Reversed=20
and Remanded and =
Opinion=20
filed December 11, 2007.
In The
Fourteenth=20
Court of Appeals
____________
NO. 14-07-00379-CV
____________
SATURN=20
CAPITAL CORPORATION, =
Appellant
V.
THE CITY OF=20
HOUSTON, =
Appellee
On Appeal from the =
County Civil Court at Law No. 2
Harris County, =
Texas
Trial Court Cause =
No. 846823
O P I N I=20
O N
Appellant,=20
Saturn Capital Corporation (ASaturn@), appeals=20
the trial court=3Ds granting=20
of the City of Houston=3Ds (the=20
ACity@) Plea to=20
the Jurisdiction. Finding the trial court erred when it =
granted the=20
City=3Ds Plea, we=20
reverse and remand to the trial court for further proceedings in=20
accordance with this opinion.
Factual=20
and Procedural Background
In 1992,=20
the City demolished buildings on the property located at 8526 =
Pitner=20
Road. The City assessed a fee for the cost of the demolition =
against=20
the Pitner Road property which was owned by L.A. Investments, =
Inc. =20
When L.A. Investments did not pay the demolition fee, the City =
filed a=20
demolition lien on the Pitner Road property. On February 15, =
2000,=20
the City, Spring Branch Independent School District (ASBISD@), and=20
other taxing authorities, obtained a judgment against L.A. =
Investments for=20
delinquent taxes on the Pitner Road property. On May 15, =
2000, an=20
Order of Sale in Tax Suit was obtained and on June 22, 2000, the =
constable=20
gave notice that the property would be sold at a public tax =
sale. =20
With the approval of L.A. Investments, Saturn purchased the tax =
lien from=20
SBISD and later foreclosed on the tax lien at a public tax =
foreclosure=20
sale. Saturn purchased the Pitner Road property at the tax=20
sale. The City did not bid at the tax sale. At the =
time Saturn=20
purchased the Pitner Road property, Saturn, taking the position =
that the=20
tax sale extinguished all inferior liens, did not pay off the=20
City=3Ds=20
demolition lien.
In 2003,=20
Saturn agreed to sell the Pitner Road property to Pitner Road =
Affordable=20
Housing, Ltd. However, the title company would not issue =
title=20
insurance and close the sale unless the City released its =
demolition=20
lien on the property. In addition, the purchaser was =
unwilling to go=20
forward with the deal as long as the City refused to release its=20
lien. Saturn, arguing the demolition lien was invalid =
because=20
it had been extinguished by the tax sale, made demand on the City =
that it=20
release the lien. The City refused to release the demolition =
lien=20
until the lien had been paid in full.
Faced with=20
the loss of the sale of the Pitner Road property, Saturn paid the =
City the=20
full amount of the demolition lien, $88,500.32, under protest and =
with=20
full reservation of rights to litigate and recover the funds =
paid. =20
Saturn then filed suit against the City seeking to recover its =
payment of=20
the demolition lien. The City filed a plea to the =
jurisdiction=20
arguing it was immune from Saturn=3Ds suit,=20
which the trial court granted. This appeal=20
followed.
Discussion
In a=20
single issue on appeal, Saturn contends the trial court erred when =
it=20
granted the City=3Ds Plea to=20
the Jurisdiction on the basis of sovereign immunity.
A. =20
The Standard of Review
Sovereign=20
immunity from suit defeats a trial court=3Ds subject=20
matter jurisdiction and is properly asserted through a plea to the =
jurisdiction. Texas Dept. of Parks and Wildlife v. =
Miranda,=20
133 S.W.3d 217, 225B26 (Tex.=20
2004). Whether a trial court has subject matter jurisdiction =
is a=20
question of law reviewed de novo. Id. at 228. =
In=20
deciding a plea to the jurisdiction, a court may not consider the =
merits=20
of the case, but only the pleadings and the evidence relevant to =
the=20
jurisdictional inquiry. Moore v. University of =
Houston-Clear=20
Lake, 165 S.W.3d 97, 101 (Tex. App.CHouston=20
[14th Dist.] 2005, no pet.). When reviewing a trial=20
court=3Ds ruling=20
on a plea to the jurisdiction, we construe the =
plaintiff=3Ds=20
pleadings liberally in the plaintiff=3Ds favor=20
and look to the pleader=3Ds=20
intent. Miranda, 133 S.W.3d at 226. We take as =
true all=20
evidence favorable to the nonmovant and indulge every reasonable =
inference=20
and resolve any doubts in the nonmovant=3Ds=20
favor. Id. at 228. In addition, the question of =
whether=20
undisputed evidence, which is the situation we are presented with =
here,=20
establishes a trial court=3Ds=20
jurisdiction, is a question of law. Id. at =
226.
B. =20
Is the City Immune From Saturn=3Ds=20
Suit?
=20
Texas has long recognized, and the City conceded during oral =
argument,=20
that sovereign immunity does not prevent a party who paid =
illegal=20
government taxes and fees under duress from filing a lawsuit to =
seek their=20
repayment. Dallas County Community College District v.=20
Bolton, 185 S.W.3d 868, 877 (Tex. 2005). Thus, to =
resolve the=20
issue of whether or not the City is immune from Saturn=3Ds suit,=20
two questions must be answered: (1) does Saturn=3Ds payment=20
of the demolition lien constitute the payment of an illegal tax or =
fee;=20
and (2) if so, did Saturn pay off the demolition lien under=20
duress?
1. =20
The Pitner Road Property Tax Sale Extinguished the=20
City=3Ds=20
Demolition Lien
In Texas,=20
a demolition lien is subordinate to a tax lien. See =
Tex. Loc.=20
Gov=3Dt Code=20
Ann. ' =
214.001(o) (Vernon 1999). Therefore, a tax foreclosure sale=20
extinguishes a demolition lien on the subject property. =
See=20
Tex. Tax Code Ann. ' =
33.95=20
(Vernon 2001) (AA=20
purchaser for value at or subsequent to the tax sale may =
conclusively=20
presume the validity of the sale and takes free of any claim of a =
party=20
with a prior interest in the property. . .@); see=20
also Conseco Finance Servicing Corp. v. J & J Mobile =
Homes,=20
Inc., 120 S.W.3d 878, 881B82 (Tex.=20
App.CFort Worth=20
2003, pet. denied) (stating that a junior lien does not survive =
the=20
foreclosure of a superior tax lien). Here, because =
Saturn=20
purchased the Pitner Road property at a properly conducted tax =
sale, the=20
City=3Ds inferior=20
demolition lien was extinguished and Saturn took the Pitner Road =
property=20
free from that lien.
2. =20
Because the Demolition Lien Had Been Extinguished, the=20
City=3Ds Refusal=20
to Release the Demolition Lien and Subsequent Acceptance of=20
Saturn=3Ds Payment=20
of the Lien Amount Constitutes the Collection of an Illegal=20
Fee
A fee is=20
defined as a fixed charge or a charge for a service. =
The=20
Merriam-webster Dictionary (New Edition,=20
2004). The=20
City=3Ds=20
demolition lien imposed on the Pitner Road property was to cover =
the cost=20
incurred by the City when it performed a service: demolishing =
dangerous=20
buildings on the property. Therefore, the costs of the =
demolition=20
constitute a fee. As discussed above, the demolition lien =
was=20
extinguished as a result of the tax sale. Therefore, when =
the City=20
sent, after the tax sale, a letter to the title company handling=20
Saturn=3Ds sale of=20
the Pitner Road property stating A[The City]=20
will issue releases for the Notice and the Order of Building =
Official=20
(Clerk=3Ds File=20
Nos. T118848 and N576628, respectively), once the lien(s) have =
been paid=20
in full,@ =
we hold=20
this constitutes an effort to collect an illegal fee.
3. =20
Saturn Paid Off the City=3Ds=20
Demolition Lien Under Duress
Saturn=20
argues that it paid the City=3Ds=20
demolition lien under duress because it faced (1) the loss =
of the=20
pending sale of the Pitner Road property if the City=3Ds=20
demolition lien was not paid off; and (2) the ultimate loss of the =
property because if the sale did not go through, it would be =
unable to=20
continue paying the taxes on the property. In response, the =
City=20
contends Saturn voluntarily paid the lien as the loss of a pending =
sale of=20
the property is insufficient to constitute duress. We agree =
with=20
Saturn.
The Texas=20
Supreme Court has consistently recognized that business =
compulsion=20
arising from the payment of illegal or improper government fees =
and taxes=20
coerced by financial penalties, loss of livelihood, or substantial =
damage=20
to a business can constitute duress and allow for the recovery of =
an=20
illegal tax or fee. Bolton, 185 S.W.3d at 878. =
The=20
duress necessary to authorize the recovery of an illegal tax or =
fee is=20
established when the unauthorized tax or fee is required, =
necessary, or=20
shall be paid to avoid the government=3Ds ability=20
to charge penalties or halt a person from earning a living or =
operating a=20
business. Id. at 879. Because the record =
demonstrates=20
that (1) Saturn faced substantial damage to its business if the =
Pitner=20
Road property sale did not go through; (2) the sale could not be =
completed=20
unless the City released its extinguished demolition lien; and (3) =
Saturn=20
paid off the extinguished demolition lien only after the City =
demanded=20
payment in full before it would release the lien, the payment was =
not=20
voluntary but made under duress. Accordingly, sovereign =
immunity is=20
not at issue and does not preclude Saturn from pursuing its suit =
against=20
the City. =20
We sustain Saturn=3Ds only=20
issue on appeal.
Conclusion
Having=20
sustained Saturn=3Ds only=20
issue on appeal, we reverse the judgment of the trial court and =
remand=20
this case to the trial court for further proceedings consistent =
with this=20
opinion.
/s/ =20
John S. Anderson
Justice
Judgment=20
rendered and Opinion filed December 11, 2007.
Panel=20
consists of Chief Justice Hedges and Justices Anderson and=20
Seymore.
ABusiness compulsion@ has also been referred to as =
Aeconomic duress@ or Aimplied duress.@ Dallas County =
Community=20
College District v. Bolton, 185 S.W.3d 868,=20
877B78 (Tex.=20
2005).
In its brief, the City emphasizes =
the role=20
of Alfred Antonini, the president of Saturn, and alleges that the =
transfer=20
of the SBISD tax lien to Saturn violates the Fraudulent Transfer=20
Act. These issues constitute affirmative defenses to=20
Saturn=3Ds suit and are not relevant to this =
appeal, which=20
addresses only the trial court=3Ds subject matter jurisdiction and does =
not reach=20
the merits of the case. Moore v. University of =
Houston-Clear=20
Lake, 165 S.W.3d 97, 101 (Tex. App.CHouston [14th Dist.] no pet.).=20
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