OPINION
Industrial Communications, Inc. appeals from a summary judgment in favor of Ward County Appraisal District and Ward County Appraisal Review Board (the Taxing Entities). We sustain Issues One and Two; reverse the trial court’s order granting summary judgment in favor of the Taxing Entities; reverse the trial court’s order denying Industrial’s motion for summary judgment; render judgment granting Industrial’s motion for summary judgment on its declaratory judgment action; and render judgment awarding attorney’s fees to Industrial.
FACTUAL SUMMARY
In July of 2000, Industrial Communications (Industrial) finalized its purchase of the accounts receivable and equipment of Industrial Communications of Pecos, Inc. (ICP). The equipment included three radio towers located on Barstow Hill in Ward County. 1 Industrial’s headquarters was located in Odessa, Texas while ICP was located in Pecos. In June of 2000, Industrial’s general manager, Charles E. Wood, began the process of registering Industrial’s purchase of the three radio towers from ICP. On June 24, 2000, he accessed the internet and went to the Federal Communication Commission’s website to register Industrial as the new owner of the three radio towers. Wood believed he had successfully registered Industrial as the owner of the three towers with the FCC, but he learned in 2006 that the online registration had been unsuccessful due to a software problem; consequently, the FCC did not show Industrial as the owner. Anita Miller, Industrial’s Accounts Payable and Accounts Receivable Clerk, notified all customers and vendors of both Industrial and ICP of the address change when Industrial purchased ICP. Further, Industrial had an employee at the Pecos address from February 5, 2002 through June 30, 2003. Thereafter, Industrial made a change of address with the United States Post Office and requested that all mail sent to the Pecos address be forwarded to the Odessa address.
Beginning in tax year 2001, Industrial filed renditions on the property previously owned by ICP but the renditions did not include the three Barstow Hill radio towers. The renditions were accepted by Ward County, Industrial was taxed according to the rendered values, and Industrial timely paid its taxes. Sometime prior to April 1, 2004, Industrial’s comptroller, Peggy Clemons, received a letter from Ward County Appraisal District advising Industrial about a law created by Senate Bill 340 which concerned the filing of business personal property renditions.
2
The letter advised that the new law, effective January 1, 2004, would impose tough penalties for failure to file a rendition with the appraisal district or for filing after the statutory deadline of April 15, 2004. Clemons thoroughly reviewed Industrial’s depreciation schedules and discovered that the three Barstow Hill radio towers had been omitted and had never been rendered
In November 2004, Industrial received a delinquent account notice for the Barstow Hill radio towers for the 2003 tax year. The notice was addressed to ICP but sent to Industrial’s address in Odessa. This was the first notice Industrial had received regarding the 2003 property taxes for the Barstow Hill radio towers because the pri- or notices, dated May 8, 2003, had allegedly been sent to ICP at its address in Pecos. 4 The Appraisal District had obtained the ownership information and address listed on the prior notices from the Federal Communication Commission. According to this notice, the 2003 taxes due on the Barstow Hill radio towers was $6,826.52 because the Appraisal District showed the value of the three towers as $67,250 for the PRD tower, $74,750 for the Dowell tower, and $79,750 for the Bell tower. Although the Ward County Appraisal District accepted the 2004 rendition showing the total value of the three towers as $15,500, the 2003 appraised value of the towers was set at $221,750, a fourteen-fold increase. The 2003 taxes had become delinquent on February 1, 2004. Around November 15, 2004, Industrial received a notice of the Appraisal District’s intent to sue. Like the delinquent account notice, the notice of intent to sue was addressed to ICP but it was mailed to Industrial’s address in Odessa. Upon receipt of the notice of intent to sue, Clemons prepared a property tax notice of protest for the 2003 taxes, and in the cover letter, she complained about the Appraisal District’s failure to provide notice. The Appraisal District and Appraisal Review Board refused to grant Industrial a hearing on its protest for the stated reason that the “deadline for filing a protest based on failure of the chief appraiser to deliver a notice to which the property owner is entitled has passed.”
On January 4, 2006, Industrial filed suit against the Appraisal District and the Appraisal Review Board pursuant to Section 41.45(f) of the Tax Code seeking to compel the Appraisal Review Board to hold a hearing on its protest. Alternatively, Industrial sought a declaratory judgment that (1) the Texas Tax Code, as applied to Industrial, failed to provide due process; (2) the attempt to collect taxes, penalties, and interest from Industrial without adequate notice or a hearing violated Industrial’s right to due process, and (3) the 2003 taxes assessed on the radio towers are void. Industrial filed a motion for summary judgment on all of its claims. The Appraisal District and the Appraisal Review Board filed a motion for summary judgment on the sole ground that Industri
SUMMARY JUDGMENT
Industrial presents two issues on appeal complaining that the trial court erred in granting the Taxing Entities’ motion for summary judgment and denying Industrial’s motion for summary judgment because taxes were assessed against Industrial’s property without notice and a reasonable opportunity to be heard. The Taxing Entities respond that the trial court properly denied Industrial’s motion for summary judgment because the Appraisal District complied with all notice requirements under the Property Tax Code by delivering notice of the 2003 appraisal to the record owner of the property, ICP. Further, they contend that the trial court properly granted summary judgment in their favor because Section 41.411 provides the exclusive administrative remedy for lack of notice and Industrial failed to exhaust its administrative remedies under that section.
Standard of Review
When both parties move for summary judgment and the trial court grants one motion and denies the other, the reviewing court should review both parties’ summary judgment evidence and determine all questions presented.
Dow Chemical Company v. Bright,
Taxpayer Entitled to Due Process
Collection of a tax constitutes a deprivation of property; therefore, a taxing unit must afford a property owner due process of law.
McKesson Corp. v. Div. of Alcoholic Beverages & Tobacco, Dept. of
Bus.
Regulation of Florida,
Due Process under the Texas Tax Code
Pursuant to Section 41.41 of the Tax Code, a property owner is entitled to protest before the appraisal review board several actions, including a determination of the appraised value of the owner’s property. Tex.Tax.Code Ann. § 41.41(a)(Vernon 2008). Additionally, a property owner is
Under the version of Section 41.44 applicable to this case, a property owner who wishes to protest pursuant to Section 41.411 must file the protest before the date the taxes on the subject property become delinquent. Acts 2005, 79th Leg., R.S., ch. 829, § 1, 2005 Tex.Gen.Laws 2839 [current version found at Tex.Tax Code Ann. § 41.44(c)(Vernon 2008) ]. The property owner must comply with the payment requirements of Section 42.08 5 or the property owner forfeits the right to a final determination of the protest. See Acts 1985, 69th Leg., R.S., ch. 504, § 1, 1985 Tex.Gen.Laws 2089 [current version found at Tex.Tax.Code Ann. § 41.411(c)(Vernon 2008) ]. 6 The pre-2008 version of Section 41.411 gave most property owners the opportunity to be heard at some stage of the administrative proceeding, satisfying due process. The issue in this case is whether the pre-2008 Tax Code provides due process for a property owner who is not given notice of the inclusion of property on the appraisal roll and the assessment of taxes until after the taxes have become delinquent. The authors of one law review article have concluded that the pre-2008 version of Section 41.411 left open a small gap in which the Tax Code fails to provide adequate due process for a taxpayer who does not receive notice in time to take advantage of Section 41.411, and appropriate pre-Code remedies may still be available. Farley P. Katz and Charles J. Muller III, Procedural Rights and Remedies under the Texas Property Tax Code — A Guide to the Code, Recent Amendments, and Developing Case Law, 18 St. Mary’s L.J. 1209, 1232 (1987). The 2007 amendment to Section 41.411(c) and the addition of Section 41.44(c-3) presumably close this gap, but the amendments do not apply to this case.
Exhaustion of Administrative Remedies
We now consider whether the trial court properly granted summary judgment in favor of the Taxing Entities on their motion for summary judgment. In the sole
If an agency has exclusive jurisdiction to determine a matter, a litigant’s failure to exhaust all administrative remedies before seeking judicial review of the administrative body’s actions deprives the court of subject-matter jurisdiction over claims within the body’s exclusive jurisdiction, and the court must generally dismiss such claims without prejudice. Tex.Gov’t Code Ann. § 2001.171 (Vernon 2008);
Subaru of America, Inc. v. David McDavid Nissan, Inc.,
The Taxing Entities argue that the administrative remedies provided by the Tax Code are exclusive and Industrial failed to exhaust its administrative remedies because it did not file a protest pursuant to Section 41.411 of the Tax Code. But as we have already noted, such a protest must be filed before the date on which the taxes on the subject property become delinquent. It is undisputed that until November of 2004 Industrial did not have
The Taxing Entities concede the lack of notice but argue that Industrial is presumed to know that it owed taxes on the three radio towers, and therefore, it had constructive notice that some amount of tax was due by the delinquency date. Given this constructive notice, the Taxing Entities reason that Industrial cannot maintain its suit in the district court unless it made diligent efforts to protest and exhausted its administrative remedies. In support of this argument, they cite
MAG-T, L.P. v. Travis Central Appraisal District,
In
MAG-T,
the taxpayers owned commercial property in Travis County.
MAG-T,
The instant case is factually distinguishable. In
MAG-T,
the taxpayers received notice in time to file a protest but they
The Taxing Entities also rely on
Denton Central Appraisal District v. CIT Leasing Corporation,
The undisputed summary judgment evidence established that Industrial did not have notice that the Barstow Hill radio towers had been included on the 2003 appraisal roll or that taxes had been assessed until after the taxes became delinquent on February 1, 2004. We thus conclude on these facts, that the Tax Code did not provide Industrial with any remedies. The trial court erred in granting summary judgment in favor of the Taxing Entities on the ground that Industrial failed to exhaust its administrative remedies.
Industrial’s Motion for Summary Judgment
We now consider whether the trial court properly denied Industrial’s motion for summary judgment. By its suit, Industrial sought two alternative forms of relief: (1) judgment compelling the Appraisal Re
Section Ul.U5(f)
Section 41.45(f) provides that:
A property owner who has been denied a hearing to which the property owner is entitled under this chapter may bring suit against the appraisal review board by filing a petition or application in district court to compel the board to provide the hearing. If the property owner is entitled to the hearing, the court shall order the hearing to be held and may award court costs and reasonable attorney fees to the property owner. [Emphasis added.]
Tex.Tax Code Ann. § 41.45(f)(Vernon 2008). We have already determined that Industrial was not entitled to a hearing under Section 41.411 because it did not receive notice until after the 2003 taxes had become delinquent, and therefore, Industrial could not timely file a protest under that section. Industrial’s protest made pursuant to Section 41.41 was untimely because it was made after the taxes had been assessed and had become delinquent. See Acts 1999, 76th Leg., R.S., ch. 631, § 12, 1999 Tex.Gen.Laws 3191, 3197 [current version found at tex.tax code ann. § 41.44 (Vernon 2008) ]. The Tax Code, as it existed prior to 2008, contains no procedural mechanisms to provide Industrial a hearing on its protest. Thus, the trial court properly denied Industrial’s motion for summary judgment on this cause of action.
Declaratory Judgment
Industrial also sought a declaratory judgment that (1) the Texas Tax Code, as applied to Industrial, failed to provide due process; (2) the attempt to collect taxes, penalties, and interest from Industiial without adequate notice or a hearing violated Industrial’s right to due process, and (3) the 2003 taxes assessed on the radio towers are void. It is undisputed that Industrial’s property was included on the 2003 appraisal roll and taxes were assessed on the property without notice to Industrial until after the taxes had become delinquent. Further, the Taxing Entities refused all of Industrial’s requests for a hearing on the late notice or the merits of the dispute about the values assigned to the Barstow Hill radio towers. Nevertheless, the Taxing Entities responded to Industrial’s motion for summary judgment by arguing they were not obligated to provide notice under the Tax Code because Industrial failed to put them on notice that it owned the three radio towers or notify them of its change of address.
Exaction of a tax constitutes a deprivation of property, and a taxing unit must afford a property owner due process of law and must provide meaningful backward-looking relief to rectify any unconstitutional deprivation.
McKesson Corporation v. Division of Alcoholic Beverages & Tobacco, Department of Business Regulation of Florida,
In
Dallas Central Appraisal District,
the Browns filed suit in district court challenging the denial of a property tax homestead exemption for tax years 1993 through 1996. The Browns purchased the home in 1992 but they did not record their warranty deed. They lived in the home continually until 1998 and paid property taxes but did not file an application for a property tax homestead exemption. The prior homeowner had been granted a homestead exemption and the Browns paid property taxes based on the prior owner’s exemption. In 1997, the Dallas Central Appraisal District learned the Browns had not applied for a homestead exemption and canceled the prior owner’s exemption. The appraisal district sent notice of the cancellation to the previous owner who delivered the notice to the Browns. On February 18, 1998, the Browns filed an application for a homestead exemption requesting an exemption for the tax years 1993 through 1998. The appraisal district granted the exemption for 1997 and 1998 but denied it for the previous years. The Browns filed a notice of protest with the appraisal review board and recorded their warranty deed on July 6, 1998. The appraisal review board denied the protest for the years 1993 through 1996 and the Browns filed suit in district court. The district court granted summary judgment in favor of the Browns and ordered that they were entitled to a homestead exemption for tax years 1993 through 1996. The Dallas Court of Appeals reversed the summary judgment because the Tax Code provides that a taxpayer may not receive an exemption for a year in which the taxpayer fails to file a timely application. Tex.Tax Code Ann. § 11.43(e)(Vernon 2008). The evidence showed the Browns did not file an application until 1998. An appraisal district has a nondiscretionary duty to remove erroneous exemptions if discovered within five years. Tex.Tax Code Ann. § 11.43(i)(Vernon 2008);
Brown,
Brown is distinguishable from the instant case because the Browns did not file suit asserting a due process violation arising from a lack of notice and no opportunity to protest an action of the taxing authorities. The taxpayers there had notice of the appraisal district’s removal of the exemption in time to file a protest with the appraisal review board. Further, the Tax Code placed a duty on the Browns to timely file an application seeking the homestead exemption. The penalty for failure to file that application is the removal of the homestead exemption to which the Browns were not entitled. In contrast, the only statutorily-imposed requirement Industrial failed to perform, filing a rendition, does not result in the imposition of taxes without due process or the removal of any exemption to which Industrial was entitled under the Tax Code.
A person is required to render for taxation all tangible personal property used for the production of income that the person owns. Tex.Tax Code Ann. § 22.01 (Vernon 2008). The Tax Code imposes substantial penalties on a person who fails to render property for taxation. Tex.Tax Code Ann. § 22.28(a)(Vernon 2008)(failure to timely file a rendition statement subjects the person to a penalty in an amount equal to ten percent of the total amount of taxes imposed on the property for that year by taxing units participating in the appraisal district). 8 The chief appraiser may waive the penalty if the chief appraiser determines that the person exercised reasonable diligence to comply with or has substantially complied with the requirements of Chapter 22 of the Tax Code. Tex.Tax Code Ann. § 22.28 (Vernon 2008). Nothing in the Tax Code indicates that failure to render property constitutes a forfeiture of the right to due process. The Taxing Entities do not cite any authority for their argument that a property owner’s failure to render property constitutes a waiver of the property owner’s constitutional right to due process. In the absence of any supporting authority, we decline to hold that the notice and hearing requirements of the Tax Code are contingent on the filing of a rendition statement. The Taxing Entities’ argument that Industrial waived its right to due process by failing to render the Barstow Hill radio towers is without merit.
The Taxing Entities also maintain that Industrial was not entitled to notice because it failed to advise them of its address change. While it is certainly advisable for a property owner to keep the taxing authorities informed of any change of address, the Tax Code does not require a property owner to inform the appraisal district of his current address nor does it provide that failure to do so waives the right to notice. The Tax Code does not state that the appraisal district’s obligation to provide the notice required by Section 25.19 is contingent upon the property owner notifying the tax assessor of its current address. The Taxing Entities do not cite any cases holding that a property owner forfeits his right to due process if he fails to inform the taxing authorities of his current address. The United States Supreme Court has held that a taxpayer’s failure to comply with a statutory obligation to keep his address updated did not forfeit his light to constitutionally sufficient notice.
See Jones v. Flowers,
Finally, the Taxing Entities urge that Industrial waived its right to due process because it failed to properly record its property interest in the three radio towers. Again, the Taxing Entities cite no authority in support of their argument that a property owner forfeits its right to due process by not recording its ownership of the subject property. If the evidence established that a taxpayer affirmatively attempted to hide its ownership of the property and avoid paying taxes, an argument could be made that the taxpayer intentionally relinquished its constitutional right to due process. Waiver is defined as “an intentional relinquishment of a known right or intentional conduct inconsistent with claiming that right.”
Jernigan v. Langley,
Industrial conclusively established that it did not receive notice of the inclusion of the three Barstow Hill radio towers on the 2003 appraisal roll and it did not have an opportunity to protest the appraised values of the property before taxes were assessed on the property. Because Industrial did not receive notice prior to the taxes on the property becoming delinquent, the remedy provided by Section 41.411 is unavailable to Industrial and the Tax Code does not provide any other backward-looking relief to rectify the unconstitutional deprivation. Accordingly, we conclude that Industrial conclusively established that its right to due process was violated. The trial court erred by denying Industrial’s motion for summary judgment on its declaratory judgment action.
We must now determine what remedy is appropriate to rectify the due process violation. Industrial asks that we render a judgment declaring that the Taxing Entities’ failure to provide due process renders the assessed taxes and associated penalties void. On the other hand, the Taxing Entities point to Section 25.19(d) of the Tax Code which expressly provides that a taxpayer’s failure to receive notice does not affect the validity of the appraisal or the imposition of any tax on the basis of the appraisal. Tex.Tax Code Ann. § 25.19(d)(Vernon 2008). Application of Section 25.19(d) is reasonable where a taxpayer has an opportunity to protest a lack of notice pursuant to Section 41.411 and other Tax Code provisions permit the correction of the records and issuance of supplemental tax bills after a taxpayer has been given an opportunity to be heard. But if we apply Section 25.19(d) literally, this taxpayer is left without a remedy for a due process violation. The pre-2008 version of the Tax Code simply does not provide a remedy for the situation presented by this case. Accordingly, we find that Section 25.19(d) is inapplicable to these unique facts.
Given the unavailability of any remedies provided by the Tax Code, it is appropriate to look to the equitable remedies available in cases decided prior to enactment of Section 41.411.
See, e.g., Appraisal Review Board of the El Paso County Central Appraisal District v. Fisher,
ATTORNEY’S FEES
In its third issue, Industrial asserts that it was entitled to attorney’s fees under the Declaratory Judgments Act. The Act provides that the trial court “may award costs and reasonable and necessary attorney’s fees as are equitable and just.” Tex.Civ.Prac. & Rem.Code Ann. § 37.009 (Vernon 2008). The granting or denial of attorney’s fees in a declaratory judgment action is within the trial court’s discretion and is not dependent on a finding that a party substantially prevailed.
Barshop v. Medina County Underground Water Conservation District,
Article 37.009 imposes four limitations on the court’s discretion: the fees awarded must be reasonable and necessary, which are matters of fact, and they must be equitable and just, which are matters of law.
Bocquet v. Herring,
The Taxing Entities argue that Industrial is not entitled to attorney’s fees under the Declaratory Judgment Act because it did not prevail in the trial court. An award of attorney’s fees under the Act is not dependent on a finding that a party substantially prevailed.
Barshop,
Having sustained Issues One and Two, we render judgment declaring that Industrial’s right to due process was violated because it did not receive notice of the appraisals or the imposition of taxes on the Barstow Hill radio towers and it did not have an opportunity to protest the appraisals before taxes were imposed on the property. We render judgment declaring void the 2003 taxes assessed on the three Bar-stow Hill radio towers and the associated penalties. Having sustained Issue Three, we render judgment awarding attorney’s fees to Industrial in the amount $15,713 for trial, $10,000 for appeal to this Court, and $7,500 in the event of appeal to the Texas Supreme Court.
CARR, J., not participating.
Notes
. The towers are known as the PRD tower, the Dowell tower, and the Bell tower.
. The letter is undated and the summary judgment evidence does not show when the letter was sent by the Ward County Appraisal District or when it was received by Industrial.
. Two towers were listed at $5,000 each and the third tower had a listed value of $5,500.
. Anita Miller, who processes all mail for Industrial, stated in her summary judgment affidavit that before Industrial received the notice in November of 2004, ”[n]o tax notice, bill, or any other communication regarding the 2003 taxes on the Barstow Hill radio towers was received at either the Pecos or Odessa addresses.”
. See Tex.Tax.Code Ann. § 42.08(b)(Vernon 2008)(providing that the property owner must pay before the delinquency date the lesser of the amount of taxes due on the portion of the taxable value of the property not in dispute, or the amount of taxes due on the property under the order from which the appeal is taken).
. In 2007 while this appeal was pending, the Legislature amended Section 41.411(c) to provide that the delinquency date for purposes of Section 42.08(b) for the taxes on the property subject to a protest under this section is postponed to the 125th day after the date that one or more taxing units first delivered written notice of the taxes due on the property, as determined by the appraisal review board at a hearing under Section 41.44(c-3). TexTax Code Ann. § 41.41 l(c)(Vernon 2008). However, the amendment applies only to an ad valorem tax protest filed on or after the effective date of the act, January 1, 2008. Acts 2007, 80th Leg., R.S., ch. 1106, § 4(c), 2007 Tex.Gen. Laws. 3738, 3739. Section 41.44(c-3) now permits a property owner to file a protest under Section 41.411 not later than the 125th day after the property owner, in the protest filed, claims to have first received written notice of tire taxes in question. Tex.Tax Code Ann. § 41.44(c-3)(Vernon 2008). This amendment applies only to an ad valorem tax protest filed on or after the effective date of the Act, January 1, 2008. Acts 2007, 80th Leg., R.S., ch. 1106, § 4(c), 2007 Tex Gen. Laws 3738, 3739.
. In 2003, the Legislature amended Section 22.23(c) of the Tax Code to encourage property owners to submit tangible personal property for taxation that had been previously omitted from the appraisal rolls. Acts 2003, 78th Leg., ch. 1173, § 6, 2003 Tex.Gen.Laws 3353, 3355. If a taxpayer filed a rendition statement of the omitted property before December 1, 2003, the chief appraiser could not add the value of the omitted properly to the 2001 or 2002 appraisal roll. Id.
. The statute authorizing imposition of the penalty became effective on January 1, 2004. Thus, Industrial was not subject to a penalty for failure to render the radio towers in the prior years.