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2011 Attorney General Opinions and Court Decisions

Opinions and Decisions

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Listed below are recent opinions and decisions concerning various property tax issues. The list is does not include all opinions and decisions concerning property tax. The summaries are provided by the Comptroller's office as a public service intended solely as an informational resource. The summaries are not intended as substitutes for or interpretations of the opinions and decisions summarized and should not be relied upon as such. Additionally, the information provided neither constitutes nor serves as a substitute for legal advice. Questions regarding the meaning or interpretation of any information included or referenced herein should, as appropriate or necessary, be directed to an attorney or other appropriate counsel.

Attorney General Opinions

  • GA-0890 - GA-0890 addresses whether a local board of realtors is a "nonprofit community business organization" for purposes of section 11.231 of the Tax Code. Attorney General’s Opinion Summary: Under section 11.231, Texas Tax Code, an entity that is engaged primarily in performing one of the section's listed economic development functions, as determined by the chief tax appraiser, is a "nonprofit community business organization" that qualifies for the property tax exemption set forth in the section.
  • GA-0881 - GA-0881 addresses the proper method of calculating interest and penalties on the residence homestead of an elderly or disabled person whose property taxes have been deferred under section 33.06 of the Tax Code. Attorney General’s Opinion Summary: Calculation of interest and penalties on the homestead of an elderly or disabled person whose taxes have been deferred is governed by section 33.06 of the Tax Code for the entire period during which the deferral is effective.
  • GA-0868 - GA-0868 addresses whether the expanded definition of "disability" under federal law affects a taxpayer's qualification for the real property tax freeze on existing homesteads under Texas law. Attorney General’s Opinion Summary: The tax freezes and exemptions authorized by article VIII, section 1-b of the Texas Constitution are available for residence homesteads of persons who are under a disability for purposes of payment of disability insurance benefits under Federal Old-Age, Survivors, and Disability Insurance. Whether a person falls within the definition of "disability" under the Americans with Disabilities Act is not relevant to the analysis.
  • GA-0861 - GA-0861 addresses requirements for real property to qualify as an "ecological laboratory" under section 23.51, Tax Code. Attorney General's Opinion Summary: Nothing in the Tax Code suggests that a chief appraiser is required to rely upon a university ecological laboratory research plan and related annual report to qualify land as an ecological laboratory under Tax Code section 23.51. However, nothing in the Tax Code prohibits the chief appraiser from relying on these materials to make his determination. The chief appraiser must evaluate the claimant's application and any additional relevant information to determine whether the designation will apply in a specific instance.
  • GA-0856 - GA-0856 addresses a municipality's selection of a local newspaper for the purpose of publication of official notices. Attorney General’s Opinion Summary: A paper used for the publication of a political subdivision's notices must satisfy the requirements of section 2051.044, Government Code. We cannot advise you that the City's proposal to use a paper that does not satisfy section 2051.044 would be lawful. Beyond the express publication alternatives provided in section 2051.048, Government Code, and other particular notice statutes, the Legislature may provide additional publication methods.

Courts of Appeals Decisions

  • Section 11.21
    Ultrasound Technical Services, Inc. v. Dallas Central Appraisal District, No. 05-10-00626-CV (Fifth Court of Appeals - Dallas)
    -
    (December 30, 2011)

    This case involves the applicability of the exemption for schools provided under Tax Code §11.21 to a for-profit school. Ultrasound Technical Services, Inc. (UTSI) challenged the denial of its application for exemption under Tax Code §11.21, arguing that the Code is unconstitutional because the exemption is limited to non-profit schools. UTSI asserted that “the Legislature exceeded its authority by limiting the tax exemption to non-profit schools in light of the language of article VIII, section 2(a) of the Texas constitution that provides no such limitation.” The trial court rendered judgment in favor of Dallas Central Appraisal District (the District) and UTSI appealed.

    The appellate court held:

    UTSI contends it “qualifies for the exemption under the plain language of [the constitution],” but is “arbitrarily excluded” from tax-exempt status due to the “discriminatory provisions” of the § 11.21(d)(3) and (5) that permit only non-profit schools to obtain tax exemptions. The District argues the Legislature may add requirements to a constitutionally created tax exemption as long as the statute does not constitute an unreasonable interpretation of the constitutional language and implements the intent of the constitutional framers. According to the District, the statute does not constitute an unreasonable interpretation and is valid.

    First, we address UTSI's argument that but for the “discriminatory provisions” of § 11.21, it would “qualify for the exemption under the plain language of the constitution.” We cannot agree. An entity qualifies for a tax exemption only if it meets the requirements of both the constitution and the statute. See, e.g., City of McAllen v. Evangelical Lutheran Good Samaritan Soc'y, 530 S.W.2d 806, 811 (Tex. 1975); Hilltop Village, Inc. v. Kerrville Indep. Sch. Dist., 426 S.W.2d 943, 946 (Tex. 1968). UTSI acknowledges it does not meet the statutory requirements.

    Second, we address UTSI's contention that “the supreme court recognized that a for-profit school qualifies for the school property exemption under the constitution.” It cites Smith v. Feather, 234 S.W.2d 418 (Tex. 1950), for this proposition. Once again, we cannot agree. There is a critical distinction between Smith and the instant case: the Smith court held the for-profit school in that case constituted a school “within the terms of the [1931] statute.” Id. at 407. Section 11.21 is a materially different statute than the 1931 statute, which provided an exemption to “all such buildings used exclusively and owned by persons or associations of persons for school purposes.” Id. at 404-05.

    The constitution provides the Legislature “may” exempt “schools” from taxation. However, the Legislature has enacted § 11.21, which exempts a subset of schools-non-profit schools. The Legislature is empowered to “restrict” this statutory exemption authorized by the constitution and has not “enlarged” it “beyond the constitutional confines.” See Dickison v. Woodmen of the World Life Ins. Soc'y, 280 S.W.2d 315, 317 (Tex. Civ. App.-San Antonio 1955, writ ref'd). We decide against UTSI on its sole issue.

    The appellate court affirmed the trial court’s judgment.

  • Thomas D. Selgas et al. v. Henderson County Appraisal District, No. 12-10-00021-CV & No. 12-10-00050-CV (Twelfth Court of Appeals - Tyler) -
    (November 16, 2011)

    This case involves a claim of excessive appraisal. Thomas D. Selgas and Michelle L. Selgas (the Selgases) purchased two tracts of a total of approximately thirty-six and a half acres of land in Henderson County on January 31, 2008. As set forth by the appellate court, the sales contract contained specific payment provisions:

    Paragraph 11 of the contract, entitled “Special Provisions,” provides that “Buyer shall tender purchase price in gold coin as described in Exhibit ‘A.’’ That exhibit is entitled “Property Payment in Lawful Money $10 American Gold Eagle Coins.” Below the title are the words “PAYMENT CLAUSE.” Section (b) provides that

    [p]ayment for the sale and purchase of the Subject Property shall be valued at sixteen thousand six-hundred seventy (16,670) “dollars” of coined gold, each such “dollar” to consist of twenty-five one-thousandths (0.025) of a Troy ounce of fine gold in the form of the coins hereinafter specified in Section (c) of this PAYMENT CLAUSE.

    Pursuant to section (c), “[p]ayment for the sale and purchase of the Subject Property shall consist only . . . of one thousand six hundred sixty-seven (1,667) American Eagle ‘ten dollar gold coin[s],’” each of which contains one-quarter troy ounce of fine gold. Section (e) provides the disclaimer that the payment clause is not to be construed for the purpose of an abusive tax shelter or other unlawful means to avoid any lawful tax.

    The Selgases protested in 2008 and 2009, requesting that the market value of their tracts be fixed at $14,370.00 and 2,300.00. The Henderson County Appraisal Review Board refused to change the valuations, sustaining market values of $251,630.00 and 40,240.00 for 2008 and 354,040.00 and 53,480.00 for 2009. The Selgases filed suit in district court. Henderson County Appraisal District (HCAD) filed a no-evidence and traditional motion summary judgment. The trial court granted HCAD’s motions and rendered judgment against the Selgases. The Selgases appealed.

    In response to HCAD’s motions for summary judgment, the Selgases had included, among other things, copies of their notices of protest for 2008 and 2009. As set forth by the appellate court:

    The Selgases filed a notice of protest in 2008 asserting that they paid “$16,670.00 in lawful (current) money,” and therefore that is the current fair market value of the property. In 2009, they filed another notice of protest explaining that they paid $16,670.00 and have made $2,500.00 in improvements. Therefore, they argued, the market value of their property is $19,170.00. They also argued that Federal Reserve Notes are legal tender, but not current lawful money, and cannot be used in payment of debts. They also explained that the Owen-Glass Act, which created the Federal Reserve System, is unconstitutional and they are not required to participate in it.

    The appellate court held:

    Ten dollar gold coins are legally a form of currency. 31 U.S.C.S. §§ 5103, 5112(a)(9) (Matthew Bender & Co., LEXIS through 2010 legislation). A gold coin has intangible value based on its representative value as currency, its face value. Sanders v. Freeman, 221 F.3d 846, 856 (6th Cir. 2000). The face value of currency in circulation is prima facie evidence of its value. Burton v. Commonwealth, 708 S.E.2d 444, 448 (Va. Ct. App. 2011). Moreover, value is inherent in the precious metals. Bronson v. Rodes, 74 U.S. (7 Wall.) 229, 249 (1869). Thus, a gold coin also has intrinsic value based on its metal content, that is, its market value. Sanders, 221 F.3d at 856. This intrinsic value is determined by weight and purity. Bronson, 74 U.S. at 249. Evidence can be presented to prove that money has a value different than its redeemable value as legal tender. Burton, 708 S.E.2d at 449 n.3. The true value of coins is affected by their market value to numismatics and the intrinsic value of the coins’ precious metal content. Id. Notably, the United States Secretary of the Treasury is required by statute to sell gold coins minted by the federal government at market value. 31 U.S.C.S. § 5112(i)(2)(A) (Mathew Bender & Co., LEXIS through 2010 legislation).

    A gold coined dollar and a Federal Reserve Note dollar are not the actual equivalent of each other. Bronson, 74 U.S. at 252. Coined dollars are worth more than note dollars. Id. Therefore, for example, an amount due in coin dollars pursuant to a contract cannot be satisfied by an offer to pay their nominal equivalent in Federal Reserve Note dollars. Id. at 253. The contract would have to be paid in an amount equal to the actual value of the gold demanded in the contract. Id. at 250.

    The contract pursuant to which the Selgases purchased the property from the Bryants is prima facie evidence that they paid $16,670.00 for the land. See Burton, 708 S.E.2d at 448. However, there is evidence showing that the value of the 1,667 ten dollar gold coins paid to purchase the property is greater than face value. In his deposition, Selgas explained that one ten 9 dollar gold coin is worth approximately $250.00 in Federal Reserve Notes. He stated that he paid 1,667 ten dollar gold coins for the property. Michelle Selgas explained that the sellers’ asking price was “approximately 400-something-thousand Federal Reserve Notes.”

    Therefore, the record shows that 1,667 ten dollar gold coins are worth approximately $416,750.00, which happens to be consistent with the sellers’ asking price. The number of ten dollar gold coins offered was clearly determined based on their intrinsic value according to their weights as precious metals, not their face value. A sales price of $416,750.00 is considerably more than the 2008 market value assessed by HCAD, before application of the appraisal formula for open space land. Likewise, the 2008 sales price of $416,750.00 is even greater than the 2009 assessment of $407,520.00. Based on this record, reasonable jurors, knowing that the Selgases paid in gold, could disregard Selgas’s testimony that he paid “$16,670 dollars.” See Tamez, 206 S.W.3d at 582. Thus, the Selgases’ evidence did not raise a fact question on whether the property was over appraised. The no evidence summary judgment was proper because the evidence establishes conclusively the opposite of the challenged element. See Taylor-Made Hose, Inc. v. Wilkerson, 21 S.W.3d 484, 488 (Tex. App.–San Antonio 2000, pet. denied). Accordingly, the trial court did not err in granting HCAD’s no evidence motion for summary judgment. Likewise, the evidence establishes as a matter of law that there is no issue of fact regarding whether the assessed value of the property is higher than the market value of the property. Accordingly, the trial court did not err in granting HCAD’s traditional motion for summary judgment. See Nixon, 690 S.W.2d at 548. We overrule the Selgases’ first and second issues.

    The appellate court affirmed the trial court’s judgment.

  • Section 31.08
    City of Clarksville et al. v. Drilltech, Inc., No. 06-11-00054-CV (Sixth Court of Appeals - Texarkana)
    -
    (November 15, 2011)

    This case addresses the provision in Tax Code §31.08(b) under which a taxing unit’s lien is extinguished if a person transfers property accompanied by a tax certificate that erroneously indicates no delinquent taxes, penalties, or interest are due or that fails to include property because of its omission from the appraisal roll. Drilltech, Inc. (Drilltech) purchased property in Red River County on November 7, 2008. The title company had ordered tax certificates from the county and the appraisal district. Both tax certificates listed the market value of the land as $15,330.00 and the improvements as “0” and both tax certificates reflected tax amounts due that were paid at closing. In December 2009, Drilltech received a notice of intent to sue from two taxing units for collection of delinquent taxes that predated Drilltech’s purchase of the property. Drilltech filed suit seeking a declaratory judgment “that the certificates indicated that no taxes were due, and thus, that the liens were forfeited under Section 31.08(b) of the Texas Tax Code.” The taxing units answered and filed cross-claims for foreclosure. Drilltech filed a motion for summary judgment pursuant to Tax Code §31.08. The taxing units filed a cross-motion for summary judgment and filed an affidavit of the chief appraiser of Red River Appraisal District. The chief appraiser’s affidavit asserted that two accounts were created for the same property, that Capital Appraisal Group, LLC appraised complex properties for the district, and that “[b]ecause the appraisal district’s staff routinely appraises the land itself in-house, it is administratively convenient to maintain two separate tax accounts, one for the land appraised by the district and identified by its own unique account number, and another account for the improvements situated thereon.” “Urging that the appraisal value of the land was only $15,330.00 ‘because the improvements situated upon the land were separately appraised and assessed under another account number as is customary in the case of industrial properties . . . , and the improvement account is indeed delinquent for tax years 2007 and 2008,’ the [taxing units] argued that Drilltech should have known additional taxes were due” and “that the only certificates produced showed delinquent taxes owing and that Section 31.08 did not apply.” Two additional taxing units intervened in the suit, seeking recovery of delinquent taxes and foreclosure. “The trial court found that ‘all tax liens on the real property’ were forfeited or extinguished, and found that Drilltech would not be personally liable for any taxes owed.”

    The appellate court held:

    A tax bill for real property must include the appraised value and taxable value of the property and the amount of taxes imposed on the property by the unit. TEX. TAX CODE ANN. § 31.01(c)(11)(A), (C) (West Supp. 2011). Real property in the Tax Code specifically includes improvements made on the land. TEX. TAX CODE ANN. § 1.04(2)(B) (West 2008). Before an executory contract is signed by the purchaser of property, the seller is required to provide the purchaser with a tax certificate from the collector to ensure proper disclosure of tax payments. TEX. PROP. CODE ANN. § 5.070(a)(1) (West 2004). Section 9.3040 of the Texas Administrative Code requires the following affirmation to accompany the list of delinquent taxes, penalties, and interest, and any known costs and expenses on the tax certificate: ‘a careful check of the tax records of the office has been made on the specified property and the tax certificate indicates the amount of delinquent taxes.’ 34 TEX. ADMIN. CODE § 9.3040 (2011) (Comptroller of Pub. Accounts, Tax Record Requirements). The definition of ‘property’ in the Texas Tax Code includes ‘any matter or thing capable of private ownership.’ TEX. TAX CODE ANN. § 1.04(1) (West 2008). Section 31.08(a) reads that ‘[a]t the request of any person, a collector for a taxing unit shall issue a certificate showing the amount of delinquent taxes, penalties, interest, and any known costs and expenses under Section 33.48 due the unit on a property according to the unit’s current tax records.’ Gooding Title specifically requested that tax certificates be issued on the ‘property,’ and provided the property address. Thus, the Taxing Units were required to issue a tax certificate showing the sums due according to the current tax records for both the value of the land and the improvements.

    The tax certificates specifically certified and guaranteed that only the amounts listed were due ‘for the above described property’ and ‘on the described property.’ No indication of delinquent taxes owing for any improvements were shown. Therefore, the certificates ‘erroneously indicate[d] that no delinquent taxes, penalties, or interest [were] due’ with respect to any improvements. TEX. TAX CODE ANN. § 31.08(b). Therefore, we find Drilltech proved its entitlement to summary judgment as a matter of law.

    The appellate court affirmed the trial court’s judgment.

  • Thames Shipyard & Repair Co., a/k/a Thames Shipyard & Repair Company v. Galveston Central Appraisal District et al. -
    (October 25, 2011)

    This case addresses exhaustion of administrative remedies prior to seeking judicial review in district court. Thames Shipyard & Repair Co., a/k/a Thames Shipyard & Repair Company (Thames), a corporation headquartered in and incorporated under the laws of Connecticut, owned a dry dock on January 1, 2004. At that time, the dry dock was situated in Galveston County, Texas, having been constructed and installed there in 1998. Thames purchased the dry dock in December 2003 and hired a company to repair and modify it in Galveston. In March of 2004, the dry dock was towed to Mobile, Alabama for additional modifications and then to New London, Connecticut, where it was placed into service. A notice of appraised value was mailed to Thames on behalf of Galveston Central Appraisal District. The notice was hand-dated May 26, 2004 and identified the dry dock as personal property valued at $4,515,000. The notice stated that any protest should be filed in writing by June 12, 2004 and enclosed a copy of the Texas Taxpayers’ Remedies pamphlet. Thames’ president testified that the notice was received after June 12, 2004. Thames was mailed and received a tax bill in October 2004. In October 2006, Thames filed a motion with the Galveston County Appraisal Review Board under Tax Code §25.25 “seeking correction of the valuation of the dry dock.” According to the appellate court, “Thames apparently never filed a Notice of Protest under Tax Code section 41.44.”

    Thames filed suit against Galveston Central Appraisal District (GCAD) and Galveston County Appraisal Review Board (GCARB). Both sides filed motions for summary judgment. The trial court denied Thames’ motion and granted the motion of GCAD and GCARB. Thames appealed.

    “Thames argued in the trial court and argues on appeal that he is excused from exhausting administrative remedies because (1) the Notice of Appraisal sent by the GCAD was insufficient and did not comport with due process requirements or the Texas Tax Code; (2) appellees never obtained jurisdiction to tax the dry dock; and (3) appellees are not empowered to determine constitutional issues.” With regard to the first two arguments, the appellate court held that Thames failed to exhaust administrative remedies. With regard to the third argument, the appellate court held that “[t]o the extent Thames suggests that it did not have to exhaust available administrative remedies on issues pertaining to situs or notice, this argument lacks merit . . . .”

    The trial court had entered a take-nothing judgment instead of dismissing Thames’ claims for want of jurisdiction. The appellate court modified the judgment to omit the take-nothing language and dismiss the claims for want of jurisdiction. The appellate court affirmed the trial court’s judgment as modified.

  • Section 1.04(18)(A), 23.12, 25.25(c)(1), and 42.25
    Lack's Stores, Inc. v. Gregg County Appraisal District et al., No. 06-10-00125-CV
    -
    (September 9, 2011)

    This case involves claims for correction of clerical errors pursuant to Tax Code §25.25(c)(1) and of excessive appraisal pursuant to Tax Code §42.25. The trial court granted partial summary judgment in favor of Gregg CAD and dismissed Lack’s Stores, Inc.’s claims for tax years 2003 through 2006. The trial court conducted a bench trial as to Lack’s Stores Inc.’s claims for tax years 2007 and 2008 and “concluded its judgment by adjudging the market property for the properties for 2007 and 2008 as the same appraised values as determined by Gregg CAD.” Lack’s Stores, Inc. appealed.

    Lack’s Stores, Inc.’s claims for tax years 2003 through 2006 were based on Tax Code §25.25(c)(1). As set forth by the appellate court,

    Lack’s Stores’ train of thought appears to be that Gregg CAD failed to use the correct appraisal method because the use of a method of appraisal that does not comport with that employed by Lack’s Stores, constituting a mistake; taking this line of reasoning further, Lack’s Stores maintains that the supposedly erroneous appraisal method resulted in clerical errors for the preceding five years’ appraisal. Traveling further along that skein, it concludes that Gregg CAD’s appraisal method constituted a clerical error and, thus, one which is permitted by statute to be corrected.

    Framing the question as “whether the language in Section 1.04(18)(A) of the Texas Tax Code can include an allegation of a failure by the taxing entity to use all of the proper considerations in calculating a tax liability, or if it is limited to the historic meaning of a ‘clerical error,’” the appellate court held that “Lack’s Stores’ allegations of error amount to a difference of opinion as to the proper means to evaluate property, not of a clerical mistake.”

    With regard to Lack’s Stores, Inc.’s claims of excessive value, the appellate court stated

    In an excessive valuation case under Tex. Tax Code Ann. § 42.25 (West 2008), the taxpayer must prove that the valuation is grossly excessive. Grossly excessive valuation exists when the assessed value is proven to so far exceed the fair market value as to shock the mind and raise the assumption that the value was either fraudulent or that it does not represent a fair and conscientious effort by the board to arrive at the cash market value. Determining whether a tax assessment is grossly excessive is a question of law. In addition to that determination, a harm analysis also applies: on appeal from a trial court’s decision after its review of an appraisal review board’s decision, an appealing taxpayer may prevail only if the taxpayer can show monetary “substantial injury” because of the alleged arbitrary taxation plan.

    The appellate court also noted, with regard to arguments raised by Lack’s Stores, Inc. regarding Tax Code §23.12(a) that “[t]he Code does not contain a specific type of analysis that must be utilized in reaching that valuation.”

    The appellate court affirmed the trial court’s judgment.

  • Section 42.21
    Bobie Kenneth Townsend v. Appraisal Review Board of Montgomery County, Texas, No. 09-11-00089-CV (Ninth Court of Appeals - Beaumont)
    -
    (August 31, 2011)

    This case addresses the requirement pursuant to Tax Code §42.21(b) that a petition for judicial review be brought against the appraisal district. Bobie Kenneth Townsend (Townsend) sued the Montgomery County Appraisal Review Board (the ARB), “seeking to have his property removed from Montgomery County’s tax rolls, and requesting an award of damages based on an alleged breach of fiduciary duty.” Townsend had filed a protest regarding the 2010 appraised value of his property and obtained an order from the ARB that the value of his property was “over market value” and “unequal compared with other properties.” After receiving the ARB’s order, Townsend timely filed a petition for review with the district court, but named the ARB as the only party. The ARB filed an answer with a plea to the jurisdiction and a subsequent motion to dismiss. The ARB asserted that Townsend failed to invoke the court’s jurisdiction because he failed to “sue the proper and necessary party.” Townsend responded that “although he ‘may have been ignorant of the provision under Section 42.21 of the Texas Tax Code,’ he served the appraisal district by serving the chairman of [the ARB].” Townsend never made the District a party to the suit. The trial court granted the ARB’s motion to dismiss for want of jurisdiction. Townsend appealed.

    Noting that “[a] taxpayer’s failure to make the District a party to a suit challenging an appraisal review board’s final order deprives the trial court of subject matter jurisdiction over a suit challenging the decisions of the appraisal review board,” the appellate court held that “the trial court property granted [the ARB’s] jurisdictional plea, and that Townsend, through his inaction, waived his right to amend his pleadings.

    The appellate court affirmed the trial court’s order dismissing Townsend’s suit for want of jurisdiction.

  • Section 32.07
    Green Tree Servicing, LLC v. Travis County et al., No. 03-10-00709-CV (Third Court of Appeals - Austin)
    -
    (August 31, 2011)

    This case involves an appeal from a post-answer default judgment in a delinquent tax suit. In the context of addressing the standard for establishing a meritorious defense for purposes of a motion for new trial, the appellate court addressed the definition of “owner” under Tax Code §32.07. The court held:

    Interpreting "owner" to include a secured party in possession of property for purposes of selling it to recover on a debt does not comport with . . . rules of statutory construction. Simply stated, a lien-holder is not an "owner" of the property within the common meaning of that term. Typically the lienholder does not enjoy any of the common benefits of ownership. A lienholder ordinarily has no legal right to share in any accretions to the collateral's value, or a legal obligation to bear any risk of lost value. A lienholder ordinarily has no right to possession or use of the property; what right it has to use and possession are only in the context of its right to take possession of its collateral upon default and sell it pursuant to the security agreement. Thus, to broaden the term "owner" to include all lienholders in possession of collateral would require us to liberally construe the statute in favor of the taxing authority and against the taxpayer. Such an interpretation would be contrary to the accepted rules of construction.

    True to the rules of construction relating to tax statutes, we employ a more common definition of "owner." Specifically, we construe the term "owner," as used in section 32.07 of the Texas Tax Code, as a person or entity holding legal title to the property, or holding an equitable right to obtain legal title to the property. This common definition of "owner" would not encompass a lienholder who takes possession of personal property collateral for the purpose of selling it pursuant to a security agreement.

    The appellate court reversed the trial court’s judgment and remanded the cause for a new trial.

  • Section 42.08
    U. Lawrence Boze’ & Associates, P.C. et al. v. Harris County Appraisal District, No. 01-10-00016-CV (First Court of Appeals - Houston)
    -
    (August 11, 2011)

    This case addresses the prepayment requirements of Tax Code §42.08. U. Lawrence Boze’ & Associates, P.C. and U. Lawrence Boze’ (collectively “Boze’”) filed suit against Harris County Appraisal District (“HCAD”), challenging the appraised value of business personal property. HCAD moved to dismiss the suit for lack of jurisdiction, arguing that Boze’ did not substantially comply with the prepayment requirements of Tax Code §42.08. The trial court granted HCAD’s motion and dismissed the suit. Boze’ appealed. Boze’, a solo attorney, asserted on appeal that “the trial court erred in granting HCAD’s motion because HCAD did not present sufficient evidence to support a determination that Boze’ did not substantially comply with section 42.08.”

    Boze’ had maintained a business personal property account with HCAD at the address of an office he leased for the operation of his law office. In 2000, Bozé relocated his law office and property to his residential homestead. He did not inform HCAD of the move or file an updated personal property rendition indicating the new address or the property. HCAD continued to send appraisal notices to the previously leased office address. Boze’ allegedly discovered the error in 2006 and notified HCAD that he wanted to protest for tax years 2000-2006. After allegedly having been informed that it was too late to protest any year other than 2006, Boze’ filed a protest for 2006 and received a significant reduction in value before the ARB. In 2008, after receiving delinquent tax statements for tax years 1998-2005, HCAD informed Boze’ that he could file a correction motion under Tax Code §25.25. Boze’ subsequently filed a motion for tax years 2003-2005 and indicated that he had not paid any of the taxes assessed on the property. After no action was taken on the motion, Bozé filed a second request for correction. In 2009, Boze’ attended a hearing on the motion. The ARB denied the motion as to tax year 2003 and dismissed the motions for tax years 2004 and 2005. The dismissal was based on the failure to pay taxes. In his petition for judicial review, Boze’ asserted, among other things, “that he should not be required to pre-pay his taxes before the delinquency date as a prerequisite to judicial review because he ‘disputed all of the alleged taxes in question . . . since such taxes are based on alleged appraisals by Defendant HCAD of business personal property which did not exist in any form at the [leased office address] location indicated in the appraisal roll’” and that “due to the ‘five year statute of limitations,’ HCAD could not collect the delinquent taxes for the 2003 tax year.” Boze’, on May 29, 2009, included with his petition for judicial review an oath of inability to pay the taxes at issue. HCAD moved to dismiss the suit for failure to substantially comply with Tax Code §42.08.

    The appellate court stated: “[B]ecause Boze’ admitted that he owned the taxable business personal property at issue in this case, moved his business without notifying the taxing authorities for six years, and maintained that property within the jurisdiction of the taxing authorities during the relevant tax years, albeit at an address not named in HCAD’s appraisal records, he was not excused from the prepayment requirement of section 42.08(b). We therefore hold that, because Boze’ did not pay any portion of the assessed taxes before the relevant delinquency dates, he did not substantially comply with section 42.08(b).” The appellate court further stated: “[B]ecause Boze’ did not file an oath of inability to pay before the Board considered his correction motions, Boze’ ‘forfeit[ed] the right to a final determination’ of the motions. We hold that the trial court correctly determined that Bozé did not substantially comply with section 42.08, which was a prerequisite to the Board determining his correction motions, and, thus, the trial court correctly granted HCAD’s motion to dismiss for lack of jurisdiction.”

    The appellate court affirmed the trial court’s judgment.

  • Section 42.09
    Bobie Kenneth Townsend v. Montgomery Central Appraisal District, No. 09-10-00394-CV (Ninth Court of Appeals - Beaumont)
    -
    (July 28, 2011)

    This case addresses the exclusive nature of the Tax Code’s remedies and governmental immunity. Bobie Kenneth Townsend (Townsend) filed suit against Montgomery Central Appraisal District (MCAD) and its Chief Appraiser, Mark Castleschoultd (Castleshoultd), in his official capacity. In 2004, Townsend had purchased a home, the previous owner of which had been given a three year variance to allow time for repairs. After the variance, Townsend notified MCAD that the home had not been repaired. Townsend protested in 2005, 2006, 2008, and 2009 and requested that MCAD extend the variance. After the protests were filed, MCAD refused Townsend’s requests to extend the variance, but lowered the values from those noticed. The lowered values were still significantly higher than the value that had been placed on the home during the period of the variance. Townsend did not timely file suit pursuant to Tax Code 42.21 for any of the tax years protested. In December 2009, based on theories of negligent hiring, breach of fiduciary duty, theft of property, and fraud, Townsend sought an injunction, a declaratory judgment, and damages. Townsend asserted that MCAD and Castleshoultd improperly considered Townsend’s home as having been repaired when MCAD appraised it and sought to have his home removed from the tax rolls. MCAD and Castleshoultd filed pleas to the jurisdiction. The trial court granted the pleas and dismissed the suit. Townsend appealed.

    The appellate court first addressed Townsend’s failure to exhaust administrative remedies. The court stated that Townsend’s claims are not within the statutory exceptions to Section 42.09, the Tax Code’s exclusive Remedy provision and held:

    In his suit, Townsend seeks declaratory and injunctive relief against the District and Castleschoultd regarding the appraisals of his home’s value, and the lawsuit asserts that the District and Castleschoultd improperly considered Townsend’s home as having been repaired when the District appraised the home’s value. Townsend also sought to have his home removed from the tax rolls. We conclude that all of Townsend’s claims concern a dispute over the home’s value. We further conclude that Townsend should have, but did not, appeal from each of the final orders in issue that assessed a market value on his home. Because Townsend did not file appeals from the District’s final orders, he failed to exhaust his remedies under the Tax Code. The trial court did not err in concluding that Townsend’s failure to exhaust his administrative remedies deprived it of the right to exercise subject matter jurisdiction over Townsend’s claims for declaratory and injunctive relief.

    Townsend argued that the Texas Constitution provides the trial court with jurisdiction to hear his claims for negligent hiring, breach of fiduciary duty, theft of property, and fraud. The appellate court noted that “the Texas Constitution provides that trial courts have jurisdiction ‘except in cases where exclusive, appellate, or original jurisdiction may be conferred by this Constitution or other law on some other court, tribunal, or administrative body.’” Citing prior case law for the proposition that “[a]n agency has exclusive jurisdiction when ‘a pervasive regulatory scheme indicates that the Legislature intended for the regulatory process to be the exclusive means of remedying the problem to which the regulation is addressed,’” the appellate court stated that the Tax Code’s provisions governing appraisal for ad valorem tax purposes, with its procedures for resolving valuation disputes, is an example of such a pervasive regulatory scheme. The appellate court held:

    As Townsend’s complaints for negligent hiring, breach of fiduciary duty, theft of property, and fraud all seek to attack the District’s final appraisal orders, the District had exclusive jurisdiction to address these claims, subject to Townsend’s right to obtain review through an appeal of the District’s final orders. We conclude that Townsend’s failure to exercise his right to appeal deprived the trial court of jurisdiction over Townsend’s claims for negligent hiring, breach of fiduciary duty, theft of property, and fraud.

    The appellate court also addressed the issue of immunity and, as to MCAD, held that “Townsend failed to plead any statutory provision that operates to waive the District’s immunity.” With regard to Townsend’s claims against Castleshoultd, the appellate court noted that a suit against a government employee in his official capacity is a suit against his government employer and that the employee sued in official capacity has the same governmental immunity as his government employer. While also noting that “governmental immunity does not preclude prospective injunctive remedies in official capacity suits against government employees who violate statutory or constitutional provisions,” the appellate court held:

    Townsend’s claims against Castleschoultd do not fall within the ultra vires exception. To fall within the ultra vires exception, a suit must not complain of a government officer’s exercise of discretion, but must allege that the officer acted without legal authority or failed to perform a purely ministerial act. Immunity from suit exists if the suit arises from the performance of the government employee’s discretionary duties, the employee acted in good faith, and acted within the scope of his authority. With respect to Castleshoultd’s duties, we note that the chief appraiser of an appraisal district has a statutory duty to prepare appraisal records for each taxable property located within the district. The chief appraiser’s duties also include a statutory duty to value taxable property by applying generally accepted appraisal methods and techniques to assess the property’s market value.

    With respect to Townsend’s complaints against Castleschoultd, all of Townsend’s claims concern Castleshoultd’s statutory duties of determining a home’s market value for the District’s appraisal records. Because Townsend’s claims against Castleschoultd do not fall within the ultra vires exception, we conclude the trial court did not err in dismissing them for lack of jurisdiction.

    The appellate court affirmed the trial court’s order dismissing Townsend’s suit without prejudice for lack of subject matter jurisdiction.

  • Section 11.182
    Comunidad Balboa, LLC v. City of Nassau Bay, No. 14-10-00167-CV (Fourteenth Court of Appeals - Houston)
    -
    (July 21, 2011)

    In December 2003, Comunidad Corporation, through several wholly owned limited liability companies, purported to purchase several apartment complexes from several limited partnerships. Comunidad Balboa, LLC (Comunidad Balboa) was one of the limited liability companies, formed in 2003 as a wholly owned subsidiary of Comunidad Corporation. Comunidad Balboa, as part of the transaction, purported to purchase an apartment complex located in the City of Nassau Bay from Balboa Partners, Ltd.

    In 2004, Comunidad Balboa applied for a tax exemption for the apartment complex for 2004 and part of 2003 under Tax Code §11.182. Harris County Appraisal District granted the exemption and the City of Nassau Bay filed a challenge with the ARB. The ARB affirmed the exemption and the City of Nassau Bay (the City) filed suit. This appeal followed the trial court’s ruling on competing motions for summary judgment. The trial court granted the City’s motion and denied Comunidad Balboa’s motion and Comunidad Balboa appealed.

    The City argued in its motion for summary judgment that Comunidad Balboa was not entitled to a tax exemption pursuant to Tax Code §11.182 because it did not own the apartment complex in 2003. The appellate court reviewed the documents pertaining to the conveyance of the subject property and determined that the “agreement is ambiguous relative to the date certain on which Comunidad Balboa became the owner of the subject apartment complex. Consequently a fact issue exists regarding whether Comunidad Balboa was entitled to a section 11.182 tax exemption on the apartment complex.”

    The appellate court reversed the trial court’s judgment and remanded the case to the trial court for further proceedings consistent with the appellate court’s opinion.

  • Sections 33.04 and 33.47(a)
    Lawrence Edward Thompson v. Aldine Independent School District et al., No. 14-09-00596-CV (Fourteenth Court of Appeals - Houston)
    -
    (July 21, 2011)

    This appeal addresses notice of delinquency and sufficiency of evidence in a delinquent tax suit. Lawrence Edward Thompson (Thompson) was one of several defendants named in a delinquent tax suit filed by several taxing units. A tax master, after hearing, signed a report setting forth delinquent taxes, penalties, and interest due, plus attorneys’ fees and collection costs. The trial court adopted the report and signed a judgment awarding the taxing units the amounts found by the master and ordering foreclosure of their tax liens and sale of the property to satisfy the judgment. The judgment was solely “in rem” as to Thompson and several other defendants and stated that no monetary relief was awarded against them. Thompson filed a motion to vacate the judgment, but the trial court denied the motion and Thompson appealed.

    Thompson advanced several arguments on appeal, including arguments that the taxing units did not prove that the taxes were delinquent and that they provided notice of delinquency to Thompson. In reviewing the challenge to the legal sufficiency of the evidence that the taxes were delinquent, the appellate court cited Tax Code §33.47(a). Finding that Aldine Independent School District had submitted an affidavit of its assessor-collector authenticating an attached delinquent tax statement and that the other taxing units had submitted a “Certified Delinquent Tax Statement Detail” from the Harris County Tax Assessor-Collector, both reflecting the amount of delinquent taxes found by the master, the appellate court held that the evidence was legally sufficient. With regard to lack of notice, Thompson argued that Tax Code §33.04 required the taxing units to deliver notice of delinquency each year to each person whose name appears on the delinquent tax roll and that the taxing units were required to give notice of delinquency every five years to each person listed on the appraisal roll. With regard to the first argument, the appellate court noted that Thompson’s name was not on the delinquent tax rolls for any applicable years. With regard to the second, the appellate court noted that Thompson was citing a former version of Tax Code §33.04 under which a person who did not receive notice “in each year divisible by five” could avoid payment of penalties and interest. The appellate court held that the current statute applies to this suit because it was filed after September 1, 2001 and noted that the current statute does not include the five-year notice requirement. The court held that the taxing units were not required to deliver notice to Thompson pursuant to Tax Code §33.04.

    The appellate court affirmed the trial court’s judgment.

  • Tex. R. Civ. P. 117a
    Geneva O. Johnson v. Hays Consolidated Independent School District et al., No. 03-10-00311-CV (Third Court of Appeals - Austin)
    -
    (July 13, 2011)

    This case involves a restricted appeal of a judgment for foreclosure of tax liens. Geneva O. Johnson (Johnson) was one of more than fifty individuals named as defendants in the underlying delinquent tax suit filed by Hays Consolidated Independent School District (HCISD). Six of the defendants were personally served with process. The remaining defendants, including Johnson, were served by publication and an attorney ad litem was appointed to represent them. Judgment was entered declaring ad valorem taxes owed to both HCISD and Hays County, awarding foreclosure of the taxing entities’ liens, and ordering the property to be sold. Johnson filed a restricted appeal.

    On appeal, Johnson challenged the court’s action in permitting service by posting and in appointing an attorney ad litem to represent her. The appellate court held:

    Assuming without deciding that we possess jurisdiction over Johnson's appeal despite the attorney ad litem's involvement at trial, we would conclude that Johnson has failed to demonstrate error on the face of the record with respect to her core contentions that she was not properly served by posting and that no attorney ad litem should have been appointed to represent her. Affirmative evidence in the record--in the form of the affidavit complying with rule 117a and the statement of evidence--demonstrates that HCISD strictly complied with the requirements for serving her citation by posting in a suit to recover delinquent ad valorem taxes. See Tex. R. Civ. P. 117a(3), (5); McKanna v. Edgar, 388 S.W.2d 927, 929-30 (Tex. 1965). Rule 117a did not, contrary to what Johnson seems to assume, require HCISD to attempt valid personal service as a prerequisite to serving her by publication or posting, as with substituted personal service. Compare Tex. R. Civ. P. 117a with id. R. 106(b). Nor does the fact that HCISD had a post office address for Johnson controvert, much less negate, the averment of HCISD's counsel that Johnson's residence was unknown and could not be ascertained through diligent inquiry. See Tex. R. Civ. P. 117a(3). Likewise, the bare fact that the district clerk had attempted to personally serve Johnson at that address through an improper method does not, standing alone, negate HCISD's diligence as to whether Johnson could be located through other means.

    Although Johnson urges us to infer from these facts that HCISD made no further attempts to locate Johnson or was otherwise less than diligent in that regard, doing so would exceed the scope of our review in a restricted appeal. In a restricted appeal, we are confined to the "face of the record," and this means that we cannot infer additional facts not present there. See Alexander, 134 S.W.3d at 849 (explaining that silence in the record does not establish error on the face of the record and finding no reversible error where record failed to show whether notice of dismissal for want of prosecution had been sent). Johnson could supply these additional facts, if they exist, only by developing an evidentiary record through a proceeding, such as a bill of review, that would afford her that opportunity. See id. at 848-49. As presented in the context of her present restricted appeal, however, we must overrule her issues and affirm the district court's judgment.

  • Section 33.48(a)(1), (4)
    Fred Rogers v. Fort Bend Independent School District, No. 14-10-00968-CV (Fourteenth Court of Appeals - Houston)
    -
    (July 12, 2011)

    This case involves a challenge to recovery of court costs and research fees in a delinquent tax suit. Fort Bend County School District (Fort Bend) filed suit against Fred Rogers (Rogers) to collect delinquent taxes, penalties, and interest. Fort Bend specifically sought recovery for court costs and “research expenses for determining the name, identity, and location of necessary parties and in procuring necessary legal descriptions of the property.” Prior to trial, Rogers paid all of the delinquent taxes, but refused to pay court costs and research fees. The trial court subsequently signed a judgment in favor of Fort Bend and ordered Rogers to pay court costs and research fees in the amount of $495. Rogers appealed.

    On appeal, Rogers claimed that “the trial court lacked jurisdiction to render judgment,” “that the school district did not refer ‘to any related statute’ to support its claim for research fees and court costs,” and that “the trial court’s judgment was ‘void without any supporting statute for [the] award,’ referring to an ‘absent’ judgment for property taxes, which formed the basis of the original suit.” Noting that the trial court’s judgment reflects Rogers’ payment of the delinquent taxes made the basis of the suit, the appellate court held that “the argument that the record contains no judgment for property taxes lacks merit.” The appellate court further noted that the “Tax Code authorizes collection of ‘all usual court costs’ and ‘reasonable expenses that are incurred by the taxing unit in determining the name, identity, and location of necessary parties and in procuring necessary legal descriptions of the property on which a delinquent tax is due.’” The appellate court noted that Fort Bend expressly referred to the statutory language regarding research fees in its live pleadings. The court held that “[a]lthough the school district did not refer to a specific statute to support these allegations in its pleadings, the petition is sufficient and meets the requisites set forth in the Property Tax Code.” The appellate court further held that “the judgment is not void merely because it did not contain a reference to the statute in support of the award” and that the lack of such a reference did not deprive the trial court of jurisdiction.

    The appellate court affirmed the trial court’s judgment.

  • Sections 25.25(c) and 1.04(18)
    Lack's Valley Stores, Ltd. v. Hidalgo County Appraisal District, No. 13-10-500-CV (Thirteenth Court of Appeals - Corpus Christi)
    -
    (June 23, 2011)

    This case involves a claim for correction of clerical errors pursuant to Tax Code §25.25(c). Hidalgo County Appraisal District (HCAD) assessed and noticed taxable values on Lack’s Valley Stores, Ltd’s (Lack’s) inventory for tax years 2003, 2004, and 2005. For each tax year, Lack’s filed protests with the ARB protesting some of the accounts and subsequently negotiated settlements on the protested accounts. In 2008, Lack’s filed a motion pursuant to Tax Code §25.25(c), alleging that HCAD had committed clerical errors in 2003, 2004, and 2005 because HCAD had failed to account for depreciation. The ARB determined that no clerical errors had been committed during the tax years at issue and Lack’s filed suit. HCAD filed a motion for summary judgment, asserting it had not committed any clerical errors and “that the market value rendered during the corresponding tax years resulted from the deliberate determination of HCAD and did not result from any errors in writing, copying, transcribing, entering, or retrieving computer data, computing or calculating.” The trial court granted HCAD’s motion for summary judgment and Lack’s appealed.

    Lack’s asserted on appeal that HCAD’s “’failure’ to account for depreciation, when assessing the market value of their inventory, constitutes a ‘clerical error’ pursuant to the Tax Code.” The appellate court identified the issue to be determined as “whether the word ‘failure’, incorporated in the definition of ‘clerical error’, includes failures to account for depreciation when assessing property valuations.” The appellate court held that it did not. The appellate court held:

    The failure to account for depreciation is outside the scope intended by the definition of “clerical error” pursuant to section 1.04(18) of the Tax Code . . . HCAD’s alleged failure to properly assess the market value of Lack’s inventory was the result of errors in the methodology, procedure, and/or computation. These are substantive issues that address the actual valuation of the property itself. However, section 25.25(c) does not make available to the taxpayer the opportunity to challenge the substantive reevaluation of a property’s market value . . . Rather, such claims must be brought through the appeals process set forth in Chapter 41 of the Texas Tax Code.

    Lack’s also argued on appeal “that the trial court erred by granting summary judgment in favor of HCAD because, by doing so, it encourages bureaucratic failures and omissions” and “that the inflated property valuation is a constitutional violation denying it the right to have its property appraised at market value and that condoning such unfair practices will inevitably destroy public respect for the ad valorem tax system.” The appellate court determined this point moot because by failing to protest or by settling its disputed accounts, “Lack’s failed to exhaust all administrative remedies available.”

    Lack’s also complained on appeal that the trial court erred in granting summary judgment because disputed fact issues existed and because the affidavit of HCAD’s chief appraiser should have been excluded. The appellate court disagreed as to both complaints and, as to the first, stated that “[r]egardless of the manner in which the valuation was conducted, it is irrelevant to whether a clerical error was committed because the compliance with or use of industry standards is a judgment determination that is outside the realm of a clerical error as a matter of law.”

    The appellate court affirmed the trial court’s judgment.

  • Dounson v. Bexar Appraisal District, No. 04-11-00010-CV (Fourth Court of Appeals - San Antonio) -
    (June 22, 2011)

    This case addresses the appeal of the denial of summary judgment after entry of final judgment. The property owners appealed to district court after they protested the appraisal of their property and the appraisal review board denied the protest. After the case was filed, no further action was taken until, approximately ten months later, the trial court specially set the case for dismissal for want of prosecution and set a hearing for October 20, 2010. The property owners subsequently filed a no-evidence motion for summary judgment in which they argued, among other things, that the appraisal district “had failed to present any evidence of the market value of their property, which the [property owners] argued was ‘an essential element on which [BCAD] would have the burden of proof at trial.’” After a hearing, the trial court denied the [property owners’] motion. The property owners did not appear at the dismissal hearing on October 20, 2010 and the trial court dismissed the case. The property owners appealed only the denial of their summary judgment motion.

    Noting that “[a]fter a trial court has rendered a final judgment, a trial court’s denial of summary judgment is an appealable order only if the trial court grants an opposing motion for summary judgment,” the appellate court held:

    The [property owners] appeal only the denial of their no-evidence motion for summary judgment. BCAD did not file — and the trial court did not grant — any competing motion for summary judgment. The trial court dismissed the [property owners’] suit for want of prosecution. This is a final judgment that the [property owners] do not challenge on appeal. Under these circumstances, the trial court’s denial of the [property owners’] no-evidence motion for summary judgment is not an appealable order.

    The appellate court affirmed the trial court’s judgment.

  • Majority Opinion
    Concurring Opinion
    Section 1.111(e) and 6.05(e)
    Bullseye PS III LP v. Harris County Appraisal District, No. 01-09-01139-CV (First Court of Appeals - Houston) -
    (June 16, 2011)

    This case addresses agreements under Tax Code §1.111(e). The trial court granted a plea to the jurisdiction in favor of Harris County Appraisal District (HCAD) advanced by HCAD on the basis that the parties had reached an agreement at the appraisal review board hearing as to the value of the property. The property owner appealed, arguing that the appeal was not precluded by the appraisal agreement because Tax Code, §1.111(e) requires an agreement with the chief appraiser and that an appraisal district representative, rather than the chief appraiser, had appeared at the appraisal review board hearing at which the agreement was reached. The property owner also claimed it had “an ‘absolute right’ [to] seek judicial review of the Board’s order,” that applying section 1.111(e) under the existing facts violated the owner’s due process rights, and that there was a disputed factual issue regarding the existence of a valuation agreement between the parties.

    The appellate court rejected the property owner’s claim that an agreement between a property owner and an appraisal district representative appearing on behalf of the chief appraiser is not an agreement subject to Tax Code §1.111(e). The appellate court cited prior court precedent holding that “because the chief appraiser could delegate his authority to appear at hearings the agreement reached between [the property owner’s] agent and HCAD’s representative was final.” With regard to the property owner’s claim of “an ‘absolute right to appeal’ the Board’s order determining the protest,” the appellate court held that “[b]ecause the agreement became final at the time the agent and the representative stated the same value for the property, ‘the subsequent approval and order by the [B]oard was irrelevant,’ and Bullseye did not have a Board order of which it could seek judicial review in the district court.” Addressing the property owner’s due process claim, the appellate court held that the property owner’s due process rights were not violated because the property owner had an opportunity to protest the initial value to the ARB and reached an agreement with HCAD during the hearing.

    With regard to the property owner’s contention that the trial court erred in granting the plea to the jurisdiction because a disputed factual issue existed regarding whether the owner’s agent and the chief appraiser agreed on the value of the property, the appellate court held that “whether an agreement between an owner’s agent and an appraisal district representative — as opposed to the chief appraiser — qualifies as a section 1.111(e) agreement that precludes a suit for judicial review . . . is a question of law that is proper for a plea to the jurisdiction.” The appellate court affirmed the trial court’s judgment.

    One of the justices issued a concurring opinion expressing disagreement with the holdings of the prior court precedent relied upon and cited in the majority opinion:

    The chief appraiser’s delegation of authority to his employees to represent the appraisal district at a protest hearing could, but need not necessarily, include a delegation of authority to enter into a final and binding agreement as to appraised value. The factual basis for the appraisal district’s claim of delegation was challenged by the property owner in the trial court, and if it is in fact the case that such authority had been delegated, then it would be plain that section 1.111(e) operates to foreclose further litigation as to appraised value. But the appraisal district produced no evidence to support its claim that the relevant authority had been delegated by the chief appraiser, and the property owner sought discovery to confirm whether there is a factual basis for the appraisal district’s claim. There is no statutory basis for denying discovery into that matter. The statute specifically identifies the chief appraiser as the person empowered to enter into a final agreement for purposes of section 1.111(e). In a large county such as Harris County, a chief appraiser is effectively required to delegate to employees the authority to appear at protest hearings, simply because there are too many hearings for the chief appraiser to attend them all. Yet the chief appraiser might still wish to retain the power of personally and finally approving agreements pursuant to section 1.111(e), thereby providing a check against overly generous concessions by the appraisal district’s representatives, collusion with agents for property owners, or any other concern the chief appraiser may have. The presumption in Kelly and KM TS Spring Cypress that such authority may be inferred from the appearance of a representative in lieu of the chief appraiser thus deprives the chief appraiser of the flexibility to tailor which powers he may or may not wish to delegate to his employees. The property owner’s failure to object to the absence of the chief appraiser — an apparently futile objection given the chief appraiser’s power to delegate responsibility for appearing at the protest hearing — adds nothing to the analysis.

    The concurring concluded that the “rule of Kelly and KM TS Spring Cypress . . . improperly assumes jurisdictional facts in favor of the defendant appraisal district.

  • Section 1.111(e)
    Genesis Capital Partners IX v. Harris County Appraisal District et al., No. 01-09-00998-CV (First Court of Appeals - Houston)
    -
    (June 16, 2011)

    This case addresses agreements under Tax Code §1.111(e). The trial court granted a plea to the jurisdiction in favor of Harris County Appraisal District, finding that the parties had reached an agreement at the appraisal review board hearing as to the value of the property. The property owner had denied the existence of any agreement as to the value of the property between the owner’s agent and the chief appraiser of the appraisal district.

    The property owner appealed, arguing that “the trial court erred in determining that its suit was barred because it had agreed with the appraisal district upon the appraised value of the subject property at an ARB hearing” and “that the trial court erred by implicitly denying its request for a continuance to obtain discovery.” The property owner asserted “that it had an absolute right to appeal because of the order issued by the ARB” and “that the denial of its appeal to the trial court violates its right to due process.” The appellate court disagreed. The appellate court held that the agreement made at the ARB hearing between the property owner’s agent and the appraisal district’s representative “is final and not subject to protest or judicial review under Chapter 42 of the Tax Code,” that “[b]ecause the parties’ agreement became final before the ARB determined the protest, the subsequent approval of the agreement by the board was irrelevant,” and that the property owner’s “due process rights were not violated because it was given an opportunity to be heard before the ARB and it reached an agreement with the appraisal district during its protest hearing.”

    The appellate court affirmed the trial court’s judgment.

  • Section 42.21(e)
    Sunblik, Inc. v. Harris County Appraisal District, no. 14-10-00198-CV (Fourteenth Court of Appeals-Houston)
    -
    (June 2, 2011)

    This case addresses the issues of proper plaintiffs for purposes of judicial review under Chapter 42 of the Tax Code and application of Tax Code §42.21(e). Blinks Investment, Inc. (Blinks), an owner of the subject property prior to the tax year at issue, filed a notice of protest with the appraisal review board. An order was issued “finding the property appraisal was incorrect and lowering the value.” Blinks appealed the determination by filing a petition in district court. Harris County Appraisal District (HCAD) filed a plea to the jurisdiction urged on the basis that Blinks did not have standing to appeal to district court because Blinks did not own the property on January 1 of the tax year at issue. An amended petition was subsequently filed naming as plaintiff Sunblik, Inc. (Sunblik). Blinks also filed a motion pursuant to Texas Rule of Civil Procedure 28. The trial court granted HCAD’s plea and dismissed the suit. Sunblik appealed, contending “that it timely amended its petition to cure a misnomer and to include Sunblik as a party pursuant to section 42.21(e)(1) of the Texas Tax Code and Texas Rule of Civil Procedure 28” and that the trial court thus erred in granting HCAD’s plea and denying the motion filed pursuant to Rule 28.

    The appellate court noted that a plaintiff seeking judicial review of an appraisal review board order under Chapter 42 of the Tax Code must be the property owner, a designated agent of the owner, or an authorized lessee pursuant to Tax Code, §41.413. The appellate court noted that Blinks did not own the property as of January 1 of the tax year at issue and did not claim rights to protest as an agent or a lessee. The court also noted that the record on appeal did not reflect that Sunblik had pursued a right of protest before the appraisal review board as the actual property owner. The appellate court held that Tax Code §42.21(e) only applies to petitions timely filed under §42.21(a) or amended under §42.21(c) and to seek judicial review under §42.21(a), “the plaintiff must be a ‘party who appeals as provided by [Chapter 42],’ meaning the plaintiff must be the property owner, a properly designated agent, or a lessee.” The appellate court further held that “[f]or a party to take advantage of Rule 28 and sue in its common name, there must be a showing that the named entity is in fact doing business under that common name.” The trial court noted that the appellant did not make a showing that Sunblik “was in fact doing business under the common name Blinks, nor was there evidence that Sunblik used Blinks as a common name to warrant application of Rule 28.” The appellate court affirmed the trial court’s judgment.

  • Sections 32.06 and 32.065
    WMC Mortgage Corporation v. Abe Ham Moss et al., No. 01-10-00948-CV (First Court of Appeals - Houston)
    -
    (May 19, 2011)

    This case is a declaratory judgment action regarding the validity of a tax lien transfer and a tax foreclosure sale. Addressing numerous arguments advanced by the appellant, WMC Mortgage Corporation (WMC), the appellate court determined, among other things, that: (1) “[t]he tax lien transfer occurred in August 2007 and is governed by [Tax Code §32.06] as it existed prior to the 2007 amendments”; (2) “Section 32.06(b), as it existed at the time, expressly permitted that ‘the sworn document, tax receipt and affidavit attesting to the transfer of the tax lien may be combined into one document,’ but it did not require that they be combined into one document”; (3) there is no requirement in Section 32.06 that the sworn authorization and tax collector’s certified statement must be recorded at the same time, “so long as they are both timely recorded in the proper county records”; (4) pursuant to the enacting language of the 2007 amendments, the tax foreclosure sale at issue is governed by Tax Code §§32.06 and 32.065 as they existed prior to the 2007 amendments; (5) “when . . . the actions required by Sections 32.06 and 32.065(b) have been performed and the only alleged defect is that the contract between the parties does not contain provisions expressly requiring those actions, the defect in the contract may render the foreclosure sale voidable but does not, alone, render the foreclosure sale void”; (6) “Section 32.06, prior to the 2007 amendments, expressly authorized the property owner and transferee to shorten the time during which foreclosure is precluded so long as the notice provisions of Section 51.002 of the Property Code are satisfied”; (7) even if the foreclosure notice should have been sent to WMC at the address provided in WMC’s assignment rather than the address provided in WMC’s deed of trust, “such a deficiency in the notice would render the tax foreclosure sale voidable rather than void”; (8) “a sale that is merely voidable is subject to the bona fide purchaser/mortgager defense with respect to subsequent buyers”; and (9) there was nothing in the county records that would put the purchaser and mortgagor on notice that the preexisting vendor’s lien and deed of trust, though properly recorded, were not extinguished by the tax foreclosure sale. The appellate court affirmed the trial court’s order.

  • Section 32.06
    Genesis Tax Loan Services, Inc. and M. Suzanne Frossard, Trustee v. Kody and Janet Kothmann and Kody Kothmann, Trustee, No. 09-0828 (Texas Supreme Court)
    -
    (May 13, 2011)

    This case addresses the statutory conditions under which tax liens on real property may be transferred under Tax Code §32.06. On appeal to the Supreme Court, the parties agreed that the case was governed by the 2004 version of the statute. The Kothmanns, holders of vendors’ liens secured by duly recorded deeds of trust on four tracts of land, sued to have their liens declared superior to the liens of Genesis Tax Loan Services, Inc. (Genesis), claimant of a tax lien on each tract by transfer from the county tax collector. The Kothmanns asserted that Genesis failed to meet the requirements of Section 32.06 in four respects. First, the Kothmanns argued that original documents must be recorded. The original tax lien transfers had never been recorded. Genesis had instead recorded a photocopy of each with an affidavit executed by the president of Genesis stating that the copy was a true and correct copy of the original and that the original had been mailed to the county clerk but had been lost either at the courthouse or in the mail. The Supreme Court held that “Genesis’s tax liens are not unenforceable because verified copies were recorded in lieu of originals.” Second, the Kothmanns argued that Genesis’s lien transfers were unenforceable because the tax collector had not attached the collector’s seal of office to the documents in accordance with the statute. Noting “that the tax collector had no seal of office at the time and did not acquire one until a year later,” the Supreme Court held that the procedure utilized by the tax collector — making “the required certification before a notary, sealed with a notarial seal, in lieu of a seal of his own” — complied with the statute. Third, the Kothmanns argued that the tax liens were not transferred to Genesis because the collector did not keep a record of all tax liens transferred as required by statute. In response, the Supreme Court noted that “[i]f the Kothmanns were correct, no duly recorded tax lien transfer could be taken at face value. Its validity could only be established by ascertaining whether the tax collector kept proper records at the time. This is not a reasonable construction of the statute.” The Supreme Court held “that the tax collector’s record-keeping is irrelevant to the enforceability of Genesis’s liens.” Fourth, the Kothmanns argued that the tax liens were improperly transferred to Genesis because the collector did not issue the required receipts until a month after the certifications were made, because the receipts incorrectly identified the Kothmanns as the property owners, and because one of Genesis’s checks bounced. In response, the Supreme Court stated that “[t]he statute imposes no deadline on issuance of the receipts and no requirement regarding their contents. The Kothmanns do not deny that Genesis paid the taxes due. Moreover, issuance of receipts cannot reasonably be regarded as any more a part of the transfer process than the tax collector’s record-keeping.” The Supreme Court held “that the receipts, too, are irrelevant to the enforceability of Genesis’s liens.”

    The Supreme Court reversed the judgment of the court of appeals and remanded the case to the trial court.

  • Montgomery County, Texas and Montgomery County Independent School District v. Veterans Land Board of Texas, No. 09-10-00588-CV (Ninth Court of Appeals – Beaumont) -
    (May 12, 2011)

    This case addresses sovereign immunity in the context of a suit to recover delinquent property taxes and foreclose a tax lien. In 1992, the Veterans Land Board (VLB) purchased a tract of land in Montgomery County. James Shaw subsequently purchased the property from the VLB through a “Contract of Sale and Purchase.” Several years later, with the VLB’s consent, Shaw assigned the contract to John Henry Bly. The contract required Bly to pay the taxes on the property and provide the VLB evidence of payment. The contract required the VLB to execute a deed in Bly’s favor after Bly fully paid for the property.

    Montgomery County and Montgomery County I.S.D. sued the VLB and Bly to collect delinquent taxes and to foreclose a tax lien on the property. VLB filed a plea to the jurisdiction, asserting immunity from suit by virtue of governmental or sovereign immunity. The trial court granted VLB’s plea and dismissed the suit. Montgomery County and Montgomery County I.S.D. appealed.

    The appellate court found that “because the appellants’ suit seeks to force the sale of the State’s interest in the property . . . the trial court properly applied the doctrine of sovereign immunity when it granted the VLB’s request to dismiss the appellants’ claims.” The court held “that while the tax obligations on the property at issue are enforceable against Bly’s equitable interest in the property, the appellants are not authorized to pursue a foreclosure sale that would result in a transfer of the VLB’s legal title to the property.” The appellate court affirmed the trial court’s order.

  • Section 31.11
    Lewisville Independent School District v. CH Townhomes, Inc., No. 02-10-00338-CV (Second Court of Appeals – Fort Worth)
    -
    (April 21, 2011)

    This case addresses governmental immunity from suit under Tax Code §31.11. CH Townhomes, Inc. filed suit against Lewisville Independent School District (LISD) under Tax Code §31.11 for a refund of overpaid taxes. LISD filed a plea to the jurisdiction and motion to dismiss, asserting that the trial court lacked subject matter jurisdiction over the suit because LISD’s governmental immunity had not been waived by section 31.11. The trial court denied the plea and LISD appealed.

    The appellate court held that Tax Code §31.11 “does not clearly and unambiguously express a legislative intent to waive governmental immunity from suit. Consequently, LISD enjoys governmental immunity from [CH Townhomes, Inc.’s] suit, which deprived the trial court of subject-matter jurisdiction . . . .” The appellate court reversed the order of the trial court and rendered judment dismissing CH Townhomes, Inc.’s suit.

  • Section 33.54
    Rameses School, Inc. v. City of San Antonio and County of Bexar, Texas, No. 14-10-00320-CV (Fourteenth Court of Appeals – Houston)
    -
    (April 7, 2011)

    This case addresses issues involving an action to set aside a tax sale. Rameses School, Inc. filed suit seeking to set aside a tax sale that resulted in a Sheriff’s deed to the County pursuant to Tax Code §34.01(j) after the Sheriff failed to receive the minimum bid and a subsequent deed from the County to the City transferring the property in a private sale. In the trial court, the City and the County both argued, among other things, that the one-year statute of limitations under Tax Code §33.54 for challenging the validity of a tax sale barred Rameses School, Inc.’s suit because it was filed more than five years after the recording of the Sheriff’s deed. The trial court ruled in favor of the City and the County and Rameses School, Inc. appealed.

    On appeal, Rameses School, Inc. asserted, among other things, that Tax Code §33.54 is not applicable “because the statute refers to a ‘purchaser’ at a tax sale and the County did not purchase the property.” Noting that Tax Code §33.51 “specifically defines ‘a taxing unit to which property is bid off under section 34.01(j)’ as a ‘purchaser’” and that the plain language of the Tax Code contains a limitation when “purchaser” is used “in a way not intended to apply to a taxing unit to which property is bid off,” the appellate court held “that the County did not merely ‘acquire’ the property; instead the County is a ‘purchaser’ entitled to rely upon the statute of limitations of section 33.54.” The appellate court affirmed the judgment of the trial court.

  • Section 21.055
    Sturgis Air One, L.L.C. v. Harris County Appraisal District, No. 14-09-00891-CV (Fourteenth Court of Appeals – Houston)
    -
    (March 24, 2011)

    This case addresses whether the business aircraft allocation provisions of Tax Code §21.055 are waived by failure to timely render. Prior to 2006, Sturgis Air One, L.L.C. had never rendered an aircraft the company leased for business purposes. HCAD discovered the aircraft hangared in Harris County in August 2006. HCAD sent a letter to Sturgis requesting information to determine taxable situs, but Sturgis did not respond. HCAD subsequently sent Sturgis a notice of appraised value with an estimate of Sturgis’s tax liability for 2006. Before a final tax was assessed, Sturgis rendered the aircraft for 2006 and, about a month later, for 2005. Sturgis sought apportionment for both tax years. HCAD refused the apportionment request and assessed a penalty for failure to timely render. Sturgis challenged the determination by protest to the appraisal review board and by judicial review in district court, but was unsuccessful. Sturgis then appealed.

    Noting that the Tax Code is a “’pervasive regulatory scheme’ replete with timetables for the administrative bodies who oversee the tax process,” the appellate court stated that “rendition statements must be submitted timely in order for the tax process to function as the legislature intended.” Sturgis argued that “[b]ecause the Tax Code provides an express penalty for delinquent renditions. . . the ten percent penalty was meant to be exclusive of all others, thereby foreclosing an interpretation of implied waiver.” The appellate court disagreed, stating that “Sturgis improperly conflates the concepts of rendition and allocation.” The court noted that the rendition requirement exists “to facilitate the listing, appraisal, and taxation of property” while allocation “is an entitlement benefitting the taxpayer.” The court also noted that untimely rendition results in a penalty while untimely allocation results in waiver of allocation.

    Holding that “Section 21.055 implicitly provides that taxpayers must timely render their aircraft before they may receive an allocation entitlement,” the appellate court found that Sturgis waived its right to interstate allocation because it failed to timely render. The appellate court affirmed the judgment of the trial court.

  • Sections 11.13, 23.23, and 42.29
    Rene Martinez v. Dallas Central Appraisal District et al., No. 05-09-00858-CV (Fifth Court of Appeals - Dallas)
    -
    (March 22, 2011)

    This case addresses appraised value limitations, attorney’s fees, and school district homestead exemptions. The appeal was filed by the property owner and the appellate court’s opinion states that Dallas County Appraisal District (“DCAD”) did not file a brief.

    With regard to the issue of appraised value limitations, the property owner, who owned an undivided 25% interest in the subject property and claimed it as his homestead, argued that DCAD had improperly prorated the Section 23.23 ten percent appraised value limitation based on his partial ownership. Finding in favor of the property owner, the appellate court held that “[t]he statute does not provide for application of the cap to a percentage of ownership. Rather, the express language of the statute provides for application of the cap to the appraised value of the homestead in its entirety.”

    As to the issue of attorney’s fees, the appellate court held that “the language in section 42.29 is mandatory, and affords the trial court no measure of discretion in determining whether to award attorney’s fees.”

    Regarding the school district homestead exemptions, the appellate court held that DCAD had properly calculated and applied the Section 11.13(b) $15,000 exemption in applying the exemption to the property owner’s 25% fractional ownership interest in the property. The appellate court also held that the Texas Constitution does not require that the exemption provided under Tax Code §11.13(n) always be at least $5,000 and may be restricted by an owner’s percentage of ownership interest.

  • Reid Road Municipal Utility District No. 2 v. Speedy Stop Food Stores, Ltd., No. 09-0396 (Texas Supreme Court) -
    (March 11, 2011)

    This case involves two evidentiary questions: the first addressing entity representatives who may testify about the fair market value of partnership property under the Property Owner Rule or Texas Rule of Evidence 701 and the second addressing whether a condemning authority adopted the damages opinion of an appraiser by presenting the appraiser’s written appraisal and testimony at the special commissioners’ hearing in a condemnation proceeding.

    With regard to the Property Owner Rule’s application to organizations, the Court, discussing the general rule in Texas and the law in other jurisdictions, held that “the Property Owner Rule is limited to those witnesses who are officers of the entity in managerial positions with duties related to the property, or employees of the entity with substantially equivalent positions and duties. Furthermore, the Property Owner Rule falls within the ambit of Texas Rule of Evidence 701 and therefore does not relieve the owner of the requirement that a witness must be personally familiar with the property and its fair market value, but the Property Owner Rule creates a presumption as to both.” Citing Tex. Bus. & Orgs. Code §152.101 & 153.003(a) for the propositions that “[p]artnership property is not property of the partners” and “rules governing general partnerships also apply to limited partnerships absent conflict,” the Court noted that the limited partnership’s general partner was not the owner of the partnership’s property. The Court held that the trial court did not abuse its discretion by excluding the affidavit of an individual not timely disclosed as an expert who was an officer of the corporate general partner and not an employee of the limited partnership that owned the property. “Even though [the officer] had general knowledge of [the limited partnership’s] property, he did not fall into the category of entity representatives to whom the Property Owner Rule applies. He did not qualify to testify to the value of the Property under the Property Owner Rule, and the trial court did not abuse its discretion by excluding his affidavit to the extent it offered his opinion as to [the limited partnership’s] damages.”

    With regard to the damages opinion, the condemning authority had introduced at the special commissioners’ hearing the testimony and written appraisal of an appraiser who had evaluated the limited partnership’s damages. The limited partnership had not appeared at the hearing, so the testimony and appraisal constituted the only evidence presented. In the trial court, the limited partnership offered the testimony and appraisal as evidence, asserting it was admissible as an admission by the condemning authority. The condemning authority sought to have the evidence excluded, arguing that “the testimony of witnesses in an administrative proceeding is not admissible in a de novo appeal to the trial court; neither party timely designated [the appraiser] as an expert; and his testimony was not an admission by the [condemning authority] because [the appraiser] was not an agent of the [condemning authority].” The Court noted that Texas Rule of Evidence 801(e)(2) “provides that admissions of a party-opponent are admissible non-hearsay,” that “because the evidence was an admission by the [condemning authority], as opposed to testimony by a witness called by [the limited partnership], [the limited partnership] was not required to identify [the appraiser] as an expert before his opinion could be admitted,” and that “admissions by a party opponent can occur outside a judicial proceeding and are not inadmissible simply because they occur in an administrative hearing such as was involved here.” The Court held that the trial court erred by excluding the appraiser’s testimony and written appraisal.

  • Section 11.1825
    McLennan County Appraisal District v. American Housing Foundation et al., No. 10-08-00416-CV (Tenth Court of Appeals - Waco)
    -
    (March 9, 2011)

    This case addresses exemptions under Tax Code, §11.1825 and involves two apartment complexes. The appellate court’s opinion sets forth the following ownership facts:

    American Housing Foundation (AHF) is a community housing development organization and a section 501(c)(3) non-profit entity. The apartment complexes at issue are the Parkside Village Apartments and the Robinson Garden Apartments. Waco Parkside Village, Ltd. (Parkside Village) is the record titleholder of the Parkside Village Apartments. Waco Robinson Garden, Ltd. (Robinson Garden) is the record titleholder of the Robinson Garden Apartments. AHF Parkside Village, L.L.C. is the sole general partner of Parkside Village and is a wholly owned subsidiary of AHF. AHF Robinson Garden, Inc. is the managing general partner of Robinson Garden and is a wholly owned subsidiary of AHF. AHF is the administrative general partner of Robinson Garden.

    The limited partners for both complexes “provided the equity investment for these properties” and “received federal tax credits and depreciation because of their investment.” McLennan County Appraisal District (MCAD) asserted on appeal that AHF, Parkside Village, and Robinson Garden were not entitled to exemptions “because they do not meet the constitutional requirement that a qualifying organization must be ‘engaged primarily in public charitable functions.’” In support of its assertion, MCAD argued that “99.98% or more [of the ownership interests in Parkside Village and Robinson Garden are] owned by purely for-profit entities for purely profit motives, and [these for-profit entities operate] the property in question for the profit ends of those owners” and even though the apartments are being leased to low-income families, “they are being so utilized for the profit of the investors, not out of any charitable motives of the owners.”

    The appellate court noted that the parties stipulated that the properties’ titleholders “each engage in the rental of low-income or moderate-income housing and related activities.” The trial court had found that Parkside Village and Robinson Garden were “engaged exclusively in the charitable function of providing low-income or moderate-income housing” and MCAD did not challenge that finding.

    The appellate court held:

    The fact that other persons or entities with a profit motive have invested resources in these entities is irrelevant. These limited partners have no control over the operation of the limited partnerships. They are no different than a person or entity that makes a donation to a charitable organization. In this situation, the donor may hope for favorable publicity and likely expects to receive a tax deduction for the charitable contribution, but the donor usually has no legal authority to direct the operation of the charitable organization.

    The limited partnerships that own the properties at issue are engaged exclusively in the provision of low-income or moderate-income housing. MCAD does not dispute that this is a public charitable function. Article VIII, section 2 requires only that such institutions be primarily engaged in a public charitable function to qualify for an exemption from ad valorem taxes. MCAD also does not dispute that the organizational structure of the entities in question satisfies the requirements of section 11.1825.

    Finding that the constitutional and statutory requirements for the exemptions had been established, the appellate court affirmed the trial court’s judgment that the entities were entitled to the exemptions.

  • Section 42.21(e)
    Grocers Supply Co., Inc. a/k/a Southwest Redevelopment v. Harris County Appraisal District, no. 14-10-00243-CV (Fourteenth Court of Appeals – Houston)
    -
    (February 24, 2011)

    This case addresses the issues of proper plaintiffs for purposes of judicial review under Chapter 42 of the Tax Code and application of Tax Code, §42.21(e). Southwest Redevelopment, an owner of the subject property prior to the tax year at issue, filed a notice of protest with the appraisal review board. An order was issued “finding the property was unequally appraised and lowering the value.” Southwest Redevelopment appealed the determination by filing a petition in district court. An amended petition was subsequently filed naming as plaintiff Grocers Supply Co., Inc. a/k/a Southwest Redevelopment. After the petition had been amended, Harris County Appraisal District (HCAD) filed a plea to the jurisdiction urged on the basis that the original plaintiff, Southwest Redevelopment, did not have standing to appeal to district court because Southwest Redevelopment did not own the property on January 1 of the tax year at issue. In response to HCAD’s plea, the plaintiff “filed a motion pursuant to Texas Rule of Civil Procedure 28.” The trial court granted HCAD’s plea and dismissed the suit. Grocers Supply Co., Inc. a/k/a Southwest Redevelopment appealed, contending that the petition had been timely amended to include Grocers Supply Company, Inc. (“Grocers Supply”) as a party pursuant to Tax Code, §42.21(e) and Texas Rule of Civil Procedure 28 and that the trial court thus erred in granting HCAD’s plea and denying the motion filed pursuant to Rule 28.

    The appellate court noted that a plaintiff seeking judicial review of an appraisal review board order under Chapter 42 of the Tax Code must be the property owner, a designated agent of the owner pursuant to Tax Code, §1.111, or an authorized lessee pursuant to Tax Code, §41.413. The appellate court noted that Southwest Redevelopment did not own the property as of January 1 of the tax year at issue and did not claim rights to protest as an agent or a lessee. The court also noted that the record on appeal did not reflect that Grocers Supply had pursued a right of protest before the appraisal review board as the actual property owner. The appellate court held that Tax Code, §42.21(e) only applies to petitions timely filed under §42.21(a) or amended under §42.21(c) and to seek judicial review under §42.21(a), “the plaintiff must be a ‘party who appeals as provided by [Chapter 42],’ meaning the plaintiff must be the property owner, a properly designated agent, or a lessee.” The appellate court further held that “[f]or a party to take advantage of Rule 28 and sue in its common name, there must be a showing that the named entity is in fact doing business under that common name.” The trial court noted that the appellant did not make a showing that Grocers Supply “used Southwest Redevelopment as a common name to warrant application of Rule 28.” The appellate court affirmed the trial court’s judgment.

  • Section 42.25 and Tex. R. Civ. P. 166a
    Harris County Appraisal District v. Riverway Holdings, L.P. et al., No. 14-09-00786-CV (Fourteenth Court of Appeals – Houston)
    -
    (February 15, 2011)

    This case involves traditional and no-evidence motions for summary judgment filed by property owners on a claim of excessive appraisal under Tax Code, §42.25. The property owners filed a combined traditional and no-evidence motion for summary judgment with an affidavit of an appraisal expert and a supporting expert report. In support of their traditional summary judgment motion, the property owners relied on their expert’s affidavit and supporting 40-page report that included an opinion regarding the property’s market value as of January 1 of the tax year at issue. In support of their no-evidence motion for summary judgment, the property owners argued entitlement to judgment because Harris County Appraisal District (HCAD) had failed to designate experts when required and “bore the burden of proving the building’s appropriate valuation, but failed ‘to produce timely and admissible expert information on the valuation issue.’” HCAD filed a response, but did not file a controverting affidavit. HCAD asserted that the property owners “could not obtain a no-evidence summary judgment because HCAD did not plead a counterclaim and had no burden of proof at trial.” HCAD argued that the property owners “could not obtain a traditional summary judgment because such a judgment would be ‘the procedural equivalent of a directed verdict without even giving HCAD the opportunity to cross-examine [the property owners’ expert]” and that “the absence of a controverting valuation opinion did not ‘force[] the Court to accept at face value [the property owners’ expert’s] final number.’” HCAD did not assert that the property owners’ expert’s affidavit and report were conclusory or that the expert’s value rested on a deficient methodology. HCAD also did not challenge the property owners’ expert’s “qualifications to opine as an appraisal expert.”

    The trial court signed an order granting summary judgment in favor of the property owners, not specifying whether it granted a traditional or a no-evidence summary judgment. HCAD filed a motion for new trial, arguing “that a no-evidence summary judgment was improper because [the property owners] bore the burden of establishing that the property’s market value differed from the appraised value,” that the grant of summary judgment denied it an opportunity to cross-examine [the property owners’ expert],” and that the expert’s affidavit was conclusory and the expert used a deficient valuation methodology. Without expressly ruling on the motion for new trial or HCAD’s objections to the expert’s testimony that had been raised for the first time in that motion, the trial court vacated its prior order and signed a modified summary judgment order granting the property owners’ traditional motion for summary judgment and denying the property owners’ no-evidence motion for summary judgment. HCAD appealed.

    On appeal, HCAD argued that the trial court erred in granting the property owners’ traditional motion for summary judgment “because (1) [the property owners] bore the burden to prove that the property’s market value differed from its appraised value; (2) [the property owners’ expert’s] uncontroverted affidavit and supporting report do not establish the property’s market value as a matter of law; (3) Rule 166a(c)’s reference to summary judgment based on uncontroverted expert testimony is inapplicable here because the fact finder need not be guided solely by expert opinion testimony in this context; (4) [the property owners’] expert opinion was conclusory and used deficient methodology; and (5) the grant of summary judgment impermissibly deprived HCAD of the opportunity to cross-examine [the property owners’ expert].”

    The appellate court agreed that the property owners bore the burden of establishing entitlement to summary judgment as a matter of law. However, the court rejected “HCAD’s accompanying contention that a trial court cannot grant a traditional summary judgment in favor of the property-owner movant on the basis of uncontroverted and unchallenged expert opinion evidence addressing property valuation.” The court noted that “[i]t is one thing to say that a trial court is not compelled to accept expert testimony when it has determined that the proffered testimony lacks credibility or probative force – even in the absence of controverting testimony. It is quite another to argue, as HCAD does here, that a trial court cannot grant summary judgment on the basis of uncontroverted and unchallenged expert testimony in the absence of such a determination.” HCAD argued that the property owner rule – “that property owners are deemed to have sufficient expertise to opine about their own property’s value” – “forecloses exclusive reliance on expert appraisal testimony to obtain summary judgment as to valuation for ad valorem tax purposes.” Acknowledging that “[i]t is not clear that [the property owners], as [entities] other than a natural person, can invoke the property owner rule,” the court stated, “[e]ven if the supreme court decides that the rule applies to a property owner other than a natural person, the property owner rule does not foreclose application here of Rule 166a(c)’s provision concerning expert testimony.” Noting that the property owner rule “treats valuation testimony from a property owner as the functional equivalent of expert valuation testimony insofar as the owner’s own property is concerned,” the appellate court held that “[b]ecause property owners are treated as having expertise regarding the value of their own property, a valuation dispute like the one at issue here is a ‘subject matter’ on which the trier of fact is guided by ‘the opinion testimony of experts’ under Rule 166a(c) regardless of whether such testimony comes from (1) a designated appraisal expert with expertise to opine about properties he does not own; or (2) an individual property owner with sufficient expertise to opine only about his own property.”

    Regarding HCAD’s assertion that the expert’s opinion was conclusory, the appellate court noted various aspects of the expert’s affidavit and report and determined the opinion was not conclusory. Regarding HCAD’s assertion that the expert’s methodology was deficient, the appellate court held that HCAD could not attack the expert’s methodology on appeal because “HCAD did not challenge [the property owners’ expert’s] valuation methodology in its summary judgment response or at any other time before the trial court signed an order granting summary judgment in [the property owners’] favor.” The appellate court noted that “[c]omplaints about an expert’s deficient, flawed, or unreliable valuation methodology must be asserted at the appropriate time in the trial court” and that “[c]hallenges to expert methodology raised for the first time in a motion for new trial will not be considered on appeal.”

    The appellate court also rejected HCAD’s argument regarding the denial of the right to cross-examination of the property owners’ expert, stating that “HCAD erroneously assumes that cross-examination can occur only at trial” and noting that nothing prevented HCAD from deposing the expert in pretrial discovery regarding alleged deficiencies in his methodology and highlighting such alleged deficiencies in HCAD’s response to the property owners’ motion for summary judgment.

    The appellate court affirmed the trial court’s judgment.

  • Section 1.111(e)
    Joseph W. Kelly et al. v. Harris County Appraisal District et al., No. 01-09-00996-CV (First Court of Appeals – Houston)
    -
    (February 10, 2011)

    This case addresses agreements under Tax Code, §1.111(e). The trial court granted a motion for summary judgment in favor of Harris County Appraisal District and the Appraisal Review Board of Harris County, finding that the parties had reached an agreement at the appraisal review board hearing as to the value of the property. The property owners had denied the existence of any agreement as to the value of the property between their agent and the chief appraiser of the appraisal district.

    The property owners appealed, arguing that no agreement existed as to the value of the property, that they have an “‘absolute’ statutory right to seek a judicial appeal from any order determining the appraised value of the property made by the ARB,” and that “the denial of an appeal violates their due process rights.” On appeal, the property owners emphasized that the appraisal review board order did not state or confirm any agreement and that the appraisal district and the appraisal review board had offered no summary judgment evidence supporting any contention that the chief appraiser, as opposed to the appraisal district, was a party to any agreement. Noting that “the ARB held a protest hearing, an [appraisal district] representative appeared on behalf of the chief appraiser, no objection was made that the chief appraiser was not present, and, during the hearing, an agreement was made between the [property owners’] agent and the [appraisal district] representative as to the value of the property,” the appellate court held “that the agreement is final and not subject to protest or subject to judicial review under chapter 42.”

    Regarding the property owners assertion of an ‘absolute right to appeal,’ the property owners argued that the appraisal review board “issued an order which authorized the appeal and the tax code provides that a property owner is ‘entitled’ to appeal an order of an appraisal review board.” The appellate court opinion cited language from the appraisal review board order that had been sent to the property owners that stated: “’You have the right to appeal this order to the district court.’” The appellate court noted that “a section 1.111(e) agreement is final regardless of whether it is later approved or adopted by the board” and that “[a]t the moment an agreement is reached it becomes final, thus, rendering any subsequent determinations by the board regarding the value irrelevant.” The court held that “[b]ecause the agreement became final, and the subsequent approval and order by the board was irrelevant, the [property owners] did not have an ARB order to appeal.”

    With regard to the property owners’ due process claim, the court noted that “due process is satisfied if a taxpayer is given an opportunity to be heard before an assessment board at some stage of the proceedings.” Finding that “the [property owners] filed a protest and were given an opportunity to present arguments before the ARB” and that the appraisal district’s representative “agreed with the [property owners’] valuation of the subject property and the [property owners] made no objections or final comments, even though they were given the opportunity to do so,” the appellate court held “that the [property owners’] due process rights were not violated because they were given an opportunity to be heard before the ARB and they reached an agreement with [the appraisal district] during their protest review.”

    The appellate court affirmed the trial court’s judgment.

  • Section 34.21
    Deutsche Bank Nat'l Trust Co., as Indenture Trustee for New Century Home Loan Trust 2006-2 v. Stockdick Land Co., No. 14-09-00617-CV (Fourteenth Court of Appeals – Houston)
    -
    (February 3, 2011)

    This case addresses issues involving redemption of real property sold at a tax sale, liens, and deed language. The appellate court held, among other things, that under Tax Code, §34.21, "an owner may not provide a promissory note to the purchaser to satisfy the requirement of 'paying' the redemption amount under section 34.21(a)."

  • Section 42.21(e)
    Reddy Partnership/5900 North Freeway LP et al. v. Harris County Appraisal District, No. 14-10-00064-CV (Fourteenth Court of Appeals – Houston)
    -
    (January 13, 2011)

    This case addresses the issues of proper plaintiffs for purposes of judicial review under Chapter 42 of the Tax Code and application of Tax Code, §42.21(e). The trial court granted a plea to the jurisdiction in favor of Harris County Appraisal District urged on the basis that the plaintiff did not have standing to appeal to district court because the plaintiff did not own the property on January 1 of the tax year at issue. In response to HCAD's plea, the plaintiff had amended its petition to name the record owner and moved to substitute the record owner as plaintiff. The original plaintiff and record owner argued that the procedural defects had been corrected pursuant to Tax Code, §42.21(e) and that, pursuant to Texas Rule of Civil Procedure 28, the record owner was an assumed name of the original plaintiff. The trial court granted HCAD's plea and dismissed the suit. Both the original plaintiff and the record owner appealed.

    The appellate court noted that a plaintiff seeking judicial review of an appraisal review board order under Chapter 42 of the Tax Code must be the property owner, a designated agent of the owner pursuant to Tax Code, §1.111, or an authorized lessee pursuant to Tax Code, §41.413. The appellate court noted that the original plaintiff did not own the property as of January 1 of the tax year at issue and that the record owner had not pursued its right of protest before the appraisal review board. The appellate court held that Tax Code, §42.21(e) only applies to petitions timely filed under §42.21(a) or amended under §42.21(c) and to seek judicial review under §42.21(a), "the plaintiff must be a 'party who appeals as provided by [Chapter 42],' meaning the plaintiff must be the property owner, a properly designated agent, or a lessee." The appellate court further held that "[f]or a party to take advantage of Rule 28 and sue in its common name, there must be a showing that the named entity is in fact doing business under that common name." The trial court noted that the record owner did not make a showing that it was doing business under the common name of the original plaintiff and that there was no evidence that the "entities used the original plaintiff's name as an assumed or common name to warrant application of Rule 28." The appellate court affirmed the trial court's judgment.

  • Sections 1.111(e) and 6.05(e)
    Crescent Oaks LP v. Harris County Appraisal District, No. 14-10-00199-CV (Fourteenth Court of Appeals – Houston)
    -
    (January 13, 2011)

    This case addresses agreements under Tax Code, §1.111(e). The trial court granted a plea to the jurisdiction in favor of Harris County Appraisal District urged on the basis that the Tax Code prohibits judicial review of a valuation agreement. The property owner appealed, arguing that the appeal was not precluded by the appraisal agreement because Tax Code, §1.111(e) requires an agreement with the chief appraiser and that an appraisal district representative, rather than the chief appraiser, had appeared at the appraisal review board hearing at which the agreement was reached.

    The appellate court rejected the property owner's claim that an agreement between a property owner and an appraisal district representative appearing on behalf of the chief appraiser is not an agreement subject to Tax Code, §1.111(e), holding that "[a]lthough the Tax Code requires the appearance of the chief appraiser at a protest hearing, it also allows the chief appraiser to delegate authority to his employees" pursuant to Tax Code, §6.05(e). The court stated that "the chief appraiser is not prohibited from delegating his authority to reach an agreement with a property owner." The appellate court also held that the issue of "whether an agreement between a property owner and a representative of the chief appraiser precludes an appeal is a question of law." Overruling additional issues raised by the property owner regarding the constitutionality of Tax Code, §1.111(e) and the issuance of appraisal review board orders after the agreement had been reached, the appellate court affirmed the trial court's judgment.

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