Sebastian Cotton & Grain, Ltd. v. Willacy County Appraisal District
2016 Tex. App. LEXIS 4376
Tex. App.2016Background
- Sebastian Cotton & Grain filed personal property tax renditions listing large quantities of grain it claimed to own; WCAD initially assessed higher value but entered a §1.111(e) agreement reducing Sebastian’s assessed value based on contracts indicating De-Bruce owned much of the grain.
- De-Bruce protested, invoking NGFA trade rules that legal title passes on delivery; WCAD’s chief appraiser reconsidered and issued notice under Tex. Tax Code §25.25(b) to change ownership back to Sebastian for a large portion of the grain.
- The Willacy County Appraisal Review Board (Appraisal Board) concluded Sebastian owned ~69.7% of the contested portion; Sebastian appealed to district court for a trial de novo.
- WCAD amended its answer in district court to allege Sebastian procured the §1.111(e) agreement by fraud; the district court found fraud and assessed Sebastian with tax liability for the 69.7% share.
- On appeal, Sebastian argued (1) WCAD failed to exhaust administrative remedies by not raising fraud before the Appraisal Board; (2) §25.25(b) did not authorize increasing an individual owner’s tax liability after the roll was finalized; (3) insufficient evidence of fraud; and (4) it should recover attorney’s fees.
Issues
| Issue | Sebastian's Argument | WCAD's Argument | Held |
|---|---|---|---|
| 1. Whether WCAD’s failure to raise fraud before the Appraisal Board deprived the district court of jurisdiction to decide fraud | WCAD failed to exhaust administrative remedies; fraud claim waived | Trial de novo allows new issues and evidence; pleading raised fraud in district court | Court: Overruled Sebastian — failure to raise fraud at appraisal board did not bar district court jurisdiction in a trial de novo |
| 2. Whether Tex. Tax Code §25.25(b) authorized changing ownership to increase an individual owner’s tax liability after roll finalization | §25.25(b) cannot be used to increase an individual taxpayer’s liability; "liability" refers to individual, not net effect | Chief appraiser can change ownership anytime so long as net tax liability doesn’t increase | Court: Sustained Sebastian — §25.25(b) does not authorize increasing an individual taxpayer’s liability after finalization; district court lacked authority to shift liability under §25.25(b) |
| 3. Whether evidence supported a fraud-based voiding of the §1.111(e) agreement | Agreement was procured by fraud; district court found fraud | WCAD argued fraud supported voiding | Court: Did not reach merits of fraud sufficiency after resolving statutory-authority issue (no final ruling on fraud in this opinion) |
| 4. Whether Sebastian is entitled to attorney’s fees under Tex. Tax Code §42.29 | Prevailing property owner in §25.25 appeal should receive mandatory reasonable fees | WCAD contested amount/reasonableness | Court: Remanded for determination of reasonable attorney’s fees consistent with §42.29 (award is mandatory if statutory conditions met) |
Key Cases Cited
- Subaru of Am. v. David McDavid Nissan, 84 S.W.3d 212 (Tex. 2002) (failure to exhaust administrative remedies ordinarily operates as jurisdictional bar)
- In re ExxonMobil Corp., 153 S.W.3d 605 (Tex.App.-Amarillo 2004) (discussion of administrative-review framework and trial de novo)
- Lamar Cnty. Appraisal Dist. v. Campbell Soup Co., 93 S.W.3d 642 (Tex.App.-Texarkana 2002) (trial de novo generally cures procedural defects from administrative proceedings)
- Cherokee Water Co. v. Gregg Cnty. Appraisal Dist., 801 S.W.2d 872 (Tex. 1990) (trial de novo reviews all issues of fact and law as in civil suits)
- PR Invs. & Specialty Retailers, Inc. v. State, 251 S.W.3d 472 (Tex. 2008) (trial de novo may admit new evidence; proceedings treated as civil trial)
- Cameron Appraisal Dist. v. Sebastian Cotton & Grain, Ltd., 443 S.W.3d 212 (Tex.App.-Corpus Christi 2013) (related case addressing ownership of grain)
- Martinez v. Dallas Cent. Appraisal Dist., 339 S.W.3d 184 (Tex.App.-Dallas 2011) (§42.29 attorney’s-fee award interpreted as mandatory)