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Title Resources Guaranty Co. v. The Lighthouse Church & Ministries

Court of Appeals of Texas, First District

July 23, 2019

TITLE RESOURCES GUARANTY COMPANY AS SUBROGEE OF SLS PROPERTIES, Appellant
v.
THE LIGHTHOUSE CHURCH & MINISTRIES, Appellee

          On Appeal from the 11th District Court Harris County, Texas Trial Court Case No. 2015-25934

          Panel consists of Justices Lloyd, Kelly, and Hightower.

          OPINION

          RICHARD HIGHTOWER JUSTICE

         Appellant Title Resources Guaranty Company ("TRG"), as subrogee[1] of SLS Properties ("SLS"), appeals the trial court's summary judgment in favor of Appellee / Cross-Appellant The Lighthouse Church & Ministries (the "Church"). In its summary judgment order, the trial court ruled that TRG take nothing by its contract cause of action. TRG asks that we reverse and render judgment in its favor on this claim. It contends that SLS and the Church's contract for the sale of land unambiguously obligated the Church to pay taxes that were imposed on the land post-sale under Tax Code Section 11.201(a). It also asks that we either render judgment in its favor on its claim for attorneys' fees or, if we affirm the summary judgment, affirm the ruling that neither party is entitled to attorneys' fees.

         The trial court also granted summary judgment in TRG's favor, ruling that the Church take nothing by its counterclaims. The Church has now abandoned its counterclaims. It also cross-appeals for a rendition of judgment in its favor on its claim for attorneys' fees.

         The contract gives rise to an ambiguity, even after interpreting the plain language of the competing contract provisions and applying the interpretive canons advanced by the parties. We therefore reverse the summary judgment in part and remand the case for further proceedings.

         Background

         The Church acquired a tract of land in late 2011 and received an exemption from ad valorem taxes on the land under Tax Code Section 11.20(a)(6). That statute applies to certain land upon which a religious organization plans to expand or build a place of regular religious worship. Tex. Tax Code § 11.20(a)(6)(A)-(B). If, however, the religious organization sells or transfers the land in a year in which the land is receiving the exemption, "an additional tax is imposed on the land equal to the tax that would have been imposed on the land had the land been taxed for each of the five years preceding the year in which the sale or transfer occurs in which the land received an exemption . . . ." Id. § 11.201(a).

         Later, the Church agreed to sell the land to SLS. The parties entered into an Unimproved Property Contract in April 2014 to govern the sale. The Unimproved Property Contract stemmed from a form "promulgated by the Texas Real Estate Commission." Paragraphs 13(A) and 13(B) of the Unimproved Property Contract address "Prorations" and "Rollback Taxes," respectively. Because the land received the exemption under Section 11.20(a)(6) for tax years 2012, 2013, and 2014, the Church had not been required to pay taxes on the land for those years.

         The Church and SLS closed the sale on May 30, 2014. Also on that day, they and the escrow agent for the sale executed an "Escrow With[h]old Agreement" (the "EWA"). Under the EWA, the escrow agent held an amount of money deposited by the Church "for possible Tax Rollbacks until" the agent "receive[d] proof of . . . no additional taxes due from [the] Harris County Tax Assessor." If there were "additional amounts due beyond the amount withheld," the EWA required that "the seller will pay the additional monies to satisfy the amount due to the Tax assessor/collector."

         SLS's title insurer for the sale was TRG, under an Owner's Policy of Title Insurance.

         In October 2014, the Harris County Appraisal District ("HCAD") sent a letter to the Church and a copy of it to SLS. The letter advised that HCAD "has canceled the exemption on the" land sold by the Church to SLS, and it identified the exemption as the one provided by Section 11.20(a)(6). The letter went on to cite and paraphrase most of the language of Section 11.201(a).

         Three taxing entities then demanded payment from SLS for ad valorem taxes relating to the land for tax years 2012, 2013, and 2014. TRG, on SLS's behalf due to the subrogation provisions of the title-insurance policy, demanded that the Church pay those taxes, as allegedly required by the provisions of SLS and the Church's contract of sale. The Church refused. TRG then paid the 2012 and 2013 taxes on SLS's behalf-ultimately $111, 813.95 after certain refunds-in part to avoid accrual of penalties and interest and to allow SLS to protest the appraised value of the land that the taxing authorities used to calculate the taxes they imposed under Section 11.201(a). For the 2014 taxes, SLS paid the amounts that accrued after the May 30, 2014 closing, and the funds that the Church deposited in escrow under the EWA paid off the amounts that had accrued for January through May 2014.

         After SLS's appraisal protest was denied, SLS petitioned for judicial review of the protest in court. The protest suit was ultimately settled.

         TRG, as subrogee of SLS, filed this suit against the Church. TRG pleaded causes of action for breach of contract and quantum meruit. It sought as damages the $111, 813.95 that it had paid for 2012 and 2013 taxes, recovery of $44, 776.50 for costs it allegedly incurred to mitigate its damages, and attorneys' fees. The Church answered and counterclaimed, but the Church represents on appeal that it has "clearly abandoned its counterclaims." However, it has not abandoned its claims for attorneys' fees under the Unimproved Property Contract's "prevailing party" provision.

         TRG and the Church's dispute arises largely out of their competing interpretations of the documents that constitute SLS and the Church's contract of sale. In short, the Church contends that Paragraph 13(B) of the Unimproved Property Contract unambiguously required SLS to pay the 2012 and 2013 taxes imposed by the taxing authorities under Section 11.201(a). TRG contends that the EWA unambiguously required the Church to pay those taxes.

         The parties cross-moved for summary judgment on their competing theories. On TRG's causes of action for breach of contract and quantum meruit, the trial court granted summary judgment in the Church's favor that TRG take nothing. On the Church's counterclaims, the trial court granted summary judgment in TRG's favor that the Church take nothing. The trial court also ruled that neither party was entitled to attorneys' fees.

         The trial court's judgment, in effect, returned the parties to the status quo ante-TRG had paid the 2012 and 2013 taxes imposed under Section 11.201(a), and both parties took nothing by this suit. TRG appealed, and the Church cross-appealed.

         Contractual Obligation for Taxes Imposed Under Tax Code Section 11.201(a)

         In its first issue, TRG contends that the contract unambiguously obligated the Church to pay the taxes imposed under Section 11.201(a). The Church's first issue is the mirror image of TRG's-that the contract unambiguously obligated TRG to pay those taxes.

         I. Standard of Review

         We review orders granting or denying summary judgment, either traditional or no-evidence, de novo. See Laverie v. Wetherbe, 517 S.W.3d 748, 752 (Tex. 2017); Contractors Source, Inc. v. Amegy Bank Nat'l Ass'n, 462 S.W.3d 128, 132 (Tex. App.-Houston [1st Dist.] 2015, no pet.); Reiland v. Patrick Thomas Props., Inc., 213 S.W.3d 431, 435 (Tex. App.-Houston [1st Dist.] 2006, pet. denied). Traditional summary judgment is proper when a movant establishes that there is no genuine issue of material fact and that he or she is entitled to judgment as a matter of law. Tex.R.Civ.P. 166a(c); Reiland, 213 S.W.3d at 435. No-evidence summary judgment is proper for a defendant on a plaintiff's cause of action when, after an adequate time for discovery, the defendant-movant shows that "there is no evidence of one or more essential elements of a claim or defense on which [the plaintiff] would have the burden of proof at trial." Tex.R.Civ.P. 166a(i). Once the movant makes this showing, the burden then shifts to the nonmovant to present evidence raising a genuine issue of material fact as to each of the elements specified in the defendant's motion. Johnson v. Phillips, 526 S.W.3d 529, 534 (Tex. App.-Houston [1st Dist.] 2017, pet. denied).

         In reviewing a grant of summary judgment, we consider as true all evidence that favors the nonmovant, and we indulge every reasonable inference, and resolve all reasonable doubts, in the nonmovant's favor. Reiland, 213 S.W.3d at 435. We must consider whether reasonable and fair-minded jurors could differ in their conclusions in light of all of the evidence presented. See Goodyear Tire & Rubber Co. v. Mayes, 236 S.W.3d 754, 755 (Tex. 2007). A genuine issue of material fact exists when there is more than a scintilla of probative evidence on a particular issue. See Buck v. Palmer, 381 S.W.3d 525, 527 & n.2 (Tex. 2012) (per curiam). "Evidence that is so weak as to do no more than create a mere surmise or suspicion that the fact exists is less than a scintilla." Regal Fin. Co. v. Tex Star Motors, Inc., 355 S.W.3d 595, 603 (Tex. 2010) (internal quotations omitted). A summary judgment should not be granted unless the movant conclusively shows that there is no dispute about, among other things, "the inferences that may properly be drawn from the evidence." Jones v. Mem'l Hosp. Sys., 746 S.W.2d 891, 896 (Tex. App.- Houston [1st Dist.] 1988, no writ).

         Both TRG and the Church moved for summary judgment: (a) TRG, on only traditional grounds, both on its causes of action and on the Church's counterclaims and (b) the Church on both traditional and no-evidence grounds on TRG's causes of action and on only traditional grounds on its counterclaims. See Tex. R. Civ. P. 166a(a)-(c), (i).

         When both parties move for summary judgment, and the trial court grants one motion and denies the other, the unsuccessful party may appeal both the successful party's motion and the denial of his or her own motion. Holmes v. Morales, 924 S.W.2d 920, 922 (Tex. 1996); Reiland, 213 S.W.3d at 436. In such an appeal, we must review both sides' summary judgment evidence, determine all questions presented, and render the judgment that the trial court should have rendered. Gilbert Tex. Constr., L.P. v. Underwriters at Lloyd's London, 327 S.W.3d 118, 124 (Tex. 2010); Reiland, 213 S.W.3d at 436. We may affirm the summary judgment or reverse and render judgment on the unsuccessful party's motion. Holmes, 924 S.W.2d at 922. "When, as here, a summary judgment order does not specify the grounds on which it was granted, we will affirm the judgment if any one of the theories advanced before the trial court is meritorious." Bowers v. Taylor, 263 S.W.3d 260, 263 (Tex. App.-Houston [1st Dist.] 2007, no pet.).

         Both TRG and the Church are in the position of being both successful and unsuccessful on their respective cross-motions. The trial court granted the Church's motion as to TRG's causes of action, ruling that TRG take nothing by them, but it denied the rest of the Church's motion. It also ruled that TRG was entitled to summary judgment on the Church's counterclaims, but it otherwise denied TRG's motion.

         II. Applicable Tax Code Provisions

         The parties' competing contract interpretations play out against the backdrop of Tax Code Sections 11.20 and 11.201. A qualified religious organization "is entitled to an exemption from taxation of:"

the land that the religious organization owns for the purpose of expansion of the religious organization's place of regular religious worship or construction of a new place of regular religious worship if:
(A) the religious organization qualifies other property, including a portion of the same tract or parcel of land, owned by the organization for an exemption under Subdivision (1) or (5); and
(B) the land produces no revenue for the religious organization.

Tex. Tax Code § 11.20(a)(6); see also Tex. Const. art. VIII, § 2 (authorizing such an exemption). This exemption expires after either one of two periods, depending on whether the land is contiguous with the religious organization's present place of regular religious worship:

A tract of land that is contiguous to the tract of land on which the religious organization's place of regular religious worship is located may not be exempted under Subsection (a)(6) for more than six years. A tract of land that is not contiguous to the tract of land on which the religious organization's place of regular religious worship is located may not be exempted under Subsection (a)(6) for more than three years.

Tex. Tax Code ยง 11.20(j). TRG and the Church agree that the land at issue was not contiguous to the Church's then-existing place of regular religious worship. ...


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