On December 17, 2018, the Dallas Court of Appeals held that a trial court lacked jurisdiction to consider a taxing unit's common-law (negligence) cause of action to recover damages for an alleged undervaluation of property for ad valorem tax purposes.
Before the trial court, a taxing entity sued the appraisal district’s contract appraisal firm claiming that common-law negligence resulted in undervaluation of Kinder Morgan's mineral property. Based on the common-law claims, it sought damages for the purported lost tax revenue. The taxing units sought to discover the confidential documents rendered to the appraisal district by Kinder Morgan. After the trial court granted a motion to compel production of the confidential documents by the taxing entities, the several defendants, including Kinder Morgan, the appraisal firm, and the appraisal district, appealed.
Without considering merits of the discovery issues, the Court of Appeals held that the order was void because the trial court lacked jurisdiction of over the claims. Citing Jim Wells Co v. El Paso Production Oil & Gas Co. (Houston Court of Appeals [1st Dist.]), the Court explained that the taxing units had no common-law right to sue for damages for an alleged loss in tax revenues. Instead, the taxing entities were required to comply with the procedures and remedies of the Tax Code.
The opinion can be found on the Dallas Court of Appeals' website. Currently, the deadline for a motion for rehearing is January 17, 2019.