Recent Property Tax Cases
Recent Court Opinions
Updated : August 19, 2024
Kamy Investments, LLC v. Denton County Appraisal Review Board
2024 WL 3611451 (Tex. App. – Fort Worth, August 1, 2024, no pet. hist.) (not reported)
Issues: Governmental immunity
Kamy failed to appear for ARB hearings concerning 2022 protests on its various properties. Kamy then filed multiple requests with the Comptroller seeking limited binding arbitrations. The ARB and Kamy agreed that the ARB would schedule new hearings and Kamy would withdraw its arbitration requests. But Kamy didn’t withdraw its requests. Instead, it went through with the arbitrations and lost most of them. Months later, Kamy sued the ARB claiming that it had a contractual right to new hearings on the basis of the agreement. The ARB filed a plea to the jurisdiction claiming that it was immune from the suit. The trial court dismissed the case, and Kamy appealed.
The court of appeals affirmed the trial court’s order and ruled that the ARB was immune. The higher court explained that the ARB, as a governmental unit is immune from suit unless that immunity has been waived somehow. The court rejected several of Kamy’s theories about how the ARB’s immunity might have been waived. The Tort Claims Act did not allow the suit against the ARB because no tort was involved. The limited-binding-arbitration law, §41A.015 of the Tax Code, did not allow the suit. Section 41.45(f) allows a property owner to sue an ARB on a claim that the ARB wrongfully refused to hear the owner’s protest. In this case, however, the ARB had attempted to conduct hearings, but Kamy had not appeared. Even when a suit is allowed by §41.45(f), the suit must be filed within sixty days after the property owner knows that the ARB will not hear his/her protest. Kamy’s suit was filed too late.
Further, a governmental entity may not be sued over a settlement agreement unless it could be sued over the underlying claim that was settled. Thus, the agreement between the ARB and Kamy did not create a right to sue the ARB where no such right had existed before. Chapter 271 of the Local Government Code sometimes allows a governmental entity to be sued over a contract for goods or services, but the agreement between Kamy and the ARB did not involve goods or services. There was no waiver of the ARB’s immunity.
Texas Disposal Systems Landfill, Inc. v. Travis Central Appraisal District
2024 WL 3076317 (Tex., June 21, 2024)
Issues: Judicial appeals; unequal appraisals
Landfill filed a protest alleging the incorrect and unequal appraisal of its property. Right before the ARB hearing, Landfill withdrew its incorrect-value claim. It relied solely on its unequal-appraisal claim. The ARB reduced the appraised value substantially. The appraisal district then filed suit to appeal the ARB’s order. The district alleged that the value set by the ARB was incorrect and unequal compared to other values. Landfill filed a plea to the jurisdiction arguing that the district could not allege an incorrect appraisal in the appeal because Landfill had withdrawn its incorrect-value claim before the ARB. The trial court granted the plea to the jurisdiction and dismissed the case. The district appealed.
The court of appeals reversed the trial court’s order and reinstated the case. The intermediate court ruled that the district could appeal on the grounds of market value. The district had nothing to complain about with respect to the appraised value until the ARB lowered that value. Then, the district’s only option was to take the matter to court. The Supreme court decided to consider the case.
The Supreme Court agreed that the trial court had jurisdiction over the appraisal district’s lawsuit, but the high Court’s reasoning differed substantially from that of the court of appeals. The Supreme Court ruled that the appraisal district could not prevail on a claim that was not considered by the ARB. The ARB considered only an unequal-appraisal claim, so the trial court could not grant relief to the district on the basis of an incorrect-value claim. The high Court sent the case back to the trial Court for further consideration.
One justice issued a dissenting opinion saying that the district should be able to raise an incorrect-value claim in court even if that claim was not decided by the ARB. The dissenting justice also disagreed about whether the failure to satisfy a statutory requirement was jurisdictional.
Editor’s Comment: In recent years, the Supreme Court has been focusing extensively on questions concerning whether statutory requirements are jurisdictional. In many instances, this is a distinction without a difference. It is the distinction between a court saying, “We cannot even consider your claim” and a court saying, “We can consider your claim, but you lose.” Still the Court celebrates this distinction with the enthusiasm of a puppy with a new chew toy. The justices generally favor saying, “A court can consider your claim, but you lose.”
Also noteworthy is the Court’s ambivalent discussion of whether a property’s market value is relevant to an unequal-appraisal claim. Earlier opinions from Texas courts have implied that market value has little relevance in a case involving the direct comparison of appraised values (rather than a comparison of appraisal ratios). Some courts have restricted an appraisal district’s ability to even discover evidence of market value. There is some language in this new opinion indicating greater relevance of market value to an unequal-appraisal claim.
Oncor Electric Delivery Company NTU LLP v. Wilbarger County Appraisal District
2024 WL 30757706 (Tex., June 21, 2024)
Issues: Appealability of ARB action; agreement resolving protest
In 2019, an electric utility called Sharyland owned property including two types of electrical lines, one type more valuable than the other. Sharyland reported quantities of the two types of lines to the appraisal districts in several West Texas counties. It protested the districts’ appraisals but then entered agreements with the districts concerning the total value of its lines. Sharyland sold the lines to Oncor. Oncor filed motions under §25.25(c) of the Tax Code to correct the 2019 appraisal rolls claiming that Sharland had reported the wrong quantities of the two types of lines. Sharyland had allegedly reported too much of the more valuable line and too little of the less valuable line, so the total value was less than the value to which Sharyland had agreed. The ARBs determined that they could not hear the motions because the matter had already been resolved by agreements. Oncor then sued the districts and the ARBs. Both responded with pleas to the trial court’s jurisdiction. After a hearing, the trial courts dismissed the case. Oncor appealed.
The appeals produced different results from different courts of appeals. The Amarillo Court of appeals, considering the case from Wilbarger County, ruled against Oncor. The Austin Court of Appels, considering the case from Mills County, ruled for Oncor. The Texas Supreme Court agreed to consider the two cases.
The high Court ruled in favor of Oncor, but its ruling was very narrow and avoided many sensitive issues. The Court ruled that the trial courts did have jurisdiction over Oncor’s appeals. The agreements with the appraisal districts might mean that Oncore would ultimately lose its cases, but they did not mean that the trial courts could not even consider the cases. The Court’s opinion is unclear in many respects. Some parts indicate that the ARB’s never had the authority to consider Oncor’s motions, but other parts indicate that the ARB’s should have considered the motions but denied them based on the agreements. The trial courts should have considered Oncor’s suits even if the ARBs could not consider Oncor’s motions. A court faced with an agreement between an appraisal district and a property owner could at least interpret the agreement and determine its validity. In the Court’s words, “[A]though limitations on an ARB's authority to review or reject a Section 1.111(e) agreement may restrict the scope of a court's review, they do not defeat its jurisdiction.” The Court sent the cases back to the trial courts for further proceedings.
The Supreme Court’s opinion is probably most notable for the issues that it did not decide. Those issues include: 1) whether a property owner can escape an agreement by showing that the parties were mistaken about something when they made it; 2) whether Oncor could sue the ARBs; and 3) whether the errors alleged by Oncor could be corrected under §25.25(c) or (d).
Johnson v. Bastrop Central Appraisal District
2004 WL 3073766 (Tex. App. – Austin, June 21, 2024, no pet. hist.) (not reported)
Issues: Vexatious litigants; limited binding arbitration
Johnson had a long history of filing lawsuits against the appraisal district and people associated with it. Following an unsuccessful protest, he filed another suit claiming that his land qualified for 1-d-1 appraisal in 2022. The district filed a motion asking the trial court to declare Johnson a vexatious litigant and to require a surety bond in order for him to continue with the suit. The court granted the district’s motion. Instead of filing a bond, however, Johnson filed a plea to the jurisdiction seeking the dismissal of his own lawsuit. His theory was a little strange. He claimed that he had filed for limited binding arbitration following his ARB hearing, and that limited binding arbitration somehow deprived the ARB of the authority to determine his protest. Thus, there was no valid order of the ARB and nothing for him to appeal to the trial court. The trial court never ruled on Johnson’s plea to the jurisdiction. The court dismissed the case in response to the district’s motion because Johnson had never filed the required bond. Johnson appealed.
The court of appeals reversed the trial court’s ruling that Johnson was a vexatious litigant. The higher court explained that the district bore the burden of proving that Johnson had no reasonable probability of prevailing in his suit. The court was not satisfied with the evidence offered by the district to show that Johnson’s land did not have the required history of agricultural use. The evidence showed that Johnson had used his land for raising and training horses for polocrosse or sale or for feeding them fodder. According to the court’s opinion, however, the evidence was not sufficient to prove that agriculture was not the principal use of the land.
The court of appeals also addressed and rejected Johnson’s theory about limited binding arbitration. The court explained that the ARB’s order determining Johnson’s protest was final and appealable even though he had filed for limited binding arbitration. The ARB had the duty to issue the order notwithstanding the arbitration, and Johnson had the right to appeal it to the trial court. The court of appeals sent the case back to the trial court for further proceedings.
Bexar Appraisal District v. Johnson
2024 WL 2869321 (Tex., June 11, 2024)
Issues: Disabled veteran’s homestead exemption
Gregory and Yvondia Johnson were disabled veterans, married to each other but separated and living in different homes. The homes were both owned by the Johnsons jointly. The residence occupied by each spouse was his/her principal residence. Their disabilities were so severe that each of them could qualify for the 100% homestead exemption described in §11.131 of the Tax Code. Gregory was receiving the exemption on his residence when Yvondia applied for the exemption on her residence. The appraisal district denied the exemption on the theory that two spouses could not receive the same exemption on two different properties. Following an unsuccessful protest, she sued the district. The trial court entered a summary for the district. The court of appeals reversed the trial court and ruled for Yvondia. Then the Texas Supreme Court agreed to consider the case.
The high Court upheld the court of appeals and ruled that Yvondia could receive the exemption. The Court explained that several types of homestead exemptions are set out in §11.13, e.g., general school-tax exemptions and over-65 exemptions. That section includes prohibitions against property owners “double-dipping” the exemptions. Section 11.131, however, does not include the same prohibitions against double-dipping. It bestows a 100% homestead exemption on an individual disabled veteran without regard to whether he/she is married or part of a family. There was no dispute that Yvondia’s residence qualified as her homestead or that she was a severely disabled veteran. There was no reason to deny her the exemption. The Supreme Court’s ruling was limited to the disabled veterans’ homestead exemption and did not address other types of homestead exemptions.
Two of the Supreme Court’s justices dissented. They would have denied Yvondia the exemption. Generally, they reasoned that the Tax Code incorporates a traditional understanding that a family can receive only one homestead exemption of a particular type.
J-W Power Co. v. Sterling County Appraisal District
2024 WL 2869325 (Tex., June 7, 2024)
Issues: Correcting appraisal rolls
This is a lingering remnant of the compressor cases. The Tax Code directs appraisal districts to appraise leased heavy equipment (including pipeline compressors) at values far below actual market value. When that provision was enacted, appraisal districts resisted, arguing that the Texas Constitution required them to appraise property at market value. The dispute resulted in hundreds of lawsuits. In 2018, the Texas Supreme Court shocked everyone by ruling that the Constitution did not require appraisals based on market value. EXLP Leasing, LLC v. Galveston Central Appraisal District, 554 S.W.3d 572 (Tex. 2018). The Court upheld the Tax Code’s provisions (§§23.1241 and 23.1242). The Court further interpreted the Code to make compressors taxable at the owner’s location, not where the compressors were actually located. Some property owners, including J-W Power began trying to claim the benefit retroactively for past years.
J-W Power filed protests concerning its compressors located in Sterling County for several years prior to 2018. The ARB ruled against it, but J-W Power did not appeal. Then after the Supreme Court’s ruling in EXLP Leasing, J-W Power tried to contest the 2013-2016 appraisals retroactively by filing motions with the ARB under §25.25(c). It claimed that its compressors were subjected to multiple appraisals and that they had not existed in Sterling County. The ARB denied the motions, and J-W Power sued the district. The district asserted the defense of res judicata; it argued that the question of whether the property should be appraised as heavy-equipment inventory had already been finally decided by the ARB in the earlier protests and could not be raised again. The trial court entered summary judgment for the district, and J-W Power appealed.
The court of appeals affirmed the summary judgment for the district. J-W Power’s motion under §25.25(c) was the same claim asserted in the earlier protests. J-W Power cited §25.25(l), which states that a property owner may file a §25.25(c) motion even if the owner previously filed a protest relating to the value of the property. The court explained that the protests had not been protests about market value. They had specifically raised J-W- Power’s claim about heavy-equipment inventory. Section 25.25(l) did not allow J-W Power to raise the same claim again in a motion. When the ARB determined the protests, J-W Power had a ripe claim that it should have appealed.
The Texas Supreme Court then decided to hear the case. The high Court reversed the court of appeals. The Court reasoned that despite the language of §25.25(l) a property owner could raise a non-value claim in a protest, have that claim decided by the ARB, and then raise the identical claim in a §25.25(c) motion. The Court left open the question of whether the principle of res judicata might ever apply to an ARB order. The Court sent the case back to the court of appeals for further consideration.
Editor’s Comment: Following the Supreme Court’s opinion in EXLP Leasing, we wondered whether the Couty would ever again be able to make a decision so egregiously wrong. But they have done it. This opinion rejects the principle of res judicata, the concept that the same parties cannot litigate the same claims before the same tribunal over and over again. The principle is a cornerstone of Anglo-American law.
The legislature expressly said that a property owner who had raised a value claim in a protest before an ARB could later raise a different claim in a §25.25(c) motion. For example, a property owner might file a protest alleging that the appraised value of his/her property was unequal compared to the values of comparable properties. That would not prevent the owner from later filing a §25.25(c) motion alleging that the property appeared on the appraisal roll more than once. The Supreme Court now substitutes its own rule, a rule that a property owner who files a protest on any grounds can later assert the identical claim in a §25.25(c) motion.
Brazoria Civic Club v. Brazoria County Appraisal District
2024 WL 1774913 (Tex. App. – Houston [14th Dist.], April 25, 2024, no pet. hist.) (to be published)
Issues: Challenging tax sales; exhaustion of remedies
The Club received a charitable exemption for its property for several years, but the appraisal district cancelled the exemption for 2016. Taxes were assessed but not paid for several years. In late 2019 taxing units filed a delinquent-tax suit. The Club was cited by posting. In July of 2020, a lawyer for the Club wrote to the district, admitted that she knew about the delinquent-tax suit and filed an exemption application. But the Club still didn’t answer the suit. The trial court entered a default judgment against the Club in December of 2020. The property was sold at a tax sale in August of 2021. In early 2022, the Club filed another exemption application referring all the way back to 2016. The district then notified the Club that both applications were denied.
In March of 2022, the Club filed its own lawsuit against the district and the taxing units. It sought to undo the judgment in the delinquent-tax suit and obtain an exemption for the property. The Club claimed that it had not been notified about the cancellation of the exemption, the delinquent-tax suit, or the tax sale. The district responded with a plea to the jurisdiction. The trial court dismissed the Club’s suit, and the club appealed.
While the appeal was pending, the taxing units filed a motion in the delinquent-tax suit asking the court to set aside the judgment and the tax sales. With the consent of the tax-sale purchasers, the trial court set aside the judgment and voided the tax sales. The district then filed a motion to dismiss the appeal in the Club’s suit on the grounds that the trial court’s actions in the delinquent-tax suit mooted the appeal in the Club’s suit.
The court of appeals decided that the actions in the delinquent-tax suit mooted most but not all of the Club’s suit. In a nutshell, the court decided that the Club’s appeal was moot to the extent that it sought relief that had already been granted in the delinquent- tax suit. Under §33.56 of the Tax Code, the trial court had the authority to set aside its judgment in the delinquent-tax suit and void the tax sales even though that court’s plenary power over the case had ended. The appeal was not moot to the extent that it concerned issues not addressed in the delinquent-tax suit.
The court of appeals went on to explain that the trial court did not have jurisdiction over the Club’s suit because the Club had not timely pursued and exhausted the Tax Code’s remedies for a property owner complaining about the denial or cancellation of an exemption. Under §§41,41 and 41.411, the Club could have protested the cancellation of the exemption and the alleged failure of the district to send a required notice, but the Club hadn’t done that. A property owner must raise those claims in a protest before the ARB before it can raise them in court. The Club argued that a federal civil-rights statute, 42 U.S.C. §1983, creates an exception to that rule, but the court of appeals pointed out that the Club has not raised a §1983 claim. (The court noted that the Club could have pursued a protest without paying any taxes because the Club alleges that the property had no taxable value.) The court of appeals affirmed the trial court’s dismissal of the Club’s suit to the extent that the appeal was not moot.
Solaris Oilfield Site Services Oper LLC v. Brown County Appraisal District
688 S.W.3d 918 (Tex. App. – Eastland, April 18, 2024, no pet.)
Issues: Heavy equipment
Solaris owns storage silos and related equipment used to store and move sand for hydraulic fracturing. Solaris sets up base trailers including compressors and generators at a wellsite. The silos are delivered by special transport trailers and set up atop the base trailers. The base trailers and silos stay in place, but the transport trailers leave after the silos are set up. Solaris claimed that the silos were leased heavy equipment subject to taxation at arbitrary low values rather than market value. The appraisal district rejected Solaris’s claim and appraised the silos at their market value. Following an unsuccessful protest, Solaris sued the district. The trial court entered a summary judgment for the district and Solaris appealed.
The court of appeals reversed the trial court and entered judgment for Solaris. The higher court’s opinion looked at §23.1241 of the Tax Code, the law creating a special appraisal method for inventories of heavy equipment. The definition of “heavy equipment” specifically excludes “motor vehicles.” The district treated the silos, the transport trailers that deliver them, and the base trailers that support the silos and move sand as an integrated motor vehicle. The court, however, insisted that the silos were separate, not part of a trailer but a “load” carried and supported by trailers. The collection of items could be treated as an integrated system for some purposes and as separate components for other purposes. The silos, integrated with the base-trailer generators were “self-powered” as required by the statutory definition of “heavy equipment”, but the silos could nevertheless be treated as separate non-vehicles. “The statutory taxation scheme before us does not forbid the trailers that are used to haul and support the silo system equipment from being taxed as motor vehicles and the remaining silo system equipment from qualifying as heavy equipment under Section 23.1241.”
Sadeghian v Denton Central Appraisal District
2024 WL 1318252 (Tex. App. – Fort Worth, March 28, 2024, no pet.) (not reported)
Issues: Judicial appeals; limited binding arbitration
Sadeghian protested the 2022 appraisals of his property. He received the ARB’s order on September 20, 2022, and decided to appeal. He filled his suit against the appraisal district within the sixty-day limitations period set out in §42.21 of the Tax Code. But he did not request a citation until May 8, 2023. The district was not served with the suit papers until May 9, 2023. The district raised the statute of limitations as a defense, and the trial court entered a summary judgement in the district’s favor. Sadeghian appealed.
The court of appeals affirmed the summary judgment for the district. The higher court explained that a plaintiff must not only file his/her suit within the limitations period, but the plaintiff must also diligently pursue service of process on the defendant. If service occurs after the limitations period has expired, the plaintiff must be able to show that he/she was diligent up until the time that the defendant was served. The plaintiff must explain “every lapse in effort or period of delay.” Sadeghian’s only excuse for the delayed service was that after his ARB hearing, he had pursued a limited binding arbitration against the district and the ARB. The court responded that a limited binding arbitration does not affect the limitations period for a judicial appeal or excuse a property owner’s lack of diligence in securing service. The filing of a judicial appeal moots the limited binding arbitration. The court went on to note that Sadeghian had not even followed §41A.051, which governs limited binding arbitrations. He had not sent his demand notice within five business days following the ARB’s hearing, nor had he sent a copy to the district’s taxpayer liaison officer.
Parkwood 121 Village LP v. Collin Central Appraisal District
2024 WL 748397 (Tex. App. – Dallas, February 23, 2024, no pet.) (not reported)
Issues: Agreements between appraisal districts and property owners; agricultural appraisals
Parkwood owner qualified 1-d-1 land. In late 2014, it notified the appraisal district that it planned to end the agricultural use of the land and begin commercial development. Parkwood and the district signed an “Agreement of Use Change” agreeing to the account numbers, years, acreages and effective change of use date, December 29, 2014. The agreement also said that the parties “acknowledge and agree that all complaints or formal protests with respect to the change of use determination . . . have been settled to their satisfaction, and hereby waive any further complaint and/or withdraw any protest, and waive any right to any further relief in this matter.” The district made a change-of-use determination that resulted in additional taxes being assessed for 2014. Parkwood sued the district claiming that no additional taxes should be assessed for 2014. The district responded that the agreement waived Parkwood’s right to sue. The trial court entered summary judgment for the district, and Parkwood appealed.
The court of appeals reversed the summary judgment for the district. The higher court determined that the agreement was not sufficient to preclude Parkwood’s suit. The agreement did not state that Parkwood was agreeing to a particular value for any year. In the court’s words, “There is no foundation in the plain language of the parties’ agreement that would limit Parkwood’s ability to challenge the District’s valuation of the property in any year; it only reflects the parties’ agreement on the year in which the change of use occurred.” The court of appeals sent the case back to the trial court for further proceedings.