Opinion
NO. 14-15-00630-CV
05-02-2017
MIKE SULLIVAN, IN HIS OFFICIAL CAPACITY AS HARRIS COUNTY TAX ASSESSOR-COLLECTOR, Appellant v. SHERIDAN HILLS DEVELOPMENT L.P., Appellee
On Appeal from the 189th District Court Harris County, Texas
Trial Court Cause No. 2014-68886
MEMORANDUM OPINION
Appellant Mike Sullivan, in his official capacity as Harris County Tax Assessor-Collector, appeals a summary judgment ruling granting commercial property owner Sheridan Hills Development L.P. ("Sheridan Hills") declaratory judgment and mandamus relief and ordering him to refund penalties and interest assessed on Sheridan Hills' 2013 taxes. On appeal, Sullivan alleges that the judgment should be reversed because the law did not authorize a judgment ordering Sullivan in his official capacity to pay funds on Sheridan Hills' suit for mandamus and declaratory relief. For the reasons set forth below, we reverse and render.
We substitute Ann Harris Bennett, in her official capacity, as successor to Mike Sullivan as Harris County Tax Assessor-Collector. See Tex. R. App. P. 7.2(a). The opinion, however, will continue to refer to "Sullivan" in accordance with the record below and the briefs.
I. Background
In 2013, the Harris County Appraisal District ("HCAD") Appraisal Review Board valued Sheridan Hills' property at $84,677,163. Sheridan Hills' property's tax value for the previous year was $56,500,000.
The property at issue is known as the Life Science Plaza located at 2130 West Holcombe, Houston, Texas 77030.
On August 1, 2013, Sheridan Hills filed an appeal of the 2013 appraisal to the district court. To perfect its appeal, Sheridan Hills made a payment of $1,450,000, which was the amount of taxes imposed on the property in the preceding year. See Tex. Tax Code § 42.08(b)(3). Sheridan Hills reached a settlement with HCAD on a taxable property value of $78,600,000, which was more than the prior year but less that that originally valued by HCAD. The district court approved the settlement on June 13, 2014. Thereafter, corrections were made to the HCAD appraisal to match the final settled value of the property.
Prior to Sullivan sending Sheridan Hills a supplemental tax bill, Sheridan Hills asserts that it contacted Sullivan's office and was verbally advised of additional taxes due in the amount of $561,343.35. On July 28, 2014, Sheridan Hills made a payment of $561,343.35. Thereafter, Sullivan sent Sheridan Hills the supplemental tax bill for $794,862.20. The breakdown of the supplemental tax bill is as follows: base levy of $561,343.35; penalty and interest of $101,041.81; and attorney's fees of $132,477.04. Sullivan removed the attorney fees charge and recalculated the remaining balance of the penalty and interest. On September 10, 2014, Sheridan Hills paid, under protest, $102,754.40 in penalties and interest.
On October 28, 2014, counsel for Sheridan Hills sent a letter to Sullivan requesting a complete refund of the $102,754.40, asserting that Sullivan's office had misinterpreted Section 42.42 of the Tax Code regarding delinquent payment, penalties, and interest. Sullivan denied the request for refund. In a November 2014 email, an attorney from Harris County Attorney's Office explained the bases for denying Sheridan Hills' refund, including its interpretation of the relevant Tax Code provisions and supportive case law.
In November 2014, Sheridan Hills initiated this suit against Sullivan in district court. In its original petition, Sheridan Hills asserts the trial court has jurisdiction of the subject matter of this dispute under Tex. Gov't Code § 24.011 (writs of mandamus) and Tex. Civ. Prac. & Rem. Code § 37.004 (Declaratory Judgments Act). In its prayer for relief, Sheridan Hills seeks to obtain declaratory and mandamus relief voiding the illegal assessment of penalties and interest and ordering a refund of all penalties and interest paid under protest by Sheridan Hills.
Sheridan Hills filed a motion for interlocutory summary judgment, noting it appealed a property tax valuation to the district court for trial de novo; it paid taxes on the property subject to the appeal in an amount required by Section 42.08 of the Tax Code; the appeal in district court settled; its tax liability increased to an amount in excess of that amount tendered under Section 42.08(b)(3) (the amount of taxes imposed on the property the preceding year); it paid the additional base levy of $561.343.35; and it paid, under protest, penalties and interest of $102,754.40, which it asserts were wrongfully assessed. According to Sheridan Hills' interpretation, Section 42.42(b) of the Tax Code provides the additional tax ($561.343.35) is due on receipt of the supplemental bill and becomes delinquent if not paid within 21 days or before the first day of the next month after the date of mailing that will provide at least 21 days for payment of the tax, whichever is later. Section 42.42(c) provides that the additional tax is due and becomes delinquent as provided by subsection (b), but the property owner is liable for penalties and interest on the tax included in the supplemental bill as provided by Section 33.01 as if the tax included in the supplement bill became delinquent on the original date prescribed by Chapter 31 (i.e., February 1 of the year following the year in which imposed). See Tex. Tax Code § 31.02(a). In short, Sheridan Hills contends that a taxpayer should not be liable for penalties and interest during the pendency of its judicial review of a property's valuation. It argues that Section 42.42(b) acts as a safe harbor to taxpayers, giving them 21 days for payment of the tax without being delinquent. After hearing oral arguments, the trial court denied Sheridan Hills' motion.
Sullivan filed his own motion for summary judgment and motion to dismiss, asserting Section 42.42(c) of the Tax Code controls Sheridan Hills' situation because it only paid a portion of its tax liability to perfect its appeal. Sullivan argues that Section 42.42(b) does not control because Sheridan Hills did not pay its tax liability in full and did not incur an increased tax liability above the original assessment. The plain language of Section 42.42(c) places liability for penalties and interest on the property owner if the bill is not paid before February 1. The statute does not allow the taxpayer to jump to Section 42.42(b) for a new delinquency date. Because Sheridan Hills chose to make a partial payment as permitted by Section 42.08 to perfect its appeal, it owes penalties and interest on the balance of the "additional tax" due. Sullivan points out that if a taxpayer pays its tax liability in full by the delinquency date and get its tax liability lowered in a protest suit, the taxpayer will be entitled to a refund with interest under Section 42.43 of the Tax Code. Sheridan Hills filed its response and motion for reconsideration of its motion for interlocutory summary judgment.
On April 24, 2015, the trial court signed an Order granting Sheridan Hills' motion for reconsideration of its motion for interlocutory summary judgment, denied Sullivan's motion for summary judgment and motion to dismiss, and denied Sheridan Hills' request that Sullivan be ordered to void the illegal assessments. The Order also provided that the amount of attorney's fees to which Sheridan Hills is entitled would be decided at a later date. Later, on that same day, the trial court clarified its order and initialed the same that it was not only denying Sheridan Hills' request that Sullivan be ordered to void the illegal assessments, but it also denied Sheridan Hills' request for attorney's fees. The trial court's clarification was memorialized by striking through on the Order the language that provided for attorney's fees to be determined at a later date and placing the trial court's initials above the same.
In May 2015, Sullivan filed a motion for reconsideration or to modify the judgment. While its motion for reconsideration was pending, Sullivan filed a notice of appeal with this court on July 21, 2015. Thereafter, the trial court denied Sullivan's motion for reconsideration.
On October 20, 2015, Sullivan filed a motion to vacate the judgment, arguing that refunds of government money cannot be done in equity because sovereign immunity, for a variety of reasons, bars all suits for money damages unless the legislature waives this immunity. Sheridan Hills responded that the trial court lacked plenary power to vacate its order and that appellate jurisdiction was invoked by Sullivan filing a notice of appeal. The trial court denied Sullivan's motion to vacate.
II. Analysis
In two issues, Sullivan asserts the following: (1) whether the judgment is final and permitting appellate review when Sheridan Hills affirmatively states there are no remaining claims for relief and it requests no further consideration by the trial court; and (2) whether Sheridan Hills conclusively established the right to a summary judgment against Sullivan in his official capacity on the bases it presented.
A. Is there a final judgment over which this court has jurisdiction.
In its first issue, Sullivan maintains this court has jurisdiction over the appeal because the trial court's April 24, 2015, order disposed of all issues.
"Generally, Texas appellate courts have jurisdiction only over final judgments." Rusk State Hosp. v. Black, 392 S.W.3d 88, 92 (Tex. 2012) (citing Bally Total Fitness Corp. v. Jackson, 53 S.W.3d 352, 352 (Tex. 2001)). An exception exists for certain interlocutory orders that are not present in this case. See Tex. Civ. Prac. & Rem. Code § 51.014(a).
On March 29, 2017, we ordered this case abated and remanded to the trial court for clarification of whether the grant of Sheridan Hills' interlocutory motion for summary judgment was a final judgment, and to permit the parties to obtain an order disposing of Sheridan Hills' claim for attorney's fees. On April 3, 2017, the trial court signed an agreed order for clarification of its April 24, 2015 judgment, providing that the granting of Sheridan Hills' interlocutory motion for summary judgment on April 24, 2015, is a final judgment and denying Sheridan Hills' claim for attorney's fees against Sullivan. The trial court's agreed order for clarification resolves any ambiguity over our jurisdiction to hear this appeal.
Accordingly, we hold there is a final judgment over which this court has jurisdiction.
B. Whether Sheridan Hills' claims are barred by governmental immunity.
Taken as a whole, Sullivan's second issue is an attack on the trial court's jurisdiction. Sullivan argues the trial court's judgment should be reversed because Sheridan Hills "did not allege any specific law or doctrine that specifically gave private property owners the right to obtain an order requiring Sullivan to provide a refund." Further, Sullivan contends that Sheridan Hills "did not allege that any individual taxing unit refused to refund tax monies" that allegedly were assessed wrongfully. Sullivan argues that Sheridan Hills' contentions do not support an ultra vires action and are improper under the Declaratory Judgments Act and mandamus relief. In essence, Sullivan maintains that the trial court lacked subject matter jurisdiction because Sheridan Hills failed to establish a waiver of sovereign immunity. Although Sullivan did not raise jurisdiction below, a challenge to a trial court's subject-matter jurisdiction may be raised for the first time on appeal; it may not be waived by the parties. See Tex. Ass'n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 445 (Tex. 1993); Haven Chapel United Methodist Church v. Leebron, 496 S.W.3d 893, 900 (Tex. App.—Houston [14th Dist.] 2016, no pet.).
Governmental immunity encompasses both sovereign immunity and official immunity. Fed. Sign v. Tex. S. Univ., 951 S.W.2d 401, 405 (Tex. 1997). Although both are types of governmental immunity, sovereign immunity and official immunity are two distinct doctrines aimed at different policies. McCartney v. May, 50 S.W.3d 599, 605 (Tex. App.—Amarillo 2001, no pet.). Sovereign immunity, unless waived, protects the State of Texas, its agencies, and officials from lawsuits for damages. Fed. Sign, 951 S.W.2d at 405. On the other hand, official immunity protects a governmental employee from suit for incidents that arise out of his good faith performance of discretionary acts, so long as the employee acted within the scope of his authority. Wadewitz v. Montgomery, 951 S.W.2d 464, 466 (Tex. 1997); City of Lancaster v. Chambers, 883 S.W.2d 650, 653 (Tex. 1994). In this case, however, Sullivan has only been sued in his official capacity as tax assessor-collector. A "a suit against a state officer in his official capacity is a suit against the state." Liberty Mut. Ins. Co. v. Sharp, 874 S.W.2d 736, 738 (Tex. App.—Austin 1994, writ denied).
Generally, governmental immunity deprives a trial court of subject matter jurisdiction over a lawsuit in which a party has sued the State or a state agency unless the Legislature has consented to suit. See, e.g., Tex. Dep't of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 224-226 (Tex. 2004); Tex. Natural Res. Conservation Comm'n v. IT-Davy, 74 S.W.3d 849, 855 (Tex. 2002) ("Sovereign immunity protects the state from lawsuits for money damages."). "When bringing suit against a governmental unit, the plaintiff bears the burden of establishing the court's subject matter jurisdiction by alleging a valid waiver of immunity." Anheuser-Busch, LLC v. Harris Cty. Tax Assessor-Collector, ___S.W.3d ___, No. 01-15-00422-CV, 2016 WL 5920766, at *2 (Tex. App.—Houston [1st Dist.] Oct. 11, 2016, no pet. h.) (citing Dallas Area Rapid Transit v. Whitley, 104 S.W.3d 540, 544 (Tex. 2003)). We review immunity issues under a de novo standard of review. Tex. Dep't of Transp. v. Sefzik, 355 S.W.3d 618, 620 (Tex. 2011) (per curium).
2. Sheridan Hills' claims
In its original petition, Sheridan Hills asserts the trial court has jurisdiction of the subject matter of this dispute under Tex. Gov't Code § 24.011 (writs of mandamus) and Tex. Civ. Prac. & Rem. Code § 37.004 (Declaratory Judgments Act). In its prayer for relief, Sheridan Hills seeks to obtain mandamus relief and a declaration to issue to Sullivan to void the illegal assessment of penalties and interest and refund all penalties and interest paid under protest by Sheridan Hills.
Sullivan maintains that on the bases pled, Sheridan Hills did not establish a valid waiver of governmental immunity; hence, the trial court was deprived of subject-matter jurisdiction. In appellee's brief, Sheridan Hills argues that "where statutory provisions create an entitlement to payment, suits seeking to require state officers to comply with the law are not barred by immunity merely because they compel the state to make those payments." Sheridan Hills frames its case as an ultra vires action that would allow a refund and suggests that the refund also was authorized under the Declaratory Judgments Act and mandamus. We disagree.
a. Ultra vires claims
An ultra vires claim against a state official—that is, a suit against a state official for acting outside his or her authority and seeking to require the state official to comply with statutory or constitutional provisions—is not barred by sovereign immunity. City of El Paso v. Heinrich, 284 S.W.3d 366, 372 (Tex. 2009). To fall within the ultra vires exception, "a suit must not complain of a government officer's exercise of discretion, but rather must allege, and ultimately prove, that the officer acted without legal authority or failed to perform a purely ministerial act." Id. "The ultra vires suit seeks to enforce existing policy, not alter it." Stiefer v. Moers, No. 14-14-00617-CV, 2015 WL 69550104, at *4 (Tex. App.—Houston [14th Dist.] Nov. 10, 2015, no pet.) (citing Lone Star Coll. Sys. v. Immigration Reform Coalition of Tex. (IRCOT), 418 S.W.3d 263, 272 (Tex. App.—Houston [14th Dist.] 2014, pet. ref'd) (citing Heinrich, 284 S.W.3d at 372))).
The ultra vires exception to governmental immunity depends upon a plaintiff's allegation, and ultimately proof, that the officer acted without legal authority or that he failed to perform a purely ministerial act. Id. A complaint about how the officer exercised his discretion is not an ultra vires complaint. Id. Additionally, the exception to immunity allows only prospective declaratory or injunctive relief, not retroactive relief. Id. (citing Heinrich, 284 S.W.3d at 374-77).
Sullivan argues that Sheridan Hills' claim is essentially one for retrospective money damages, i.e., a refund of the penalties and interest paid. "As Heinrich made clear, immunity for an ultra vires act is only a waiver with regard to bringing future acts into compliance with the law." City of Galveston v. CDM Smith, Inc., 470 S.W.3d 558, 569 (Tex. App.—Houston [14th Dist.] 2015, pet. denied) (citing Heinrich, 284 S.W.3d at 374). Governmental immunity bars ultra vires claims for retrospective relief. Heinrich, 284 S.W.3d at 374-76.
b. Declaratory Judgments Act
Sheridan Hills sought relief against Sullivan under the Texas Declaratory Judgments Act. In its petition, Sheridan Hills requested the court to "declare the [Sullivan's] actions in this case violate the Code." It further requested that the court "declare the [Sheridan Hills] is entitled to a refund from the [Sullivan] of all penalties and interest paid to the [Sullivan] for the Property for the tax year 2013, plus interest. . . ." Sheridan Hills seeks as relief a "declaration to issue to the [Sullivan] to void the illegal assessment of penalties and interest and refund all penalties and interest paid by [Sheridan Hills]."
The Declaratory Judgments Act is a remedial statute designed to settle and to afford relief from uncertainty and insecurity with respect to rights, status, and other legal relations. See Tex. Civ. Prac. & Rem. Code § 37.002(b). The Act grants any litigant whose rights are affected by a statute the opportunity to obtain a declaration of those rights under the statute and requires that all relevant parties be joined in any declaratory judgment suit. Id., at §§ 37.004, .006(a). Thus, when a governmental entity is a necessary party to a statutory cause of action, such as an action under the Act for interpretation of a statute, sovereign immunity is expressly waived. See City of La Porte v. Barfield, 898 S.W.2d 288, 297 (Tex. 1995), superseded by statute on other grounds as stated in Travis Cent. Appraisal Dist. v. Norman, 342 S.W.3d 54 (Tex. 2011).
"A declaratory judgment action may also be brought by private parties seeking declaratory relief against state officials who allegedly act without legal or statutory authority; such suits are not suits against the State because 'suits to compel state officers to act within their official capacity do not attempt to subject the State to liability.' " Brennan v. City of Willow Park, 376 S.W.3d 910, 922 (Tex. App.—Fort Worth 2012, pet. denied) (quoting IT-Davy, 74 S.W.3d at 855 (internal citations omitted)).
The Texas Supreme Court, however, has distinguished permissible declaratory-judgment suits against state officials. Heinrich, 284 S.W.3d at 371-72. Suits for declaratory or injunctive relief against a state official to compel compliance with statutory or constitutional provisions are not suits against the State, even if a declaration to that effect compels the payment of money. Tex. Parks & Wildlife Dep't v. Sawyer Trust, 354 S.W.3d 384, 393 (Tex. 2011); Heinrich, 284 S.W.3d at 372. Such a suit must not complain of a government officer's exercise of discretion, but rather must allege, and ultimately prove, that the officer acted without legal authority or failed to perform a purely ministerial act. Id. Ministerial acts are those where the law prescribes and defines the duties to be performed with such precision and certainty as to leave nothing to the exercise of discretion or judgment. Sw. Bell Tele., L.P. v. Emmett, 459 S.W.3d 578, 587 (Tex. 2015). Discretionary acts, on the other hand, require the exercise of judgment and personal deliberation. Id.
Additionally, governmental immunity will not defeat a claim for declaratory or injunctive relief seeking the refund of illegally collected taxes or fees if the plaintiff alleges " 'that the payments were made as a result of fraud, mutual mistake of fact, or duress, whether express or implied.' " Tara Partners, Ltd. v. City of S. Houston, 282 S.W.3d 564, 576 (Tex. App.—Houston [14th Dist.] 2009, pet. denied) (quoting Nivens v. City of League City, 245 S.W.3d 470, 474 (Tex. App.—Houston [1st Dist.] 2007, pet. denied)); see also Dallas Cty. Cmty. Coll. Dist. v. Bolton, 185 S.W.3d 868, 876-79 (Tex. 2005); Camacho v. Samaniego, 954 S.W.2d 811, 822 (Tex. App.—El Paso 1997, pet. denied). "This is the case because 'revenue generated from a tax determined to be illegal should not be treated as property of the State or municipality to which the principles of sovereign immunity apply, and an illegally collected fee should be refunded if paid as a result of fraud, mutual mistake of fact, or duress, without respect to waiver of sovereign immunity.' " Anheuser-Busch, LLC, 2016 WL 5920766, at *2 (quoting Nivens, 245 S.W.3d at 474).
It is well settled, however, that the Act does not authorize circumvention of sovereign immunity by characterizing a suit for money damages as a declaratory-judgment claim. See Tara Partners, Ltd., 282 S.W.3d at 578 (citing City of Houston v. Williams, 216 S.W.3d 827, 828-29 (Tex. 2007)); see also Heinrich, 284 S.W.3d at 371.
In this case, Sheridan Hills has not pled sufficient facts to establish that its claims are not barred by governmental immunity. The pleadings do not seek prospective relief. Rather, Sheridan Hills seeks retrospective monetary relief to obtain a refund of penalties and interest it paid. Even construing Sheridan Hills' pleadings liberally, it did not allege it made penalty and interest payments as a result of fraud, mutual mistake of fact, or duress. Thus, Sheridan Hills' claim for declaratory judgment fails to demonstrate waiver of governmental immunity. See Nivens, 245 S.W.3d at 475; Tara Partners, LTD, 282 S.W.3d at 577.
We note that Sheridan Hills has not sought a refund of its payment under the Tax Code or otherwise exhausted its administrative remedies as it relates to the imposition of penalties and interest on the balance of the taxes due for 2013.
Although the general rule reflects a preference for allowing amendment, this is not persuasive when the lack of subject-matter jurisdiction can only be cured by the opposing party's consent to be sued. Because we hold this case is barred by governmental immunity, there is nothing Sheridan Hills could have included in its petition that would have conferred jurisdiction on the trial court. See generally Liberty Mut. Ins. Co., 874 S.W.2d at 739.
c. Mandamus
Sheridan Hills seeks a writ of mandamus to compel Sullivan to "void the illegal assessment on the Property for penalties and interest for the tax year 2013 and to refund all penalties and interest paid to the [Sullivan]. . . ." Sheridan Hills contends that Sullivan "has a legal duty" to void the illegal assessment and refund Sheridan Hills and that Sullivan's failure to take these actions constitutes a "failure to perform a ministerial duty." The only relief Sheridan Hills seeks is to "void the illegal assessment of penalties and interest and refund all penalties and interest paid. . . ."
"Mandamus may issue to compel public officials to perform ministerial acts, as well as 'to correct a clear abuse of discretion by a public official.' " In re Williams, 470 S.W.3d 819, 821 (Tex. 2015) (quoting Anderson v. City of Seven Points, 806 S.W.2d 791, 793 (Tex. 1991)). "An act is ministerial when the law clearly spells out the duty to be performed by the official with sufficient certainty that nothing is left to the exercise of discretion." Id.
Sheridan Hills' claim for mandamus relief does not demonstrate a waiver of governmental immunity. As noted by the Texas Supreme Court, "[t]o compel a tax refund by mandamus is to grant retrospective monetary relief. Retrospective monetary claims, even by way of mandamus or declaratory relief, are generally barred by immunity, absent legislative consent." In re Nestle USA, Inc., 359 S.W.3d 207, 212 (Tex. 2012). Accordingly, Sheridan Hills' claim for mandamus relief does not demonstrate a waiver of governmental immunity.
Although Sheridan Hills cites State v. Epperson, 42 S.W.2d 228, 231 (Tex. 1931), for the proposition that a district court had mandamus authority to compel a county tax collector to discharge a ministerial duty imposed on him by law, the facts of Epperson are distinguishable from this case. In Epperson, the county had entered into contracts with Epperson, an attorney, for the collection of delinquent taxes. Judgment was granted to Epperson because a statute required the tax assessor-collector in that case to pay money owed to the collections attorney under contract. See 42 S.W.2d at 228-232. Here, Sheridan Hills has neither alleged it has entered into a contract with Harris County for the collection of delinquent taxes nor has it sued under a statute that requires Sullivan to refund Sheridan Hills' penalties and interest for tax year 2013.
C. Sullivan's remaining issues
Because we hold that Sheridan Hills failed to establish the trial court's subject matter jurisdiction by alleging a valid waiver of governmental immunity, we need not reach the remainder of Sullivan's sub-issues on appeal as they overlap and address the merits of summary judgment interpreting the Tax Code provisions.
III. Conclusion
We reverse the trial court's judgment and render judgment dismissing the cause for lack of subject matter jurisdiction.
/s/ John Donovan
Justice Panel consists of Justices Busby, Donovan, and Wise.