In a pair of lawsuits brought by a gas compressor leasing company against appraisal districts in Irion and Sterling Counties, the Austin Court of Appeals has affirmed a trial court’s summary judgment dismissal of the company’s attempt to compel correction of the appraisal rolls to remove compressors leased as part of a heavy equipment inventory.
The cases, J.W. Power Company v. Irion County Appraisal District (No. 03-21-00005-CV) and J.W. Power v. Sterling County Appraisal District (No. 03-21-00069-CV), arose when Plaintiff filed a §25.25, Tax Code, motion to correct the appraisal rolls for tax years 2013 to 2016 to remove compressors located in the two counties and appraised by the appraisal districts. In each of those years Plaintiff had filed protests under §41.41, Tax Code, which the ARBs had both denied. Plaintiff did not appeal either ARB order to district court. Subsequently, the Texas Supreme Court handed down its ruling in EXLP Leasing, LLC v. Galveston Cent. Appraisal District (554 S.W.3d 572 (Tex. 2018), which held that a dealer’s inventory of heavy equipment could only be appraised in the county in which the equipment (i.e., compressors) were based and maintained (in this case, Ector County). Plaintiff then filed the §25.25 motions, arguing that the compressors in the two counties were erroneously placed on the rolls. Again, the ARBs denied the motions, and Plaintiff appealed to district court. The trial court granted the districts’ summary judgment motion based, among other things, on the doctrine of res judicata. Plaintiff appealed.
The court of appeals affirmed on res judicata grounds. Establishing the res judicata defense requires proof of three elements: “(1) a prior final judgment on the merits by a court of competent jurisdiction; (2) identity of parties or those in privity with them; and (3) a second action based on the same claims as were raised or could have been raised in the first action” [citations omitted]. With respect to the first prong of the test, a prior final judgment, the court of appeals followed SCOTX precedent that res judicata may preclude claims resolved by administrative bodies, including appraisal review boards (Plaintiff did not press this issue on appeal). Here the two ARBs denied Plaintiffs’ protests that the compressors leased to operators in Irion and Sterling counties should have been assessed only in Ector County. Plaintiff did not pursue its claims any further at the time.
The real issue for the court of appeals was whether Plaintiffs’ 25.25 motion to correct the appraisal roll involved the “same claims” as the original protest. Noting that both the Plaintiff’s protests and subsequent §25.25 motions employed virtually the same language—that the appraisal districts’ inclusion of the compressors on the rolls constituted “double assessment”—the court had little difficulty finding that the claims were essentially the same in both actions. Plaintiff unsuccessfully argued that since the protests and motions to correct the roll were made under separate statutes, they could not present the “same” claim. Texas law, however, looks through this distinction if the “basic nature” of the claims is the same under both statutory theories.
The more complex issue—whether §25.25(l)’s provision allowing a motion to proceed regardless of whether the property owner protested the value of the property under §41.41—turned on whether Plaintiffs’ original protest concerned the “value” of the compressors. Citing other appellate decisions on the question, the court of appeals held that the protest did not concern the statutory formula used by the appraisal districts to establish value but whether the compressors were taxable at all in the two counties. Even if the ARBs erroneously denied Plaintiffs’ protests, the clarification of the statute prescribing the situs of an dealer’s inventory of heavy equipment after the ARBs ruled did not revive the claims. Although “the judgment may have been wrong or premised on a legal principle subsequently overruled,” it “does not affect application of res judicata.”
The EXLP decision left a lot of compressors stranded on appraisal rolls in the years between the Legislature’s enactment of the statute in 2012 and the statute’s clarification of the situs issue by the Court in 2018. It looks like, at least for now, they’ll have to stay there.
