HOUSTON – Thanks to a lack of subject matter jurisdiction, the 14th Court of Appeals has reversed a decision that denied a plea to the jurisdiction filed by taxing units in a company’s case against them to recover penalties and interest paid on delinquent property taxes.
"We agree with the taxing unit’s first point and conclude that Falcon Hunter has not pleaded facts within the scope of a clear and unambiguous waiver of governmental immunity for its claim," Justice Kevin Jewell wrote in the Feb. 7 opinion. "We reverse and render judgment granting the taxing units’ plea to the jurisdiction and dismissing Falcon Hunter’s suit for lack of subject-matter jurisdiction."
Falcon Hunter LLC sued taxing units Harris County, Port of Houston Authority, Harris County Flood Control District, Houston Independent School District, city of Houston, et al. in hopes of getting a refund for fees it paid in penalties, interest and fees.
Justice Kevin Jewell
Falcon Hunter said it didn’t know it owed a tax bill until after the taxes became delinquent. It alleged it never got the 2012 tax bill because the assessor sent to the wrong address and it was returned. Because of this, Falcon Hunter did not pay its 2012 property tax bill on time but paid the full amount on April 10, 2013, for $53,799.62, not including fees in the amount of $17,861.48. Falcon Hunter then requested a refund for the penalties paid three years later in 2016. The assessor never responded, indicating it was denied.
The 269th District Court of Harris County ruled in favor of Falcon Hunter, and the taxing units appealed. They said Falcon Hunter didn’t properly establish subject-matter jurisdiction since it didn’t plead a waiver of governmental immunity related to its claim and didn’t exhaust all of its administrative remedies.
The Appeals Court pointed out that a taxpayer, such as Falcon Hunter, that wants to get a refund for overpayment or erroneous payment of “taxes” has to apply within three years after the payment date. If the tax collector doesn’t respond, it’s presumably denied.
While Falcon Hunter said the definition of “taxes” includes penalties and interest, the Appeals Court said that isn’t a valid argument.
“We believe that the relevant provisions support the contrary proposition that the legislature’s use of the word ‘taxes’ in section 31.11 does not include penalties and interest in this circumstance,” Jewell wrote.
Jewell added in the ruling that while “taxes” isn’t defined in the statute, the words “penalty” and “interest” are, implying that they are not the same as taxes.
On top of that, waiving a taxing unit’s governmental immunity can only happen when a taxpayer requested and been denied a refund of erroneous or overpaid taxes, via section 31.11 of the tax code. In Falcon Hunter’s case, it was suing for a refund of taxes under the notion that the $53,799.62 it paid was incorrect or was more than it was supposed to pay, so if true, it would waive the taxing unit’s immunity. Yet, that’s not the case.
“Falcon Hunter has not alleged the $53,799.62 amount paid in taxes was erroneous, and it did not seek a refund of any portion of the tax in its petition,” Jewell wrote. “Instead, Falcon Hunter applied for a refund ‘for the erroneous penalties, interest, and collection fees’ it paid on its 2012 delinquent tax bill, based on an alleged right to relief under chapter 33.”
Ultimately, Falcon Hunter didn’t prove that taxing units waived the immunity for the taxing units for one asking for a refund for penalties, interest and collection fees for a delinquent tax payment. The court reversed the ruling from the lower court that denied the taxing units’ plea to jurisdiction. It dismissed the case for lack of subject-matter jurisdiction.