### TEXA S C OU R T OF A PPEAL S, THIR D DIST R ICT , AT AU STIN

NO. 03-0 8 -00 291 -CV

Sus an Com bs , in h er Offi cial Capacity as Com ptroller of P ubl ic Acc ounts

for th e St at e of Te xa s, App e lla nt

v. Ci tyof We bst e r , W e bst e r Ec ono m ic De ve lop m e ntCo r por at ion , C it y o f De nt on, Ci tyof Hum ble , C it y o f Le wisv ill e , C it y o f Me squi te , C it y o f No r th Ri c hla nd Hil ls, Ci tyof P lan o, Ci tyof Wa c o, De nt on C ount y Tr ans por ta ti on A ut hor it y, and

F ort Wor th Transp ortat ion Auth ority, Appellees

F ROM THE DISTRICT CO URT OF TRAVIS COUNTY , 261S T JUDICIAL DISTRICT NO. D-1- GV-06- 0018 23 , HO NORAB LE GISELA D. TRIANA-DO Y AL , JUDGE PRESIDI NG

C O N C U R

R I N G AN D D I S S E N T I N GO P I N I O N Appellee s’ UDJA claims fall square ly within the jurisdiction of the courts, and the Com ptr oll e r’ s p le a

to t he jur isd ic ti on on

tho se c la ims wa s p ro pe rl y de nie d b y

the tr ia l c ourt
. Citi ng the supreme court’s holdingin Cobb v. Harrington , 190 S.W .2d 709 (Tex. 1945), and quoting this Court’s prior opinion in Texas De partment of Insurance v . Rec onvey ance Se rvice s, Inc. , 24 0 S. W.3 d 4 18 , 4 34 (T e x. Ap p. —Aus tin 20 07 , p e t. f

ile d) , th e ma

jor ity fi nd s, “ ‘[I ]t is w e lle sta bli sh e d th a t T e xas c ourt s have su bje c t- matte r j ur isd ic tio n to de c lare ill e g a l or e njo in a g e nc ie s’ act s that mis int e rp re t an d m isa

pp ly the laws they

are char g ed with administering .’” S ee Combs v. City of W

ebster , N o . 0 3
- 0 8
- 0 0 2 9 1 , s l i p o p . a t1 6 ( T e x . Ap p . — A u s t i n O c t
. 2 , 2 0 0 9 )
. T h e m a j o r i ty, ho we ve r, the n igno re s it s ow n state me nt o f t he law a nd dis mis se s a

pp e lle e s’ mis int e rp re tatio n c la im,2

while re manding appellee s’ misapplication claim for further proce eding s. Be cause Iconclude that the trial court had jurisdiction over both appe llees’ misinterpre tation and misapplication claims for de c larator y jud g me nt, Idis se nt f

ro m th a t po rt ion

of the ma jor ity ’s op ini on

dis mis sin g a

pp e lle e s’ claim that the Comptroller misinterprete d the s tatute and acted without leg al authority in rea llocating tax revenues f

rom appe llees to the Ci t y o f Gr an d P ra i rie. I also dissent from that portion of the
ma jor ity ’s op ini on

dis mis sin g a

pp e lle e s’ c on sti tut ion a l c la ims
. D e c l a r a t o r y J u d g me n t C l a i ms I n Cobb v. Harrington , a

ta xpay e r s ue d th e Com

ptr oll e r s e e kin g a de c lara

tio n that it was not leg ally

liable to pay

an occ upation tax for “motor ca rri er s.” 190 S.W.2d at 710. The supreme c ourt held that the taxpay er’ s action for decla ra t o ry j u d gment was prope r bec ause the Comptroller misint erpr eted the tax code and, t here fore , acte d without lega l authority in compelling the taxpay er to pa

y a tax applicable to motor ca rrier s. Id. at 712. Li k e the taxpay er in Cobb v. Ha r r in g ton , appellee s claim that the Comptroller misinterprete d the tax code’s def inition of “place of business” a

nd, t h er efore, ac ted without leg al authority in rea llocating the tax revenue s from appellee s to Grand Pra irie. The ma jority ag ree s that the issue is whether appellee s have alleg ed an ultra vires c laim. Combs , su pra , slip op. at 11-12. Relying on the supreme c ourt’s holding in City of El Paso v. Heinrich , 284 S.W .3d 366 (Tex. 2009), howeve r, the majority conclude s that appellee s’ claim that the Comptroller mis int e rp re te d th e statut e c ann ot f a ll w ith in t

he ult ra vir e s e xce pti on to so ve re ig n immun ity un le ss the Comptroller’s interpr etation of the statute is unreasona ble or inconsistent with the leg islative intent. Combs , su

pra , s l i p o p . a t1 5 ( “ T o f

a l l w i th i nth e u l tr a

v i r e s e x c e p t i o nt o s o v e r e i g ni m mu n i ty,Had the leg islature int ended to g ive t he C omptroller ex clusive j urisdiction to interpret the 1 rele vant statutory

provisions, it could have done so. See, e .g. , Tex. Tax Code Ann. § 151.0101(b) (g ivi ngthe c omp tr oll e r e xclu siv e jur isd ic tio n to int e rp re t th e de fi nit ion of “ ta xab le se rv ic e ” in subsection 151.0101(a ) of the tax code)
. 3 a su it mus t a lle g e and

ult imate ly

pr ov e , that the state of

fi c ia l ac te d with out leg a l autho ri ty or fa ile d to p er fo rm a mi n i s t er i al ac t
. ” ( ci t i n g Heinrich , 2 84 S.W. 3d a t 37 2) ). Th e ma

jor ity mis re a ds Heinrich
. I n Heinrich , the supreme c o u r t e xp la in e d

th a t w hen a statute provides that an a g ency ’s interpre tation of the statute is final and binding , there is no right of judicial revie w to that interpre tation. See H

einrich , 2 8 4 S
. W
. 3 d

at3 7 1 n . 3 (c i t i n g an d

d i s cu s s i n g Houston Mun. Employe es Pe ns ion Sy

s. v . F e rre ll , 2 48 S.W. 3d

15 1 ( Te x. 20 07 )) . St a ted diff e re ntl y , th e re is n o r ig ht t o judicial revie w wher e a statute g ives an a g ency exclusive authority

to interpret the a ct. Id. But the supreme c ourt ac knowledg ed that “[a] differ ent case [is] prese nted” whe n a statute doe s not give an ag ency exclusive authority to interpret a statute and the pla intiff alleg es that the a g ency is violating the statute. Id. Applying the supreme c ourt’s analy sis here, the tax code does not g ive the Co mp tr ol le r e xclu siv e a

uth or ity to i nte rp re t th e re le va

nt s tatut or

y pr ov isi on s, and appe llees have

1 alleg ed that the Comptroller ha s misint erpr eted se ction 321.002 (a )( 3 ) of the tax code a nd that her
re su lti ngre a llo c a tio n o f t a x re ve nu e s f ro m a pp e lle e s to the City of Gr and Pr a ir ie vio late s th a t a c t. See id. Be cause appellee s contend that the Comptroller r eallocated their tax revenue s without any statutory authority , appellee s’ s uit seeks to compe l the Comptroller to comply with state law. That claim is not prohibited by sovere ign immunit y , and the trial court thus ha d jurisdiction to conside r whether the Comptroller misint erpr eted section 321.002(a) (3) of the tax code. See id. a t 3 7 2 ( “ [I ]t4

is clear that suits to re quire state officia ls to comply with statutory

or constitutional provisions are
no t pr oh ib it ed by

so ve re ig n immun ity .” ); see also Texas Natural Res. Conservation Comm’n v. IT-Dav y , 74 S.W .3d 849, 855 (Tex. 2002) (suits to compel state off icer s to a ct within their offic ial capa city are not “suits ag ainst the State,” a nd, there fore , do not impli cate sovere ign immunity). F ind ingthat the jur isd ic tio na l inq uir y “ ov e rl a ps wi th” the me ri ts o f a

pp e lle e s’ c la im, the majority

g oes on to consider

whether the Comptroller’s interpre tation of section 321.002(a )(3) of the tax code wa s rea sonable. Combs , su pra , slip op. at 14-15. The supreme court has confir med that a trial c ourt exercises i ts discretion in determiningwhether the jurisdictional deter

mination should be made at a preliminary hear ing or awa it a fuller de velopment of the c ase. See Tex as Dep’t of Parks &W

ildlif e v. M iranda , 133 S.W .3d 217, 227 (Tex. 2004). Given a ppellees’ alleg ations that the C o m p t ro ller withheld discover y reg ardingher pa st interpretations of the rele vant statutory provisions at issue, I would conclude that the trial cour t acted w ithin it s discretion to deny the Comptroller’s plea to the jurisdiction.

Up on de te rm ini ngthat th e Com ptr oll e r’ s in te rp re tatio n w a s r e a so na ble , th e ma

jor ity conclud es that appellee s’ misinterpretation claim should be dismis sed. Althoug h questions of statut or y c on str uc tio n ar e qu e sti on s of law, a t this jun c tur e , it is u nn e c e ssa ry he re to r e a c h th e me ri ts of appe llees’ c laim to decide the juri s dictional inquiry beca use appe llees have alleg ed that the Comptroller has both misint erpr eted the statutory definition of “plac e of business” and violated the law by rea llocating tax revenues f rom appe llees to the City of Gra nd Prairie. See He i nrich , 28 4 S. W.3 d at 37 0 n. 3. “ [T]he pr op e r f un c tio n o f a

dil a tor y ple a do e s n ot a

uth or ize an in qu ir

y so fa r i nto the su

bs tanc e of the c la ims pr e se nte d that pla int if fs are re qu ir e d to put on

the ir c a se sim plyI n a ny event, the tr ia l c ourt

did no t ha ve the be ne fi t of

the su pr e me c ourt ’s de c isi on

in 2 Cit y o f El Paso v. He inrich , 284 S.W .3d 366 (Tex. 2009), when it issued the orde r deny ing the Comptroller’s plea to the j urisdiction on April 11, 2008, since Heinrich was not re lease d until over a y e ar late r o n M ay

1, 2009. S

ee id. Thus, Iwould aff irm the trial cour

t’s order , or, in the alternative, Iwould rema

nd both of appellee s’ UDJA claims for re consideration in li g ht of Heinrich
. See Te x. R. A

pp . P. 43 .3 ; Ex

x on Cor p. v . Ti dwe ll , 86 7 S.W. 2d 19 , 2 3 ( Te x. 19 93 ) ( re mand ingc a us e in the interest of justice f

or re consideration in li g ht of new standa rd announc ed by

court). 5 to establish jurisdiction.” Bland Indep. Sc h

. Di s t
. v. Blue , 3 4 S. W.3 d 5 47 , 5 54 (T e x. 20 00 ). I t is
me re ly an e mpt y ta uto logy to a sse rt that th e me ri ts mus t be re a c he d to a dd re ss t he thr e sh old j u r i s d i c t i o n a l i n qu i r

y. 2
C o n s t itu t i o n a l C l a i ms Whil e I a g re e wi th the g e ne ra l pr inc ipl e that a pp e lle e s mus t a sse rt

a ve ste d r ig ht i n order to maintain their constitutional claims, Idisag ree with the majority ’s ana ly sis of whether appellee s have a vested right in their sales tax reve nues under the fa cts of this case . Relying on the supreme c ourt’s holding in Corpus Chr isti People’s Baptist Church, Inc. v. N u e c e s Co u n ty A p p r a isal District , 904 S.W .2d 621, 6 2 6 (T ex . 1995), the majority conclude s that appellee s have no ve sted rig ht to their sales tax revenue s during the per iod in w h i ch a t ax pay er ma y reque st a ref

und. See Combs , su

pra , slip op. at 9-10. The majority , howeve r, fails to addre ss appellee s’ ar g ument that the State does not own the tax reve nues at issue be cause such re venues a re me rely held i n trust by the Comptroller for the ben ef i t an d use of a

ppellees pur suant to the tax code. SeeTex. Tax Code Ann. §§ 32 1. 10 1, .1 03 -. 10 4, .5 01 (We st 2 00 8) . N or do e s th e ma

jor ity a dd re ss c on fl ic tin g su

pr e me court a uthority cited by appellee s in which the supreme court he ld that tax ing units, includingcities6

and school districts, have a veste d rig ht in fu n d s d er i ved fr om local taxation. See Lovev. City of Dallas , 40 S.W .2d 20, 29 (Tex. 1931).

The supre me court’s analy sis and holding in Corpus Chr isti People’s Baptist Church was ba sed on a sing le taxpay er’ s belated c laim of a re ligious ex em p t ion from liability for r eal proper ty taxes. See904 S .W .2d at 62 4- 25 . In c on c lud ingthat a c ha lle ng e d s tatut e “ me re ly deter mined the procedure

s for c laiming a

relig ious org anization ex emption,” id. a t 62 5 ( e mph a sis added) , the supreme court did not cite or othe rwise r efe renc e or ove rrule its prior holdin g in Love
v. C ity of Dallas r e g ar d in g a taxin g un it ’ s v e s te d

r igh t t o f

un d s d e r iv e d

f r o m l o c a l t a xation. See id. at 626. Moreove r, the fa cts of Cor p u s C h r i s ti People’s Baptist Church did not involve al l ega t i o n s o f at ax i n g u n i t ’s co o rd i n at ed l o b b yi n g ef fo rt s an d t ax p ay er re fu n d re qu es t s t o en co u ra ge the Com ptr oll e r t o c ha

ng e he r l on g sta

nd ingint e rp re ta

tio n a nd a pp lic a tio n o f Te xas ta x la

w. No r d id that case involve a situation in which a municipality ’s tax revenue s are held in trust by the Comptroller for the be nefit and use of the municipality . For t hese r easons, I

find the majority ’s relianc e on Corpus Chr isti People’s Baptist Church misplaced, a nd Idissent from that portion of the
ma jor ity ’s op ini on

dis mis sin g a

pp e lle e s’ c on sti tut ion a l c la ims
. CO NC LU SION B e c a us e Iwo uld

c on c lud e that th e tr ia l c ourt ha d ju ri sd ic tio n o ve r a

pp e lle e s’ c la im that the Comptroller misint erpr eted, as we ll as misapplied, the statute at issue, I respe ctfully

dissent7

from t h at portion of the majority opinion dism issing appe llees’ c laim that the Comptroller misint erpr eted the statute and acte d without leg al authority in r eallocating the tax reve nues at issue. Ilik e wi se dis se nt f

ro m th a t po rt ion

of the ma jor ity ’s op ini on

dis missi ng a

pp e lle e s’
c on sti tut ion a l c la ims
.

__________________________________________ J an P. Patterson, J ustice Be fore J ustices Patterson, Pember ton and Waldrop Filed: Oc tober 2, 2009