Affirmed and Memorandum Opinion filed April 2 8 , 2015

.

In The 

## Fourteenth Court of Appeals

NO. 14

- 14

- 00366

- CV

PACIFIC WESTERN BANK , AS SUCCESSOR BY ME RGER 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 c onsider the asserted defense, because appellant failed to exhaust its administrative remedies. Therefore, we affirm.F ACTUAL AND P ROCEDURAL B ACKGROUND CapitalSource Bank (“CapitalSource”), which was the predecessor

- in

interest to appellant Pacific Wester n 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 t he 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 Dir ectly.” 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 containe rs, 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 t hrough 2013 3d Called Sess.).

1 We will refer to CapitalSource Bank exclusively in this opinion

.
2In 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 Oblig ation 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 is sued 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 o n the notice stated, “VALUE
INCREASED FROM PRIOR YEAR

– NO EXPLANATION.” The District’s

appraisal r eview b oard sent CapitalSource notice that the protest hearing was scheduled for July 11, 2012 at 1:00 PM. CapitalSource, however, did not appear for the pro test 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 Count y 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

3filed 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
instrum entalities 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. Se e 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 2 4 , 2014 , granting
Brazoria County ’s plea to the ju risdiction, 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) (W est, Westlaw through 2013 3d Called Sess.).

A NALYSIS 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 o f the ad valorem tax assessment against the cargo containers does not preclude it from asserting in the underlying litigation that
the taxes are unconstitution al and, thereby, unenforceable. “We review de novo a trial court’s ruling on a plea to the jurisd iction.” Allstate Indem

. Co. v. Mem’l

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

4Hermann 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 conte s t 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 o wner 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 admin istrative 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 dissatisf ied 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.” Appra isal 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 judicia l 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

5property 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 v alorem
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 t he Delinquency Suit Seeks to Set Aside the Tax Assessment s

, 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 def ense is a pure question of law. We disagree.

In Rourk , the supreme court reversed a court of appeals’ decisio n 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.).

6uncon stitutional

— 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 assessment s on t he cargo containers set aside. Therefore, t his 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 pro test 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 bec ause 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. ( cit ing 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) exp ressly 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, CapitalSourc e places great emphasis on the fact that it marked its 2011 and 2012 renditions as being “for informational purposes only” and with similar such

7statements. 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 legally

effective instructions to the District, Capit alSource 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 “informa tional” 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 Chiqu ita

— 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 a dministrative 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 fu ll 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
concl ude 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 o n the assessment.

8argument that cargo contain ers 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 va lorem 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 ass essments. 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
iss ue 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 unde r 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,

9and to what extent, the claimed informal dialogue actually occurred, which CapitalSource effectively concedes by its statement s 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. T ax 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 defense s are barre d if not raised therein.”) (quoting s ection 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. T his argument presupposes that the 2011 and
2012 tax assessments are uncon stitutional

— a fact that has neither been adjudicated

n or 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
constit utionally

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

10194 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

. C ONCLUSION 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 ta xation 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 tria l court.

/s/ Marc W. Brown J ustice

Panel consists of Justices Jamison, Busby, and Brown

.

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