                        COURT OF APPEALS
                         SECOND DISTRICT OF TEXAS
                              FORT WORTH

                             NO. 02-14-00188-CV


JACK COUNTY APPRAISAL                                             APPELLANT
DISTRICT

                                       V.

JACK COUNTY HOSPITAL                                                APPELLEE
DISTRICT


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          FROM THE 271ST DISTRICT COURT OF JACK COUNTY
                    TRIAL COURT NO. 13-07-097

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                                  OPINION

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      In two issues, Appellant Jack County Appraisal District (the Appraisal

District) appeals from the trial court’s order granting Appellee Jack County

Hospital District’s (the Hospital District) motion for summary judgment and

denying the Appraisal District’s motion for summary judgment. We affirm.
                                  Background

      The Hospital District is a political subdivision of the State of Texas. In

June 2011, the Hospital District entered into a lease agreement with Provident

Equipment Leasing, a division of Celtic Leasing Corporation, to lease a CT

scanner for use at Faith Community Hospital in Jacksboro, Texas. The lease

agreement provided that title to the CT scanner would remain in Provident and

that the Hospital District was required to pay all property taxes on the CT

scanner. The monthly rental payments were $10,788, and the lease agreement’s

initial term was for sixty months and could be extended in one-year intervals.

The lease agreement also gave the Hospital District the right to purchase the CT

scanner from Provident at the expiration of the lease term:

      Lessee may purchase, or renew the Lease for, all but not less than
      all of the Equipment subject to any Schedule, provided Lessee is not
      in default and upon proper written notification to Lessor,[1] as of the
      expiration of the Term of said Schedule. In the event Lessee notifies
      Lessor it elects to purchase the Equipment, the purchase price shall
      be the “Fair Market Value” of the Equipment. For the purpose of this
      Lease, “Fair Market Value” is defined as the total cost(s) it would
      take to replace the Equipment on an in-place, installed basis,
      including all current cost(s) and expense(s) for the purchase,
      assembly, installation, delivery, freight, consulting, training, site
      preparation[,] and any other services that would be required to
      render such Equipment fully installed, ready, and acceptable for use
      by an end user as of the termination of the Term. If Lessor and
      Lessee can[]not agree on a purchase price then the purchase price
      shall be determined by the average of two Senior Appraisers
      accredited by the American Society of Appraisers, one chosen by

      1
        The lease agreement required that the Hospital District notify Provident in
writing of its election to purchase the CT scanner at least six months, but not
more than twelve months, before the end of the lease term.

                                        2
      Lessor and one chosen by Lessee, both using the definition of Fair
      Market Value hereunder in determining their purchase price, the cost
      of which shall be borne by Lessee.

      In April 2012, Celtic Leasing rendered the CT scanner to the Appraisal

District. See Tex. Tax Code Ann. § 22.01 (West 2015). The Appraisal District

appraised the CT scanner at a value of $571,560 and sent notice of the

appraised value to Celtic Leasing. See id. § 25.19 (West 2015). Celtic Leasing

did not file a protest. The Appraisal District sent two tax bills to Celtic Leasing

totaling $19,578.71.   Celtic Leasing paid the taxes, and Provident billed the

Hospital District for them. The bill from Provident was the first notice the Hospital

District had received that the Appraisal District had appraised the CT scanner for

taxation. The Hospital District filed a protest with the Jack County Appraisal

Review Board, which was denied.

      The Hospital District appealed the Jack County Appraisal Review Board’s

decision to the district court, contending that the CT scanner was public property

and therefore tax exempt. See id. § 11.11(a), (h). (West 2015). The Hospital

District and the Appraisal District filed cross-motions for summary judgment. See

Tex. R. Civ. P. 166a(a)–(c). The Hospital District moved for summary judgment

on the grounds that the CT scanner was tax exempt under section 11.11

because it was used for public purposes and because the Hospital District was a

political subdivision of the state and the owner of the CT scanner for purposes of

application of the exemption. See Tex. Tax Code Ann. § 11.11(a), (h). The

Hospital District argued in the alternative that it was the owner of the CT scanner

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because the lease agreement created a security interest in the CT scanner in

favor of Provident, making the Hospital District the owner. The Hospital District

further argued that because the 2012 notice of appraised value was not delivered

to the Hospital District, it was denied due process, thereby voiding the tax

assessment.      The Appraisal District moved for summary judgment on the

grounds that the CT scanner was not exempt under section 11.11 because there

was no signed lease agreement between the Hospital District and Provident, and

even if there were a signed lease agreement, the CT scanner would not be tax

exempt because the Hospital District was not the owner of the CT scanner under

section 11.11.

      Without specifying the grounds upon which it relied, the trial court granted

the Hospital District’s motion, denied the Appraisal District’s motion, and ordered

the Appraisal District to “perform the ‘post-appeal administrative procedures’

found at Texas Property Tax Code, Chapter 42, Subchapter C, including, but not

limited to, removing the subject property from the District’s Appraisal Rolls for the

tax year(s) in question.” The Appraisal District appealed.

                               Standard of Review

      We review a summary judgment de novo. Travelers Ins. Co. v. Joachim,

315 S.W.3d 860, 862 (Tex. 2010). We consider the evidence presented in the

light most favorable to the nonmovant, crediting evidence favorable to the

nonmovant if reasonable jurors could, and disregarding evidence contrary to the

nonmovant unless reasonable jurors could not. Mann Frankfort Stein & Lipp

                                         4
Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009). We indulge every

reasonable inference and resolve any doubts in the nonmovant’s favor. 20801,

Inc. v. Parker, 249 S.W.3d 392, 399 (Tex. 2008).           A plaintiff is entitled to

summary judgment on a cause of action if it conclusively proves all essential

elements of the claim. See Tex. R. Civ. P. 166a(a), (c); MMP, Ltd. v. Jones, 710

S.W.2d 59, 60 (Tex. 1986). A defendant who conclusively negates at least one

essential element of a cause of action is entitled to summary judgment on that

claim. Frost Nat’l Bank v. Fernandez, 315 S.W.3d 494, 508 (Tex. 2010); see

Tex. R. Civ. P. 166a(b), (c).

      When both parties move for summary judgment and the trial court grants

one motion and denies the other, the reviewing court should review both parties’

summary-judgment evidence and determine all questions presented.               Mann

Frankfort, 289 S.W.3d at 848; see Myrad Props., Inc. v. Lasalle Bank Nat’l Ass’n,

300 S.W.3d 746, 753 (Tex. 2009).         The reviewing court should render the

judgment that the trial court should have rendered. Mann Frankfort, 289 S.W.3d

at 848.

                                   Discussion

      In its first issue, the Appraisal District argues that the trial court erred by

granting summary judgment for the Hospital District and by denying summary

judgment for the Appraisal District by holding that the CT scanner was owned by

the Hospital District, either legally or equitably, for the purpose of property



                                         5
taxation and, therefore, was tax exempt under tax code section 11.11(h) or

otherwise not subject to property taxation.

      All “tangible personal property” that is located in the taxing unit on the date

of valuation “for more than a temporary period” is taxable unless exempt by law.

Tex. Tax Code Ann. §§ 11.01, 21.02 (West 2015). Generally, property owned by

the state or a political subdivision of the state is exempt from taxation if the

property is used for public purposes. Id. § 11.11(a). Section 11.11(h) provides:

      For purposes of this section, tangible personal property is owned by
      this state or a political subdivision of this state if it is subject to a
      lease-purchase agreement providing that the state or political
      subdivision, as applicable, is entitled to compel delivery of the legal
      title to the property to the state or political subdivision, as applicable,
      at the end of the lease term. The property ceases to be owned by
      the state or political subdivision, as applicable, if, not later than the
      30th day after the date the lease terminates, the state or political
      subdivision, as applicable, does not exercise its right to acquire legal
      title to the property.

Id. § 11.11(h).

      This issue involves statutory construction, which we review de novo. See

CHCA Woman’s Hosp., L.P. v. Lidji, 403 S.W.3d 228, 231 (Tex. 2013).                 In

construing statutes, our primary objective is to give effect to the legislature’s

intent. Tex. Lottery Comm’n v. First State Bank of DeQueen, 325 S.W.3d 628,

635 (Tex. 2010) (citing Galbraith Eng’g Consultants, Inc. v. Pochucha, 290

S.W.3d 863, 867 (Tex. 2009)). We rely on the plain meaning of the text as

expressing legislative intent unless a different meaning is supplied by legislative

definition or is apparent from the context or the plain meaning leads to absurd


                                          6
results. Id. (citing City of Rockwall v. Hughes, 246 S.W.3d 621, 625–26 (Tex.

2008)). We presume that the legislature selected language in a statute with care

and that every word or phrase was used with a purpose in mind. Id. (citing In re

Caballero, 272 S.W.3d 595, 599 (Tex. 2008); Chastain v. Koonce, 700 S.W.2d

579, 582 (Tex. 1985)). We read statutes as a whole and interpret statutes to give

effect to “every sentence, clause, and word of a statute so that no part thereof

[will] be rendered superfluous.”   City of San Antonio v. City of Boerne, 111

S.W.3d 22, 29 (Tex. 2003) (quoting Spence v. Fenchler, 180 S.W. 597, 601

(1915)).

      In addition to the general principles that guide our construction of the tax

code, statutory tax exemptions are disfavored and are strictly construed against

the taxpayer and in favor of the taxing authority. N. Alamo Water Supply Corp. v.

Willacy Cty. Appraisal Dist., 804 S.W.2d 894, 899 (Tex. 1991). The burden of

proof for showing the exemption applies lies with the claimant.      See id.   An

exemption must affirmatively appear in the statute, and all doubts are resolved in

favor of the taxing authority. See Bullock v. Nat’l Bancshares Corp., 584 S.W.2d

268, 272 (Tex. 1979).

      The Appraisal District does not dispute that the Hospital District is a

political subdivision of the state or that the CT scanner is used for public

purposes.2 See Tex. Tax Code Ann. § 11.11(a). The Appraisal District contends


      2
      The Appraisal District has abandoned on appeal its contention that the CT
scanner was not exempt under section 11.11 because there was no signed lease
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that the Hospital District did not own the CT scanner within the meaning of

section 11.11(h) because the lease agreement was not a lease-purchase

agreement giving the Hospital District the present right to compel delivery of legal

title to the CT scanner at the end of the lease agreement’s term but instead

afforded the Hospital District only the opportunity to purchase the CT scanner for

an additional, undetermined amount of consideration at the end of the lease

without credits for the lease payments made by the Hospital District. Thus, the

Appraisal District argues that title does not automatically vest in the Hospital

District at the end of the lease term. The lease merely gives the Hospital District

the option to enter into a second transaction to negotiate for the purchase of the

CT scanner after the lease ends. The Appraisal District asserts that, at best, the

Hospital District has a contingent remainder in the CT scanner because the lease

agreement does not specify a sales price and because the Hospital District’s

ability to purchase the CT scanner depends on the availability of public funding

and on the decision of its board of directors.      The Appraisal District further

asserts that the Lease Agreement did not create a security interest in the CT

scanner. It contends that, for these reasons, the CT scanner is not exempt under

section 11.11(h), and therefore, it should not be removed from the appraisal roll.




agreement between the Hospital District and Provident. The lease agreement
attached to the Hospital District’s motion as summary-judgment evidence was
unsigned, but the Hospital District attached a signed copy of the lease agreement
to its summary-judgment response.

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      Section 11.11(h) does not require that a lease-purchase agreement

provide a fixed sales price or credit the lease payments towards the sales price.

Nor does it require that the state or political subdivision have the necessary funds

or approval to purchase the equipment at the end of the lease.            The plain

language of section 11.11(h) provides that the state or political subdivision is

considered the owner of tangible personal property if the property “is subject to a

lease-purchase agreement providing that the state or political subdivision, as

applicable, is entitled to compel delivery of the legal title to the property to the

state or political subdivision, as applicable, at the end of the lease term.” Id.

§ 11.11(h).   Under the terms of the lease agreement, if the Hospital District

chooses to exercise its right to purchase the CT scanner, it is required to notify

Provident in writing at least six months, but not more than twelve months, before

the end of the lease term. Upon proper written notice of its election to purchase

the CT scanner, the Hospital District has the right to compel delivery of legal title

to the CT scanner at the end of the lease term by purchasing it at its fair market

value, or if the Hospital District and Provident cannot agree on the fair market

value, the average of the values determined by two appraisers.3

      Citing Texas Department of Corrections v. Anderson County Appraisal

District, 834 S.W.2d 130 (Tex. App.—Tyler 1992, writ denied), the Appraisal

      3
        If the Hospital District properly elects to purchase the CT scanner, but a
fair market value purchase price has not been determined at least thirty days
prior to the expiration of the lease term, the term will continue on a month-to-
month basis until such time a fair market purchase price can be determined.

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District argues that because the lease agreement does not provide that legal title

automatically passes to the Hospital District at the end of the term, section

11.11(h) does not apply. In that case, the court of appeals held that the state

was the equitable owner of a prison unit because, according to the terms of a

lease agreement between the Texas Department of Corrections and a private

entity to finance the construction of the unit, the state would acquire full legal title

to the unit when all the lease payments were made. Id. at 131. The court

reasoned that if the lease payments were made, the state could compel delivery

of legal title, and therefore, the state was the equitable owner of the prison unit.

Id. Thus, the unit was tax exempt. Id.

      But interpreting the “entitled to compel delivery of the legal title” language

in section 11.11(h) to mean or to require that title automatically pass at the end of

the lease term renders the remainder of the section meaningless or mere

surplusage:    “The property ceases to be owned by the state or political

subdivision, as applicable, if, not later than the 30th day after the date the lease

terminates, the state or political subdivision, as applicable, does not exercise its

right to acquire legal title to the property.”     See Columbia Med. Ctr. of Las

Colinas, Inc. v. Hogue, 271 S.W.3d 238, 256 (Tex. 2008) (stating that courts

must not interpret a statute in a manner that renders any part of the statute

meaningless or superfluous); Cont’l Cas. Ins. Co. v. Functional Restoration

Assocs., 19 S.W.3d 393, 402 (Tex. 2000) (noting that courts give effect to all of a

statute’s words and, if possible, do not treat any statutory language as mere

                                          10
surplusage); see also Tex. Gov’t Code Ann. § 311.021(2) (West 2013)

(presuming that legislature intended entire statute to be effective). If title passed

automatically, there would be no right to exercise by the thirtieth day after the

termination of the lease. Moreover, if the legislature intended to require that title

pass automatically, it would have used the language used in tax code section

11.11(g), which addresses improvements to real property leased to the Texas

Department of Criminal Justice:


      (g) For purposes of this section, an improvement is owned by the
      state and is used for public purposes if it is:

             (1) located on land owned by the Texas Department of
             Criminal Justice;

             (2) leased and used by the department; and

             (3) subject to a lease-purchase agreement providing that legal
             title to the improvement passes to the department at the end
             of the lease period.

Tex. Tax Code Ann. § 11.11(g) (West 2015) (emphasis added).

      The Appraisal District also argues that the legislative history of section

11.11(h) supports its contention that the legislature intended that ownership

would transfer to the state or a political subdivision of the state only if title passed

at the end of the lease term. Specifically, the Appraisal District points to the

following language from a fiscal note accompanying one of the versions of House

Bill 846, which eventually became section 11.11(h):

      The bill would amend Section 11.11 of the Tax Code to provide that,
      for property tax purposes, property is owned by the state or a

                                          11
        political subdivision of the state if it is subject to a lease-purchase
        agreement containing a provision that legal title passes to the state
        or to a political subdivision at the end of the lease term.

Fiscal Note, Tex. H.B. 846, 75th Leg., R.S. (1997). The original version of House

Bill 846 was consistent with the fiscal note:         “For purposes of this section,

property is owned by this state or a political subdivision of this state if it is subject

to a lease-purchase agreement providing that legal title to the property passes to

this state or the political subdivision, as applicable, at the end of the lease term.”

Tex. H.B. 846, 75th Leg., R.S. (1997). This version of the bill, however, was not

enacted. See Act of May 23, 1997, 75th Leg., R.S., ch. 843, § 1, sec. 11.11,

1997 Tex. Gen. Laws 2715 (codified at Tex. Tax Code § 11.11(h)). Had the

legislature intended to require that the lease agreement provide that legal title

would automatically pass at the end of the lease term, it would have stated as

such.    See Tex. Gov’t. Code Ann. § 311.023(3) (West 2013) (stating that in

construing a statute, “whether or not the statute is considered ambiguous on its

face,” courts may consider legislative history).

        The Appraisal District further argues that according to Texas Turnpike Co.

v. Dallas County, 271 S.W.2d 400 (Tex. 1954), the Hospital District has only a

contingent remainder. In that case, the two petitioners were chartered as private

corporations for the purpose of building, acquiring, owning, and maintaining toll

roads within the State of Texas. Id. at 401. Conveyances of real property to the

state by the petitioners were placed in escrow pending acceptance by the Texas

Turnpike Authority upon satisfaction of certain conditions by the petitioners. Id.

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at 401–02.    The issue on appeal was whether the property acquired by the

petitioners was publicly owned so as to be tax exempt under article XI, section 9

of the Texas constitution. Id. at 402. The supreme court held that the state had

no control over performance of the conditions, which could be exercised only by

the petitioners, and hence had no legal or equitable title but only a “contingent

remainder” that was not a vested interest. Id. at 402–03. Thus, the property was

not owned or held by the state and was not exempt from taxation.              Id.   In

contrast, in this case, the Hospital District alone has the right to elect to purchase

the equipment at the end of the lease term. Moreover, the issue in this case is

whether the CT scanner is tax exempt under tax code section 11.11(a), which the

legislature enacted under the power granted to it by article VIII, section 2 of the

Texas constitution, not whether the property is exempt under article XI, section 9.

Compare Tex. Const. art. VIII, § 2(a) (stating that “the legislature may, by general

laws, exempt from taxation public property used for public purposes”), with Tex.

Const. art. XI, § 9 (“The property of counties, cities[,] and towns, owned and held

only for public purposes . . . and all other property devoted exclusively to the use

and benefit of the public shall be exempt from forced sale and from taxation.”).

Thus, Texas Turnpike is not controlling.

      We conclude and hold that the Hospital District established, as a matter of

law, that it was the owner of the CT scanner as defined in section 11.11(h), and

therefore, the CT scanner was exempt from taxation under section 11.11(a).

Thus, the trial court did not err by granting summary judgment in favor of the

                                           13
Hospital District.   Because we have concluded that the trial court properly

granted summary judgment on the basis of the tax exemption, we need not

address whether the lease agreement created a security interest in the CT

scanner in favor of Provident, thereby making the Hospital District the owner.

See Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 216 (Tex.

2003); see also Tex. R. App. P. 47.1. It is likewise unnecessary for us to address

the Appraisal District’s second issue in which it argues that the trial court erred by

granting summary judgment for the Hospital District and by denying summary

judgment for the Appraisal District on the basis that the Hospital District was

denied due process because the 2012 notice of appraised value was delivered to

Celtic Leasing and not to the Hospital District. See Knott, 128 S.W.3d at 216;

see also Tex. R. App. P. 47.1.

                                    Conclusion

      For these reasons, we affirm the trial court’s judgment.



                                                    /s/ Anne Gardner
                                                    ANNE GARDNER
                                                    JUSTICE

PANEL: GARDNER, WALKER, and GABRIEL, JJ.

GABRIEL, J., filed a dissenting opinion.

DELIVERED: January 14, 2016




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