### 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. 03-17-00735- CV

In re Cather ine Tow er, LLC

ORI GINAL P ROCEEDI NG F ROM TRAVIS CO UNTY

O P I N I O N

A Texas proper

ty taxpay er has invoked its rig ht, confe rre d on all such persons by the
1997 “Te x as Taxpay er Bill of Rights,” to challeng e the tax appra isal of its proper ty by compar ison 1

to “the median appra ised value of a rea sonable number o f co m p ar able proper ties appropr iately adjusted,” first befor e the local appra isal revie w board, then in district court. The litigation tactics 2
of the local appra isal district ultimately y ielded order s from the district court compelling production

to the district, over the t ax p ay er ’s objections, and constraine d only by a protec tive order limit ing
dissemination to third parties, of the entirety of a third-par ty finan ci n g ap p raisal of the t axpay er’ s
proper ty

. T h i s fi n an ci ng appra isal is over 200 pag es in leng th and contains extensive financ ial

an d b u siness information reg arding the proper ty and the taxpay er—ma tters that a taxpay er, at

See Act of May 25, 1997, 75th L eg ., R.S., ch. 1039, §§ 37, 42, 1997 Tex. Gen. L aws 3897, 1 3915–17.
See Tex. Ta x Code §§ 41.43(b)( 3) (providing this standa rd in protest proce eding s befor e 2 appra isal revie w board) , 42.26(a) (3) (par allel provision in suit for judicial revie w of appra isal revie w board’ s ruling on pr otest).least in T exas, w ould or dinarily have no duty to disc lose to a n appra isal district or any other org an of g overnme nt.
The taxpay er seeks mandamus relief from the district court’s order , urg ing among
other objections brought forwa rd that the discovery at issue is irrele vant to, and not rea sonably
calc ulated to le ad to the discovery of admissible evidence reg arding , the ty pe of unequal- appra isal

reme dy it is seeking. We a g ree that mandamus re lief is war rante d.
The tax pay er and rela tor is Catherine T ower , L L C, which in April 2016 acquir ed a
h ig h

- r is e a partment complex, commonly known as “The Catherine,” located on Ba rton Springs Ro a d
in Austin. This location is in Travis County , and is thus within the jurisdiction of the Travis Central Appra isal District (TCAD), the rea l party in interest. TCAD subsequently appra ised the proper ty ’s 3
value for the 2016 tax y ear in excess of $134 milli on. Cather i n e timely protested this proposed
valuation t o t h e local appra isal revie w board, was reje cted, and then appea led the board’ s order

t hroug h suit in district court. I n its suit, Catherine has relied solely on the g round of “u n eq u al 4 appraisal”—i.e., that TCAD discriminated ag ainst it rela tive to other taxpay ers —as deter mined 5 throug h the previously descr ibed compar ison to “the median appra ised value of a rea sonable number

See id. §§ 6.01–.02 (establishing appra isal district in, and with boun d ar i es coextensive 3 with, eac h county

).
See id

. §§ 42.01, .21. Catherine Tower also pray s fo r t h e attorney ’s fees authoriz ed if it 4 preva ils. See id . § 42.29.
See Tex. Const. art. VI I I , § 1(a) (“Ta x ation shall be equal and uniform.”) ; Tex. Tax Code 5 §§ 41.41(a) (2) ( providing that g rounds for pr otest befor e appraisal review boa rd include “ unequal appra isal of the owner ’s proper ty ”), .43(b) (pre scribing proce dures and standards for det ermining protests befor e board, including “on the g round of unequal appra isal of proper ty ”); id

. §§ 42.24, .26 (p rescribing proce dures and reme dies in district court in reg ard to “inequa lity ” in or “unequa l” appra isal of prope rty

).
2of com p ara ble proper

ties appropr iately adjusted.” This is the standard or means of establishing unequal appra isal in dist ri ct court that the L eg islature authorized throug h Tax Code Section 42.26(a) (3), and is the counter part to Tax Code Section 41.43(b)( 3), which applies in the underlying 6 administrative proc eeding s befor e the a ppraisal r eview boa

rd. 7
Catherine ha d financ ed its purcha se of the pr operty throug h a loan obtained from a
financ ial-ser

vices arm of Prudential I nsuranc e Company , secur ed by a deed of trust for Prudential’s
benef it that was rec orded in the Travis County rea l proper ty rec ords. Evident l y uncover ing that filing, TCAD serve d notice in the litigation of its intent to take a deposition on written questi o ns
from Prudential, acc ompanied by a reque st fo r p ro d u ction of documents calc ulated to secur e any analy ses of the proper

ty ’s value that had been prepa red or obtained in connec tion with the loan. The 8
document reque st called for “[a]n y appra isals, valuations or estimates of value perf ormed in

connec tion with the loan by [P rudential] to Catherin e T o we r,” and cited an attache d copy of the

rec o rd ed deed of trust. I n fac t, Catherine had been require d to commission an appra isal of the

proper ty in connec tion with Prudential’s loan, and t he underta king g ener ated an elabor ate and

See Tex. Ta x Code § 42.26(a) (3) (“The district c ourt shall g rant re lief on the g round that 6
a proper ty is appra ised unequally if

. . . the appra i s ed v al u e of the proper ty exceeds the median appra ised value of

a re asonable number of c ompara ble prope rties appr opriately adjusted.”)

. See id

. § 41.43(b)( 3) (“ A protest on the gr ound of unequal appra isal of property shall be 7 deter mined in favor of the protesting party unless t h e ap praisal district establishes that

. . . the appra ised value of

the prope rty

is equal to or l ess t han the median appra ised value of a re asonable number of c ompara

ble prope rties appr opriately adjusted.”)

. See Tex. R. Civ. P. 199.2(b)( 5), 200. 1 , 2 0 5

. T h e mandamus rec ord ref lects that TCAD 8 also attempted to se ek simil ar valuation-re lated documents or information direc tly from Catherine —including the closing statement ref lecting the sale price Catherine had paid. Howeve r, the prese nt mandamus proc eeding conce rns only TCAD’s discove ry

reque sts aimed at Prudential.
3leng t h y analy sis of the proper ty ’s value, taking acc ount of, in Catherine’ s words, “conf idential
financ ial and budg eting projec tions—such as tenant names, addre sses, balanc es owed, and lease
terms; company

financ ial health; and c ompany financ ial projec ts and perf ormanc e informa tion.”

To simpli fy the materia l portions of a complicated ensuing proce dural history , Catherine prese rved objections that the document reque st exceede d the permissible scope of discovery by seeking information t hat was neither rele vant to an unequal- appra isal claim broug ht
under Tax Code Section 42.26(a) (3), nor rea sonably calc ulated to lead to admissible evidenc e. The
district court signe d a series of order s having the ultimate eff ect, as indicated, of requiring production
of the entire Prudential financ ing appra isal to T CAD, limit ed only by a protec tive order restric ting dissemination bey ond the par ties, court, and w itnesses.
“A discovery order that compels production bey ond the rules of proce dure is an abuse
of discretion for which mandamus is the proper reme dy .” “Our proce dural rules define the g ener al 9

scope of discovery as any unprivileg ed information that is rele vant to the subject of the action, even though it would be inadmissible at trial, as long as the information soug ht is ‘re asonably calc ulated
to le ad to the discovery

of admissible evidenc e.’” “The phrase ‘re levant to the subject matter’ is 1 0

In re National Ll oyds Ins. Co. , 449 S.W .3d 486, 488 (Tex. 2014) (orig

. proce eding ) (per 9 curia m) (citing In re Dee re & Co. , 299 S.W .3d 819, 820 (Tex. 2009) (orig

. proce eding ) (per curia m); Texaco, I nc. v. Sande rson , 898 S.W .2d 813, 815 (Tex. 1995) (per curia m)).
In re Nationa l Lloyds Ins. Co. , 507 S.W .3d 219, 223 (Tex. 2016) (orig

. proce eding ) 1 0 (quoting In re CSX Corp ., 124 S.W .3d 149, 152 (Tex. 2003) (orig

. proce eding ) (per curia m); Tex. R. Civ. P. 192.3(a) ); see also In re National Lloyds Ins. Co. , 532 S.W .3d 794, 808 (Tex. 2017) (orig

. proce eding ) (“The di s co v er y g uideposts [under the rules] can be s ummarized as follows: [1] only rele vant evidenc e is discovera ble; [2] rele vant evidenc e that is privileg ed i s not discovera ble; [3] rele vant evidenc e that is not privile ged is discovera ble when (i) it is admissible or (ii) it is inadmissible but reasonably calc ulated to lead to the disc overy of admissible evidenc e . . . .”)

. 4to be broadly construed,” but “eve n these liberal bounds have limit s.” “Evidenc e is rele vant if ‘(a ) it

has any tendenc y to make a fac t more or less probable than i t would be without the evidence; and (b) the fac t is of conseque nce in deter mining the action.’” Thus, “[a]lt houg h the scope of discovery 1 1
is broad, a reque st for informat ion ‘must show a rea sonable expectation of obtaining information that
will aid t he dispute’s re solution.’” L ikewise, discove ry reque sts must be “rea sonably tailored to 1 2
include only matters re l ev an t to the case ”—i.e., they “must not be overbr oad”—a nd such a flaw
rende rs re quests improper indepe ndently from whe ther they

are also burdensome or har assing

. 1 3
Catherine disputes that the Prudential financ ing appra isal is rele vant to i t s ac tion
under Section 42.26(a) (3) or that TCAD’s reque st is otherwise rea sonably tailored to seek rele vant

or admissible information. TCAD insists that its discovery reque st is “nar rowly tailored” in seeking
the entirety of the Prudential financ ing appra isal. The parties’ competing views o f t h e discovery
ref lect u n d er l y i n g differ ence s reg arding the nature of an unequal- appra isal claim under Tax Code
Section 42.26(a) (3) and spec i fi ca lly conce rning the extent to which the inquiry there

presc ribed—whe ther “the appra ised value of the proper ty exceeds the median appra ised value of a

rea sonable number of compar able proper ties appropr iately adjusted” —entails independe nt 1 4
consideration of the subject proper ty ’s “mar k et v alue” (with both parties using the term in its

In re National Ll oyds Ins. Co. , 532 S.W .3d at 808 (quoting Tex. R. Evi d. 401). 1 1
Id . (quoting In re CSX Corp ., 124 S.W .3d at 152). 1 2
In re National Lloyds Ins. Co. , 449 S.W .3d at 488 (citing In re Allstate Cty. Mut. Ins. Co. , 1 3 227 S.W .3d 667, 669–70 (Tex. 2007) (orig

. proce eding ) (per curia m); In re CSX Corp ., 124 S.W .3d at 153; Sanderson , 898 S.W .2d at 815).
Tex. Tax Code § 42.26(a) (3). 1 4
5conventional se nse to denote the price the proper ty would command in the marke tplace betwee n a willing and informed seller and willing and informed buy er)

. Resolution of this underlying 1 5 question impacts the discovery issue beca use the Prudenti al fi n an cing appra isal repr esents or
includes an inde pendent a ppraisal of

the prope rty ’s marke t value. TCAD summarizes its posi tion as follows:

Relator filed suit to challeng e the appra ised value of its proper ty pursuant to Chapter 42 of the Tax Code. Respondent soug ht discovery of an appra isal of Relator’s proper ty

. An appraisal of the s ubject property i s rele vant t o the appraised value of that proper

ty

. The trial court, there fo re , did not abuse its discretion in allowing discovery that is releva

nt and mater ial to the centr al issue in the ca se. 1 6

TCAD elabor ates that “an a ssessment of a proper ty ’s appra ised value under Section 42.26(a) (3) is

an assessment of its marke t value.” This is so, TCAD explain s , b ec au s e “[ b]y constitutional and
statutory law, ‘appr aised value’ is an appra isal of ‘marke t value.’ ” TCAD g rounds this view in the

Texas Constit ution’s require ment in Article VI I I , Section 1(a) , that “[t] axation shall be equal and
uniform” and the ensuing , more specific require ment in 1(b) that “prope rty

. . . shall be taxed in

See id. § 1.04(7) (def

ining “mar

ket value” as “the price at which a proper ty would transfe r 1 5 for cash or its equivalents under preva iling marke t conditions” i f “e x p o s ed for sale in the open marke t with a rea sonable time for the seller to find a purcha ser,” both seller and purcha ser are fully informed, and both “see k to maxi miz e their g ains and ne ither is in a posi tion to take advantag e of the exigenc ies of the other” ); EXLP Leasing, LLC v

. Galveston Cent. Appraisal Dist ., ___ S.W .3d

___, ___, No. 15-0683, 2018 Tex. L EXI S 185, *7–10 (Tex. Mar. 2, 2018) (discussing simil ar “mar ket value” definition from case law: “‘the price the proper ty would bring when it is offe red for sale by one who desires, but is not obliga ted to sell, and is boug ht by one who is under no nece ssity of buy ing’ ” (quoting City of Harlingen v. Estate of Sharboneau , 48 S.W .3d 177, 187 (Tex. 2001))) ; fair marke t value , Black’ s Law Dictionary (10th ed. 2014) (def ining the term as “the p ri ce t h at a seller is wiling to acc ept and a buy er is wil l i n g t o p ay o n t h e open marke t and in an arm’s- leng th transac tion”).
I nterna l citation omitt ed. 1 6
6proportion to its val u e, wh i ch s h all be asce rtained as provided by law.” As TCAD observe s, the

Texas Supreme Court has deter mined that the Article VI I I provisions following 1(a) ’s E qual and
Uniform Clause are “examples” of “equa l and uniform” taxation, such that “[a] proper ty tax is equal
and uniform only if it is in proportion to proper ty value” and complies with 1(b). And a proper ty ’s 1 7
“value ” under 1(b), TCAD insists , is marke t value, pointing to a 1996 Texas Supreme Court decision
in which the court stated that “our Constitution requires ‘va lue’ for ad valor em tax purposes to be
based on the rea sonable marke t value of t h e p roper ty .” The Tax Code eff ectua tes this same 1 8 understanding , TCAD further urg es, by requiring in Chapter 23 that “ a ll ta x able proper

ty is appra ised

at its marke t value as of J anuar y 1,” taking acc ount of “the individual char acte ristics that aff ect the 1 9

p ro p er t y ’s marke t value and all available evidenc e that is specific to the value of the proper ty .” 2 0

Fr om these propositions TCAD deduce s that a dispute about a proper ty ’s appra ised value, including

one under Section 42.26(a) (3), conce rns the proper ty ’s marke t value, making rele vant—and opening
the d o o r to discovery of—indepe ndent assessments of marke t value, “mar ket data,” or other
“evide nce conce rning fac tors that aff ect marke t va lue,” such as the Prudential financ ing a ppraisal.
The Texas Supreme Court— s u b s equent to the district court’s discovery ruling
here —dismantled the logic al underpinning s of TCAD’s arg u me n t

. E X LP Le a s in g, LLC v. Galveston

In re Nestle USA , Inc. , 387 S.W .3d 610, 620 (Tex. 2012) (orig . proce eding ). 1 7
Enron Corp. v. Spring Indep. Sch. Dist ., 922 S.W .2d 931, 935 (Tex. 1996) (citing W helan 1 8 v. State , 282 S.W .2d 378, 380 (Tex. 1955)).

Tex. Ta x Code § 23.01(a) ; see also id . § 1.04(7) ( defining “mar ket value” as pre viously 1 9 noted), (8) (def

ining “appr aised value” as “the value deter mined as provi ded by Chapter 23 of this code”)

.

Id . § 23.01(b). 2 0
7Central Appraisal District in pertinent part involved a constitutional challeng e broug ht by the 2 1

appra isal district to a specia liz ed formula imposed under Tax Code Chapter 23 for appra ising the
taxable value of cer

tain heavy equipment. The formula had the eff ect of reduc ing the equipment’s 2 2

appra ised v al u e t o wh at the appra isal district decr ied as “a minute fra ction” of its marke t value. 2 3
This reduc tion, the appra isal district asser ted, violated Article VII I , Section 1(a) ’s require ment of “equa l and uniform” taxation and 1 (b )’ s re quirement that proper ty be taxed “in proportion to its
value.” This was so, the district rea soned, beca use the p roper

ty “value ” ref

ere nced there means 2 4
marke t value, in essenc e constitutionaliz ing marke t va lue as the basis for appra isal and not me rely

as a c ap. The Te x as Supreme Court r ejec ted that notion:

2 5

Not hing in the constitution

. . . binds the leg islature to tax only on “mar ket v al u e”
as so d ef i n ed. The constitution ref ers only to the leg islature’s authority to set the “value ” of proper

ty for taxation

. I t sets no require ment that “value ” must approximate “mar

ket value.” I n fac t, section 1(b) does not mention “mar ket value” at all. I nstead, the constitution assi gn s to the leg islature the task of deter mining

___ S.W .3d ___, 2018 Tex. L EXI S 185. 2 1
See id . at *3–4 (c iting Te x . Tax Code § 23.1241(b)). 2 2
See id . at *8. 2 3
See id . at *8–9. 2 4
See id .; cf. Tex. Const. art. VI I I , § 20 (“N o proper ty of any kind in this State shall ever be 2 5 assessed for ad valore m taxes at a g rea ter value than its fair cash marke t value

. . . .”). The appra isal district’s challeng e was thus simil ar to the constitutional challeng e to Tax Code Sections 41.43(b)( 3) and 42.26(a) (3) that the City of Austin attempted to raise in its rec ent suit ag ainst TCAD. See City of A ustin v

. Travis Cent. Appraisal Dist ., 506 S.W .3d 607, 611 (Tex. A pp.—Austin 2016, no pet.) (summarizing City ’s alleg ations “that the challeng ed Tax Code provisions ‘have incentivized taxpay er protests and led to widespre ad diminuti on of appra ised proper ty values to a ‘median value’ that is below marke t value,’ ” which i n t h e C i ty ’s view “‘ha [d] resulted in unequal taxation in violation of the Texas Consti tution’” (quoting the City ’s amende d pleading s)).
8“value ,” providing that i t “s hall be asce rtained as may be provided by law.” This

provision, would seem to leave the L eg islature fre e to adopt the mode of asce rtaining the value of

any class of pr operty

by such method as it might de em best. 2 6

Nor had it ever held o t h er wi s e, the supreme court asser ted, distinguishing a number of its prior
decisions that the district, simil ar to TCAD here , had touted as prec edent for a constitutional linkag e
of “va lue” to mar

ket value. 2 7
The s upreme court simil arly reje cted an arg ument by the appra isal district that its
constitutional construction had been “codif ied” into the Tax Code. Whil e acknow ledg ing that “the
tax code is built on the founda tion of tax ing pr operty

at marke t value,” the court obser ved that the
Code’s use o f “m arke t value” did not uniformly denote the conventional meaning of the price a willing buy er w ould pay

a willing se ller:

Viewing tax code chapte r 23 as a whole, the leg isla t u re cl ea rly chose a single label—“ma

rket value” —as a catc h-all re fer ence to the taxable value produce d throug h application of the code’ s rules. Ex actly what “mar ket value” means fo r taxation purposes depends on the circ umstances at hand and the rules the leg islature presc ribed for them. The tax code has not “codif ied” a single understandi n g of marke t value as the price a willing buy er would pay a willing seller. Rather, the term encompa sses a va

riety of wa y s to determine taxable value

. 2 8

EXLP Leasing, LLC , 2018 Tex. L EXI S 185, at *8–9 (interna l citations and some quotation 2 6 marks omitted).

See id

. at *15–16 (distinguishing , among other cases, Enron Corp ., 922 S.W .2d at 935, 2 7
as “not a case construing constitutional ‘value ,’ nor
. . . any dispute

. . . whether valuat i o n o f t h e proper ty at issue was ma

rket-va lue base d”).
Id

. at *12 (citing Tarrant Appraisal Dist. v. Colonial Country Club , 767 S.W .2d 230, 234 2 8 (Tex. App.—For

t Worth 1989, writ denied)).
9Guided by EXLP , we reje ct TCAD’s premise t h at a dispute about a proper ty ’s tax

appra isal value automatically or inhere ntly place s the proper ty ’s marke t value (in the sense of what

a willing buy er would pay a willing seller) at issue and there by permits broad discovery of marke tvalue- rela ted information. Nor does Section 42.26(a) (3), the specific basis for Catherine’ s appra isal challeng e her e, open tha t door so widely . Section 42.26(a) (3) state s:

(a) The district court shall g rant relief on the g round that a proper ty is appra ised unequally if:

. . . (3) the appra ised value of the proper ty exceeds the m edian appra ised value of a rea sonable number of compar able proper ties appropr iately adjusted. 2 9

The relief authorized by Section 42.26(a) (3), as Catherine corr ectly observe s, does not hing e upon
whether the subject proper ty ’s appra isal is consonant with its marke t v al ue. Rather, Section 42.26(a) (3) assumes whatever “appr aised value” has been assig ned by the appra isal district,

reg ardle ss how derive d or whether corr ectly or incorre ctly deter mined under that measure
. Section 42.26(a) (3) thus stands in c ontrast to a taxpay er’ s challeng e to the underly ing deter mination of the

appra ised value in itself, which is a separ ate g round that Catherine has not pursued in district court. 3 0

Simi larly , the analy sis presc ribed by Section 42.26(a) (3) d o es not independe ntly

See Tex. Tax Code § 42.26(a) (3). 2 9
See id

. § 41.41(a) (1) (“A proper ty owner is enti t l ed t o protest

. . . deter mination of the 3 0 appra ised value of the owner ’s proper ty .”); cf. id

. § 41.41(a) (2) (allowing protest on separ ate g round of “unequa l appra isal of the owner ’s proper ty ”). Catherine did c halleng e the underly ing appra ised value be fore the appr aisal re view boar d, howeve r, along side its unequal-a ppraisal c halleng e. 10deter

mine the marke t value of either the subject proper ty or the compar ison proper ties. Essentially , 3 1 one merely takes the appra ised v al u es o f t he subj ect property and of the comparison proper ties as
“found on the tax rolls” and compar es them, and “the only independe nt analy sis require d is adjusting
the appra ised values [of the compar ison proper ties] to put the proper

ties on equal footing .” Section 3 2 42.26(a) (3) there by differ s from—and repr esents a l ess burdensome alterna tive to—the other
statutory means throug h which a taxpay er may establish an unequal- appra isal claim, which would 3 3 require independe nt appra isals. And that is the very purpose of Section 42.26(a) (3), as Catherine 3 4

See Harris Cty. Appraisal Dist. v. United Inv’ rs Realty Trust , 47 S.W .3 d 648, 651–53 3 1 (Tex. App.—Houston [14t h Dist.] 2001, pet. denied) (re aching that conc l u s i on under para llel prede cessor

statute).
Id

. at 653; see also W

eingarten Realty Inv’ rs v. Harris Cty. Appraisal Dist ., 93 S.W .3d 3 2 280, 286 (Tex. App.—Houston [14t h Dist.] 2002, no pet.) (op. on reh’ g ) (“I n order to perfor m the calc ulation under this statute, the appraisal ex pert determines a rea sonable number of comparable proper ties[,]

. . . takes the appra i s ed v alue of those proper ties from the public rec ord, and appropr iately adjusts them to the s ub j ec t proper

ty .” (citing United Inv’rs Realty T rust , 47 S.W .3d at 654)).
See Tex. Tax Code § 42.26(a) (1) (re quiring relief if “the appra isal ratio of the proper ty 3 3 exceeds by at least 10 perc ent the median level o f appra isal of a rea sonable and repr esenta tive sample of other proper

ties in the appra isal district”), (2) (re quiring relief if “the appra isal ratio of the proper ty exceeds by at least 10 perc ent the median level of appra isal of a sample of proper ties in the appra isal district consisting of a rea sonable number of other proper ties simil arly situated to, or of the
same g ener al kind or char acte r as, the proper t y subject to the appea l”); see also id

. § 1.12(b) (def ining “appr aisal ratio” as “the ratio of a proper ty ’s appra ised value as deter mined by the appra isal office or appra isal revie w board, as applicable , to: (1) the appra ised value of the proper ty acc ording to law if the proper

ty qualifies for appra i s al for tax purposes acc ording to a standard other than marke t value; or (2) the marke t value of the proper ty if Subdivis ion (1) of thi s s u b s ection does not apply ”).

United Inv’ rs Realty Trust , 47 S.W .3d at 653 (obser ving that these other means “re quire[] 3 4
a taxpay er to obtain an independe nt appra isal of the marke t value of a repr esenta tive sample or other proper ties in the appra ised district, or a sa mple of other pr operties that are simil arly situated, or of the same g ener al char acte r as the proper ty at issue”); accord Harris Cty. Appraisal Dist. v. Houston 8th W onder Prop., L.P. , 3 9 5 S

. W

. 3d 245, 251–52 (Tex. App.—Houston [1st Dist.] 2012, pet.
11emphasizes. As this Court observe d recently in another appea l involving TCAD, the L eg islature

added the lang uag e now codified in Section 42.26(a) (3), a s well as that of the counter part Sec tion 41.43(b)( 3), as components of the 199 7 T ex as T axpay er Bill of R ights, an enac tment having “the
intention of fac ilitating tax remedies for proper ty owner s.” 3 5

I f t h e i nformation contained in the Prudential financ ing appra isal could have

any potential rele vance to Catherine’ s Section 42.26(a) (3) cl ai m, it could only be in reg ard to
“the o nly independe nt analy sis require d” under that provision, identify ing “compa rable proper

ties” 3 6
and m ak ing “appr opriate[] adjust[m ents].” Adjustments to the compar able proper ties are 3 7 made, g ener ally speaking , “ac cording to f actor s that tend to inf

luence value, suc h as loca tion, ag e, depre ciation, phy sical char acte ristics of the proper ty , and ‘ec onomic fac tors.’” Effe ctive 3 8

J anuar y 1, 2016, the L egi s l at u re am ended the Tax Code to further specify that “[t] he selec tion of

compar able p roperties and the application of appropr iate adjustments for the deter mination of an
appra ised value of

proper ty by any person under Section 41.43(b)( 3) or 42.26(a )(3) must be based

denied) (op. on reh’g) (“ Al t h oug h marke t value may not be nece ssary to a deter mination made pursuant to Tax Code section 42.26(a )(3) , it is not irrele vant t o a determination of appraisal value made pursuant to section 42.26(a) (1) & (2),” as “m ar k et v alue is an element of the calc ulation of ‘appr aisal ratio’ that m ay be used to deter mine whether an appra isal is equal and uniform” under Section 42.26(a) (1) a

nd (2).)

. City of Austin , 506 S.W .3d at 614 (citing United Inv’ rs R ealty Trust , 47 S.W .3d at 652); 3 5
see also United Inv’ rs Realty Trust , 47 S.W .3d at 652–53 (re counting this hist ory ).
United Inv ’rs Realty Trust , 47 S.W .3d at 653. 3 6
See Tex. Tax Code § 42.26(a) (3). 3 7
Houston 8th W

onder Prop., L.P. , 395 S.W .3d at 254 (quoting In re MHCB ( USA) Leasing 3 8 & Fin. Corp ., No. 01-06-00075- CV, 2006 Tex. App. L EXI S 3515, at *10 (Tex. App.—Houston [1st Dist.] Apr. 27, 2006, orig . proce eding ) (mem. op.) ).
12o n th e a

p p li c a ti o n o f g e n e r a ll y a c c e p te d a p p r a is a l me th o d s a

n d te c h n iq

u e s , ” w it h “ a d ju s tm e n ts

. . . based on r ecog nized methods and techniques that a re ne cessa

ry to produce a cr edible opinion.” 3 9
Acknowle dg ing the potential rele vance to adjustments, Catherine has urg ed in t h e
alterna tive that TCAD is at most entitled to production of limit ed portions of the Prudential financ ing

appra isal reve aling the proper ties deeme d c o mp a

r a b le b y the third-par

ty appra iser and the fac tors this

appra iser used in making adjustments to those proper ties. I n fac t, Catherine produce d twenty -nine

pag es of reda cted excerpts from the Prudential appra isal in which it purported to disclose that information, appar ently in the belief that an interim ruling by the district court had require d only this.

Bu t T C AD i n s ists that it is entitled to the entirety of t he P rudential financing appra isal, save only

an ag ree d-upon reda ction of the sal e p ri ce Catherine paid for its proper ty

. I ts rea soning is

ag ain unconvincing

.

I n attempting to justify

its broad discover

y demand, TCAD points to specif ic ty pes

o f i n formation that it seeks within the Prudential appra isal. I t explains—wit hout appar ent
acknow ledg ment of the production alre ady made—that “[t] he bank’s appra isal will contain a list of

compar able proper

ties that have been adjusted t o acc ount for differ ence s ref lected in the marke t
betwee n the subject proper ty and it s competit ors.” TCAD also emphasizes a 2006 memorandum opinion from a sister court that permitted limit ed discovery in a Section 42.26(a) (3) case conce rning
marke t value of a subject proper ty and comp ar i s o n proper ties, in the view that such information
“could potentially be rele vant” by illumi nating the “pric e” of various require d adjustments and was

Act of May 23, 2015, 84th L eg ., R.S., ch. 101, § 1, 2015 Tex. Gen. L aws 110 1 , 1 101 3 9 (cur rent ve rsion at Tex. Tax C ode § 23.01(f )).
13thus “not so irrele vant as to rende r it undiscovera ble.” That case , MHCB , preda tes E X L P , and 4 0
Catherine asser

ts that even the issuing court “has since distanced itself” from it. But setting any such

conce rns aside, MHCB would not support the deep dive into Catherine’ s financ i al an d b usiness
i n fo rm ation that TCAD attempts here

. On the contra ry , MHCB ultimately held that di s co v er y
reque sts probing into, e.g ., the financ ing of the subject proper ty and seeking “all documents that state

an opinion of the value of some or all of” the proper ty wer e irrele vant or otherwise bey ond the proper scope of discovery

. 4 1

TCAD’s arg uments reve al its reque st to be, at best, vastly overbr oad, a mere “fishing expedition.” “A centr al consideration in deter mining overbr eadth is whether the reque st could have
been more narr owly tailored to a void inc luding tenuous information and still obtain the nece ssary , pertinent information.” I f TCAD perc eives in g ood faith that Catherine may possess specific 4 2
information not a lrea dy produce d that is r eleva nt to the selec tion of compar able proper ties and the application of appropr iate adjustments to those proper ties under Section 42.26(a) (3), then it should
formulate reque sts that seek that specific information (subject, of course , to Catherine’ s rig ht to raise
further objections at that juncture reg arding s co p e, or asser tions of privileg e). But the prese nt

reque st, to the effec t of “hand over y o u r enti re financing appra isal,” i s “nar rowly tailored” only if

one cre dits TCAD’s fallac ious sy llogism that an appra isal dispute under Section 42.26(a) (3) means
that marke t value is at issue, exposing the taxpay er to intrusive discove ry of “ma rket da ta.”

See In re M

HCB ( USA) Leasing & Fin. Corp ., 2006 Tex. App. L EXI S 3515, at *12–13. 4 0
See id . at *14–24. 4 1
In re C S X Corp ., 124 S.W .3d at 153 (citing In re American Optical Corp. , 988 S.W .2d 4 2 711, 713 (Tex. 1998) (orig . proce eding ) (pe r cur iam)).
14Fur ther, we would ech o t h e o bserva tion by Catherine that such broad- rang ing discovery of marke t-value information in a Section 42.26(a) (3) cl a im thwarts the L eg islature’s intent underly ing that provision. For one, it eff ectively confla tes the Section 42.26(a) (3) reme dy with the

more onerous alterna tive means of proving u n eq ual appra isal, if not also with a challeng e to the underly ing appra isal valuation. Worse, as Catherine urg es, such discovery tends to unde rmine the
Section 42.26(a) (3) reme dy altog ether

. By threa tening disclosure of sensitive financ ial information

t o taxi ng and other g overnme ntal authorities as a price of invoking Section 42.26(a) (2), t h e t ac t i c
tend s t o deter or punish taxpay ers who avail themselves of the reme dy

. And the disclosure,
Catherine further sug g ests, also achie ves the prac tical eff ect of mandatory sale-pr ice disclosure despite the L eg islature’s long standing ref usal to require it.
Catherine’ s conce rns have been echoe d by sever al amici who have filed letter briefs
in support of Catherine’ s petition. Collectively they repr esent to us, without appar ent dispute from 4 3
TCAD, that TCAD’s discovery tactics are common among appra isal districts statewide in resistanc e

to Section 42.26(a) (3) claims. A rela ted theme is that the prese nt issues reg arding discovery under
Section 42.26(a) (3 ) h ave “widespr ead impact” and are “re peate dly litigated” below, y et have persistently eluded appellate revie w beca use Texas proper

ty taxpay ers ty

pically cannot aff

o rd to

Amici include Crow Holdings Capital Partners, L .L .C.; Gre y star Real Estate Partners, 4 3 L L C; Mid Americ a Ap ar t ments; the Texas Apar tment Association; the Texas Association of Manufa cture rs; the Texas Buildi n g Owner s and Manag ers Association; the Texas Public Policy Founda tion; and Texas Self St orag e Associa tion, I nc. 15car

ry the fig ht to that level. I f that is so, this opinion should provide some neede d clar ification as 4 4 to the respe ctive rig hts of Texas property taxpay ers a

nd local appr aisal districts who serve them.

We conditionally g rant Catherine’ s petition for writ of mandamus. We order that the
d i s trict court withdraw i ts order s compelling production of the P rudential financing appra isal an d

overr uling Catherine’ s objections to the rele vance of the und er l y i n g reque st, sustain Catherine’ s objections, and underta ke other proce eding s consistent with this opinion. The writ will issue only in the unlikely

event it does not comply

.

_________________________________________ Bob Pembe rton, J ustice

Be fore J ustices Pury ear , Pemberton, and B ourland Filed: June 20, 2018

I n this reg ard, it is perha

ps ironic that TCAD in its filings has repe at ed l y ch aracter ized 4 4 Ca th e r in e ’ s p r o p e r

ty a s “ lu xu r y ” a p a r tm e n ts , a s if s u c h la

b e ls ( o r r e la

te d a b il it y to a f f o r d th e li ti g a

ti o n ) should be a leg itimate basis for tre ating a par ty less favor ably

under the law.
16