In a decision likely to send shivers down the spines of chief appraisers across the state, the Waco Court of Appeals has held that a taxpayer’s action for a declaratory judgment against the chief appraiser for an arbitrary appraisal may proceed as an action against the appraiser in his personal capacity.
Falls County Appraisal District, Allen McKinley, and Andrew J. Hahn v. Wally and Voncyle Rusty Burns (No. 10-21-0019-CV) arose from a taxpayer challenge to the chief appraiser’s addition of a new improvement to the taxpayer’s homestead for utilities provided by a water supply corporation, as opposed to a municipal system. The chief appraiser valued the improvement at $6,000 (which is outside the 10% cap). The taxpayer challenged both the addition of the “improvement,” which they allege is improper, and the value, which they allege is unlawful, arbitrary, and discriminatory. What makes this case unusual is that the taxpayer not only filed the ordinary protest but sued the chief appraiser in his personal capacity for arbitrarily assigning a $6,000 assessment on rural homeowners only. The taxpayer alleges that the appraiser acted ultra vires, or outside of his statutory authority. If the suit is successful, the taxpayer would receive attorney’s fees under the Uniform Declaratory Judgment Act (UDJA).
The trial court denied the appraisal district’s motion for summary judgment on that ground, and the court of appeals affirmed (though it reversed other trial court orders relating to other claims). Reasoning that the basis of the taxpayer’s claim was that the chief appraiser acted without legal authority by “making up” the assessment of so-called “HS (homestead) Utilities” and assigning a flat value to the taxpayer’s homestead. “An ultra vires claim based on actions taken ‘without legal authority’ has two fundamental components,” the court stated,” (1) authority giving the government employee some (but not absolute) discretion to act and (2) conduct outside of that authority” (citations omitted). After detailing the chief appraiser’s duties under the Property Tax Code, the court determined that the chief appraiser has considerable but not absolute discretion in determining market value, being bound by generally accepted appraisal methods and techniques. Although the taxpayer did not explicitly allege a statutory violation, the court inferred that the taxpayer’s claim was based on a violation of § 23.01, Tax Code, which requires the chief appraiser to appraise property at its market value on January 1. Thus, the taxpayer is not just alleging that the appraisal district got the value “wrong,” but that the chief appraiser himself went beyond the scope of his statutory authority.
The court of appeals concluded that the taxpayer pleaded “a viable ultra vires claim” against the chief appraiser, depriving him of official immunity. The case now returns to the trial court, which will hear evidence on whether the chief appraiser applied generally accepted appraisal methods and techniques and took into account “all available evidence that is specific to the value of the property” in determining the market value pursuant to § 23.01.
Is this case an outlier or does it suggest a new avenue for challenging an appraisal outside of the ARB process? Do chief appraisers have to worry about lawsuits against them in their personal capacities based on “violations” of § 23.01 (which may be little more than disputes over value)? Time will tell, but this decision should certainly raise eyebrows in the property tax world.
