State v. Sherrie Allen Neill ( 2014 )

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-12-00571-CV
The State of Texas, Appellant
v.
Sherrie Allen Neill, Appellee
FROM THE COUNTY COURT AT LAW NO. 1 OF TRAVIS COUNTY,
NO. C-1-CV-09-008538, HONORABLE ERIC SHEPPERD, JUDGE PRESIDING
MEMORANDUM OPINION
The State of Texas sued appellee Sherrie Allen Neill seeking to recover amounts
owed on two student loans that she guaranteed. Following a bench trial, the trial court entered a take
nothing judgment in favor of Neill. On appeal, the State asserts that the trial court erred in barring
the State’s recovery based on laches and that the State established its right to recover judgment
against Neill by a preponderance of the evidence. For the reasons that follow, we affirm the trial
court’s judgment.1
In 1994, Neill’s nephew signed promissory notes for student loans payable to the
Texas Higher Education Coordinating Board (THECB), and Neill guaranteed the debt. The notes
became due and payable in 1997, but Neill’s nephew failed to pay the amounts owed. In 1999, Neill
1
The parties are familiar with the facts, procedural history, and applicable standards of
review. Accordingly, we will not recite them here except as necessary to advise the parties of the
Court’s decision and the basic reasons for it. See Tex. R. App. P. 47.4.
made three payments against the debt, but she did not make any other payments. Although a default
judgment for the amount owed under the notes was rendered against Neill’s nephew in 2003, Neill
was not aware of the judgment, and she retired in 2004. At that time, she believed that her nephew
had paid off the debt or was making payments on the debt.
After she made the payments in 1999, Neill did not hear anything further from
THECB until 2009 when the State sued her seeking to recover the amount owed on the student loans.
Neill answered the suit and asserted affirmative defenses including laches.2 The State did not amend
its petition to address Neill’s pleaded defenses. Following a bench trial in 2012, the trial court
entered a take nothing judgment in Neill’s favor. The trial court also entered findings of fact and the
following conclusion of law:
The State of Texas has been guilty of laches due to its unreasonable delay in bringing
the subject action and due to Neill’s good faith reliance on the passage of time
without any collection effort being made by the State of Texas. Laches bars the
claims asserted against Neill in this lawsuit.
At trial, Neill testified that she probably would not have retired in 2004 if she would have known
that she would be asked at some later date to pay the amounts owed on the student loans and that she
relied on the fact that she did not owe anything.
2
The elements of a laches defense are (1) an unreasonable delay in asserting a legal or
equitable right; and (2) a good faith, detrimental change of position because of the delay. Rogers
v. Ricane Enters., Inc., 772 S.W.2d 76, 80 (Tex. 1989); Ebner v. First State Bank of Smithville,
27 S.W.3d 287, 305–06 (Tex. App.—Austin 2000, pet. denied).
2
The State raises two issues on appeal, but we limit our analysis to its first issue
because it is dispositive.3 See Tex. R. App. P. 47.1. In its first issue, the State argues that the trial
court erred in barring the State’s recovery due to laches because laches is an affirmative defense that
does not apply to a sovereign, such as the State of Texas. The State, however, did not raise this
argument in its pleadings or raise it with the trial court.
Rule 94 of the Texas Rules of Civil Procedure states in relevant part: “In pleading
to a preceding pleading, a party shall set forth affirmatively . . . any other matter constituting an
avoidance or affirmative defense.” See Tex. R. Civ. P. 94. “[T]he language of rule 94 makes clear
that it requires the pleading of any ‘matter(s) constituting an avoidance’ of any other
matter—affirmative claim or defense—asserted in another pleading, regardless of the alignment of
the parties.” Compass Bank v. MFP Fin. Servs., Inc., 152 S.W.3d 844, 853 (Tex. App.—Dallas
2005, pet. denied); see Simmons v. Compania Financiera Libano, S.A., 830 S.W.2d 789, 792–93
(Tex. App.—Houston [1st Dist.] 1992, writ denied) (“When a plaintiff desires to rely on an
affirmative matter in avoidance of a defense pled in the defendant’s answer, he must allege it in a
supplemental petition, unless it is already put in issue by the petition. Rule 94 thus imposes on the
plaintiff the requirement that he plead any matter in avoidance on which he intends to rely.”).
The State does not challenge the sufficiency of the evidence to support the trial
court’s finding that Neill met her burden to prove the affirmative defense of laches. The State also
did not amend its petition after Neill pleaded the defense of laches in her answer, to raise the fact that
3
As stated above, in its second issue, the State argues that the trial court erred in rendering
judgment against the State because the State established its right to recover judgment against Neill
by a preponderance of the evidence.
3
it is immune from the defense of laches. See Tex. R. Civ. P. 94; Compass Bank, 152 S.W.3d at 853;
see also Texas Dep’t of Transp. v. Jones, 8 S.W.3d 636, 638 (Tex. 1999) (noting that a governmental
unit may waive defense of immunity from liability by failing to plead it); Davis v. City of San
Antonio, 752 S.W.2d 518, 519 (Tex. 1988) (noting that “governmental units litigate as any other
party in Texas courts and must observe the same rules that bind all other litigants, which include the
laws and rules governing pleadings”).
We also note that the State failed to argue to the trial court that laches does not apply
to a sovereign, such as itself. See Tex. R. App. P. 33.1 (record must show claim was raised in trial
court for it to be presented on appeal); Hayes v. Patrick, 45 S.W.3d 110, 115 n.3 (Tex. App.—Fort
Worth 2000, pet. denied) (noting that “grounds not expressly presented to the trial court are not
preserved for appeal”). In response to Neill’s closing argument that the laches defense barred the
State’s suit against Neill, the State argued in total as to the laches defense:
And the notion of laches as being a subset of statute of limitations. If you use laches
to apply here that would undermine the whole meaning of the statute of limitations.
By failing to plead or otherwise raise its first issue with the trial court, the State failed to preserve
the issue for appellate review. See Tex. R. App. P. 33.1; Tex. R. Civ. P. 94; Compass Bank,
152 S.W.3d at 853; cf. Mastin v. Mastin, 70 S.W.3d 148, 154 (Tex. App.—San Antonio 2001, no
pet.) (concluding affirmative defense tried by consent and not waived where party orally raised it
during argument to court and opposing party did not object to lack of pleading).
Thus, we overrule the State’s first issue, do not reach the State’s second issue, and
affirm the trial court’s judgment. See Tex. R. App. P. 47.1; BMC Software Belg., N.V. v. Marchand,
4
83 S.W.3d 789, 794 (Tex. 2002) (noting that conclusions of law upheld if judgment can be sustained
on any legal theory supported by the evidence).
__________________________________________
Melissa Goodwin, Justice
Before Chief Justice Jones, Justices Goodwin and Field
Affirmed
Filed: April 10, 2014
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