in Re: William Van Haselen III
08-20-00070-CV
| Tex. App. | Jun 30, 2021Background
- Tommy Lewis (minority stakeholder) sued William Van Haselen III and several entities, alleging siphoning of funds through a "shell game" with SOVA as a central clearinghouse.
- Parties produced ledgers, corporate tax returns, bank records, P&Ls, balance sheets; Lewis contended SOVA’s produced paper ledger was incomplete/illegible and sought an electronic ledger plus Van Haselen’s personal tax returns (2005–2016).
- At a hearing, Van Haselen argued post-motion productions made Lewis’s requests moot; Lewis argued SOVA is a Schedule C passthrough and transfers would appear on Van Haselen’s 1040.
- The trial judge, lacking accounting expertise, appointed a neutral CPA (chosen by counsel) to review the tax returns and related materials, hear 20–30 minute arguments from each side, and report which parts of the returns might be relevant; the judge would then rule on discoverability.
- Van Haselen petitioned for mandamus, arguing the court abused its discretion by ordering his returns to be submitted to the CPA without a showing of relevance or lack of alternative sources.
- The Court of Appeals denied mandamus, holding the trial court acted within its discretion in using a neutral accountant to assess potential relevance before ordering any production.
Issues
| Issue | Plaintiff's Argument (Lewis) | Defendant's Argument (Van Haselen) | Held |
|---|---|---|---|
| Whether trial court abused discretion by directing relator to submit tax returns to a neutral CPA for review | SOVA is a clearinghouse; as a Schedule C, SOVA’s activity appears on Van Haselen’s personal returns, so CPA review is needed to assess relevance | No showing of relevance; returns are private and potentially duplicative of produced business records; court should not force submission to third party | No abuse: trial court may enlist a neutral expert to identify potentially relevant portions before any compelled production; mandamus denied |
| Whether requesting party met burden to show tax returns are relevant and not obtainable elsewhere | Testimony and ledger issues show possible transfers and irregularities that could appear on personal returns | Produced ledgers and records (though not audited) may already supply information; later productions may render request unnecessary | Court found the record sufficient to justify expert review to determine whether returns contain non-duplicative, relevant information |
| Whether trial court must inspect returns itself (and segregate irrelevant portions) before permitting disclosure | N/A (Lewis sought review to support later disclosure) | Trial court should protect privacy by separating irrelevant parts before any wider disclosure | Permissible to have a neutral CPA assist the court in separating relevant from irrelevant portions and to report to the court prior to any ordered production |
| Whether mandamus is appropriate (adequate appellate remedy) | N/A | Mandamus necessary because order compels submission of private returns to third party | Mandamus denied: relator failed to show clear abuse or lack of adequate appellate remedy |
Key Cases Cited
- Walker v. Packer, 827 S.W.2d 833 (Tex. 1992) (mandamus requires showing clear abuse of discretion and no adequate appellate remedy)
- Maresca v. Marks, 362 S.W.2d 299 (Tex. 1962) (tax returns discoverable only as to relevant/material parts; court must segregate irrelevant portions)
- Sears, Roebuck & Co. v. Ramirez, 824 S.W.2d 558 (Tex. 1992) (requesting party must show relevance; avoid duplicative discovery)
- Hall v. Lawlis, 907 S.W.2d 493 (Tex. 1995) (limits on uncontrolled/ unnecessary discovery of tax returns)
- In re CSX Corp., 124 S.W.3d 149 (Tex. 2003) (trial courts must impose reasonable discovery limits and not exceed rules)
- In re N. Cypress Med. Ctr. Operating Co., Ltd., 559 S.W.3d 128 (Tex. 2018) (relevance in discovery is broad and liberally construed)