Are Attorney Fees in Property Tax Cases Mandatory or Discretionary?

If you file a lawsuit against your local appraisal district, win in court, and successfully have your property taxes lowered, is the district required to pay your attorney’s fees?

Public policy clearly influenced the Texas legislature to provide for attorney's fees in property tax valuation cases. The goal was to discourage taxing agencies from unreasonable taxation efforts by recognizing the financial consequences for such efforts (Atascosa County Appraisal Dist. v. Tymrak).

When an excessive appraisal is issued, a property owner is forced to pay more in taxes than is actually required. To recover the money overpaid, the owner must go through the onerous task and added expense of filing a lawsuit. To remedy this, Section 42.29 of the Texas Property Tax Code provides the statutory authority to award attorney fees to the property owner.

The question that often arises in court is the wording of the statute. Because it says the owner "may be awarded" fees, is the award mandatory by law, or is it discretionary (meaning it’s entirely up to the judge to decide)?

How Texas Courts Have Ruled

Three separate Texas Courts of Appeals (Dallas, Austin, and San Antonio) have all examined this specific statute. All three have held that the award of attorney's fees under Section 42.29 is mandatory. No case has held that these fees are discretionary.

I. Zapata County Appraisal District v. Coastal Oil & Gas Corp.

In Zapata, judgment was rendered upon a jury verdict in favor of the property owner, but the owner was denied attorney fees in a separate bench trial. The San Antonio Court of Appeals held the trial court erred in denying the fees. They found the fees mandatory based upon the Texas Supreme Court case of Bocquet v. Herring.

The Supreme Court noted that statutes providing that "a party may recover" or "a party is entitled to" attorney's fees mandate an award of fees. It is not the use of the word "may" that determines if an award is discretionary; rather, it is whether the statute grants permission *to the litigant* to recover fees, versus granting permission *to the trial court* to award them.

II. Aaron Rents, Inc. v. Travis Central Appraisal District

In Aaron Rents, a furniture company succeeded against the taxing authority, but the trial court denied recovery of attorney's fees. On appeal, the Austin court held attorney's fees were mandatory. They noted that when the legislature enacted the statute, they did not specify that "the court may award attorney's fees"; rather, they specified that the prevailing taxpayer "may be awarded" attorney's fees.

The court reasoned: "Given this fact setting, it is reasonable to conclude the legislature intended parties to recover the amount of attorney's fees incurred in pursuing their claims when they prevail."

III. Martinez v. Dallas Central Appraisal District

In Martinez, the Dallas Court of Appeals conducted a thorough examination of the law. They concurred with the reasoning of the Zapata and Aaron Rents courts, concluding that "the language in section 42.29 is mandatory, and affords the trial court no measure of discretion in determining whether to award attorney's fees."