Supreme Court of Texas

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No. 22-0313

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Pecos County Appraisal District and

Kinder Morgan Production Company, LLC, 

Petitioners,

v.

Iraan-Sheffield Independent School District, 

Respondent

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On Petition for Review from the

Court of Appeals for the Eighth District of Texas

═══════════════════════════════════════

Argued February 2, 2023

JUSTICE BLACKLOCK delivered the opinion of the Court.

JUSTICE BLAND did not participate in the decision.

“Taxation shall be equal and uniform.” TEX. CONST. art. VIII, 

§ 1(a). Taxable property “shall be taxed in proportion to its value, which 

shall be ascertained as may be provided by law.” Id. § 1(b). In 

furtherance of these constitutional commands, the Legislature has 

“provided by law” a detailed and comprehensive statutory regime 

governing the ascertainment of the value of taxable property. The 
2

centerpieces of that regime are the appraisal districts, which are 

“established in each county” and “responsible for appraising property” 

for taxation based on neutral principles of property valuation. TEX. TAX 

CODE §§ 6.01(a), (b); 23.01(a), (b), (f), (h); 23.0101–.013.

Appraisal districts may employ outside firms to assist with 

appraisals, but they may not pay such firms a fee that “is contingent on 

the amount of or increase in appraised, assessed, or taxable value of 

property appraised.” Id. § 25.01(b). In this way, and in others as well, 

the Legislature has taken steps to insulate the appraisal process from 

the “pernicious incentives to maximize recovery” that are created when 

the personal income of those in a position to influence our tax system is 

linked to higher taxation. Kinder Morgan SACROC, LP v. Scurry 

County, 622 S.W.3d 835, 843 (Tex. 2021).

Today’s case asks whether a school district may retain a lawyer 

on a contingent-fee basis to prosecute litigation designed to increase the 

appraised value of property so as to generate more tax receipts for the 

school district. We conclude that no statute expressly authorizes a 

school district to do so. We further conclude that authority for such an 

arrangement cannot be implied from a school district’s express authority 

to bring litigation regarding appraisals.

A political subdivision’s general authority to bring litigation and 

to hire lawyers may in some instances entail the implied power to pay 

those lawyers a contingent fee. Implying such a power in the 

tax-appraisal context, however, would be inconsistent with the 

comprehensive statutory framework governing property taxation, which 

vests appraisal districts with the responsibility to neutrally appraise 
3

property and guards against personal financial incentives to maximize 

appraised values. The law has long acknowledged that contingent-fee 

arrangements creating a personal profit motive to maximize taxation 

may be “unfair and unjust to the public.” White v. McGill, 114 S.W.2d 

860, 863 (Tex. 1938). The Legislature has expressly authorized such 

arrangements only for the collection of delinquent taxes that have 

already been imposed but remain unpaid. TEX. TAX CODE § 6.30. It has 

not done so with respect to litigation seeking to increase appraisal 

values, and we find no valid basis on which to imply such authority.

Because the school district in this case lacked legal authority to 

engage its attorney on a contingent-fee basis to bring this appraisal 

litigation, the district court correctly granted the defendants’ Rule 12 

motion challenging the attorney’s authority to represent the school 

district. However, dismissal of the school district’s case with prejudice 

was not the proper remedy under Rule 12. The school district must be 

afforded the opportunity to adjust its contract with its attorney or to 

substitute other counsel if it wishes to continue prosecuting this lawsuit. 

The case is remanded to the district court for that purpose.

I.

Iraan-Sheffield ISD, located in Pecos County, employed attorney 

D. Brent Lemon to pursue claims regarding the Pecos County Appraisal 

District’s allegedly inaccurate valuation of Kinder Morgan’s mineral 

interests. The school district’s contract with Mr. Lemon promises to 

compensate him as follows:

Twenty percent (20%) of all total and gross payments, 

funds, compensation, or value (including agreement for 

future payments) received by Clients from any source 
4

related to or paid on behalf of Kinder Morgan, Inc., its 

predecessors, affiliates, or subsidiaries related in any way 

to the Claim.

Consultants retained by Mr. Lemon criticized the Appraisal 

District’s valuation of Kinder Morgan’s property as far too low. Lemon 

demanded the Appraisal District reappraise the properties, but the 

Appraisal District declined. On the school district’s behalf, Lemon 

challenged the appraisal before the Appraisal Review Board pursuant 

to section 41.03 of the Tax Code.

Section 41.03 authorizes appraisal challenges by taxing units 

only on certain enumerated grounds, one of which is “an exclusion of 

property from the appraisal records.” Id. § 41.03(a)(1). The school 

district’s challenge to Kinder Morgan’s appraisal relied on this 

provision, which on its face applies only to challenges to the “exclusion 

of property” from appraisal, not challenges to the amount of an 

appraisal. The parties argued below, and to some extent continue to 

argue in this Court, over whether section 41.03(a)(1) authorizes the 

school district’s challenge. This merits question is not properly before 

us in this appeal from a dismissal under Texas Rule of Civil Procedure

12. We therefore do not resolve it.1

1 The school district cites our decision in Kinder Morgan SACROC, a 

related case, to support its contention that property should be considered 

“excluded” from the appraisal records and therefore subject to challenge under 

section 41.03(a)(1) if an appraisal is erroneously low because of taxpayer fraud. 

In Kinder Morgan SACROC, we observed that section 41.03(a)(1) “has been 

construed” as providing “a remedy for an erroneous appraisal based on 

property that escaped taxation because of a void assessment arising from 

taxpayer fraud.” 622 S.W.3d at 845 (quoting Willacy Cnty. Appraisal Dist. v. 

Sebastian Cotton & Grain, Ltd., 555 S.W.3d 29, 50 (Tex. 2018)). Of course, 
5

The Appraisal Review Board denied the school district’s 

challenge. The school district appealed that decision to district court, as 

permitted by section 42.031(a) of the Tax Code. It named Kinder 

Morgan and the Appraisal District as defendants.2 When Kinder 

Morgan asked Mr. Lemon to identify the source of his authority to 

represent the school district, he provided the above-quoted contract.

Kinder Morgan then filed a motion under Rule 12 alleging that 

Mr. Lemon lacks authority to represent the school district because the 

school district has no power to hire attorneys on a contingent-fee basis 

for this appraisal litigation. The motion also asked the court to strike 

the school district’s pleadings. Kinder Morgan simultaneously filed a 

plea to the jurisdiction, arguing that if the pleadings were struck as 

observing in passing that a statute “has been construed” a certain way is 

hardly a precedential holding that it must be so construed. Kinder Morgan 

SACROC quoted a passage from our decision in Willacy County, but that 

passage addressed a different provision of the Tax Code, section 25.21. Amicus 

curiae Texas Taxpayers and Research Association argues that the school 

district cannot attack the appraisal of Kinder Morgan’s property by claiming 

that property was “excluded” from the tax roll when in fact “Kinder Morgan’s 

property was appraised by the chief appraiser as required by law and placed 

on the tax roll.” Amicus curiae Texas Oil and Gas Association similarly argues 

that section 41.03(a) is inapplicable because “it is undisputed that Kinder 

Morgan’s property was in fact included in the Pecos County appraisal records 

and appraised and taxed during each and every one of the disputed years.” The 

petitioners themselves do not directly present this merits argument for our 

consideration, and they likely could not have done so given the procedural 

posture—an appeal from a non-merits dismissal under Rule 12. We consider 

the question open for further litigation.

2 See TEX. TAX CODE § 42.21(b) (stating that an appeal to district court 

“must be brought against the appraisal district and against the owner of the 

property involved in the appeal”). The defendants filed joint briefs in this 

Court, and this opinion often refers collectively to the defendants as “Kinder 

Morgan.”
6

requested, the time for filing the appeal in district court had expired and 

the court therefore lacked jurisdiction.3 Among other arguments, the 

school district responded that section 6.30(c) of the Tax Code authorized

Mr. Lemon’s representation. The district court agreed with Kinder 

Morgan. It struck the school district’s pleadings and rendered judgment 

dismissing the suit with prejudice.

The court of appeals reversed. 645 S.W.3d 827, 843 (Tex. App.—

El Paso 2022). It concluded that section 6.30(c) of the Tax Code 

authorizes the contingent-fee arrangement between Mr. Lemon and the 

school district. Id. at 840–41.

II.

Kinder Morgan refers to Mr. Lemon as a “tax ferret.”4 Not to be 

outdone, Lemon calls Kinder Morgan a “tax cheat” and “the progeny of 

Enron.” Name-calling aside, this case does not turn on whether it is 

accurate to call Lemon’s agreement with the school district a “tax ferret 

contract.” This colorful terminology does not aid our review of the legal 

questions presented, which turn primarily on the relevant provisions of 

the Tax Code, none of which use mammalian metaphors.

3 See TEX. TAX CODE § 42.21(a) (providing a 60-day deadline for filing 

an appeal in district court).

4 “A ‘tax ferret contract’ has been defined as an agreement to locate 

property that has been omitted from the tax rolls.” Kinder Morgan SACROC, 

622 S.W.3d at 843. Kinder Morgan wields the term “tax ferret” as a 

condemnation. Mr. Lemon is eager to assure us that he is no such thing. We 

assume the parties mean no disrespect to the furry mammal itself, a beloved 

pet of Queen Elizabeth I, celebrated annually on National Ferret Day, April 2.
7

A.

Any action of a political subdivision, including a school district, 

“must be grounded ultimately in the constitution or statutes.” Guynes 

v. Galveston County, 861 S.W.2d 861, 863 (Tex. 1993). Political 

subdivisions “possess only such powers and privileges as have been 

expressly or impliedly conferred upon them.” Wasson Ints., Ltd. v. City 

of Jacksonville, 489 S.W.3d 427, 430 (Tex. 2016) (quoting Payne v. 

Massey, 196 S.W.2d 493, 495 (Tex. 1946)). While a political subdivision’s 

express authorities are those that appear expressly in the Constitution 

or statutes, its implied authorities are only those that are “reasonably 

necessary to make effective” the expressly granted powers. State v. 

Hollins, 620 S.W.3d 400, 406 n.28 (Tex. 2020) (quoting Tri-City Fresh 

Water Supply Dist. No. 2 v. Mann, 142 S.W.2d 945, 947 (Tex. 1940)). 

Authority will not be implied lightly. We have explained that the 

“reasonably necessary to make effective” standard encompasses those 

powers that are “indispensable” or “essential” to the exercise of 

expressly granted powers. Id. at 406 (quoting Foster v. City of Waco, 255 

S.W. 1104, 1105–06 (Tex. 1923)). Any reasonable doubt concerning the 

existence of an implied power is resolved against the political 

subdivision. Id. (quoting Foster, 255 S.W. at 1106).

The school district first contends that section 6.30(c) of the Tax 

Code expressly authorizes Mr. Lemon’s contingent-fee agreement. 

Section 6.30(c) states:

The governing body of a taxing unit may contract with any 

competent attorney to represent the unit to enforce the 

collection of delinquent taxes. The attorney’s 

compensation is set in the contract, but the total amount of 
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compensation provided may not exceed 20 percent of the 

amount of delinquent tax, penalty, and interest collected.

The court of appeals held that this statute authorizes the school district 

to retain Lemon on a contingent-fee basis to bring this litigation. 645 

S.W.3d at 841. We disagree.

As always, our analysis of the statute “begins with the statutory 

text.” In re Geomet Recycling LLC, 578 S.W.3d 82, 86 (Tex. 2019). 

Section 6.30(c)’s authorization of a 20 percent contingency fee applies 

only to attorneys hired “to enforce the collection of delinquent taxes.” 

The parties agree that whether section 6.30(c) applies turns on whether 

the school district’s suit is “to enforce the collection of delinquent taxes.” 

It is not, for multiple reasons.

First and foremost, the additional taxes the school district hopes 

Kinder Morgan will be required to pay are in no sense “delinquent,” as 

the Tax Code consistently uses that term. The school district contends 

that it is accurate to call the taxes at issue “delinquent” because, absent 

Kinder Morgan’s alleged fraud, the taxes rightly were owed in previous 

years and are therefore “delinquent” in the sense that they were not paid 

when they should have been owed. But the Tax Code does not use the 

labels “delinquent” or “delinquency” casually or colloquially. These are 

carefully defined terms of art, and various legal consequences attach 

when unpaid taxes become correctly described as “delinquent.” See, e.g., 

TEX. TAX CODE §§ 33.01, .07.

The Tax Code leaves little doubt about when taxes become 

“delinquent,” and its conception of delinquency differs from the school 

district’s. Section 31.02(a) states that “taxes are due on receipt of the 

tax bill and are delinquent if not paid before February 1 of the year 
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following the year in which imposed.” Section 31.04 contains additional 

provisions used to determine when unpaid taxes become “delinquent” in 

various circumstances, none of which applies here.

In the scenario before us, there have been no taxes “imposed” 

based on the heightened valuation the school district desires, so there 

are no “delinquent taxes” to collect. This lawsuit seeks to require the 

Appraisal District to raise its valuation of Kinder Morgan’s property so 

that Kinder Morgan will owe additional taxes, which have not yet been 

imposed. The school district anticipates that success in this suit would 

yield an increased appraisal, which would require the assessment of 

additional taxes against Kinder Morgan, which could then be collected. 

If “not paid before February 1 of the year following the year in which 

imposed,” such taxes would generally be “delinquent.” Id. § 31.02(a). 

But the taxes at issue in this litigation have yet to be assessed or

imposed. They cannot possibly be “delinquent.”5

The school district cannot be right about the authority granted to 

it by section 6.30(c) unless “delinquent” means one thing in that section 

and an altogether different thing everywhere else in the Tax Code. But 

it is well settled that “when feasible, we should consistently interpret 

terms used throughout a statute.” Tex. Dep’t of Transp. v. Needham, 82 

S.W.3d 314, 321 (Tex. 2002). The need for consistent and predictable 

5 See, e.g., In re ExxonMobil Corp., 153 S.W.3d 605, 609 (Tex. App.—

Amarillo 2004, orig. proceeding) (holding that a suit by a taxing unit asserting 

that taxpayers’ fraudulent conduct resulted in the undervaluation of their 

mineral interests was not a suit “to collect delinquent taxes” because there was 

“no allegation the defendants failed to pay the taxes assessed them with 

respect to the oil interests”).
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interpretation of the term “delinquent” or “delinquency” throughout the 

Tax Code is particularly acute given the severe consequences that can 

follow when unpaid taxes become “delinquent.”6 Nothing in the Tax 

Code’s interrelated provisions governing property taxes indicates that 

“delinquent” has a different meaning in section 6.30(c) than it does 

elsewhere in the Code.

Aside from the problem with the school district’s idiosyncratic 

conception of the word “delinquent,” the school district’s position does 

not adequately account for section 6.30(c)’s use of the words “enforce” 

and “collection.” There can be no “collection” of the taxes at issue here 

because those taxes have not been assessed. Likewise, there can be no 

“enforcement” of a payment obligation that has not yet arisen. The 

school district’s suit seeks to bring about the assessment of additional 

taxes against Kinder Morgan, taxes that could then be collected. If taxes 

imposed on Kinder Morgan remained uncollected past their delinquency 

date, the school district could then consider its options “to enforce the 

collection of delinquent taxes,” which include the contingent-fee 

arrangements authorized by section 6.30(c). But that is not what is 

happening in this case. There is no sense in which the suit before us—

which seeks to increase the appraised value of Kinder Morgan’s 

property—is a suit “to enforce the collection of delinquent taxes” as the 

Tax Code uses that phrase.

6 Possible consequences include monetary penalties and seizure of 

property. See, e.g., TEX. TAX. CODE §§ 33.01, .07, .21, .22, .41, .53, .91, .911.
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B.

Because nothing in the Tax Code itself indicates that the power 

to hire attorneys “to enforce the collection of delinquent taxes” includes 

the power to hire attorneys to advocate for increased appraisal values, 

the school district supports its reading of the Code primarily by pointing 

to this Court’s prior decisions. Its appeals to precedent, however, are 

unconvincing. The school district first relies on Willacy County 

Appraisal District v. Sebastian Cotton & Grain, Ltd., 555 S.W.3d 29 

(Tex. 2018), for the proposition that tax liability arises from property 

ownership, not from receipt of a tax bill. Willacy County indeed supports 

that proposition, but the proposition does not help the school district.

As we observed in Willacy County, under section 31.02 of the Tax 

Code, “[t]axes are due upon receipt of the tax bill, but delinquency is not 

dependent on such receipt. Rather, taxes ‘are delinquent if not paid 

before February 1 of the year following the year in which imposed.’” 555 

S.W.3d at 44 (quoting TEX. TAX CODE § 31.02(a)). The school district is 

therefore correct that Kinder Morgan’s having not received a tax bill

does not determine whether the taxes at issue are “delinquent.” But as 

section 31.02 makes clear—and as we said in the very next sentence in 

Willacy County—taxes do not become “delinquent” until some time after 

they have been “imposed.” The taxes the school district hopes will be 

imposed on Kinder Morgan have not yet been imposed, so there can be 

no delinquency within the meaning of section 31.02. Nothing in Willacy 

County says otherwise.

The school district relies most heavily on White v. McGill, 114 

S.W.2d 860 (Tex. 1938). The court of appeals did the same. 645 S.W.3d 
12

at 833–34, 839–40. In the court of appeals’ view, White required it to 

adopt a “non-technical” understanding of section 6.30(c)’s use of the term 

“delinquent taxes,” under which the term encompasses the 

as-yet-unassessed taxes at issue here. In White, this Court considered 

the legality of a “tax ferret contract” with non-attorneys who were paid 

a contingent fee for recovery of taxes on property not yet on the tax rolls. 

A predecessor statute to section 6.30(c), in effect at the time, provided 

as follows:

Section 1. No contract shall be made or entered into by the 

Commissioners’ Court in connection with the collection of 

delinquent taxes where the compensation under such 

contract is more than fifteen per cent of the amount 

collected. Said contract must be approved by both the 

Comptroller and the Attorney General of the State of 

Texas, both as to substance and form. Provided however 

the County or District Attorney shall not receive any 

compensation for any services he may render in connection 

with the performance of the contract or the taxes collected 

thereunder.

TEX. REV. CIV. STAT. art. 7335a (Act of Feb. 17, 1930, 41st Leg., 4th C.S., 

ch. 8, 1930 Tex. Gen. Laws 9, 9, repealed by Act of May 26, 1979, 66th 

Leg., ch. 841, § 6(a)(1), 1979 Tex. Gen. Laws 2217, 2329).

Although the contract at issue in White contemplated the 

collection of taxes not yet imposed (and therefore not “delinquent” in the 

modern Tax Code sense), this Court held that the statute nevertheless 

applied to the contract. The Court concluded, essentially, that the term 

“delinquent taxes” as used in article 7335a could include taxes not yet 

imposed, reasoning that “we do not think the Legislature used the words 

‘delinquent taxes’ in a technical sense.” 114 S.W.2d at 863. Other 

considerations also influenced the Court’s reasoning in White, but the 
13

school district focuses our attention on White’s statement that the

Legislature did not use “delinquent taxes” in a “technical sense.” The 

school district extrapolates from this statement a requirement that the 

term “delinquent taxes” must likewise be given a “non-technical sense” 

in section 6.30(c), a successor statute to article 7335a regarding the 

authority of taxing units to hire agents using contingent fees.

If the reasoning of White indeed controlled our interpretation of 

section 6.30(c), as the court of appeals thought, then we might agree 

with the court of appeals’ conclusion as a matter of precedent, despite 

the textual problems with this view of the statute. But White

interpreted a different statute than the one at issue here, and it did so 

long before the Legislature enacted the modern Tax Code. White is not 

binding precedent on the interpretation of section 6.30(c), which differs 

from the statute White considered and is situated within a 

comprehensive statutory scheme that did not exist when White was 

decided.

To begin with, section 6.30(c) differs materially from the statute 

at issue in White in a way that has nothing to do with the disputed word 

“delinquent.” The prior statute broadly covered all contracts “in 

connection with” the collection of delinquent taxes, while the current 

statute is limited to contracts “to enforce” the collection of delinquent 

taxes. This change in phrasing between the prior statute and the one in 

effect today suggests a deliberate constriction of the statute’s scope. 

While the prior statute analyzed in White applied to any contract “in 

connection with” the collection of delinquent taxes, today’s statute now 

specifies only a single “connection.” In order for section 6.30(c) to apply, 
14

the contract must be “to enforce” the collection of delinquent taxes. No 

other contract “in connection with” the collection of delinquent taxes is 

within the scope of section 6.30(c). Of course, in order to be “enforced”—

rather than imposed in the first place—tax obligations must already 

exist, which distinguishes the scenario envisioned by section 6.30(c) 

from the school district’s position. Thus, quite apart from the parties’ 

focus on the word “delinquent,” the statutory text has been adjusted 

since White in a way that restricts its authorization of contingent fees to 

the enforcement of existing tax obligations. There is no sense in which 

the school district’s litigation against Kinder Morgan fits that 

description.

White must also be placed in its historical and legal context. It 

was decided “long before the Tax Code was enacted in 1979.” Kinder 

Morgan SACROC, 622 S.W.3d at 843.7 In the years since White, the 

Legislature decided to place today’s version of section 6.30(c) within the 

7 The modern “Property Tax Code,” which is Title I of the Tax Code, 

created a comprehensive regulatory scheme designed in part to yield more fair 

and uniform property valuations. It abolished the appraisal authority of taxing 

units and established a centralized appraisal district for each county. See Jim 

Wells County v. El Paso Prod. Oil & Gas Co., 189 S.W.3d 861, 871 (Tex. App.—

Houston [1st Dist.] 2006, pet. denied); WILLIAM D. ELLIOT & J. SCOTT MORRIS,

ELLIOT & MORRIS’ TEXAS TAX CODE ANNOTATED § 1.01 commentary; TEX.

PROP. CODE §§ 6.01, .05. Appraisal review boards were created to hear 

taxpayer and taxing unit complaints, with certain appeal rights to the courts. 

ELLIOT & MORRIS, supra, § 1.01 commentary; TEX. PROP. CODE §§ 6.41; 41.01, 

.03; 42.01, .031. The appraisal district was charged with the exclusive 

responsibility for appraising property in the district. Taxing units were pushed 

out of the appraisal process altogether, except for a limited right to contest 

appraisals before the appraisal review board and to appeal those decisions to 

district court. Jim Wells County, 189 S.W.3d at 871; ELLIOT & MORRIS, supra,

§ 1.01 commentary; see TEX. PROP. CODE §§ 6.01, .05; 41.03; 42.031.
15

comprehensive and interrelated statutory framework that is Title I of 

the Tax Code, also known as the Property Tax Code. Act of May 26, 

1979, 66th Leg., R.S., ch. 841, § 1, sec. 6.30, 1979 Tex. Gen. Laws 2217, 

2231. Even if White were correct that the Legislature did not use the 

word “delinquent” in a “technical sense” in article 7335a—a defunct 

statute that resembles but differs from section 6.30(c)—this historical 

observation does not authorize us to interpret the word “delinquent” in 

the modern Tax Code in a way that is out of step with the word’s precise 

and consistent meaning throughout the Code. If the Legislature 

actually sought to preserve White’s “non-technical” understanding of 

“delinquent taxes” in the limited realm of contingent-fee contracts, it 

certainly could have said so. Instead, it generated the opposite result by 

incorporating the amended, modern version of section 6.30(c)—and its 

reference to “delinquent taxes”—into a comprehensive Code that 

contains a clear and consistent understanding of the words “delinquent 

taxes.” White does not authorize courts to give section 6.30(c)’s use of 

“delinquent taxes” a different meaning than those words have elsewhere 

in the Code, and the court of appeals erred by holding otherwise.

For these reasons, we agree with Kinder Morgan that section 

6.30(c) did not authorize the school district to retain Mr. Lemon on a 

contingent-fee basis. Section 6.30(c) authorizes contingent-fee contracts 

only “to enforce the collection of delinquent taxes,” which means taxes 

that have already been imposed and have become delinquent as the Tax 

Code uses that term. See TEX. TAX CODE § 31.02.

Finally, the school district also relies on section 45.231(a) of the 

Education Code, which provides: “The board of trustees of an 
16

independent school district may employ a person to assess or collect the 

school district’s taxes and may compensate the person as the board of 

trustees considers appropriate.”8 Just as the school district’s retention 

of Mr. Lemon is not “to enforce the collection of delinquent taxes,” it is 

also not “to assess or collect the school district’s taxes.” This lawsuit—

and the administrative challenge underlying it—seeks to increase 

Kinder Morgan’s appraisals so as to impose additional taxes on Kinder 

Morgan. The “assessment” and “collection” of these taxes are later 

stages of the process, which can only take place if the appraisals are in 

fact increased. See generally id. §§ 26.01–.18, 31.01–.12. Because there 

is no sense in which Mr. Lemon’s actions in this case amount to the 

assessment or collection of taxes, his authority to represent the school 

district in this litigation cannot be found in section 45.321(a) of the 

Education Code.

C.

The school district points to no other statute that might explicitly 

authorize it to engage Mr. Lemon on a contingent-fee basis for this 

litigation. This brings us to the question of whether the school district’s 

authority for its arrangement with Mr. Lemon arises impliedly from one 

of the district’s expressly granted powers. As explained above, implied 

authority should be found only when it is “indispensable to the declared 

objects of the corporation and the accomplishment of the purposes of its 

creation.” Tri-City, 142 S.W.2d at 947.

8 Section 11.1511(c)(3) of the Education Code similarly empowers a 

school board to “employ a person to assess or collect the district’s taxes as 

authorized under Section 45.231.”
17

Kinder Morgan does not dispute that the express authority to 

bring litigation necessarily entails implied authority to hire attorneys to 

do so. Whether the general power of a governmental unit to hire 

attorneys for litigation includes the power to pay them contingent fees 

in other contexts—such as tort actions—is not a question we consider 

here. Instead, the narrow question before us is whether, in the 

particular context of appraisal litigation, the express authority of a 

taxing unit to challenge appraisals necessarily entails implied authority 

to hire attorneys on a contingent-fee basis, an arrangement which gives 

the attorneys a personal financial incentive to maximize appraisal 

values. We conclude that no such authority can be implied from the 

relevant statutes.

Both the Legislature and this Court have long been cognizant 

that the government’s use of contingent-fee agreements in the taxation 

context can be “unfair and unjust to the public.” White, 114 S.W.2d at 

863. This “evil,” as we called it in 1938, motivated the Legislature to 

enact article 7335a, the statute at issue in White, which authorized some 

contingent-fee agreements with a 15 percent cap and required approval 

by the Attorney General and the Comptroller. TEX. REV. CIV. STAT. art. 

7335a (repealed 1979). Section 6.30(c), the amended successor statute 

to article 7335a, likewise authorizes contingent-fee contracts in discrete 

circumstances and limits the fee’s percentage. TEX. TAX CODE § 6.30(c). 

Moreover, because of Texas law’s longstanding skepticism and close 

regulation of such arrangements in the taxation context, the Attorney 

General in 2000 issued an opinion concluding that a taxing unit has 
18

neither express nor implied authority to enter such contracts. Tex. Att’y 

Gen. Op. No. JC-0290 (2000).

Undergirding any statute or judicial opinion regarding taxation 

is the Texas Constitution’s requirement that “[t]axation shall be equal 

and uniform.” TEX. CONST. art. VIII, § 1(a). In light of that foundational 

promise, we cannot lightly disregard legitimate concerns—which have a 

lengthy pedigree in Texas law—that contingent-fee contracts such as 

this one create “incentives to maximize recovery in ways that may be 

abusive, coercive, or harassing.” Kinder Morgan SACROC, 622 S.W.3d 

at 843.

The Tax Code does not mention contracts such as Mr. Lemon’s 

specifically, but the Code is elsewhere keenly concerned to guard against 

similar incentives to maximize appraisals. Section 25.01(b) of the Tax 

Code prohibits appraisal districts from hiring outside firms on a 

contingent-fee basis. The obvious aim of such a prohibition is to protect 

taxpayers from those with a personal financial incentive to raise

appraisals as high as possible. The statutes governing appraisals guard 

against improper incentives in other ways, as well. For example, most 

employees of taxing units within an appraisal district are ineligible to 

serve on the board of the district. TEX. TAX CODE § 6.03(a). And the 

compensation of an appraisal district’s chief appraiser cannot be linked 

to an increase in appraised values. Id. § 6.05(d).

We must consider the school district’s claim to implied authority 

against the backdrop of these related statutory provisions and in light 

of the well-recognized concerns that accompany contingent-fee 

agreements in the taxation context. The Legislature’s response to those 
19

concerns, thus far, has been to authorize taxing units to use 

contingent-fee agreements related to taxation in only one specific 

circumstance—to “enforce the collection of delinquent taxes.” Id. 

§ 6.30(c).

With this legal background in mind, the question is whether the 

Legislature’s silence as to contracts like Mr. Lemon’s is better 

understood as (1) implying that such contracts are authorized, or 

(2) withholding authorization. The second is far more likely. The best 

inference from the Legislature’s silence is that the law-making branch 

has not authorized taxing units to pursue appraisal litigation by 

engaging attorneys on a contingent-fee basis—not that the Legislature 

has impliedly authorized such controversial contracts without saying so. 

See., e.g., Hollins, 620 S.W.3d at 408 (given the law’s longstanding 

concern with regulating ballot security, “the only fair inference from the 

Code’s express recognition of private distribution of ballot applications 

and its silence on any official distribution is that the latter is 

unauthorized”).

The school district contends that requiring Kinder Morgan to pay 

the taxes it rightfully should owe—which is what the school district 

believes Mr. Lemon’s representation does—would best promote equality 

and uniformity in taxation. Kinder Morgan disagrees, of course. It 

contends that equality and uniformity of taxation are diminished when 

attorneys are given a personal financial incentive to maximize appraisal 

values. The Constitution charges the Legislature with making such 

determinations. The Legislature’s duty is to “provide[] by law” for the 

“equal and uniform” ascertainment of the value of taxable property. 
20

TEX. CONST. art. VIII, § 1(a), (b). In so doing, the Legislature has neither 

explicitly nor impliedly authorized taxing units to pay contingent fees to 

attorneys to pursue either administrative appraisal challenges or 

appraisal litigation. We therefore hold that the school district lacks 

authority to retain Mr. Lemon for this litigation on a contingent-fee 

basis.

III.

Although we agree with Kinder Morgan that Texas law does not 

authorize the school district to retain Mr. Lemon on a contingent-fee 

basis, we must also consider whether Kinder Morgan’s Rule 12 motion 

properly challenged Lemon’s authority and whether the appropriate 

relief under Rule 12 was to dismiss the school district’s case with 

prejudice. As explained below, we conclude that Rule 12 allows for 

challenges to contingent-fee contracts of this nature but that the school 

district’s claims should not have been dismissed with prejudice.

Rule 12 provides:

A party in a suit or proceeding pending in a court of this 

state may, by sworn written motion stating that he believes 

the suit or proceeding is being prosecuted or defended 

without authority, cause the attorney to be cited to appear 

before the court and show his authority to act. The notice 

of the motion shall be served upon the challenged attorney 

at least ten days before the hearing on the motion. At the 

hearing on the motion, the burden of proof shall be upon 

the challenged attorney to show sufficient authority to 

prosecute or defend the suit on behalf of the other party. 

Upon his failure to show such authority, the court shall 

refuse to permit the attorney to appear in the cause, and 

shall strike the pleadings if no person who is authorized to 

prosecute or defend appears. The motion may be heard and 

determined at any time before the parties have announced 
21

ready for trial, but the trial shall not be unnecessarily 

continued or delayed for the hearing.

TEX. R. CIV. P. 12.

The school district contends that its alleged lack of authority to 

pay Mr. Lemon a contingent fee is immaterial to Lemon’s authority to 

represent the district. The school district points to testimony from its 

superintendent indicating that the school district in fact authorized

Lemon to represent it in court. It views this factual authorization as the 

only thing required by Rule 12. We disagree.

Rule 12 may be used both “to prevent an attorney from purporting 

to represent a client when the client has not authorized that 

representation” and also “to question whether a party has the power or 

authority to hire an attorney.” Gulf Reg’l Educ. Television Affiliates v. 

Univ. of Hous., 746 S.W.2d 803, 809 (Tex. App.—Houston [14th Dist.]

1988, writ denied). In either situation—whether the defect in authority 

is factual or legal—the “proceeding is being prosecuted or defended 

without authority” if the challenged attorney cannot “show his authority 

to act.” TEX. R. CIV. P. 12.

Because the school district is a political subdivision with only 

those powers assigned to it by the Legislature, the intent of its officers 

to take an action does not mean the action has the intended legal effect. 

This is because an ultra vires action outside the authority of a political 

subdivision is void and therefore has no legal consequence. See 

Chambers–Liberty Cntys. Navigation Dist. v. State, 575 S.W.3d 339, 

348–55 (Tex. 2019); see also City of Arlington v. Lillard, 294 S.W. 829, 

830 (Tex. 1927). Thus, the school district does not actually vest an 

attorney with the “authority to act,” as contemplated by Rule 12, if the 
22

means by which it attempts to do so are beyond its power. If the school 

district lacks the power to retain attorneys on a contingent-fee basis to 

pursue appraisal litigation, as we hold above, then Mr. Lemon cannot 

show his authority to represent the school district in this lawsuit by 

pointing to his contingent-fee contract, which was an ultra vires act 

beyond the school district’s authority.

Nor can the contingent-fee provision of the contract be separated 

from the contract’s other provisions authorizing Mr. Lemon to represent 

the school district in court. If the Legislature’s choice not to authorize 

contingent-fee contracts in appraisal litigation brought by taxing units 

is to have any practical effect, it must at least mean that an attorney 

retained by a taxing unit under such a contract cannot proceed any 

further once the existence of an ultra vires contingent-fee agreement is 

established. Outside of tax litigation, it may not always be the case that 

questions about the way a governmental client has chosen to pay its 

attorney implicate the attorney’s “authority to act” as contemplated by 

Rule 12. We are mindful of the potential that Rule 12 may be abused, 

and we have previously cautioned that attorney disqualification is a 

severe remedy that “can result in immediate and palpable harm, disrupt 

trial court proceedings, and deprive a party of the right to have counsel 

of choice.” In re Nitla S.A. de C.V., 92 S.W.3d 419, 422 (Tex. 2002).

As explained above, however, both the Judiciary and the 

Legislature of our State have long been concerned with the way

attorneys or other agents of the government are paid in the taxation 

context. The issue here is not a technical or procedural defect in the 

school district’s hiring of Mr. Lemon. To the contrary, legal limitations 
23

on the authority of taxing units to give their hired agents a financial 

incentive to maximize taxation exist to protect the substantive rights of 

taxpayers. Contracts executed in violation of these limitations cannot 

be minimized as mere paperwork errors or excused as immaterial to the 

attorney’s authority to prosecute the litigation. In these circumstances, 

we hold that a Rule 12 motion challenging an attorney’s authority to 

represent a taxing unit on a contingent-fee basis is a proper way for a 

taxpayer to insist that taxing units pursue increased taxation only by 

lawful means.9

Finally, although we agree with the district court that Mr. Lemon 

failed to show his authority under Rule 12, the proper remedy was not 

dismissal with prejudice of the school district’s claims. Rule 12 states 

its remedy. The Court “shall refuse to permit the attorney to appear in 

the cause, and shall strike the pleadings if no person who is authorized 

to prosecute or defend appears.” The district court properly applied the 

first part of this remedy by refusing further appearance by Mr. Lemon 

under his contingent-fee contract. But the district court also struck the 

school district’s pleadings, a sanction only available “if no person who is 

authorized to prosecute or defend appears.” We see no indication in the 

record—and Kinder Morgan does not contend—that the school district 

was afforded a reasonable opportunity to hire another attorney or to 

adjust its arrangement with Mr. Lemon, either of which would have 

cured the problem identified by the Rule 12 motion.

9 We find no support in the record for the school district’s complaints 

regarding the notice or timing of the Rule 12 hearing in the district court.
24

As we recently observed in related litigation, “[w]hile Rule 12 

requires the trial court to dismiss counsel who fails to show authority to 

prosecute or defend the proceeding, pleadings filed by any such counsel 

are not nullified and may only be stricken ‘if no person who is authorized 

to prosecute or defend appears.’” Kinder Morgan SACROC, 622 S.W.3d 

at 846. The leniency and flexibility of this remedy recognizes that claims 

and defenses in litigation belong to the parties, not their lawyers. Here, 

the Legislature has given the school district the right to pursue 

administrative appraisal challenges and appraisal litigation. See TEX.

TAX CODE §§ 41.03, 42.031. The school district may continue to exercise 

that right if it so chooses, but it must do so through attorneys hired on 

terms that are within its statutory authority.10

IV.

Although we disagree with the court of appeals’ holding that the 

law authorizes the school district’s contingent-fee contract with Mr. 

Lemon, we nevertheless affirm the court of appeals’ judgment insofar as 

it reverses the dismissal with prejudice of the school district’s claims. 

The case is remanded to the district court for further proceedings 

consistent with this opinion. On remand, the school district must be 

given a reasonable opportunity either to modify its agreement with Mr. 

Lemon or to retain other counsel on terms that are within its lawful 

authority.

10 The parties agree that the contingent-fee contract at issue is not 

subject to sections 2254.1036 and 2254.1038 of the Government Code, enacted 

in 2019. Act of May 21, 2019, 86th Leg., R.S., ch. 857, § 4, 2019 Tex. Gen. Laws 

2321, 2322–23. We express no opinion on the effect of these recently enacted 

provisions on the questions addressed in this opinion.
25

James D. Blacklock

Justice

OPINION DELIVERED: May 19, 2023