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No. 11-0589

In The Supreme Court of Texas

FILED IN THE SUPREME COURT OF TEXAS 11 August 22 P1:51 BLAKE. A. HAWTHORNE CLERK

IN RE ALLCAT CLAIMS SERVICE, L.P. AND JOHN WEAKLY

Relators,

REPLY TO RESPONSE TO ORIGINAL PETITION

James F. Martens Texas Bar No. 13050720 Michael B. Seay Texas Bar No. 24051318 Lacy L. Leonard State Bar No. 24040561 Amanda M. Traphagan Texas Bar No. 24066208

MARTENS, SEAY & TODD

301 Congress Avenue, Suite 1950 Austin, Texas 78701 Tele: (512) 542-9898 Fax: (512) 542-9899

ATTORNEYS FOR RELATORS, ALLCAT CLAIMS SERVICE, L.P. AND JOHN WEAKLY

No. 11-0589

In The Supreme Court of Texas

IN RE ALLCAT CLAIMS SERVICE, L.P. AND JOHN WEAKLY

Relators,

REPLY TO RESPONSE TO ORIGINAL PETITION

James F. Martens Texas Bar No. 13050720 Michael B. Seay Texas Bar No. 24051318 Lacy L. Leonard State Bar No. 24040561 Amanda M. Traphagan Texas Bar No. 24066208

MARTENS, SEAY & TODD

301 Congress Avenue, Suite 1950 Austin, Texas 78701 Tele: (512) 542-9898 Fax: (512) 542-9899

ATTORNEYS FOR RELATORS, ALLCAT CLAIMS SERVICE, L.P. AND JOHN WEAKLY

TABLE OF CONTENTS

TABLE OF CONTENTS

1

INDEX OF AUTHORITIES

2

ARGUMENT

3

I. Relators’ Equal and Uniform Taxation Claim Requires Some Limited Discovery

3

II. This Court Has Jurisdiction Over Relators’ Requests for Declaratory Judgments and Attorney’s Fees

4

III. If the Court Does Not Exercise Jurisdiction Over Relators’ Equal and Uniform Taxation Claim, Relators Request Additional Time to Prepare Their Brief on the Merits

6

CONCLUSION

6

CERTIFICATE OF SERVICE

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1

INDEX OF AUTHORITIES

Cases

Chenault v. Phillips,

914

S.W.2d 140 (Tex. 1996)

5

State v. Morales,

869

S.W.2d 941 (Tex. 1994)

5

Statutes

Tex. Civ. Prac. & Rem. Code Ann. §§ 37.001-.011 (West 2009)

4

Tex. Tax Code Ann. § 171.1011(g)(3) (West 2009)

3

Tex. Tax Code Ann. § 171.1012 (West 2009)

3

Tex. Tax Code Ann. §§ 171.0001-.825 (West 2009)

3

Other Authorities

Act of May 2, 2006, 79th Leg., 3rd C.S., H.B. 3, § 24

4, 5

2

TO THE HONORABLE SUPREME COURT OF TEXAS:

Relators, Allcat Claims Service, L.P. (“Allcat”) and John Weakly respectfully

submit this Reply to Respondents’ Response to Original Petition.

I. RELATORS

EQUAL

AND

LIMITED DISCOVERY.

ARGUMENT

UNIFORM

TAXATION

CLAIM

REQUIRES

SOME

Respondents Response did not address the merits of Relators’ argument that the

Comptroller’s interpretation of Texas Tax Code §§ 171.1011(g)(3) and 171.1012, as

applied

to

Allcat,

violates

the

equal

and

uniform

taxation

clause

of

the

Texas

Constitution. Res. at 7-8.

They did not state a rational basis, or any explanation, for the

Comptroller’s actions. Res. at 8.

Instead, they argue only that these claims are outside

the scope of the Court’s original jurisdiction of this matter because House Bill 3, as

amended, in the 2006 third called legislative session limited the Court’s jurisdiction to

challenges to the constitutionality of the Revised Franchise Tax codified at TEX. TAX

CODE §§ 171.0001-.825 (“Revised Franchise Tax”). Res. at 8.

In their view, this Court

does not have jurisdiction of Relators’ equal and uniform taxation claim because this

claim does not challenge the constitutionality of the Revised Franchise Tax and

prosecution of this claim will require the Court to preside over discovery matters. Res. at

8.

Relators

agree

that

this

is

a

fact

based

challenge

that

will

require

some

discovery—particularly in the absence of any explanation for the Comptroller’s treatment

of Allcat in Respondents’ Response to Relators’ Original Petition.

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Relators have

previously filed a briefing and discovery schedule requesting that the Court appoint a

special master to preside over an expedited discovery schedule in the event the Court

decides to exercise jurisdiction over the claim.

Relators have also filed an Original Petition in Travis County District Court in

which they seek declaratory judgment that the Comptroller’s interpretation of the Texas

Tax Code, as applied to Allcat, violates the state constitutional requirement of equal

taxation.

Allcat Claims Service, L.P. v. Susan Combs, et al. Cause No. D-1-GN-11-

002294, 201 st Judicial District Court, Travis County, Texas.

Relators have pleaded this claim before both Courts to preserve the claim in the

event this Court declined to exercise jurisdiction over this claim. In the event the Court

declines to exercise jurisdiction, Relators request that they be allowed to pursue this

claim before the Travis County District Courts.

II.

THIS COURT HAS JURISDICTION OVER RELATORS’ REQUESTS FOR DECLARATORY JUDGMENTS AND ATTORNEYS FEES.

Respondents do not contest that Relators request declaratory relief in this suit and

that § 24 of House Bill 3 gives this Court the power to provide such relief. Respondents

argue instead that attorney’s fees are available only if authorized by statute and that while

§24 of House Bill 3 specifically provides for declaratory relief, such relief cannot be

sought through the Uniform Declaratory Judgment Act (“UDJA”) TEX. CIV. PRAC. &

REM. CODE §§ 37.001-.011. Res. at 8.

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In the matter before the Court, the jurisdictional provision cited by both Relators

and Respondents states that this court “may issue injunctive or declaratory relief in

connection with the challenge.” Act of May 2, 2006, 79th Leg., 3rd C.S., H.B. 3, § 24.

This Court has held that the UDJA is “a procedural device for deciding cases already

within a court’s jurisdiction.”

Chenault v. Phillips, 914 S.W.2d 140, 141 (Tex. 1996)

citing State v. Morales, 869 S.W.2d 941, 947 (Tex. 1994).

Respondents cite no authority that addresses the issue presented here of whether a

party seeking declaratory relief in an original proceeding properly before this Court,

under a jurisdictional provision providing for declaratory relief, should do so using the

procedural mechanism provided by the UDJA. Nor do they contest Relators’ claim that

the declarations that Relators seek are above and beyond Allcat’s request for a refund

under the Texas Tax Code. Instead, they cite to authority in which this Court overturned

a trial court awards of attorneys’ fees in a case in which the parties sought attorneys’ fees

under a statute that provided for “damages” but not specifically attorney’s fees.

Res. at

8-9.

 

Because this case is properly before the Court under §24 of House Bill 3 which

grants

this

Court

the

ability

to

provide

declaratory

relief

for

challenges

to

the

constitutionality of the Revised Franchise Tax, this Court should find under its prior

holdings that the UDJA is the proper procedural device for Relators to seek the

declarations requested in this matter from this Court.

It is just and equitable that this

Court consider Relators’ requests for declaratory relief under the UDJA and their claim

for reasonable and necessary attorney fees incurred in pursuing these requests.

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III.

IF THE COURT DOES NOT EXERCISE JURISDICTION OVER RELATORS’ EQUAL AND UNIFORM TAXATION CLAIM, RELATORS REQUEST ADDITIONAL TIME TO PREPARE THEIR BRIEF ON THE MERITS.

Relators submitted a proposed briefing and discovery schedule in this matter in

which they requested 14 days for discovery, 21 days to file their initial brief on the

merits, and 7 days to file their Reply to Respondent’s Response. If the Court declines to

exercise jurisdiction over Relators’ equal and uniform taxation claim, Relators request

that the Court order that their initial brief be due 30 days from the date briefing is ordered

and that their reply brief be due 15 days after Respondents’ Response is due.

Relators

believe that this would give Relators sufficient time to provide the Court with thorough

and thoughtful briefing to assist the Court in deciding this matter.

CONCLUSION

The Relators respectfully request that the Court note probable jurisdiction over all

of its claims in this original proceeding, allow the parties to conduct limited discovery,

request briefing on the merits, and submit the original proceeding on an expedited basis

in accordance with the previously submitted suggested briefing and discovery schedule.

In the alternative, if the Court declines to exercise jurisdiction over Relators’ equal and

uniform taxation claim, Relators’ respectfully request that the Court exercise jurisdiction

over Relators’ request for a declaration under the UDJA that the Revised Franchise Tax is

unconstitutional under the Bullock Amendment and request for attorney’s fees, and enter

a briefing schedule in accordance with the schedule Realtors request in Section III.

above.

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Respectfully Submitted,

/s/ James F. Martens

James F. Martens Texas Bar No. 13050720 Michael B. Seay Texas Bar No. 24051318 Lacy L. Leonard State Bar No. 24040561 Amanda M. Traphagan Texas Bar No. 24066208

MARTENS, SEAY & TODD

301 Congress Avenue, Suite 1950 Austin, Texas 78701 Tele: (512) 542-9898 Fax: (512) 542-9899

ATTORNEYS FOR RELATORS, ALLCAT CLAIMS SERVICE, L.P. AND JOHN WEAKLY

CERTIFICATE OF SERVICE

I hereby certify that a true and correct copy of the foregoing document has been

served via certified mail return receipt requested and electronic mail on August 22, 2011

to:

Danica Milios Deputy Solicitor General Office of the Attorney General P.O. Box 12548 (MC 059) Austin, Texas 78711-2548

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/s/ James F. Martens

James F. Martens