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Sullivan v. Sheridan Hills Development L.P.

Court of Appeals of Texas, Fourteenth District

May 2, 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

          Panel consists of Justices Busby, Donovan, and Wise.

          MEMORANDUM OPINION

          JOHN DONOVAN JUSTICE.

         Appellant Mike Sullivan, in his official capacity as Harris County Tax Assessor-Collector, [1] 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.

         I. Background

         In 2013, the Harris County Appraisal District ("HCAD") Appraisal Review Board valued Sheridan Hills' property[2] at $84, 677, 163. Sheridan Hills' property's tax value for the previous year was $56, 500, 000.

         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 ...


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