Legal Panel/Case Law Update

Transcription

1 Legal Panel/Case Law Update Gavin McBryde, Moderator Panel Members Kelley Hill Joe Harrison Jason Marshall Lorri Michel

2 Texas Property Tax Case Law Review 2015 TAPTP Annual Conference Prepared by Gavin McBryde Supreme Court of Texas 1. Tex. Student Hous. Auth. v. Brazos County Appraisal Dist., 460 S.W.3d 137 (Tex. 2015). Holding: A dormitory like facility that hosts or provides housing for short on-campus instructional programs does not forefeit a tax exemption under Section of the Tex. Educ. Code because the exemption is stated categorically and not conditionally on the property s use. The Texas Student Housing Authority (TSHA) is a non-profit created through the Texas Higher Education Code with the bylaws providing it shall have all the powers and authority under the Higher Education Authority Act. In 2002, TSHA acquired title to the Cambridge, a student-residential facility near Texas A&M University (TAMU). From , TAMU hosted various summer programs involving athletics, science, camps, and other extracurricular activities attended by high school and elementary students. TSHA provided lodging to the participants in these programs in addition to the TAMU students enrolled in summer school. Based on the housing of the summer program participants, the Appraisal District voided TSHA s tax exempt status from and assessed back taxes. The Supreme Court reversed judgment of the Court of Appeals finding the exemption language in section declare emphatically the TSHA is exempt, and is not conditioned on the requirement that no non-university persons or entities may ever use the property. Texas Court of Appeals 2. Bexar Appraisal Dist. v. Sivage Invs., Ltd., No CV, 2014 WL (Tex. App. San Antonio [4 th Dist.] November 19, 2014). Holding: Rollback tax penalties are imposed for the five years preceding the change in use of land. However, Section of the Texas Tax Code does not authorize rollback tax for the year the change in use occurred. Taxpayer owned land that had been appraised as open space land for prior years. The owners subsequently subdivided the land which prompted the District to impose a rollback tax penalty. In addition to these rollback taxes, the District also reappraised the Property on its full market value for the year the change in use occurred. The owners sued the District disputing the additional taxes for the year the change in use occurred, but not the rollback taxes in preceding years. The trial court found the plain 1

3 language of the statute did not authorize reappraisal of the land for the year the change in use occurs and that any rules issued by the Comptroller inconsistent with the statutory authority are void. The court of appeals affirmed the decision. 3. Signal Int l Tex. V. Orange County, No CV, 2014 WL (Tex. App. Beaumont [9 th Dist.] December 18, 2014) (pet. denied). Holding: Entering into a Section 1.111(e) agreement with an appraisal district waives the right to protest and all other administrative remedies under the Texas Tax Code. In 2011, the taxpayer entered into a Section 1.111(e) agreement with Orange CAD for certain business personal property that included a barge. After entering into the agreement, the taxpayer discovered the barge was relocated and that situs was not proper in Orange County. Taxpayer sought to rescind the 1.111(e) agreement and argued the case at bar was analogous with In Re Willacy County Appraisal Dist. where an appraisal district sought to rescind an agreement on allegations of fraud. Orange CAD filed a plea to the jurisdiction claiming the agreement waived any rights of protest the taxpayer had. The trial court granted Defendant s plea to the jurisdiction. The appellate court affirmed the decision, holding that situs must be protested to the appraisal review board and signing a 1.111(e) agreement deprives the trial court of jurisdiction. The court also distinguished Willacy as it concerned allegations of fraud that were absent in the case at bar. 4. Valerus Compression Servs. V. Gregg County appraisal Dist., 457 S.W.3d 520 (Tex. App. Tyler [12 th Dist.] January 7, 2015). Holding: Taxable situs of tangible personal property is governed by Section 21.02(a) of the Texas Tax Code and determined by looking back in time to the location of the property in the year preceding January 1 of the applicable tax year. For purposes of Section , pull type equipment refers to equipment that performs its job while being pulled. Valerus sued the appraisal district on the appraised value of its Property claiming it did not have taxable situs in Gregg County and, should the Property be found to have taxable situs in Gregg County, that the Property be valued in accordance with Section as heavy equipment inventory. The trial court found that taxable situs of the Property was in Gregg County, that the Property did qualify as heavy equipment but that Section of the Texas Tax Code was unconstitutional. Both parties appealed the decision. The court of appeals affirmed the trial court s holding that situs was in Gregg County as Valerus failed to produce evidence that the property was not located in Gregg County for a sufficient amount of time to comply with Section of the Texas Tax Code. However, the court of appeals reversed the trial court s ruling regarding the Property s heavy equipment inventory classification. Specifically, the Court of Appeals held Valerus did not bring forward sufficient facts to meet its burden to prove heavy equipment inventory status. Simply establishing that equipment be pulled to move it does not classify the equipment as pull-type. To be classified as pull-type equipment, the equipment must perform its job while it is being pulled. Similarly, an indication of the equipment s horsepower does not evidence it is self-powered. As the court of appeals held Valerus Property was not heavy equipment inventory the Court did not address GCAD s claims that Section was unconstitutional. 2

4 5. Hunt County Appraisal Dist. v. Horizons Ahead, LLC, No CV, 2015 WL (Tex. App. Texarkana [6 th Dist.] January 9, 2015). Holding: A trial court has jurisdiction over a Ch. 42 appeal when a taxpayer has exhausted its administrative remedies and the appeal is properly pled with regards to the ARB Order issued. The taxpayer waives its right to interstate allocation when it fails to file the information necessary to determine the allocated value at the time of rendition pursuant to section of the Tex. Tax Code. Horizons rendered a good faith estimate of value of its aircraft at 1.1 million dollars. However, Horizons did not include with its rendition information to support the determination of allocation provided by Section of the Tex. Tax Code, which relates to a ratio of the number of departures of the aircraft from the state to all departures for the proceeding year. On July 23, 2012, Horizons received a value notice reflecting the aircraft s market value as 1.1 million dollars. Horizons responded on August 2, 2012, and sent a letter to the Appraisal District stating: 1) they received the notice after the deadline, and thus could not file a protest and 2) asked the Appraisal District when the allocation information should be submitted. Horizon paid the full amount of taxes due on the aircraft, and sent a second letter to the Appraisal District that included its aircraft flight log and a Motion to Correct under section 25.25(d) of the Tex. Tax. Code. The ARB afforded Horizons a hearing pursuant to section of the Texas Tax Code, and issued an order determining protest denying the request for interstate allocation. Horizon timely filed suit in district court and successfully reduced the value of the aircraft. The District appealed. On appeal, the District raised subject matter jurisdiction for the first time and argued the trial court lacked subject matter jurisdiction because Horizon failed to assert a section 25.25(d) claim in its petition, failed to exhaust its administrative remedies, and was untimely in its protest. The court found Horizons exhausted its administrative remedies and timely filed its petition for review in district court. However, the Court reversed the trial court s judgment and found Horizon waived its right to allocation when it failed to file the necessary information concurrently with its rendition in accordance with section of the Texas Tax Code. 6. Town & Country, L.C. v. Harris County Appraisal Dist., 461 S.W.3d 208 (Tex. App. Houston [1 st Dist.] January 27, 2015). Holding: A trial court has subject matter jurisdiction over a suit appealing an Appraisal Review Board decision even if a property owner is misidentified. Section is not limited to misnomer cases and can be relied upon in cases of misidentification. Texas Tax Code Section 42.21(h) authorizing substitution of a correct party is constitutional. In 1997, the subject property was conveyed to Town & Country Suites by 3 individuals. In 2012, the property s valuation was protested in the previous owners names and not by Town & Country Suites. The Appraisal Review Board conducted a hearing and issued an Order Determining Protest to the previous owners. An appeal was subsequently filed in district court correctly identifying the property but named the previous owners as Plaintiffs. HCAD filed a plea to the jurisdiction claiming that Town & Country, the true owner, had not filed an appeal to district court within the limitations period. The trial 3

5 court granted HCAD s plea to the jurisdiction. The court of appeals reversed the trial court s ruling, holding that the language in 42.21(h) stating brought on behalf of a property owner signified the Legislature s intent to create jurisdiction over suits not brought directly by the property owner. The court further held 42.21(h) was constitutional. HCAD then filed a Motion for Rehearing with the appellate court claiming that Section did not apply to cases of misidentification and is strictly limited to cases of misnomer. The appellate court denied the Motion for Rehearing and issued a new opinion with the disposition in the case remaining the same. 7. Townsend v. Montgomery Cent. Appraisal Dist., No CV, 2015 WL (Tex. App. Houston [14 th Dist.] March 3, 2015). Holding: A property owner that timely files a motion that contains a request for a new trial has ninety days to file an appeal. A property owner lacks standing to request removal of a chief appraiser or member of a review board. Townsend purchased his home in The Appraisal District gave prior owners of the property threeyear variance to allow repairs to the home but denied Townsends request for the variance. Townsend timely protested the value of his home several times between 2005 and 2009 but never sought judicial review of the board orders. Prior to the current litigation, Townsend filed suit twice concerning the appraisal of his home. In 2009, Townsend filed suit and named the Chief Appraiser as defendant. In 2010, Townsend timely sought judicial review of a board order and named the ARB as defendant. Both suits were dismissed for a lack of subject matter jurisdiction. Following the ARB s issuance of the 2011 board orders, Townsend again filed suit naming the Appraisal District, the ARB, the Chief Appraiser, and the ARB chairman as defendant. He alleged his property should not be taxed in the county, an exemption was improperly denied, modified, or cancelled, his home was valued above market value and to remove the Chief Appraiser and Chairman of the Board from their positions. The court on its own issued an order in which it construed Townsend s pleading as a petition for review of all Townsend s 2011 taxes, and dismissed the remainder of the suit for subject-matter jurisdiction. The District filed a traditional motion for summary judgment regarding Townsend s remaining claim that his property was not subject to taxation by the District and a no-evidence summary judgment on the claim Townsend s property was exempt from taxation. The appellate court affirmed the trial court s dismissal of Townsend s claims to remove the Chief Appraiser and Chairman from their positions because he lacked standing, and thus the trial court lacked subject matter jurisdiction. The appellate court also affirmed the trial court s dismissal of claims that related to years prior to the 2011 tax year because the court lacked jurisdiction, as the claims were untimely. The appellate court affirmed the trial court s granting of the District s motions for summary judgment, as Townsend failed to file a response motion or set his own motion for summary judgment for submission or oral hearing and failed to identify any exemption he was wrongfully denied. 4

6 8. Galveston Cent. Appraisal Dist. v. Valero Refining Texas L.P., 463 S.W.3d 177 (Tex. App. Houston [14 th Dist.] March 31, 2015) (pet. filed). Holding: Excluding portions of a refinery without reason in a valuation analysis negates the legal sufficiency of that analysis required to support a reduction in the value of a refinery. Valero filed a lawsuit challenging the appraised value of its refinery claiming the refinery was not equally appraised with comparable properties. Valero amended its petition several times and ultimately went to trial on only two accounts containing its business personal property and pollution control equipment. At trial, Valero s expert did not sufficiently explain the basis of their calculations supporting the equal and uniform value of the refinery. Specifically, the experts provided no basis for the decision to include the appraised dollar value of the comparable refineries non-process facilities while excluding the value of the subject s pollution control equipment. Therefore, the experts opinions were conclusory and legally insufficient to support the jury finding. The Court remanded to the trial court for a new trial. 9. Pac. Western Bank v. Brazoria Cnty., No CV, 2015 WL (Tex. App. Houston [14 th Dist.] April 28, 2015). Holding: A taxpayer s failure to exhaust its administrative remedies as provided in the Texas Tax Code deprives the courts of jurisdiction. Taxpayer s agent submitted personal property renditions to the Defendant Appraisal District for tax year 2011 and 2012 that included cargo containers. While the taxpayer filed a protest concerning tax year 2012, they failed to attend the hearing or pursue the protest any further. In December of 2013, the taxpayer sued the Appraisal District claiming the taxation of the cargo containers was unconstitutional. The Defendant filed, and the trial court granted, Defendant s plea to the jurisdiction based on the taxpayer s failure to exhaust its administrative remedies. The court of appeals affirmed. 10. TVMAX Holdings, Inc. v. Spring Indep. Sch. Dist., No CV, 2015 WL (Tex. App. Houston [1 st Dist.] April 20, 2015). Holding: Failure to comply with Section s prepayment requirement of taxes not in dispute forfeits the right to proceed to a final determination of a Section protest hearing. In accordance with Section of the Texas Tax Code, a property owner must pay taxes due on the portion of the taxable value of the property not in dispute prior to the delinquency date or the right to proceed to a final determination of the motion is forfeited. As the taxpayer did not pay any taxes on the property or demonstrate an inability to pay taxes that were not in dispute, the taxpayer forfeited the right to a final determination of the motion. 5

7 11. ETC Mktg., Ltd. v. Harris County Appraisal Dist., No CV, 2015 WL (Tex. App. Houston [1 st Dist.] May 5, 2015). Holding(s): Even if property is in interstate commerce, a property owner must prove that the tax is invalid under the Dormant Commerce Clause to avoid taxation. ETC and its affiliate, Houston Pipeline Company ( HPC ), maintain offices in multiple locations throughout Texas. ETC marketing is a natural gas marketer which buys, sells and markets natural gas. ETC s business practice involved buying natural gas at a hub in Harris County, Texas and entrusting the gas to HPC for storage. Although ETC buys gas in Texas, it is unable to determine where the gas originates from. ETC focuses on buying gas during warmer months and selling it to northern markets in the winter months. HCAD assessed roughly 33 billion cubic feet of natural gas owned by ETC and stored by HPC in the Bammel reservoir. ETC filed a protest claiming the gas was in interstate commerce and therefore exempt from taxation. The ARB and trial court held in favor of HCAD. The court of appeals affirmed those decisions and held that even if the gas was in interstate commerce, the gas was still taxable as the ETC failed to prove the tax violated the Dormant Commerce Clause. To prove a tax is invalid under the Dormant Commerce Clause, the taxpayer must prove that the tax fails one prong of the Complete Auto test. Under the Complete Auto standard, a tax on interstate commerce violates the Dormant Commerce Clause if the tax (1) applies to an activity lacking a substantial nexus to the taxing state; (2) is not fairly apportioned; (3) discriminates against interstate commerce; or (4) is not fairly related to the services provided by the State. In this case, the business presence of the Plaintiff and prolonged physical presence of the gas in the State and County was a substantial nexus, the tax was fairly apportioned, and the tax did not discriminate against interstate commerce. The court also found that the tax was fairly related to the public services received by the Plaintiff, which facilitate gas storage. 12. Pleasant Hill Cmty. Dev. Corp. v. Appraisal Review Bd., No CV, 2015 WL (Tex. App. Houston [1 st Dist.] May 14, 2015). Holding: Failure to timely file a protest pursuant to Section of the Texas Tax Code deprives a property owner of the remedies included in Section 41.45(f) of the Texas Tax Code. On November 9, 2009, HCAD mailed the property owner a letter informing them the exemption on the subject property had been cancelled. On January 2, 2012, Plaintiff filed a protest on the Property for various tax years. After the ARB dismissed the protest, Plaintiff filed suit pursuant to Section 41.45(f) to compel an administrative hearing on its protest. The trial court granted HCAD s plea to the jurisdiction on the grounds that the owner failed to exhaust its administrative remedies by not timely filing a protest. The court of appeals affirmed. 6

8 13. Arthur v. Uvalde Cnty. Appraisal Dist., No CV, 2015 WL (Tex. App. San Antonio [4 th Dist.] May 20, 2015) (pet. filed). Holding: Breach of a agreement is not a matter that falls within the exclusive remedies anticipated in the Texas Tax Code. It is not necessary for an employee of a property owner to file a written designation of agent with the appraisal district. Uvalde County Appraisal District ( UCAD ) brought suit against the Arthurs to recover delinquent taxes for tax years The Arthurs asserted numerous defenses and two counter claims that included breach of a agreement entered into with UCAD and the denial of due process. The Arthurs then filed a motion for summary judgment. UCAD filed a plea to the jurisdiction and no-evidence motion for summary judgment claiming the Arthurs did not exhaust their administrative remedies and that a valid agreement did not exist because the Arthurs employee who executed the agreement did not have an appointment of agent on file with UCAD. Following a hearing on the motions, the trial court granted UCAD s plea to the jurisdiction and UCAD s no evidence motion for summary judgment and denied Arthurs motion for summary judgment. The Arthurs appealed. The appellate court found that the Arthurs claim for breach of agreement against UCAD was outside the exclusive remedies anticipated in the Texas Tax Code and therefore, the Arthurs did not need to exhaust their administrative remedies to pursue their counter claim. The Court also held that an employee of a property owner need not file an appointment of agent form to enter into a valid agreement and remanded the case for further proceedings. 14. EXLP Leasing, LLC v. Webb Cnty. Appraisal Dist., No CV, 2015 WL (Tex. App. San Antonio [4 th Dist.] June 3, 2015). Holding: When the entire amount of taxes is in dispute, nothing is required to be paid pursuant to Section of the Texas Tax Code. Exterran leases field compressors for use in the extraction of oil and natural gas. From the compressors constituted taxable BPP in Webb County. In 2012, Exterran paid taxes on the compressors to the Victoria County Appraisal District pursuant to the newly enacted Section (a) of the Texas Tax Code. Based on that amendment, Exterran believed the property constituted heavy equipment dealer inventory requiring taxes to be paid to Victoria CAD. Webb County assessed the compressors to which Exterran protested and then appealed. Exterran did not pay any taxes on the compressors. The United Independent School District then intervened in the litigation and filed a motion to dismiss for failure to comply with Section of the Texas Tax Code. The trial court granted the Motion to Dismiss and Exterran appealed. The court of appeals reversed the decision because Exterran was not required to pay any taxes pursuant to Section of the Texas Tax Code because the entire amount of valuation was in dispute. 7

9 15. Smith v. City of Wichita Falls, No CV, 2015 WL (Tex. App. Fort Worth [2 nd Dist.] June 4, 2015). Holding(s): An individual or entity vested with an interest in property is a taxable owner of the property. After a taxing unit introduces prima facie evidence of delinquent taxes, a property owner must introduce competent evidence that the taxing units did not deliver required tax notices Smith, appearing pro se appealed the trial court s ruling in favor of the city of Wichita Falls, Wichita County, and Wichita Independent School District (collectively, the Taxing Entities ) in a suit pertaining to delinquent taxes and the foreclosure of a tax lien. The Taxing Entities sued Smith and his siblings for delinquent taxes for several tax years between 1994 and On appeal, Smith argued he conveyed his interest in the property at issue to his mother, and she conveyed the property to another individual. However, at trial, the Taxing Entities introduced a certified copy of a 1992 deed in which Smith s mother conveyed the property to Smith and his siblings. One of Smith s siblings appeared pro se at trial, attempted to introduce several documents into evidence and offered testimony of a witness. However, none of the documents were certified or authenticated, and Smith failed to attach the witness fee to the subpoena he issued for his other witnesses. As such, the Court sustained the Taxing Entities objections to this evidence, and the Taxing Entities evidence was uncontroverted. The Parties stipulated to a quitclaim deed conveying the property from Smith s mother to a third party, however that deed was dated after the 1992 conveyance. Smith also failed to introduce any evidence rebutting the Taxing Entities evidence demonstrating it took all necessary action necessary to obtain legal authority to tax, and provided all notices. Therefore, the trial court s ruling was affirmed. 16. Douglas v. City of Kemp, No CV, 2015 WL (Tex. App. Dallas [5 th Dist.] June 9, 2015). Holdings: Sovereign immunity is not waived for tort claims arising in connection with the assessment or collection of taxes. Further, sovereign immunity is not waived when there is no properly executed written contract. Douglas claimed to have entered into an agreement with the city s mayor and manager where they agreed to abate property taxes as an incentive for Douglas construction of a nursing facility in the city. After he received a tax statement reflecting the assessment of taxes with no mention of the alleged abatement agreement, the appellant sued the city for 1) breach of contract, 2) negligent misrepresentation, 3) fraudulent inducement, 4) promissory estoppel, and 5) declaratory judgment. The city filed a plea to the jurisdiction that was granted by the trial court. Douglas appealed and the city argued it did not waive its sovereign immunity with regards to all of Douglas claims. For the fraud and negligent misrepresentation claims, the court found the trial court did not err in granting the city s plea to the jurisdiction because there was no waiver in sovereign immunity under section (l) of the Texas Tort Claim Act. For the declaratory judgment actions, the city raised sovereign immunity and also the appellant s failure to exhaust his administrative remedies. In his brief, Douglas only addressed the issue of sovereign 8

10 immunity. Because Douglas failed to challenge the city s argument with regards to exhaustion of administrative remedies, the court affirmed the trial court s plea to the jurisdiction. Regarding the breach of contract claim, the city relied on sections (2)(A) and of the Tex. Loc. Gov t Code, claiming that no written contract was ever executed, and the purported contract would not be for the provision of goods and services, and thus, would not waive sovereign immunity. Similar to the declaratory judgment action, the court affirmed the trial court s ruling because the appellant only addressed in his brief whether contract was written, and not the alternative basis raised by the city. 17. Gonzales v. Dallas Cnty. Appraisal Dist., No CV, 2015 WL (Tex. App. Dallas [5 th Dist.] June 23, 2015). Holding: A former owner of property lacks standing to bring a claim of unequal appraisal under the Texas Tax Code. Gonzales, a pro se litigant, appealed the trial court s dismissal of her lawsuit against DCAD, the Dallas ARB, and the owner of a comparable property Lyons Equities ( Lyons ). In 2009, Gonzales transferred title of the property to a corporation of which she was the shareholder ( Lenola ). In 2013, Gonzales filed suit in her own name against DCAD and Dallas ARB alleging unequal appraisal. Gonzales also sued Lyons, alleging Lyons exerted undue influence against DCAD and the ARB. The court of appeals affirmed the trial court s dismissal as Gonzales did not own the property and lacked standing to sue thereby depriving the court of subject matter jurisdiction. While Gonzales was the sole shareholder of the property owner, a shareholder does not own the property of the corporation. Further, Lenola was not an assumed name of Gonzales and Gonzales failed to assert she was bringing a derivative suit to enforce Lenola s rights. 18. AETC II Privatized Housing, LLC v. Tom Green Cnty. Appraisal Dist., No CV, 2015 WL (Tex. App. Austin [3 rd Dist.] June 24, 2015). Holding(s): Improvements made by an LLC on federally owned lands are still subject to taxation unless the federal government has exclusive jurisdiction of the land. Equitable title to improvements does not exist unless one has the present right to compel legal title AETC is a public-private venture formed as a Delaware LLC. The U.S. owns 49% as an investor member. AETC provides multi-family housing for U.S. military personnel. The parties entered into a lease where, for a nominal amount, the Air Force leased AETC a tract of land adjacent to an Air Force Base. The U.S. later acquired the land from the City of San Angelo; however, the tract was not ceded to the U.S. by the state. The Air Force conveyed the improvements on the land to AETC. AETC agreed to renovate existing housing and construct new housing. Three years after the land was conveyed, AETC received a notice of value for the improvements to which they protested and ultimately appealed to district court. At trial, the court held the property was not ceded to the federal government and therefore subject to ad valorem taxation and that the U.S. did not hold equitable title to the improvements because a member of a Delaware LLC does not have a property interest regarding the property of the company. 9

11 19. City of Conroe v. TPProperty LLC, No CV, 2015 WL (Tex. App. Beaumont [9 th Dist.] June 25, 2015). Holding: Sovereign immunity is not waived by a governmental entity when it enters into an agreement that is not a contract to provide goods or services directly to the city. However, sovereign immunity is waived with respect to specific issues if they are germane, connected with and properly defensive to a counter-claim raised by the governmental entity. Prior to purchasing a hotel, a corporation entered into two agreements with the City of Conroe. The city agreed to abate certain ad valorem property taxes on improvements made to the hotel that the corporation agreed to construct (the Abatement Agreement ). The corporation also agreed it would manage the expenditure of some of the city s hotel occupancy taxes collected from guests for marketing tourism in the area (the HOT Agreement ). The corporation later defaulted on its loan, and the property was purchased by, and the rights of the above contracts transferred to, TPProperty. Subsequently, the city sent default letters to the TPProperty, and later adopted a resolution declaring the new owners to be in default and terminated the second agreement. TPProperty sued the city for breach of contract, to compel specific performance of both agreements, and for declaratory relief regarding the parties rights, status, and legal relationship. The city answered by alleging various defenses and affirmative defenses. The city subsequently filed counter claims for the collection of ad valorem property taxes and hotel occupancy taxes, and later filed a plea to the jurisdiction that was denied. The city appealed the denial of their plea to the jurisdiction. The appellate court held because the underlying agreements were not contracts to provide goods or services directly to the city, the city did not waive sovereign immunity under Tex. Loc. Gov t Code Ann However, by asserting counterclaims against the property owner for recovery of ad valorem taxes under the agreements, the city waived immunity with respect to the breach of contract claims because the taxpayer s claims of breach of contract damages were germane to, connected with, and properly defensive to a portion of the city s counter claims. Under the unique facts and timing of events in the case, the taxpayer was not required to exhaust its administrative remedies because at the time the trial court acquired jurisdiction from the city s counter claim, no administrative relief could have been granted. Due to the city s waiver of immunity in alleging its counter claims, the trial court had jurisdiction to adjudicate its declaratory judgment claims seeking declarations that have the effect of establishing the parties rights and liabilities under the two underlying agreements. 20. NHH-Cana St. Apts., Inc. v. Harris Cnty. Appraisal Dist., No CV, 2015 WL (Tex. App. Houston [14 th Dist.] June 30, 2015). Holding: An organization established exclusively as a charitable organization that provides services to the impoverished is entitled to Section 11.18(d)(2) exemption and does not have to demonstrate it does so without regard to the beneficiaries ability to pay. A non-profit whose mission is to provide life stabilizing, affordable permanent housing with support services for people who live on limited incomes, owned an apartment complex with all low-income 10

12 residents. All residents paid no or significantly reduced rents. The Appraisal District denied the exemption under Texas Tax Code section 11.18(d)(2) due to the apartment s general requirement that its residents pay some portion of the rent, and thus, the apartment could not establish it provided support without regard to a tenant s ability to pay. On appeal, the court overturned the trial court s ruling and held because the organization demonstrated that its beneficiaries are not required to pay the full cost of services received, the exemption should not have been denied. In accordance with the canons of construction, the apartment did not have to demonstrate it provides support to the impoverished without regard to the beneficiaries ability to pay. 21. Moers v. Harris County Appraisal Dist., No CV, 2015 WL (Tex. App. Houston [1 st Dist.] June 30, 2015) Stiefer v. Moers, No CV, 2015 WL (Tex. App. Houston [14 th Dist.] August 13, 2015). Holding(s): Summary judgment in favor of appraisal district was proper as the property owner failed to demonstrate Standards implemented by the Chief Appraiser were invalid or raise a fact issue proving they satisfied the degree of intensity' argument; valuations claims are governed by the exclusive remedies of the Texas Tax Code which requires a taxpayer to exhaust administrative remedies for a trial court to have subject matter jurisdiction; further, a claim that a chief appraiser reached an incorrect result is insufficient to make an ultra vires claim; court costs and attorney fees pursuant to Section 41.45(f) are discretionary, not mandatory. Moers sued the Harris County Appraisal District, the Chief Appraiser and the Harris County ARB to protest a denial of open-space land appraisal. Specifically, the Moers requested a declaratory judgment invalidating the degree of intensity standards set by the Chief Appraiser regarding open space land appraisal, sought an injunction to preclude the Chief Appraiser from collecting taxes on their land, challenged the denial of open space land valuation on their land and claimed they were denied due process. The trial court dismissed the Harris County ARB and Chief Appraiser from the litigation and granted HCAD s motion for summary judgment. The appellate court modified the court s ruling to dismiss the claims without prejudice and affirmed as modified. The appellate found the Chief Appraiser has authority to create the degree of intensity standards in determining the qualification for open-space land appraisal and the Moers failed to raise a fact issue as to whether the adopted standard contravenes the Texas Tax Code or State Comptroller Manuel. Therefore, granting summary judgment was proper. With regards to the declaratory judgment action and ultra vires complaint, Moers complaints did not assert or establish a waiver of immunity by the Chief Appraiser. In fact, Moers complaints of due process and constitutional violations were actually valuation claims. As the Moers did not exhaust their administrative remedies with regards to these claims, the trial court lacked subject matter jurisdiction to consider them. 11