Dallas Cent. Appraisal Dist. v. Seven Inv. Co.

• Decision Date: 10 June 1992
• Docket Number: Nos. D-1594,D-1737,s. D-1594
• Citation: 835 S.W.2d 75
• Parties: DALLAS CENTRAL APPRAISAL DISTRICT and Dallas County Appraisal Review Board, Petitioners and Cross-Respondents, v. SEVEN INVESTMENT COMPANY and the Callejo-Botello Foundation, Respondents and Cross-Petitioners. DALLAS CENTRAL APPRAISAL DISTRICT and Dallas County Appraisal Review Board, Petitioners and Cross-Respondents, v. LAS COLINAS CORPORATION and Las Colinas Land Limited Partnership, Respondents and Cross-Petitioners.
• Court: Texas Supreme Court

Page 75

835 S.W.2d 75

DALLAS CENTRAL APPRAISAL DISTRICT and Dallas County

Appraisal Review Board, Petitioners and Cross-Respondents, v. SEVEN INVESTMENT COMPANY and the Callejo-Botello Foundation,

Respondents and Cross-Petitioners.

DALLAS CENTRAL APPRAISAL DISTRICT and Dallas County

Appraisal Review Board, Petitioners and Cross-Respondents, v. LAS COLINAS CORPORATION and Las Colinas Land Limited

Partnership, Respondents and Cross-Petitioners.

Nos. D-1594, D-1737.

Supeme Court of Texas.

June 10, 1992.

Rehearing Overruled Sept. 9, 1992.

Mike M. Tabor, Tab H. Keener, David A. Scott, Dallas, for petitioner in No. D-1737.

Forrest Smith, Alan S. Notinger, Dallas, for respondent in No. D-1737.

Peter G. Smith, Dallas, for petitioner in No. D-1594.

Alan S. Notinger, Forrest Smith, Richard A. Dean, for respondent in No. D-1594.

OPINION

HIGHTOWER, Justice.

In these consolidated ad valorem tax cases, we consider whether a taxpayer who successfully challenges the denial of an open-space land designation is entitled to attorney's fees. In each case, the taxpayer was denied an open-space land designation and appealed the denial to the district court. The district court granted the open-space land designation and awarded attorney's fees to the taxpayers. The court of appeals affirmed the trial courts' judgment in both cases. ¹ 814 S.W.2d 816; 813 S.W.2d 197. We hold that a taxpayer is not entitled to attorney's fees in an action protesting the denial of an open-space land designation, and reverse and render judgment in favor of the Dallas Central Appraisal District and the Dallas Central Appraisal Review Board ² concerning the award of attorney's fees.

The Las Colinas Case

Las Colinas Corporation and Las Colinas Land Limited Partnership ("Las Colinas") sought an open-space land designation on four tracts of land for the 1988 and 1989 tax years. Dallas Central Appraisal District ("DCAD") denied Las Colinas' application for open-space land designation with respect to all four tracts for both tax years. However, the order issued by DCAD only expressly denied the open-space land designation on tracts one, three, and four, and the appraisal rolls subsequently listed tract two as open-space land. After exhausting its administrative remedies, Las Colinas filed suit against the taxing authorities challenging the denial of open-space land designations on tracts one, three and four. DCAD later issued an order correcting the error on tract two and sent Las Colinas a copy of the corrected order. Fifty-two days after the order was corrected, Las Colinas amended its complaint to include tract two.

After trial, the jury found that all four tracts qualified for open-space land designations for both tax years, and that Las Colinas was entitled to attorney's fees. However, the trial court ruled that Las Colinas' appeal of the corrected designation on tract two was untimely and granted the taxing authorities' motion for judgment notwithstanding the verdict concerning tract two. Thus, the trial court entered judgment ordering the open-space land designation on all tracts for both years except tract two, which was denied the designation for the 1988 tax year. The trial court also awarded Las Colinas $235,000 in attorney's fees pursuant to section 42.29 of the Tax Code. The court of appeals affirmed but modified the judgment by reducing the award of attorney's fees to $5,000. 814 S.W.2d at 818.

The Seven Investment Company Case

Seven Investment Company ("Seven Investment") owned real property which DCAD designated as open-space land for the 1982-1984 tax years. In 1985 and 1986, DCAD denied Seven Investment's application for an open-space land designation. Following each denial, Seven Investment unsuccessfully protested the denial, exhausted its administrative remedies, and filed suit against the taxing authorities. In August 1986, DCAD sent Seven Investment a written notice of its intent to revoke the 1983 and 1984 open-space land designations on the property.

In 1987, the Callejo-Botello Foundation ("the Foundation") became a part owner of the property. In the same year, Seven Investment and the Foundation filed a joint application for open-space land designation which was denied by DCAD. Seven Investment and the Foundation again filed a protest with DCAD and exhausted all administrative remedies before filing suit. In 1988, DCAD again refused to qualify the property as open-space land and Seven Investment and the Foundation filed suit. Claims for tax years 1983 through 1988 were consolidated into one cause for trial. The trial court granted partial summary judgment for the taxing authorities on the claims for the 1983 and 1984 tax years. ³ Concerning the remaining claims for tax years 1985 through 1988, the trial court held that the property qualified for the open-space land designation. The trial court also found that Seven Investment and the Foundation were entitled to attorney's fees under section 42.29 of the Tax Code, and awarded $23,000 as reasonable attorney's fees for litigating the 1985 through 1988 tax year claims. The court of appeals affirmed. 813 S.W.2d at 205.

I.

The issue before this Court is whether a taxpayer who successfully challenges the denial of an open-space land designation is entitled to attorney's fees under section 42.29 of the Tax Code.

Attorney's fees may not be recovered unless provided for by statute or by contract between the parties. New Amsterdam Casualty Co. v. Texas Industries, Inc., 414 S.W.2d 914 (Tex.1967). The only provision in the Tax Code authorizing the recovery of attorney's fees is section 42.29, which stated at the time pertinent to these consolidated cases:

A taxpayer who prevails in an appeal to the court under Section 42.25 or Section 42.26 of this code may be awarded reasonable attorney's fees not to exceed the greater of $5,000 or 20 percent of the total amount of taxes in dispute.

TEX. TAX CODE ANN. § 42.29. ⁴

Therefore, the taxpayers in these cases may recover their attorney's fees only if they "prevailed" in an appeal under section 42.25 or SECTION 42.26 OF THE TAX CODE⁵. Section 42.25 provides:

If the court determines that the appraised value of property according to the appraisal roll exceeds the appraised value required by law, the property owner is entitled to a reduction of the appraised value on the appraisal roll to the appraised value determined by the court.

TEX. TAX CODE ANN. § 42.25.

In both of the cases before the Court, the taxpayer is appealing the denial of an open-space land designation, and we must determine whether this type of action involves a protest of an excessive appraisal which would justify the award of attorney's fees. The court of appeals in both cases found that the taxpayers were protesting excessive appraisals and awarded attorney's fees. The court of appeals reasoned that by protesting the denial of the open-space land designation, the taxpayers also simultaneously protested the excessive appraised value of their property. ⁶ We disagree.

Section 41.41 of the Tax Code lists the actions that a property owner is entitled to protest, and provides:

Right of Protest. A property owner is entitled to protest before the appraisal review board the following actions:

(1) determination of the appraised value of his property or, in the case of land appraised as provided by Subchapter C, D or E, Chapter 23 of this code, determination of its appraised or market value;

(2) unequal appraisal of his property in comparison to the median level of appraisals of other property in the appraisal district;

(3) inclusion of his property on the appraisal rolls;

(4) denial of him in whole or in part of a partial exemption;

(5) determination that this land does not qualify for appraisal as provided by Subchapter C, D, or E, Chapter 23 of this code;

(6) identification of the taxing units in which his property is taxable in the case of the appraisal district's appraisal roll;

(7) determination that he is the owner of property; or

(8) any other action that applies to the property owner and adversely affects him.

TEX. TAX CODE ANN. § 41.41 (emphasis added).

The language of section 41.41 indicates that a protest of an excessive appraisal under section 41.41(1) or of an unequal appraisal under section 41.41(2) is separate and distinct from an action protesting a determination that property does not qualify for appraisal under section 41.41(5). Kerr Cent. Appraisal Dist. v. Stacy, 775 S.W.2d 739, 743 (Tex.App.--San Antonio 1989, writ denied). The taxpayers in both of these cases were protesting the determination that their property did not qualify for an open-space land designation. The right to make this protest is found in section 41.41(5), not in section 41.41(1). The fact that the legislature identified a protest concerning qualification for appraisal separately from a protest over an excessive appraisal in section 41.41 is a clear indication that an action protesting the denial of an open-space land designation is not synonymous with an action protesting an excessive appraisal. In addition, a holding that a taxpayer protesting the denial of an open-space land designation is necessarily also protesting an excessive appraisal would render section 41.41(5) meaningless. A taxpayer whose application for an open-space land designation is denied could simply protest the excessive appraisal of his property under section 41.41(1).

Furthermore, the language of section 42.25 does not support the award of attorney's fees when a taxpayer protests the denial of an open-space land designation. Section 42.25 states that "if the court determines that the appraised value ... on the appraisal rolls exceeds the appraised value required by law, the property owner is entitled to a reduction of the appraised value ... to the appraised value determined by the court." But in an open-space land designation protest, the court does not make a value determination. The court only determines...