Mount Vernon United Methodist Church v. Harris County, Texas ( 2019 )

Opinion issued December 17, 2019.
In The
Court of Appeals
For The
First District of Texas
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NO. 01-18-01114-CV
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MOUNT VERNON UNITED METHODIST CHURCH, Appellant
V.
HARRIS COUNTY, TEXAS, CITY OF HOUSTON, HOUSTON
INDEPENDENT SCHOOL DISTRICT, AND HOUSTON COMMUNITY
COLLEGE SYSTEM, Appellees
On Appeal from the 152nd District Court
Harris County, Texas
Trial Court Case No. 2014-29708
MEMORANDUM OPINION
Appellant Mount Vernon United Methodist Church is attempting to appeal
from an order denying its petition to withdraw the excess proceeds from a property
tax foreclosure sale. We affirm the trial court’s judgment.
Background
On April 4, 2016, the trial court signed a final judgment awarding appellees
Harris County, Texas, City of Houston, Houston Independent School District, and
Houston Community College System delinquent taxes and costs concerning real
property belonging to the Peace Community Development Corporation. The real
property was subsequently sold at a tax sale and the excess proceeds from the tax
sale were placed in the trial court’s registry on September 27, 2016. On May 11,
2018, appellant received an assignment of the excess proceeds from the Peace
Community Development Corporation by and through its Executive Director,
Mildred Bright, who was a named party in the delinquent tax litigation.
On September 4, 2018, appellant filed a post-judgment petition to withdraw
excess funds. A copy of the assignment is attached to the petition. See TEX. TAX
CODE § 34.04(a). Appellees did not file a response. On September 17, 2018,
appellant set the petition for submission without an oral hearing. On October 11,
2018, the tax master issued a report recommending that appellant’s motion to
withdraw be denied “on the basis of the record.” The trial court denied the petition
on October 13, 2018.
Appellant filed a request for findings of fact and conclusions of law and a
notice of past due findings of fact and conclusions of law. The trial court denied
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appellant’s request on December 10, 2018, and appellant filed its notice of appeal
on December 13, 2018.
Excess Proceeds from Tax Foreclosure Sales
The proceeds from tax foreclosure sales are governed by sections 34.03 and
34.04 of the Tax Code. Section 34.04(a) allows any person to file a “petition in the
court that ordered the seizure or sale setting forth a claim to the excess proceeds”
within two years after the property was sold. TEX. TAX CODE § 34.04(a). The court
shall order the proceeds to be paid to each party that establishes its claim to the
proceeds. See id. § 34.04(c). If no claimant establishes entitlement to the proceeds
within this period, the “clerk shall distribute the excess proceeds to each taxing unit
participating in the sale in an amount equal to the proportion its taxes, penalties, and
interests bear to the total amount of taxes, penalties, and interest due all participants
in the sale.” Id. § 34.03(b).
Jurisdiction
Appellees argue that the court does not have jurisdiction over this appeal
because the order is interlocutory and Tax Code section 34.04 does not allow appeals
from an order denying a petition for excess proceeds. Appellant argues that the order
is final and appealable and that depriving appellant of an appeal in this case violates
its Equal Protection and Due Process rights guaranteed by the United States and
Texas Constitutions.
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Unless specifically authorized by statute, Texas appellate courts have
jurisdiction only to review final judgments. McFadin v. Broadway Coffeehouse,
LLC, 539 S.W.3d 278, 283 (Tex. 2018). A judgment is final for purposes of appeal
if it disposes of all pending parties and claims. Id. (citing Lehmann v. Har-Con
Corp., 39 S.W.3d 191, 195 (Tex. 2001)).
In a delinquent property tax proceeding, the final judgment is the order
granting judgment to the taxing units for the unpaid taxes. See Royal Indep. Sch.
Dist. v. Ragsdale, 273 S.W.3d 759, 763–64 (Tex. App.—Houston [14th Dist.] 2008,
no pet.). An order on a petition for distribution of excess proceeds from a tax
foreclosure sale made pursuant to Tax Code section 34.04 is a post-final-judgment
proceeding. See id. at 764.
Although an order in a post-final-judgment proceeding is not a final judgment,
such an order “may be appealable if an appeal is statutorily authorized or if the order
has the nature of a mandatory injunction that resolves property rights.” Jack M.
Sanders Family P’ship v. Roger T Fridholm Revocable Living Trust, 434 S.W.3d
236, 242 (Tex. App.—Houston [1st Dist.] 2014, no pet.); see also Alexander Dubose
Jefferson & Townsend LLP v. Chevron Phillips Chem. Co., L.P., 540 S.W.3d 577,
586–87 (Tex. 2018) (holding that some post-judgment orders can be final and
appealable judgments if they function similarly to mandatory injunctions). “A
post-judgment order operates as a mandatory injunction when it resolves property
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rights and imposes obligations on the judgment creditor or interested third parties.”
Jack M. Sanders Family P’ship, 434 S.W.3d at 242.
Although section 34.04(e) authorizes interlocutory appeals from orders
“directing that all or part of the excess proceeds be paid to a party,” there is no
statutory authorization for interlocutory appeals from an order denying a petition for
excess funds, such as the one in this case. TEX. TAX CODE § 34.04(e); see also 2012
Properties, LLC v. Garland Indep. Sch. Dist., No. 05-15-01002, 2016 WL 3902585,
at *3–4 (Tex. App.—Dallas July 14, 2016, pet. denied) (mem. op.) (holding section
34.04(e) authorizes only interlocutory appeals of orders granting petitions for excess
proceeds and dismissing interlocutory appeal of order denying petition for excess
proceeds for want of jurisdiction).
The order denying appellant’s petition, however, is nevertheless appealable if
it has the nature of a mandatory injunction that resolves property rights. See Jack M.
Sanders Family P’ship, 434 S.W.3d at 242. The record reflects that appellant was
the only party to file a petition for excess proceeds during the two-year period. The
trial court’s order denying appellant’s petition for excess funds, which was entered
after the two-year period expired, effectively resolved the question of the disposition
of the excess funds because at that point, no claimant had established that it had a
right to the funds, and the clerk was required to “distribute the excess proceeds to
each taxing unit” without any further intervention by the court. TEX. TAX CODE
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§ 34.03(b); cf. Jack M. Sanders Family P’ship, 434 S.W.3d at 242. Appellees, the
taxing units, were effectively awarded the excess proceeds by default.
Appellees argue that the order is interlocutory and not appealable because it
“is consistent with and does not work a material change in the adjudicative portions
of the original judgment; it merely effectuates the judgment.” McFadin, 539 S.W.3d
at 284. The final judgment foreclosed on the property, awarded appellees “the total
sum of money due for taxes, penalties, interest, and attorney fees with penalty and
interest continuing to accrue . . . plus all costs of court,” and ordered the property to
be sold in order to satisfy the judgment. The judgment did not award appellees the
excess funds from the foreclosure sale, which is the result of the trial court’s order
denying appellant’s petition.
Appellant’s reliance on 2012 Properties, L.L.C. for the proposition that the
court does not have jurisdiction over appellant’s appeal of an order denying the
withdrawal of excess funds is also misplaced. In 2012 Properties, L.L.C., the
claimant timely filed its petition for excess proceeds and the trial court denied the
petition more than a year before the two-year deadline for a party to establish its
right to the proceeds had expired. See 2016 WL 3902585, at *2. As a result, the
denial of the order in 2012 Properties, L.L.C did not resolve any property rights with
respect to the funds. Pursuant to the statute, the money was required to remain in the
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court’s registry for the rest of the two-year period unless a party established its
entitlement to all or some of the proceeds during that time.
Based on the unique facts in this case, we conclude that the order functions
similarly to a mandatory injunction, and therefore, we hold that we have jurisdiction
over appellant’s appeal. See Jack M. Sanders Family P’ship, 434 S.W.3d at 242; see
also Alexander Dubose Jefferson & Townsend LLP, 540 S.W.3d at 586–87.
Findings of Fact and Conclusions of Law
In its first issue, appellant argues that the trial court erred by not issuing
findings of fact and conclusions of law.
Findings of fact and conclusions of law are required upon request in any case
tried in the district or county court without a jury pursuant to Texas Rule of Civil
Procedure 296. See TEX. R. CIV. P. 296, 297. Rule 296, however, does not apply to
post-judgment hearings. See Johnson v. J.W. Constr. Co., 717 S.W.2d 464, 467–68
(Tex. App.—Fort Worth 1986, no writ); see also Shearn v. Brinton-Shearn, No. 01-
17-00222-CV, 2018 WL 6318450, at *11 (Tex. App.—Houston [1st Dist.] Dec. 4,
2018, no pet.) (mem. op.) (“[A] trial court’s duty to file findings of fact and
conclusions of law does not extend to post-judgment hearings.”). An order on a
petition for distribution of excess proceeds from a tax foreclosure sale is a
post-final-judgment proceeding. See Royal Indep. Sch. Dist., 273 S.W.3d at 764.
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Because Rule 296 does not apply to post-judgment hearings and the trial court
had no duty to make findings of fact and conclusions of law, we hold that the trial
court did not err in not filing the requested findings of fact and conclusions of law.
See Shearn, 2018 WL 6318450, at *11.
We overrule appellant’s first issue.
Petition for Excess Proceeds
Appellant argues that the trial court erred by denying its petition because it
established its right to the excess funds in the court’s registry.
Appellees contend that the trial court did not err when it denied the petition
because the assignment did not satisfy the requirements of Tax Code section
34.04(f)(4) and (5).1 Section 34.04(f)(4) and (f)(5)(I) state:
A person may not take an assignment or other transfer of an owner’s
claim to exceed proceeds unless: . . . (4) the assignee or transferee pays
the assignor or transferor on the date of the assignment or transfer an
amount equal to at least 80% of the amount of the assignor’s or
transferor’s claim to the excess proceeds [and] (5) the assignment or
transfer document contains a sworn statement by the assignor or
transferor affirming . . . (I) that the consideration paid was an amount
equal to at least 80 percent of the amount of the assignor’s or
transferor’s claim to the excess proceeds.
TEX. TAX CODE §§ 34.04(f)(4), (f)(5)(I).
1
Appellant argues that appellees have not preserved this argument for appeal because
they did not file any pleadings in the trial court contesting or objecting to the
assignment of the excess funds. Appellees, however, are not challenging or
complaining about the trial court’s judgment; they are raising this argument as an
“alternative position to seek affirmance of the judgment.” See City of San Antonio
v. Winkenhower, 875 S.W.2d 388, 391 (Tex. App.—San Antonio 1994, pet. denied).
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Appellant attached a copy of the sworn assignment to the petition. The
assignor, however, avers in the assignment that “the amount of consideration given
for the assignment is $ 1.00 and other good and valuable consideration.” The
assignment further states that “the amount of the excess proceeds contained in the
registry of the Court is $33,172.35.” Thus, the assignor’s sworn statement
affirmatively reflects that the assignment does not comply with the requirements of
section 34.04(f)(4) because the consideration paid for the assignment ($1.00) was
far less than “80 percent of the amount of the assignor’s or transferor’s claim to the
excess proceeds” ($33,172.35). Because the assignment does not comply with the
requirements of section 34.04(f), we cannot say that the trial court erred by denying
the petition for excess funds.
We overrule appellant’s second issue.
Conclusion
We affirm the trial court’s judgment. Any pending motions are dismissed as
moot.
Russell Lloyd
Justice
Panel consists of Justices Lloyd, Goodman, and Landau.
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