the Duncan House Charitable Corporation v. Harris County Appraisal District

Affirmed and Memorandum Opinion filed December 9, 2021.
In The
Fourteenth Court of Appeals
NO. 14-20-00461-CV
THE DUNCAN HOUSE CHARITABLE CORPORATION, Appellant
V.
HARRIS COUNTY APPRAISAL DISTRICT, Appellee
On Appeal from the 55th District Court
Harris County, Texas
Trial Court Cause No. 2018-75883
MEMORANDUM OPINION
Appellant, The Duncan House Charitable Corporation (“Duncan House”),
filed suit against appellee, Harris County Appraisal District (“HCAD”), seeking
judicial review of the Appraisal Review Board’s dismissal of Duncan House’s
cause of action seeking an exemption from taxation on its fifty percent ownership
interest in a single-family residence for the year 2018. HCAD filed a plea to the
jurisdiction arguing that the trial court did not have subject-matter jurisdiction over
Duncan House’s tax exemption claim because Duncan House did not exhaust its
administrative remedies. The trial court granted HCAD’s plea and dismissed
Duncan House’s 2018 tax exemption claims. Because Duncan House was required
to file an application for the tax exemption for 2018, and it did not, we overrule
Duncan House’s issues on appeal and affirm the trial court’s dismissal order.
BACKGROUND
Duncan House alleged that it is a Texas nonprofit corporation formed to
perform religious, charitable, literary, or educational purposes, and to preserve the
Charles W. Duncan, Sr. House, a River Oaks residence, as a historical landmark.
In 2017, Duncan House purchased a fifty percent undivided interest in the River
Oaks property from Mrs. Carol Cantrell. Mr. William Cantrell, Carol’s spouse,
retained his fifty percent interest in the property. The Cantrells continue to reside
in the property. The property has been designated as a historical landmark by the
City of Houston and has also been listed by the National Park Service in the
National Register of Historic Places.
In 2017, Duncan House sought to have its fifty percent interest in the
property qualify for a total exemption from taxation pursuant to section 11.18 of
the Texas Tax Code. See Tex. Tax Code Ann. § 11.18 (providing that real
property and buildings owned by a charitable organization are exempt from
taxation). As of May 1, 2018, Duncan House’s tax exemption application for 2017
had not been allowed.1 Duncan House did not submit an application for a
charitable organization tax exemption for the 2018 tax year. It did however, file a
protest checking three grounds: (1) “incorrect appraised (market) value”; (2)
“value is unequal compared with other properties”; and (3) “exemption denied,
1
Duncan House’s application for a tax exemption for 2017 was eventually denied on
June 6, 2018. Duncan House protested the denial of the 2017 tax exemption, which the
Appraisal Review Board rejected on October 1, 2018.
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modified, or cancelled”.
A hearing was held before the Appraisal Review Board on March 9, 2020,
only on the 2018 appraised value of the property. During the hearing, Duncan
House recognized that “[i]n 2017, the ARB denied the [charitable] exemption
[application] and had they granted it, it would have been effective in 2018.” At the
conclusion of the hearing, the Appraisal Review Board determined the market
value for the property was $3,150,000.
Duncan House filed suit complaining that the property was denied the
exemption for property owned and used exclusively by a charitable organization
for the 2017 tax year. Duncan House amended that petition to add a claim for the
alleged denial of a charitable exemption for the property for the 2018 tax year.
HCAD filed a plea to the jurisdiction arguing that the trial court should dismiss
Duncan House’s 2018 tax exemption complaint because Duncan House did not file
an application for the exemption and therefore did not exhaust its administrative
remedies, depriving the trial court of subject-matter jurisdiction. The trial court
granted HCAD’s plea and dismissed Duncan House’s 2018 complaint for lack of
jurisdiction. This accelerated appeal followed.
ANALYSIS
Duncan House raises two issues on appeal challenging the trial court’s
dismissal of its 2018 complaint. We address them together.
I. Standard of review and applicable law
The existence of subject matter jurisdiction is a question of law that can be
challenged by a plea to the jurisdiction. Klumb v. Houston Mun. Emps. Pension
Sys., 458 S.W.3d 1, 8 (Tex. 2015); Tex. Dep’t of Parks & Wildlife v. Miranda, 133
S.W.3d 217, 226 (Tex. 2004). We review a trial court’s ruling on a plea de novo.
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See Miranda, 133 S.W.3d at 226, 228; Woodway Drive LLC v. Harris Cnty.
Appraisal Dist., 311 S.W.3d 649, 651 (Tex. App.—Houston [14th Dist.] 2010, no
pet.).
Where, as here, a plea to the jurisdiction challenges the existence of
jurisdictional facts, we consider relevant evidence submitted by the parties when
necessary to resolve the jurisdictional issues. See Miranda, 133 S.W.3d at 227.
The movant, in this case HCAD, must meet the summary-judgment standard of
proof by conclusively demonstrating that the trial court lacks subject matter
jurisdiction. See id. at 227–28. We credit as true all evidence favoring the
nonmovant and draw all reasonable inferences and resolve any doubts in the
nonmovant’s favor. Id. at 228. If the evidence creates a fact question regarding
the jurisdictional issue, then the trial court may not grant the plea, and the fact
issue will be resolved at trial by the factfinder. Id. at 227–28. If relevant evidence
is undisputed or fails to raise a fact question on the jurisdictional issue, then the
trial court rules on the plea as a matter of law.
This appeal presents questions of statutory construction, which we also
review de novo. Texas Dep’t of Transp. v. Needham, 82 S.W.3d 314, 318 (Tex.
2002). When construing statutes, our primary objective is to give effect to the
legislature’s intent. Willacy Cty. Appraisal Dist. v. Sebastian Cotton & Grain,
Ltd., 555 S.W.3d 29, 38 (Tex. 2018). We rely on the plain meaning of the text as
expressing legislative intent unless a different meaning is supplied by legislative
definition or is apparent from the context, or the plain meaning leads to absurd
results. Id. We presume that the legislature intended the entire statute to be
effective. Vitol, Inc. v. Harris Cty. Appraisal Dist., 529 S.W.3d 159, 168 (Tex.
App.—Houston [14th Dist.] 2017, no pet.). We also presume that the legislature
chose a statute’s language with care, intentionally including each word chosen, and
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omitting words purposefully. Id. at 168. Another fundamental principle of
statutory construction is that when construing a statute, a reviewing court must
consider the act as a whole and not just as single phrases, clauses, or sentences.
Fredericksburg Care Co. v. Perez, 461 S.W.3d 513, 520 (Tex. 2015). We must
give effect to each provision of a statute so that none is rendered meaningless or
mere surplusage. TIC Energy & Chem., Inc. v. Martin, 498 S.W.3d 68, 74 (Tex.
2016). Therefore, when construing the provisions of the Property Tax Code at
issue in this appeal, we must consider how each “provision fits both within the
narrow framework of the tax-appraisal protest scheme and within the broader
scope of the Property Tax Code as a whole.” Willacy Cty. Appraisal Dist., 555
S.W.3d at 39.
The overall purpose of the Property Tax Code is to assure “the orderly
collection of revenue so that the functions of government should not be dependent
upon the outcome of a multitude of lawsuits,” while also ensuring that property
owners have been given adequate time to file their protests. Valero Transmission
Co. v. Hays Consol. Indep. Sch. Dist., 704 S.W.2d 857, 859, n.1 (Tex. App.—
Austin 1985, writ ref’d n.r.e.) (examining purpose behind newly enacted Property
Tax Code); see Willacy Cty. Appraisal Dist., 555 S.W.3d at 40 (citing Anderton v.
Rockwall Cent. Appraisal Dist., 26 S.W.3d 539, 543 (Tex. App.—Dallas 2000, pet.
denied)). To fulfill this purpose, the Property Tax Code provides detailed
administrative procedures which are exclusive for anyone wanting to contest their
property taxes. See Tex. Tax Code § 41.41 (providing right of protest by a
property owner); Vitol, Inc., 529 S.W.3d at 166; Appraisal Review Bd. Of Harris
Cty. Appraisal Dist. v. O’Connor & Assocs., 267 S.W.3d 413, 417 (Tex. App.—
Houston [14th Dist.] 2008, no pet.). The administrative-review process is intended
to resolve most tax protests at the administrative level, relieving the burden on the
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court system in the process. Harris Cty. Appraisal Dist. v. ETC Mktg., 399 S.W.3d
364, 367 (Tex. App.—Houston [14th Dist.] 2013, pet. denied). Therefore, property
owners generally must exhaust their administrative remedies before they can seek
judicial review. Vitol, Inc., 529 S.W.3d at 166. As a result, “a taxpayer’s failure to
pursue an appraisal review board proceeding deprives the courts of jurisdiction to
decide most matters relating to ad valorem taxes.” Cameron Appraisal Dist. v.
Rourk, 194 S.W.3d 501, 502 (Tex. 2006) (internal quotation marks omitted).
Pursuant to Chapter 41 of the Property Tax Code, property owners are
entitled to administratively protest certain actions related to property taxes to an
appraisal review board. See Tex. Tax Code § 41.41(a). Section 41.41 outlines
eight actions that may be protested by a property owner to an appraisal review
board, including “denial to the property owner in whole or in part of a partial
exemption.” Id. § 41.41(a)(4). In addition, subsection (a)(9) authorizes a general
protest of “any other action of the chief appraiser [or] appraisal district . . . that
applies to and adversely affects the property owner.” Id. § 41.41(a)(9). A protest
asserting that a property qualifies for exemption from taxation is properly raised
through Chapter 41 proceedings before an appraisal review board. See Harris
Cnty. Appraisal Dist. v. Nunu, No. 14-08-00528-CV, 2009 WL 2620732, at *1
(Tex. App.—Houston [14th Dist.] Aug. 27, 2009, pet. denied) (mem. op.)
(resolving appeal of denial of homestead exemption from trial de novo in trial
court following completion of administrative review process).
II. Because the plain language of the statute required Duncan House to file
an application for a 2018 tax exemption, it failed to exhaust its
administrative remedies when it failed to do so.
Section 11.18 of the Texas Property Tax Code provides that a charitable
organization is exempt from taxation on the buildings and tangible personal
property it owns so long as the property is used exclusively by the charitable
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organization. See Tex. Tax Code § 11.18. To qualify for that exemption, however,
the charitable organization “must apply for the exemption.” See id. § 11.43(a). In
addition, the Property Tax Code provides that “[a]n exemption provided by Section
. . . 11.18, . . . once allowed, need not be claimed in subsequent years, and except
as otherwise provided by Subsection (e), the exemption applies to the property
until it changes ownership or the person’s qualification for the exemption
changes. . . .” See id. § 11.43(c). If a charitable organization fails to timely file a
completed application form in a given year, it “may not receive the exemption for
that year.” See id. § 11.43(e). Therefore, under the plain language of the statute,
the timely filing of an application for the charitable organization exemption is a
statutory prerequisite for a charitable organization to receive the exemption.
It is undisputed that Duncan House filed an application for a charitable
organization exemption for the 2017 tax year. It is also undisputed that the
requested exemption had not been granted by May 1, 2018, the deadline for
Duncan House to apply for the charitable organization exemption for the 2018 tax
year. In addition, it is not disputed that the 2017 application was eventually denied
by the Appraisal Review Board. Finally, it is undisputed that Duncan House did
not file an application for a charitable organization exemption for the 2018 tax year
by the May 1, 2018 deadline. Because Duncan House did not comply with a
statutory prerequisite of filing an application for the charitable organization
exemption for the 2018 tax year, it could not receive the exemption. As a result,
neither the Appraisal Review Board nor the trial court had jurisdiction to grant a
charitable organization exemption to Duncan House for 2018. See Mount Vernon
United Methodist Church v. Harris County, No. 14-16-00590-CV, 2017 WL
1512251, at *3 (Tex. App.—Houston [14th Dist.] Apr. 25, 2017, no pet.) (mem.
op.) (“Under the tax code’s administrative procedures outlined above, and because
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it is asserting a religious-organization exemption, Mount Vernon’s remedy was to
first apply for a tax-exemption and then protest the denial of its application.”);
Vitol, Inc., 529 S.W.3d at 170 (“Under the plain language of section 11.43,
property owners who wish to claim certain exemptions–excepting section 11.12
and other exemptions–must submit an application.”). We hold that the trial court
did not err when it granted HCAD’s plea to the jurisdiction and dismissed Duncan
House’s cause of action seeking a charitable organization exemption for the 2018
tax year. See Mount Vernon United Methodist Church, 2017 WL 1512251, at *3
(“If the property owner fails to seek available relief before the administrative
review board, the courts lack jurisdiction to decide most matters relating to [the
property owner’s] ad valorem taxes.”) (internal quotation marks omitted). We
overrule Duncan House’s issues on appeal.2
2
Duncan House cites numerous cases in its appellate briefing in support of its argument
that it complied with all of the requirements set forth in those cases for the Property Tax Code
procedures. These cases include Valero Ref.-Tex., L.P. v. Galveston Cent. Appraisal Dist., 519
S.W.3d 66 (Tex. 2017) and Atascosa Cty. Appraisal Dist. v. Tymrak, 858 S.W.2d 335 (Tex.
1993). We conclude that these cases are distinguishable and therefore do not control the
outcome in this appeal because they do not address exemptions, and in particular the Property
Tax Code’s language requiring an annual application unless an exemption had been previously
granted. See Tex. Tax Code § 11.43.
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CONCLUSION
Having overruled Duncan House’s issues on appeal, we affirm the trial
court’s order dismissing Duncan House’s claims.
/s/ Jerry Zimmerer
Justice
Panel consists of Chief Justice Christopher and Justices Zimmerer and Wilson.
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