KEITH BAXTER ALEXANDER v. THE STATE OF TEXAS

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Court of Appeals of Texas, El Paso.

KEITH BAXTER ALEXANDER, Appellant, v. THE STATE OF TEXAS, Appellee.

No. 08-14-00102-CR

Decided: March 09, 2018

Before McClure, C.J., Rodriguez, and Hughes, JJ.

OPINION

Appellant Keith Alexander appeals his conviction for false statement to obtain property or credit.1 In five issues, Appellant contends that: (1) the trial court abused its discretion by excluding a letter from the Tarrant County District Attorney's office initially declining prosecution in the case, asserting that it should have been properly admitted as an admission by a party opponent; (2) the trial court abused its discretion by excluding a statement from the Tarrant County District Attorney's office website, asserting that it should have been properly admitted as an admission by a party opponent; (3) the trial court abused its discretion by allowing the victim to testify about his subjective interpretation of contract documents over a timely objection based on the parol-evidence rule; (4) the trial court erred by failing to include a jury instruction concerning the parol-evidence rule; and (5) the trial court erred by failing to include a jury instruction on the law of general contractors. We affirm.

BACKGROUND

Keith Baxter Alexander was the president and owner of the construction company K.B. Alexander Co. of Texas, Inc. (“KBA”). In August 2006, Appellant contracted with Ed Kent to build Kent a used car lot in Fort Worth, Texas. The contract price was $383,871, to be paid in incremental progress payments. Kent was to make the progress payments after receiving itemized “application for payment” invoices from KBA. The contract also provided that Kent was entitled to request, at his discretion, evidence from KBA that the subcontractors had been paid before making any payment in response to the payment applications. It further provided that if a lien were filed against the property by a subcontractor for non-payment, KBA would remove the lien within thirty days or it would be removed at KBA's expense. To receive the final progress payment, the contract required that KBA's application for payment include an affidavit declaring, among other things, that all subcontractors had been paid.

After construction began, Appellant submitted several payment applications to receive the progress payments. The final payment application, dated January 19, 2007, included a notarized statement signed by Appellant, which read as follows:

The undersigned Contractor certifies that to the best of the Contractor's knowledge, information and belief the Work covered by this Application For Payment has been completed in accordance with the Contract Documents, that all amounts have been paid by the Contractor for Work for which previous Certificates for Payment were issued and payments received from Owner, and that current payment shown herein is now due.

Kent wrote a check twelve days later to KBA for $38,210. He did not demand to see proof that the subcontractors had been paid before making this payment.

Kent moved his business into the completed property in February 2007. Later that month, one of Appellant's subcontractors came to Kent's business and informed him that Appellant had not yet paid the subcontractors. Over time, several other subcontractors called Kent and reported that Appellant had not paid them for the work done. Eventually, Kent received letters from some of the subcontractors notifying him of their intent to file liens against his property for the unpaid amounts. During this time, Appellant repeatedly assured Kent that he was merely doing his due diligence before paying the subcontractors.

In March, with subcontractor threats mounting, Kent requested that Appellant provide him with an accounting of the amounts owed to the subcontractors. Appellant provided Kent with a spreadsheet showing that various subcontractors were owed $127,207.88 for work done constructing the used car lot. Kent eventually paid $19,661.32 to remove some of the subcontractors' liens filed against his property.

In July 2008, Kent filed a written complaint with the Economic Crimes Unit of the Tarrant County District Attorney's Office regarding the Appellant's representations and failure to pay the subcontractors. In a letter response dated July 21, 2008, the District Attorney's Office declined prosecution. However, the case was reopened and Appellant was eventually indicted in 2013 for False Statement to Obtain Property or Credit of the Value of $20,000 or More, But Less Than $100,000. Following a brief trial, Appellant was found guilty and sentenced to 3 years' incarceration and fined $10,000. This appeal followed.

DISCUSSION

The Letter from the District Attorney's Office and Website Statement

In his first and second issue, Appellant contends that the trial court abused its discretion in excluding two pieces of evidence: (1) a 2008 letter from the Tarrant County District Attorney's Office responding to Kent's complaint and declining to prosecute (Defendant's Exhibit 27), and (2) a statement on the Tarrant County District Attorney's website for its Economic Crimes Unit suggesting that when proof of an economic crime beyond a reasonable doubt is impossible, the complaining parties may receive such a letter (Defendant's Exhibit 29). Appellant asserts that both exhibits were admissions by a party opponent—an exception to hearsay under Texas Rule of Evidence 801(e)—and as such were admissible.

We review a trial court's decision to admit or exclude evidence for abuse of discretion. Tillman v. State, 354 S.W.3d 425, 435 (Tex.Crim.App. 2011). If the trial court's decision falls within the zone of reasonable disagreement, is reasonably supported by the record, and is correct “under any theory of law applicable to the case,” it will be upheld. State v. White, 306 S.W.3d 753, 757 (Tex.Crim.App. 2010); Ramos v. State, 245 S.W.3d 410, 418 (Tex.Crim.App. 2008).

The Texas Rules of Evidence provide several notable exceptions to the general bar on hearsay. Certain out of court statements that would otherwise be considered hearsay are categorized as “not hearsay” and are thus admissible, providing they are not subject to exclusion under another evidentiary rule. Texas Rule of Evidence 801(e) provides that:

(e) Statements That Are Not Hearsay. A statement that meets the following conditions is not hearsay:

(2) An Opposing Party's Statement. The statement is offered against an opposing party and:

(A) was made by the party in an individual or representative capacity;

(B) is one the party manifested that it adopted or believed to be true;

(C) was made by a person whom the party authorized to make a statement on the subject;

(D) was made by the party's agent or employee on a matter within the scope of that relationship and while it existed; or

(E) was made by the party's coconspirator during and in furtherance of the conspiracy.

TEX.R.EVID. 801(e). The Fort Worth Court of Appeals has held that in a criminal action, the State, not the complainant, is the party opponent of the defendant for purposes of Rule 801(e)(2). Logan v. State, 71 S.W.3d 865, 869 (Tex.App.--Fort Worth 2002, pet. ref'd); see also Rodela v. State, 829 S.W.2d 845, 849 (Tex.App.--Houston [1st Dist.] 1992, pet. ref'd)(police detective was agent of the State and his out of court statement was admissible as statement made by a party opponent).

Appellant argues that the letter and website information constituted a statement by a party opponent because the Tarrant County District Attorney's office was the agent of the State, making their exclusion on hearsay grounds an abuse of discretion. The State does not contest this point, but instead asserts that in reviewing the trial court's decision we must uphold the decision if it was correct under any theory of law applicable to the case, and contends that the evidence was either irrelevant under Texas Rule of Evidence 402 or would have failed a prejudicial versus probative analysis under Texas Rule of Evidence 403.

The State initially raised an anticipatory relevance objection to the letter and website information but ultimately objected on hearsay grounds, which the trial court sustained. Assuming that Appellant is correct that the letter and website information were not hearsay under Rule 801(e), that would not be the end of our inquiry. As noted above, the trial court's decision will be upheld if it is correct under any theory of law applicable to the case; the fact that the trial court gave the wrong reason for the correct ruling will not result in a reversal. Calloway v. State, 743 S.W.2d 645, 651-52 (Tex.Crim.App. 1988). “Under the Calloway rule, the prevailing party at the trial court level need not have explicitly raised that alternative theory in the court below to justify the appellate court's rejection of the appellant's claim.” State v. Esparza, 413 S.W.3d 81, 85 (Tex.Crim.App. 2013); see also Hailey v. State, 87 S.W.3d 118, 121 (Tex.Crim.App. 2002)(“It is well-settled that a Court of Appeals can affirm a trial court's decision on a legal theory not presented to the trial court without violating ‘ordinary notions of procedural default.’ ”)[Emphasis omitted].

The State contends that the letter and website information were not relevant to determining whether Appellant had made a materially false or misleading statement with the intent to obtain property. Conversely, Appellant contends that the evidence tended to indicate that the District Attorney's office believed that, based on a review of the evidence, Appellant had at worst breached a contractual obligation. Evidence is relevant if it “is helpful in determining the truth or falsity of any fact that is of consequence to the lawsuit.” Montgomery v. State, 810 S.W.2d 372, 391 (Tex.Crim.App. 1990). The State needed to prove beyond a reasonable doubt that Appellant (1) intentionally (2) made a materially false or misleading statement (3) with the intent to obtain property for himself or another valued between $20,000 and $100,000. Despite Appellant's contention, it is difficult to see how the letter from the District Attorney's office initially declining prosecution, and the website information suggesting that such a letter indicated the case could not be successfully prosecuted, was relevant to proving or disproving the elements of the offense. True, the letter indicates the Tarrant County District Attorney's office did not believe the case could be successfully prosecuted, but the trial court would not have abused its discretion in ruling the assessment by the District Attorney's office was not relevant as to whether Appellant actually committed the charged offense. Montgomery, 810 S.W.2d at 391. The same is true of the information on the Economic Crimes Unit's website. Even if the letter and website information did have some relevancy, the trial court would not have abused its discretion in determining that its probative value was substantially outweighed by its potential to confuse the jury under Texas Rule of Evidence 403. See TEX.R.EVID. 403; see also Henley v. State, 493 S.W.3d 77, 93 (Tex.Crim.App. 2016)(“An evidentiary ruling will be upheld if it was correct on any theory of law applicable to the case. We hold that, even if the proffered evidence had been relevant, the trial court judge had the authority under Rule 403 to exclude it.”)[Citations omitted]. Accordingly, we hold that the trial court did not abuse its discretion in excluding Defendant's Exhibits 27 and 29 from evidence. Appellant's first and second issues are overruled.

The Parol-Evidence Rule and Rule 401

In his third issue, Appellant claims that the trial court erred in admitting Kent's testimony regarding his interpretation of language included in the notarized pay request he received from Appellant. He first asserts that this testimony violated the parol-evidence rule, as the contract terms were unambiguous and the rule bars introduction of subjective interpretations of a contract when the terms are clear. Alternatively, he argues Kent's testimony was irrelevant because Kent's understanding of what the pay request meant did not prove Appellant's intent in sending the request, given that his intent is a necessary element of the offense.

As noted above, we review a trial court's decision to admit or exclude evidence for abuse of discretion. Tillman, 354 S.W.3d at 435. If the trial court's decision falls within the zone of reasonable disagreement and is reasonably supported by the record, it will be upheld. Ramos v. State, 245 S.W.3d 410, 418 (Tex.Crim.App. 2008); Torres v. State, 71 S.W.3d 758, 760 (Tex.Crim.App. 2002).

Even assuming, without deciding, that the parol-evidence rule is applicable in this type of case, the rule does not bar interpretive testimony about documents exchanged between the parties after the contract has been executed. First Bank v. Brumitt, 519 S.W.3d 95, 111 (Tex. 2017)(“the parol-evidence rule ‘does not apply to agreements made subsequent to the written agreement’ ”)[Emphasis in orig.], quoting Lakeway Co. v. Leon Howard, Inc., 585 S.W.2d 660, 662 (Tex. 1979). It is undisputed that the contract between KBA and Kent was executed August 25, 2006, and that the pay request at issue was dated January 19, 2007. If the pay request was in fact an agreement between the parties; it was a subsequent agreement, and the parol-evidence rule—which would bar evidence attempting to modify unambiguous terms in the original contract—would be inapplicable. First Bank, 519 S.W.3d at 111. More importantly, the pay application was not a contract—it was an invoice, a representation that the requisites for payment had been met. See Copeland v. Alsobrook, 3 S.W.3d 598, 604 (Tex.App.--San Antonio 1999, pet. denied)(discussing contract formation generally). The parol-evidence rule cannot be used to bar testimony regarding an invoice that is not a contract. Gannon v. Baker, 818 S.W.2d 754, 755-56 (Tex. 1991)(“The parol evidence rule applies only to contractual or jural writings ․”), citing Brannon v. Gulf States Energy Corp., 562 S.W.2d 219, 222 (Tex. 1977). Thus, the trial court did not abuse its discretion in overruling Appellant's parol-evidence rule objection.

Appellant also contends Kent's testimony is not relevant evidence under Texas Rule of Evidence 401, and inadmissible under Rule 402. “Finding a piece of evidence to be relevant is the first step in a trial court judge's determination of whether the evidence should be admitted before the jury.” Henley, 493 S.W.3d at 83. Evidence is considered relevant if:

(a) it has any tendency to make a fact more or less probable than it would be without the evidence; and

(b) the fact is of consequence in determining the action.

TEX.R.EVID. 401. Any evidence which does not meet this criteria is by definition irrelevant and, under Texas Rule of Evidence 402, inadmissible. TEX.R.EVID. 402. As noted above, an appellate court will not disturb a trial court's decision to admit or exclude evidence if the ruling was within the zone of reasonable disagreement. Torres, 71 S.W.3d at 760. Indeed, when reviewing such a decision based on Rule 401, the reviewing court should only overrule the trial court “[w]here the appellate court can say with confidence that by no reasonable perception of common experience can it be concluded that proffered evidence has a tendency to make the existence of a fact of consequence more or less probable than it would otherwise be ․” Montgomery, 810 S.W.2d at 391.

Here, Appellant was charged with making a materially false or misleading written statement with the intent to obtain property. See TEX.PENAL CODE ANN. § 32.32(b)(West 2016). Kent testified that the notarized pay application, to him, represented a sworn assurance that the subcontractors had been paid. This testimony is relevant to determining the extent to which the assurance in the pay request, if false, induced Kent to pay the Appellant. Because Kent's interpretation of the misleading statement could have induced him to make a payment he otherwise would not have made, it has some tendency to show that the materially false or misleading statement was calculated to obtain property. Given the wide latitude afforded to the trial court in admitting or not admitting relevant evidence, and our deference in not overturning such a decision unless it is outside the zone of reasonable disagreement, we cannot say that the trial court abused its discretion in allowing Kent's testimony. Montgomery, 810 S.W.2d at 391. Accordingly, Appellant's third issue is overruled.

Proposed Jury Instructions

Finally, in his fourth and fifth issues, Appellant asserts that the trial court erred by not including in its jury instructions his proffered instructions on the parol-evidence rule and the civil law regarding general contractors co-mingling funds.

An appellate court reviews a claim of jury-charge error by first determining whether an error exists in the charge. Ngo v. State, 175 S.W.3d 738, 743 (Tex.Crim.App. 2005). If the reviewing court finds error in the charge, it then analyzes that error for harm. Middleton v. State, 125 S.W.3d 450, 453 (Tex.Crim.App. 2003)(en banc). The level of harm required for reversal depends on whether the defendant objected to the error at trial. Almanza v. State, 686 S.W.2d 157, 171 (Tex.Crim.App. 1985)(opn. on reh'g). If the defendant timely objected to the error, the error is analyzed under the “some harm” standard; the standard being that the judgment may not be reversed unless the error was calculated to injure the rights of the defendant. Id. In deciding whether some harm occurred, “the actual degree of harm must be assayed in light of the entire jury charge, the state of the evidence, including the contested issues and weight of probative evidence, the argument of counsel and any other relevant information revealed by the record of the trial as a whole.” Id. at 171.

The purpose of the jury charge is to inform the jury of the applicable law and to guide it in applying the law to the case. Hutch v. State, 922 S.W.2d 166, 170 (Tex.Crim.App. 1996). As the Court of Criminal Appeals recently reiterated, “It is not the function of the charge merely to avoid misleading or confusing the jury: it is the function of the charge to lead and to prevent confusion.” [Emphasis added]. Reeves v. State, 420 S.W.3d 812, 818 (Tex.Crim.App. 2013), quoting Williams v. State, 547 S.W.2d 18, 20 (Tex.Crim.App. 1977). Article 36.14 of the Texas Code of Criminal Procedure requires a judge to deliver to a jury, in writing, a charge “distinctly setting forth the law applicable to the case , , , .” The duty of the trial court in charging the jury is to communicate to the jury each statutory definition that affects the meaning of an element of an offense. TEX.CODE CRIM.PROC.ANN. art 36.14 (West 2007); see Vasquez v. State, 389 S.W.3d 361, 366 (Tex.Crim.App. 2012)(“The purpose of the trial court's jury charge is to instruct the jurors on all of the law that is applicable to the case.”); Villarreal v. State, 286 S.W.3d 321, 329 (Tex.Crim.App. 2009)(same). The application paragraph of the jury charge applies the relevant penal law, abstract definitions, and general legal principles to the facts of the case and the indictment allegations. Vasquez, 389 S.W.3d at 366. Parties may request a special instruction, provided the instruction: (1) is grounded in the Penal Code; (2) is not already covered by the general charge to the jury; and (3) does not focus the jury's attention on a specific type of evidence that may support an element of an offense or defense. Walters v. State, 247 S.W.3d 204, 212 (Tex.Crim.App. 2007). The trial court must not express any opinion on the weight of the evidence. TEX.CODE CRIM.PROC.ANN. art 36.14.

Here, Appellant made timely requests for jury instructions on the parol-evidence rule and Texas law regarding general contractors. The requested instruction on the parol-evidence rule was as follows:

You are instructed that the parol evidence rule is a rule of substantive law which provides that, in the absence of fraud, accident, or mistake, extrinsic evidence is not admissible to vary, add to, or contradict the terms of a written contract that is facially complete and unambiguous. Evidence that violates the parol evidence rule is incompetent, without probative force, and cannot be given legal effect. The rule forbids the adding of parol evidence where the writing is silent, as well as to vary where it speaks. [Footnotes omitted].

Appellant's requested instruction on Texas general-contractor law was submitted as follows:

Texas law does not require funds received from owners to be kept in separate accounts. Nor must these funds be spent only on the project for which they were received—they may be spent on other projects or on expenses related to general business overhead. Texas law does not require any segregation of funds; it does not obligate the fund holder to maintain the separate identity of any trust res; it imposes no bookkeeping obligations on the fund holder. In other words, a general contractor is not required to use ‘yellow’ dollars received from an owner for ‘yellow’ subcontractors, or ‘red’ dollars for ‘red’ subcontractors.

A general contractor may pay ‘actual expenses directly related to the construction or repair of an improvement.’ This includes overhead and other expenses which, though not readily traceable to a particular job, are necessary to obtaining or completing the job, so long as the expenses are ‘actua1,’ i.e., have in fact been incurred. [Footnotes omitted].

Both requested instructions were denied by the trial court.

Although Appellant acknowledges that these proposed instructions are not grounded in the Penal Code, he nevertheless contends that the instructions “fit the criteria of non-Penal Code instructions that should be given.” He directs our attention to two cases, Medford and Chase, where the Texas Court of Criminal Appeals held certain non-Penal Code provisions were properly incorporated into the instructions to the jury. Both cases are distinguishable. In Chase, appellant had been charged with cruelty to non-livestock animals when he killed a neighbor's dog after it had gotten loose and mauled his dog. Chase v. State, 448 S.W.3d 6, 8 (Tex.Crim.App. 2014). The Health and Safety Code provided a legal justification for when an individual kills a dog that had recently attacked livestock or domestic animals. Id., at 15. The Court of Criminal Appeals held that the trial court improperly denied appellant's proffered instruction on the Health and Safety Code provision because it provided a legal justification for the exact actions of the appellant, and legal justifications are “generally considered to be a defense in criminal cases” even when not explicitly labeled as such in the statute. Id., at 16. Medford involved defining the term “arrest,” which was not defined in the relevant section of the Penal Code and was an element of the offense. Medford v. State, 13 S.W.3d 769, 771 (Tex.Crim.App. 2000). The court held that it was proper for the jury to be instructed on the term “arrest” with a non-Penal Code instruction, because the technical meaning of the term would make it inappropriate for jurors to arbitrarily apply their personal definitions of the term. Id., at 772.

Here, Appellant's non-Penal Code instructions involved neither a legal justification to the crime charged nor a definition of an ambiguous or technical term necessary to an element of the offense. Special instructions are only proper when they are (1) grounded in the Penal Code, (2) not already covered by the general charge to the jury, and (3) do not focus the jury's attention on a specific type of evidence that may support an element of an offense or defense. Walters, 247 S.W.3d at 212.

First, as evidenced by our discussion of the applicability of the parol-evidence rule, it is clearly inapplicable to the case at hand. Further, the co-mingling of funds or separation of funds is also clearly inapplicable to the elements of the offense and any proffered defenses. The inclusion of Appellant's requested jury instructions could have confused or mislead the jury. Given that the requested jury instructions do not reflect the applicable law for the charged offense as mandated by Article 36.14, the trial court was correct in denying Appellant's request for special instructions.

Second, each instruction here sought to highlight Kent's testimony and urge the jury to give it diminished consideration in determining Appellant's intent in making the false statement. As noted above, a trial court may not comment on the weight of the evidence, and a trial court comments on the weight of the evidence when it directs undue attention to particular evidence. Hawkins v. State, 656 S.W.2d 70, 73 (Tex.Crim.App. 1983)(“it is not proper for a charge to single out certain testimony, as this would constitute an improper comment on the weight of the evidence.”); cf. Watts v. State, 99 S.W.3d 604, 612 (Tex.Crim.App. 2003)(“By drawing attention to our holding of American Plant Food shortly before the jury began its deliberations, the trial judge may have inadvertently communicated an opinion concerning the weight of the evidence in this case.”). Because Appellant's proffered instructions would have constituted an impermissible comment on the weight of the evidence by directing undue attention to Kent's testimony, the trial court properly denied the requested instructions. Accordingly, Appellant's fourth and fifth issues are overruled.

CONCLUSION

Having overruled issues one through five, the judgment of the trial court is affirmed.

FOOTNOTES

1.   This appeal was transferred from the Fort Worth Court of Appeals pursuant to a docket equalization order issued by the Texas Supreme Court. We apply the precedent of that court to the extent required by TEX.R.APP.P. 41.3.

YVONNE T. RODRIGUEZ, Justice

Hughes, J., Not Participating

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