Affirmed and Memorandum Opinion filed April 28, 2015.

In The

Fourteenth Court of Appeals

NO. 14-14-00366-CV

PACIFIC WESTERN BANK, AS SUCCESSOR BY MERGER TO 

CAPITALSOURCE BANK, Appellant

V.

BRAZORIA COUNTY, Appellee

On Appeal from the 239th District Court

Brazoria County, Texas

Trial Court Cause No. 70781

MEMORANDUM OPINION

In this interlocutory appeal, the appellant challenges the trial court’s grant of 

a plea to the jurisdiction that dismissed one of appellant’s defenses to the 

underlying tax delinquency suit. We conclude that the trial court does not have 

jurisdiction to consider the asserted defense, because appellant failed to exhaust its 

administrative remedies. Therefore, we affirm. 
FACTUAL AND PROCEDURAL BACKGROUND

CapitalSource Bank (“CapitalSource”), which was the predecessor-ininterest to appellant Pacific Western Bank,1 allegedly had a financial arrangement 

(the details of which are unclear) with Chiquita Brands L.L.C. (“Chiquita”) 

pertaining to the purchase of refrigerated cargo containers. These containers 

allegedly are used by Chiquita in international trade, but at times a certain number 

of containers are temporarily located at a storage facility in Freeport, Brazoria 

County, Texas. 

In April 2011, an agent acting on behalf of CapitalSource filed a business 

personal property rendition of taxable property with the Brazoria County Appraisal 

District (“the District”) for the cargo containers. The rendition listed CapitalSource 

as the “Property owner/manager[],” and included a signed attestation that 

CapitalSource was the property owner or an affiliated entity of the property owner. 

CapitalSource, however, also added stamped notations reading “FOR 

INFORMATIONAL PURPOSES ONLY,” and included notes reading “Tax 

Obligation of User, not Taxpayer – Personal Property” and “INFORMATIONAL 

FILING ONLY – Please Assess User Directly.” The only reference made to 

Chiquita in the rendition was in an attached table that listed “Chiquita Brands, 

LLC” under a column titled “Site Name.” In May 2011, the District issued to 

CapitalSource a notice of appraised value for the cargo containers, which listed an 

estimated tax of over $317,000. CapitalSource admittedly did not file a protest of 

the tax assessment with the District claiming that the cargo containers are exempt 

from taxation. See Tex. Tax Code Ann. §§ 41.41, 41.44 (West, Westlaw through 

2013 3d Called Sess.).

1 We will refer to CapitalSource Bank exclusively in this opinion.

2

 
In April 2012, CapitalSource again filed a business personal property 

rendition of taxable property with the District for the cargo containers. As with the 

2011 rendition, the 2012 rendition listed CapitalSource as the “Property 

owner/manager[],” and included a signed attestation that CapitalSource was the 

property owner or an affiliated entity of the property owner. CapitalSource also 

affirmed that “the information contained in the most recent rendition statement 

filed by the property owner in a prior year is accurate with respect to the current 

tax year.” But, CapitalSource also included on the 2012 rendition various 

handwritten and stamped notations reading “BILL TO LESSEE,” “FOR 

INFOMATIONAL PURPOSES ONLY,” “Tax Obligation of User, Not Taxpayer –

Personal Property,” “INFORMATIONAL FILING ONLY – Please Assess User 

Directly,” “Capital Source Bank – For Chiquita Brands LLC Please Assess User 

Directly,” and “PER HUGH LANDRY FILE INFORMATIONAL.”

In May 2012, the District issued to CapitalSource a notice of appraised value 

for the cargo containers, which listed an estimated tax of over $349,000. In June 

2012, CapitalSource filed a formal administrative protest of the tax assessment. 

The only reason for the protest disclosed on the notice stated, “VALUE 

INCREASED FROM PRIOR YEAR – NO EXPLANATION.” The District’s 

appraisal review board sent CapitalSource notice that the protest hearing was 

scheduled for July 11, 2012 at 1:00 PM. CapitalSource, however, did not appear 

for the protest hearing, and it admits it did not pursue that protest. Also, 

CapitalSource admittedly did not file a protest of the tax assessment with the 

District claiming that the cargo containers are exempt from taxation.

In December 2012, appellee Brazoria County filed a delinquent tax suit 

against CapitalSource alleging that the assessed taxes on the cargo containers, 

along with penalties and interest, had not been paid. CapitalSource subsequently 

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filed a third-party petition against Chiquita. In December 2013, CapitalSource and 

Chiquita jointly filed a motion for summary judgment, in which they argued that 

the ad valorem taxes assessed against the containers are unconstitutional under 

federal law, and, therefore, unenforceable, because the containers are 

instrumentalities used exclusively in international commerce. In response, Brazoria 

County filed a plea to the jurisdiction, motion to dismiss, and response to the 

motion for summary judgment, in which Brazoria County argued, among other 

matters, that the trial court lacks jurisdiction to hear the constitutional claim 

because neither CapitalSource nor Chiquita exhausted its administrative remedies 

by filing a protest of the tax assessment as required by the Tax Code. See Tex. Tax 

Code Ann. § 42.09 (West, Westlaw through 2013 3d Called Sess.). CapitalSource 

and Chiquita filed a response to Brazoria County’s plea. 

After a hearing, the trial court signed an order on April 24, 2014, granting 

Brazoria County’s plea to the jurisdiction, and dismissing the constitutional 

defense asserted by CapitalSource and Chiquita in their respective answers. 

CapitalSource then filed this interlocutory appeal of the trial court’s order.2 See 

Tex. Civ. Prac. & Rem. Code Ann. § 51.014(a)(8) (West, Westlaw through 2013 

3d Called Sess.). 

ANALYSIS

In its sole issue, CapitalSource argues that the trial court’s grant of Brazoria

County’s plea to the jurisdiction was in error, because CapitalSource’s failure to 

file a formal administrative protest of the ad valorem tax assessment against the 

cargo containers does not preclude it from asserting in the underlying litigation that 

the taxes are unconstitutional and, thereby, unenforceable. “We review de novo a 

trial court’s ruling on a plea to the jurisdiction.” Allstate Indem. Co. v. Mem’l 

2 Chiquita did not appeal the trial court’s order. 

4

 
Hermann Health Sys., 437 S.W.3d 570, 573 (Tex. App.—Houston [14th Dist.] 

2014, no pet.); see also Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 

217, 226 (Tex. 2004).

Challenges to a Property Tax Assessment Generally Must Be Made Through an 

Administrative Protest Process and Corresponding Judicial Review.

“The Texas Tax Code provides detailed administrative procedures for those 

who would contest their property taxes.” Cameron Appraisal Dist. v. Rourk, 194 

S.W.3d 501, 502 (Tex. 2006) (per curiam). Under the Tax Code, a property owner 

is entitled to protest various actions before the respective appraisal review board, 

such as “inclusion of the owner’s property on the appraisal records,” “denial to the 

property owner in whole or in part of a partial exemption,” and “any other action . . 

. that applies to and adversely affects the property owner.” Tex. Tax Code Ann. 

§ 41.41(a)(3), (a)(4), (a)(9) (West, Westlaw through 2013 3d Called Sess.). “The 

intent of the administrative review process is to resolve the majority of tax protests 

at this level, thereby relieving the burden on the court system.” Webb Cnty. 

Appraisal Dist. v. New Laredo Hotel, Inc., 792 S.W.2d 952, 954 (Tex. 1990). “If 

the property owner is dissatisfied by the determination of the appraisal review 

board following the protest hearing, the property owner is then entitled to judicial 

review under Chapter 42 of the Tax Code—a trial de novo in the district court 

further appealable as any civil case.” Appraisal Review Bd. of Harris Cnty. 

Appraisal Dist. v. Spencer Square Ltd., 252 S.W.3d 842, 845 (Tex. App.—

Houston [14th Dist.] 2008, no pet.).

As a corollary to the existence of the administrative protest process, 

including the availability of further judicial review, the Tax Code provides (with 

limited exceptions not applicable here) that the “procedures prescribed . . . for 

adjudication of the grounds of protest authorized by this title are exclusive, and a 

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property owner may not raise any of those grounds: (1) in defense to a suit to 

enforce collection of delinquent taxes.” Tex. Tax Code Ann. § 42.09(a).3

Therefore, “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.” Matagorda Cnty. Appraisal Dist. v. Coastal Liquids Partners, L.P., 165 

S.W.3d 329, 331 (Tex. 2005); see also Patel v. Harris Cnty. Appraisal Dist., 434 

S.W.3d 803, 812–13 (Tex. App.—Houston [14th Dist.] 2014, no pet.) (“[A] 

property owner’s failure to protest a ground of protest before the appraisal review 

board deprives the district court of jurisdiction because the property owner has 

failed to exhaust administrative remedies as to that ground.”). 

CapitalSource’s Constitutional Defense to the Delinquency Suit Seeks to Set 

Aside the Tax Assessments, Which is a Claim that Must Be Brought 

Administratively.

CapitalSource acknowledges that it did not pursue a formal administrative 

protest of either the 2011 or 2012 tax assessments on the cargo containers based on 

CapitalSource’s assertion that the containers are exempt from taxation as 

instrumentalities of international commerce. CapitalSource nonetheless argues that 

it may raise the alleged unconstitutionality of the tax assessments as a defense to 

Brazoria County’s suit—notwithstanding Section 42.09(a) of the Tax Code—

because the defense is a pure question of law. We disagree. 

In Rourk, the supreme court reversed a court of appeals’ decision that the 

requirement to exhaust administrative remedies was inapplicable because the 

taxpayers had raised purely legal and constitutional questions. The court reasoned: 

“The taxpayers here are seeking more than a declaration that taxing trailers is 

3 Exhaustion of administrative remedies is not required to assert an affirmative defense 

that the taxpayer either did not own the property or that the property was outside the boundaries 

of the taxing unit. Rourk, 194 S.W.3d at 502 n.2; Tex. Tax Code Ann. § 42.09(b) (West, 

Westlaw through 2013 3d Called Sess.). 

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unconstitutional—they are seeking to have their individual assessments set aside. 

While the former claim need not be brought administratively, the latter must.” 

Rourk, 194 S.W.3d at 502. CapitalSource is likewise seeking to have the 2011 and 

2012 tax assessments on the cargo containers set aside. Therefore, this is a claim 

that CapitalSource was required to bring administratively. 

Our recent decision in Harris County Appraisal District v. ETC Marketing, 

Ltd., 399 S.W.3d 364 (Tex. App.—Houston [14th Dist.] 2013, pet. denied), is 

particularly instructive. In that case, the taxpayer claimed that the property in 

question was exempt from taxation under federal law because it was in interstate 

commerce. The taxpayer failed to raise that claim in its administrative protest to 

the appraisal review board. Instead, the taxpayer raised the claim for the first time 

in the appeal to the district court of the review board’s decision. Id. at 366. The 

taxpayer argued it was not required to exhaust its administrative remedies because 

the assessed tax was unconstitutional and the taxpayer was raising a pure question 

of law. Id. at 368. We rejected that argument, stating: “[The taxpayer] is not raising 

a pure question of law; it also is seeking to have its tax assessments set aside. It 

therefore is not relieved from the requirement of exhausting administrative 

remedies.” Id. (citing Rourk, 194 S.W.3d at 502). Here, CapitalSource is making 

effectively the same argument that we rejected in ETC Marketing, except that it is 

trying to raise the claim even later in the process as a defense to a collection suit—

which section 42.09(a) expressly says it cannot do. 

CapitalSource’s Attempts to Distinguish this Case Are Unpersuasive. 

CapitalSource makes several arguments why the holding in Rourk should 

not apply here, but we are not persuaded by these arguments. As one argument, 

CapitalSource places great emphasis on the fact that it marked its 2011 and 2012 

renditions as being “for informational purposes only” and with similar such 

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statements. But CapitalSource does not provide us any authority to demonstrate 

that the handwritten and stamped markings on its filed renditions have any legal 

effect, nor are we aware of any such authority. Moreover, even were we to assume 

that the markings added by CapitalSource on its renditions provided some legallyeffective instructions to the District, CapitalSource does not provide any authority 

to support its position that it was excused from having to file an administrative 

protest of the resulting tax assessments in order to raise its constitutional claim 

merely because CapitalSource included the “informational” markings on the 

renditions. Indeed, to the extent the various markings added by CapitalSource have 

any significance at all, it appears to be in connection with which entity—

CapitalSource or Chiquita—should have been assessed the tax, which is distinct 

from the constitutional claim CapitalSource now makes that the containers should 

be exempt from tax.

4 Cf. ETC Mktg., 399 S.W.3d at 369–70 (holding that filing a 

protest on other grounds did not exhaust administrative remedies with respect to 

constitutional claim). 

CapitalSource also attempts to distinguish the holding in Rourk based on 

purported admissions by Brazoria County that the tax assessments were 

inappropriate because Brazoria County granted a full exemption for cargo 

containers in the 2013 tax year. As an initial matter, we do not read the record as 

containing an admission by Brazoria County that the 2011 and 2012 tax 

assessments for cargo containers were inappropriate. And, even were we to 

conclude that Brazoria County did make such an admission, CapitalSource 

provides no authority to support its argument that such an admission relieves it

from having to exhaust its administrative remedies. If CapitalSource had a valid 

4 For example, on both the 2011 and 2012 renditions, CapitalSource included the notation 

“Please Assess User Directly.” This statement does not challenge the validity of any assessment, 

but rather concerns the obligee on the assessment. 

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argument that cargo containers were exempt from taxation under federal law in 

2011 and 2012, it could have—and should have—raised that argument through an 

administrative protest. See Tex. Tax Code Ann. § 11.12 (West, Westlaw through 

2013 3d Called Sess.) (“Property exempt from ad valorem taxation by federal law 

is exempt from taxation.”); ETC Mktg., 399 S.W.3d at 366 (“[A] taxpayer desiring 

to have its property removed from the tax rolls on the ground that the property is in 

interstate commerce and therefore exempt from taxation must exhaust 

administrative remedies by raising that argument with the appraisal review board 

in a timely tax protest under Chapter 41 of the Texas Tax Code.”). 

CapitalSource further refers to “informal dialogue” that it claims it engaged 

in with the District following the issuance of the 2011 notice of appraised value, 

although CapitalSource fully acknowledges that it did not pursue any formal 

administrative protest of either the 2011 or 2012 tax assessment based on the 

asserted unconstitutionality of the assessments. In its opening brief, CapitalSource 

suggests such informal dialogue has some bearing on why it is excused from 

having to file a formal administrative protest, but CapitalSource does not explain 

that suggestion or provide any authority in support. In its reply brief, CapitalSource 

suggests that the alleged informal dialogue “may lead to the determination that an 

informal protest was triggered sufficient to satisfy the Tax Code and preserve the 

issue for judicial determination.” 

CapitalSource’s claim of ongoing “informal dialogue” with the District does 

not affect our conclusion. First of all, CapitalSource’s suggestion in its reply brief 

that such informal dialogue may be a sufficient protest under the Tax Code was not 

made in CapitalSource’s opening brief, and therefore is waived. See Zurita v. 

Lombana, 322 S.W.3d 463, 477 (Tex. App.—Houston [14th Dist.] 2010, pet. 

denied). Next, there is insufficient evidence in the record to demonstrate whether,

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and to what extent, the claimed informal dialogue actually occurred, which 

CapitalSource effectively concedes by its statements that discovery is still being 

sought on this topic. Also, CapitalSource fails to provide any authority to support 

its position that engaging in informal dialogue enables it to challenge the 

constitutionality of the tax assessment in a delinquency suit in district court when 

the Tax Code mandates the formal administrative protest procedure as the 

exclusive initial route. See Tex. Tax Code Ann. §§ 41.44(a) (“[T]o be entitled to a 

hearing and determination of a protest, the property owner initiating the protest 

must file a written notice of the protest with the appraisal review board . . . .”), 

42.09(a) (West, Westlaw through 2013 3d Called Sess.) (providing that the 

“procedures prescribed by this title for adjudication of the grounds of protest 

authorized by this title are exclusive”); Rourk, 194 S.W.3d at 502 (“The 

administrative procedures are ‘exclusive’ and most defenses are barred if not raised 

therein.”) (quoting section 42.09). 

CapitalSource Failed to Obtain a Determination that the Assessed Tax on the 

Cargo Containers is Unconstitutional Through the Exclusive Procedure for 

Doing So. 

CapitalSource further argues that the existence of an administrative 

procedure to challenge the constitutionality of a tax does not mean that an 

unconstitutional tax is enforceable. This argument presupposes that the 2011 and 

2012 tax assessments are unconstitutional—a fact that has neither been adjudicated 

nor stipulated. As previously noted, the Tax Code provides an exemption for 

property exempted from taxation under federal law. See Tex. Tax Code Ann. 

§ 11.12 (West, Westlaw through 2013 3d Called Sess.). But the Tax Code also 

specifies exclusive procedures that CapitalSource was required to follow after 

receiving the notices of appraised value in order to assert its claim to a

constitutionally-based exemption. See Tex. Tax Code Ann. § 42.09(a)(1); Rourk, 

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194 S.W.3d at 502; ETC Mktg., 399 S.W.3d at 366, 368. CapitalSource appears to 

be arguing that requiring adherence to the mandatory procedures of the Tax Code 

is impermissible, because doing so may result in Brazoria County collecting a tax 

on property that otherwise may have been determined to be exempt from taxation 

under federal law. To the extent CapitalSource is making such an argument, that 

argument cannot be reconciled with Rourk or ETC Marketing.

CONCLUSION

CapitalSource failed to avail itself of the exclusive procedures established by 

the Tax Code to claim that the 2011 and 2012 tax assessments on the cargo 

containers should be set aside because the containers are exempt from taxation as 

instrumentalities of international commerce. As a consequence, the district court 

does not have jurisdiction to consider CapitalSource’s constitutional defense in the 

underlying tax delinquency suit. Therefore, the trial court was correct to have

granted Brazoria County’s plea to the jurisdiction with respect CapitalSource’s 

assertion that the cargo containers are exempt from taxation under federal law. 

Accordingly, we overrule appellant’s sole issue presented, and affirm the 

judgment of the trial court.

/s/ Marc W. Brown 

 Justice

Panel consists of Justices Jamison, Busby, and Brown.

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