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

HAWTHORNE CLERK

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

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 This Court Has Jurisdiction Over Relators Requests for Declaratory Judgments and Attorneys Fees..................................................................... 4 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

II.

III.

CONCLUSION ................................................................................................................... 6 CERTIFICATE OF SERVICE ............................................................................................ 8

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

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.

ARGUMENT
I. RELATORS EQUAL AND UNIFORM TAXATION CLAIM REQUIRES SOME LIMITED DISCOVERY. Respondents Response did not address the merits of Relators argument that the Comptrollers 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 Comptrollers actions. Res. at 8. Instead, they argue only that these claims are outside the scope of the Courts original jurisdiction of this matter because House Bill 3, as amended, in the 2006 third called legislative session limited the Courts 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 discoveryparticularly in the absence of any explanation for the Comptrollers treatment of Allcat in Respondents Response to Relators Original Petition. 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 Comptrollers 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-11002294, 201st 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 attorneys 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.

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 courts 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 Allcats 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 attorneys 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.
5

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 Respondents 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 attorneys fees, and enter a briefing schedule in accordance with the schedule Realtors request in Section III. above.

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

/s/ James F. Martens James F. Martens