This property tax case concerns the application of a law meant to stop retaliatory lawsuits filed to silence or intimidate citizens: the Texas Citizens Participation Act.

Scurry County taxing units^[1] alleged taxpayer fraud on the part of oil-and-gas industry giant Kinder Morgan^[2] resulted in excluded and omitted mineral interest property from the appraisal roll.  In their suit, the taxing units asked the court to fix the appraised value of the property pursuant to Section 42.24^[3] of the Texas Property Tax Code or issue a writ of mandamus requiring the appraisal district and chief appraiser to re-appraise the property for tax year 2018 and back-appraise it for tax years 2013 to 2017.  Kinder Morgan filed a motion to dismiss the taxing units’ suit under the Texas Citizens Participation Act (“TCPA”).^[4]

The TCPA is meant to stop retaliatory lawsuits that are filed to silence or intimidate citizens.  The TCPA allows an aggrieved party—who is sued based on, related to, or in response to the exercise of a protected right—to file a TCPA motion to dismiss a retaliatory lawsuit.      

HISTORY

In its TCPA motion to dismiss, Kinder Morgan argued the taxing units’ claims related to the exercise of its rights to petition and free speech—and that the taxing units could not meet the TCPA’s evidentiary requirements to defeat a TCPA motion to dismiss.  The taxing units first objected to Kinder Morgan’s TCPA motion to dismiss on the grounds that it was not timely filed.  That objection ultimately resulted in a 2021 opinion  out of the Texas Supreme Court.  The Texas Supreme Court held Kinder Morgan’s TCPA motion to dismiss was timely filed and remanded the case to the trial court.^[5]

On remand, the trial court took up Kinder Morgan’s TCPA motion to dismiss again but this time denied it for failure to meet the first component of the TCPA’s three-step process for determining whether a claim is subject to dismissal.  Kinder Morgan filed this second interlocutory appeal. 

On appeal, the Eastland Court of Appeals reversed and remanded the case back to the trial court for further proceedings.^[6] 

In the court’s opinion, it analyzed the pleadings, allegations, TCPA’s requirements, and shifting burdens of proof to determine if a property tax lawsuit may be dismissed under the TCPA.  The court ultimately concluded Kinder Morgan established a sufficient nexus between the exercise of its right to petition and the taxing units’ claims to invoke the TCPA.

In its analysis, the court noted that whether the TCPA applies is a question of statutory interpretation subject to de novo review.  The court stated it interprets the statute as a whole, gives effect to the legislature’s intent based on the plain meaning of the words used unless context requires otherwise or the plain meaning would lead to absurd results.  The court stated it presumes the legislature enacts a statute “with complete knowledge of, and reference to, the existing law.”  Old and new statutes that do not conflict must be construed to give effect to both. 

IMPORTANCE OF THIS CASE

This case is important for two reasons.  Under the facts presented:  (1) it concludes the Texas Property Tax Code does not preempt the TCPA, even though the Code “is a pervasive and regulatory scheme,” and (2) it holds a taxpayer’s communications with an appraisal district, in connection with the valuation of its property in a given year, constitute the exercise of the right to petition—which is protected under the TCPA.  Thus, if a taxing unit sues a taxpayer based on the taxpayer’s communications with an appraisal district about the value of its property—like the lawsuit by Scurry County taxing units against Kinder Morgan here—the taxpayer may file a TCPA motion to dismiss the suit.  Whether the taxpayer can meet TCPA’s requirements to prevail on a TCPA motion to dismiss is a separate issue, one the court did not reach in this case. 

No preemption.  Regarding the taxing units’ argument that the Texas Property Tax Code is a pervasive regulatory scheme that leaves no room for the TCPA, the court concluded the Code’s requirements to follow the law generally were in effect when the TCPA was enacted—specifically Section 42.23(a)’s requirement that the court “try all issues of fact and law raised by the pleadings in the manner applicable to civil suits generally[,]”^[7] and Section 42.24(3)’s authorization of the court to enter “orders necessary to preserve rights protected by and impose duties required by the law.”^[8]  The court also reasoned that the TCPA expressly makes certain legal actions exempt from the TCPA, but it did not exempt a taxing unit’s appeal from an ARB order.  Because the court found no conflict or “clear repugnance” between the Tax Code and the TCPA, it gave effect to both statutes, and concluded the TCPA applied to the taxing units’ claims.

Right to petition.  Regarding the exercise of the right to petition, the court noted the TCPA’s definition of “the right to petition” includes “communication,” which the TCPA broadly defines.  Communication includes making or submitting a “statement or document in any form or medium, including oral, visual, written audiovisual, or electronic.”  The court concluded Kinder Morgan communicated with the appraisal district within the meaning of the TCPA.    

The court’s opinion was limited to the first component of the TCPA’s motion to dismiss provisions.  It remains to be seen how the case will develop on remand.  To be continued. 

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^[1] The taxing units were: Scurry County, Snyder Independent School District, Scurry County Junior College District d/b/a Western Texas College, and Scurry County Hospital District d/b/a Cogdell Memorial Hospital.
^[2] The taxing units also sued the Scurry County Appraisal District.
^[3] To review the text of Texas Property Tax Code Section 42.24, click the following link (or copy and paste): https://codes.findlaw.com/tx/tax-code/tax-sect-42-24.html.
^[4] To review the text of the Texas Citizen Participation Act, click the following  link (or copy and paste): https://statutes.capitol.texas.gov/Docs/CP/htm/CP.27.htm.
^[5] The Texas Supreme Court expressly did not consider whether the TCPA applied to the taxing units’ lawsuit—the issue was not presented on appeal and was not determined.  The Texas Supreme Court did address a new issue raised for the first time on appeal implicating subject-matter jurisdiction—tax ferret contracts. 
^[6] As of the date of this article, August 11, 2022, the lawsuit is still pending in the 132nd District Court in Scurry County, Texas under Cause No. 26387.
^[7] To review the text of Texas Property Tax Code Section 42.23, click the following link (or copy and paste): https://codes.findlaw.com/tx/tax-code/tax-sect-42-23.html.
^[8] To review the text of Texas Property Tax Code Section 42.24, click the following link (or copy and paste): https://codes.findlaw.com/tx/tax-code/tax-sect-42-24.html.

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