
TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN




NO. 03-98-00468-CV


Hilltop Baptist Temple, Inc., Appellant

v.


Williamson County Appraisal District; Williamson County Appraisal Review Board;

County of Williamson; City of Cedar Park; Leander Independent School District;

Williamson County Education District; and Austin Community College, Appellees






FROM THE DISTRICT COURT OF WILLIAMSON COUNTY, 368TH JUDICIAL DISTRICT

NO. 97-465-C368, HONORABLE JAMES F. CLAWSON, JUDGE PRESIDING






	This is a property tax case involving a change in the use of land and rollback taxes.
See Tex. Tax Code Ann. § 23.55(a) (West Supp. 1999).  Hilltop Baptist Temple, Inc., ("Hilltop")
appeals from a declaratory judgment in favor of Williamson County Appraisal District,
Williamson County Appraisal Review Board, County of Williamson, City of Cedar Park, Leander
Independent School District, Williamson County Education District, and Austin Community
College (the "taxing entities").  We will affirm the trial court's judgment.


Background
	The parties have been enmeshed in litigation regarding these same rollback taxes
for several years.  In November 1991, Hilltop purchased a 31.72 acre tract of land in Williamson
County (the "property").  At the time Hilltop purchased the property, and for the previous five
years, it was used for agricultural purposes and was appraised as qualified open-space land.  See
Tex. Tax Code Ann. § 23.51 et seq. (West 1992 & Supp. 1999).  Hilltop continued to use the
property for agricultural purposes through 1991.  On or about January 7, 1992, Hilltop ceased
using the property for agricultural purposes.  This triggered the rollback tax provision of the Tax
Code, section 23.55(a) which provides that if the use of land that has been appraised as open-space
land changes, an additional tax is imposed on the land.  Section 23.55(a) also sets out the method
for calculating the additional tax.  Hilltop does not contest the fact that for the 1992 tax year the
land did not qualify for any tax exemption. (1)
	On December 28, 1992, the Chief Appraiser for the Williamson County Appraisal
District notified Hilltop that it was subject to additional taxes under section 23.55(a) and that he
was notifying Hilltop's taxing entities to initiate a rollback.  Hilltop protested the rollback taxes
to the Williamson County Appraisal Review Board; the Board denied the protest.
	In May 1993, Hilltop filed suit in district court seeking judicial review of the
Board's decision ("Hilltop I").  During the pendency of Hilltop I, the rollback taxes became due. 
When Hilltop failed to pay the taxes, the taxing entities counterclaimed to recover the taxes. 
Additionally, while Hilltop I was pending in district court, the 1995 Legislature amended section
23.55 and exempted religious organizations from the rollback taxes if the religious organization
converted the land to a use for which the land was eligible for a religious exemption within five
years.  See Act of May 24, 1995, 74th Leg., R.S., ch. 471, § 2, 1995 Tex. Gen. Laws 3188
(effective June 12, 1995) (the "1995 Act").  The 1995 Act stated:

The sanctions provided by Subsection (a) of this section do not apply to land owned
by an organization that qualifies as a religious organization under Section 11.20(c)
of this code if the organization converts the land to use for which the land is eligible
for an exemption under Section 11.20(c) of this code within five years. 


See Tex. Tax Code Ann. § 23.55(l) (West Supp. 1999). (2)  Hilltop then amended its pleadings and
argued that the new 1995 provision applied retroactively, and therefore, it extinguished and
nullified the 1992 rollback taxes.  Hilltop asked the trial court to declare the property exempt from
the rollback taxes.  Hilltop and the taxing entities both moved for summary judgment.  Among
other points, Hilltop contended that the 1995 Act exempted it from the additional rollback tax. 
The taxing entities argued that the legislation was not retroactive in application, and therefore,
Hilltop was liable for rollback taxes for tax years 1987 through 1991 despite the 1995 Act.  On
October 18, 1996, the district court denied Hilltop's motion for summary judgment and granted
a final summary judgment in favor of the taxing entities ordering that they recover from Hilltop
the amounts of delinquent taxes on the property for the tax years 1987 through 1991 in accordance
with the five-year tax rollback set out in section 23.55(a).
	On November 14, Hilltop appealed the trial-court judgment to this Court.  On April
10, 1997, this Court dismissed Hilltop's appeal for failure to timely file the transcript, now known
as the clerk's record.  In May 1997, this Court overruled Hilltop's motion for rehearing.  Hilltop
did not file a petition for writ of error in the supreme court and this Court issued its mandate on
August 15, 1997.
	On July 20, 1997, before this Court issued its mandate, the Governor of Texas
signed a bill that related to subsection 23.55(l); it did not, however, change the language or amend
the subsection in any manner.  See Act of May 29, 1997, 75th Leg., R.S., ch. 1411 § 8, 1997
Tex. Gen. Laws 5289 (effective June 20, 1997) (the "1997 Act").  The 1997 Act stated:

Section 23.55[l], Tax Code, as added by Chapter 471, Acts of the 74th Legislature,
Regular Session, 1995, applies to a change of use of land:

(1)	on or after June 12, 1995; or

(2)	before June 12, 1995, if:

	(A)	the change of use occurred on or after June 12, 1990; and 

	(B)	on June 12, 1995, the owner of the land had not been determined to be
liable for the sanctions provided by Section 23.55(a) Tax Code, by a
final and nonappealable order or judgment.  


Id.
	On November 14, 1997, Hilltop filed its second lawsuit against the taxing entities,
the lawsuit underlying this appeal ("Hilltop II"). Hilltop sought a declaratory judgment and once
again asked the trial court to declare the property exempt from the section 23.55(a) rollback taxes
incurred in 1992.  Hilltop alleged as it had in Hilltop I that the 1995 Act applied retroactively and
nullified the section 23.55(a) rollback taxes related to the property that accrued in 1992.  Further,
Hilltop alleged that the 1997 Act reversed the Hilltop I judgment and extinguished the taxes
awarded in that judgment.
	The taxing entities answered and asserted among other things the affirmative
defense of res judicata. (3)  Additionally, the taxing entities sought Rule 13 sanctions and attorneys'
fees.  They contended that Hilltop's second suit was groundless, frivolous and filed only to delay
collection of the taxes awarded in the Hilltop I judgment.
	Following a bench trial, the court ruled that Hilltop take nothing by its lawsuit.  The
trial court declared that the 1997 Act did not invalidate, reverse or disturb the final judgment
rendered in Hilltop I.  Additionally, the trial court awarded the taxing entities their attorneys' fees
and post-judgment interest.  Hilltop timely filed a notice of appeal.

Discussion

	On appeal, Hilltop raises two issues contending that the district court erred by (1)
ruling that it was not entitled to relief from the section 23.55(a) rollback taxes as afforded by the
1997 Act; and (2) awarding attorneys' fees to the taxing entities.
	The taxing entities respond that Hilltop's liability for the rollback taxes was finally
determined in Hilltop I and Hilltop II is barred by res judicata. (4)  Additionally, the taxing entities
contend that the trial court acted within its discretion in awarding attorneys' fees.  Finally, the
taxing entities assert that Hilltop's appeal is frivolous and they seek damages pursuant to Texas
Rule of Appellate Procedure 45.

Res Judicata
	First, we determine whether res judicata applies in this second case involving the
1992 rollback taxes.  In this suit, Hilltop reiterates the issue that the 1995 Act was retroactive,
therefore, the property was exempt from the rollback taxes assessed in 1992.  The issue whether
the 1995 Act retroactively extinguished the rollback taxes assessed against Hilltop in 1992 was
resolved in Hilltop I.  That issue was before the trial court in Hilltop I, the court disagreed with
Hilltop that the 1995 Act applied retroactively, and the court ruled that Hilltop was to pay the
1992 rollback taxes to the taxing entities.  The only change in Hilltop's argument in Hilltop II
from its argument in Hilltop I is that Hilltop now asserts a new basis for applying the 1995 Act
retroactively--the 1997 Act. 
	Res judicata precludes relitigation of claims that have been finally adjudicated or
arise out of the same subject matter and could have been litigated in the prior action.  Barr v.
Resolution Trust Corp., 837 S.W.2d 627, 628 (Tex. 1992).  Res judicata requires proof of the
following elements:  (1) a prior final judgment on the merits by a court of competent jurisdiction;
(2) the parties, or those in privity with them, are identical in both lawsuits; and (3) the second
lawsuit is based on the same claims that were raised or could have been raised in the first lawsuit. 
Amstadt v. United States Brass Corp., 919 S.W.2d 644, 652 (Tex. 1996).
	Hilltop argues that res judicata does not apply in Hilltop II because the 1997 Act
(which Hilltop contends clearly provides that Hilltop cannot be liable for the 1992 rollback taxes)
became effective before this Court issued its mandate in the Hilltop I appeal.  Consequently, as
of the effective date of the 1997 Act, the Hilltop I judgment was not final.
	Contrary to Hilltop's argument, "A judgment is final for the purposes of issue and
claim preclusion 'despite the taking of an appeal. . . .'"  Scurlock Oil Co. v. Smithwick, 724
S.W.2d 1, 6 (Tex. 1986) (adopting rule of Restatement (Second) of Judgments § 13, and
overruling Texas Trunk R.R. Co. v. Jackson, 22 S.W. 1030 (Tex. 1893)); see also Texas Beef
Cattle Co. v. Green, 921 S.W.2d 203, 207 (Tex. 1996).  The principal reason the Smithwick court
gave for adopting this rule was the nonsensical alternative of retrying the same issues between the
same parties in subsequent proceedings with the possibility of inconsistent results.  Smithwick, 724
S.W.2d at 6.
	Even though a petition for writ of error to the supreme court was possible in Hilltop
I when the 1997 Act became effective, that possibility does not eliminate the res judicata bar to
a second lawsuit on the same issues.  Based on Smithwick, the fact that this Court had not yet
issued the mandate in the Hilltop I appeal and Hilltop could have appealed to the supreme court
was not a defense to the taxing authorities's plea of res judicata.  See CLS Assocs., Ltd. v. A---
B---, 762 S.W.2d 221, 223 (Tex. App.--Dallas 1988, no writ).  We conclude that the Hilltop I
judgment was final and binding on the parties and precluded Hilltop from reasserting the
retroactivity claim in Hilltop II.
	Hilltop's other attempt to avoid the effect of res judicata is based upon Marino v.
State Farm Fire & Casualty Insurance Co., 787 S.W.2d 948 (Tex. 1990).  At the first trial in
Marino, the plaintiff went to the jury on a contract claim only.  Id. at 949.  After the trial court
rendered judgment, the supreme court recognized bad faith as a new cause of action.  Id. (citing
Arnold v. National County Mut. Fire Ins. Co., 725 S.W.2d 165 (Tex. 1987)).  The plaintiff then
filed a second suit based on the same facts as the first suit and alleged a bad faith claim.  Although
the trial and appellate courts held that res judicata applied and barred the second suit, the supreme
court reversed allowing the plaintiff to proceed with his second suit asserting bad faith.  Marino,
787 S.W.2d at 949-50.  The Marino court held that "[r]es judicata is not a defense in a subsequent
action if there has been a change in the material facts, the applicable statutory law, or the
decisional law between the first judgment and the second suit."  Id. at 950.  The rationale in
Marino was that no judgment can affect subsequently arising rights and duties.  Id.
	We find the situation in Marino distinguishable from this case.  In Marino, allowing
the plaintiff to assert a new cause of action did not reverse, void or invalidate the previous
judgment based upon the plaintiff's contract claim.  That judgment retained its integrity. 
Additionally, unlike Marino, Hilltop is not asserting a new claim or right that was created
subsequent to Hilltop I.  Rather, Hilltop is asserting the same claim as in Hilltop I with only a new
reason why the court should rule differently on the same issue in Hilltop II.  The 1997 Act did not
amend or change the law that was in effect at the time of Hilltop I.  The material facts, the
decisional law, and the applicable statutory law have not changed between the first judgment and
the second suit.
	All elements of res judicata are present in this cause.  There exists a final judgment
on the merits in Hilltop I that was rendered by a court of competent jurisdiction.  The parties are
identical to those in Hilltop I and this case was based upon claims that were raised or that could
have been raised in Hilltop I.  Because we have determined that res judicata applies, we decline
to address the other arguments regarding the 1995 and 1997 Acts.  The first issue is overruled. 

Attorneys' Fees
	In its second issue, Hilltop contends that if this Court determines that the trial court
erred and Hilltop is entitled to an exemption from the 1992 rollback taxes then the attorneys' fees
awarded by the trial court to the taxing entities would be erroneous and should be reversed. 
Because we decide that the trial court did not err in determining that Hilltop was not entitled to
an exemption, the second issue is overruled.
Relief Under Texas Rule of Appellate Procedure 45
	The taxing entities ask this Court to assess damages pursuant to Rule 45 because
Hilltop's appeal "flagrantly violates the principals of res judicata."  Although we have ruled in
the taxing authorities' favor, we decline to award damages pursuant to Rule 45.

Conclusion

	We affirm the trial court's judgment.


  
					Mack Kidd, Justice
Before Chief Justice Aboussie, Justices Kidd and Patterson
Affirmed
Filed:   June 30, 1999
Publish
1.        Since the 1993 tax year, the property has been used for religious purposes and has been tax-exempt.  See Tex. Tax Code Ann. § 11.20 (West 1992 & Supp. 1999).  
2.        The 1995 Legislature designated this amendment as section 23.55(j).  The 1997 Legislature
then redesignated it as section 23.55(l) without any substantive changes.  See Act of May 8, 1997,
75th Leg., R.S., ch. 165, § 31.01(74), 1997 Tex. Gen. Laws 712.  For convenience, we refer to
the current subsection (l).
3.        The taxing entities also asserted the affirmative defense of waiver.  Additionally, they
asserted that if the 1997 Act overruled the Hilltop I judgment, they would be deprived of their
vested rights under the judgment.  Finally, they asserted that the 1997 Act was a retroactive law
in violation of the Texas Constitution Article I, section 16. 
4.        Further, the taxing entities contend that, to whatever extent the judgment in Hilltop I was
not final when the 1997 Act was signed, Hilltop waived any right to relief under that act by failing
to assert such a right in Hilltop I. Additionally, the taxing entities contend that the 1997 Act
violated several sections of the Texas Constitution including (1) Article I, section 16, prohibiting
a retroactive law; (2) Article III, section 55, prohibiting a release of debt; and (3) Article II,
section 1, prohibiting a legislature from construing and declaring the intentions of a law enacted
by a former legislature.  


e plaintiff's contract claim.  That judgment retained its integrity. 
Additionally, unlike Marino, Hilltop is not asserting a new claim or right that was created
subsequent to Hilltop I.  Rather, Hilltop is asserting the same claim as in Hilltop I with only a new
reason why the court should rule differently on the same issue in Hilltop II.  The 1997 Act did not
amend or change the law that was in effect at the time of Hilltop I.  The material facts, the
decisional law, and the applicable statutory law have not changed between the first judgment and
the second suit.
	All elements of res judicata are present in this cause.  There exists a final judgment
on the merits in Hilltop I that was rendered by a court of competent jurisdiction.  The parties are
identical to those in Hilltop I and this case was based upon claims that were raised or that could
have been raised in Hilltop I.  Because we have determined that res judicata applies, we decline
to address the other arguments regarding the 1995 and 1997 Acts.  The first issue is overruled. 

Attorneys' Fees
	In its second issue, Hilltop contends that if this Court determines that the trial court
erred and Hilltop is entitled to an exemption from the 1992 rollback taxes then the attorneys' fees
awarded by the trial court to the taxing entities would be erroneous and should be reversed. 
Because we decide that the trial court did not err in determining that Hilltop was not entitled to
an exemption, the second issue is overruled.
Relief Under Texas Rule of Appellate Procedure 45
	The taxing entities ask this Court to assess damages pursuant to Rule 45 because
Hilltop's appeal "flagrantly violates the principals of res judicata."  Although we have ruled in
the taxing authorities' favor, we decline to award damages pursuant to Rule 45.

Conclusion

	We affirm the trial court's judgment.


  
					Mack Kidd, Justice
Before Chief Justice Aboussie, Justices Kidd and Patterson
Affirmed
Filed:   June 30, 1999
Publish
1.        Since the 1993 tax year, the property has been used for religious purposes and has been tax-exempt.  See Tex. Tax Code Ann. § 11.20 (West 1992 & Supp. 1999).  
2.        The 1995 Legislature designated this amendment as section 23.55(j).  The 1997 Legislature
then redesignated it as section 23.55(l) without any substantive changes.  See Act of May 8, 1997,
75th Leg., R.S., ch. 165, § 31.01(74), 1997 Tex. Gen. Laws 712.  For convenience, we refer to
the current subsection (l).
3.        The taxing entities also asserted the affirmative 