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Opinion issued August 31, = 2007




















In = The

Court of=20 Appeals

For=20 The

First=20 District of Texas



NO. 01-04-01185-CV

__________


EXCEL AUTO=20 AND TRUCK LEASING, L.L.P., Appellant


V.


ALIEF INDEPENDENT SCHOOL DISTRICT, CHARTERWOOD = MUNICIPAL=20 UTILITY DISTRICT, CHELFORD ONE MUNICIPAL UTILITY DISTRICT, = CIMARRON=20 MUNICIPAL UTILITY DISTRICT, CITY OF BAYTOWN, CITY OF DEER PARK, = CITY OF=20 HOUSTON, CITY OF KATY, CITY OF PASADENA, CLEAR BROOK CITY = MUNICIPAL=20 UTILITY DISTRICT, CY-CHAMP PUBLIC UTILITY DISTRICT, = CYPRESS-FAIRBANKS=20 INDEPENDENT SCHOOL DISTRICT, DEER PARK INDEPENDENT SCHOOL = DISTRICT,=20 FALLBROOK UTILITY DISTRICT, GOOSE CREEK CONSOLIDATED INDEPENDENT = SCHOOL=20 DISTRICT, HARRIS COUNTY, HARRIS COUNTY EDUCATION DEPARTMENT, = HARRIS COUNTY=20 EMERGENCY SERVICE DISTRICT NO. 1, HARRIS COUNTY EMERGENCY SERVICE = DISTRICT=20 NO. 7, HARRIS COUNTY EMERGENCY SERVICE DISTRICT NO. 9, HARRIS = COUNTY=20 EMERGENCY SERVICE DISTRICT NO. 28, HARRIS COUNTY FLOOD CONTROL = DISTRICT,=20 HARRIS COUNTY FORT BEND EMERGENCY SERVICE DISTRICT NO. 100, HARRIS = COUNTY=20 HOSPITAL DISTRICT, HARRIS COUNTY MUNICIPAL UTILITY DISTRICT NO. = 33, HARRIS=20 COUNTY MUNICIPAL UTILITY DISTRICT NO. 38, HARRIS COUNTY MUNICIPAL = UTILITY=20 DISTRICT NO. 64, HARRIS COUNTY MUNICIPAL UTILITY DISTRICT NO. 81, = HARRIS=20 COUNTY MUNICIPAL UTILITY DISTRICT NO. 120, HARRIS COUNTY MUNICIPAL = UTILITY=20 DISTRICT NO.132, HARRIS COUNTY MUNICIPAL UTILITY DISTRICT NO. 158, = HARRIS=20 COUNTY RURAL FIRE PREVENTION DISTRICT NO. 13, HARRIS COUNTY RURAL = FIRE=20 PREVENTION DISTRICT NO. 16, HARRIS COUNTY RURAL FIRE PREVENTION = DISTRICT=20 NO. 17, HARRIS COUNTY RURAL FIRE PREVENTION DISTRICT NO. 20, = HARRIS COUNTY=20 RURAL FIRE PREVENTION DISTRICT NO. 24, HARRIS COUNTY RURAL FIRE = PREVENTION=20 DISTRICT NO. 25, HARRIS COUNTY RURAL FIRE PREVENTION DISTRICT NO. = 26,=20 HARRIS COUNTY RURAL FIRE PREVENTION DISTRICT NO. 29, HARRIS COUNTY = RURAL=20 FIRE PREVENTION DISTRICT NO. 46, HARRIS COUNTY RURAL FIRE = PREVENTION=20 DISTRICT NO. 48, HARRIS COUNTY UTILITY DISTRICT NO. 6, HARRIS = COUNTY WATER=20 CONTROL AND IMPROVEMENT DISTRICT NO. 113, HARRIS COUNTY WATER = CONTROL AND=20 IMPROVEMENT DISTRICT NO. 132, HARRIS COUNTY WATER CONTROL AND = IMPROVEMENT=20 DISTRICT NO. 133, HORSEPEN BAYOU MUNICIPAL UTILITY DISTRICT, = HOUSTON=20 COMMUNITY COLLEGE DISTRICT, HOUSTON INDEPENDENT SCHOOL DISTRICT, = HUMBLE=20 INDEPENDENT SCHOOL DISTRICT, KATY INDEPENDENT SCHOOL DISTRICT, = KLEIN=20 INDEPENDENT SCHOOL DISTRICT, LAKE FOREST UTILITY DISTRICT, LEE = COLLEGE=20 DISTRICT, LOUETTA NORTH PUBLIC UTILITY DISTRICT, NORTH BELT = UTILITY=20 DISTRICT, NORTH FOREST INDEPENDENT SCHOOL DISTRICT, NORTH HARRIS=20 MONTGOMERY COMMUNITY COLLEGE DISTRICT, NORTHPARK PUBLIC UTILITY = DISTRICT,=20 NORTHWEST HARRIS COUNTY MUNICIPAL UTILITY DISTRICT NO. 16, = PASADENA=20 INDEPENDENT SCHOOL DISTRICT, PONDEROSA FOREST UTILITY DISTRICT, = PORT OF=20 HOUSTON AUTHORITY OF HARRIS COUNTY, RANKIN ROAD WEST MUNICIPAL = UTILITY=20 DISTRICT, SAGEMEADOW UTILITY DISTRICT, SAN JACINTO COMMUNITY = COLLEGE=20 DISTRICT, SPRING BRANCH INDEPENDENT SCHOOL DISTRICT, SPRING = INDEPENDENT=20 SCHOOL DISTRICT, TIMBER LANE UTILITY DISTRICT, WEST HARRIS COUNTY=20 MUNICIPAL UTILITY DISTRICT NO. 6, Appellees




On = Appeal=20 from the 11th District Court

Harris County, Texas

Trial Court=20 Cause No. 2002-03877




OPINION ON=20 REHEARING

We = withdraw our=20 Opinion of April 19, 2007 and issue this one in its stead. Excel = Auto and=20 Truck Leasing, L.L.P.'s motion for rehearing is denied. =

In this=20 suit for delinquent ad valorem taxes, Excel Auto & Truck = Leasing,=20 L.L.P., appellant/taxpayer, complains of the trial court's = granting=20 summary judgment in favor of the various taxing units, appellees. = In three=20 issues, Excel argues that the trial court erred in (1) finding = that it was=20 the owner of the vehicles and liable for ad valorem taxes; (2) = finding=20 that there was no genuine issue as to any material fact as to = ownership of=20 the vehicles; and (3) granting summary judgment to Pasadena = Independent=20 School District ("ISD"), which filed no Motion for Summary = Judgment,=20 rendering the judgment interlocutory.

We affirm.=20

Background

This action=20 arises from the non-payment of ad valorem taxes by Excel Auto = & Truck=20 Leasing, L.L.P. Pasadena ISD filed a delinquent tax suit against = Excel,=20 and numerous taxing units intervened. The intervening taxing units = sought=20 to collect delinquent personal property taxes on vehicles that the = taxing=20 units allege were owned by Excel. The Tax Master recommended = judgment for=20 the taxing units, and Excel appealed the recommendation to the = trial court=20 and requested a jury trial de novo. The taxing units moved for = summary=20 judgment contending that Excel is the owner of the vehicles for = which the=20 2002 and 2003 delinquent taxes are due and owing, and Excel is = responsible=20 for the payment of those taxes. Attached to the motions were = certified=20 copies of the delinquent tax records.

Excel=20 responded by asserting that it does not own the vehicles because = its=20 "leases" are actually security agreements. It argued that "it is = not the=20 owner of the vehicles and the lease agreement form used is = actually a=20 security agreement creating a security interest in the vehicles = its=20 customers own." Its customers have possession of the automobiles = and=20 insure and care for them, but Excel maintains a lien by possession = of the=20 original title. Excel included an affidavit from Larry=20 Tschoerner, Excel's = general=20 manager and finance director, in which he testified that Excel's = customers=20 were responsible for paying the taxes on their vehicles. The = affidavit=20 further states that, "in addition, pursuant to the terms of the = agreement,=20 these agreements could not be terminated by a customer." = Excel = asked the=20 trial court to deny the taxing units' motions for summary = judgment, enter=20 judgment in favor of Excel as to no tax liability, or "on the = alternative,=20 that the Court find as a matter of law, that the form agreement = Excel used=20 was a security agreement, and/or that Excel is not the owner of = the=20 vehicles, or, in the alternative, that one or both of these = matters should=20 be submitted to the Jury in this case for a determination of the = fact=20 questions involved."

The trial=20 court found that there was no genuine issue as to any material = fact that=20 the taxing units were entitled to judgment as a matter of law and = that the=20 motions should in all things be granted against Excel Auto and = Truck=20 Leasing, L.L.P. and Excel Lease Fund, Inc. as successor in = interest to BLJ=20 & Associates, Inc. d/b/a Excel Financial Company (in rem = only).=20 (1)

Interlocutory Judgment

In issue=20 three, Excel contends that the trial court erred in granting = summary=20 judgment to Pasadena ISD, which filed no motion for summary = judgment,=20 rendering the judgment interlocutory.

The taxing=20 units supplemented the appellate record with Pasadena ISD's motion = for=20 summary judgment. We overrule issue three.

Ownership of Vehicles

In issues=20 one and two, Excel = argues that=20 the trial court erred in finding that it was the owner of the = vehicles and=20 liable for ad valorem taxes and in finding that there was no = genuine issue=20 as to any material fact as to ownership of the = vehicles.

Summary=20 Judgment Standard of Review

A party = moving for=20 summary judgment must conclusively prove all of the elements of = its cause=20 of action or defense as a matter of law. Tex. R. Civ. P. 166a(c); = Holy=20 Cross Church of God in Christ v. Wolf, 44 S.W.3d 562, 566 = (Tex.=20 2001); Rhone-Poulenc, Inc. v. Steel, 997 S.W.2d 217, = 222-23 (Tex.=20 1999). When, as here, both sides move for summary judgment, and = the trial=20 court grants one motion but denies the other, a reviewing court = should=20 review both sides' summary judgment evidence, determine all = questions=20 presented, and render the judgment that the trial court should = have=20 rendered. FM Props. Operating Co. v. City of Austin, 22 = S.W.3d=20 868, 872 (Tex. 2000). When a summary judgment does not specify or = state=20 the grounds on which the trial court relied, the non-movant on = appeal must=20 negate any grounds on which the trial court could have relied, and = we will=20 affirm the summary judgment on appeal if any of the grounds = presented in=20 the motion is meritorious. See Harwell v. State Farm Mut. = Auto. Ins.=20 Co., 896 S.W.2d 170, 173 (Tex. 1995); Mellon Serv. Co. v. = Touche=20 Ross & Co., 17 S.W.3d 432, 435 (Tex. App.--Houston [1st = Dist.]=20 2000, no pet.). A non-movant is required to show that each ground = alleged=20 in the motion for summary judgment was insufficient to support = summary=20 judgment. Star-Telegram, Inc. v. Doe, 915 S.W.2d 471, 473 = (Tex.=20 1995).
Ad = Valorem=20 Taxes

All=20 tangible personal property is taxable unless otherwise exempt by = law. Tex.=20 Tax Code Ann. =A7 11.01 (Vernon 2004). Property taxes "are the = personal=20 obligation of the person who owns or acquires the property on = January 1 of=20 the year for which the tax is imposed." Tex. Tax Code Ann. =A7 = 32.07 (Vernon=20 2004). In a prosecution for the collection of delinquent taxes, = certified=20 copies of a taxing unit's tax records or tax statements constitute = prima=20 facie evidence of all of the elements of the taxing unit's = petition,=20 including ownership of the property, and create a presumption that = the=20 taxing units complied with all of the requirements imposed upon = them by=20 law. Tex. Tax Code Ann. =A7 33.47(a) (Vernon 2004); Davis v. = City of=20 Austin, 632 S.W.2d 331, 333 (Tex. 1982); Aldine Indep. = Sch. Dist.=20 v. Ogg, 122 S.W.3d 257, 263-64 (Tex. App.--Dallas 2003, no = pet.). It=20 is an affirmative defense to tax liability that the person against = whom=20 the tax is assessed was not the owner of the property at the time = of=20 assessment. Tex. Tax Code Ann. =A7 42.09(b)(1) (Vernon 2004). It = has also=20 been held that a person holding a lien or other security upon the = property=20 is not an owner for tax purposes. Comerica Acceptance Corp. v. = Dallas=20 Cent. Appraisal Dist., 52 S.W.3d 495, 497 (Tex. App.--Dallas = 2001,=20 pet. denied).

Here, the=20 taxing units attached certified copies of their tax records to = their=20 motions for summary judgment, thus establishing their prima facie = case. In=20 response, Excel asserted the affirmative defense that it was not = the owner=20 of the vehicles because its leases should be interpreted as = security=20 agreements, making the lessees the actual owners of the vehicles. = Excel=20 did not dispute the amount of taxes or any aspect of the levy of = the=20 taxes. Its only dispute is whether it can be taxed as the owner of = the=20 vehicles. The taxing units argue that, because Excel is the owner = of the=20 property and not merely a lienholder or a secured party as it = claims to=20 be, Excel is personally liable for the property taxes imposed. =

Analysis

The Texas=20 Business and Commerce Code controls the determination of whether a = transaction, in the form of a lease, creates a lease or security = interest.=20 Tex. Bus. & Com. Code Ann. =A7 1.203 (Vernon Supp. 2006). = Section 1.203=20 sets forth the following two-part test to determine whether an = agreement=20 constitutes a lease or a security interest:

Lease=20 Distinguished From Security Interest

(a) Whether=20 a transaction in the form of a lease creates a lease or security = interest=20 is determined by the facts of each case.


(b) A=20 transaction in the form of a lease creates a security interest if = the=20 consideration that the lessee is to pay the lessor for the right = to=20 possession and use of the goods is an obligation for the term = of the=20 lease and is not subject to termination by the lessee,=20 and:



(1) the=20 original term of the lease is equal to or greater than the = remaining=20 economic life of the goods;



(2) the=20 lessee is bound to renew the lease for the remaining economic life = of the=20 goods or is bound to become the owner of the goods;


(3) the=20 lessee has an option to renew the lease for the remaining economic = life of=20 the goods for no additional consideration or for nominal = additional=20 consideration upon compliance with the lease agreement; = or=20



(4) the=20 lessee has an option to become the owner of the goods for no = additional=20 consideration or for nominal additional consideration upon = compliance with=20 the lease agreement.



. = .=20 .



Id.=20 (emphasis added). By = enacting Section=20 1.203, Texas has adopted the official version of Uniform = Commercial Code=20 Section 1-201(37). Accordingly, we are guided by decisions from = other=20 jurisdictions which interpret this uniform statute. See e.g., = Franklin=20 Nat'l Bank v. Boser, 972 S.W.2d 98, 103 (Tex. App.--Texarkana = 1998,=20 pet. denied).

To create a=20 security interest, the first part of this test requires that the = rental=20 payments the lessee must pay cannot be terminable by the lessee = during the=20 term of the lease. Tex. Bus. & Com. Code Ann. =A7 1.203. This = factor=20 requires the existence of a "hell or high water" clause. = See In = re=20 Triplex Marine Maint. Inc., 258 B.R. 659, 669 (Bankr. E.D. = Tex.=20 2000). A "hell or = high=20 water" clause requires that the lessee, once it accepts the leased = item,=20 must pay its rent in all events (i.e., come hell or high water) = without=20 regard for the proper function of the item or the conduct of the = lessor=20 with respect to the subject or any other transaction. See = id. at=20 n.20.=20 (2) = The second=20 part of the conjunctive test lists four factors, one of which must = also=20 exist for the lease to be deemed a security interest.=20 (3)=20

This two-part test focuses = on the=20 economics of the transaction rather than the intent of the parties = or the=20 label of the document. Boser, 972 S.W.2d = at 103;=20 In re Triplex Marine Maint. Inc., 258 B.R. at = 668-69. For leases which satisfy = the=20 foregoing bright-line two-part test, the inquiry comes to an = end--such=20 leases constitute security interests as a matter of = law. In re Triplex Marine = Maint.=20 Inc., 258 B.R. at 668-69. If the bright-line test is not = satisfied,=20 the finding of a security interest is not mandated, and the court = may=20 examine additional facts, recognized by the statute, to determine=20 whether the = economic=20 realities of a particular transaction create a security=20 interest. = Id.=20

In this case, = Excel's Motor=20 Vehicle Lease Agreements do not meet the first part of the test = because=20 they do not contain "hell or high water" clauses. Instead, they = contain=20 provisions, which specifically state that the entire = lease,=20 including the provisions for the payment of the rent over the term = of the=20 agreement, can be terminated at any time at the will of the = lessee.=20 Paragraphs 23 of Excel's Motor Vehicle Lease Agreements provide as = follows:

23. LEASE=20 TERMINATION: This Lease will end ("terminate") when one = of the=20 following events occurs, whichever happens first: (a) You = choose to=20 end this Lease early and return the Vehicle to us; . . = .

This language = cannot meet=20 the first part of the test because, unlike a hell or high water = clause, it=20 does not require the payment of all rents, both past due and = due in=20 the future for the term of the lease, upon a lessee's = termination of=20 the lease. See, e.g, In re Triplex Marine = Maint.=20 Inc., 258 B.R. at 669 (holding that the first part of the test = was met by=20 the inclusion of the following language in the lease in = capital letters under the = heading of=20 "Important Conditions" that: YOU [the debtor] UNDERSTAND AND AGREE = THAT:=20 (A) THE LEASE CANNOT BE CANCELED BY YOU AT ANY TIME FOR ANY REASON = . . .=20 .").

Nevertheless, Excel=20 argues that its leases satisfy the first part of the test because = a "hell=20 or high water" clause is not required--the leases' early = termination=20 clause serves the same function. We disagree.

Excel has=20 not cited to us, nor do we find, any case law under the current = version of=20 Section 1.203 that dispenses with the requirement of an express = hell or=20 high water clause to establish the existence of a security = interest.=20 (4)=20 Furthermore, the early termination provision cannot substitute for = a hell=20 or high water clause because it does not prevent the lessee from=20 terminating the agreed upon consideration to Excel--the payment of = the=20 full amount of the rental payments under the lease. The early = termination=20 clause does not require that, at the time of termination, the = lessee still=20 be responsible for payment of past due and unmatured or future = rental=20 payments under the terms of the lease. In fact, in the event = of a=20 lessee termination, the=20 amount paid to Excel for future rental fees will vary depending on = the=20 calculation of the "realized value" of the vehicle versus the = "adjusted=20 lease balance" due on the vehicle at the time of termination. = Paragraph 24=20 of Excel's Motor Vehicle Lease Agreements provides = that:

24. EARLY=20 TERMINATION: This section applies if the Lease terminates = before=20 the end of the scheduled Lease term. . . . On early termination, = you will=20 return the Vehicle to us. You will deliver it to our address or to = another=20 reasonable location at our request.



(a) Early=20 Termination Liability. On early termination, you agree to = pay=20 us:



(1) A VEHICLE = RETURN FEE, if=20 any, given in section 28(b);



(2) All accrued = and unpaid=20 amounts that are due or past due at that time . . .=20 ;



(3) The amount = by which=20 the "Adjusted Lease Balance" is greater than the "Realized Value:=20 [sic] of the Vehicle=20 (5). . . ; and


(4) All official = fees and=20 taxes imposed in connection with the Lease termination.

At best, this = provision is=20 nothing more than a liquidated damages provision, not the = functional=20 equivalent of a hell or high water clause. Thus, we hold that = Excel's=20 leases do not satisfy the two-part test for establishing the = existence of=20 a security interest.

Other=20 Considerations

We next turn to an = examination of the lease to determine whether there are any other = factors=20 that have been recognized by the courts to indicate the existence = of a=20 security interest. Courts have recognized that, if, under the = terms of the=20 lease, a lessee has no equity interest whatsoever in the property, = the=20 lease may be a true lease and not a security interest. Touch = of Class=20 Leasing v. Mercedes-Benz Credit of Canada, Inc., 591 A.2d = 661, 665-66=20 (N.J. Super. Ct. 1991).=20 This is = the case=20 here. Excel's leases expressly provide that the lessee has no = equity=20 interest in the vehicle. Paragraph 27 of Excel's Motor Vehicle = Lease=20 Agreements provides, in pertinent part, as follows:

27.=20 TITLING, OFFICIAL FEES AND TAXES: You understand and = agree that=20 this agreement is a lease only. We own the Vehicle = and it=20 will be titled in our name or in the name of our assignee. You = have no=20 ownership interest in the Vehicle except for any future = options to=20 purchase provided in this Lease.



Excel=20 argues that, despite the language above, the leases are security=20 interests, not true leases, because, under their terms, the lessee = is=20 required to: pay taxes, if any, on the vehicle; pay for and = maintain=20 insurance on the vehicles; and pay for the service and maintenance = of the=20 vehicle. However, contrary to Excel's arguments, courts have held = that=20 lessee's acceptance of the costs similar to those stated in = Excel's lease=20 are typical of true leases, not secured transactions, and more = likely=20 reflect the relative bargaining power between parties rather than = the=20 character of the transaction. See = Rainier=20 Nat'l Bank v. Inland Mach. Co., 631 P.2d 389, 395 (Wash. = 1981)=20 (stating that "lessor is either going to include those costs = within rental=20 charge or agree to lower rent, if lessee takes responsibility for = them");=20 Mr. C's Rent To Own v. Jarrels (In re Jarrells), 205 B.R. = 994,=20 998-99 (Bankr. M.D. Ga. 1997) (recognizing that, while debtor = would be=20 responsible for all repairs, maintenance, taxes, and insurance, = these=20 factors alone are not controlling). Business = and=20 Commerce Code Section 1.203(c) specifically addresses this issue = and notes=20 that such facts are not controlling in the determination of a = security=20 interest:

(c) A=20 transaction in the form of a lease does not create a security = interest=20 merely because:



. = .=20 .



(2) the=20 lessee assumes risk of loss of the goods;


(3) the=20 lessee agrees to pay, with respect to the goods, taxes, insurance, = filing,=20 recording, or registration fees, or service or maintenance=20 costs;



Tex. Bus. = & Com.=20 Code Ann. =A7 1.203 (c) (Vernon Supp. 2006).


Excel's=20 leases do not comply with the two-part test for the existence of a = security interest rather than a lease. This mandates the = conclusion that=20 the agreements are true leases, and Excel is the owner of the = vehicles.=20 Accordingly, Excel's affirmative defense of nonownership, based on = its=20 claim that its leases with its customers were security interests, = fails as=20 a matter of law. See Tex. Bus. & Com. Code Ann.=20 =A7 1.203(b); In re=20 Powers, 983 F.2d 88, 90 (7th Cir. 1993) ("where a lessee has = the=20 right to terminate the lease before the option arises to purchase = the=20 property for no additional or nominal consideration, the lease is = a true=20 lease and cannot be a conditional sale); = In re=20 Yarbrough, 211 B.R. 654, 658-59 (Bankr. W.D. Tenn. 1997) = (noting that=20 court found it sufficient for finding of true lease that lease was = terminable at will); In re = Arthur=20 Rigg, 198 B.R. 681, 685 (Bankr. N.D. Tex. 1996) (court held = that=20 "[a]=20 lease agreement can be construed to create a security interest = only if the=20 agreement prohibits the lessee from terminating the = lease," if it = does not,=20 then the agreement is considered a true lease rather than a = security=20 agreement).

We hold=20 that, because the taxing units' production of certified copies of = tax=20 records or tax statements constituted prima facie evidence of all = the=20 elements in their petitions and Excel's affirmative defense of=20 nonownership failed, there is no genuine issue of material fact = for the=20 trial court to determine in this case. Excel failed to rebut the = taxing=20 units' prima facie case of ownership. We overrule Excel's issue=20 one.

Fact Question

In issue=20 two, Excel contends that the trial court erred in finding that = there was=20 no genuine issue as to any material fact as to ownership of the=20 vehicles.

Once the=20 movant establishes that it is entitled to summary judgment, the = non-movant=20 can defeat that showing only by producing evidence that raises a = fact=20 issue. Haight v. Savoy Apartments, 814 S.W.2d 849, 851 = (Tex.=20 App.--Houston [1st Dist.] 1991, writ denied).=20 "To constitute competent summary judgment evidence, = affidavits=20 must be made on personal knowledge, set forth facts as would be = admissible=20 in evidence and show affirmatively that the affiant is competent = to=20 testify to matters stated therein." Tex. R. Civ. P. = 166a(f).

Larry=20 Tschoerner, Excel's general manager and finance director, = submitted an=20 affidavit in which he testified that Excel's customers were = responsible=20 for paying the taxes on their vehicles. Most of Tschoerner's = affidavit=20 focused on addressing the four factors listed in Section 1.203 of = the=20 Texas Business and Commerce Code. Having already held that Excel's = leases=20 expressly provide that they are subject to termination by the = lessee--the=20 prerequisite to considering the four additional factors--we need = not=20 examine Tschoerner's affidavit pertaining to these four factors.=20

The=20 affidavit further states that, "in addition, pursuant to the terms = of the=20 agreement, these agreements could not be terminated by a = customer."=20 This is = contrary to=20 the plain language of the agreement. Whether a contract is = ambiguous is a=20 question of law. Gulf Ins. Co. v. Burns Motors, Inc., 22 = S.W.3d=20 417, 423 (Tex. 2000). If a court determines that a contract is = ambiguous,=20 then the court may consider extraneous evidence to ascertain the = true=20 meaning of the instrument. Nat'l Union Fire Ins. Co. v. CBI = Indus.,=20 Inc., 907 S.W.2d 517, 520 (Tex. 1995). Here, = neither party=20 has claimed ambiguity in the subject lease agreements. Accordingly, we may=20 not consider Tschoerner's testimony = that=20 changes the plain language of the lease agreements, as noted=20 above.

We hold=20 that there is no genuine issue as to any material fact as to = ownership of=20 the vehicles. We overrule issue two.

















Conclusion

Because=20 Excel failed to raise a material fact issue refuting the ownership = of the=20 vehicles, we hold that the trial court did not err in denying = Excel's=20 summary judgment. We affirm the trial court's judgment.

George C.=20 Hanks, Jr.

Justice


Panel=20 consists of Justices Taft, Keyes, and Hanks.


Justice=20 Keyes concurring in the judgment.



Justice=20 Keyes dissenting from denial of rehearing.

1. Excel = Lease Fund,=20 Inc. as successor in interest to BLJ & Associates, Inc. d/b/a = Excel=20 Financial Company is not a party to this appeal.=20

2. Under the = previous=20 version of this statute, the existence of a "hell or high water = clause"=20 was also a requirement to create a security interest. See, = e.g., In re=20 Rigg, 198 B.R. 681, 685 (Bankr. N.D. Tex. 1996) (stating that = "[a]=20 lease agreement can be construed to create a security interest = only if the=20 agreement prohibits the lessee from terminating the lease.").=20

3. For = purposes of the=20 summary judgment motion, the parties do not dispute that one of = these four=20 factors exists in this case: (4) that = the lessee=20 has an option to become the owner of the goods for no additional=20 consideration or for nominal additional consideration upon = compliance with=20 the lease agreement.=20

4. To the = extent that=20 Excel relies on caselaw developed under the previous version of = Section=20 1.203 to argue that a hell or high clause is not required for a = security=20 interest to exist, we find this caselaw not helpful to our = analysis in=20 this case. As noted by the court in Triplex, the current = version=20 of Section 1.203 contains significant changes to the statute. = In re = Triplex=20 Marine Maint. Inc., 258 B.R. at 669. As a = result, prior=20 cases consider certain factors as = attributes of a=20 security interest, which are no longer considered as such under=20 the=20 current version. Id.=20

5. Paragraph 24=20 (c) provides as follows:

(c)=20 Determining the Realized Value. If the law so requires, = we will=20 send you a notice and wait any required period of time before = taking=20 action to establish the Vehicle's Realized Value. Unless otherwise = required by law, the Realized Value will be determined in one of = the=20 following ways: (1) by a written agreement between you and us = reached=20 within 15 days of the Vehicle's return; (2) by the professional = appraisal=20 of an independent third party agreed to by you and us and obtained = at your=20 expense within 15 days of the Vehicle's return (or longer period, = if all=20 parties so agree or if the law so requires). The appraisal shall = be of the=20 Vehicle's wholesale value and shall be final and binding on both = you and=20 us; or (3) if it is not determined within 15 days of the Vehicle's = return,=20 we will determine the Realized Value in accordance with accepted = practices=20 in the automobile industry for determining the wholesale value of = used=20 vehicles by obtaining a wholesale cash bid for the purchase of the = Vehicle=20 or by disposing of the Vehicle in an otherwise commercially = reasonable=20 manner. . . .=20

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