COURT OF APPEALS EIGHTH DISTRICT OF TEXAS EL PASO, TEXAS

' THE STANLEY WORKS D/B/A No. 08-11-00015-CV STANLEY MECHANICS TOOLS, ' Appeal from Appellant, ' 30th District Court v. ' of Wichita County, Texas ' WICHITA FALLS INDEPENDENT SCHOOL DISTRICT, ' (TC # 165,364-A)

Appellee.

OPINION

The Stanley Works d/b/a Stanley Mechanics Tools appeals from a judgment entered in favor of Wichita Falls Independent School District. We affirm in part, reverse in part and remand to the trial court for entry of judgment in accordance with this opinion.

FACTUAL SUMMARY

In May 1990, the Wichita County Commissioners Court adopted an order establishing guidelines and criteria for the designation of reinvestment zones and entry into tax abatement

agreements pursuant to the Property Redevelopment and Tax Abatement Act contained in Chapter 312 of the Texas Tax Code. See TEX.TAX CODE ANN. §§ 312.001-312.403 (West

2008 and Supp. 2011). In June 1994, Stanley entered into a written Tax Abatement Agreement

with Wichita County, Texas. WFISD became a party to the agreement in July 1994. Under the Agreement, Stanley agreed to make certain personal property additions and improvements to its tool manufacturing facility in Wichita Falls, Texas. The Agreement provided that Stanley would relocate to Wichita Falls certain equipment and processes from an existing Ohio facility. Stanley would also purchase additional equipment for the Wichita Falls facility. The parties contemplated that the expansion would create an additional 100 jobs by the end of the expansion period.

Attached to the tax abatement agreement is Exhibit B which describes the three-phase project as follows:

Phase I - Projected Timing - June through December 1994

Scope of this phase will be the manufacture of ‘Mac’ Tool branded product, produced and distributed via jobbers. Ultimate distribution is to the independent professional mechanics. Manufacturing processes will include CNC turning (rough and final), grinding, polishing, marking, swaging, broaching and drilling. Products to be manufactured will include extensions, sockets, hex bits, wrenches and cold chisels.

Phase II - Projected Timing - March 1995

Final steps of closing down this Ohio manufacturing facility and absorbing all remaining production operation in Texas. Products and processes will expand what is part of first phase. Now it will include the manufacture of adapters, magnetic sockets, speeders, ratchets, impact universals and sockets.

With the completion of Phases I and II, we anticipate equipment having a value of approximately $3,700,000 will have been moved to our Wichita Falls facility. In addition, we expect the creation of approximately 170 new jobs; however, this will be offset by jobs being relocated to other Texas locations, netting the Wichita Falls facility approximately 100 jobs.

Phase III - Project Timing - 1994

Major investment in process equipment to produce 4” through 12” adjustable wrenches. Investment of this magnitude will allow us to increase capacity three times existing volume. This state of the art technology will allow us to become price competitive in the worldwide market. By becoming more competitive in the worldwide market, this will assure our continued growth in the volume of adjustable wrenches and expand our labor force. Wichita County agreed to give Stanley declining ad valorem tax abatements on the additions and improvements for two ten-year periods.^[1] The tax abatement for the Phase I and Phase III improvements began on January 1, 1995 and continued for a period of ten years. The tax abatement for the Phase II improvements began on January 1, 1996 and likewise continued for a period of ten years. The Wichita Appraisal District (WAD) administered the tax abatement.

Under the Agreement, Stanley was required to provide a certificate each year containing a

general description and cost of the personal property and improvements added to the facility, and the number of jobs created since the commencement of the improvements or the previous certificate. Stanley had the right to protest any appraisal or assessment of the facility and any

improvements or tangible personal property, and the tax abatement would be applied to the amount of taxes finally determined to be due following resolution of a protest.

The Tax Abatement Agreement provided that if Stanley “fails to make the personal property additions and improvements to the Premises which are described in this Agreement as

Phase I, II, or III, respectively, [Stanley] shall repay all property tax revenue lost by the County

as a result of this Agreement insofar as such lost tax revenue relates to the additions and improvements described in the particular Phase, subject to any and all lawful offsets, settlements, deductions or credits to which [Stanley] may otherwise be entitled; provided, however, the failure to make the additions and improvements in any particular Phase shall not adversely affect the tax abatement provided for herein with respect to any other Phase.”

In 1994, Stanley created $1,969,108 in personal property additions to its Wichita Falls facility attributable to Phases I and III. In 1995, it made $1,352,608 of personal property additions to its Wichita Falls facility attributable to Phase II. From 1995 through 2001, Wichita

County and WFISD abated $220,087.54 of ad valorem tax on Stanley’s personal property that

would have been owed by Stanley in the absence of the Tax Abatement Agreement. After 2001, Stanley stopped seeking tax exemptions and made no further personal property additions under the Agreement. In 2002, Stanley moved its tool manufacturing operations out of Wichita

County.2

On August 28, 2003, WFISD notified Stanley by letter that it had failed to make all of the personal property additions to its Wichita Falls facility as required by the Agreement, and consequently, it was obligated to pay all ad valorem tax revenue lost as a result of the Tax

Abatement Agreement.3 Stanley disagreed in a letter from its assistant general counsel. WFISD

sent a letter to Stanley on May 24, 2006 demanding payment of the ad valorem tax lost under the Tax Abatement Agreement. Stanley did not make payment and WFISD filed suit alleging breach of the Tax Abatement Agreement and seeking recovery of the lost ad valorem tax revenue as damages. Stanley filed a general denial and additionally asserted that WFISD’s claims were barred by Section 33.05 of the Texas Tax Code, laches, and estoppel.

Following a bench trial, the court awarded judgment in favor of WFISD in the sum of $220,087.54, pre-judgment interest in the sum of $74,251.11, and attorney’s fees in the sum of $44,017.50. The trial court entered written findings of fact and conclusions of law.

TAX CODE SECTION 33.05(A)(1)

In its first issue, Stanley contends the suit is barred by the applicable four year statute of limitations provided by Section 33.05(a)(1) of the Texas Tax Code. The trial court concluded that WFISD’s suit is for breach of contract and it is not barred by limitations or laches. We review de novo the trial court’s legal conclusions based on the findings of fact to determine their correctness. BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002). If we

2 Stanley states in its brief there is no evidence to support the trial court’s finding that Stanley left Wichita County in 2002, but the record reflects that counsel submitted a portion of Lisa Stephens-Musick’s deposition to support an objection to her testimony. Stephens-Musick testified that “They closed down their facility during the term of the abatement agreement.” 3 On June 20, 2005, WFISD and Wichita County entered into an interlocal collection agreement whereby Wichita County appointed WFISD as its agent to pursue collection against Stanley and to file suit to enforce the Tax Abatement Agreement.

determine a conclusion of law is erroneous but the trial court nevertheless rendered a proper judgment, the erroneous conclusion does not require reversal. Id.

Section 33.05(a)(1) provides that: “Personal property may not be seized and a suit may not be filed: (1) to collect a tax on personal property that has been delinquent more than four years.” TEX.TAX CODE ANN. § 33.05(a)(1)(West 2008). Stanley asserts that the Tax

Abatement Agreement required that it make the improvements under Phases I and III by 1994 and the improvements under Phase II by 1995, and therefore, any breach of the Agreement occurred in 1994 and/or 1995. Stanley reasons that “[i]f it were true that Stanley failed to comply with the Abatement Agreement in 1994 and/or 1995, then any unpaid personal property taxes necessarily would have become delinquent ‘more than four years’ before this suit was filed in November 2006.” [Emphasis in original.] WFISD responds that Section 33.05 is inapplicable because the statute only applies to suits to collect delinquent taxes and it did not sue Stanley to collect delinquent taxes, but rather it sought damages for Stanley’s breach of the Tax Abatement

Agreement. Whether Section 33.05 applies to a suit alleging breach of a Tax Abatement

Agreement is an issue of first impression. Further, the parties’ arguments raise an issue of statutory construction.

Statutory construction is a legal question that we review de novo in order to ascertain and give effect to the Legislature’s intent. F.F.P. Operating Partners, L.P. v. Duenez, 237 S.W.3d

680, 683 (Tex. 2007). When construing a statute, we begin with its language. State v. Shumake, 199 S.W.3d 279, 284 (Tex. 2006). We must interpret the statute according to the plain meaning

of the language used, and must read the statute as a whole without giving effect to certain provisions at the expense of others. City of San Antonio v. City of Boerne, 111 S.W.3d 22, 25

(Tex. 2003). Words shall be given their ordinary meaning unless a word is connected with and used with reference to a particular trade, subject matter, or is used as a word of art, and in such a

case, the word shall have the meaning given by experts in the particular trade, subject matter, or art. TEX.GOV’T CODE ANN. § 312.002 (West 2005). Each word, phrase, or expression must be read as if it were deliberately chosen, and we will presume that words excluded from a provision were excluded for a purpose. Gables Realty Ltd. Partnership v. Travis Central

Appraisal District, 81 S.W.3d 869, 873 (Tex.App.--Austin 2002, pet. denied). We may consider

other matters in ascertaining legislative intent, including the objective of the law, its history, and the consequences of a particular construction. See TEX.GOV’T CODE ANN. § 311.023(1), (3), (5); Shumake, 199 S.W.3d at 284.

The application of Section 33.05 is restricted by its terms to a suit to collect a delinquent tax on personal property. The Tax Code does not define the term “delinquent.’ Its ordinary meaning is a past due or unperformed obligation. BLACK’S LAW DICTIONARY 493 (9th Ed.

2009). Section 31.02 of the Tax Code, which is entitled “Delinquency Date,” provides that

“taxes are due on receipt of the tax bill and are delinquent if not paid before February 1 of the year following the year in which imposed.” TEX.TAX CODE ANN. § 31.02(a)(1).4 Citing

Section 31.01(g), Stanley argues that the failure to send a tax bill does not affect the validity of the tax, and therefore, the taxes sought to be recovered in this case would have been due on

February 1 of each year following the applicable tax year. See TEX.TAX CODE ANN. §

31.01(g)(West 2008 and Supp. 2011)(“Except as provided by Subsection (f), failure to send or receive the tax bill required by this section, . . . does not affect the validity of the tax, penalty, or interest, the due date, the existence of a tax lien, or any procedure instituted to collect a tax.”).5

The terms of the Agreement required Stanley to repay all lost property tax revenue if it failed to make the personal property additions and improvements under Phases I, II, and III. By

its suit, WFISD sought to recover the amount of taxes which had been abated by virtue of the Tax Abatement Agreement from 1995 through 2001 because it contended, and the trial court found, that Stanley breached the Agreement by failing to make all of the required improvements and additions. It is undisputed that Wichita County and WFISD did not impose the abated taxes during either ten-year abatement period. Consequently, the abated taxes were not due on

February 1 of each tax applicable tax year and the taxes did not become delinquent. We conclude that WFISD’s suit is not a suit to collect delinquent taxes, and therefore, Section

33.05’s limitations period is inapplicable. We overrule Issue One.

LACHES

In its second issue, Stanley argues that WFISD’s claims are barred by laches as a matter of law.6

Waiver

WFISD maintains that Stanley waived this issue because it failed to request findings on the essential elements of this affirmative defense. Laches is an affirmative defense.

TEX.R.CIV.P. 94. Therefore, it was Stanley’s burden to plead, prove, and secure findings on its defense. Woods v. William M. Mercer, Inc., 769 S.W.2d 515, 517 (Tex. 1988). A party asserting an affirmative defense in a trial before the court must request findings in support of the defense to avoid waiver. Cooper v. Cochran, 288 S.W.3d 522, 531 (Tex.App.--Dallas 2009, no pet.);

Cotten v. Weatherford Bancshares, Inc., 187 S.W.3d 687, 708 (Tex.App.--Fort Worth 2006, pet.

denied). If the trial court’s findings do not include any of the elements of the defense asserted, the party must specifically request additional findings relevant to the defense. Cooper, 288

S.W.3d at 531. The trial court’s findings of fact did not include any elements of laches, but

Stanley made a request for amended or additional findings that WFISD had the legal or equitable right to assert the claims made in this suit, it unreasonably delayed asserting its claims for almost twelve years after the alleged breach, and the delay impaired Stanley’s ability to defend against the claim or to ascertain the true facts. We find that Stanley preserved the issue.

Elements of Laches

Generally, laches is an affirmative defense comprised of two elements: (1) a party’s unreasonable delay in asserting a legal or equitable right; and (2) a good faith and detrimental change of position due to the delay. Rogers v. Ricane Enterprises, Inc., 772 S.W.2d 76, 80 (Tex.

1989); In the Matter of the Estate of Romancik, 281 S.W.3d 592, 597 (Tex.App.--El Paso 2008, no pet.).

Standard of Review

Findings of fact in a bench trial have the same force and dignity as a jury’s verdict upon questions and are reviewed for legal and factual sufficiency of the evidence by the same

standards. Ortiz v. Jones, 917 S.W.2d 770, 772 (Tex. 1996); Anderson v. City of Seven Points, 806 S.W.2d 791, 794 (Tex. 1991). The findings are not conclusive when, as in this case, a complete reporter’s record appears in the record. Tierra Sol Joint Venture v. City of El Paso, 311

S.W.3d 492, 498 (Tex.App.--El Paso 2009, no pet.). We review the trial court’s legal conclusions de novo. BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex.

2002).

When a party attacks the legal sufficiency of an adverse finding on an issue on which it has the burden of proof, it must demonstrate on appeal that the evidence establishes, as a matter of law, all vital facts in support of the issue. Dow Chemical Company v. Francis, 46 S.W.3d

237, 241 (Tex. 2001); Sterner v. Marathon Oil Co., 767 S.W.2d 686, 690 (Tex. 1989). The reviewing court first examines the record for evidence that supports the finding, while ignoring all evidence to the contrary. Dow Chemical, 46 S.W.3d at 241. If there is no evidence to support the finding, the reviewing court will then examine the entire record to determine if the contrary proposition is established as a matter of law. Id. To prevail on appeal, Stanley must demonstrate that the evidence conclusively established all vital facts in support of the affirmative defense of laches.

Review of the Evidence

It is unnecessary to review the first element because Stanley failed to conclusively establish the second element of its laches defense. Stanley’s sole argument is that evidence was lost and “witnesses had scattered” due to the passage of time. Stanley does not argue that it made a good faith and detrimental change of position due to the delay. It instead contends that when the delay is such that the defendant’s ability to defend against the claim is impaired, then

the plaintiff’s claim should be barred. In support of its position, Stanley cites De Benavides v. Warren, 674 S.W.2d 353, 362 (Tex.App.--San Antonio 1984, writ ref’d n.r.e.), which in turn cited Pearson v. American Fidelity & Casualty Company, 321 S.W.2d 620 (Tex.Civ.App.--

Amarillo 1959, writ ref’d n.r.e.)7 and Brady v. Garrett, 66 S.W.2d 502 (Tex.Civ.App. --El Paso 1933, writ dism’d).8 Assuming for the sake of argument that evidence of an impaired ability to defend can satisfy the second element, we conclude that Stanley failed to prove this element as a matter of law.

Lisa Stephens-Musick has been the deputy chief appraiser for the Wichita Appraisal

District since 1999 and she is the custodian of the appraisal district’s records. The evidence showed that WAD, in accordance with its records retention plan, destroyed the original renditions of personal property submitted by Stanley five years after each applicable tax year.

Stanley did not offer any evidence to explain why it did not have copies of the renditions it had filed. Under the Agreement, Stanley had the right to protest any appraisal of the personal property, but there is no evidence that Stanley ever protested any of the valuations for the tax

years in question. One inference to be drawn from this evidence is that Stanley accepted the valuations at the time they were made. Stanley does not direct our attention to where in the record it established that witnesses could not be located due to the delay nor is there any evidence indicating the substance of the witnesses’ expected testimony. Stanley’s bare claims that the renditions had been destroyed and witnesses had scattered do not conclusively prove that

Stanley’s ability to defend was impaired or that it made a good faith and detrimental change of position as a result of the delay. Issue Two is overruled.