Opinion issued June 24, 2014




                                  In The

                           Court of Appeals
                                 For The

                       First District of Texas
                         ————————————
                           NO. 01-13-00152-CV
                         ———————————
                      KMR MINDEN, L.P., Appellant
                                    V.
          HARRIS COUNTY APPRAISAL DISTRICT, Appellee



                 On Appeal from the 164th District Court
                          Harris County, Texas
                    Trial Court Case No. 2011-70247



                       MEMORANDUM OPINION

     In this ad valorem property tax case, KMR Minden, L.P. (“KMR Minden”)

sued the Harris County Appraisal District (“HCAD”), alleging that HCAD had

overvalued its property for the 2011 tax year.   HCAD filed a plea to the
jurisdiction, arguing that the trial court lacked jurisdiction because KMR Minden

failed to comply with the prepayment requirement of Texas Tax Code section

42.08. The trial court granted the plea to the jurisdiction and dismissed the case.

In ten issues, KMR Minden challenges the legal and factual sufficiency of the

evidence to support four of the trial court’s findings of fact, challenges the

correctness of thirteen conclusions of law, and contends that the trial court

erroneously determined that it had not substantially complied with Tax Code

section 42.08(d), which excuses a taxpayer from the prepayment requirement if it

demonstrates an inability to pay the taxes at issue.1

      We affirm.

                                      Background

      KMR Minden owns property at 5444 Minden Street in Houston and operates

twenty-six duplex units on the property. For the 2011 tax year, HCAD initially

appraised the subject property at $628,000. KMR Minden timely protested the

appraised value before the Harris County Appraisal Review Board (“the Board”),

and, as a result of the protest, the Board lowered the appraised market value of the




1
      KMR Minden raised eleven issues. In its seventh issue, KMR Minden argued that
      the trial court committed reversible error when it failed to file findings of fact and
      conclusions of law. This Court abated the appeal for the trial court to file findings
      and conclusions, which the trial court did. KMR Minden’s seventh issue is thus
      moot, and we do not address this issue.

                                            2
property to $476,000.     Unsatisfied with this valuation, KMR Minden sought

judicial review of the Board’s determination in the district court.

      KMR Minden alleged that HCAD excessively and unequally appraised its

property. KMR Minden included the following statement in its original petition:

“Pursuant to [Tax Code] Section 42.08 Plaintiff intends on timely paying all taxes

due on the property, or the taxes due on the undisputed portion of the value of the

property, or, if unable to timely pay the lesser of these amounts, Plaintiff requests

relief from the Court.”

      Several months later, HCAD filed a plea to the jurisdiction, arguing that the

trial court lacked jurisdiction because KMR Minden did not comply with the

prepayment requirement of Tax Code section 42.08. Specifically, HCAD argued

that KMR Minden failed to pay any portion of its tax bill by the delinquency date,

February 1, 2012. HCAD attached exhibits to its plea to the jurisdiction, including

a delinquent tax statement, dated April 13, 2012, reflecting that KMR Minden

owed $13,363.50 in property taxes.

      KMR Minden responded, filed an oath of inability to pay the taxes at issue,

and requested that the trial court determine whether it had substantially complied

with section 42.08(d), which allows trial courts to excuse the prepayment

requirement. KMR Minden argued that it paid the taxes at issue in full on April

19, 2012, as it “became able to afford to do so” and that, before that date, it “was



                                          3
unable to afford to pay the taxes.” It argued that the funds that it had in its bank

account as of the delinquency date were not enough to cover the entire tax bill and

“were already obligated to outstanding, uncleared transactions.” KMR Minden

was able to pay its delinquent taxes in April 2012 only after obtaining loans from

the individual members of its general partner. It argued, “Had the owner paid the

taxes prior to receiving the loan funds, KMR Minden L.P. would not have had

adequate funds to meet other financial obligations that have resulted in

consequences ranging from ceasing operation of the property to foreclosure on the

property by the bank that held the mortgage.” KMR Minden attached financial

records, primarily composed of bank statements from January through April 2012,

to support its contention that it lacked the ability to pay the assessed taxes on the

delinquency date.

      KMR Minden also attached the affidavit of Scott Ray, one of the members

of KMR Minden’s general partner, and a representative of KMR Minden. He

averred:

      The ad valorem taxes for the property were due before February 1,
      2012. The ad valorem taxes for the property were not paid prior to
      February 1, 2012 because as of January 31, 2012, the due date, the
      ownership entity, KMR Minden LP, was financially unable to pay
      those taxes. The base taxes for the 2011 tax year for the property
      were $12,039.16. As of January 31, 2012, KMR Minden LP had a
      balance of $1,523[.]24 in the bank. On January 31, 2012, there were
      still outstanding check, debt, and credit transactions that represented
      an amount larger than the funds available. In late 2011 and early
      2012, KMR Minden, LP had income from rent charged to tenants of

                                         4
      the property. KMR Minden had expenses for the mortgage on the
      property, fire and hazard insurance, flood insurance, management
      company fees, employee salaries, electricity service, water and sewer
      service, trash collection service, telephone and internet service, and
      maintenance costs, eviction costs and make ready costs. Without
      paying these expenses, the property would have been foreclosed by
      the mortgage company, sued by employees for non-payment of
      wages, had utilities cut off and unable to operate, and/or been unable
      to operate in a safe manner for the public and its tenants. The amount
      of taxes due significantly exceeded the available funds for the next
      few months. As of March 2012, the owner was still unable to operate
      at a profit that would allow for the taxes to be paid. As a result,
      several members of the . . . General Partner entity, CSP Development,
      LLC, including myself, made loans to KMR Minden, LP in order to
      allow the taxes to be paid and other operating expenses met on or
      around April 9, 2012. As soon as the funds became available from the
      loans made by general partner members, the taxes and all penalties
      and interest were paid. KMR Minden LP would have paid the taxes
      timely had the funds been available. KMR Minden LP would not
      have willingly incurred penalties and interest that were in excess of
      10% of the base tax had the funds been available.

      The trial court held a hearing on HCAD’s plea to the jurisdiction, at which

Ray testified. Ray testified that he is one of six members of KMR Minden’s

general partner and one of three involved with the day-to-day activities of KMR

Minden.     He acknowledged that the subject property is an income-producing

property.   He stated that KMR Minden was solvent around the time of the

delinquency date and that it received rental income from the tenants on the

property on a monthly basis, but that it was also having financial difficulties

because the rental income was not enough to cover the expenses needed to

maintain the property. Three of the individual members occasionally contributed



                                        5
their own funds to cover expenses, first in October 2011 and then again in April

2012. None of the funds contributed in October were specifically allocated for tax

purposes because, at that time, the members believed they would have enough

funds to be able to pay the property taxes by the end of January.

      Ray testified generally regarding the various expenses for the property, such

as the mortgage, the utility bills, and the office staff’s salaries, and the

consequences that could occur from those expenses not being paid, such as

foreclosure and utilities being shut off. Ray stated that at the end of January 2012,

KMR Minden only had about $1,500 in its bank account, which was not enough to

cover its expenses. He testified that KMR Minden was not financially able to pay

the assessed taxes for the 2011 tax year in a timely manner.

      On cross-examination, Ray agreed that in the months after KMR Minden

received its tax bill in the fall of 2011, it chose to pay other expenses instead of the

assessed taxes. Ray had the following exchange with HCAD’s counsel:

      [HCAD’s counsel]:          If you’d wanted to, if you’d really wanted
                                 to, you could’ve sat down and wrote a check
                                 and paid your taxes, couldn’t you?
      [Ray]:                     That would’ve implied a choice to not pay
                                 something else that would’ve caused
                                 immediate concern to the business.

Ray admitted that KMR Minden never attempted to work out a payment plan with

either the Harris County tax assessor-collector or with any of its other creditors.



                                           6
      The trial court ultimately granted HCAD’s plea to the jurisdiction and

denied KMR Minden’s “Motion for Substantial Compliance and/or Excusing

Prepayment.” KMR Minden timely requested that the trial court file findings of

fact and conclusions of law, and, when the trial court failed to do so, it requested

past due findings and conclusions, which the trial court still did not file. This

appeal followed, and this Court abated the appeal and ordered the trial court to file

findings and conclusions.

      The trial court issued findings and conclusions, and KMR Minden

challenges several of these findings and conclusions on appeal. KMR Minden

challenges the following findings of fact and conclusions of law:

      FINDINGS OF FACT
      10. KMR’s appeal was not accompanied by any statement in
      writing on the amount of ad valorem taxes it proposed to pay under
      Section 42.08(b) of the Texas Property Tax Code.
      17. The financial records offered by KMR showed it was making
      regular electronic payments to “Chk . . . 2235” in the following
      amounts:
         •   January 2012:      $4,629.76
         •   February 2012:     $6,764.99
         •   March 2012:        $8,077.28
         •   April 2012:        $3,781.60
      No explanation was given as to what these expenditures were for and
      why they could not be used to pay ad valorem taxes. No evidence or
      bank records were offered to show if these payments were also being
      paid prior to January 1, 2012, and why they could not have been used
      to pay ad valorem taxes prior to delinquency.



                                         7
18. The evidence shows that KMR had sufficient funds to timely
pay its ad valorem taxes, but chose to pay other bills instead.
Therefore, KMR voluntarily elected not to pay its ad valorem taxes
prior to delinquency.
19. Three partners of the General Partner of KMR-Minden LP
(Chuck Hoskins, Frances Neubig, and Scott A. Ray) loaned KMR a
total of $30,000.00 in April of 2012. No credible evidence was
offered as to why these partners could not have loaned funds to KMR
prior to the delinquency date for paying its ad valorem taxes.
CONCLUSIONS OF LAW
2.    KMR had the burden of proof to show that it was financially
unable to pay any portion of its ad valorem taxes prior to the
delinquency date and that it was excused from substantially
complying with Section 42.08(b) of the Texas Property Tax Code.
5.     KMR failed to substantially comply with subsection (d) [of
Section 42.08] because the evidence showed that KMR had sufficient
funds to pay the ad valorem taxes prior to delinquency, but failed to
do so.
6.     KMR failed to substantially comply with subsection (d)
because the partners could have, but did not, pay the ad valorem taxes
prior to delinquency.
7.    Section 42.08’s requirement to pay taxes prior to delinquency
does not unreasonably deny KMR access to the courts because KMR
was solvent and had sufficient funds or access to funds from its
partners to pay the ad valorem taxes prior to delinquency.
8.     Substantial compliance with the prepayment requirements and
the inability to pay requirements set forth in Section 42.08(b) and (d)
of the Texas Property Tax Code for challenging property tax valuation
is a jurisdictional prerequisite to the District Court’s subject-matter
jurisdiction.
13. Section 42.08(b-1) requires a property owner who elects to file
the amount of ad valorem taxes due on the portion of the taxable
property that is not in dispute to file with the appeal a statement in
writing of the amount of the taxes the property owner proposes to pay.



                                  8
15. The portions of the bank statements submitted by KMR to show
a lack of funds available to the property owner to pay any ad valorem
taxes prior to the delinquency date, were too limited in time to show
that the property owner had no funds available to pay any amount of
ad valorem taxes at any time before the delinquency date.
16. The bank statements submitted by KMR with its Motion
showed funds were in the property owner’s bank account during the
thirty (30) days before the delinquency date and showed a previous
balance in the account from the prior month. There was no credible
evidence explaining why those funds were not used to make any
payment on the ad valorem taxes due.
17. Evidence contained in KMR’s Exhibit “A” showed funds were
in the property owner’s bank account during the thirty (30) days
before the due date of January 31, 2012, including deposits totaling
$14,559.00. There was no credible evidence that some portion of
those funds could not have been available to pay some part of the ad
valorem taxes due.
18. The evidence submitted by KMR did not excuse it from paying
any portion of the 2011 ad valorem taxes at any time prior to the
delinquency date of February 1, 2012.
20. KMR did not substantially comply with Texas Property Tax
Code Section 42.08(d) because the Oath of Inability to Pay and the
documents submitted with the Oath did not demonstrate an inability to
pay and, in fact, showed funds were available and no notice was
provided to advise the taxing authority that the owner would not be
paying the due ad valorem taxes before the delinquency date.
21. Requiring prepayment prior [to] the delinquency date of
February 1, 2012 of some amount of ad valorem taxes on the evidence
in this case would not constitute an unreasonable restraint on KMR’s
access to the courts because the evidence fails to show an inability to
pay and there is evidence that funds were available.
22. The payment by KMR of ad valorem taxes after the
delinquency date absent evidence of an inability to pay any amount at
any time before the delinquency date in combination with KMR’s
failure to file a sufficient Oath of Inability to Pay, the submission of
documents inconsistent with an inability to pay, the failure of KMR to


                                   9
      file a written election and a statement of the amount of ad valorem
      taxes it proposed to pay and KMR[’s] failure to enter into an
      installment payment plan demonstrates there was not substantial
      compliance with either Section 42.08(b) or (d) of the Texas Property
      Tax Code.

                                 Standard of Review

      Compliance with Tax Code section 42.08’s prepayment requirement is “a

jurisdictional prerequisite to [the] district court’s subject matter jurisdiction to

determine property owner’s rights.” 2 U. Lawrence Boze’ & Assocs., P.C. v. Harris

Cnty. Appraisal Dist., 368 S.W.3d 17, 23 (Tex. App.—Houston [1st Dist.] 2011,

no pet.) (quoting Lawler v. Tarrant Appraisal Dist., 855 S.W.2d 269, 271 (Tex.

App.—Fort Worth 1993, no writ)).           Whether a trial court has subject matter

jurisdiction is a question of law that we review de novo. See Mayhew v. Town of

Sunnyvale, 964 S.W.2d 922, 928 (Tex. 1998); U. Lawrence Boze’ & Assocs., 368

S.W.3d at 23; see also Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217,


2
      In its sixth issue, KMR Minden argues that the trial court erroneously granted
      HCAD’s plea to the jurisdiction because section 42.08 is not a jurisdictional
      prerequisite to a suit for judicial review, and Tax Code section 42.21(a), governing
      the timing of filing a petition for judicial review and with which KMR Minden
      complied, is the only statutory provision that grants jurisdiction to the district
      court. We have repeatedly held that section 42.08 is a jurisdictional prerequisite to
      suit and overruled this argument. See Welling v. Harris Cnty. Appraisal Dist., ---
      S.W.3d ---, No. 01-11-00874-CV, 2014 WL 503781, at *2, 7 (Tex. App.—
      Houston [1st Dist.] Feb. 4, 2014, no pet. h.); Palaniappan v. Harris Cnty.
      Appraisal Dist., --- S.W.3d ---, No. 01-11-00344-CV, 2013 WL 6857983, at *3, 8
      (Tex. App.—Houston [1st Dist.] Dec. 31, 2013, no pet. h.); U. Lawrence Boze’ &
      Assocs., P.C. v. Harris Cnty. Appraisal Dist., 368 S.W.3d 17, 23 (Tex. App.—
      Houston [1st Dist.] 2011, no pet.). We therefore overrule KMR Minden’s sixth
      issue.

                                           10
226, 228 (Tex. 2004) (holding that we review trial court’s ruling on plea to

jurisdiction de novo).

      If a plea to the jurisdiction challenges the existence of jurisdictional facts,

we consider relevant evidence submitted by the parties when necessary to resolve

the jurisdictional issues presented. Carter v. Harris Cnty. Appraisal Dist., 409

S.W.3d 26, 30 (Tex. App.—Houston [1st Dist.] 2013, no pet.). “When a challenge

to the existence of jurisdictional facts does not implicate the merits of the case and

the facts are disputed, the court must make the necessary fact findings to resolve

the jurisdictional issue.” Id. (citing Miranda, 133 S.W.3d at 226 (“Whether a

district court has subject matter jurisdiction is a question for the court, not a jury, to

decide, even if the determination requires making factual findings, unless the

jurisdictional issue is inextricably bound to the merits of the case.”)).

      When conducting a legal sufficiency review, we credit favorable evidence if

a reasonable fact-finder could do so and disregard contrary evidence unless a

reasonable fact-finder could not. See City of Keller v. Wilson, 168 S.W.3d 802,

827 (Tex. 2005); Brown v. Brown, 236 S.W.3d 343, 348 (Tex. App.—Houston [1st

Dist.] 2007, no pet.). We consider the evidence in the light most favorable to the

finding under review and we indulge every reasonable inference that would

support the finding. City of Keller, 168 S.W.3d at 822. In a factual sufficiency

review, we consider and weigh all of the evidence and set aside the finding only if



                                           11
it is so contrary to the overwhelming weight of the evidence as to be clearly wrong

and unjust. See Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986) (per curiam);

Arias v. Brookstone, L.P., 265 S.W.3d 459, 468 (Tex. App.—Houston [1st Dist.]

2007, pet. denied).

      We review a trial court’s conclusions of law as a legal question. BMC

Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002).             If we

determine that a conclusion of law is erroneous but the trial court rendered the

proper judgment, the erroneous conclusion of law does not require reversal. Id.;

see also City of Austin v. Whittington, 384 S.W.3d 766, 793 n.10 (Tex. 2012) (“We

may review conclusions of law to determine their correctness. But we will not

reverse an erroneous conclusion of law if the trial court rendered the proper

judgment.”).

                      Substantial Compliance with Section 42.08

      In its first, second, third, fourth, and fifth issues, KMR Minden contends that

the trial court erred in concluding that KMR Minden had not established an

inability to pay the assessed taxes by the delinquency date and in granting HCAD’s

plea to the jurisdiction.

      A taxpayer owes a continuing obligation to pay taxes on its property.

Atascosa Cnty. v. Atascosa Cnty. Appraisal Dist., 990 S.W.2d 255, 258 (Tex.

1999); U. Lawrence Boze’ & Assocs., 368 S.W.3d at 24. Tax Code Chapter 41



                                         12
entitles a property owner to file an administrative protest of certain actions with the

appraisal review board, including the determination of the appraised value of the

taxpayer’s property. See TEX. TAX CODE ANN. § 41.41(a) (Vernon 2008); U.

Lawrence Boze’ & Assocs., 368 S.W.3d at 24.

      Tax Code Chapter 42 governs suits for judicial review of appraisal review

board orders. See TEX. TAX CODE ANN. §§ 42.01–.43 (Vernon 2008 & Supp.

2013). A property owner is entitled to seek judicial review of an appraisal review

board order determining, among other things, a protest by the property owner

pursuant to Chapter 41. See id. § 42.01(a)(1)(A) (Vernon Supp. 2013). Section

42.08(b) requires:

      Except as provided in Subsection (d), a property owner who appeals
      as provided by this chapter must pay taxes on the property subject to
      the appeal in the amount required by this subsection before the
      delinquency date or the property owner forfeits the right to proceed to
      a final determination of the appeal. The amount of taxes the property
      owner must pay on the property before the delinquency date to
      comply with this subsection is the lesser of
          (1) the amount of taxes due on the portion of the taxable
              value of the property that is not in dispute; or
          (2) the amount of taxes due on the property under the order
              from which the appeal is taken. 3




3
      The current version of the statute, applicable to proceedings pending on or filed on
      or after June 14, 2013, allows a property owner to comply with section 42.08(b)
      by paying “the amount of taxes imposed on the property in the preceding tax
      year.” TEX. TAX CODE ANN. § 42.08(b) (Vernon Supp. 2013).

                                           13
Act of May 12, 1997, 75th Leg., R.S., ch. 203, 1997 Tex. Gen. Laws 1070

(amended 2013) (current version at TEX. TAX CODE ANN. § 42.08(b) (Vernon

Supp. 2013)). If the property owner elects to pay the amount of taxes due on the

portion of the taxable value that is not in dispute, the appeal must be accompanied

by “a statement in writing of the amount of taxes the property owner proposes to

pay.” See TEX. TAX. CODE ANN. § 42.08(b-1).

      Generally, with some exceptions not applicable in this case, “taxes are due

on receipt of the tax bill and are delinquent if not paid before February 1 of the

year following the year in which imposed.” Id. § 31.02(a) (Vernon 2008); see also

id. § 31.04 (Vernon 2008) (providing that delinquency date may be postponed in

certain circumstances). “Courts have repeatedly held that if the property owner

does not pay any portion of the assessed taxes by the delinquency date, even if it

later pays some or all of the taxes after the due date, the property owner has not

substantially complied with section 42.08(b).”      Carter, 409 S.W.3d at 30–31

(quoting U. Lawrence Boze’ & Assocs., 368 S.W.3d at 27); J.C. Evans Constr. Co.

v. Travis Cent. Appraisal Dist., 4 S.W.3d 447, 451 (Tex. App.—Austin 1999, no

pet.). In this case, it is undisputed that KMR Minden did not pay any portion of

the assessed taxes prior to the delinquency date, and it does not contend on appeal

that it substantially complied with subsection 42.08(b).

      Subsection 42.08(d) provides an exception to the prepayment requirement:



                                         14
      After filing an oath of inability to pay the taxes at issue, a party may
      be excused from the requirement of prepayment of tax as a
      prerequisite to appeal if the court, after notice and hearing, finds that
      such prepayment would constitute an unreasonable restraint on the
      party’s right of access to the courts. On the motion of a party and
      after the movant’s compliance with Subsection (e), the court shall
      hold a hearing to review and determine compliance with this section,
      and the reviewing court may set such terms and conditions on any
      grant of relief as may be reasonably required by the circumstances. If
      the court determines that the property owner has not substantially
      complied with this section, the court shall dismiss the pending action.
      If the court determines that the property owner has substantially but
      not fully complied with this section, the court shall dismiss the
      pending action unless the property owner fully complies with the
      court’s determination within 30 days of the determination.

TEX. TAX CODE ANN. § 42.08(d); see id. § 42.08(e) (requiring movant, at least

forty-five days before hearing to determine substantial compliance, to mail notice

of hearing by certified mail to collector for each taxing unit that imposes taxes on

property).

      Subsection 42.08(d) does not define “the required content of the oath of

inability to pay” or “the evidentiary standards to be met by a taxpayer seeking to be

excused from prepayment under that subsection.” Carter, 409 S.W.3d at 35.

Subsection 42.08(d) is likewise silent regarding the “items a taxpayer must prove

to show that he was financially unable to pay the taxes on the due date.” Id. at 36.

A property owner avoids forfeiting its right to a final determination of its suit if it

substantially complies with either subsection 42.08(b), subsection 42.08(d), or

some combination of both. See U. Lawrence Boze’ & Assocs., 368 S.W.3d at 26



                                          15
(quoting J.C. Evans Constr., 4 S.W.3d at 450). “‘Substantial compliance’ means

that one has performed the ‘essential requirements’ of a statute and it ‘excuse[s]

those deviations from the performance required by statute which do not seriously

hinder the legislature’s purpose in imposing the requirement.’”            Carter, 409

S.W.3d at 32 (quoting U. Lawrence Boze’ & Assocs., 368 S.W.3d at 27).

      Because HCAD sought dismissal of the suit for lack of subject matter

jurisdiction, it had the burden to establish that KMR Minden did not substantially

comply with section 42.08. See id.; Lee v. El Paso Cnty., 965 S.W.2d 668, 671

(Tex. App.—El Paso 1998, pet. denied) (“The party seeking dismissal for lack of

jurisdiction maintains the burden of proof.”).       Whether a property owner has

substantially complied with section 42.08 is a factual matter to be determined by

the trial court on a case-by-case basis. See U. Lawrence Boze’ & Assocs., 368

S.W.3d at 26; J.C. Evans Constr., 4 S.W.3d at 449. We construe tax statutes

strictly against the taxing authority and liberally in favor of the taxpayer, and, if the

statute is designed to relieve a property owner from the harshness of forfeiture, we

liberally construe the statute to accomplish that purpose. See U. Lawrence Boze’ &

Assocs., 368 S.W.3d at 26.

      This Court has addressed whether a taxpayer presented sufficient evidence

to demonstrate an inability to pay the assessed taxes on three occasions in the past

year. In Carter, Carter presented bank records from January and February 2011



                                           16
and testimony indicating that the balance of his checking account was $1,144.90

on January 27, 2011, and $886.23 on February 2, 2011, and that the assessed taxes

on his property totaled $54,835.95. 409 S.W.3d at 36. This Court stated that

“[t]he record contains no evidence calling into question the veracity of Carter’s

testimony regarding his inability to pay the taxes” and ultimately concluded that

Carter demonstrated by a preponderance of the evidence that he was financially

unable to pay the assessed taxes by the delinquency date. Id.

      This Court next addressed this issue in Palaniappan v. Harris County

Appraisal District, --- S.W.3d ---, No. 01-11-00344-CV, 2013 WL 6857983 (Tex.

App.—Houston [1st Dist.] Dec. 31, 2013, no pet. h.). In that case, Palaniappan

argued that the amount of taxes on the undisputed value of the property totaled

around $7,000, and he paid $1,800 before the delinquency date and the remainder

in installments over the next several months. Id. at *1, 2. Palaniappan’s bank

records, however, reflected that he had over $23,000 cash on hand as of the

delinquency date, over $10,000 more than the amount of the assessed taxes. Id. at

*7. This Court thus concluded that, unlike in Carter, evidence presented “call[ed]

into question the veracity of the property owner’s testimony regarding his inability

to pay the taxes prior to the delinquency date.”        Id.     This Court held that

Palaniappan failed to demonstrate by a preponderance of the evidence that he was

financially unable to pay the assessed taxes by the delinquency date. Id.



                                        17
      This Court most recently considered this issue in Welling v. Harris County

Appraisal District, --- S.W.3d ---, No. 01-11-00874-CV, 2014 WL 503781 (Tex.

App.—Houston [1st Dist.] Feb. 4, 2014, no pet. h.). Welling submitted bank

records that demonstrated a negative account balance on January 31, 2011, but a

positive account balance at the beginning of January 2011. Id. at *1. This Court

noted that Welling was not required to pay the full amount of assessed taxes by the

delinquency date, as he could have elected to pay the lesser of that amount or the

taxes on the portion of the appraised value not in dispute, but Welling presented no

evidence relevant to which was the lesser of the two amounts or whether he also

would not have been able to pay an amount less than the full amount. Id. at *5.

This Court also noted that tax bills are mailed by October 1, are due on receipt of

the bill, and become delinquent only if not paid by the following February 1. Id. at

*6 (citing TEX. TAX CODE ANN. §§ 31.02(a), 31.01). Welling presented bank

records only for the months immediately preceding and following the delinquency

date; he presented no evidence concerning whether he was unable to pay at least

the undisputed portion of the taxes during October, November, or December 2010.

Id. at *6. Welling also presented no evidence why a portion of the almost $73,000

deposited into his bank account during January could not have been used to pay at

least some portion of the tax bill. Id. This Court also considered the fact that

Welling knew as early as October that he would have difficulty making the tax



                                        18
payment, but he did not inform the Harris County tax assessor/collector of this

inability to pay at any point before the delinquency date. Id. This Court therefore

concluded that Welling failed to demonstrate an inability to pay the assessed taxes.

Id.

      Here, KMR Minden argues that it filed a proper oath of inability to pay the

assessed taxes and supported this oath with evidence, including financial records

and the testimony of Scott Ray, a member of KMR Minden’s general partner. Ray

averred that KMR Minden was financially unable to pay the assessed taxes as of

the delinquency date. As of January 31, 2012, the last day before the delinquency

date, KMR Minden had a $12,039.16 tax bill but only $1,523.24 in its bank

account.   Ray generally listed KMR Minden’s expenses, including mortgage

payments, insurance payments, management company fees, employee salaries,

utility services, and other costs and fees. He stated the consequences of failing to

make those payments, such as foreclosure or cessation of utility services, and

stated, “The amount of taxes due significantly exceeded the available funds for the

next few months.” Because KMR Minden still was not operating at a profit as of

March 2012, Ray and two other members of KMR Minden’s general partner

loaned money to KMR Minden to cover the delinquent tax liability. The taxes

were paid in full, plus penalties and interest, on April 19, 2012. Ray averred,

“KMR Minden LP would have paid the taxes timely had the funds been available.



                                        19
KMR Minden LP would not have willingly incurred penalties and interest that

were in excess of 10% of the base tax had the funds been available.”

      KMR Minden submitted three promissory notes, one each from Ray and two

other members of KMR Minden’s general partner, each loaning KMR Minden

$10,000 around April 1, 2012. KMR Minden also submitted statements from its

account at Chase Bank. The statement for December 31, 2011, through January

31, 2012, reflected a beginning balance of $5,028.75, deposits of $14,559, and

withdrawals of $18,064.51,4 resulting in an ending balance of $1,523.24 as of

January 31, 2012. The statement for February 1, 2012, through February 29, 2012,

reflected a beginning balance of $1,523.24, deposits of $20,407, and withdrawals

of $19,352.33, resulting in an ending balance of $2,577.91. The statement for

March 1, 2012, through March 31, 2012, reflected a beginning balance of

$2,577.91, deposits of $21,549, and withdrawals of $22,063.73, resulting in an

ending balance of $2,063.18. KMR Minden also attached a tax receipt, which

demonstrated that it paid the assessed taxes in full on April 19, 2012.




4
      Five of these withdrawals, totaling $4,629.76, were transfers to another checking
      account. In finding of fact 17, the trial court found that KMR Minden made
      transfers to this particular account in similar amounts during February, March, and
      April 2012, but that KMR Minden provided no explanation for the purpose of
      these expenditures or why it could not have used these funds, which ultimately
      totaled $23,253.63, to pay the assessed taxes. Ray did not discuss these transfers
      during his testimony at the hearing.

                                          20
      Ray also testified at the hearing on HCAD’s plea to the jurisdiction and on

KMR Minden’s motion to determine substantial compliance with subsection

42.08(d). Ray testified that the property at issue is an income-producing property

for KMR Minden. He stated that KMR Minden was solvent during the end of

2011 and beginning of 2012. He also, however, testified that KMR Minden had

financial difficulties at that time and that its income generated from rental charges

did not cover its expenses. KMR Minden attempted to raise money on multiple

occasions by cash calls and loans from the individual members of its general

partner. Three of the six members were able to loan KMR Minden $5,000 each in

October 2011, but none of those funds were allocated for the payment of property

taxes. Ray testified that, at that point in time, KMR Minden anticipated being able

to pay its property taxes by the delinquency date.

      According to Ray, the October 2011 loans from the partners did not solve

KMR Minden’s financial woes, and although KMR Minden continued to receive

rental income throughout November and December 2011 and January 2012, this

income was not enough to cover all expenses plus the property taxes. Ray testified

that KMR Minden’s expenses included a mortgage, utilities for the property, staff

salaries, and maintenance costs, and he also testified that if those expenses were

not timely paid, KMR Minden would suffer severe consequences. Ray stated that,

at the end of January 2012, KMR Minden had approximately $1,500 in its bank



                                         21
account, which was not enough to cover the $12,039.18 tax bill. Ray further stated

that KMR Minden was not financially able to pay its 2011 taxes in a timely

manner. KMR Minden began soliciting additional loans from the members in

December 2011 or January 2012, but it did not receive those funds until April

2012, and it paid the delinquent tax bill immediately thereafter.

      On cross-examination, Ray agreed with HCAD’s counsel that KMR Minden

received its tax bill in the fall of 2011 and that, during that time, KMR Minden

paid other bills instead of the tax bill. Ray had the following exchange with

HCAD’s counsel:

      [HCAD’s counsel]:          If you’d wanted to, if you’d really wanted
                                 to, you could’ve sat down and wrote a check
                                 and paid your taxes, couldn’t you?
      [Ray]:                     That would’ve implied a choice to not pay
                                 something else that would’ve caused
                                 immediate concern to the business.

Ray agreed that KMR Minden never tried to work out a payment plan with its

other creditors, and it never tried to enter into an installment plan with the Harris

County tax assessor/collector.     Ray also agreed that KMR Minden received

sufficient deposits in the months leading up to the delinquency date to pay its tax

bill, “[i]f [KMR Minden] chose to pay nothing else.”

      We conclude that this case is most analogous to Welling, a case in which this

Court found that the property owner did not demonstrate an inability to pay even



                                         22
though he had a negative bank account balance on the delinquency date. Id. at *5.

Here, KMR Minden had a positive account balance as of the delinquency date,

albeit not enough funds to cover the entire tax bill. KMR Minden presented no

bank records demonstrating an inability to pay the assessed taxes for October

through December 2011.        These are, contrary to KMR Minden’s assertions,

relevant to the question of inability to pay, as property owners begin receiving their

tax bills, which are due on receipt, in October. See id. at *6. Although KMR

Minden presented evidence that it had expenses such as the mortgage, utilities,

employee salaries, and maintenance costs, and that it lacked the funds to satisfy

these expenses plus the assessed taxes, the evidence also demonstrated that on

several occasions each month KMR Minden transferred several thousand dollars to

a specific checking account. As the trial court found in finding of fact number 17,

KMR Minden made no attempt to explain these transactions, and it presented no

evidence of the purpose of these transfers and no evidence that these funds could

not be used to pay the tax bill instead. See id. (“Moreover, the bank records show

that $72,562.29 was deposited into the bank account during the month of January

2011, and Welling introduced no evidence regarding why some portion of this

money was not, or could not have been, used for prepayment of some portion of

the tax bill.”).




                                         23
      Also as in Welling, KMR Minden presented no evidence concerning what it

considered to be the undisputed value of the property, the amount of taxes on this

value, whether this amount was less than the amount of taxes actually assessed, or

whether it would have been unable to pay the lesser amount. 5 See id. at *5.

Finally, Ray testified that KMR Minden had financial difficulties all throughout

the fall of 2011. He admitted that KMR Minden made no attempt to contact the

Harris County tax assessor/collector regarding its inability to pay prior to the

delinquency date. Id. at *6.

      We conclude that the trial court’s findings and conclusions that KMR

Minden failed to demonstrate an inability to pay its taxes and that section 42.08’s

prepayment requirement did not constitute an unreasonable restraint on its access

to the courts were supported by evidence in the record. We therefore hold that the

trial court did not err in granting HCAD’s plea to the jurisdiction.

      We overrule KMR Minden’s first, second, third, fourth, and fifth issues.6


5
      If a property owner elects to prepay the taxes on the undisputed value of the
      property, instead of on the full appraised value, the owner must file with its appeal
      a statement of the amount of taxes it proposes to pay. See TEX. TAX. CODE ANN.
      § 42.08(b-1) (Vernon Supp. 2013). KMR Minden did not do this. However,
      failure to do so does not constitute jurisdictional error. See id. Thus, KMR
      Minden, upon discovering that it was unable to pay the taxes in full by the
      delinquency date, could have paid the taxes on the undisputed value of the
      property, and its failure to file the required statement contemporaneous with its
      appeal would not provide grounds for dismissal for lack of jurisdiction.
6
      Because we conclude that the trial court properly granted HCAD’s plea to the
      jurisdiction, we need not address KMR Minden’s ninth, tenth, and eleventh issues,

                                           24
                     Challenges to Specific Findings of Fact

      In its eighth issue, KMR Minden challenges the sufficiency of the evidence

supporting four specific findings of fact: findings 10, 17, 18, and 19. We have

already addressed finding 17 and determined that evidence in the record supports

this finding.

      In finding 10, the trial court found, “KMR’s appeal was not accompanied by

any statement in writing on the amount of ad valorem taxes it proposed to pay

under Section 42.08(b) of the Texas Property Tax Code.” KMR Minden contends

that this finding “is clearly refuted by the Plaintiff’s Original Petition in paragraph

V.” Paragraph V of KMR Minden’s original petition states: “Pursuant to Section

42.08 Plaintiff intends on timely paying all taxes due on the property, or the taxes

due on the undisputed portion of the value of the property, or, if unable to timely

pay the lesser of these amounts, Plaintiff requests relief from the Court.”

      Subsection 42.08(b-1) applies only when a property owner elects to pay the

amount of taxes due on the portion of the taxable value of the property not in

dispute and provides, “The appeal filed by the property owner must be

accompanied by a statement in writing of the amount of taxes the property owner

proposes to pay.” TEX. TAX CODE ANN. § 42.08(b-1). KMR Minden made only a

      which challenge thirteen conclusions of law. See BMC Software Belg., N.V. v.
      Marchand, 83 S.W.3d 789, 794 (Tex. 2002) (holding that if appellate court
      determines that conclusion of law is erroneous but that trial court rendered proper
      judgment, erroneous conclusion of law does not require reversal).

                                          25
general, blanket statement in its original petition that it would either pay all of the

assessed taxes, pay the taxes on the undisputed portion of the property’s value, or

seek relief from the trial court if it could not pay the lesser amount. KMR Minden

never elected to pay taxes only on the undisputed portion of the appraised value,

and it never made a statement regarding the amount of taxes that it proposed to

pay. Finding 10 is therefore supported by the record. 7

      In finding 18, the trial court found, “The evidence shows that KMR had

sufficient funds to timely pay its ad valorem taxes, but chose to pay other bills

instead. Therefore, KMR voluntarily elected not to pay its ad valorem taxes prior

to delinquency.” The bank records submitted to the trial court and Ray’s testimony

at the hearing demonstrated that KMR Minden was solvent: it was an ongoing

business that received rental income from tenants each month. The bank records

presented demonstrated a positive balance at the end of each month. Ray testified

generally about KMR Minden’s expenses and offered explanations as to why it

chose to pay those expenses instead of its tax bill before the delinquency date, but

the evidence reflects that KMR Minden had available funds that it used to pay


7
      We also note that non-compliance with subsection 42.08(b-1) does not affect the
      determination of whether the property owner substantially complied with
      subsection 42.08(d). See Carter v. Harris Cnty. Appraisal Dist., 409 S.W.3d 26,
      34 (Tex. App.—Houston [1st Dist.] 2013, no pet.) (“Because he did not elect to
      pay only the undisputed amount, Carter was required, by default, to pay the full
      amount of taxes by the delinquency date, or to comply with subsection 42.08(d).”)
      (emphasis in original).

                                          26
other expenses and that it did not set aside to satisfy its tax liability. The record

therefore supports finding 18.

         In finding 19, the trial court found, “Three partners of the General Partner of

KMR-Minden LP (Chuck Hoskins, Frances Neubig, and Scott A. Ray) loaned

KMR a total of $30,000 in April of 2012. No credible evidence was offered as to

why these partners could not have loaned funds to KMR prior to the delinquency

date for paying its ad valorem taxes.” KMR Minden’s own evidence attached to its

motion to determine substantial compliance supports the first sentence of finding

19. KMR Minden attached three promissory notes between KMR Minden and

three of the members of its general partner, in which the members promised to loan

KMR Minden $10,000 each. The members signed each of these promissory notes

in the beginning of April 2012. Ray testified that KMR Minden began soliciting

additional funds from the members in December or January, “when we began to

understand what the [financial] situation was,” but he gave no rationale as to why

the members did not make the loans until April other than to state that it took time

to “build a business case” to convince the members why they needed to make

another loan to KMR Minden so soon after the ones they made in October 2011.

The trial court, as the fact finder, had the opportunity to observe Ray’s demeanor at

the hearing, and it found his testimony not credible, as it was within its discretion

to do.



                                            27
      KMR Minden argues on appeal that this finding “attempt[s] to muddle the

distinction between the Appellant with the individuals who are limited partners in

the venture” and notes that the Tax Code requires that the property owner—which,

here, is the entity KMR Minden, not the individual members—demonstrate an

inability to pay the assessed taxes. Finding 19 does not, however, “muddle the

distinction” between KMR Minden and the members of its general partner. This

finding instead merely identifies the members as a source of income for KMR

Minden and finds that KMR Minden presented no credible evidence for why it

could not have obtained a loan from these three members, all of whom were

willing to loan money to the entity, before the delinquency date. This finding in

itself does not require the individual members to also demonstrate their inability to

pay KMR Minden’s tax liability. We conclude that the record supports finding 19.

      We overrule KMR Minden’s eighth issue.

                                    Conclusion

      We affirm the judgment of the trial court.         All pending motions are

dismissed as moot.




                                              Evelyn V. Keyes
                                              Justice

Panel consists of Justices Keyes, Sharp, and Huddle.

                                         28
