in Re Velvin Oil Company, Inc.

• Court: Court of Appeals of Texas
• Decided: January 23, 2018
• Docket: 01-17-00384-CV
• Status: Published

Opinion

Opinion issued January 23, 2018

In The

Court of Appeals For The

First District of Texas ———————————— NO. 01-17-00384-CV ——————————— IN RE VELVIN OIL COMPANY, INC., Relator

Original Proceeding on Petition for Writ of Mandamus

MEMORANDUM OPINION

Velvin Oil Company, Inc. seeks mandamus relief challenging the trial court’s

order granting a Rule 202 Petition and its failure to rule on Velvin’s motion to

transfer venue.1 We conclude that the trial court abused its discretion in failing to

rule on the motion to transfer venue before deciding the Rule 202 Petition.

1 The underlying case is In re A.J.P. Oil Company, LLC d/b/a Grapeland Fuel & BBQ, cause number 2017-20243, pending in the 61st District Court of Harris County, Texas, the Honorable Fredericka Phillips presiding. Accordingly, we conditionally grant the petition as it concerns the motion to transfer

venue.

Background

Velvin distributes diesel fuel, gasoline, and other related products to retailers

across Texas, including AJP. AJP originally sued Velvin in Houston County alleging

fraud, negligence, and other claims regarding the quality and merchantability of the

diesel fuel sold by Velvin. AJP further alleged that Velvin committed fraud by

overcharging AJP for fuel taxes and keeping the excess amount for itself.

Velvin filed a plea to the jurisdiction in the Houston County suit on the

overcharge claims, asserting that the trial court lacked subject-matter jurisdiction

because AJP failed to exhaust its administrative remedies. Specifically, Velvin

argued that AJP’s overcharge claims fell under the statutory provisions requiring tax

refund claims to be filed with the state comptroller. See Burgess v. Gallery Model

Homes, Inc., 101 S.W.3d 550, 558 (Tex. App.—Houston [1st Dist.] 2003, pet.

denied) (holding that legislature has created exclusive means for obtaining refund of

improperly collected taxes and trial court lacks jurisdiction if plaintiff has not

exhausted administrative remedies under this legislative scheme); TEX. TAX CODE §

111.104 (procedure for requesting tax refund from comptroller).

The Houston County trial court granted the plea and dismissed AJP’s claims

concerning overcharges and its claims for common-law fraud and negligent

2 misrepresentation. The Houston County lawsuit remains pending as to AJP’s causes

of action regarding the quality and merchantability of the diesel fuel it purchased

from Velvin.

AJP later filed a Verified Rule 202 Deposition Petition in Harris County,

seeking to investigate claims “arising out of Velvin’s sale of diesel fuel and

collection of state diesel fuel taxes.” AJP argued that it was entitled to discovery on

whether Velvin was collecting and keeping for its own benefit amounts represented

to be fuel taxes paid to the refineries, but which included an excess amount that

Velvin kept for itself.

Velvin filed an opposition to the petition, a motion to transfer venue, and a

motion to dismiss. Velvin responded that the issues raised in the Rule 202 petition

mirrored those dismissed in the Houston County case. Velvin also filed a motion for

leave to set the venue motion on the same date as the hearing on the Rule 202

petition, but the trial court denied this motion for leave. After a hearing, the trial

court granted the Rule 202 petition. The trial court has not ruled on Velvin’s motion

to transfer venue.

Standard of Review

3 To be entitled to mandamus relief, a petitioner must show both that the trial

court abused its discretion and that there is no adequate remedy by appeal. In re

Prudential Ins. Co., 148 S.W.3d 124, 135 (Tex. 2004). Generally, appellate courts

will hold that a trial court abuses its discretion if its actions are either “without

reference to any guiding rules and principles” or “arbitrary or unreasonable.”

Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241–42 (Tex. 1985).

Trial Court Had Subject-Matter Jurisdiction

Although a person may petition a court for an order authorizing a deposition

to investigate a potential claim or suit, see TEX. R. CIV. P. 202.1(b), a petitioner

generally may not “obtain by Rule 202 what it would be denied in the anticipated

action.” In re DePinho, 505 S.W.3d 621, 623 (Tex. 2016). To properly obtain presuit

discovery under Rule 202, the court must have subject-matter jurisdiction over the

anticipated action. Id.

Subject-matter jurisdiction is necessary to a court’s authority to decide a case.

Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 443 (Tex. 1993). A

plaintiff must allege facts affirmatively showing that the trial court has subject-

matter jurisdiction, id. at 446, and a party may challenge the lack of subject-matter

jurisdiction by filing a plea to the jurisdiction or by other means, including by motion

for summary judgment. Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 554 (Tex.

4 2000). Velvin filed an opposition and a motion to dismiss the Rule 202 petition on

the ground that the court lacked subject-matter jurisdiction.

Whether a court has subject-matter jurisdiction is a question of law that we

review de novo. Mayhew v. Sunnyvale, 964 S.W.2d 922, 928 (Tex. 1998). When we

conduct a de novo review, we exercise our own judgment and re-determine legal

issues, giving no deference to the trial court’s ruling. See Quick v. City of Austin, 7

S.W.3d 109, 116 (Tex. 1998).

Section 111.104 of the Tax Code, entitled “Refunds,” provides for the filing

of a tax refund claim with the state comptroller. See TEX. TAX CODE § 111.104(b).

Unless the plaintiff exhausts administrative remedies under the statute, a trial court

lacks subject-matter jurisdiction over a suit seeking a refund for overcharges of sales

tax because the legislature has created an exclusive means for obtaining a refund of

improperly-collected sales tax. See Burgess, 101 S.W.3d at 558 (holding that when

defendant mistakenly charged customers inapplicable taxes and paid them to State,

customer had to exhaust administrative remedy by filing claim with Texas

Comptroller); Serna v. H.E. Butt Groc. Co., 21 S.W.3d 330, 336 (Tex. App.—San

Antonio 1999, no pet.) (holding trial court lacked jurisdiction over fraud claim

because plaintiff failed to exhaust Tax Code administrative remedies when

defendant inadvertently overcharged on sales tax and state comptroller). See also

Thomas v. Long, 207 S.W.3d 334, 340 (Tex. 2006) (“If an administrative body has

5 exclusive jurisdiction, a party must exhaust all administrative remedies before

seeking judicial review of the decision. Until the party has satisfied this exhaustion

requirement, the trial court lacks subject matter jurisdiction and must dismiss these

claims without prejudice to refiling.”). Velvin asserted in the trial court, and asserts

here, that AJP’s petition for presuit discovery is an attempt to circumvent the

Houston County lawsuit and to avoid the statutorily required administrative

procedures, and thus, the trial court lacked jurisdiction to grant presuit discovery.

To determine whether the trial court had subject-matter jurisdiction over

AJP’s claims, we must determine whether the Tax Code applies to those claims. If

so, “the Texas Legislature intended for the remedies and causes of action in the Tax

Code to be exclusive.” Burgess, 101 S.W.3d at 558. AJP does not allege that Velvin

overcharged for fuel taxes and paid those amounts to the State. Instead, AJP asserts

that Velvin misrepresented the taxes it paid and charged AJP an excess amount that

it kept for itself. There is no support for requiring AJP to exhaust the procedures

under the Tax Code when the State of Texas does not have the funds for which AJP

sues.

Because AJP is not claiming an overcharge of taxes that were paid to the State

or seeking a refund of taxes that were overpaid, Velvin has not shown that the trial

court lacked jurisdiction and abused its discretion in denying the motion to dismiss

on jurisdictional grounds.

6 Trial Court Failed to Rule on Motion to Transfer Venue Promptly

AJP filed its Rule 202 petition on March 24, 2017. Rule 202 permits a person

to petition the trial court for an order to take a deposition “to investigate a potential

claim or suit.” TEX. R. CIV. P. 202.1(b). The petition must be verified and filed in

the county where venue of the anticipated suit lies or where the witness resides, if

suit is not anticipated. See id. 202.2(a)-(b). The petition was set for a hearing on May

19, 2017. Velvin timely filed its motion to transfer venue on April 28, 2017.

Velvin asserts that AJP failed to comply with Rule 202 venue requirements.

TEX. R. CIV. P. 202.2(b)(1)-(2). AJP responded that venue in Harris County was

proper because Velvin sells and delivers diesel fuel to retailers all over Texas,

including some operating in Harris County.

A few days after filing the motion to transfer, Velvin filed a motion (1) for

leave to set the motion to transfer without the required 45 days’ notice on the same

date as the Rule 202 petition hearing or, (2) alternatively, for a continuance on the

Rule 202 petition hearing. The certificate of conference in the motion for leave

indicates that AJP opposed the continuance but did not indicate that it was opposed

to the motion for leave to set the motion to transfer on the same date as the Rule 202

petition hearing. Velvin contends that it asked AJP to move the Rule 202 Petition

setting to July to allow 45 days’ notice of the motion to transfer venue, but AJP

opposed this delay. AJP did not file a response to the motion for leave to set the

7 matter on the same day as the hearing on the Rule 202 petition. The trial court denied

Velvin’s motion for leave and never ruled on Velvin’s motion for continuance or

motion to transfer venue.

Although a trial court has broad discretion to determine the order of

proceedings, TEX. R. CIV. P. 84, that discretion is limited concerning motions to

transfer venue. Glover v. Moser, 930 S.W.2d 940, 944 (Tex. App.—Beaumont 1996,

writ denied). A motion to transfer venue must be decided promptly. See TEX. R. CIV.

P. 87(1). The movant bears the burden of requesting a setting on the motion to

transfer. See id. Each party is entitled to 45 days’ notice of a hearing on the motion

to transfer except on leave of court. See id.

Once Velvin properly filed its motion to transfer venue and requested a

hearing, the trial court was required to hear the motion before ruling on the merits

of the case. See Glover, 930 S.W.2d at 944 (once movant filed motion to transfer

and obtained hearing, trial court required to hear and determine motion before

hearing motion for default judgment); see also Gordon v. Jones, 196 S.W.3d 376,

383 (Tex. App.—Houston [1st Dist.] 2006, no pet.) (unless motion to transfer venue

is waived by untimely filing of motion, trial court must determine venue before

proceeding to matters relating to merits). Accordingly, it was an abuse of discretion

for the trial court not to determine the motion to transfer before determining the Rule

202 petition. See Bench Co., Inc. v. Nations Rent of Tex., L.P., 133 S.W.3d 907, 908

8 (Tex. App.—Dallas 2004, no pet.) (trial court must determine motion to transfer

venue before determining merits); Glover, 930 S.W.2d at 944 (trial court must rule

on motion to transfer venue before ruling on motion for default judgment).

In its response to Velvin’s mandamus petition, AJP asserts that the trial court

did not abuse its discretion because the party opposing a motion to transfer must

have the opportunity to obtain reasonable discovery. Essentially, AJP now objects

to Velvin’s motion on the basis that it needed time to conduct reasonable discovery

in preparation for the venue hearing. See TEX. R. CIV. P. 258 (trial court shall allow

reasonable discovery in support of, or in opposition to, motion to transfer venue).

AJP contends that discovery on the venue matters would overlap with “the very same

matters sought by AJP in its Rule 202 Petition.” But AJP’s objections are too late;

AJP did not object to Velvin’s motion to set the transfer motion sooner than the

required 45 days or file a motion for a continuance of the hearing on the Rule 202

petition. See Beard v. Gonzalez, 924 S.W.2d 763, 765 (Tex. App.—El Paso 1996,

orig. proceeding) (if opponent of motion to transfer venue wants to claim inadequate

time to conduct discovery, it must preserve error by filing motion for continuance).

Although an erroneous ruling on a motion to transfer venue is generally

reviewable on appeal, see Cone v. Gregory, 814 S.W.2d 413, 414–15 (Tex. App.—

Houston [1st Dist.] 1991, orig. proceeding), an order granting a presuit deposition

when a subsequent suit is anticipated is not an appealable order. See In re Jorden,

9 249 S.W.3d 416, 419 (Tex. 2008). Therefore, Velvin has no adequate remedy by

appeal under these facts.

Conclusion

Accordingly, we conditionally grant Velvin’s petition for writ of mandamus

and direct the trial court to: (1) vacate its May 17, 2017 order denying Velvin’s

motion for leave, and (2) set Velvin’s motion to transfer venue for a hearing and rule

on the motion before proceeding with the Rule 202 deposition. The petition is

otherwise denied because the trial court’s ruling on the merits before determining

the venue issue was premature. We are confident the trial court will comply with this

opinion and the writ will issue only if it does not. See TEX. R. APP. P. 52.8.

PER CURIAM

Panel consists of Justices Keyes, Brown, and Lloyd.