REVERSE AND RENDER; Opinion Filed March 9, 2020




                                                             In The
                                         Court of Appeals
                                  Fifth District of Texas at Dallas
                                                       No. 05-18-01113-CV

                             MCKINNEY MILLENNIUM, LP, Appellant
                                            V.
                         COLLIN CENTRAL APPRAISAL DISTRICT, Appellee

                               On Appeal from the 366th Judicial District Court
                                            Collin County, Texas
                                   Trial Court Cause No. 366-03033-2015

                                                          OPINION
                                Before Justices Whitehill, Schenck, and Rosenberg1
                                            Opinion by Justice Schenck
          McKinney Millennium, LP (“McKinney”) appeals the trial court’s grant of summary

judgment in favor of Collin Central Appraisal District (“CCAD”) and its denial of McKinney’s

summary judgment motion. In four issues, McKinney complains the trial court erred in concluding

CCAD properly assessed property taxes on McKinney’s property to include an additional tax

following a change in use. For the reasons discussed below, we reverse the trial court’s order

granting summary judgment in favor of CCAD and render judgment in favor of McKinney.

                                                         BACKGROUND

          In March 2014, McKinney purchased 6.314 acres of land in Collin County (“the

Property”). For several years prior to the purchase, the Property was used for agricultural purposes


   1
       The Hon. Barbara Rosenberg, Justice, Assigned
and was assessed property taxes as “qualified open-space land” pursuant to section 23.52 of the

Texas Tax Code. In April 2014, CCAD provided notices of appraised value to the prior owners

of the Property, which again assessed the Property as qualified open-space land. McKinney timely

paid all of the 2014 taxes for the Property.

       On March 23, 2015, CCAD sent McKinney a “Notice of Change of Use Determination” in

which it notified McKinney that pursuant to section 23.55 of the tax code, CCAD determined the

Property was not used for agriculture as of July 1, 2014, and therefore no longer qualified for

appraisal as agricultural use. The Notice informed McKinney that it would be assessed “an

additional rollback tax equal to the tax savings realized for the previous five years.” The Notice

went on to state that “[i]n addition to the 5 year change of use rollback tax, acreage effected [sic]

by the rollback will be adjusted to market value for the current tax year, as listed below.” CCAD

then supplemented the 2014 Appraisal Roll for the Property.

       McKinney filed a protest with the Collin Appraisal Review Board (“ARB”). Although

McKinney did not contest that the use of the Property changed during 2014 or the imposition of

additional taxes for the previous five years, McKinney did protest the supplemented 2014

Appraisal Roll, contesting the “adjustment” of the Property’s 2014 assessed value to full market

value for that year. On June 11, 2015, the ARB issued orders granting McKinney’s protests and

reversing CCAD’s adjustments.

       On July 31, 2015, CCAD appealed the ARB’s orders in a suit filed against McKinney and

the prior owner. McKinney responded with a counterclaim seeking reinstatement of the ARB’s

orders and recovery of attorney’s fees. McKinney and CCAD filed competing motions for

summary judgment. In CCAD’s motion for summary judgment, it relied on a rule promulgated

by the Texas Comptroller requiring it to assess adjusted taxes on the Property for 2014. It further

argued the tax code directed the Comptroller to promulgate rules setting forth the method for

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appraising qualified open-space land, and it was pursuant to that authority that the Comptroller

promulgated the rule requiring appraisal districts to assess land in the year of change of use. In

McKinney’s motion for summary judgment, it argued the tax code did not authorize any tax in the

year of change of use, the tax code did not authorize the Comptroller to promulgate any rule

requiring such tax, and the rule relied on by CCAD conflicted with the tax code.2 On August 24,

2018, the trial court signed an order granting CCAD’s motion for summary judgment and denying

McKinney’s motion for summary judgment. McKinney filed this appeal.3

                                                               DISCUSSION

           We review a trial court’s summary judgment rulings de novo. KMS Retail Rowlett, LP v.

City of Rowlett, 559 S.W.3d 192, 197 (Tex. App.—Dallas 2017) (mem. op.), aff’d, No. 17-0850,

2019 WL 2147205 (Tex. May 17, 2019). Both parties moved for summary judgment on traditional

grounds and thus each bore the burden of establishing that there are no issues of material fact and

it is entitled to judgment as a matter of law. See id. When both parties move for summary

judgment and the trial court grants one party’s motion for summary judgment and denies the other

party’s motion, we can consider both motions, review the summary judgment evidence presented

by both sides, determine all questions presented, and render the judgment the trial court should

have rendered. Id.

           In four issues, McKinney argues the trial court erred in concluding CCAD properly

adjusted the Property’s appraised value. First, it urges Texas law forbids imposition of taxes

without clear, unequivocal expression of legislative intent. Second, it argues the Texas Legislature

neither enacted an additional “change year” tax on qualified open-space property, nor




    2
      McKinney’s motion also requested the trial court grant McKinney its attorney’s fees in the event the trial court granted its motion for
summary judgment.
     3
       As the trial court’s order on summary judgment disposed of all claims against the prior owner and the prior owner did not file a notice of
appeal, the prior owner is not a party to this appeal, and we need not discuss this entity any further.

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unambiguously manifested any intent for either the State Property Tax Board or the Comptroller

to create such a tax. Third, it contends this Court should follow a decision from the San Antonio

Court of Appeals, Bexar Appraisal District v. Sivage Investments, Ltd., Nos. 04-14-00227-CV, 04-

14-0028-CV, 04-14-0029-CV, 04-14-00230-CV, 2014 WL 6475369 (Tex. App.—San Antonio

Nov. 19, 2014, no pet.) (mem. op.), which held that a similar rule issued by the Comptroller in the

Agricultural Appraisal Manual (“Manual”) was contrary to the tax code and thus void. Fourth,

McKinney argues the fact that the Comptroller removed the rule relied upon by CCAD after the

issuance of Sivage indicates that decision should control in this case.

       CCAD responds the Legislature provided the Comptroller with the authority to promulgate

a rule to assess property in a “change of use” year to recapture the difference between the

Property’s market value and its agricultural use. CCAD relies on section 23.52(d) of the tax code,

which provides “[t]he comptroller by rule shall develop and distribute to each appraisal office

appraisal manuals setting forth this method of appraising qualified open-space land, and each

appraisal office shall use the appraisal manuals in appraising qualified open-space land.” See TEX.

TAX CODE ANN. § 23.52(d). CCAD urges that the directive to lay out the method of appraisal also

authorizes the Comptroller to determine which years are subject to additional tax.

       At bottom, the issue here is one of statutory construction, whether section 23.52(d) of the

tax code properly authorizes CCAD to reassess the property taxes McKinney owes for the year of

change. See id. § 23.52(d). This case presents an important and recurring statutory construction

problem addressed in only one memorandum opinion from the San Antonio Court of Appeals,

which held contrary to what was set forth in the Manual at the time CCAD reassessed the

Property’s 2014 taxes. See Sivage, 2014 WL 6475369, at *2. As discussed below, we conclude

there is no clear language in section 23.52(d) of the tax code that indicates the Legislature intended




                                                 –4–
to tax property in the year of change of use or to delegate the authority to impose such a tax to the

Comptroller. Further, the argument that we should defer to the Manual is unpersuasive.4

I.         Pro-taxpayer Presumption

           We begin our analysis by noting that “[t]he reach of an ambiguous tax statute must be

construed ‘strictly against the taxing authority and liberally for the taxpayer.’” See TracFone

Wireless, Inc. v. Comm’n on State Emergency Commc’ns, 397 S.W.3d 173, 182 (Tex. 2013)

(quoting Morris v. Houston Indep. Sch. Dist., 388 S.W.3d 310, 313 (Tex. 2012) (per curiam)). In

other words, a tax must apply unequivocally if it is to apply at all. See id. As the Texas Supreme

Court has observed, “the sovereign is bound to express its intention to tax in clear and

unambiguous language.” Id. (quoting Eidman v. Martinez, 184 U.S. 578, 583 (1902)). One reason

for the presumption is that taxpayers should be given notice of their tax obligations before the State

imposes them. Id. Furthermore, agency deference does not displace strict construction when

the dispute is not over how much tax is due but, more fundamentally, whether the tax applies at

all. Id. at 182–83.

           The Legislature set forth provisions for appraisal of land that qualifies as open-space land.

See TAX § 23.51(1).5 In its motion for summary judgment, McKinney argued that while the tax

code authorizes an “additional” backward-looking tax to recapture reduced value over the

preceding five years, it did not authorize any tax in the year of change of use, it did not authorize




     4
       CCAD argues this Court may affirm the summary judgment on the ground that McKinney was required to file a new application for appraisal
as “ag” land, but failed to do so, and thus the taxes were properly based on the Property’s market value. See TAX § 23.54 (a) (requiring application
for appraising eligible land as “ag” land), (e) (permitting chief appraiser with good cause to believe land no longer eligible for appraisal to require
new application). However, this ground was not raised in the trial court. Accordingly, we do not address this argument. See State Farm Lloyds v.
Page, 315 S.W.3d 525, 532 (Tex. 2010) (holding summary judgment may not be affirmed on appeal on ground not presented to trial court).
      5
        “Qualified open-space land” means land that is currently devoted principally to agricultural use to the degree of intensity generally accepted
in the area and that has been devoted principally to agricultural use or to production of timber or forest products for five of the preceding seven
years or land that is used principally as an ecological laboratory by a public or private college or university. Qualified open-space land includes all
appurtenances to the land. For the purposes of this subdivision, appurtenances to the land means private roads, dams, reservoirs, water wells, canals,
ditches, terraces, and other reshapings of the soil, fences, and riparian water rights. Notwithstanding the other provisions of this subdivision, land
that is currently devoted principally to wildlife management as defined by Subdivision (7)(B) or (C) to the degree of intensity generally accepted
in the area qualifies for appraisal as qualified open-space land under this subchapter regardless of the manner in which the land was used in any
preceding year.

                                                                        –5–
the Comptroller to promulgate any rule requiring such tax, and the Manual guidance relied on by

CCAD conflicts with the tax code. In its competing motion for summary judgment, CCAD argued

the tax code directed the Comptroller to promulgate rules setting forth the method for appraising

qualified open-space land and it was pursuant to that authority that the Comptroller promulgated

a rule regarding assessing land in the year of change of use, which rule CCAD followed when

assessing adjusted taxes on the Property for 2014.

II.    Bexar Appraisal District v. Sivage Investments, Ltd.

       As noted above, McKinney points us to Sivage, a memorandum opinion in which the San

Antonio Court of Appeals addressed an issue similar to that here: whether the tax code provided

authority to the Comptroller to promulgate a rule to reappraise property and assess taxes on its full

market value for the year when a property’s use changes from one of qualified open-space. See

Sivage, 2014 WL 6475369, at *1–2. In Sivage, the Bexar Appraisal District (“BAD”) argued that

section 23.52(d) authorized the Comptroller to promulgate rules the appraisal district must follow.

See id. The Sivage court noted administrative agency rules must not exceed statutory authority

and turned to examine the statutory authority found in section 23.55, which addresses “change of

use of land.” See id. Subsection (a) of section 23.55 provides for “an additional tax . . . equal to

the difference between the taxes imposed on the land for each of the five years preceding the year

in which the change of use occurs . . . and the tax that would have been imposed had the land been

taxed on the basis of market value.” See TAX § 23.55(a). The Sivage court concluded section

23.55 authorized the appraisal district to assess only the five-year rollback penalty and thus the

challenged rule conflicted with the statute. See Sivage, 2014 WL 6475369, at *1–2. We agree

with the reasoning of the Sivage court and conclude there is no support in section 23.55(a) for the

Comptroller to promulgate a rule requiring an appraisal district to assess additional taxes for the

year of the change of use.


                                                –6–
          CCAD attempts to distinguish Sivage by noting the decision did not address whether

section 23.52(d) provided the Comptroller with the authority to promulgate a rule requiring

additional taxes for the “change of use” year. Accordingly, we now address section 23.52(d).6

III.      Section 23.52(d)

          CCAD argues that section 23.52(d) provides the Comptroller with the authority to

promulgate a rule in the Manual to appraise open-space land, specifically the following rule titled

Taxes for the Year that the Use Changes. The Manual advised:

          If land changes to a non-qualifying use from a qualifying one after the appraisal
          review board has approved the appraisal records, the land is back assessed for the
          difference between the property’s market value and its agricultural use value. The
          assessor sends a supplemental bill for taxes on the added value. This amount
          becomes delinquent on the same date as the original tax bill for the property. If
          those taxes have been paid, the supplemental bill becomes delinquent on February
          1 of the year following the date the bill is mailed or the first day of the next
          following month that allows the property owner 21 days to pay the tax, whichever
          is later.

          CCAD points to section 23.52(d) of the tax code, which provides “[t]he comptroller by rule

shall develop and distribute to each appraisal office appraisal manuals setting forth this method of

appraising qualified open-space land, and each appraisal office shall use the appraisal manuals in

appraising qualified open-space land.” TAX § 23.52(d) (emphasis added). CCAD contends that

this section provides the Comptroller with the authority to promulgate a rule to require appraisal

districts to “back assess” land for the difference between the property’s market value and its

agricultural use value. There is no definition of the word “method” in the tax code. We do note

that the only other use of “method” within section 23.52 is in subsection (a), which provides “[t]he

appraised value of qualified open-space land is determined on the basis of the category of the land,

using income capitalization methods applied to average net to land.” See id. § 23.52 (a) (emphasis


      6
        CCAD also argues section 23.01(a) provided the Comptroller with the authority to promulgate a rule in the Manual to appraise open-space
land. However, CCAD did not raise this argument below to the trial court. Accordingly, we do not address this argument. See Page, 315 S.W.3d
at 532.



                                                                    –7–
added).7 Thus, “method” is used within this section to refer to how to value property for purposes

of calculating the tax not whether to “back assess” property in the first instance. Accordingly, we

do not read “method” in section 23.52(d) to provide the Comptroller with authority to promulgate

a rule in the Manual to assess taxes for the year of change in addition to those taxes required by

section 23.55(a).

           We conclude CCAD failed to establish as a matter of law that it had the authority to assess

additional taxes on the Property in the “change of use” year. We further conclude McKinney

established as a matter of law that CCAD lacked the authority to assess additional taxes on the

Property in the “change of use” year. Accordingly, we conclude the trial court erred in granting

summary judgment in favor of CCAD and denying summary judgment in favor of McKinney.

IV.        Attorney’s Fees

           At the conclusion of its brief, McKinney requests this Court grant summary judgment in

its favor on all issues requested in its motion for summary judgment. In its counterclaim and its

motion for summary judgment, McKinney requested its attorney’s fees pursuant to section 42.29

of the tax code. However, McKinney has not presented this Court with any arguments specifically

with respect to its request for attorney’s fees below. While McKinney’s brief is arguably

inadequate, we do not require further briefing in view of our determination that McKinney is not

entitled to attorney’s fees because its protest is not related to an excessive appraisal, but instead a

protest over the decision to re-assess or “back access property.”

           Section 42.29 provides, “A property owner who prevails in an appeal to the court under

Section 42.25 . . . may be awarded reasonable attorney’s fees.” TAX § 42.29(a). Section 42.25

provides a “remedy for excessive appraisal.” See id. § 42.25.



     7
       Additionally, Subchapter A of Chapter 23 discusses different methods of appraisal. See, e.g., id. §§ 23.0101 (alternate appraisal methods),
23.011 (cost method of appraisal), 23.012 (income method of appraisal), 23.013 (market data comparison method of appraisal).

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          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.

See id.

          We interpret the requirements of section 42.29 narrowly. See Willacy Cty. Appraisal Dist.

v. Sebastian Cotton & Grain, Ltd., 555 S.W.3d 29, 52 (Tex. 2018), opinion corrected on reh’g

(Sept. 28, 2018).      CCAD responded to McKinney’s motion, arguing attorney’s fees were

unavailable under that section because McKinney’s counterclaim was not for an “excessive

appraisal,” but for the treatment of the property as “qualified open-space land.” CCAD relied on

a decision from the Texas Supreme Court, which held where a taxpayer successfully appeals the

denial of an open-space land designation, the use of the property is examined, not the value of the

property, and thus the dispute is not one for excessive appraisal such that the taxpayer could

recover attorney’s fees under section 42.29. See Dallas Cent. Appraisal Dist. v. Seven Inv. Co.,

835 S.W.2d 75, 78–79 (Tex. 1992).

          In Seven Investment Co., the supreme court examined the language of section 41.41 of the

tax code, which lists the actions a property owner is entitled to protest. See id. The court noted

section 41.41(a) detailed nine different actions including a determination of the appraised value of

the owner’s property (section 41.41(a)(1)) and a determination that the owner’s land does not

qualify for appraisal as provided by Subchapter C, D, or E of Chapter 23 (section 41.41(a)(5)).

See id. (citing TAX § 41.41(1), (5)). The supreme court concluded that the fact that the Legislature

separately identified a protest of a determination that property does not qualify for an appraisal

from a protest over an excessive appraisal in section 41.41 was 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. See id.



                                                  –9–
       Here, the Notices CCAD sent to McKinney notified McKinney that CCAD had determined

a change of use and determined the Property no longer qualified for agricultural use under

Subchapter D of Chapter 23. As noted by McKinney in its brief, it is not the change in qualification

that McKinney protested to the ARB, but the assessment of additional taxes in the year of change

of use accomplished by supplementing the appraisal roll with market value for the non-qualifying

Property. Thus, this protest does not relate a determination of whether property qualifies for an

appraisal, but neither does it relate to an excessive appraisal. Instead, it is a protest over the

decision to re-assess or “back assess” property. As we must construe section 42.29 strictly, we

cannot conclude McKinney established as a matter of law that it may be awarded attorney’s fees.

See Sebastian Cotton & Grain, Ltd., 555 S.W.3d at 52.

                                          CONCLUSION

       Because the law applicable to the parties’ dispute establishes CCAD had no authority to

assess additional taxes on the Property during the change of use year, we reverse the trial court’s

order granting summary judgment in favor of CCAD and render judgment in favor of McKinney.

Because the parties’ dispute does not relate to an excessive appraisal, McKinney is not entitled to

seek recovery of attorney’s fees.




                                                   /David J. Schenck/
                                                   DAVID J. SCHENCK
                                                   JUSTICE

181113F.P05




                                               –10–
                               Court of Appeals
                        Fifth District of Texas at Dallas
                                       JUDGMENT

 MCKINNEY MILLENNIUM, LP,                              On Appeal from the 366th Judicial District
 Appellant                                             Court, Collin County, Texas
                                                       Trial Court Cause No. 366-03033-2015.
 No. 05-18-01113-CV         V.                         Opinion delivered by Justice Schenck.
                                                       Justices Whitehill and Rosenberg
 COLLIN CENTRAL APPRAISAL                              participating.
 DISTRICT, Appellee

    In accordance with this Court’s opinion of this date, the judgment of the trial court is
REVERSED and judgment is RENDERED that:

       affirms the Collin Appraisal Review Board’s June 11, 2015 orders granting
       McKinney Millenium, LP’s protests and reversing the adjustments made by the
       Collin County Appraisal District.

       It is ORDERED that appellant MCKINNEY MILLENNIUM, LP recover its costs of this
appeal from appellee COLLIN CENTRAL APPRAISAL DISTRICT.


Judgment entered this 9th day of March, 2020.




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