REVERSE and REMAND and Opinion Filed April 21, 2020




                                   S  In The
                            Court of Appeals
                     Fifth District of Texas at Dallas
                                No. 05-19-00185-CV

 AMREIT SSPF PRESTON TOWNE CROSSING LP, AMREIT SSPF PTC
  ANCHOR LP, AMREIT SSPF BERKELEY LP AND AMREIT SSPF
                PRESTON GOLD LP, Appellants
                           V.
       COLLIN CENTRAL APPRAISAL DISTRICT, Appellee

               On Appeal from the 416th Judicial District Court
                            Collin County, Texas
                   Trial Court Cause No. 416-03779-2017

                        MEMORANDUM OPINION
                Before Justices Myers, Whitehill, and Pedersen, III
                           Opinion by Justice Whitehill
      In this property tax protest case, the pivotal question is whether a discrepancy

in the property’s square footage was raised before the appraisal review board and

thus among the administrative remedies the protester exhausted such that the trial

court had jurisdiction. The trial court concluded that the protester had not fully

exhausted its administrative remedies, granted Collin County Appraisal District’s

(Collin) plea to the jurisdiction in part, and then excluded the protester’s expert

witness based on this ruling.
         In three issues, the protester, Amreit SSPF Town Crossing, LP and related

entities (Amreit) argues the trial court erred by (i) granting the plea to the

jurisdiction; (ii) striking its expert on the morning of trial; and (iii) denying its oral

motion for continuance.

         We conclude that the trial court erred by granting the plea to the jurisdiction

because the pleadings demonstrate that the square footage issue was evidentiary not

jurisdictional and the property valuation using different square footage than what

was on the tax rolls was fairly included in the valuation issue raised with the

appraisal review board (ARB). Therefore, Amreit exhausted its administrative

remedies and the trial court had jurisdiction.

         We further conclude that the trial court erred by excluding Amreit’s expert

because that exclusion was predicated on the court’s jurisdictional ruling.

         We thus reverse the trial court’s judgment and remand for further proceedings

consistent with this opinion.1

                                          I. BACKGROUND

         Amreit owns real property in Collin County, Texas consisting of three retail

shopping centers known as Preston Towne Crossing, Preston Park Gold, and Berkley

Square (the Property).




   1
       Given this disposition, we need not consider Amreit’s third issue. See TEX. R. APP. P. 47.1


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       Collin appraised the Property as of January 1, 2017 and notified Amreit of the

appraised value. Amreit timely filed a protest with the ARB.

       The ARB proceedings are not included in our record. But it is undisputed that

the ARB determined the protest by written order and Amreit appealed the order by

filing this case.

       Amreit’s petition states:

       Plaintiffs timely filed a Notice of Protest to the ARB. Plaintiffs were
       granted a protest hearing and presented evidence to the ARB displaying
       the appraised value of the Property was excessive, unequal and
       unlawful. The ARB appraised the Property at an amount in excess of
       the appraised value required by law.

       The appraised value of the Property is not equal and uniform compared
       to the median level of appraisal of similarly situated properties and/or
       not equal and uniform compared to appropriately adjusted comparable
       properties in violation of Tex. Tax Code §§ 41.43, 42.26 and Tex.
       Const. art. 8 §1. The appraised value is not equal and uniform and
       therefore unequal, excessive and unlawful.

       The unequal and unlawful appraised value of the Property causes injury
       to Plaintiffs by assessing an excessive lien and tax burden on the
       Property.

       Plaintiffs request the Court determine an equal and uniform value for
       the Property and grant relief to Plaintiffs by reducing the appraised
       value of the Property pursuant to Tex. Tax Code §§ 42.24 & 42.26.

Collin did not specially except to this pleading.

       Amreit designated Stevan Bach as an expert, but the trial court initially struck

his reports as untimely. After the case was reset, the court ruled that for purposes of

trial efficiency, Bach’s reports would be allowed. During this pretrial hearing,



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Collin also told the court that some of Amreit’s evidence was unnecessary because

Collin had stipulated that Amreit had exhausted its administrative remedies.

      Despite a scheduling order requiring that dispositive motions be filed and

heard thirty days before trial, the night before trial, Collin filed a plea to the

jurisdiction. The plea asserted that Amreit failed to exhaust its administrative

remedies relating to the proper square footage to be used in deriving a value for the

Property. Collin also argued that since Bach relied on the incorrect square footage

in forming his opinions, his testimony should not be allowed.

      The court considered the plea and the proposed Bach exclusion on the

morning of trial. The court concluded that Amreit had not fully exhausted its

administrative remedies because it did not challenge the Property’s square footage

in the ARB protest and granted the plea to the jurisdiction on that issue. The court

also excluded Bach because Bach’s expert opinions were based on square footage

values that were not properly before the court.

      After Bach was excluded, Amreit made an oral motion for continuance that

the trial court denied. Consequently, Amreit waived a jury trial and made a bill of

exception and the parties presented attorney’s fees evidence. The trial court entered

a final judgment for Collin.

                                  II. ANALYSIS

A.    Did the trial court err by granting the plea to the jurisdiction?

      Yes, because the square footage issue was litigated before the ARB.

                                        –4–
      Amreit’s first issue argues the trial court erred by partially granting the plea

to the jurisdiction, arguing that it exhausted its administrative remedies in its ARB

protest because the square footage issue was raised during that proceeding. Collin

responds that the ARB protest did not include the Property’s square footage and

Amreit’s failure to exhaust its administrative remedies on that issue deprived the

court of jurisdiction to consider anything concerning square footage other than what

was on the official tax rolls.

      A plea to the jurisdiction challenges a trial court’s authority to decide the

subject matter of a specific cause of action. See Texas Dep’t of Parks & Wildlife v.

Miranda, 133 S.W.3d 217, 225–26 (Tex. 2004). The plaintiff has the initial burden

of alleging facts that would affirmatively demonstrate the trial court’s jurisdiction

to hear the cause. Id. at 226. Whether a court has subject matter jurisdiction is a

matter of law that we review de novo. Miranda, 133 S.W.3d at 226.

      In reviewing a grant or denial of a plea to the jurisdiction, the court determines

whether the plaintiff’s pleadings, construed in the plaintiff’s favor, allege sufficient

facts affirmatively demonstrating the court’s jurisdiction to hear the case. Id.

      Evidence relevant to the jurisdictional issue can be introduced and considered

at the plea to the jurisdiction stage if needed to determine jurisdiction. Id. at 227.

      The plea to the jurisdiction must be granted if the plaintiff’s pleadings

affirmatively negate the existence of jurisdiction or if the defendant presents



                                          –5–
undisputed evidence that negates the existence of the court’s jurisdiction. Heckman

v. Williamson Cnty., 369 S.W.3d 137, 150 (Tex. 2012).

      Amreit’s filed its ARB protest under Tax Code §§ 42.24 and 42.26 and the

Texas Constitution article 8, section 1. See TEX. TAX CODE §§ 42.24, 42.26; TEX.

CONST. art. 8, §1, 20. The Tax Code “vests appraisal review boards with exclusive

jurisdiction to decide protests and challenges as permitted under chapters 41 and

42.” City of Austin v. Travis Cent. Appraisal Dist., 506 S.W.3d 607, 618 (Tex.

App.—Austin 2016, no pet.). The procedures prescribed by the Tax Code for

adjudication of the grounds of protest authorized by that statute are exclusive.

Harris County Appraisal Dist. v. ETC Mktg., Ltd., 399 S.W.3d 364, 366–67 (Tex.

App.—Houston [14th Dist.] 2013, pet. denied).

      This administrative review process is intended to “resolve the majority of tax

protests at this level, thereby relieving the burden on the court system.” Webb Cnty.

Appraisal Dist. v. New Laredo Hotel, Inc., 792 S.W.2d 952, 954 (Tex. 1990) (citing

Dall. Cnty. Appraisal Dist. v. Lal, 701 S.W.2d 44, 47 (Tex. App.—Dallas 1985, writ

ref’d n.r.e.)). Thus, taxpayers are required to exhaust administrative remedies before

challenging a tax assessment. Subaru of Am., Inc. v. David McDavid Nissan, Inc.,

84 S.W.3d 212, 221 (Tex. 2002).

      Although the district court’s review is de novo, its jurisdiction is still appellate

in nature and depends on the issue having been raised with the appraisal review

board. ETC Mktg., Ltd., 399 S.W.3d at 371.
                                          –6–
       A litigant’s failure to exhaust administrative remedies before seeking judicial

review deprives the court of subject matter jurisdiction and the court must dismiss

such claims with prejudice. MAG-T, L.P. v. Travis Cent. Appraisal Dist., 161

S.W.3d 617, 624 (Tex. App.—Austin 2005, pet. denied).

       The Tax Code allows property owners to protest (i) a determination of the

appraised value of the owner’s property; (ii) an unequal appraisal of the owner’s

property; or (iii) any other action of the chief appraiser, appraisal district, or appraisal

review board that applies to and adversely affects the property owner. See TEX. TAX

CODE § 41.41 (a). Here, Amreit asserted that the Property had been unequally

appraised.

       A property is unequally appraised if “the appraised value of the property

exceeds the median appraised value of a reasonable number of comparable

properties appropriately adjusted.” Id. § 42.46. To perform a calculation under

§ 42.46, “the appraisal expert determines a reasonable number of comparable

properties . . . takes the appraised value of those properties from the public record,

and appropriately adjusts them to the subject property.” Weingarten Realty Inv’rs

v. Harris Cnty. Appraisal Dist., 93 S.W.3d 280, 286 (Tex. App.—Houston [14th

Dist.] 2002, no pet.). Then, a median is determined from those “appropriately

adjusted properties.” Id.

       The foundational data and values for the comparables come from the appraisal

district’s public records; independent verification of the data is not required. See
                                           –7–
Harris Cnty. Appraisal Dist. v. Kempwood Plaza, Ltd., 186 S.W.3d 155, 160 (Tex.

App.—Houston [1st Dist.] 2006, no pet.).

      Collin relies on Harris Cnty. Appraisal Dist. v. United Investors Realty Trust,

47 S.W.3d 648, 653 (Tex. App.—Houston [14th Dist.] 2001, pet. denied) to argue

that when calculating an equal and uniform value for a property, an appraiser is

limited to the appraised value and size of the property as listed on the tax roll.

(Emphasis added). This reliance is misplaced.

      In United Investors, the court considered, among other things, whether Tax

Code § 42.26 should be interpreted to require comparisons of appraised values to

actual market value. Id. at 651. In concluding that the statute does not require such

comparison, the court compared § 42.26(a) to § 42.26(d). Id. at 651. In this regard,

the court noted that § 42.26(a) requires a taxpayer to obtain an independent appraisal

of the market value of a representative sample of other properties. Id. Conversely,

§ 42.26(d) does not require independent appraisals of all or some of the properties

in the district. Id. Instead, it requires only a comparison of the appraised value of

the property at issue with “comparable properties appropriately adjusted.” Id.

Accordingly, the court concluded that § 42.26(d) allows a protest without proof of

comparable properties’ market value because “the tax [rolls] can be used to

determine value; the only independent analysis required is in adjusting the appraised

values to put the properties on equal footing.”



                                         –8–
      Contrary to Collin’s suggestion, the United Investors court said nothing about

a property’s size. Rather, it said that the tax rolls may be used for value. More

important, Collin’s argument ignores what the United Investors court recognized,

and the statute requires—that is, that the values on the tax rolls be “appropriately

adjusted.” The statute provides no instruction concerning the nature of an

“appropriate adjustment,” leaving that to an appraiser’s discretion and expertise.

      Here, both Bach and Collin’s expert employed the same methods and virtually

identical comparables, but Bach adjusted his values based on a net rentable area

different from the tax rolls. Collin cites to no authority, nor have we found any,

providing that such an adjustment is not allowed or appropriate. But even if it is not

appropriate, there is nothing to suggest that it equates to a jurisdictional defect.

      Moreover, there is nothing in Amreit’s pleadings or briefs to support the

proposition that the square footage discrepancy was a stand-alone issue per se.

Instead, Amreit’s expert used adjusted square footage amounts in making his value

calculations. Whether a property owner might specifically protest to the ARB that

the square footage was incorrectly assessed, that is not this case.

      Collin’s reliance on Atlantic Shippers of Texas, Inc. v. Jefferson County, 363

S.W.3d 276, 284 (Tex. App.—Beaumont 2012, no pet.) is also unpersuasive. In that

case, the court held that Atlantic’s claim concerning the county’s incorrect square

footage calculation was not subsumed in its constitutional claim and therefore



                                          –9–
Atlantic failed to exhaust its administrative remedies. Id. Significantly, however,

Atlantic had not filed a protest at all.

        In contrast, Amreit filed a protest challenging value. Its pleading shows that

the issue is one of unequal and uniform value and asserts that the Property’s value is

not “equal and uniform compared to appropriately adjusted comparable properties.”

The petition further asserts that Amreit presented evidence to the ARB that the

appraised value was excessive, unequal, and unlawful and the ARB appraised the

Property “at an amount in excess of the appraised value required by law.” These

facts affirmatively demonstrate the trial court’s jurisdiction over the ARB’s

valuation of the Property. See Miranda, 133 S.W.3d at 225–226.

        During the hearing on Collin’s plea, Amreit introduced evidence showing that

the rent roll adjustments had been presented to the ARB. Collin’s counsel admitted

that he was not present at the ARB hearing and had no personal knowledge of what

was protested or presented. And neither Collin’s general denial nor its subsequent

plea to the jurisdiction assert any facts that negate the existence of the court’s

jurisdiction.2 See generally, Heckman, 369 S.W.3d at 150.

        Thus, on these facts, Amreit demonstrated, and Collin did not negate, the trial

court’s jurisdiction over determining the Property’s value. Bach’s square footage



    2
     Collin’s plea to the jurisdiction makes the same legal arguments concerning square footage that Collin
makes here, and further asserts that Bach’s opinions are a backdoor challenge to the Property’s square
footage.
                                                  –10–
adjustments are part of his expert opinion concerning that valuation. Whether such

adjustments were reasonable or appropriate may have been an evidentiary weight

question, but it was not jurisdictional.

      Accordingly, we sustain Amreit’s first issue.

B.    Did the court abuse its discretion by striking Amreit’s expert?

      Amreit’s second issue argues that the trial court erred by excluding Bach.

Because the sole basis for this exclusion was predicated on the court’s determination

that it lacked jurisdiction over anything concerning the Property’s square footage,

we agree.

      Although Collin now argues that Bach’s testimony was irrelevant and

unreliable, the sole basis upon which Collin moved for Bach’s exclusion in the court

below was his square footage adjustment “contrary to the tax roll.” To this end,

Collin argued that because the “issue of a purported discrepancy in the property’s

square footage was not raised at the administrative level, this Court is without subject

matter jurisdiction” and because “all of Mr. Bach’s opinions . . . are predicated upon

this purported square footage discrepancy for which no jurisdiction lies, he should

not be permitted to provide any expert testimony at the trial of this case.”

      The trial court is charged with making the initial determination about whether

an expert’s testimony is relevant and reliable. See TXI Transp. Co. v. Hughes, 306

S.W.3d 230, 234 (Tex. 2010). But here, the record reflects that the sole basis for

Bach’s exclusion was the court’s determination that the square footage discrepancy

                                           –11–
was not part of the valuation issue. Indeed, the court started the hearing by stating,

“We aren’t going do backdoor an argument about size.” And the remainder of the

judge’s comments demonstrate that the square footage/jurisdiction analysis

remained her focus. Thus, there is no relevance or reliability determination for us to

review.

      We have concluded that the square footage adjustment did not deprive the

court of jurisdiction. Therefore, the trial court erred by excluding Bach on this basis.

      Therefore, we sustain Amreit’s second issue.

                                 III. CONCLUSION

      We sustain Amreit’s first two issues, reverse the trial court’s judgment, and

remand for further proceedings consistent with this opinion.




                                            /Bill Whitehill/
                                            BILL WHITEHILL
                                            JUSTICE


190185F.P05




                                         –12–
                                    S
                            Court of Appeals
                     Fifth District of Texas at Dallas
                                   JUDGMENT

AMREIT SSPF PRESTON TOWNE                      On Appeal from the 416th Judicial
CROSSING LP, AMREIT SSPF                       District Court, Collin County, Texas
PTC ANCHOR LP, AMREIT SSPF                     Trial Court Cause No. 416-03779-
BERKELEY LP AND AMREIT                         2017.
SSPF PRESTON GOLD LP,                          Opinion delivered by Justice
Appellants                                     Whitehill. Justices Myers and
                                               Pedersen, III participating.
No. 05-19-00185-CV           V.

COLLIN CENTRAL APPRAISAL
DISTRICT, Appellee

       In accordance with this Court’s opinion of this date, the judgment of the trial
court is REVERSED and this cause is REMANDED to the trial court for further
proceedings consistent with this opinion.

      It is ORDERED that appellant AMREIT SSPF PRESTON TOWNE
CROSSING LP, AMREIT SSPF PTC ANCHOR LP, AMREIT SSPF BERKELEY
LP AND AMREIT SSPF PRESTON GOLD LP recover the costs of this appeal
from appellee COLLIN CENTRAL APPRAISAL DISTRICT.


Judgment entered April 21, 2020




                                        –13–
