Southwest Texas Appraisal District, A Case Study

Transcription

1 NO CV.,.,,, Pil ): 53 LISA M\TZ. CLERK IN T.HE COURT OF APPEALS FOR THE FIFTH DISTRICT OF TEXAS AT DALLAS DALLAS CENTRAL APPRAISAL DISTRICT AND THE APPRAISAL REVIEW BOARD OF DALLAS C OUNTY, Appellants, vs. SOUTHWEST A IRLINES Co., Appellee. On Appeal from the I 16th Judicial District Comi, Dallas County, Texas Trial Court Cause No. DC APPELLANTS' REPLY BRIEF NICHOLS, JACKSON, DILLARD, HAGER & SMITH, L.L.P. l [ Peter G. Smith State Bar No Braden W. Metcalf State Bar No Victoria W. Thomas State Bar No Lincoln Plaza 500 N. Akard Street Dallas, Texas Telephone: Facsimile: A TIORNEYS FOR APPELLANTS [ I 1

2 NO CV IN THE COURT OF APPEALS FOR THE FIFTH DISTRICT OF TEXAS AT DALLAS DALLAS CENTRAL APPRAISAL DISTRICT AND THE APPRAISAL REVIEW BOARD OF DALLAS COUNTY, Appellants, vs. SOUTHWEST AIRLINES Co., Appellee. On Appeal from the!16th Judicial District Court, Dallas County, Texas Trial Court Cause No. DC APPELLANTS' REPLY BRIEF NICHOLS, JACKSON, DILLARD, HAGER & SMITH, L.L.P. Peter G. Smith State Bar No Braden W. Metcalf State Bar No Victoria W. Thomas State Bar No Lincoln Plaza 500 N. Akard Street Dallas, Texas Telephone: Facsimile: ATTORNEYS FOR APPELLANTS 1

3 IDENTITY OF PARTIES AND COUNSEL Defendants/ Appellants: Trial and appellate counsel: Dallas Central Appraisal District and The Appraisal Review Board of Dallas County NICHOLS, JACKSON, DILLARD, HAGER & SMITH, L.L.P. Peter G. Smith State Bar No Braden W. Metcalf State Bar No Victoria W. Thomas State Bar No Lincoln Plaza 500 N. Akard Street Dallas, Texas Telephone: Facsimile: Plaintiff/ Appellee: Trial and appellate counsel: Southwest Airlines Co. THOMPSON & KNIGHT, LLP James B. Hanis Bar Card No One Arts Plaza 1722 Routh Street, Suite 1500 Dallas, Texas 7520 I (214) (214) (fax) 2

4 TABLE OF CONTENTS IDENTITY OF PARTIES AND COUNSEL TABLE OF CONTENTS... 3 INDEX OF AUTHORITIES... 4 ISSUES PRESENTED... 6 ARGUMENT... 7 PRAYER CERTIFICATE OF SERVICE

5 INDEX OF AUTHORITIES CASES Aramco Associated Company v. Harris County Appraisal District, 33 S.W.2d 361,364 (Tex. App.--Texarkana 2000, pet. denied)... 8 Bland Indep. Sch. Dist. v. Blue, 34 S. W.3d 54 7, 55 5 (Tex. 2000)... 7 BPAC Tex., LP v. Harris County Appraisal Dist., No CV, 2004 WL , at 3 (Tex.App.-Houston [1st Dist.] Oct. 28,2004, no pet.)... 11, 13 In re Nolo Press, 991 S.W. 2d 768, 778 (Tex. 1999)... 9 Lamar Univ. v. Doe, 971 S.W.2d 191, 197 (Tex. App.-Beaumont 1998, no writ h.)... 7 Liberty Mut. Ins. Co. v. Shmp, 874 S.W.2d 736, 739 (Tex. App.-Austin 1994, writ denied)... 7 Matagorda County Appraisal Dist. v. Coastal Liquids Partners, L.P., 165 S. W.3d (Tex.2005) Montgomel)' County v. Fuqua, 22 S.W.3d 662, 665 (Tex. App.-Beaumont 2000, pet. denied)... 7 Son dock v. Harris County Appraisal Dist., 231 S.W.3d 65,68-70 (Tex.App.-Houston [14th Dist.] 2007, no pet.) Tex. Ass 'n of Bus. v. Tex. Air Control Bd., 852 S. W.2d 440, 446 (Tex. 1993)... 7 Vincent v. West Tex. State Univ., 895 S.W.2d 469, 472 n.3 (Tex. App.-Amarillo 1995, no writ)

6 STATUTES TEX. TAX CODE ANN (e)... 11,12 TEX. TAX CODE ANN (e)(1) TEX. TAX CODE ANN (e)(1) and(2) (Vernon2001) TEX. TAX CODE ANN (Vernon 2001)... 8 TEX. TAX CODE ANN (c)(1) TEX. TAX CODE ANN (b) (Vernon 2001) TEX. TAX CODE ANN (Vernon 2001)... 8 TEX. TAX CODE ANN (Vernon 2001)

7 TO THE HONORABLE COURT OF APPEALS: The Appellant respectfully submits this Reply to the Appellee's Brief. ISSUES PRESENTED ISSUE ONE: THE TEXAS PROPERTY TAX CODE ALLOWS INVOCATION OF THE JUIUSDICTION OF A TRIAL COURT ONLY IN VERY LIMITED AND SPECIFIC SITUATIONS, NONE OF WHICH WERE PRESENT FOR SOUTHWEST'S REQUESTS FOR ALTERATION OF THE 2003 AND 2006 TAX ROLLS. 6

8 ARGUMENT ISSUE ONE: THE TEXAS PROPERTY TAX CODE ALLOWS INVOCATION OF THE JURISDICTION OF A TRIAL COURT ONLY IN VERY LIMITED AND SPECIFIC SITUATIONS, NONE OF. WHICH WERE PRESENT FOR SOUTHWEST'S REQUESTS FOR ALTERATION OF THE 2003 AND 2006 TAX ROLLS. As an initial matter, it should be noted that in its Appellee's Brief, Southwest offers no factual or legal supp01i for its request that this Court view Southwest's selection of what it now says was incottect data for submission to DCAD as a "clerical" error. On this basis alone, reversal as to all of Southwest's claims, for tax years 2003 through 2007, is proper because the error Southwest complains that it made in each of these years was not a clerical error but an error in Southwest's own selection of data that it would report. In its Appellee's Brief, Southwest candidly admits that its reporting of the wrong data was not the result of a math error or a typographical enor, but of Southwest's own selection of the wrong information to report. As discussed fully in Appelant's Brief, the law in Texas is clear that incorrectly selecting and reporting data is not a clerical error. In its Appellee's Brief, Southwest offers nothing to the contrary. Southwest does point out that its en or resulted in it paying more tax than it otherwise would have been required to pay. While this may be true, this does not establish the enor as a clerical enor for which relief is available under section of the Texas Propetiy Tax Code. Southwest is not entitled to relief under section and for this reason the trial court's judgment should 7

9 be reversed and judgment rendered in favor ofdcad and the Appraisal Review Board of Dallas County. Furthermore, Southwest's claims for relief for tax years 2003 and 2006 should be reversed for the further reason that the trial court lacked subject matter jurisdiction as to each of these two claims. A court's jurisdiction is conferred by constitution and statutes; a court without jurisdiction cannot render a valid judgment. Liberty Mut. Ins. Co. v. Shmp, 874 S.W.2d 736, 739 (Tex. App.-Austin 1994, writ denied). Southwest, as the plaintiff below, bears the burden to allege facts affirmatively showing the trial coutt has jurisdiction. See, e.g., Tex. Ass 'n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 446 (Tex. 1993); Vincent v. West Tex. State Univ., 895 S.W.2d 469, 472 n.3 (Tex. App. Amarillo 1995, no writ). When the plaintiff fails to allege sufficient facts in his petition to invoke the Court's jurisdiction, it is appropriate to dismiss the case with prejudice for lack of jurisdiction. Montgomery' County v. Fuqua, 22 S.W.3d 662, 665 (Tex. App.-Beaumont 2000, pet. denied); see also Lamar Univ. v. Doe, 971 S.W.2d 191, 197 (Tex. App. Beaumont 1998, no writ h.). When deciding whether to grant a plea to the jurisdiction based on lack of subject matter jurisdiction, the trial court looks solely to the allegations in the petition together with any necessary jurisdictional evidence. Bland Indep. Sell. Dist. v. Blue, 34 S.W.3d 547, 555 (Tex. 2000); Liberty Mut., 874 S.W.2d at 739. In the case at hand, it is clear that Southwest has not established subject matter jurisdiction with regard to tax years 2003 and The law establishes an orderly process for property owners like Southwest to contest their appraisals and correct the appraisal rolls. The Texas Tax Code provides for an administrative proceeding before an 8

10 appraisal review board which reviews the taxpayer's protest and makes a determination. A property owner may protest the appraisal of its propetiy for the current tax year by filing a protest with the appraisal review board by June 1 or within thirty days after notice was delivered. TEX. TAX CODE ANN (Vernon 2001). If dissatisfied with the appraisal review board's determination, the property owner may appeal by filing a petition for review in district court within sixty-five days of notice of the final order. TEX. TAX CODE ANN (Vernon 2001). If a propetiy owner does not avail itself of the protest remedies available under Tax Code Chapter 41, the Code provides a second, but limited, set of remedies to correct the appraisal roll under Tax Code TEX. TAX CODE ANN (Vernon 2001). "These legislative remedies are more narrowly drawn than those in Chapters 41 and 42. Section provides for a cottection of the appraisal roll under some circumstances." Aramco Associated Company v. Harris County Appraisal District, 33 S.W.2d 361, 364 (Tex. App.--Texarkana 2000, pet. denied). "The Legislature has indicated its awareness of a need for a taxing entity to establish a final tax roll to be aware of the income from taxes for purposes of making its budget."!d. A component of a district couti's subject matter jurisdiction over an appeal of a case brought under or, for that matter, over any case, is justiciability of the controversy before it. For a controversy to be justiciable, the court must have authority to grant the relief requested and that relief must resolve the controversy before the court. See, e.g., State Bar v. Gomez, 891 S.W. 2d 243, (Tex. 1994)(no subject matter jurisdiction where no justiciable issue presented as district court did not have authority to 9

11 compel State Bar or Supreme Court to implement mandatory pro bono program); In re Nolo Press, 991 S.W. 2d 768, 778 (Tex. 1999)(similar holding where district comi did not have authority to modify Supreme Court order). In cases arising under 25.25, the limited appellate jurisdiction of the District Conrt is defined by the statutory language establishing the right of appeal. The District Court lacked subject matter jnrisdiction over Southwest's claims for tax years 2003 and 2006 because, pursuant to the statutory grant of appellate jnrisdiction, the District Court did not have authority to grant the relief requested by Southwest for those tax years. Southwest, in its Appellee's Brief, makes an effmi to avoid this jurisdictional bar to its claims for tax years 2003 and 2006 by arguing that DCAD's arguments do not relate to subject matter jurisdiction and, inasmuch as they were not raised below, they were waived. Southwest says that in raising these issues, DCAD is just asserting that Southwest did not accomplish some statutory prerequisite to having the matter heard. Appellee's Brief, pp Southwest likens DCAD's arguments to a statute of limitations argument (for tax year 2003) and an accord and satisfaction argument (for tax year 2006). Respectfully, Southwest is patently incorrect. As discussed more fully below, in its Appellant's Brief, DCAD pointed out that because of the limited grant of statutory appellate review, Southwest's claims for tax years 2003 and 2006 do not fall within the Distr ict Court's subject matter jurisdiction. The statutory language establishing review by the District Court clearly precludes the District Comi from granting the relief requested- review of a tax year beyond the preceding five, in the case of tax year 2003, and, as to tax year 2006, review of a tax year for which the parties have previously 10

12 reached agreement as to market value of the propetiy. Southwest's claims for tax years 2003 and 2006 thus present nonjusticiable issues, for which the District Court cannot, due to the limited grant of subject matter jurisdiction, grant the relief requested. A. The District Court lacked jurisdiction to consider tax year 2006 because the parties entered into an agreement under Tax Code section l.lll(e) and the Tax Code precludes review of such agreements. It is unequivocal from the record that, as to the 2006 tax year the parties agreed to the market value and taxability of the propetiy at issue. Southwest disingenuously attempts to play semantics games, arguing that while its agreement did set the final value of Southwest's business personal propetiy account for tax year 2006, it did not address the allocation formula to be used to a11'ive at that value. See Appellee's Brief, p. 30. Respectfully, it is undisputed that Southwest and DCAD entered into a formal Value Settlement Record for tax year 2006 wherein the parties specifically agreed that the final value of Southwest's business personal property account for tax year 2006 was $379,211, CR 659 (Affidavit of Randy Scott); CR 789 (Exhibit 7 to Affidavit of Randy Scott). For Southwest to 1)ttempt to argue that it agreed to the ultimate value but not the allocation formula used to reach that value is, candidly, less than straightfotward. The Property Tax Code contemplates the making of agreements like Southwest and DCAD made regarding tax year The Code mandates that such an appraisal agreement "between a property owner or the owner's agent and the chief appraiser is final 11

13 if the agreement relates to a matter: (1) which may be protested to the appraisal review board or on which a protest has been filed but not determined by the board; or (2) which may be corrected under section ".TEX. TAX CODE ANN. l.lll(e)(l) & (2)(Vernon 2001) (emphasis added). 1 Agreements under Section l.lll(e) are final, even without approval or adoption by the appraisal board. In this case, Southwest's agreement with DCAD for tax year 2006 was, therefore, final in setting market value of the property. See Tex. Tax Code Ann. l.lll(e)(l); BPAC Tex., LP v. Harris County Appraisal Dis/., No CV, 2004 WL , at 3 (Tex.App.-Houston [1st Dist.] Oct. 28, 2004, no pet.) (mem.op.). The finality of section l.lll(e) agreements is emphasized by the Propetiy Tax Code's express preclusion of any review of such agreements by an appraisal review board.. "In 1993, the Legislature amended Section l.lll(e) by deleting the previous requirement that the Board must approve of the agreement before it became final." Sondock v. Harris County Appraisal Dist:, 231 S.W.3d 65, (Tex.App.-Houston [14th Dist.] 2007, no pet.) (citing Act of May 28, 1989, 71st Leg., R.S., ch. 796, 2, 1989 Tex. Gen. Laws 3591, 3591, amended by Act of May 30, 1993, 73rd Leg., R.S., ch. 1031, 1, 1993 Tex. Gen. Laws 4440, 4440 (current version at TEX. TAX CODE ANN (e))). As the Sondock Court explained, by making this change, the Legislature "intended to make it easier for parties to reach agreements in the event of a dispute 1 In its Appellee's Brief, Southwest incorrectly asserts that "DCAD makes no reference to this provision [Tex. Tax Code 25.25] in arguing that section 1.111( e) of the Tax Code prevents a refund of 2006 overpayments."!d. at p. 30. Southwest is inconect. DCAD pointed out in its initial brief, as it does here, that Section l.lll(e) precludes review of final agreements as to market value by way of protest under Chapter 41 of the Tax Code or request for correction under section See Appellant's Brief, p

14 involving taxable property."!d. Therefore, under the current statutory scheme, an appraisal review board may determine propetiy owners' protests generally, but it "may not review or reject an agreement between a propetiy owner or the owner's agent and the chief appraiser under Section 1.111(e)." TEX. TAX CODE ANN. 4l.Ol(b) (Vernon 2001); see Matagorda County Appraisal Dist. v. Coastal Liquids Partners, L.P., 165 S.W.3d (Tex.2005) (noting, in dictum, that appraisal review board "has no authority to change a settlement reached by a taxpayer and the chief appraiser"). The result of the above statutes is two-fold. First, appraisal agreements between property owners and chief appraisers are final and cannot be reviewed or rejected by appraisal review boards. See TEX. TAX CODE ANN. l.lll(e), 4l.Ol(b). Second, and as a corollary, given that the appraisal review board cannot entertain a protest or a motion to correct based on a review of an appraisal agreement, the propetiy owner cannot file a suit under Tax Code chapter 42 (which, generally speaking, allows judicial review of board orders) for judicial review of matters relating to an appraisal agreement. See, e.g., Sondock, 231 S.W.3d at (agreement reached by propetiy owners and district as to the value of the propetiy precluded judicial review of the assessment under the Tax Code); BPAC Tex., LP, 2004 WL , at 3 (property owner had reached final and enforceable agreement with HCAD as to appraised value of property and, thus, the provisions of the Tax Code foreclosed BP AC from contesting the appraisal in an appeal to the trial court);. That is, the Property Tax Code makes section (e) agreements final and not subject to protest by the property owner or subject to a propetiy owner's 13

15 statutory suit for judicial review under chapter 42. See TEx. TAX CODE ANN (b); BPAC Tex., LP, 2004 WL , at *3; Sondock, 231 S.W.3d at Significantly, in both BPAC Tex, LP and Sondock, following the parties reaching agreement as to the value of the property, the respective appraisal review boards had nonetheless issued orders that stated purpmied to detennine the protest. EPA C Tex, LP, 2004 WL , at *3, Sondock, 231 S.W. 3d at 68. In both cases, the Couti of Appeals held that the appraisal review board's subsequent order, despite its language indicating a determination of the protest and a right to judicial review, did not "determine" the outcome of the protest and did not provide a right to judicial review. ' BPAC Tex, LP at *3; Sondock, 231 S.W. 3d at 69. As the Sondock Court explained, "[T]he agreement... at the moment it was reached... became final. That finality rendered any subsequent determinations by the Board regarding the vaue, such as the order it entered, irrelevant."!d. In the case at hand, the evidence is unequivocal that an agreement was reached regarding the valuation of Southwest's business personal property for tax year That agreement falls squarely within the parameters of section 1.111( e). The law is clear that the appraisal review board could not consider Southwest's motion with regard to tax year 2006 under these circumstances and thus that the District Court similarly could not review the issue. The District Court was never vested with subject matter jurisdiction to consider and issue an order on the same. In this case the agreement between Southwest and the appraisal district was final as to the 2006 tax year, and any subsequent detetmination by the appraisal review board, 14

16 such as the Order Detennining Protest, was irrelevant and not appealable to this District Court. On this basis, the Court should dismiss the totality of the 2006 cause of action for want of subject matter jurisdiction. B. The Tax Code specifically limits the subject matter jurisdiction for a correction of the Tax Code to five (5) preceding years and thus precludes the district court from entering an order altering the Tax Rolls for As with Southwest's claim for tax year 2006, the District Court's judgment should be reversed as to Southwest's claim for tax year 2003 for the additional reason that the District Court lacked subject matter jurisdiction to consider that claim. Texas Tax Code section is abundantly clear on its face that a property owner can only seek to compel a written order changing the appraisal roll from the appraisal review board for any of the five preceding years to correct clerical errors that affect a property owner's liability for a tax imposed in that tax year. See TEX. TAX CODE ANN (c)(l). As DCAD pointed out in its Appellant's Brief, in the case at hand, Southwest did not file a motion to compel correction until 2008 and, accordingly, the "five preceding" tax years for which appraisal rolls had been set and, thus, for which Southwest could have sought conection of clerical errors under Section 25.25(c)(l) were clearly 2004, 2005, 2006, 2007, and TEXAS TAX CODE ANN (c)(l). At first blush, it might seem that 2008 should not be included in the five "preceding" years. However, as DCAD explained in its Appellant's Brief, to hold that the 2008 tax roll would not fall within the five years would create the illogical result of 15

17 requiring Southwest or any other taxpayer to wait a year to seek correction of a clerical enor on that tax roll, even though it knows of the alleged enor then. Southwest responds to this by asserting that 2008 should not be counted in the five preceding years and that if a clerical error is discovered after the time for a protest, "then it might be necessary to file two motions to correct, one in the year of discovery to allow recovery... and one in the following year to cover the year in which the clerical enor was discovered." Appellee's Brief at p. 32. Such a scheme would not promote certainty of the tax rolls and futiher would increase and in fact double the expense to taxpayers, requiring that not one but two separate motions be brought. The five years contemplated by the legislature clearly encompasses 2008 and thus, the reach of the statutory jurisdiction granted to the District Comi in this case would not include matters relating to tax year For this additional reason, reversal of the District Comi's judgment as to the 2003 tax year is proper. PRAYER WHEREFORE, PREMISES CONSIDERED, Appellants Dallas Central Appraisal District and the Appraisal Review Board of Dallas County respectfully request that this Court reverse the order of the district court and render judgment in favor of Defendants granting their motion for summary judgment on all of Plaintiff Southwest Airlines Co.'s claims and that Defendants recover their taxable court costs, as well as any and all other relief in law and in equity to which they are justly entitled. 16

18 Respectfully submitted, NICHOLS, JACKSON, DILLARD, n:iager &SMQI, ;~ Peter <i' mith State Bar No Braden W. Metcalf State Bar No Victoria W. Thomas State BarNo Lincoln Plaza 500 N01ih Akard Dallas, Texas (214) (214) Fax ATTORNEYS FOR APPELLANTS CERTIFICATE OF SERVICE I hereby certify that on January 31, 20 ll, a hue and correct copy of the foregoing was forwarded via United States Certified Mail, Return Receipt Requested, to all counsel of record pursuant to Texas Rule of Appellate Procedure 25.l(e), and addressed as follows: James B. Ranis Thompson & Knight, LLP One Arts Plaza 1722 Routh Street, Suite 1500 Dallas, Texas Via CMRRR # s;.2wd (47098) 17

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