EXLP Leasing LLC and EES Leasing LLC v. Webb County Appraisal District and United Independent School District , 2015 Tex. App. LEXIS 5594 ( 2015 )

Fourth Court of Appeals
San Antonio, Texas
OPINION
No. 04-14-00343-CV
EXLP LEASING, LLC and EES Leasing, LLC,
Appellants
v.
WEBB COUNTY APPRAISAL DISTRICT and United Independent School District,
Appellees
From the 406th Judicial District Court, Webb County, Texas
Trial Court No. 2013-CV-8000073-D4
Honorable Oscar J. Hale, Jr., Judge Presiding
Opinion by: Marialyn Barnard, Justice
Sitting: Karen Angelini, Justice
Marialyn Barnard, Justice
Rebeca C. Martinez, Justice
Delivered and Filed: June 3, 2015
REVERSED AND REMANDED
This is an appeal from a trial court’s order dismissing a tax dispute action for lack of
jurisdiction. On appeal, appellants EXLP Leasing, LLC and EES Leasing, LLC (collectively
“Exterran”) contend the trial court erred in dismissing the suit because it complied with the
mandates of section 42.08(b) of the Texas Tax Code, thereby vesting the trial court with
jurisdiction. We reverse and remand.
04-14-00343-CV
BACKGROUND
Exterran leases field compressors for use by oil and gas operators in the extraction of oil
and natural gas. As of January 1, 2012, Exterran owned 113 compressors reportedly located on an
oil and gas lease in Webb County, Texas. These compressors were part of Exterran’s “South Texas
Region inventory,” which is managed from its business and storage facility in Victoria County,
Texas.
It is undisputed that for tax years 2008 through 2011, the compressors constituted taxable
business personal property. Accordingly, for those years, Exterran paid taxes due on the
compressors to the Webb County Appraisal District (“Webb County”) because they were located
in Webb County. According to Exterran, tax payments for the compressors were made to Webb
County for the compressors because the version of the Texas Tax Code (“the Tax Code”) in effect
at the time required payment be made to the county in which the business personal property was
located when the property was leased as opposed to being held for sale.
However, for the tax year 2012, Exterran paid taxes on the compressors to the Victoria
County Appraisal District (“Victoria County”) based on an amendment to the Texas Tax Code that
became effective January 1, 2012. See Act of May 19, 2011, 82nd Leg., R.S., ch. 322, § 1, 2011
Tex. Gen. Laws 938, 938 (current version at TEX. TAX CODE ANN. § 23.1241(a) (West 2015)).
Based on that amendment, Exterran believed the compressors no longer constituted business
personal property, but “heavy equipment dealer inventory.” See id. As such, the taxes on the
compressors, according to Exterran, were payable to Victoria County where Exterran maintained
its business address. Exterran calculated the value of the compressors — $1,333,626.00 — and
tendered the taxes due on that amount to Victoria County.
Webb County sent Exterran a tax assessment for the 2012 tax year for the compressors just
as it had for tax years 2008 through 2011. Exterran protested the tax assessment, sending Webb
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County copies of the dealer heavy equipment declaration forms and other documentation it filed
in Victoria County and claiming that based on the amendment to the Tax Code, the compressors
were not taxable in Webb County. Webb County rejected Exterran’s claims, affirming the tax
assessment. Exterran then filed an appeal in district court challenging Webb County’s conclusion
that section 23.1241 of the Tax Code was inapplicable — in other words, challenging Webb
County’s conclusion that Exterran owed taxes to Webb County because the compressors were not
heavy equipment inventory pursuant to the amendment to section 23.1241.
The United Independent School District intervened in the suit, asserting a motion to dismiss
in which it claimed dismissal was proper because Exterran had failed to comply with the mandates
of section 42.08(b) of the Tax Code, depriving the trial court of jurisdiction. See id. § 42.08(f)
(permitting taxing unit that imposes taxes on property to intervene for limited purpose of
determining whether property owner has complied with jurisdictional requirements of section
42.08(b)). The trial court granted the motion to dismiss, and Exterran perfected this appeal.
ANALYSIS
On appeal, Exterran raises a single issue, contending the trial court erred in dismissing its
suit, effectively finding Exterran failed to satisfy the jurisdictional prerequisite set out in section
42.08(b) of the Tax Code. Section 42.08 mandates that a property owner pay a certain portion of
the property taxes in dispute before the delinquency date or the owner’s right to appeal is forfeited.
Id. § 42.08(b). Thus, to resolve this appeal, we must determine whether Exterran complied with
the jurisdictional prerequisite, which requires us to interpret section 42.08. That is the only issue
before this court. We are not called upon to resolve the underlying dispute, i.e., whether Exterran
should have continued to pay taxes on the compressors to Webb County or whether Exterran
correctly paid taxes on the compressors to Victoria County based on the legislative amendment to
section 23.1241(a) of the Tax Code.
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Standard of Review
Numerous Texas courts have held that “[c]ompliance with the prepayment requirements of
section 42.08 ‘is a jurisdictional prerequisite to [the] district court’s subject matter jurisdiction to
determine property owner’s rights.’” Welling v. Harris Cnty. Appraisal Dist., 429 S.W.3d 28, 31
(Tex. App.—Houston [1st Dist.] 2014, no pet.) (quoting Lawler v. Tarrant Appraisal Dist., 855
S.W.2d 269, 271 (Tex. App.—Fort Worth 1993, no writ); Sonne v. Harris Cnty. Appraisal Dist.,
No. 01-12-00749-CV, 2014 WL 2933227, at *4 (Tex. App.—Houston [1st Dist.] June 26, 2014,
no pet.) (mem. op.). A determination of whether a trial court has subject matter jurisdiction is a
question of law, and we review questions of law using a de novo standard. Klumb v. Houston
Mun. Emps. Pension Sys., No. 13-0515, 2015 WL 1276557, at *5 (Tex. Mar. 20, 2015); City of
San Antonio v. Casey Indus., Inc., No. 04-14-00429-CV, 2014 WL 7437638, at *2 (Tex. App.—
San Antonio Dec. 31, 2014, no pet.) (citing Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d
217, 226 (Tex. 2004)). Thus, in this case, we must use the de novo standard in determining whether
the trial court erred in granting the motion to dismiss. See Klumb, 2015 WL 1276557, at *5; Casey
Indus., 2014 WL 7437638, at *2 (citing Miranda, 133 S.W.3d at 226).
Application
With regard to an appeal from a decision by a tax appraisal board, section 42.08(b) of the
Tax Code provides, in pertinent part:
[A] property owner who appeals as provided by this chapter must pay taxes on the
property subject to the appeal in the amount required by this subsection before the
delinquency date or the property owner forfeits the right to proceed to a final
determination of the appeal. The amount of taxes the property owner must pay on
the property before the delinquency date to comply with this subsection is the lesser
of:
(1) the amount of taxes due on the portion of the taxable value of the property that
is not in dispute;
(2) the amount of taxes due on the property under the order from which the appeal
is taken; or
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(3) the amount of taxes imposed on the property in the preceding tax year.
TEX. TAX CODE ANN. § 42.08(b) (emphasis added). In sum, before a property owner can appeal a
taxing authority’s decision, the owner must pay the lesser of: (1) amount of taxes not in dispute,
(2) the amount due pursuant to the taxing authority’s order, or (3) the tax imposed the previous
year. Id. Here, the entire amount of the taxes assessed is in dispute — thus, the amount not in
dispute is zero, which is obviously less than the amount due under the taxing authority’s order or
the amount of taxes imposed the previous year. Accordingly, the sole issue on appeal is whether
under Section 42.08(b)(1), the trial court had jurisdiction to review Exterran’s appeal from the
taxing authority’s decision in light of Exterran’s failure to pay anything.
Exterran contends that under the plain language of Section 42.08(b), specifically the “lesser
of” language, it was not required to make any payment prior to its appeal to the district court.
Exterran reasons that because the entire amount of the tax bill is in dispute — in that Exterran
contends it owes taxes to Victoria County as opposed to Webb County and United Independent
School District (collectively “Webb County”) — the lesser amount under the plain language of the
statute is zero. Webb County disagrees, arguing Exterran is required to pay something before it
may appeal because courts have repeatedly held that if the property owner does not pay any portion
of the assessed taxes by the delinquency date, then the property owner has not complied with
section 42.08(b), depriving the trial court of jurisdiction.
In construing a statute, our primary objective is to give effect to the Legislature’s intent,
which is determined first and foremost by the language of the statute itself. First Am. Title Ins.
Co. v. Combs, 258 S.W.3d 627, 631–32 (Tex. 2008). When the words of a statute are
unambiguous, “it is inappropriate to resort to rules of construction or extrinsic aids to construe the
language.” City of Rockwall v. Hughes, 246 S.W.3d 621, 626 (Tex. 2008). We have a duty to
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“resist revising a statute under the guise of interpreting it.” Christus Health Gulf Coast v. Aetna,
Inc., 397 S.W.3d 651, 654 (Tex. 2013). Moreover, and as is particularly applicable in this case,
Texas courts have often held that tax statutes must be liberally construed in favor of the taxpayer
and strictly construed against the taxing authority. TracFone Wireless, Inc. v. Comm’n on State
Emergency Commc’ns, 397 S.W.3d 173, 182 (Tex. 2013); Wilson Commc’ns, Inc. v. Calvert, 450
S.W.2d 842, 844 (Tex. 1970); U. Lawrence Boze’ & Assocs., P.C. v. Harris Cnty. Appraisal Dist.,
368 S.W.3d 17, 26 (Tex. App.—Houston [1st Dist.] 2011, no pet.). This is particularly true when
a statutory interpretation would result in forfeiture of the taxpayer’s right of appeal. See U.
Lawrence Boze’ & Assocs., 368 S.W.3d at 33 (citing J.C. Evans Constr. Co., Inc. v. Travis Cent.
Appraisal Dist., 4 S.W.3d 447, 449 (Tex. App.—Austin 1999, no pet.).
Looking at the plain language of Section 42.08(b), and liberally construing it in favor of
Exterran — the taxpayer — and its right to appeal, we hold Exterran was not required to pay
anything before it appealed Webb County’s decision in order to vest the trial court with
jurisdiction. The statute specifically states a taxpayer is required to pay only the lesser of the
undisputed portion of taxes, the amount due according to the order from which the appeal was
taken, or the amount due from the preceding tax year. See TracFone Wireless, 397 S.W.3d at 182;
U. Lawrence Boze’ & Assocs., 368 S.W.3d at 33. In this case, the lesser amount is zero. Our
interpretation is not only supported by our interpretation of the plain language of Section 42.08(b),
but by case law.
In Central Appraisal Dist. v. Lall, 924 S.W.2d 686, 690 (Tex. 1996), the supreme court, in
upholding the constitutionality of a prior version of section 42.08(b) in response to an open courts
challenge, specifically noted that requiring a taxpayer to pay the amount he conceded was due
prior to appealing a taxing authority decision is a constitutional practice tracking the common law
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rule. Thus, when the amount the taxpayer concedes is due is zero, requiring the taxpayer to pay
something more might have constitutional implications under the open courts provision. Cf. id.
In Pratt & Whitney Canada, Inc. v. McLennan Cnty. Appraisal Dist., 927 S.W.2d 641 (Tex.
App. – Waco 1996, writ denied), the Waco Court of Appeals was called upon to decide the exact
issue presented in this case — whether a taxpayer may, under the plain language of Section
42.08(b), make a prepayment of zero dollars when the entire amount of taxes assessed is in dispute.
In Pratt & Whitney, the taxpayer contested the placement of business personal property on
McLennan County’s tax rolls, putting the entire taxable amount in dispute. Id. at 642. The
taxpayer had never been taxed by the McLennan County Appraisal District before. Id. As in this
case, the trial court dismissed the suit for want of jurisdiction on the ground that Pratt & Whitney
did not pay any portion of the taxed amount prior to the delinquency date. See id. On appeal, the
appellate court reversed the trial court’s dismissal, holding that because the entire amount of taxes
assessed by the taxing authority was in dispute, Pratt & Whitney was not required under section
42.08(b) to pay anything in order to vest the trial court with jurisdiction. Id.
As in Pratt & Whitney, the taxpayer in this case, Exterran, disputes the full amount of taxes
assessed for the 2012 tax year. The only difference between Pratt & Whitney and the case before
us is that the property in Pratt & Whitney had never been taxed in the appraisal district before,
whereas here, Exterran was obligated to pay taxes to Webb County Appraisal District in tax years
2008 through 2011. Webb County contends this renders the decision in Pratt & Whitney
distinguishable, and therefore, inapplicable. We disagree and find this is a distinction without a
difference. Indeed, Exterran paid taxes to Webb County from 2008 until 2011. However, payment
was made pursuant to a version of the Tax Code that was subsequently amended, prompting
Exterran’s belief that it was necessary to pay the taxes in question to Victoria County as opposed
to Webb County, which it did.
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Webb County points to numerous cases which it contends establish that some prepayment
is necessary before jurisdiction vests with the trial court, pointing out that Texas courts have
repeatedly held that if the taxpayer fails to pay some portion of the assessed taxes by the mandated
date, the property owner has failed to substantially comply with section 42.08(b), divesting the
trial court of jurisdiction. See Lall, 924 S.W.2d at 690; Carter v. Harris Cnty. Appraisal Dist., 409
S.W.3d 26, 30–31 (Tex. App.—Houston [1st Dist.] 2013, no pet.); J.C. Evans Constr. Co., 4
S.W.3d at 451; Gen. Motors Acceptance Corp. v. Harris Cnty. Mun. Util. Dist. No. 130, 899
S.W.2d 821, 823 (Tex. App.—Houston [14th Dist.] 1995, no writ); Harris Cnty. Appraisal Dist.
v. Dipaola Realty Assoc., 841 S.W.2d 487, 490 (Tex. App.—Houston [1st Dist.] 1992, writ
denied); Filmstrips & Slides, Inc. v. Dallas Cent. Appraisal Dist., 806 S.W.2d 289, 291 (Tex.
App.—Dallas 1991, no writ); Harris Cnty. Appraisal Dist. v. Consol. Capital Props. IV, 795
S.W.2d 39, 41 (Tex. App.—Amarillo 1990, writ denied). However, we have reviewed the cases
relied upon by Webb County and hold they are readily distinguishable. In each case cited by Webb
County, there was a portion of taxes assessed that was not in dispute, mandating some payment
under the plain language of section 42.08(b). For example, in Carter v. Harris County Appraisal
District, the taxpayer did not dispute the appraisal district’s authority to tax his property. 409
S.W.3d 26, 30–31. Rather, the issue was the appraised value of the property and whether the
taxpayer’s inability to pay by the delinquency date affected his ability to challenge the appraisal
review board’s valuation of his property. Id. Indeed, the court was not even called upon to
consider whether the taxpayer complied with Section 42.08(b). Id. at 30. The taxpayer admittedly
did not comply with Section 42.08(b), asserting he met the exception outlined in Section 42.08(d).
Id. at 31. Thus, Carter — as with the other cases cited by Webb County — is distinguishable. As
stated above, here, the entire amount assessed was in dispute — therefore, the lesser amount to be
paid prior to an appeal was zero. Thus, the cases cited by Webb County do not mandate affirmance.
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There is nothing in Section 42.08(b) that requires a taxpayer to pay something above zero
when zero dollars is the lesser amount, i.e., the amount in dispute. We decline to interpret Section
42.08(b) to the contrary as such construction would be in favor of the taxing authority as opposed
to the taxpayer, resulting in a forfeiture of Exterran’s appellate rights, and therefore contrary to
Texas law. See TracFone Wireless, 397 S.W.3d at 182; U. Lawrence Boze’ & Assocs., 368 S.W.3d
at 33. Because the statute does not expressly require an amount greater than zero be paid, we
decline to impose a payment requirement. What amount would Webb County have Exterran pay?
There is nothing in the statute to suggest an amount under the circumstances presented here.
We note that United Independent School District raises another argument in support of the
trial court’s dismissal. The school district urges us to hold Exterran’s alleged failure to submit
with its appeal to the district court a statement in writing of the amount of taxes it proposed to pay
deprived the trial court of jurisdiction over Exterran’s appeal. See TEX. TAX CODE ANN. § 42.08(b-
1). Admittedly, Section 42.08(b-1) requires an appealing property owner to include a “statement
in writing of the amount of taxes the property owner proposes to pay.” Id. However, the last
sentence of section 42.08(b-1) specifically states that failure to provide the written statement is not
a jurisdictional error. Id. This provision is applicable here. The provision was effective June 14,
2013, and specifically applies to all proceedings pending on that date or filed thereafter. See Act
of June 14, 2013, 83rd Leg., R.S., ch. 1259, § 29, sec. 42.08(b-1), 2013 Tex. Gen. Laws 3182,
3193. Exterran filed its appeal in the district court on January 10, 2013, and it was still pending in
the district court on June 14, 2013 — the trial court did not sign its order of dismissal until April
1, 2014. Thus, by statute, Exterran’s failure to supply a written statement at the time it filed its
appeal was not jurisdictional error. See id.
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CONCLUSION
Based on the plain meaning of Section 42.08(b)(1), and because the entire amount was in
dispute, we hold Exterran was not required to make a prepayment of taxes to invoke the trial court’s
jurisdiction. Accordingly, the trial court erred in dismissing Exterran’s tax appeal for want of
jurisdiction. We therefore sustain Exterran’s appellate complaint, reverse the trial court’s order of
dismissal, and remand the matter to the trial court for further proceedings consistent with this
court’s opinion.
Marialyn Barnard, Justice
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