If you have initiated or your client has authorized the initiation of a Texas property tax lawsuit, it must be understood that you will be starting from scratch. The initiation of a typical property tax lawsuit is a challenge to an appraisal review board ruling. And such challenges are de novo proceedings where the district court conducts a trial in the same manner as a general civil lawsuit. To understand what that means, Johnson v. Bastrop Central Appraisal District is an instructive example of how this applies to open-space land appraisal denials, though can also be instructive to denial of exemptions and general valuation protests and other motions.

Johnson v. Bastrop Central Appraisal District, No. 13-22-00031-CV, 2024 WL 269528 (Tex. App.—Corpus Christi Jan. 25, 2024, pet. denied)
To be eligible for open-space land appraisal (1-d-1), a property owner must meet three elements: (1) their land is “currently devoted principally to agricultural use,” (2) the agricultural use is “to the degree of intensity generally accepted in the area,” and (3) their land “has been devoted principally to agricultural use . . . for five of the preceding seven years.” Tex. Tax Code § 23.51(1).

In Johnson v. Bastrop Central Appraisal District, BCAD issued a denial letter in response to Johnson’s 1-d-1 application. The letter stated one reason for the denial — that the property did not meet element (1), “currently devoted principally to agricultural use.”

At trial, BCAD introduced evidence on all three elements and the jury was instructed and charged with determining whether Johnson’s property met all three elements. In the end, the jury found that Johnson’s property did not meet all three elements and as a result is not eligible for 1-d-1 appraisal.

Johnson appealed to the 13th Court of Appeals and argued that the trial court only had subject matter jurisdiction over the issue relied on by BCAD in its initial denial letter — principal use. The 13th Court rejected this and held that the initial denial letter is not controlling and that the case starts from scratch.

It reasoned that appraisal lawsuits are de novo proceedings under Chapter 42 of the Texas Property Tax Code, and Johnson’s argument is similar to an argument previously rejected by the Texas Supreme Court¹ as an impermissible hybridization of the problems of issue preservation and exhaustion of administrative remedies.

As a de novo proceeding, a new trial is conducted on the entire case (on both questions of fact and issues of law) as if there had been no trial in the first place. Johnson’s argument ignored this. And instead attempted to hybridize the problems of issue preservation (i.e., BCAD was required to bring its arguments on degree of intensity and five-out-of-seven-years use to the attention of the ARB for those to be considered) and exhaustion of remedies (i.e., BCAD must receive an ARB determination before challenging in district court).

With respect to preservation, the 13th Court held BCAD did not waive issues not raised in the ARB proceeding because Johnson’s lawsuit challenges an appraisal review board ruling, which is conducted as a trial de novo that starts over. And with respect to exhaustion of remedies, unlike Johnson, BCAD had no administrative remedy to exhaust at the ARB stage.

With these rejections, the 13th Court held that the trial court had subject matter jurisdiction over all issues pertaining to whether Johnson’s property qualified for open-space land appraisal and affirmed the trial court’s judgment.

The takeaway from this case is de novo means start from scratch. This is important to understand, advise, and comport with. If you or your client intends to file a lawsuit challenging an appraisal review board ruling, the job is to prove the case as if you or your client never received a denial letter, notice of appraised value, or hearing on a protest or motion. Truly, you or your client are starting from scratch.

Tex. Tax Code § 42.23(a):
(a) Review is by trial de novo.  The district court shall try all issues of fact and law raised by the pleadings in the manner applicable to civil suits generally.

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To review the Opinion from Johnson v. Bastrop Central Appraisal District, click the following link (or copy and paste): https://search.txcourts.gov/SearchMedia.aspx?MediaVersionID=7df9bec8-1ae1-466f-ac40-86d970569b32&coa=coa13&DT=Opinion&MediaID=cba2b615-0e82-4494-86f0-bed008efd261.

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Key Sections of Texas Property Tax Code: 
§ 42.23, Scope of Review  

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