                                       In The

                                Court of Appeals

                    Ninth District of Texas at Beaumont

                            ____________________

                               NO. 09-13-00412-CV
                            ____________________

             SIGNAL INTERNATIONAL TEXAS L.P., Appellant

                                         V.

              ORANGE COUNTY, TEXAS, ORANGE COUNTY
              APPRAISAL DISTRICT AND ORANGE COUNTY
                 TAX ASSESSOR-COLLECTOR, Appellees

_______________________________________________________             ______________

                    On Appeal from the 163rd District Court
                            Orange County, Texas
                         Trial Cause No. B-120281-C
________________________________________________________             _____________

                          MEMORANDUM OPINION

      This case involves an assessment of ad valorem taxes. Appellant, Signal

International Texas L.P. (“Signal”), appeals the district court’s order dated June 18,

2013, dismissing Signal’s suit and granting the pleas to the jurisdiction filed by the

defendant-appellees, Orange County Appraisal District (“OCAD”), Orange



                                          1
County, Texas (“the County”), and the Orange County Tax Assessor-Collector, in

her official capacity, (“OCTA”) (collectively the “Taxing Entities”). We affirm.

                               UNDERLYING FACTS

      The principal underlying facts are not in dispute. Signal filed its Original

Petition on August 15, 2012, seeking relief against the Taxing Entities regarding an

assessment amount of $335,838.79 in ad valorem taxes assessed on Signal’s

personal property located at Signal’s facility in Orange County, Texas. Before the

tax assessment was levied, Signal’s representatives met with the OCAD appraisal

agent, Pritchard & Abbott, and Signal submitted its 2011 Tax Year Rendition of its

personal property to OCAD on or about March 22, 2011. The Signal Rendition set

a total value of $31,729,090.00 for all of Signal’s personal property, and it

specifically included a barge (“the Atlas Barge”) as a Signal asset with a value of

$12,854,762.75.

      Signal and OCAD later reached an agreement on the value of all of the

Signal personal property and on the total ad valorem assessment for the 2011 tax

year. Their Settlement Agreement was reduced to writing and signed by all parties

on or about May 13, 2011. The Settlement Agreement set Signal’s property

valuation at $31,729,090.00, and it included the Atlas Barge as one of the items on

the inventory of property attached to the agreement.

                                         2
      According to Signal, the Atlas Barge was constructed pursuant to a 2009

Charter Agreement between Signal and Signet Maritime Corporation giving Signet

an option to purchase the barge. The barge was completely constructed by Signal

as of April of 2010, and on or about May 6, 2010, Signet moved the Atlas Barge

from Texas to Pascagoula, Mississippi, without notifying Signal. According to

Signal, Signet then moved the barge on May 31, 2010, to Mexico, where it

remained for the entirety of 2011.

      Signal contends it did not discover that the Atlas Barge left Texas until

December of 2011, and Signal alleges that it notified Pritchard & Abbott on

January 4, 2012, that Signal made a mistake when Signal rendered the Atlas Barge

as part of its personal property for tax year 2011. Signal requested that Pritchard &

Abbott request a correction and relief from the 2011 tax assessment in an amount

of $335,838.79 (that portion of the 2011 ad valorem tax attributed to the Atlas

Barge asset). In February of 2012, Signal sent OCAD a letter about the disputed

amount. Pritchard & Abbott later notified Signal that it could not change the

agreed-upon settlement amount and that the county tax roll had already been

certified, but Pritchard & Abbott agreed to remove the Atlas Barge from the 2012

assessment as long as the barge did not return to Orange County, Texas, during

2012. The County included the tax amount allocated to the Atlas Barge. In March

                                         3
2012, Signal received from OCAD a Notice of Delinquent Taxes, stating that

Signal then owed $359,347.51.

      In May 2013, Signal filed its First Amended Original Petition seeking what

Signal describes in its appellate brief as “equitable relief of rescission or

reformation of the Settlement Agreement[,]” as well as “injunctive relief”

preventing seizure of the Atlas Barge. The Taxing Entities filed pleas to the

jurisdiction, seeking a dismissal for lack of subject matter jurisdiction. On June 18,

2013, the trial court entered an order dismissing Signal’s claims against the Taxing

Entities with prejudice for lack of subject matter jurisdiction, and Signal filed this

appeal.

                                 ISSUES ON APPEAL

      In its first issue, Signal contends that the district court erred in granting the

pleas to the jurisdiction and that the trial court had subject matter jurisdiction over

Signal’s equitable claim because Signal has no recourse under the Texas Tax Code

to correct the error and “mutual mistake” made by the parties. In issue two, Signal

argues that it was not required to exhaust administrative remedies because the

statutory provisions in the Tax Code do not govern Signal’s equitable claim. In

issue three, Signal contends the trial court erred in dismissing Signal’s claims with

prejudice and denying Signal an opportunity to replead to cure the jurisdictional

                                          4
defects. The Taxing Entities argue that the trial court correctly dismissed the

claims because (1) the Texas Tax Code provides the exclusive remedy for a

property owner to protest the assessment of property for ad valorem taxes; (2)

Signal failed to exhaust its administrative remedies; (3) Signal cannot collaterally

attack the taxable situs of the Atlas Barge by seeking “equitable relief[;]” and (4)

Signal entered into a final and binding property settlement agreement in

accordance with section 1.111(e) of the Texas Tax Code, thereby waiving any

rights of protest under the provisions of the Texas Tax Code.

                                STANDARD OF REVIEW

      A plea to the jurisdiction challenges the trial court’s subject matter

jurisdiction over the claims that a plaintiff has asserted in the lawsuit. Bland Indep.

Sch. Dist. v. Blue, 34 S.W.3d 547, 554 (Tex. 2000). We review the trial court’s

order on a plea to the jurisdiction de novo. Tex. Dep’t of Parks & Wildlife v.

Miranda, 133 S.W.3d 217, 228 (Tex. 2004). In our de novo review, we do not

weigh the merits of the plaintiff’s claims, but we consider the plaintiff’s pleadings

and the evidence pertinent to the jurisdictional inquiry. Cnty. of Cameron v.

Brown, 80 S.W.3d 549, 555 (Tex. 2002). The plaintiff bears the burden in a lawsuit

to allege facts that affirmatively demonstrate the trial court’s subject matter

jurisdiction. See Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 446

                                           5
(Tex. 1993). “[W]e construe the pleadings in the plaintiff’s favor and look to the

pleader’s intent.” Brown, 80 S.W.3d at 555. If the plea to the jurisdiction

challenges the existence of jurisdictional facts, we will consider only the evidence

relevant to the resolution of the jurisdictional issues raised. Miranda, 133 S.W.3d

at 227.

                                    DISCUSSION

      The Tax Code establishes a detailed set of procedures that property owners

must abide by to contest the imposition of property taxes. See Tex. Tax Code Ann.

§§ 41.01-43.04 (West 2008 & Supp. 2014). As a general rule, “‘a taxpayer’s

failure to pursue an appraisal review board proceeding deprives the courts of

jurisdiction to decide most matters relating to ad valorem taxes.’” Cameron

Appraisal Dist. v. Rourk, 194 S.W.3d 501, 502 (Tex. 2006) (per curiam) (quoting

Matagorda Cnty. Appraisal Dist. v. Coastal Liquids Partners, L.P., 165 S.W.3d

329, 331 (Tex. 2005)); Kellair Aviation Co. v. Travis Cent. Appraisal Dist., 99

S.W.3d 704, 709 (Tex. App.—Austin 2003, pet. denied) (“[E]ven constitutional

entitlement can be waived when a party fails to follow the implementing

legislation.”) (citing Aramco Associated Co. v. Harris Cnty. Appraisal Dist., 33

S.W.3d 361, 364 (Tex. App.—Texarkana 2000, pet. denied)). A trial court’s




                                         6
subject matter jurisdiction may not be waived and may be raised for the first time

on appeal. See Tex. Ass’n of Bus., 852 S.W.3d at 445.

      Chapter 41 of the Texas Tax Code expressly provides that a property owner

may file an administrative protest of certain actions, including “unequal appraisal

of the owner’s property[,]” “inclusion of the owner’s property on the appraisal

records[,]” and “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 Ann. § 41.41(a)(2), (3), (9) (West 2008). Chapter 42 then

allows the property owner to seek judicial review of an adverse determination of an

administrative protest. See id. § 42.01(a)(1)(A) (West Supp. 2014). More

specifically, a taxpayer may protest the taxable situs of property pursuant to section

41.42 of the Texas Tax Code by utilizing the procedures of chapters 41, 42, or

section 25.25 of the Tax Code. See id. § 41.42 (West 2008).

      To prevail on a protest of taxable situs, the property owner must establish

that the property is on the appraisal roll of another district or is not taxable in the

state. Id. After a hearing before the appraisal review board, the taxpayer or taxing

unit may appeal to the district court for a de novo review of the board’s

determination. See id. at §§ 42.21, 42.23. This is the exclusive method provided by

the Tax Code for adjudicating a protest of situs. Sierra Stage Coaches, Inc. v. State

                                          7
of Texas—Cnty. of Harris, 832 S.W.2d 191, 193 (Tex. App.—Houston [14th Dist.]

1992, no writ). However, if the taxpayer enters into a section 1.111(e) agreement,

the district court is deprived of jurisdiction over an appeal under section 42.01. See

Curry v. Harris Cnty. Appraisal Dist., 434 S.W.3d 815, 822 (Tex. App.—Houston

[14th Dist.] 2014, no pet.).

      The Taxing Entities argue the parties entered into a section 1.111(e)

settlement agreement and the agreement is final and binding on the parties. See

Tex. Tax Code Ann. § 1.111(e) (West Supp. 2014). We first address a footnote in

Signal’s reply brief wherein Signal states it “does not concede” that the Settlement

Agreement was pursuant to section 1.111(e). Section 1.111(e) of the Texas Tax

Code provides the following:

      An agreement between a property owner or the owner’s agent and the
      chief appraiser is final if the agreement relates to a matter:
             (1) which may be protested to the appraisal review board or on
             which a protest has been filed but not determined by the board;
             or
             (2) which may be corrected under Section 25.25 or on which a
             motion for correction under that section has been filed but not
             determined by the board.

Id. The written agreement, signed by Signal’s agent and a representative of the

appraisal district, states that the parties “agreed to the settled value for the 2011 tax

year in the amount of $31,729,090[.]” The agreement further states:


                                           8
      I acknowledge that the subject matter of property described above has
      been settled to my satisfaction. I hereby waive my right to any further
      proceeding in this matter, any claim for exemptions other than those
      already granted for the tax year, or any other actions under Chapter 41
      or Chapter 25 of the Property Tax Code.

      An agreement is a section 1.111(e) agreement when the agreement is

between the property owner or the owner’s agent and the chief appraiser, and the

agreement concerns a matter that could have been protested to the appraisal review

board or on which a protest has been filed but not determined by the board. Tex.

Tax Code Ann. § 1.111(e); see, e.g., Bastrop Cent. Appraisal Dist. v. Acme Brick

Co., 428 S.W.3d 911, 916-17 (Tex. App.—Austin 2014, no pet.); Hartman v.

Harris Cnty. Appraisal Dist., 251 S.W.3d 595, 599 (Tex. App.—Houston [1st

Dist.] 2007, pet. denied); Sondock v. Harris Cnty. Appraisal Dist., 231 S.W.3d 65,

69 (Tex. App.—Houston [14th Dist.] 2007, no pet.). Upon review of the

Settlement Agreement in the case at bar, we conclude that the agreement is a

section 1.111(e) agreement because it concerns a matter that could have been

protested to the appraisal review board. See Tex. Tax Code Ann. § 1.111(e); see

also id. §§ 41.01(a)(1) (providing for appraisal review boards to determine

property owners’ protests), 41.41(a)(1) (allowing for owner’s protest of a

property’s appraised value), 41.42 (allowing for owner to protest the taxable situs

of property). Section 1.111(e) agreements are final, even without approval or

                                        9
adoption by the appraisal board. See BPAC Tex., LP v. Harris Cnty. Appraisal

Dist., No. 01-03-01238-CV, 2004 Tex. App. LEXIS 9592, at *7 (Tex. App.—

Houston [1st Dist.] Oct. 28, 2004, no pet.) (mem. op.). Section 42.09(a)(2)

provides, in relevant part, that:

      procedures prescribed by this title for adjudication of the grounds of
      protest authorized by this title are exclusive, and a property owner
      may not raise any of those grounds . . . as a basis of a claim for relief
      in a suit by the property owner to . . . obtain a refund of taxes paid.

Tex. Tax Code Ann. § 42.09(a)(2) (West Supp. 2014). Signal contends that the

equitable claims of contract rescission, reformation, and mutual mistake are

inapplicable to a section 1.111(e) agreement.

      Signal relies on In re Willacy County Appraisal District, Cause No. 13-13-

00550-CV, 2013 Tex. App. LEXIS 13593 (Tex. App.—Corpus Christi Nov. 1,

2013) (orig. proceeding), in arguing that, even assuming the Settlement Agreement

was executed pursuant to section 1.111(e), contract law can be applied to reform or

rescind a section 1.111(e) agreement. In re Willacy County Appraisal District is

inapposite.

      In re Willacy County Appraisal District involved a discovery dispute arising

out of a property tax case. 2013 Tex. App. LEXIS 13593, at *1. The taxpayer,

through its agent, filed a motion to correct ownership of certain inventory for the

2009 tax year pursuant to section 25.25(c) of the Tax Code. After the filing of the
                                         10
motion to correct, the taxpayer and the appraisal district’s chief appraiser reached

an agreement on the motion that the appraisal district would make the changes

requested in the motion and no hearing by the appraisal review board would be

necessary. Id. at *2. The appraisal district reduced the appraised value as agreed

and issued the taxpayer a refund of overpaid taxes. Id. In September 2011, the

chief appraiser notified the taxpayer that the appraisal district changed the

ownership of the same property to reflect that it was owned by the taxpayer as of

September 1, 2009, pursuant to section 25.25(b) of the Texas Tax Code. Id. The

notice provided that the taxpayer had a right to protest the chief appraiser’s action

to the appraisal review board. Id. at **2-3. The taxpayer protested on the grounds

that the appraisal district was legally prohibited from changing the ownership

under section 25.25(b). Id. The appraisal review board denied the taxpayer’s

protest, and the taxpayer appealed to the trial court and argued that the 2010

agreement was final and could not be reviewed or rejected by appraisal review

boards. Id. at *3.

      The appraisal district filed an answer and denial, asserting that its actions

were authorized under the Tax Code, and asserting an affirmative defense of fraud

or misrepresentation regarding the taxpayer’s motion to correct ownership. Id. at

*4. The appraisal district propounded discovery to the taxpayer, and the taxpayer

                                         11
objected and did not respond. Id. The appraisal district filed a motion to compel the

written discovery and sent a notice of intent to take a deposition of a representative

of the taxpayer. Id. The taxpayer filed a motion to quash the deposition. Id. After a

hearing, the trial court denied the appraisal district’s motion to compel and granted

the taxpayer’s motion to quash, which resulted in the original proceeding wherein

the appraisal district contended that the trial court abused its discretion in denying

the appraisal district’s motion to compel and in granting the taxpayer’s motion to

quash. Id. at **4-5. In conditionally granting the appraisal district’s petition for

writ of mandamus, the court concluded that the defense of fraud “in this case is

viable[,]” that the trial court abused its discretion by denying the appraisal district’s

requested discovery to develop its affirmative defense, and that the appraisal

district had no adequate remedy on appeal. See id. at **11-12.

      We disagree with Signal’s assertions that Willacy “is directly on point to the

matter at hand.” Willacy involved allegations of fraud and not “mutual mistake.”

Furthermore, the Corpus Christi Court of Appeals in Willacy limited its review of

the case to the issue of whether the appraisal district met its burden to establish its

entitlement to mandamus relief. 2013 Tex. App. LEXIS 13593, at *9. To the extent

Signal argues that Willacy confirms that the court has jurisdiction to apply

common law contract defenses to section 1.111(e) agreements, we note that the

                                           12
Court in Willacy explicitly stated, “We are not directed to, nor do we find any

authority, that expresses an opinion on whether the defense of fraud may be used in

the context of the present controversy under the tax code.” Id. at *10. The Court

again explained that “[a]t this stage of the proceedings, we again express no

opinion—as the parties implicitly invite us to do—regarding the merits, ultimate

success, or applicability of such an affirmative defense” because those

“considerations relate to the factual and procedural postures of the case” and not to

whether the appraisal district met its burden to establish its entitlement to

mandamus relief. Id. at **9-11.

      Signal also contends Dallas Central Appraisal District v. 1420 Viceroy

Limited Partnership, 180 S.W.3d 267 (Tex. App.—Dallas 2005, no pet.), supports

Signal’s position that (1) principles of contract law are applicable to the Settlement

Agreement here, and (2) Signal has no remedy under the Tax Code and therefore

“cannot be faulted for its alleged failure to exhaust remedies which do not exist.”

In Dallas Central Appraisal District, 1420 Viceroy Limited Partnership

(“Viceroy”) filed suit against Dallas Central Appraisal District (“DCAD”) seeking

to recover a refund of penalties, fees, and interest allegedly imposed on its property

without proper notice and in violation of due process of law. Id. at 268. Viceroy

alleged it did not receive notice that taxes, penalties, fees, and interest were owed

                                         13
on the property until August 2003, and it requested a waiver of penalties, fees, and

interest pursuant to section 33.011 of the Tax Code, which was denied. Id. Viceroy

filed a notice of protest with the appraisal board challenging the valuation of its

property and requesting a refund of penalties, fees, and interest because the tax

office never sent it proper notice of the charges. Id. After a hearing, the review

board issued an order denying any relief to Viceroy. Id. Viceroy filed suit in

district court, and the appraisal district filed a plea to the jurisdiction. Id. The trial

court denied the plea to the jurisdiction and the appraisal district appealed. In

affirming the trial court’s judgment, the Dallas Court of Appeals held that the

exclusivity provision in section 42.09 was not applicable and did not preclude the

trial court from exercising subject matter jurisdiction because “[t]he basis of

Viceroy’s complaint in the trial court . . . is not a ground of protest contained in the

property tax code.” Id. at 270-71.

      We conclude that Viceroy is distinguishable from the present case because

Viceroy did not involve a section 1.111(e) agreement and Signal’s basis of its suit,

the taxable situs of the Atlas Barge, is a ground of protest specified in the Tax

Code. Signal argues that the basis of its suit is “its request for the equitable

remedies” which “is not a ‘ground of protest’ specified by the Code” for which

there are remedies and, therefore, section 42.09(a)(2) does not apply to its suit.

                                           14
According to Signal, the Tax Code does not address or prohibit Signal’s “right to

seek equitable relief concerning extrinsic matters which merely relate to the Tax

Code.” We disagree with Signal that its claims “concern[] extrinsic matters which

merely relate to” the Tax Code. Signal’s equitable suit is an attempt to protest the

taxable situs of the Atlas Barge outside of Texas’s designated statutory procedure,

and therefore, the suit is prohibited by section 42.09(a)(2). The situs of property is

an issue on which a property owner must first exhaust its administrative remedies

before asserting the issue in a lawsuit. See Tex. Tax Code Ann. §§ 41.42, 42.09;

Gen. Elec. Credit Corp. v. Midland Cent. Appraisal Dist., 826 S.W.2d 124, 124-25

(Tex. 1991). The exclusive remedies and procedures in the Tax Code can be

waived when the parties enter into a section 1.111(e) settlement agreement. See

Tex. Tax Code Ann. § 1.111(e). Signal waived its right to protest under the Tax

Code and waived all administrative remedies when it entered into the property

settlement agreement. See id.; § 42.09(a)(2). Furthermore, because Signal chose to

reach an agreement with OCAD as to the appraised value of its property instead of

pursuing a protest, Signal was not deprived of its due process of law. See Hartman,

251 S.W.3d at 601; Sondock, 231 S.W.3d at 70; BPAC, 2004 Tex. App. LEXIS

9592, at **9-10. Therefore, we conclude that the trial court did not err in granting

the Taxing Entities’ pleas to the jurisdiction and did not err in ruling that Signal

                                         15
was required to exhaust administrative remedies under the Tax Code prior to

seeking judicial relief. Issues one and two are overruled.

      In light of our conclusions that the Settlement Agreement is a final

resolution to Signal’s right to protest the taxable situs of the Atlas Barge and that

Signal has no equitable claim to rescind the Settlement Agreement, Signal’s

pleadings failed to plead facts that establish jurisdiction and affirmatively

demonstrate an incurable defect. The district court did not err in dismissing

Signal’s cause of action with prejudice. Issue three is overruled. We affirm the trial

court’s judgment.

      AFFIRMED.



                                                    _________________________
                                                       LEANNE JOHNSON
                                                             Justice


Submitted on August 11, 2014
Opinion Delivered December 18, 2014

Before McKeithen, C.J., Horton and Johnson, JJ.




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