From a recently decided case out of the 2nd Court of Appeals [Fort Worth], it appears there may be no repercussions to an appraisal review board that refuses to perform its written promise to conduct a protest hearing.

Kamy Investments, LLC v. Denton County Appraisal Review Board, No. 02-23-00487-CV, 2024 WL 3611451 (Tex. App.—Fort Worth August 1, 2024, no pet. h.)

In Kamy Investments, LLC v. Denton County Appraisal Review Board, the property owners’ protest hearings were dismissed following their representatives need to urgently leave the hearings due to medical complications. The owners then filed a series of requests for limited binding arbitration under Section 41A.015 of the Texas Property Tax Code to reset the previously dismissed hearings.

To avoid the arbitrations, Denton County ARB agreed to set regular protest hearings for the owners on the condition that the owners withdrew the arbitration proceedings.

The owners did not withdrawal all their arbitrations and continued forward with their hearings. They claimed, among other things, that Denton County ARB forced them to continue the arbitrations because Denton County ARB set 25.25(d) hearings, instead of regular protest hearings (what was allegedly agreed to). The owners lost all arbitration hearings and sued Denton County ARB for breach of contract for failing to set regular protest hearings.  

Denton County ARB filed a plea to the jurisdiction to dismiss the owners’ breach of contract claims because Denton County ARB is immune from suit as a governmental unit. Trial court agreed and the owners appealed.

On appeal the owners argued that the suit could proceed because Denton County ARB’s immunity was waived.¹ One argument important to emphasize for this article is Denton County ARB waived immunity by (1) voluntarily entering into a contract with private citizens and (2) breaching the terms of the agreement. This is interesting because the owners relied on Denton County ARB’s promise to set regular protest hearings … so what happens for not fulfilling that promise? Well, apparently nothing.

The 2nd Court upheld the dismissal and rejected the owner’s arguments and emphasized from numerous different cases that a lawsuit cannot be pursued on a breach of contract claim without the Texas Legislature’s express waiver of the governmental unit’s immunity. In other words, a contract alone does not waive immunity.

The 2nd Court did, however, acknowledge that a governmental unit waives its immunity from liability when it contracts with a private citizen. But this is different than immunity from a lawsuit. So doesn’t mean much, though there is an instance when it does.

If a governmental unit settles a claim for which immunity from a lawsuit has been waived, immunity from suit is also waived for a breach of that settlement agreement.

The likely applicable scenario in the Texas property tax world would be the settlement of a claim against an appraisal review board pursuant to Section 41.45(f) of the Texas Property Tax Code in exchange for a regular protest hearing. In that instance, the appraisal review board’s immunity from the lawsuit is waived pursuant to Section 41.45(f), so immunity is likely also waived for the breach of the settlement agreement if they fail to hold a regular protest hearing. The owners in this case appeared to somewhat make this argument, but the court rejected that Section 41.45(f) applied because the owners did get a hearing, it’s representative just didn’t appear, and the owners did not file suit within 60 days from when they received notice of the dismissal.

This case is a complex immunity case out of the 2nd Court of Appeals, but on a base line it appears to stand for the proposition there are no repercussion to an appraisal review board that refuses to perform its written promise to conduct a protest hearing unless — the legislature has waived immunity (which it hasn’t for breach of a contract) or the promise is connected to the settlement of a claim for which immunity has been waived (which it could potentially be through Section 41.45(f)).

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To review the Opinion from Kamy Investments, LLC v. Denton County Appraisal Review Board, click the following link (or copy and paste): https://search.txcourts.gov/SearchMedia.aspx?MediaVersionID=61122f55-7beb-40ec-bd61-ff805d4fe12f&coa=coa02&DT=Opinion&MediaID=e1c0c6e6-1213-46ed-a773-28c99593a5db.

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