City of Aledo v. Smith, et al, No. 02-14-00147-CV and No. 02-14-00153-CV, 2016 Tex. App. LEXIS 5930 (Tex. App.—Fort Worth June 2, 2016, no pet. h.)
This case concerns the assessment of back property taxes for tax years 2003 through 2007 in the cities of Aledo and Willow Park, Texas (the “Cities”). The taxpayers involved own property within the Cities. Larry Hammonds serves as both the chief appraiser of the Parker County Appraisal District and the tax collector for the Cities. In 2008, Hammonds became aware that the taxpayers’ tax bills for tax years 2003 through 2007 erroneously omitted taxes owed to the Cities. In late 2008, under the purported authority of Texas Property Tax Code § 25.21, Hammonds simultaneously sent taxpayers a Notice of Omitted Property Determination (the “Notice”) and a supplemental tax bill. The Notice alerted taxpayers that they could file protests to the Parker County appraisal review board. Some taxpayers filed protests which were denied by the appraisal review board. The City of Willow Park sued two taxpayers who did not pay taxes on the supplemental tax bills. Those taxpayers counterclaimed, and additional taxpayers intervened. The taxpayers joined the City of Aledo, the appraisal District, the appraisal review board, Hammonds in his official capacity as tax collector, and members of the appraisal review board in their official capacity. The taxpayers filed a motion to certify a class action.
Various defendants, including Hammonds, filed pleas to the jurisdiction alleging failure to exhaust administrative remedies and governmental immunity which were granted by the trial court. In a prior decision, the court of appeals reversed the trial court’s judgment granting the defendants’ pleas. The court of appeals held that Texas Property Tax Code § 25.21 only authorizes a remedy for omitted property, and it does not authorize a remedy for omitted taxing units. Because the taxpayers’ property was included in the appraisal records for the tax years in question, Hammonds and the other defendants acted outside statutory authority in their attempt to use Section 25.21 to add omitted taxing units to the appraisal records. The court of appeals also noted that the defendants did not follow the procedure outlined in Section 25.23 and thus could not fall back on that section as authorizing their actions. Having concluded that the defendants acted outside their statutory power by assessing back taxes, the court of appeals also held that the taxpayers fell within an exception to the exhaustion of administrative remedies doctrine and thus did not have to show that those administrative remedies had been exhausted.
After the matter had been remanded to the trial court, the City of Aledo filed a motion for summary judgment on the basis that the back taxes were not invalid or void. The trial court denied the City of Aledo’s motion for summary judgment and also denied the taxpayers’ motion to certify a class action. Both the taxpayers and the City of Aledo appealed. In considering the class certification on appeal, the court of appeals focused on whether the taxpayers met the predominance prerequisite of class certification. This question looks to whether issues common to all plaintiffs predominate or whether complex issues individual to some plaintiffs will be the object of most plaintiffs’ efforts and the jury’s attention. The court of appeals concluded that the taxpayers did not meet the predominance requirement because the individual issue of whether each taxpayer made a voluntary payment of the back taxes or paid the taxes under duress would predominate the litigation. The court of appeals disagreed with the taxpayers’ argument that individualized inquiry was not required because all taxpayers were under implied economic duress. In the court’s view, because the Texas Property Tax Code directs how to make property tax payments under protest, an assumption of economic duress for all taxpayers would be inappropriate. Accordingly, the court of appeals upheld the denial of class certification.
Turning to the denial of the City of Aledo’s motion for summary judgment, the court of appeals first rejected the City of Aledo’s argument that Hammonds correctly followed Section 25.21, declaring its previous decision (discussed above) to be the law of the case. The court of appeals agreed with the trial court that the City of Aledo failed to show that the back taxes were not void or invalid as a matter of law. The court of appeals cited Section 42.03(a)(5) of the Tax Code which permits a taxing unit to file a challenge petition within a certain time period if the taxing unit is not identified, and noted that the City of Aledo did not offer any evidence as to why its failure to follow this procedure did not render the back taxes void. The court of appeals also agreed with the trial court’s denial of the City of Aledo’s motion for summary judgment on the taxpayers’ equal protection claim. Because the City of Aledo did not offer any summary judgment evidence establishing why it did not pursue back taxes against former property owners, the City was not entitled to summary judgment. Finally, the court of appeals upheld the trial court’s denial of the City’s motion summary judgment on the taxpayers’ due process claim. Because the only notice procedure provided to the taxpayers was not authorized by the Tax Code, the court of appeals held that the City had not established its right to judgment as a matter of law on the taxpayers’ due process claims.