### T E X A S C O U R T O F A P P E A L S , T H I R D D I S T R I C T , A T A U S T I N

NO. 03-11-00707- CV

Travis Central Appraisal District , Appellan t

v. Wells F argo Bank Min nesota, N.A., Appellee

F ROM TH E DISTRI CT COURT O F TRAVIS CO UNTY, 201 ST JUDICI AL DISTRICT NO. D-1 -GN-0 8-0 0002 5, H ONO RAB LE GISELA D. TRI ANA-DO Y AL, JUDGE P RESIDING

O P I N I O N Appellant Travis Central App ra isal District (“TCAD ”) appea ls a trial court order imposing $337,956 in sanctions ag ainst i t for alleg edly failing to comply with the court’s prior summary -judg ment order , which require d TCAD to apply a pollution-control exemption to the ad valore m proper

ty valuation of proper

ty owned by Wells Fa

rg o Ba nk Minnesota, N.A. (“Wells Fa rg o”). See Tex. Tax Code Ann. § 11.31 (West 2008) (providing tax exemption for rea l and persona l proper

ty used for pollution control); see also Tex. Const

. art. VI I I , § 1- l (authorizing L eg islature to enac t ad valore m tax exemption for pollution-control proper ty). We hold that the trial court lac ked jurisdiction to impose sanctions for TCAD’ s alleg ed failure to proper ly apply the t ax exemption for tax y ear s 2008, 2009, and 2010 based on the prior summary -judg ment order , which

was rende red in c onnection with Wells Fa rg o’s protest of the proper ty ’s 2007 assessed va lue. We there fore vaca

te the trial c ourt’s orde r and dismiss the appea l for wa nt of jurisdiction.F ACTUAL AND P ROCEDURAL BACK GR OUND The trial court assessed monetary sanctions ag ainst TCAD for failing to comply with

a summary -judg ment order issued in J uly 2008 in the underly ing case , which was a suit for judicial revie w of Well s Fa

rg o’s protest of the 2007 assessed value of proper ty it owned that housed a residential apar

tment building. The proper ty had former ly been used as a landfill, and Wells Fa rg o had claimed a partial polluti o n - c o n tr o l e xe mp ti on based on a positive-use deter mination by the Texas Commi s s ion on Environmental Quality (“TCEQ” ). See Tex. Tax Code Ann. § 11.31. TCAD interpre ted the TCEQ’s use deter mination to exempt only the portion of the land value attributable to storm-wate r rete ntion ponds on the proper ty that wer e identified by the TCEQ as having a “positive use” deter

mination, but not to exempt any part of the improvement value of the apar tment building, citing (1) the lang uag e used in the TCEQ’s use deter mination of a “neg ative deter mination for the 594,208 sq. ft. of rea l estate which is being used to house a commerc ial apar tment complex,” and (2) a statutory exclusion making proper ty used for residential purposes ineligible for the exemption. See id. § 11.31(a) (“Prope rty used for residential purposes . . . is ineligible for an

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ex em p tion under this section.”)

. After paying its 2007 taxes under protest, Wells Fa rg o appeal ed TCAD’s deter

mination to the Travis Appra isal Review Boa rd, contending that the use deter mination The TCEQ’ s final deter

mination as to the proper

ty stated as f

ollows: 1 A positive use deter

mination for 100% of the two s t o rmwate r rete ntion ponds rea l est at e (1 , 2 24 sf + 65,586 sf); continuous emission monitors; liners over landfill; semi-ac tive g as extract ion sy stem; methane monitoring & control equipment; two stormwater containment ponds; sloping of concr ete surfa ces for leac hate collection and remova l; landfill fi nal cover sy stem; g roundwater monitoring wells; fug itive emissions c ontainment structure s; and building for active g as extraction sy stem. A neg ative deter

mination for the 594,208 sq. ft. of rea l estate which is being used to house a c ommercia l apar

tment complex. 2also exempted the value of t he first floor apartment uni ts in which poll u t i o n co n trol device s wer e

installed. See id

. § 41.41(a) (4) (West 2008). When the Boa rd upheld TCAD’s deter

mination, Wells Fa rg o filed the unde rly ing suit for judicial revie w. Whil e the matter was p en d ing in the trial court, TCAD issued the 2008 notice of assessed value for Wells Fa rg o’s proper

ty , which applied the exemption for the 2008 tax y ear in the

same manner as it had for the 2007 tax y ear . Howeve r, Wells Fa rg o did not pro t es t the 2008 assessment, did not pay the taxes for that y ear under protest, did not amend its petition to include the 2008 assessment, and did not independe ntly file suit with reg ard to the 2008 assessment. See id. §§ 41.41 (rig ht to protest), .411 (protest of failure to g ive notice), .44 (pre scribing deadlines for filing notice of protest); 4 2 .209 (re medies under tax code are taxpay er’ s exclusive reme dies), .21 (pre scribing proce dures in suit for judicial revie w) (West 2008 & Supp. 2012). Shortly afte r the deadline for protesting the 2008 assessment had passed, the trial court g rante d Wells Fa rg o’s motion for summary judgme nt in the pending action and order ed TCAD to apply the pollution-control use deter mination issued by

the TCEQ i n a manner consist ent wit h Wells Fa rg o’s i nterpre tation. The summary -judg ment order was not appe aled a

nd beca me final. I nterpret i n g the pollution-control use deter mination to exclude any part of the apar tment complex building, TCAD continued, in the fac e of the summary -judg ment order , to apply the exemption only to the portion of the proper ty on which there wer e storm-wate r rete ntion ponds. See generally Travis Cent. Appraisal Dist. v. W ells Fargo Bank Minn., N.A. , No. 03-09-00013- CV, 2010 WL 983924 (Tex. App.—Austin Mar. 19, 2010, no pet.) (mem. op.)

. Wells Fa rg o filed a motion for sanctions, contending that the TCEQ’s use d e te r mi n a tion—and thus the pollution-control

3exemption—also applied to the units on the first floor of the apar tment building, that the trial court had nece s s ar i l y s o h eld in g ranting summary judgme nt in its favor , and that TCAD was not comply ing with the court’s order to apply the pollution-control use deter mination the TCEQ issued. Id. at *3. The trial court gra nted W ells Fa

rg o’s motion and ordered that Wells Fa rg o rec over as a sanction the portion of the ad valore m ta x assessed on the first-floor units, whic h Wells F arg o had paid under

protest for the 2007 tax y ear . Id

. TCAD appea led that sanctions order to this Court. We aff irmed, holding that the trial court did not abuse its discretion in s an ct i oning TCAD for failing to comply with the summary -judg ment order beca use by g ranting Wells Fa

rg o’s motion for summary judgme nt, it was sufficie ntly clea

r to TCAD that the summary -judg ment order require d TCAD to downwar dly adjust the proper ty -tax assessment for the 2007 tax y ear , and the evidenc e was undisputed that it had failed to do so. Id. at *5.

I n the meantime, while the prior appea l was pending in this Court, TCAD issued the 2009 notice of assessed value for Wells Fa rg o’s proper

ty , which applied the pollution-control exempt i on in essentially the same manner as the 2007 and 2008 tax y ear s. Wells Fa rg o did not protest the 2009 assessment, did no t p ay the taxes under protest, did not amend its petition in the

u nderlying lawsuit, and did not independe ntly file suit ag ainst TCAD in reg ard to the 2009

assess m en t

. After we issued our Marc h 2010 opinion aff irming the prior sanctions order , it is undisputed that TCAD applied the tax exemption to the first-floor apar tments for the 2007 tax y ear . TCAD did not, h o we v er, retroa ctively revise the 2008 and 2009 tax assessments, for which no protest had been filed. TCAD simil arly applied only a partial exemption in the 2010 notice of

4assessed value, which w as issued after we handed down our opi nion. Wells Fa rg o did protest t he 2010 assessed value but subsequently executed a settlement ag ree ment with TCAD, withdrew its tax protest, and wa ived the rig ht to any further proce eding s relate d to the 2010 assessment. 2 Although Wells Fa

rg o had not protested the 2008 or 2009 assessed values and had settled its protest of the 2010 assessed value, Wells Fa rg o filed in the trial court a sec o n d m o t i on for sanctions in which it claimed that TCAD had willfully failed to compl y with the 2008 summary -judg ment order and soug ht to rec over the excess taxes and penalties it had paid for those three tax y ear s. Wells Fa rg o asser ted that the 2008 summary -j u d gm en t o rder require d TCAD to ap p l y t he exemption and adjust the assessed value in all future tax periods, reg ardle ss of whether Wells Fa rg o had protested valuation i n those y ear s, beca use the tax code provides that once a taxpa y er qualifies for the pollution-control exemption, the proper ty owner need not claim it in subsequent y ear s (subject to cer tain exceptions not asser

ted to be applicable in this case ). See Tex. Tax Code Ann. § 11.43(c)

. Wells Fa rg o argued that, following the 2008 summary -judg ment order , TCAD’s implementation of the exemption to all pros p ective tax periods was a minist eria l task, TCAD had no discretion in applying it, and TCAD had contu m aciously failed to comply with the trial court’s order requiring its applicat i o n . S ee i d

. § 11.31(i) (“The chief appraiser shall acc ept a final deter

mination by the ex ec u t i v e d irec tor as conclusive evidenc e that the fac ility , device , or method is used wholly

or par tly as pollution control property .”).

Curiously , in the “re asons for y our protest” section of Wells Fa rg o’s notice of protest for 2 the 2010 tax y ear , Wells Fa rg o chec ked the box es for “value is over marke t value” an d “v al ue is unequal compar ed with other proper ties.” Wells Fa

rg o did not selec t the option on the protest form for “ [e] x emption was denie d, modified or ca ncelled.” 5TCAD opposed the sanctions motion, contending that the tri al court lacke d

jurisdiction to impose sanctions for any tax y ear afte r 2007 beca u s e t h e s u m mary -judg ment order

was silent as to subsequent tax y ear s and beca use Wells Fa

rg o had failed t o u t iliz e the exclusive

reme dies provided in the tax code for p ro t es t i n g the 2008 and 2009 tax-y ear assessments, had expressly waived its rig ht to protest t he 2010 assessment, and had not amende d the petition in the underlying lawsuit to include any subsequent tax y ear s. TCAD further asser ted that it had not failed to apply the exemption but rathe r had appl i ed it to part of the proper ty based on a rea sonable interpre tation of the TCEQ’s use deter mination. The sanctions motion wa s tried on stipulated fac ts, a nd the trial court r

uled that the 2008 summary -judg ment order applied t o t ax y ear s subsequent to 2007, observing that the order

was not expressly limi t ed t o t h e 2007 tax period and stating that the tax code does not require a taxpay er to rea

pply for the pollution-control exemption once g ran t ed

. S ee id. § 11.43(c)

. After hear ing evidenc e from Wells Fa rg o reg arding the exten t t o whi ch it was denied the benef it of the pollution-control exemption in 2008, 2009, and 2010, the trial court g rante d the motion for sanctions and assessed $337,956 ag ainst TCAD. The amount of the san ct i o n s aw ar d was based on the full amount Wells Fa

rgo claimed to have overpa id for proper ty taxes in 2008, 2009, and 2010, plus assessed penalties. The trial court further g rante d Wells Fa rg o attorney ’s fee s in the event of appea l, but otherwise de nied Wells Farg o’s re quest for attorney ’s fe es.

On appea l, TCAD rea sserts its contention that the trial court lack ed jurisdiction to impose sanctions for the 2008, 2009, and 2010 tax y ear s. I n the alternative, it contends that the trial

6court abused its discretion in imposing sanctions beca use TCAD did not act in bad faith and beca use the amount awa

rded w as excessive.

DISCUSSIO N The trial court signe d the second sanctions order almost s i x t een months afte r this Court’s mandate was issued in the ear lier appea l. Thus, unless the 2008 summary -judg ment order applied to tax y ear s bey ond 2007, TCAD’s actions as to subsequent tax y ear s wer e outside the scope of the 2008 summary -judg ment order and would not support the trial court’s second sanctions order

. Acc ording ly , the critica l jurisdictional inquiry in t h i s case is the proper scope of the 2008 summary -judg ment order

. For the rea sons that follow, we hold that the trial court’s construction of the underlying summary -judg ment order as applying to assessments in tax y ear s subsequent to 2007 is inconsistent wi t h t h e scope of Wells Fa rg o’s petition, the statutory provisions conce rning exhaustion of administ rative r emedies, a nd rele vant ca se law. When Wells Fa

rg o filed the underly

ing suit for judicial revie w, its petitio n wa s limit ed to a complaint abo u t t h e as s essment for tax y ear 2007. The petition did not ref ere nce subsequent tax y ear s specific ally or g ener ally

. I n g ranting the second sanctions order , howeve r, the trial court construed the 2008 summary -judg ment order as applyi ng to subsequent tax y ear s, appa re n t l y b as ed on the following two fac ts: (1) the summary -judg ment order did not include lang uage ex pressly limit ing its scope to the 2007 tax period, and (2) the tax code states that a taxpay er need only apply for the pollution-control ex empt ion once and need not claim it in subsequent y ear s unless the proper ty ’s use or owner ship chang es. See id. § 11.43(c)

. We conclude that the trial court’s deter

mination ignor es the limit ed scope of Wells Fa rg o’s petition and is contra ry

7to case law establishing that courts lack jurisdiction to adjudicate disputed tax assessments for tax y ear s not included in a petition reque sting relief as well as those for which administrative reme dies

wer e not exhausted.

I n Atascosa County Appraisal District v. Tymrak , 858 S.W .2d 335 (Tex. 1993), the Texas Supreme Court outlined in detail the steps that must be followed to challeng e an assessment for su b s eq u en t y ea rs . Id. at 336-37. To challeng e any assessment, a taxpay er must timely file a notice of protest and appea r (per sonally , by aff

idavit, or by repr esentative) at a protest hear ing. Id

. at 336; see also Tex. Tax Code Ann. §§ 41.44, .45 (West S u p p . 2 0 1 2 ). I f these steps are timely completed without a satisfac tory resolution, the taxpay er must then timely file its petition in the trial court; this “appe al” of the appra isal revie w board’ s order conce rns the curr ent tax y ear only

. Tymrak , 858 S.W .2d at 337; see also Tex. Tax Code Ann. § 42.21 (West Supp. 2012). I f an appea l of a prior y ear ’s protest is pending when the appra isal revie w board issues its order , the tax code provides the taxpay er with two options: (1) amend the petition for the pending appea l to include the g rounds for appea ling the subsequent order , or (2) appea l the board’ s order independe ntly of the pending appea l. Tex. Tax . Code Ann. § 42.21(c ). As the supre me cour t in Tymrak

observe d,

Since taxpay er appea ls are usually filed at the end of the y ear , most case s are s t i l l pending when the appra isal district delivers notices of appra ised value for t h e next tax y ear . At that time, the taxpay er makes the decision whether to beg in the task of ex hausting its administrati v e re m ed ies in order to corr ect an improper appraisal of its proper

ty for that tax y ear . The taxpay er must complete these steps for eac h y ear that it desires to challeng e the valuation beca use the completion of all the administrative require ments, the filing of a timely petition in the trial court, and the prosec ution of the lawsuit to its final dispositi on aff ects only the appra ised value of the proper

ty for that one t ax y ear . Unless a proper ty owner repe ats this almost y ear -long administrative proce ss and files another petition in a separ ate lawsuit or files an amende d petiti o n i n a p ending lawsuit filed appea ling from an appra isal

8revie w board order issued in a previous y ear , the taxpay er loses its rig ht to litigate the

appra ised value for the subsequent y ear , even when a lawsuit cha l l en g ing the appra ised v al u e of the same proper ty for a previous y ear is pending

. Tex. Tax Code § 42.21(c)

. Tymrak , 858 S.W .2d at 337; see also Tex. Tax Code Ann. § 42.09 (t ax code proce dures for protesting assessment are taxpay er’ s exclusive reme dies). I t is undisputed that Wells Fa rg o did not comply with these proce dures for tax y ear s 2008 and 2009 and that it settled and waived its protest for 2010 without ever having soug ht judicial revie w of the assessed value. Nonethele ss, it now seeks to avoid the conseque nces of its failure to follow mandatory tax-code proce dures, not by protesting the assessed values for those y ear s but by seeking sanctions and c la iming that the summary -judg ment order in a suit perta ining only to the assessment for the 2007 tax y ear n ece ssarily g overne d assessment protests for all subsequent tax periods mere ly beca use Wells Fa

rg o was not require d to

rea pply for the e x emption once it was g rante d. We disag ree . I n Hende rson County Appraisal Dis trict v. HL Farm Corp. , 956 S.W .2d 672 (Tex. App.—Eastland 1997, no pet.), the court considere d Tymrak in connec tion with a dispute reg arding the taxpay er’ s entitlement to an open-spa ce land desig nation for sever al tax periods. Id. at 673; see also Tex. Tax Code Ann. §§ 23.51, .52, .54 (West 2008 & Supp. 2012). L ike the pollution-control exemption at issue in this case , a taxpay er claiming an open-spa ce land desig nation for purposes of ad valore m tax valuation is e ntitled to reta in the desig nation in subse quent tax y ear s without filing

a new application unless use or owner ship chang es. Tex. Tax Code Ann. § 23.54(e) (West 2008). I n its tax-protest suit, the taxpay er had expressly challeng ed the taxi ng authority ’s denial of the openspace land designation for “1988 and all subsequent y ea rs,” and the t rial court rende red judgment in its favor for a six -y ear period—1988 throug h 1993. HL Farm , 956 S.W .2d at 673. The taxpay er, 9howeve r, had only exhausted its administrative reme dies as to 1988, 1989, and 1992. See id. at 675.

Apply ing Tymrak , the court of appea ls held that the taxpay er was only entitled to the open-spa ce land desig nation for the y ear s included in the taxpay er’ s petition and for which administrative reme dies had been exhausted. Id. at 674-75. Be cause the taxpay er had exhausted its administrative reme dies for the y ear s 1988, 1989, and 1992, the c ourt held that the trial court did not err in f inding that HL Fa rm wa s en t i t l ed to the open-spa ce land desig nation in those y ear s. Id. at 675. Significa ntly , howeve r, the court deter

mined that succe ssful litigation of the desig nation issue as to those specific y ear s did not extend to subsequent y ear s for which HL Fa rm h ad n o t exhausted its administrative

reme dies: “We hold that HL Fa rm was require d to exhaust its administrative reme dies for eac h y ear at i s s u e i n t h i s appea l and that the t rial court did not have jurisdiction to consider the issue of H L Fa rm’s entitlement to open-spa ce la nd desig nation in 1990, 1991, and 1993.” Id. I n the prese nt case , Wells Fa rg o neither reque sted relief for the 2008, 2009, and 2010 tax y ear s n o r exhausted its administrative reme dies as to those y ear s. The tax code and case law make it clea

r that these failure s would be fata l to a t ax p ay er ’s cl aim for a ref und. Wells Fa

rg o

never theless asser

ts two rea sons why we must construe the 2008 summary -judg ment order to apply to subsequent tax y ear s and allow it to obtain relief throug h the bac k door (sa nctions) that it could not obtain throug h the front door (re fund afte r protest). The first is that application of the pollutioncontrol exemption to one tax y ear relieve s the taxpay er of the obligation to apply for it in subsequent tax y ear s, and Wells Fa

rg o was entitled to the exemption for the 2007 tax y ear by virtue of the 2008 summary -judg ment order

. As HL Farms demonstrates, howeve r, even if the 2008 summary judgme nt order obviated the need for Wells Fa rg o to rea pply eac h y ear for the polluti o n -control exemption, it did not obviate the need for Wells Fa rg o to follow tax-code proce dures for protesting 10assessed va lues in subsequent y ear s in a ccor dance with the proce dures mandated by the tax code. Be cause Wells Fa

rg o failed to follow those proce dures, the trial court lacke d authority to awa rd any relief for those subse quent y ear s in the 2008 summary -judg ment order

. Ant ic ip a ti n g th a t th e f a il u r e to e xh a u s t a d mi n is tr a tive reme dies would be problematic, Wells F arg o further contends that it need not have exhausted its reme dies in order to c halleng e the 2008, 2009, and 2010 assessments beca use cer tain exceptions to the exhaustion require ment apply under the fac ts of this c ase. That may or may not be true, but it is beside the point. Wells F arg o is not challeng ing the 2008, 2009, and 2010 assessments in a tax -protest suit ; it is seeking sanctions based on the 2008 summary -judg ment order ren d er ed i n a suit that challeng ed the assessed value only for the 2007 tax y ear . We need not decide in this case whether Wells Fa rg o could have asser

ted claims for subsequent y ear s without first exhausting its administrative reme dies; the pertinent jurisdict i o n al i n q u i ry in this case is whether it did. On that point, we conclude that the 2008 summary -judg ment order cannot proper ly be construed as applying to subsequent tax y ear s that wer e not included within the scope of the underly ing laws u i t beca

use no relief was reque sted for those y ea rs , the failure to exhaust statutory prer equisites to suit indicates that those tax y ear s wer e not place d at issue in the underlying lawsuit, and case law makes it clea r that litigation of a tax dispute

as to one tax period does not apply to subsequent t ax p er i o d s. Although neither Tymrak nor HL Farms is a sanctions case , those case s are instructive as to the proper construction of the relief g rante d in the 2008 summary -judg ment order beca use they demonstrate why that order co u l d n o t have g rante d relief beyond the 2007 tax y ear —the only tax y ear for which relief was reque sted and administrative reme dies had been exhausted. The trial court’s contra ry deter mination in its second

11sanctions orde r is inc onsistent with the lang uag e in Wells Fa rg o’s petition, the g overningstatutes, and re levant ca se law.

We hold that the trial court exceede d its jurisdiction wh en i t sanctioned TCAD in relation to the 2008, 2009, and 2010 tax assessments, which wer e not part of the proce eding s befor e the court when it g rante d summary judgme nt in 2008 and there fore could not have been cover ed by the 2008 summary -judg ment order

.
CONCLUSION

For the rea sons stated, we vacate the trial court’s sanctions order and dismiss the appea l for wa

nt of jurisdiction.

_________________________________________ J . Woodfin J ones, Chief Just ice Be fore Chief J ustice Jones, J ustices Rose and Goodw in Vac ated a nd Dismissed for Want of J urisdiction Filed: Oc tober 12, 2012

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