The Eastland Court of Appeals has sent a lawsuit back to a Scurry County district court that denied a taxpayer’s motion to dismiss an appeal by Scurry County taxing units of an ARB decision denying reappraisal of certain property over a five-year period. The taxpayer moved to dismiss the lawsuit under the Texas Citizens Participation Act (“TCPA) on the basis that the taxing units’ claims were based on or related to the taxpayer’s exercise of its right to petition and right of free speech and that the units could not establish by clear and specific evidence a prima facie case for each essential element of their claims.

The case, Kinder Morgan SACROC, LP v. Scurry County, et al. (No. 11-21-00205-CV) has a lengthy procedural history. It has already traveled up to the Texas Supreme Court once, which reversed the trial court and court of appeals’ ruling that Kinder’s TCPA motion was untimely. See Kinder Morgan SACROC, LP v. Scurry Cty., 622 S.W.3d 835, 851 (Tex. 2021). On remand to the trial court, the taxing units filed an amended petition alleging that Kinder “purposefully provided fraudulent, inaccurate, and false information” to the appraisal district in order to avoid taxation. The trial court once again dismissed Kinder’s TCPA motion, and Kinder took filed an interlocutory appeal.

On appeal, the taxing units first argued that the TCPA does not apply to “the pervasive regulatory scheme set out in the Tax Code.” The court of appeals quickly disposed of this argument, stating that the scheme pre-existed the TCPA, and if the Legislature had intended to exempt actions thereunder, it would have done so. Second, the taxing units contended that their claims based on Kinder’s “allegedly fraudulent misrepresentation, alleged fraud by nondisclosure, and alleged unlawful conduct do not fall within the TCPA.” The court of appeals held that Kinder had shown that its communications with the appraisal district constituted the exercise of the right to petition “because they were made in connection with an issue under consideration or review by a governmental body” under the TCPA (§27.001(4)(B), CPRC). Noting the breadth of the term “in connection with,” the court of appeals had no trouble in finding that the taxing units’ legal action “had more than a tangential, tenuous, or remote relationship with an issue, the value of Kinder Morgan’s mineral interests in Scurry County, that was under consideration by the Appraisal District for purposes of imposing ad valorem taxes.” Thus, the court held that Kinder met its burden of showing that the taxing units’ claims were “factually predicated on the alleged conduct that falls within the scope of [the] TCPA’s definition of ‘exercise or right of free speech,’ pertition, or association.”

In response to the taxing units’ contention that Kinder’s alleged fraud rendered the appraisal process void ab initio, including any rights under the TCPA, and that any claims based on the nondisclosure of information did not fall within the TCPA’s requirement of “communication,” the court of appeals observed that the TCPA “does not involve consideration of whether a movant’s communications were false or fraudulent,” just that such communications occurred. If they do, then the burden shifts to the nonmovants to establish by clear and specific evidence a prima facie case for each element of their claim. And although the TCPA ordinarily does not apply to conduct or an alleged failure to disclose or communicate, the application of the TCPA in this case hinges on communications that Kinder did make to the appraisal district, whether incomplete or not. It should be noted that the court of appeals interpreted the statute as it existed prior to the 2019 amendments, which narrowed the nexus requirement between the legal action and the right to speech, petition, or association, by removing the expansive phrase “relates to” (leaving in “based on” or “in response to”). It referred to this “related to” language removed from the statute in 2019 to justify its holding on the failure to disclose part of the taxing units’ claim, but in our view even the narrower nexus standard would likely be met here.

The court of appeals remanded the case to the trial court for further proceedings, which will require the taxing units to produce clear and specific evidence on each essential element of their claims. If they do that, the burden shifts back to Kinder to establish an affirmative defense or other grounds on which the moving party is entitled to judgment as a matter of law. If Kinder ultimately prevails on its TCPA motion to dismiss, it will become entitled to court costs and reasonable attorney’s fees (which, in view of the fact that the case has already been to the court of appeals twice and SCOTX once, should be considerable).

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