.
19. On August 2, 2013 , the State of Texas filed this lawsuit against Jeff Kaiser, P.C. , and the
   individual former officer/director of that corporation, Jeffery Benedict Kaiser.
20. August 2, 2013 is less than three years after April 15, 2013.
21. The attorney' s fee requested by Plaintiff, The State of Texas, in the amount of $2,500.00
   is reasonable in this case.

                                                                                                 2




                                                                                                      85
                               CONCLUSIONS OF LAW


1. This case was brought by the State of Texas to secure a judgment for delinquent franchise
   taxes against the permitted taxpayer, Jeff Kaiser, P.C. pursuant to Chapter 171 of the
   Texas Tax Code, and to impose personal liability for the delinquent franchise taxes on the
   individual defendant, Jeffery Benedict Kaiser, alk/a Jeffrey B. Kaiser, pursuant to Texas
   Tax Code §171.255.
2. In their Answer, Defendants raised the defense of the statute of limitation to Plaintiffs
   cause of action to recover delinquent franchise taxes.
3. The statute of limitation applicable to this case is Texas Tax Code § 111.202, which
   provides in part:        "At any time within three years after a deficiency or jeopardy
   determination has become due and payable or within three years after the last
   recording of a lien, the comptroller may bring an action in the courts of this state ... "
4. The State's recording of its tax lien on April 15, 2013, commenced the running of the
   statute of limitation in this case.
5. The State's filing of suit on August 2, 2013 was timely under Texas Tax Code § 111.202.
   The State' s cause of action for recovery of delinquent franchise taxes is not barred by the
   statute of limitation.
6. In his Answer, Defendant Jeffery Benedict Kaiser, a/k/a Jeffrey B. Kaiser raised the
   defense of Discharge in Bankruptcy to his personal liability for the franchise taxes made
   the subject of this lawsuit.
7. At or prior to trial, Defendant Jeffery Benedict Kaiser, alk/a Jeffrey B. Kaiser abandoned
   the defense of Discharge in Bankruptcy to his personal liability for the franchise taxes
   made the subject of this lawsuit by failing to raise, argue or offer evidence to support the
   defense ofDischarge in Bankruptcy.
8. Regardless of Defendant's abandonment of the defense of Discharge in Bankruptcy, the
   taxes made the subject of this lawsuit are excepted from discharge in bankruptcy by the
   operation of Bankruptcy Code, 11 U.S.C. §523(a)(1)(B)(ii). That section excepts from
   discharge any taxes for which a return is required and for which the returns are filed after
   they were due, and after two years before the date of filing the petition in bankruptcy.



                                                                                                3




                                                                                                    86
9. Pursuant to Texas Tax Code §111.013, the Texas Comptroller's Certified Claim for
   Texas Franchise Tax constitutes 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.

10. Neither Defendant Jeff Kaiser, P.C. nor Defendant Jeffery Benedict Kaiser, alkla Jeffrey
   B. Kaiser offered evidence sufficient to overcome the statutory presumptions in favor of
   the State' s Certified Claim for Texas Franchise Tax.
ll. Pursuant to Texas Tax Code § 171.255. as an officer and director of Jeff Kaiser, P.C ..
   Defendant Jeffery Benedict Kaiser, a!k/a Jeffrey B. Kaiser is personally liable for the
   delinquent franchise taxes of Jeff Kaiser, P.C. that accrued after the corporate privileges
   of Jeff Kaiser, P.C. were forfeited for the failure to file a report or pay a tax or penalty
   and before such corporate privileges were revived.
12. Defendants Jeff Kaiser, P.C. and Jeffery Benedict Kaiser, a!k/a Jeffrey B. Kaiser are
   jointly and severally liable for the delinquent franchise taxes made the subject of this
   lawsuit.
13. Plaintiff, The State of Texas, is entitled to recover attorney's fees pursuant to TEx. GovT
   CODE ANN.    § 2107.066.
14. Defendants Jeff Kaiser, P.C. and Jeffery Benedict Kaiser, a!k/a Jeffrey B. Kaiser are
   jointly and severally liable for the attorney's fees awarded to Plaintiff in this case.




                                                                                              4




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