NO CV IN THE COURT OF APPEALS FOR THE FIFTH JUDICIAL DISTRICT OF TEXAS AT DALLAS, TEXAS. MELVIN J. KLEIN and OSNAT KLEIN, Appellants,

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1 NO CV ORAL ARGUMENT REQUESTED IN THE COURT OF APPEALS FOR THE FIFTH JUDICIAL DISTRICT OF TEXAS AT DALLAS, TEXAS MELVIN J. KLEIN and OSNAT KLEIN, Appellants, v. DALLAS CENTRAL APPRAISAL DISTRICT and APPRAISAL REVIEW BOARD OF DALLAS COUNTY, Appellees. ON APPEAL FROM THE 101st JUDICIAL DISTRICT COURT, DALLAS COUNTY, TEXAS Trial Court No E REPLY BRIEF OF APPELLANTS MELVIN J. KLEIN ATTORNEY AT LAW 4313 Avondale Avenue Dallas, Texas phone (214) fax - none mel@melklein.com Attorney for Appellants

2 TABLE OF CONTENTS INDEX OF AUTHORITIES iii TO THE HONORABLE COURT OF APPEALS: REPLY POINT I Appellant appealed the entire appraisal, not just a component REPLY POINT II Hirschy s testimony complied with Tex. Tax Code 42.26(d), because there was no requirement that his analysis of land and improvements be confined to the same sample REPLY POINT III The statute does not require the taxpayer to offer an appraisal. Appellant complied with the statute CONCLUSION PRAYER SUBMITTED CERTIFICATE OF SERVICE ii

3 CASES INDEX OF AUTHORITIES Bader v. Dallas Central App. Dist., 139 S.W.3d 778 (Tex. App.-Dallas 2004)... 3 Boulle v. Boulle, 254 S.W.3d 701 (Tex.App.-Dallas 2008) Covert v. Williamson Central Appraisal Dist., 241 S.W.3d 655 (Tex.App.-Austin 2007) no writ history FFE Trans. Servs. Inc. v. Fulgham, 154 S.W.3d 84, (Tex. 2004) Gee v. Liberty Mut. Fire Ins. Co., 765 S.W.2d 394, 396 (Tex.1989) Harris County App. Dist. V. Kempwood Plaza, 186 S.W.3d 155 (Tex. App. Houston [1st Dist.] 2006) Harris County App. Dist. v. United Investors Realty Trust, 47 S.W.3d Holden v. Weidenfeller, 929 S.W.2d 124 (Tex.App. San Antonio 1996) K-Mart Corp. v. Honeycutt, 24 S.W.3d 357 (Tex.2000) Schauer v. Memorial Care Sys., 856 S.W.2d 437, 451 (Tex.App.--Houston [1st. Dist.] 1993, no writ) STATUTES Tex. Tax Code 25.19(f) Tex. Tax Code 42.26(a)(3) Tex. Tax Code 42.26(d) Tex. Tax Code iii

4 Tex. Tax Code Tex. Tax Code Tex. Tax Code 42.26(a)(3) iv

5 TO THE HONORABLE COURT OF APPEALS: the Court: Appellants offer this brief in reply to the brief of Appellees, and would show REPLY POINT I Appellant appealed the entire appraisal, not just a component. Appellee incorrectly contends the requirement that the challenge be on the total appraisal bars separate analysis of the land and the improvements. Counsel misstates Hirschy s testimony (Appellee s Brief, 10-11). Hirschy, Appellant s expert, did not testify that he had appraised only the improvements on subject s street, Avondale, or only the land on Newton Court. Hirschy testified that he analyzed the Appellant s property using the standards used by a commercial appraiser (2, RR, 51). Hirschy testified (2,RR, 63, 97) that the land values on Avondale, $42.50 per square foot, were incomparable to Appellant s land because of speculation on Avondale which does not apply to Appellant s land, since it is unlikely to be bought by speculators due to its adjacence to the auto repair lot (4, 1

6 RR, J37). Rather, Hirschy testified, Appellant s land is more comparable to the adjacent street, Newton Court, $17.35 per square foot, where there has been no speculation (2, RR, 60). As to improvements, Hirschy analyzed all improvement values in the same Mapsco page (2, RR, 68; 4, RR, J58.) Using the District s appraisals, the appraised improvement values per square foot for houses in similar condition on the same Mapsco page, for a large sample of 200 houses, the median was $13.84 per square foot (4, RR, J57). He also analyzed a narrower sample which yielded results more favorable to Appellee, the median being $14.01 per square foot (4, RR, J58). Although a challenge must be on the total appraisal, rather than on only the land or only the improvements, Covert v. Williamson Central Appraisal Dist., 241 S.W.3d 655 (Tex.App.-Austin 2007) no writ history, where the challenge is to the whole there is no prohibition on analyzing the component parts. In Covert the taxpayer challenged only the land value, not the improvements. Here, Appellant challenged the total appraised value, both the land and improvements values. (CR 15 17) The statute requires the district to separately report its land and improvement appraisal values. Tex. Tax Code 25.19(f) The purpose of 25.19(f) is that the 2

7 owner of real property must be able to identify the value set for the component parts of one's real property in order to determine whether to contest an appraised value set by the [district]. Bader v. Dallas Central Appraisal Dist., 139 S.W.3d 778 (Tex. App.-Dallas 2004). It makes no sense in requiring the distinct appraisal and disclosure of the land and improvement values if the owner cannot challenge them by analyzing each separately in a challenge to the whole. Analyzing the components is not prohibited. The trial court abused its discretion in excluding Hirschy s testimony, and therefore the instructed verdict was error. REPLY POINT II Hirschy s testimony complied with Tex. Tax Code 42.26(d), because there was no requirement that his analysis of land and improvements be confined to the same sample. A taxpayer challenging the district s appraisal should surely be permitted to compare its lot to similar lots on different streets where it is dissimilar to lots on its street. Hirschy testified that the subject property was unique on the block because it, 3

8 and it alone, was situated adjacent to the auto repair lot; the other lots were subject to speculation driving up their value while the subject property was not. Appellee misconstrues the meaning of 42.26(d). That section provides that in doing his analysis, where the property is a homestead, the expert uses the values reported on the tax rolls. That is precisely what Hirschy did. Once he determined that Avondale was incomparable and that Newton was comparable, he used the reported the values of the Newton land. He similarly used the tax values of all comparable improvements of like condition in the local area and calculated the median. There is no requirement that the comparable land and the comparable improvements be based on an identical sample. Land value is based on location; improvement value is based on building materials, age, condition, style, etc. Those factors might not exist in the given land sample, but are comparable to other improvements on other land samples. Each is reported in units of area, square feet or acres, so mathematical comparison and calculation of the mean are straightforward. REPLY POINT III The statute does not require the taxpayer to offer an appraisal. Appellant complied with the statute. 4

9 The issue of whether expert testimony is necessary in a particular case is a question of law subject to de novo review in the appellate courts. FFE Trans. Servs. Inc. v. Fulgham, 154 S.W.3d 84, (Tex. 2004). Questions that are within the common knowledge of the jury require no expert testimony. K-Mart Corp. v. Honeycutt, 24 S.W.3d 357 (Tex.2000). The trial court conflated the functions of the district s appraiser and the taxpayer under Tex. Tax Code 42.26(a)(3). The court sustained Respondent s objection to Hirschy s report on the issue of market value and equity value, because it doesn t say that. It doesn t do that. (2, RR, 48). Market value is irrelevant in a 42.26(a)(3) case. The District s appraiser renders an appraisal on market value. The the taxpayer challenger under 42.26(a)(3) submits evidence of an alternate set of comparables, reasons for the superiority of the proffered comparables, evidence of those comparables land and improvement values, and the basis for adjustments. Market value is irrelevant. There is a statutory distinction between excessive appraisal value, which is appealed under 42.25, and unequal treatment which is appealed under Under 42.24, Action by the court, the function of the court differs: in an excessive 5

10 appraisal case, the court fixes the appraised value, (1); in an unequal treatment case, the court enters orders remedying the inequality, 42.24(2), changing the property value, not fixing an appraised value (b) provides, If a property owner is entitled to relief under Subsection (a)(3), the court shall order the property's appraised value changed to the value calculated on the basis of the median appraised value according to Subsection (a)(3). Changing the property value is not the same as fixing the appraised value. An excessive appraisal case requires the challenger to offer evidence of an alternate appraisal; an unequal treatment case requires the challenger to offer evidence of an alternate sample. Harris County Appraisal Dist. v. United Investors Realty Trust, 47 S.W.3d 648, 653 (Tex. App. -- Houston [14th] 2001, pet. denied); Harris County App. Dist. V. Kempwood Plaza, 186 S.W.3d 155 (Tex. App. Houston [1st Dist.] 2006). In an unequal treatment case under 42.26(a)(3), the appropriate value is not an appraisal, not a market value, and not an appraisal ratio; it is a median of the sample. The Legislature chose median value in contrast to mean (average) value to simplify proof because the statute was amended for the stated purpose of 6

11 strengthening taxpayers rights to fair taxation. United Investors, id. This is both a matter of law and within the common knowledge of laymen, and requires no expert opinion. The court expressly excluded Hirschy s testimony and report as irrelevant, and entered an instructed verdict, because he did not render a market appraisal. (CR 21). The exclusion of the expert evidence was the express reason for the entry of the instructed verdict. Exclusion of evidence is reversible error where it probably caused rendition of an improper judgment. TEX.R.APP. P. 44.1(a)(1); Gee v. Liberty Mut. Fire Ins. Co., 765 S.W.2d 394, 396 (Tex.1989); Boulle v. Boulle, 254 S.W.3d 701 (Tex.App.-Dallas 2008). A market appraisal is not the statutory criterion in an unequal treatment case; it is irrelevant under 42.26(a)(3). Under the statute, median value is a question of law, and an expert s opinion on a question of law is irrelevant. Schauer v. Memorial Care Sys., 856 S.W.2d 437, 451 (Tex.App.--Houston [1st. Dist.] 1993, no writ); Holden v. Weidenfeller, 929 S.W.2d 124 (Tex.App. San Antonio 1996). Calculating the median value is a matter of simple counting and selecting the middle 7

12 one. In the instant case, the land values on Newton Court were substantially uniform, so no counting was even necessary. Questions that are within the common knowledge of the jury require no expert testimony. K-Mart Corp. v. Honeycutt, 24 S.W.3d 357 (Tex.2000). CONCLUSION Hirschy testified on all relevant facts, and gave expert testimony on all matters requiring expertise. He testified on the incomparability of the Avondale lots and the superior comparability of the Newton Court lots. He testified on the improvement values in the neighborhood for houses of comparable condition, calculated the median of those improvement values. The area of the subject lot and the area of the improvements were never in contention. He testified on the location obsolescence factors, the major thoroughfare and the adjacent car repair shop, and he testified on the range of location obsolescence adjustments (up to thirty percent) with examples from the District s records. Since median value, not appraised value, is the statutory criterion, Hirschy s failure to give an appraised value complied with the statutory scheme, and the exclusion of his testimony for failure to give an araised value was error. The judgment of the trial court should therefore be reversed. PRAYER 8

13 Wherefore Appellants pray that the judgment of the trial court be reversed and the case remanded for trial. RESPECTFULLY SUBMITTED MELVIN J. KLEIN Texas Bar. No Avondale Ave. Dallas, Texas (214) ATTORNEY FOR APPELLANTS and pro se CERTIFICATE OF SERVICE I hereby certify that I have served a copy of the foregoing Brief and Appendix on Donald W. Hicks, attorney for Appellees, addressed to him at Law Offices of Donald W. Hicks, Sr South Hampton Road, Suite 120, Dallas, Texas , by depositing same in the U.S. Mail, postage prepaid, on the 25th day of January,

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