The Texas Supreme Court recently denied a petition for review of decision of the Texas Fourteenth Court of Appeals’ decision in West Exchange, Inc. v. Hegar. This case illustrates the importance of complying with all statutory requirements for waivers of sovereign immunity when suing the Texas Comptroller of Public Accounts (the “Comptroller”).
In this case, the taxpayers (the “Taxpayers”) had sued the Comptroller challenging certain assessments of mixed beverage gross receipts tax and mixed beverage sales tax. Among other things, the Taxpayers requested: (1) injunctive relief prohibiting the assessment or collection of taxes, fees, penalties, and interest by the Comptroller; and (2) a judgment declaring the assessments void and unenforceable. The Comptroller filed a plea to the jurisdiction arguing that the trial court lacked subject matter jurisdiction over the case because the Taxpayers had not complied with the requirements of any statutory waiver of the Comptroller’s sovereign immunity. The trial court granted the plea to the jurisdiction. The Taxpayers appealed.
The Fourteenth Court of Appeals upheld the trial court’s decision to grant the Comptroller’s plea to the jurisdiction. The Court of Appeals noted that the Comptroller was entitled to immunity from suit under the doctrine of sovereign immunity unless his sovereign immunity had been waived.[1] In other words, the Comptroller cannot be sued unless the Legislature has provided a waiver of sovereign immunity and there has been compliance with the requirements for that waiver.
The Taxpayers argued that section 112.053 of the Texas Tax Code waived the Comptroller’s sovereign immunity in this case.[2] Section 112.053 of the Texas Tax Code allows a taxpayer to sue the Comptroller if: (1) the taxpayer submits payment of the tax or fee being challenged with a written protest that states “fully and in detail each reason for recovering the payment” before filing suit and (2) the taxpayer attaches a copy of the written protest as originally filed to the original petition. The Taxpayers’ original petition in this case did not have attached a copy of any written protest.[3] Thus, the Taxpayer did not comply with the requirements for the waiver of sovereign immunity in Section 112.053 of the Texas Tax Code.[4] Thus, the Court of Appeals held that the trial did not err in granting the Comptroller’s plea to the jurisdiction.
The Taxpayers argued that the statutory requirements of section 112.053 did not apply to their constitutional claims in this case under the Privileges and Immunities Clause of the Fourteenth Amendment.[5] However, the Taxpayers did not provide any analysis or citation to other legal authority for this argument.[6] As such the Court of Appeals held that the Taxpayers had not adequately briefed this argument.[7]
The Taxpayers next argued that the trial court had jurisdiction of claims under sections 2001.038(a) and 2001.171 of the Texas Government Code. Section 2001.038(a) of the Texas Government Code provides that “[t]he validity or applicability of a rule . . . may be determined in an action for declaratory judgment if it is alleged that the rule or its threatened application interferes with or impairs, or threatens to interfere with or impair, a legal right or privilege of the plaintiff.” Section 2001.171 of the Texas Government Code provides that “[a] person who has exhausted all administrative remedies available within a state agency and who is aggrieved by a final decision in a contested case is entitled to judicial review . . . .” However, the Court of Appeals noted that the Taxpayers were not challenging a rule of the Comptroller in this case but rather declaratory judgment with regards to the assessment of taxes, penalties, and interest against them, and Section 112.108 of the Texas Tax Code at the time prohibited such declaratory judgment actions.[8]
As a result of the Texas Supreme Court’s denial of petition for review, the Court of Appeals decision in this case stands.
[1] West Exchange, Inc. v. Hegar at 6 (citing EBS Solutions, Inc. v. Hegar, 601 S.W.3d 744, 749–50 (Tex. 2020)).
[2] West Exchange, Inc. v. Hegar at 6.
[3] West Exchange, Inc. v. Hegar at 8.
[4] West Exchange, Inc. v. Hegar at 8.
[5] West Exchange, Inc. v. Hegar at 7.
[6] West Exchange, Inc. v. Hegar at 7.
[7] West Exchange, Inc. v. Hegar at 7 (citing Tex. R. App. P. 38.1(i); Marathon Petroleum Co. v. Cherry Moving Co., 550 S.W.3d 791, 798 (Tex. App.—Houston [14th Dist.] 2018, no pet.)).
[8] West Exchange, Inc. v. Hegar at 12-3.
