                IN THE SUPREME COURT OF TEXAS
                                          444444444444
                                             NO . 11-0650
                                          444444444444


                         NED B. MORRIS III, ET AL., PETITIONERS,
                                                   v.


         HOUSTON INDEPENDENT SCHOOL DISTRICT, ET AL., RESPONDENTS

           4444444444444444444444444444444444444444444444444444
                             ON PETITION FOR REVIEW FROM THE
                      COURT OF APPEALS FOR THE FIRST DISTRICT OF TEXAS
           4444444444444444444444444444444444444444444444444444


                                           PER CURIAM


        In this case we must decide whether taxpayers who were sued for nonpayment of property

taxes lost their entitlement to contest liability based on non-ownership when the taxing authorities

non-suited after the taxpayers paid the disputed taxes under protest. We hold that they did not.

Accordingly, the court of appeals erred in reversing the trial court’s denial of the taxing authorities’

plea to the jurisdiction. We reverse the court of appeals’ judgment and remand to the trial court.

        The Harris County Appraisal District’s appraisal roll listed the petitioners, Ned B. Morris III,

Daniel W. Shipper, Patrick A. Shipper, Anita Gibson, Mary Ann Moseley, Deborah L. Moore, Linda

Shipper Bender, Caroline D. Armstrong, Pamela K. Moore, Joyce Salter, and James R. Hunt

(collectively, “Taxpayers”) as the owners of 10.34 acres of land in Harris County, of which the

Taxpayers actually owned 9.38 acres. They never administratively challenged the inclusion of the

0.96 acres they did not own. In 2004, the Houston Independent School District, Harris County, City
of Houston, Harris County Education Department, Port of Houston Authority of Harris County,

Harris County Flood Control District, Harris County Hospital District, and the Houston Community

College System1 sued the Taxpayers for twenty years of unpaid taxes on the 10.34 acres. The taxing

authorities placed a lien on the properties to secure payment. As the Taxpayers only owned 9.38 of

the 10.34 acres, they asserted their lack of ownership as an affirmative defense under section

42.09(b)(1) of the Tax Code. While the suit was pending, the Taxpayers, under protest, paid the

taxes on the entire 10.34 acres because the taxing entities would not accept payment on only the 9.38

acres. The Taxpayers did so in order to stop further penalties and interest from accruing, to avoid

foreclosure on the 9.38 acres they did own, and to avoid breaching a contract to sell the 9.38 acres.

They then filed a counterclaim for a refund of the taxes, penalties, and interest they had paid on the

0.96 acres they did not own, totaling $180,000. Once the taxing entities received the payment, they

non-suited their claims and the district court realigned the parties, designating the Taxpayers as

plaintiffs.

         The taxing authorities filed a plea to the jurisdiction, asserting that the district court lacked

jurisdiction because the Taxpayers failed to exhaust administrative remedies as required by the Tax

Code. See TEX . TAX CODE § 42.09(a). The district court denied the plea. The taxing entities then

filed an interlocutory appeal, contending that the district court erred in denying their jurisdictional

plea.2


         1
             Morris’s petition for review also names the Harris County Education District as a respondent in this Court.


         2
         W hile we generally do not have jurisdiction over interlocutory appeals, the court of appeals rendered a final
judgment granting the taxing entities’ plea to the jurisdiction and dismissing the case.

                                                            2
        The court of appeals reversed and granted the plea to the jurisdiction. 355 S.W.3d 668, 671.

The court of appeals reasoned that after the realignment, the Taxpayers became plaintiffs so the

affirmative defense of non-ownership was no longer available under section 42.09(b)(1). Id. at 677;

TEX . TAX CODE § 42.09(b)(1). Since the only other means for bringing up non-ownership was a

protest before the appraisal review board under section 41.41(a)(7), and the Taxpayers brought no

timely protest, the court of appeals held that the trial court lacked jurisdiction due to the Taxpayers’

failure to exhaust administrative remedies. 355 S.W.3d at 677; TEX . TAX CODE § 41.41(a)(7). The

Taxpayers appealed, arguing that they were not stripped of their affirmative defense of non-

ownership when the taxing units non-suited and the Taxpayers were realigned as plaintiffs. We

agree and hold that the court of appeals erred in reversing the trial court’s order denying the taxing

authorities’ plea to the jurisdiction.

        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 §§ 41.01–43.04. Under section

42.09(a) of the Code, those procedures are exclusive and a taxpayer must exhaust the remedies

provided in order to raise most grounds of protest in defense of a suit to collect taxes or as a basis

for a claim for relief. Id. § 42.09(a). Section 42.09(b)(1), however, allows a person sued for

delinquent taxes to assert as an affirmative defense “that the defendant did not own the property on

which the tax was imposed” if the suit is to enforce personal liability. Id. § 42.09(b)(1).

        In reversing the trial court’s ruling, the court of appeals emphasized the distinction between

the Taxpayers’ assertion of non-ownership as an affirmative defense and non-ownership as the basis

for an affirmative claim for reimbursement of taxes paid under protest. That there is a distinction

                                                   3
between an affirmative defense and an affirmative claim for relief is beyond dispute. But the

technical distinction between the two is insignificant in this context. In section 42.09(b)(1), the

Legislature provided taxpayers a mechanism to avoid the imposition of tax liability for property they

do not own. Under the court of appeals’ reading of the statutory scheme, however, even persons who

were never provided an opportunity to pursue the administrative remedy provided in section

41.41(a)(7) of the Code would be unable to recoup taxes paid under protest after being sued for

delinquent taxes on property they did not own if the taxing authorities non-suited. Further, the court

of appeals’ construction of the statute discourages taxpayers’ compliance with section 42.08 of the

Tax Code, which requires prepayment of taxes under protest as a condition of judicial review; as the

Taxpayers in this case note, they would have been in a better position had they resisted payment and

pursued the litigation to the end, despite not availing themselves of administrative remedies.

       While Section 42.09(b)(1) refers to non-ownership as an affirmative defense, it evidences

the Legislature’s intention to provide taxpayers with an opportunity to avoid tax liability for property

that they do not own. See City of Pharr v. Boarder to Boarder Trucking Serv., Inc., 76 S.W.3d 803,

806 (Tex. App.—Corpus Christi 2002, pet. denied)(recognizing “that 42.09 makes [it] clear that the

legislature desires that the taxpayer ‘have available the defense that he did not own the property.’”).

Taxing statutes are construed strictly against the taxing authority and liberally for the taxpayer.

Bullock v. Statistical Tabulating Corp., 549 S.W.2d 166, 169 (Tex. 1977); Wilson Commc’ns, Inc.

v. Calvert, 450 S.W.2d 842, 844 (Tex. 1970). The court of appeals’ reading of the statute

contravenes that precept: it allows taxing authorities to thwart the Legislature’s intent by accepting

taxes paid under protest and then non-suiting, just as happened in this case.

                                                   4
       Accordingly, we hold that the Taxpayers did not lose their entitlement to contest tax liability

on the basis of non-ownership when the taxing units non-suited and the Taxpayers were realigned

as plaintiffs. Accordingly, we reverse the court of appeals’ judgment and remand to the trial court.



OPINION DELIVERED: October 26, 2012




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