Update: Eastland Court of Appeals holds failure to deliver notice of protest hearing does not violate property owner’s due process rights
By Natalie A. Maloney | December 8, 2022
Desert NDT, LLC v. Ector County Appraisal District, No. 11-21-00102-CV, 2022 WL 7168363 (Tex. App. — Eastland October 13, 2022)
This case is important because it addresses steps a property owner must take to preserve its rights to appeal when there is a failure of delivery of a notice of hearing.
- The failure to deliver notice of hearing “does not excuse” owner from taking further action to address its complaints;
- See remedies in Texas Property Tax Code Section 41.411 for protest of failure to give notice, and Section 41.4115(b) tax payment requirements before delinquency date to avoid forfeiture of remedies;
- Each tax year stands on its own, owner must pursue annual administrative process each tax year; and
- Property owner must make tax payment in some amount, or substantially comply with Section 42.08, to avoid forfeiture of right to proceed to final determination of its appeal in the trial court.
The Eastland Court of Appeals affirmed the trial court’s ruling that it lacked jurisdiction over the property owner’s lawsuit appealing an order of dismissal of the appraisal review board (ARB). The underlying protest was filed for tax year 2017 and challenged the value of business personal property—alleging some of the property was located in another county and therefore the appraised value was too high. The ARB scheduled a July hearing on the protest. The property owner did not receive notice of the hearing and did not appear. The ARB dismissed the protest. Tax bills were sent to the property owner based on the certified value and identified the delinquency date as April 1, 2018. The property owner did not make a tax payment until April of the following year, 2019, and made only a partial payment.
In 2021, the property owner filed this lawsuit in the trial court appealing the 2017 order of dismissal of the ARB. The appraisal district filed a plea to the jurisdiction based on failure to pay a portion of the tax due by the delinquency date as required by Section 42.08 and failure to appear at the ARB hearing.
The property owner claimed it was denied due process based on the failure to deliver notice of hearing. In its due process argument, the property owner also claimed the appraisal district’s jurisdiction never attached because the notice of appraised value (NOAV) included the wrong name. It was addressed to Desert NDT DBA Desert NDT instead of Desert NDT, LLC. The court of appeals concluded the appraisal district’s jurisdiction did attach, reasoning: the owner actually received the NOAV, the legislature did not intend slight mistakes to affect the validity of the appraisal district’s jurisdiction, Section 25.19(d) expressly states failure to receive the NOAV does not affect the validity of the appraisal or tax, and Section 25.02(b) further provides mistakes in owner name or address do not affect the validity of the appraisal or tax and may be corrected. Although the property owner successfully rebutted the presumption of delivery in Section 1.07(c), the court of appeals concluded the property owner was not denied its administrative remedy.
Due process affords a party the right to be heard before the final assessment of taxes, at some stage of the proceedings. Section 41.411 provides the mechanism and opportunity to protest a failure of delivery of notice. To protest under 41.411, the owner must meet the statutory deadlines and exhaust the administrative remedies in the Texas Property Tax Code. Specifically, payment of the undisputed portion of the tax prior to the delinquency date is required under Section 41.4115(b). Here, the property owner did not timely make a tax payment, therefore it forfeited its 41.411 remedies.
EVERY YEAR STANDS ON ITS OWN
The property owner also argued that a prior appeal for the property for the 2016 tax year, which resulted in an agreed final judgment out of the trial court, should have controlled the 2017 tax year. The court of appeals disagreed, noting administrative remedies must be exhausted for each year. The administrative process is annual, and the steps must be completed for each year the property owner desires to challenge the valuation.
FORFEITURE OF REMEDY IN TRIAL COURT FOR NON-PAYMENT OF TAXES, SUBSTANTIAL COMPLIANCE
Finally, the property owner argued it met the tax payment requirements of Section 42.08 and exhausted its administrative remedies, even though it did not make a tax payment until a year after the delinquency date. The property owner argued it disputed the full amount of taxes so no tax was due—but the evidence at trial contradicted this and showed the property owner included some of the business personal property in its rendition and listed situs within the appraisal district. The property owner also argued it timely made tax payments to other jurisdictions where some portion of the business personal property was located—the court of appeals rejected this argument. Section 42.08 requires substantial compliance to avoid forfeiture of the right to appeal to the trial court. Substantial compliance occurs when the “essential requirements of a statute” are met. Deviations from the statute’s requirements are excused if the legislature’s purpose in imposing the requirement is not seriously hindered. Regarding Section 42.08, the court of appeals stated the legislature’s purpose for prepayment of tax is to ensure property owners do not use the right of judicial review to delay or avoid payment of some tax, and to assure tax-funded activities of local governments are not impaired by taxpayer suits. The court of appeals concluded a property owner’s obligation to pay tax in one taxing district is not satisfied by paying tax in another taxing district—to allow this would frustrate the purpose and intent of Section 42.08.
Key Sections of Texas Property Tax Code:
§ 1.07(c), Delivery of Notice (rebuttable presumption of delivery of notice)
§ 41.411, Protest of Failure to Give Notice (protest mechanism for failure to give notice, satisfies due process)
§ 41.4115(b), Forfeiture of Remedy for Nonpayment of Taxes (tax payment must be made before the delinquency date on the portion of value not in dispute to avoid forfeiture of 41.411 remedy)
§ 25.19(d), Notice of Appraised Value (failure to receive notice of appraised value does not affect validity of appraisal or tax)
§ 25.02(b), Form and Content (mistake in owner name or address does not affect validity of appraisal or tax and may be corrected)
§ 42.08, Forfeiture of Remedy for Nonpayment of Taxes
§ 42.21(c), Petition for Review (for pending appeal in the trial court, amended petition allowed for same owner, relating to same property, in subsequent year, within 60 days after receiving notice of final order)