in the supreme court of texas - amazon s3s3.amazonaws.com/docketdb/scotx/briefs/11007801.pdfpetition...

NO. 11-0078__________________________________________________________________

IN THE SUPREME COURT OF TEXAS__________________________________________________________________

HARRIS COUNTY APPRAISAL DISTRICT,

Petitioner,v.

HOUSTON LAUREATE ASSOCIATES, LTD. and LEVERING & COMPANY,

Respondents

On Appeal from the Fourteenth Court of Appeals at Houston, Texas

PETITION FOR REVIEW

Tammy White-Chaffer Olson & Olson, L.L.P.State Bar No. 24008273 Wortham Tower, Suite 600Mario L. Dell’Osso 2727 Allen ParkwayState Bar No. 05732150 Houston, Texas 77019Telephone: (713) 533-3800 Facsimile: (713) 533-3888

ATTORNEYS FOR PETITIONER,HARRIS COUNTY APPRAISAL DISTRICT

Petition for Review11-0078

ii

IDENTITY OF PARTIES AND COUNSEL

HARRIS COUNTY APPRAISAL DISTRICT Tammy White-ChafferState Bar No. 24008273Mario L. Dell’OssoState Bar No. 05732150

OLSON & OLSON, L.L.P.Wortham Tower, Suite 6002727 Allen ParkwayHouston, Texas 77019(713) 533-3800(713) 533-3888 (facsimile)

HOUSTON LAUREATE ASSOC., LTD.,LEVERING & COMPANY Hugh L. McKenney

MCKENNEY & ASSOCIATES2200 North Loop West, Suite 333Houston, Texas 77018(713) 688-6767(713) 688-0199 (facsimile)


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TABLE OF CONTENTS

IDENTITY OF PARTIES AND COUNSEL .................................................................. ii

TABLE OF CONTENTS ................................................................................................ iii

INDEX OF AUTHORITIES ........................................................................................... v

APPENDIX ...................................................................................................................... vii

STATEMENT OF THE CASE ....................................................................................... viii

STATEMENT OF JURISDICTION .............................................................................. ix

ISSUES PRESENTED..................................................................................................... ix

Issue 1. Is there legally sufficient evidence to support the Trial Court’s judgment?

Issue 2. Did the Court of Appeals err in affirming the Trial Court’s judgment, whenit was undisputed that the judgment was based on the opinion testimony ofan “expert witness” who had no knowledge of the individual characteristicsof the office building properties about which he opined, and the Courtmerely accepted his experience as the sole basis for his assumptions andadjustments?

Issue 3. Was it error for the Trial Court to admit the testimony of the “expert” basedon a “special tool,” of unsubstantiated reliability, provided by a taxconsultant firm with a contingent fee interest in the outcome of the lawsuit?

Issue 4. Did the Trial Court err in permitting the expert witness to testify when itwas undisputed that the testimony was offered in violation of Rule 3.04(b)of the Texas Disciplinary Rules of Professional Conduct, which prohibits alawyer from offering the testimony of a witness he knows is provided by atax consultant firm with a contingent fee interest in the outcome of thecase?

Issue 5. Did the Court of Appeals err in shifting the burden to demonstrate thereliability of expert testimony from the proponent to the objecting party?(reserved for briefing)

STATEMENT OF FACTS .............................................................................................. 1

SUMMARY OF THE ARGUMENT .............................................................................. 4


iv

ARGUMENT ................................................................................................................... 5

A. Incompetent expert testimony, presented under cover of ethical violations, isnot evidence. ..................................................................................................... 5

B. Goddard’s “special tool” = unequal appraisal, but without knowledge ofindividual characteristics. .................................................................................. 6

C. Hired gun Goddard, armed with a “special tool,” came in after the taxconsultant filed this lawsuit. .............................................................................. 9

D. This lawsuit lottery violated the prohibition of Tex. Disciplinary R. Prof’lConduct 3.04(b)................................................................................................. 11

E. The Court of Appeals erred in failing to strike Goddard’s testimony.................. 12

F. The Court misconstrued Ethics Opinions Nos. 458 and 553............................... 13

CONCLUSION AND PRAYER ..................................................................................... 15

CERTIFICATE OF SERVICE....................................................................................... 16


v

INDEX OF AUTHORITIES

CASES

Anderson Producing Co. v. Koch Oil Co., 929 S.W.2d 416 (Tex. 1996) ........................ 13

Ayres v. Canales, 790 S.W.2d 556 (Tex. 1990).............................................................. 12

Coastal Transport Company, Inc. v. Crown Central Petroleum Corp., 136 S.W.3d 227(Tex. 2004)...................................................................................................................... 7

Exxon Pipeline Company v. Zwahr, 88 S.W.3d 623 (Tex. 2002)...................................... 7

Gammill v. Jack Williams Chevrolet., 972 S.W.2d 713 (Tex. 1998)............................... 10

Gentry v. State, 770 S.W.2d 780 (Tex. Crim. App. 1988) .............................................. 12

Guadalupe –Blanco River Authority v. Kraft, 77 S.W.3d 805 (Tex. 2002)....................... 7

Harris County Appraisal District v. Houston Laureate Associates Ltd., 2010 WL3341880 (Tex. App.—Houston [14th Dist.] 2010, pet. filed) .........................1, 5, 7, 12, 14

In re MHCB (USA) Leasing and Finance Corp. and Valero Refining L.P., No. 01-06-00075-CV, 2006 WL 1098922 (Tex. App.—Houston [1st Dist.] 2006, no pet.)................ 6

Johnson v. Brewer & Pritchard, P.C., 73 S.W.3d 193 (Tex. 2005) ................................ 12

Lively v. Missouri, K.&T. Ry., 102 Tex. 545, 120 S.W. 852 (Tex. 1909).......................... 6

NCNB Texas National Bank v. Hon. Bill F. Coker, 765 S.W.2d 398 (Tex. 1989)........... 12

Parker v. Spindletop Oil & Gas Co., 628 S.W.2d 765 (Tex. 1982) .................................. 6

State Farm Llyods v. Nicolau, 951 S.W.2d 444 (Tex. 1997) .......................................... 11

Valiani Taufiq, by and through its Authorized Agent Patrick O’Connor & Associates, etal v. Harris County Appraisal District, 6 S.W.3d 652 (Tex. App.—Houston [14th Dist.]1999, no pet.)................................................................................................................. 11

Whirlpool Corp. v. Camacho, 298 S.W.3d 631 (Tex. 2009)......................................6, 7, 8


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STATUTES

TEXAS GOVERNMENT CODE

Texas Government Code § 22.001(a)(2) (West 2004) ........................................ viiiTexas Government Code § 22.001(a)(6) (West 2004) ........................................ viii

TEXAS TAX CODE

§ 6.01 (West 2008)................................................................................................ 1§ 22.27 (West Supp. 2010).................................................................................... 8§ 23.01(b) (West Supp. 2010) ............................................................................... 6§ 42.25 (West 2008).............................................................................................. 1§ 42.26(a)(3) (West 2008)................................................................................. 2, 6

RULES AND ETHICS OPINIONS

Tex. R. Prof’l Conduct 3.04(b) ................................................................. 3, 11, 13, 14, 15Tex. R. Prof’l Conduct 3.04(b)(3).................................................................................. 14Tex. Comm. on Prof’l Ethics, Op. 458 (1988)................................................................ 14Tex. Comm. on Prof’l Ethics, Op. 553 (2004)............................................. 2, 3, 13, 14, 15

RECORD REFERENCES

The record is cited as follows:

Clerk’s Record: [Vol.] CR at [Page]

Reporter’s Record: [Vol.] RR at [Page], [Lines]

Exhibits: P. Ex. [Number]D. Ex. [Number]


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APPENDIX

The following documents are included in the Appendix:

Final Judgment, January 30, 2009 (2 CR at 336)................................................................ A

Findings of Fact and Conclusions of Law, March 11, 2009 (2 CR at 347) ......................... B

Fourteenth Court of Appeals’ opinion and judgment, August 26, 2010.............................. C

Tex. Tax Code Ann. § 42.26 (West 2008) (1 CR at 28) ..................................................... D

Tex. Tax Code Ann. § 23.01 (West Supp. 2010) (2 CR at 288).......................................... E

Tex. Disciplinary Rules Prof’l Conduct R. 3.04, reprinted in Tex. Gov’t Code Ann., tit. 2,subtit. G, app. A (West 2005) ............................................................................................ F

O’Connor & Associates’ Appraisal Witnesses, before and after Ethics Opinion No. 553(Similar chart contained in Appellant’s Motion for Rehearing, October 18, 2010)............. G

O’Connor & Associates, “Judicial Appeals” solicitation (D. Ex. 5.) .................................. H

Tex. Comm. on Prof’l Ethics, Op. 553 (2004) (2 CR at 201) ............................................. I

Tex. Comm. on Prof’l Ethics, Op. 458 (1988) (2 CR at 204) ............................................. J

Defendant’s Request for Additional Findings of Fact, March 28, 2009 (2 CR at 350)........ K

Order on Defendant’s Request for Additional Findings of Fact, April 6, 2009 (2 CR at383) ................................................................................................................................... L


viii

STATEMENT OF THE CASE

Nature of the Case: This is an appraisal case brought pursuant to Chapter 42 ofthe Texas Property Tax Code (the “Tax Code”) appealing theappraised value of the subject office building for tax year2006. At trial, Plaintiff Houston Laureate Associates, Ltd.and Levering and Company (“Houston Laureate”) allegedthat the Harris County Appraisal District (“HCAD”) hadunequally appraised the subject office building, and soughtrelief pursuant to Section 42.26(a)(3) of the Tax Code.

Trial Court: Judge Reece Rondon, 234th Judicial District Court of HarrisCounty, Texas.

Trial Court Disposition: This case was tried to the bench on December 8 and 9, 2008.After a hearing before the trial court on Plaintiff’s Motion forProposed Final Judgment and Defendant’s Objections to Entryof Judgment, judgment was signed in favor of HoustonLaureate on January 30, 2009.

Parties in the Courtof Appeals: Harris County Appraisal District, Defendant-Appellant/

Petitioner; andHouston Laureate Associates, Ltd. and Levering & Company,Plaintiffs-Appellees/Respondents.

District of the Courtof Appeals: Fourteenth Court of Appeals, Houston.

Justices: Justices Yates, Seymore, and Brown; opinion authored byJustice Yates.

Citation: Harris County Appraisal District v. Houston LaureateAssociates Ltd., 2010 WL 3341880 (Tex. App.—Houston[14th Dist.] 2010, pet. filed) (See copy of this opinion at App.Tab B).

Disposition by the Courtof Appeals: Affirmed, without oral argument. HCAD’s motion for

rehearing was overruled.


ix

STATEMENT OF JURISDICTION

The Supreme Court has jurisdiction in this case under Texas Government Code

§ 22.001(a)(2) (West 2004), because the Court of Appeals holds differently from prior

decisions of the Supreme Court on questions of law material to a decision of the case, and

§ 22.001(a)(6) (West 2004), because the errors are of such importance to the

jurisprudence of this State that they require correction.

ISSUES PRESENTED

ISSUE ONE

Is there legally sufficient evidence to support the Trial Court’s judgment?

ISSUE TWO

Did the Court of Appeals err in affirming the Trial Court’s judgment, when it wasundisputed that the judgment was based on the opinion testimony of an “expert witness”who had no knowledge of the individual characteristics of the office building propertiesabout which he opined, and the Court merely accepted his experience as the sole basis forhis assumptions and adjustments?

ISSUE THREE

Was it error for the Trial Court to admit the testimony of the “expert” based on a “specialtool,” of unsubstantiated reliability, provided by a tax consultant firm with a contingentfee interest in the outcome of the lawsuit?

ISSUE FOUR

Did the Trial Court err in permitting the expert witness to testify when it was undisputedthat the testimony was offered in violation of Rule 3.04(b) of the Texas DisciplinaryRules of Professional Conduct, which prohibits a lawyer from offering the testimony of awitness he knows is provided by a tax consultant firm with a contingent fee interest in theoutcome of the case?

ISSUE FIVE

Did the Court of Appeals err in shifting the burden to demonstrate the reliability of experttestimony from the proponent to the objecting party? (reserved for briefing)

TO THE HONORABLE SUPREME COURT OF TEXAS:

The Harris County Appraisal District respectfully submits this Petition for Review.

STATEMENT OF FACTS

The Opinion of the Fourteenth Court of Appeals correctly states the nature of the

case; however, HCAD disagrees with the Court’s characterization of the facts and law

relied upon by Petitioner. These matters are addressed, in turn, in this Petition.

Annually HCAD “is responsible for appraising property in the district for ad

valorem tax purposes of each taxing unit … in the district.” Tex. Tax Code Ann. § 6.01

(West 2008). O’Connor & Associates (“O’Connor & Associates”), the contingent-fee

tax consultant retained by Houston Laureate, handled the administrative protest of the

2006 appraised value of its nine-story office building in Houston (the “subject

building”). (2 RR at 21, lines 10-13.) O’Connor & Associates facilitated the entire

litigation process, including hiring the lawyer, filing suit, and providing the expert

witness. (2 RR at 20, lines 6-21; D. Ex. 5, 4 RR/App. Tabs G & H.) The lawsuit alleged

that the appraised value of the subject building was excessive 1 and unequal under Tax

Code § 42.25 and § 42.26(a)(3). (1 CR at 2; 2 RR at 37, lines 4-10.)

Although the trial testimony was clear, the Court of Appeals’ Opinion

misapprehended 2 that O’Connor & Associates’ contingent compensation was based

1 Respondents’ claim of excessive appraisal (i.e., exceeds market value) was perfunctorily non-suited at thebeginning of trial. (2 RR at 7, line 18 thru 8, line 3.)2 The Opinion correctly states, “Levering testified that Houston Laureate has a contingency fee agreement withtax consultants O’Connor & Associates.” Harris County Appraisal District v. Houston Laureate, 2010 WL334188, at *3 (Tex. App.—Houston [14th Dist.] 2010, pet. filed). (Emphasis added.) However, the Opinionmistakenly states in footnote no. 2: “The record does not reflect the exact nature of the relationship betweenO’Connor & Associates and Houston Laureate, but such a contingency interest may be inferred from the testimonyand evidence presented at trial.” Id. at *6.


2

solely on the amount of tax savings generated by a lower appraised value achieved at

trial. (2 RR at 20, lines 6-18.) Delain Goddard (“Goddard”), the witness provided by

O’Connor & Associates, was the sole unequal appraisal witness. Goddard confirmed on

cross-examination that the tax consulting firm, O’Connor & Associates, paid all fees 3

associated with the litigation, including those of the expert witness and legal counsel. (2

RR at 20, line 6 thru 21, line 9; see also D. Ex. 1, 3, and 5.)

Goddard utilized O’Connor & Associates’ staff, facilities, proprietary software,

and research databases. (2 RR at 40, lines 1-8; D. Ex. 5.) Relying on a “special tool”

furnished by O’Connor & Associates (3 RR at 122, lines 6-14), Goddard testified the

subject building was unequally appraised according to Tax Code § 42.26(a)(3) (West

2008): “The district court shall grant relief on the ground that a property is

appraised unequally if: … the appraised value of the property exceeds the median

appraised value of a reasonable number of comparable properties appropriately

adjusted.” (Emphasis added; App. Tab D.)

At trial, Goddard testified he was employed by a separate entity, called Property

Evaluation Services (“PES”). PES was created with the assistance of Hugh McKenney,

Respondents’ counsel, to circumvent Tex. Comm. on Prof’l Ethics, Op. 553 (2004),

issued by the Professional Ethics Committee of the State Bar of Texas specifically to

address O’Connor & Associates’ litigation practices. (2 RR at 40, lines 1-8; 3 RR at 198,

line 2 thru 200, line 7; 3 RR at 13, lines 11-24.)

3 Cf.: “O’Connor & Associates will be responsible for all expenses, including court costs …expert witness fees andlegal fees associated with litigation . . . .” (D. Ex. 5/App. Tab H.)


3

Omitted from the Court of Appeals’ opinion are the undisputed facts that define

the sham limited partnership that is PES. In substance, there is no difference between the

expert testimony by O’Connor’s & Associates’ experts provided prior to, and then after,

Ethics Opinion No. 553. (App. Tab G.)

In its Daubert challenge, which the Trial Court carried with the case, HCAD

objected to the expert’s testimony on two grounds. (2 RR at 24, line 21 thru 26, line 7; at

27, lines 23-24.) First, due to PES’s role in obtaining O’Connor & Associates’

contingency fee, presentation of Goddard’s testimony violated the prohibition of Tex. R.

Prof’l Conduct 3.04(b), as explained by Ethics Opinion No. 553 (2004). HCAD also

objected on the grounds that his testimony was no evidence because it was irrelevant and

unreliable. (2 RR at 24, line 21 thru 26, line 7; at 27, lines 23-24.) Goddard did no

professional work. He provided no support for his assumptions or adjustments. He

lacked knowledge of the individual characteristics of either the subject property or the

comparable properties selected for him by the O’Connor & Associates’ “proprietary

software” designed to “locate and analyze the values of comparable properties.” (D. Ex.

5/App. Tab H.) HCAD was granted a running objection, and continued to object to

Goddard’s testimony, during and after the trial. (3 RR at 188, line 7 thru 190, line 16.)

Through cross examination, HCAD exposed Goddard’s speculative and

conclusory opinions:

(1) Goddard had no support for the “comparable properties” selectioncriteria which he plugged into the O’Connor & Associates’ proprietarysoftware program. (2 RR at 60, lines 15-18; at 62, lines 1-7; 3 RR at 100,lines 6-25; at 101, lines 1-9; at 122, lines 6-11; at 129, lines 13-18.)


4

(2) Goddard had no personal knowledge regarding the individualcharacteristics of either the subject building or the selected comparables. (3RR at 54, lines 3-12; at 55, lines 16-20; at 56, lines 17-23; at 57, lines 8-11;at 65, line 22 thru 66, line 5; at 66, line 21 thru 67, line 4; at 78, lines 7-9.)

(3) Goddard had no support for his adjustments (size, location) which hetestified made the comparables, selected by the “special tool,” “even morecomparable.” (2 RR at 61, lines 13-25; 3 RR at 91, lines 12-25; at 98, lines5-17; at 100, lines 13-25; at 101, lines 5-9; at 122, lines 6-11; at 129, lines10-18; at 138, lines 11-23.)

(4) Goddard could not “recall” what properties were excluded from theoriginal selection of comparables. (2 RR at 62, lines 1-7.)

Nonetheless, based upon his unsubstantiated opinion, the Trial Court entered final

judgment in favor of Houston Laureate on January 30, 2009. (2 CR at 336.) HCAD

requested additional Findings of Fact, which were denied April 6, 2009. App. Tabs K &

L. HCAD appealed. Without granting oral argument, the Fourteenth Court of Appeals

affirmed. HCAD filed a motion for rehearing and a response from Houston Laureate was

requested by the Court, but the motion was denied.

SUMMARY OF THE ARGUMENT

In deference to the Trial Court, the Fourteenth Court of Appeals has legitimized an

appraisal practice under the Tax Code based on unsupported speculation and ethical

violations, evident on the face of the record.

To lower the appraised value of an office building, the unequal appraisal “expert”

witness was presented through a tax consultant with a contingent fee interest in the

outcome of this lawsuit - filed by the tax consultant. Based on the expert’s incompetent

testimony, the appraised value was adjusted downward. The result tarnishes the judicial

process and legal profession. Being a simple scheme it is easily followed, negatively


5

impacting appraisal districts, and adversely impacting the revenues of school districts,

other governmental units, and the State. This is a statewide problem. Public policy and

finance are at serious risk. HCAD respectfully requests that the Supreme Court grant

review.

ARGUMENT

A. Incompetent expert testimony, presented under cover of ethical violations,

is not evidence. The Fourteenth Court of Appeals acknowledged: “HCAD asserts that

there is no evidence to support the judgment because (1) Houston Laureate’s attorney

violated the Texas Disciplinary Rules of Professional Conduct by presenting its unequal

valuation expert’s testimony and (2) this expert’s research and analysis were not

reliable.” Harris County Appr. Dist. v. Houston Laureate Assoc., Ltd., No. 14-09-00380-

CV, --S.W.3d--, 2010 WL 3341880, at *1, (Tex. App.—Houston [14th Dist.] August 26,

2010, pet. filed.) (Emphasis added.) (hereinafter “Houston Laureate.”) HCAD objected

to the expert testimony of Plaintiff’s expert witness before, during, and after the trial. (2

RR at 27, lines 23-24; at 28, lines 7-16.)

However, the Court of Appeals bypassed the no evidence standard of review for

reliability, finding “there would be no evidence to support the Trial Court’s judgment

only if we determined that the Trial Court erred in admitting this expert’s testimony.

Thus, the appropriate standard of review … is abuse of discretion.” Houston Laureate,

2010 WL 3341880, at * 6, fn. 3. To the contrary, this Court has held: “[u]nlike review of

a Trial Court’s ruling as to admissibility … in a no-evidence review we independently

consider … the entire record, including contrary evidence tending to show the expert


6

opinion is incompetent or unreliable.” Whirlpool Corp. v. Camacho, 298 S.W.3d 631,

638 (Tex. 2009). The contrary evidence in this case is addressed below.

B. Goddard’s “special tool” = unequal appraisal, but without knowledge of

individual characteristics. Each real property is unique. The Tax Code requires that

appraised values reflect the varying individual characteristics of each property. Tex. Tax

Code Ann. §23.01(b) (West Supp. 2010), attached under App. Tab E.

Article VIII of the Texas Constitution requires “that assessed valuations be equal

and be based upon reasonable cash market value.” Parker v. Spindletop Oil & Gas Co.,

628 S.W.2d 765, 767 (Tex. 1982). The market value standard was designed to ensure

equality and uniformity. See Lively v. Missouri, K.&T. Ry., 102 Tex. 545, 120 S.W. 852,

856 (Tex. 1909). In accord with these principles, the First Court of Appeals in In re

MHCB (USA) Leasing and Finance Corp. and Valero Refining L.P., No. 01-06-00075-

CV, 2006 WL 1098922 (Tex. App.—Houston [1st Dist.] 2006, no pet.) (not designated

for publication), explained considerations necessary to an unequal analysis:

The comparable properties are adjusted according to factors that tend toinfluence value, such as location, age, depreciation, physical characteristicsof the property, and economic factors.” (referencing Tax Code§ 42.26(a)(3)), at * 3.

... adjustments made between and among properties may be quantified bycomparing characteristics that result in differences in appraised and marketvalue - as reflected by a price placed on various kinds of “adjustments.” Id.,at * 4.

Goddard could not ignore the individual characteristics of the properties about

which he opined. Nonetheless, he did. Further, he relied on O’Connor & Associates’

proprietary software to select comparables; but that is not the type of support reasonably


7

relied upon by appraisal experts. Adding to the mystery of his analysis, Goddard testified

“I typically don’t keep a list of properties that I’ve excluded,” when asked if any

properties were excluded from the original selection of comparables. (2 RR at 62, lines 1-

7.) See Guadalupe –Blanco River Authority v. Kraft, 77 S.W.3d 805, 807 (Tex. 2002)

(appraisal expertise is “specialized knowledge:” the expert’s bald assurance that a widely

accepted approach was used does not demonstrate the opinion is reliable); Coastal

Transport Company, Inc. v. Crown Central Petroleum Corp., 136 S.W.3d 227, 232 (Tex.

2004) (it is the basis of the opinions, not qualifications or bare opinions).

“[R]ule 702’s reliability requirement focuses on … whether the analysis used to

reach … [the expert’s] conclusions is reliable.” Exxon Pipeline Company v. Zwahr, 88

S.W.3d 623, 629 (Tex. 2002) (Insert added). Goddard’s analysis impermissibly relied on

O’Connor & Associates’ proprietary software for the selection process and his alleged

“experience.” Otherwise, he had no basis for his comparable adjustments or selection

parameters. (2 RR at 65, line 7 thru 66; 3 RR at 138, lines 16-23.) See Whirlpool v

Camacho, 298 S.W.3d at 639 (courts cannot merely accept experience as a substitute for

proof).

The Court of Appeals erroneously accepted Goddard’s “experience and expertise,”

without more, to make adjustments. Houston Laureate, at * 5. But his testimony was

“subjective belief or unsupported speculation.” See Exxon Pipeline Co. v. Zwahr, 88

S.W.3d at 629. Referring to this as a “non-scientific case” (Houston Laureate, at * 4),

the Fourteenth Court of Appeals (i) did not require the proponent to “satisfy its burden

regardless of the quantity or quality of the opposing party’s evidence on the issue,” but


8

instead (ii) erroneously placed the burden on HCAD to “prove the expert testimony is

wrong.” See Whirlpool v. Camacho, 298 S.W.3d at 639.

Goddard’s arm-chair analysis consisted of (i) his reliance on the O’Connor &

Associates’ proprietary software to “select” comparables from HCAD’s public records,

(ii) sifting through other HCAD public documents online, and then applying his

“experience” 4 to create adjustments, from which he divined unequal appraisal. (2 RR at

80, lines 9-19.) Taking the path of least resistance, he simply, and erroneously, assumed

that each and every property characteristic affecting value was easily found in the public

record. But see, e.g., Tax Code § 22.27, “Confidential Information.” (West Supp. 2010.)

Goddard succinctly admitted:

Q. (HCAD Counsel) At any point do you try to make a determination about theactual characteristics, physical and economic for the subject property, oryour properties that you deem to be comparable outside of the data that youhave from HCAD?

A. Sure, I will.…

Q. Did you do that in this case?

A. No. (3 RR at 95, line 21 thru 96, line 14.) (Emphasis added.)

Following this startling admission, the Trial Court had no discretion to credit Goddard’s

unsubstantiated opinion as evidence. Whirlpool Corp. v. Camacho, 298 S.W.3d 631,

637-38 (Tex. 2009) (failure to support or explain.) These are other examples of his

lackadaisical approach:

Q. How can you tell the condition of the property from the outside?

4 Goddard was an “appraiser trainee” at the time. (3 RR at 9, lines 19-23.)


9

A. … Do I know what the condition of the inside of the property is? … no. (3 RR at56, lines 17-23.)

Q. Do you have any knowledge about the structural integrity of any of the propertiesin your list?

A. I do not. (3 RR at 57, lines 8-11.)

Q. Do you have any information about the net operating income, the actual figures forthe property for the tax year at issue?

A. No.…

Q. Do you have any of that information for any of the properties on your list?

A. No. (3 RR at 65, line 22 thru 66, line 5.).

Q. Do you have a value that you’re offering to the Court to suggest what would be theappropriate value for the property?

A. As long as we don’t discover something else in the rest of this testimony, I believeI do. (3 RR at 88, lines 8-12.)

Q. … for instance, the fitness center, the pond, the fountain? Do you know if thisproperty number one has any of those types of amenities?

A. No. I don’t know .… (3 RR 72, line 19 thru 73, line 8.)- - -

This is not expert testimony. See Tex. Tax Code Ann. § 23.01 (West Supp. 2010); App.

Tab E; Tex. R. Evid. 702, 703. HCAD objected that his testimony was no evidence. (2

RR at 12, line 12; 3 RR at 212-217.)

C. Hired gun Goddard, armed with a “special tool”, came in after the tax

consultant filed this lawsuit. In this case, the Trial Court and the Fourteenth Court of


10

Appeals credited, for the first time,5 Goddard’s incompetent testimony. This “hired

gun,” 6 armed for litigation with a “special tool,” testified:

Q. (Respondents’ counsel) What does Property Evaluation Services [PES] do?

A. That’s it. We just provide real estate appraisal services for people who areappealing their property assessments.… (2 RR at 33, lines 9-12.) (Emphasisadded.)

Q. (HCAD’s counsel) [L]itigation … Is that where PES would come in?

A. Eventually, we’ll come in, you know, after O’Connor has filed the lawsuit.Sure.

Q. PES comes in as the expert witnesses in the case?

A. Correct. (3 RR at 30, lines 1-10.) (Emphasis added.)

Q …you handle all of the cases that O’Connor & Associates has in litigation andthat’s still true today?

A. Well, PES does.… (3 RR at 22, lines 20-25.)

Q. …[Y]ou came up with this list of properties, correct?

A. Well, the database search program presents me with a list of properties. And… I can apply adjustments if I deem they’re appropriate … (2 RR at 60, lines9-22.) (Emphasis added.)

Q. (The Court) … could I do searches like that? I mean, he did, right?

A. (Respondents’ counsel) He has – he has a special tool to do that. (3 RR at 122,lines 6-11.) (Emphasis added.)

5 (Goddard) “[T]he six trials that I’ve testified in, the Court found for the defendant; the ones that are on myresume.” (3 RR at 49, lines 8-10.)6 A witness whose opinion has no reliable basis in the knowledge of the discipline. Gammill v. Jack WilliamsChevrolet., 972 S.W.2d 713, 725-26 (Tex. 1998).


11

Goddard relied on O’Connor & Associates’ “special tool,” of unsubstantiated reliability,

that “presented him with a list” of comparable properties, from which he concluded 7 the

subject building was unequally appraised. Legitimizing this as “expert” testimony or

evidence is an affront to the judicial process and the legal profession.

D. This lawsuit lottery violated the prohibition of Tex. Disciplinary R. Prof’l

Conduct 3.04(b). Tex. Disciplinary Rule Prof’l Conduct R. 3.04(b) is an express and

unequivocal prohibition: “A lawyer shall not: … acquiesce in the payment of

compensation to a witness or other entity contingent upon the content of the

testimony of the witness or the outcome of the case.” (App. Tab F, Emphasis added.)

Rule 3.04(b) prohibits payment of contingent compensation to either the (a)

witness or (b) other entity. Houston Laureate’s principal testified: “We pay them

[O’Connor & Associates] a contingent fee based on their ability to … have it

reappraised lower.” (2 RR at 20, lines 6-18.) Ignoring the prohibition, the Court of

Appeals legitimized O’Connor & Associates’ “no risk” lawsuit lottery 8 state-wide:

We [O’Connor & Associates] are currently coordinating … casesstatewide. … Our fee is [x]% of the potential property taxes saved as aresult of litigation. [and] You risk nothing because you don’t payanything until or unless you receive further value reduction.(D. Ex. 5, App. Tab H; Insert and emphasis added.)

Indeed, O'Connor & Associates should have no role in this lawsuit. 9

7 Unequal appraisal was a foregone conclusion: the “special tool” selected 18 properties; one property was exempt -and 16 had appraised values lower than the subject.8 Unequal appraisal in this case is reminiscent of the description of insurance bad faith in State Farm Llyods v.Nicolau, 951 S.W.2d 444, 453 (Tex. 1997) (dissent): like “…the Texas lottery: it costs almost nothing to play, youcan play whenever you want, and if you win you hit the jackpot ….”9 Cf. Valiani Taufiq, by and through its Authorized Agent Patrick O’Connor & Associates, et al v. Harris CountyAppraisal District, 6 S.W.3d 652, 654 (Tex. App.—Houston [14th Dist.] 1999, no pet.) (“The scope of O’Connor’srepresentation is defined by statute and does not include representing [the property owner] in a lawsuit . . . .”).


12

Respondents’ counsel was prohibited from acquiescing in payment of

compensation to either the witness or other entity, O’Connor & Associates, contingent

on the outcome. But that is exactly what has been allowed.

E. The Court of Appeals erred in failing to strike Goddard’s testimony. The

seriousness of the offending testimony presented in this case is manifest in Rule 3.04

itself. The section is entitled "Fairness in Adjudicatory Proceedings." The prohibition of

contingency-fee experts is included together with such other transgressions as falsifying

evidence and subornation of perjury. As pointed out in Ethics Opinion No. 553, this is

hardly a trivial matter. Here, public policy issues are seriously at risk.

The Court of Appeals’ reliance on Gentry v. State, 770 S.W.2d 780, 790-91 (Tex.

Crim. App. 1988) is misplaced. Houston Laureate, at * 3. The Gentry holding is

applicable only in criminal cases, and, as the Court of Criminal Appeals points out in

footnote 8, the consequences of an ethical violation would be different in a civil case. It

is not surprising that there is a dearth of cases enforcing Disciplinary Rule 3.04(b);

lawyers have heeded the prohibition. When necessary, however, the prohibitions set out

by the disciplinary rules are enforced by the courts. See Johnson v. Brewer & Pritchard,

P.C., 73 S.W.3d 193, 205 (Tex. 2005) (lawyer fee sharing agreement that violates public

policy as expressed in the disciplinary rules is unenforceable); see also attorney-witness

cases: Ayres v. Canales, 790 S.W.2d 556-57, fn. 2 (Tex. 1990) (the trial court has not

only the power, but also the duty); NCNB Texas National Bank v. Hon. Bill F. Coker, 765

S.W.2d 398, 400 (Tex. 1989) (“By proving the substantial relationship … the moving

party establishes as a matter of law that an appearance of impropriety exists. … the trial


13

court should perform its role in the internal regulation of the legal profession ….”);

Anderson Producing Co. v. Koch Oil Co., 929 S.W.2d 416, 425, 430 (Tex. 1996) in

dissent, Justice Phillips, joined by Justice Spector, wrote: “[W]e have in practice

employed … disciplinary rules as the controlling standard …,” and also in dissent, Justice

Owen, joined by Justice Hecht, wrote: “[T]he contingency fee was not raised … but a

violation of this nature should not be sanctioned by any court, objection or no.”) In this

case, the Court of Appeals erred by not striking Goddard’s testimony.

F. The Court misconstrued Ethics Opinions Nos. 458 and 553. The Court of

Appeals rejected HCAD’s contention that the presentation of Goddard’s testimony

violated the prohibition of Texas Disciplinary Rule of Prof’l Conduct R. 3.04(b), as

explained in Ethics Opinion No. 553. The Court did so on the basis of a major erroneous

conclusion. Before this case was tried, the Ethics Committee had already informed

O’Connor & Associates, its expert witnesses, and counsel - the very same individuals

before this Court - that their arrangement violated Tex. Disciplinary R. Prof’l Conduct

3.04(b). (2 CR at 206; 1 CR at 173.) After Ethics Opinion No. 553 was published in

August 2004, Goddard, et al, “[w]ith the advice of Mr. McKenney” (3 RR at 14, line 9),

took the minimal step to create a sham separate entity, Property Evaluation Services, or

“PES”. (3 RR at 13, lines 11-24; D. Ex. 7.) Beyond that, nothing changed. (App. Tabs

G & H; D. Ex. 5.) The Fourteenth Court of Appeals failed to address either this end-

around or the blatant violation of the prohibition of Rule 3.04(b), thereby legitimizing

both.


14

Before and after Ethics Opinion No. 553, all the tools of Goddard’s “trade” were

paid for and provided by O’Connor & Associates: offices, staff, proprietary software,

research, and salaries. (2 RR at 33, lines 13-22; 2 RR at 40, lines 1-8; App. Tabs G & H,

D. Ex. 5.) O’Connor & Associates hired and paid the putative plaintiffs’ counsel and

expert witness, filed the lawsuit, and thus “facilitates the entire litigation process for

you.” Id. (3 RR at 30, lines 1-10.)

After the Ethics Opinion, Goddard’s salary, including raises, and witness

testimony fees were paid through PES by O’Connor & Associates. (3 RR at 17, line 20

thru 18, line 10; App. Tabs G & H.) Ethics Opinion No. 553 clearly explains the

prohibition:

... the employing entity could itself be a witness only through anemployee or other agent.

It should be noted that the result that was reached under the old TexasCode of Professional Responsibility is even clearer under current Rule3.04(b) because the current Rule makes explicit that the prohibition ofthe Rule applies to payments of contingent compensation to an ‘otherentity’ as well as directly to a witness.

(Tex. Comm. on Prof’l Ethics, Op. 553; emphasis added, 1 CR at 172-73; referencing

Tex. Comm. on Prof’l Ethics, Op. 458 (1988); see App. Tabs I & J).

In Houston Laureate, payment hinged on the shared success of O’Connor &

Associates and Goddard/PES through litigation. The Court of Appeals has erroneously

approved of such relationships. Houston Laureate, 2010 WL 3341880, at * 1, 2.

Further, the Court mistakenly likens their relationship to that of a contingency-fee

attorney retaining an expert, but Rule 3.04(b) is a prohibition (“a lawyer shall not”),


15

whereas Rule 3.04(b)(3) specifically authorizes (“a lawyer may”) an attorney to advance

“a reasonable fee for the professional services of an expert witness.”

Quoting a colloquy between the trial judge and Houston Laureate’s counsel, the

Court of Appeals focused on the fact that Goddard was a salaried employee who was paid

the same, win or lose. However, Goddard had been a salaried employee, win or lose, of

O’Connor & Associates at the time that Ethics Opinion No. 553 was issued. (3 RR at 17,

line 20 thru 18, line 10.) The salary of the employee was not at issue in Ethics Opinion

No. 553, it was the tie-back to the entity with the contingent interest, O’Connor &

Associates. The fact that Goddard was subsequently salaried through PES is irrelevant.

(3 RR at 21, line 21 thru 22, line 6.) Thus, the Court erred in concluding that because

“Goddard [himself] had no contingency interest,” Rule 3.04(b) did not prohibit his

testimony.

CONCLUSION AND PRAYER

Respectfully, the Supreme Court should grant this Petition for Review, and reverse

and render a take-nothing judgment in favor of HCAD, because there is no evidence in

the record to support the Trial Court’s judgment.


16

Respectfully submitted,

OLSON & OLSON, L.L.P.

By: _________/s/_______________________Tammy White-ChafferState Bar No. 24008273Mario L. Dell’OssoState Bar No. 05732150Wortham Tower, Suite 6002727 Allen ParkwayHouston, Texas 77019Telephone: (713) 533-3800Facsimile: (713) 533-3888

ATTORNEYS FOR PETITIONER

CERTIFICATE OF SERVICE

I hereby certify that on the 14th day of February 2011, a true and correct copy ofthe foregoing Petition for Review was served on the counsel for Respondent by:

telecopy (713) 688-0199

certified mail, return receipt requested

courier, receipted delivery

To Hugh L. McKenney, McKENNEY & ASSOCIATES, P.C., 2200 North LoopWest, Suite 333, Houston, Texas 77018.

____________/s/________________________Tammy White-Chaffer

NO. 11-0078

APPENDIX TO THE PETITION FOR REVIEW

The following documents are included in the Appendix:

Final Judgment, January 30, 2009 (2 CR at 336) .................................................................. A

Findings of Fact and Conclusions of Law, March 11,2009 (2 CR at 347) .......................... B

FOUlieenth Court of Appeals' opinion and judgment, August 26,2010 ............................... C

Tex. Tax Code Ann. § 42.26 (West 2008) (I CR at 28) ....................................................... D

Tex. Tax Code Ann. § 23.01 (West Supp. 2010) (2 CR at 288) ........................................... E

Tex. Disciplinary Rules Prof! Conduct R. 3.04, reprinted in Tex. GOy't Code Ann., tit. 2, subtit. G, app. A (West 2005) ................................................................................................ F

O'Connor & Associates' Appraisal Witnesses, before and after Ethics Opinion No. 553 (Similar chart contained in Appellant's Motion for Rehearing, October 18,20 I 0) ........ " ... G

O'Connor & Associates, "Judicial Appeals" solicitation (D. Ex. 5.) .............................. " ... H

Tex. Comm. on Prof I Ethics, Op. 553 (2004) (2 CR at 201) .......................................... " ... I

Tex. Comm. on Prof! Ethics, Op. 458 (1988) (2 CR at 204) .......................................... " ... J

Defendant's Request for Additional Findings of Fact, March 28,2009 (2 CR at 350) ........ K

Order on Defendant's Request for Additional Findings of Fact, April 6,2009 (2 CR at 383) ..................................................... , .................................................................................. L

j

j

j

j

j

j

j

j

j

j

J

j

j

j

j

j

j

j

j

j

j

j

j

j

NO. 2006-<i4087

HOUSTON LAURBA TE ASSOC LTD, et a1.

vs.

HARRIS COUNTY APPRAISAL DISTRICT and the APPRAISAL REVIEW BOARD OF HARRIS COUNTY APPRAISAL DISTRICt

§ § § § § § § § §

FINAl, JUWMEJIT

IN THE DISTRICT COURT OF

On the 8'" day of December, 2008, the above styled matter was called to trial during its trial

docket period. The P\aintiffiJ, Houston Laureate Assoc Ltd nnd Levering & Company, appeared for

trial through its representative and through counscl., Hugh L. McKenney, and announced ready for

trial, The Defendant, Harris County AppmiBaI District, appeared for trial through cmmseJ, Tammy

White-Chaffer and Darren M. Poutra, and announced ready for trial. The Defendant, Appraisal

Review Board of Harris County Appraisal District, was not served with process in titis matter, nor

did it make any appearance herein. There having been no jury demand, nor jury fee pnid, trial was

to the bench.

The parties presented evidence through testimony and certain documents admitted into

evidence. At the conclusion of tile evideru::e the PJaintiffil rested and the Defendant rested. Counsel

for the parties made closing arguments to the Court.

After considering the testimony and evidence properly admitted at trial and the argument of

coun.'lcl, the Court was of the opinion that judgment should be entered in favor of the Plaintiffs on

their claim ofunequai appraisal. It is therefore,

_.-_._----_.

It is therefore, ORDERED, ADJUDGED, AND DECREED that for 2006 ad valorem tax

purposc.'<, the appraised value of Plaintiffs' proPCl1y which is the subject of this suit shall be as

follows:

1161 02()()()()()() I

Z()()6 APPRAISED YAIJJK

$13,327,490

It is further ORDERED that the Chief Appraiser of Defendant, Harris County Appraisal

District, shall pcrfonn the post-appeal administrative procedures provided in Section 42.4 J of the

Texns Property Tax Code.

It is further ORDERED that Plaintiffs, Houston Laureate Assoc Ltd and Levoring & _.". '. .

Company, have judgment against and recover of and from the Defendant, Harris County Appraisal

District, the sum of three thousand five hundred dollars ($3,500,00) aB attorneys feoo through trial

oflhis matter, and additio;w.\ conditional attorneys fees on appealaB folloWB: tile sum of$I,500.00

in the event ofullSU=sful appeal to the Court of Appeals; the sum 0[$1,500.00 in the event ofa

petition to the Supreme Court; and the sum of$l,500.00 in tho event that the Supreme Court grants

the petition.

It is further ORDERED that all costs are asaessed against the Defendant, Harris County

Appraisal District.

All requeSted rcliefnot granted is DENffiD. This is a final judgment which disposes of all

issues and parties. +- . L~~./ SIGNED this ~ day Of...;~:::.-_--,{--_____ --->, 200X. v

JM77i2~ JUDGE PRESIDING

APPROVED AND ENTRY REQUESmD: MCKENNB)SS ··IATES, P.c.

By: ",L....~ .. -cc---I-:-.--.---.-. Hugb L. c r , S 2200 N Loop West, Sui' HOUMtQa, Texas 77018 Telephone: 713.688.6767 / Facsimile: 713.688.0199

ATIORNEY FOR PLAINTIFFS

APPROVED AS TO FORM:

By: ::::-----,---,.---------Tummy Whitc-Chaffcr Olsoo & 01800 2727 Allen Patkway Suite 600 Telcl'hooo: 713.533.3800 Facsimile: 7\3.533.3888

ATfORNEY FOR DEFENDANT

l\lm1g2/lloutour3fj.wpd

1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

NO. 2006-64087

HOUSTON LAUREATE ASSOC LTD, ET AL.

VS.

HARRIS COUNTY APPRAISAL DISTRICT, ET AL.

§ § § § § § §

FINDINGS OF FACT AND CONCLUSIONS OF LAW

On December 8, 2008, this case was callcd for trial. All parties appeared through

attomeys of record and announccd that they were ready for trial. The case was tried to tlle Court.

Based upon the evidence and arguments of counsel, this Court cnters the following Findings of

Fllct and Conclusions of Law. To tile extent a finding is more appropriately considered a

conclusion, elich finding will also be a conclusion. To the extent a conclusion ill more

appropriately considcred a finding, each conclusion will also be a finciing.

When this lawsuit was instituted in January of 2006, Plaintiff owned real property located

at 10000 Memorial Drive, Houston, Texas 77024, which property was the subject of this lawsuit.

TI1C Subject Property is located ill Harris County, and is identificd in Defendant's records as

Account 116102000000 I.

Rule 702 of the Texas Rules of Civil Evidence provides that "if scientific, technical, or

other specialized knowledge will assist the trier of fact to understand the evidence or to

determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience,

training, or education may testify thereto in the fonn of an opitlion or otherwise." The Court

ruled at trial that Plaintiff's expert Mr. Goddard was sufficiently qualified to give testimony to

assist the Court in its fact fmding. Based on the testimony of Plaintiffs expert Goddard, which

the Court found to be crediblc and reliable, lhe appraised valuc of tbe Subject Property for the

tax year of 2006 exceeds the median appraised value of a reasonable number of comparable

properties appropriately adjusted. Furthcr, the methodology, proccdures, samplc size, etc., of

Goddard's research was such that the Court was persuaded by Goddard.

Defendant offered no expert testimony to controvert Goddard's testimony. Based on

Plaintiff's uncontroverted expert testimony, the Court finds that at the median appraised value of

a reasonable number of comparable properties appropriately adjusted, the Subject Property

would be appraised at $13,327,490.00 for tax year 2006. Further, Plaintiff incurred attomeys'

fees for representation in this matter through trial in the sum of $3,500.00, of which the Court

finds $3,500.00 to be reasonable and necessary. Moreover, the Court finds $1,500.00 to be

reasonable and necessary attorneys' fees for each level of appeal.

Purstlant to Section 42.26(a)(3) of the Texas Property Tax Code, Plaintiff is entitled to

relief on the grounds that the Subject Properly is wlequally appraised. The appraised value of

the Subject Property exceeds the median appraised value of reasonable and comparable

properties appropriately adjusted. TIle proper appraised value of the Subject Property for the

2006 tax year is $13,327,490.00. The appraised value of the Subject Property on the appraisal

roU of the Harris County Appraisal District should be changed to reflect the correct value of

$13,327,490.00 for tax year 2006 for I-[CAD Account 1161020000001.

This Court will enter a judgment in favor of Plaintiff for the value of the Subject Property

on Defendant's appraisal roll to be $13,327,490.00. Further, Plaintiff is awarded reasonable and

necessary attomeys fees in the amount of $3,500.00 through trial and additional conditional

altorneys fees on appeal as follows: the sum of $1 ,500.00 in the event of an unsuccessful appeal

to the Court of Appeals; the sum of $1,500.00 in the event of a petition to the Supreme Court;

and the sum of $1,500.00 in the eycnt that the Supreme Court grants the petition. Moreover,

PlaintifT is awarded all cost, incurred.

~ Signed this ._.J_\~ day of March, 2009

JUDGE REECE RONDON PRES1DlNG

of B

VVestldw Page I

--- S.W.3d----, 2010 WI. 3341880 (Tex.App.-Ilous. (14 Disl.» (Cite as: 2010 WL 3341880 (Tex.App.-Hous. (14 Dist.)))

H Only the Vvcstlaw citation is currently (\vai\able.

Court oj Appeals of Texas, Iiouston (14th Disl.).

HARRIS COUNTY APPRAISAL DISTRICT, Appellant,

v. HOUSTON LAUREATE ASSOCIATES LTD.

and Levering & Company, Appellees.

No. 14-09-00380-CV. Aug. 26, 20 I O.

Rehearing Overruled Dec. 23, 2010.

Background: Property owner brought action against cOllnty appraisal district alleging appraisal district unequally appraised properly. The 234th District Court, Harris County, Reese Rondon, 1., adjusted the appraised value of the property, and appraisal district appealed.

Holdings: The Court of Appeals, Leslie B. Yates, 1., held that: (I) alleged violation of rule of professional conduct did not provide a basis for excluding expert's testimony, and (2) evidence was sufficient to support finding expert's tcstinlOny was reliable.

Affirmed.

West Headnotes

[I J Evidence 157 C;:;>535.5

157 Evidence 157XII Opinion Evidence

I 57Xll(C) Competency of Experts 157k535.5 k. Disqualification; Bias or

Conflict ofInteresl. Most Cited Cases Alleged violation of rule of professional con

duct prohibiting payment of compensation to a witness contingent on the content of the testimony of the witness or the outcome of the case by counsel

far property owner did not provide a basis for excluding expert's testimony as to unequal valuation of properly by {he county appraisal district, where neither expert, nor his employer, had a contingency interest in the outcome of action against county appraisal district alleging unequal appraisal of property. State Bar Rules, V.T.eA., Government Code Title 2, Subtitle G App. A, Art. 10, § 9, Rules or Prof.Conciuct, Rule 3 .04(b).

[2\ Appeal and Error 30 C;:;>94G

30 Appeal and Error 30XVI Review

30XVI(JI) Discretion of Lower Court 30k944 Power to Review

30k946 1<. Abuse of Discretion. Mosl Cited Cases

Appeal and Error 30 C;:;>971(2)

30 Appeal and Error 30XVT Review

30XVI(H) Discretion of Lower Court 301<971 Examination of Witnesses

30k971(2) k. Competency of Witness. Most Cited Cases

The Court of Appeals reviews a trial COUl-eS decision to admit or exclude an expert witness for an abuse of discretion; under this familiar standard, the trial court abuses its discretion when its ruling is arbitrary, unreasonable, or made without reference to any guiding rules or legal principles.

13J Evidence 157 C;:;>508

157 Evidence 157Xll Opinion Evidence

I 57XTT(B) Subjects of Expert Testimony 157k508 k. Matters Involving Scientific

or Other Special Knowledge in General. Most Ciled Cases

Evidence 157 C;:;>535

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--- S. W.3d ----, 20 I 0 WL 3341880 (Tex.App.-llolis. (14 DisL)) (Cite as: 2010 we 3341880 (Tex.A pp.-Holls. (14 Dis!.)))

157 Evidence 157Xli Opinion Evidence

I 57XII(C) Competency of Experts 157k535 k. Necessity of Qualification.

Most Cited Cases

Evidence 157 €:=555.2

157 Evidence 157Xll Opinion Evidence

I 57XII(D) Examination of Experts 1571<555 Basis of Opinion

1571<555.2 Ie Necessity and Sufllclency. Most Cited Cases

Expert testimony is acllnissiblc only if the expert is qualified and the evidence is relevant and based on a reliable foundation.

\4\ Evidence 157 €:=555.2

157 Evidence I 57 XII Opinion Evidence

I 57Xll(D) Examination of Experts 157k555 Basis of Opinion

157k555.2 k. Necessity and Sufllciency. Most Cited Cases

In non-scientific cases the trial court ultimately has discretion to determine how to assess reliability of an expert witness's research and analysis.

\5\ Evidence 157 €:=555.2

I S7 Evidence 157XIl Opinion Evidence

I 57XlI(D) Examination of Experts 157k555 Basis of Opinion

157k555.2 k. Necessity and Sufficiency. Most Cited Cases

In determining whether an expert's research and analysis is based on a reliable foundation, the trial court does not decide whether the expert's conclusions are correct; instead, the trial COUlt must determine whether the analysis used to reach those conclusions is reliable.

[6l Evidence 157 €:=555.6(IO)

157 Evidence 157XII Opinion Evidence

157XJI(D) Examination of Experts 157k555 Basis of Opinion

157k555.6 Value 157k555.6( I 0) Ie Comparable Sales

or Values. Most Cited Cases Evidence was suf'ncient to support triHl court's

finding that expert witness's testimony rcgarding the appraised value of subject property was reliable, in property owner's action challenging county appraisal district's appraisal of property, even though come of the appraised valued of comparable properties identified by expert might have changed during pendency of action, where expert changed his conclusions to reflect the more current data, using data obtained from appraisal district's rccords and property classifications.

Tmnmy Yolanda White-Chaffer, John E .. Fisher, Mario L. Dell'Osso, I-louston, for appellant.

Hugh L. McKenney, Houston, for appellees.

Panel consists of lustices YATES, SEYMORE, and BROWN.

OPINION LESLIE B. YATES, lustice.

*1 In this ad valorem properly tax case, appellant Harris County Appraisal District ("HCAD") challenges the trial court's judgment adjusting the appraiscd value of the property owned by appellees Houston Laureate Associates Ltd. and Levering & Company (collectively, "Houston Laureate"). In two issues, I-I CAD asselts that there is no evidence to support the judgment because (1) Houston Laureates attorney violated the Texas Disciplinary Rules of Professional Conduct by presenting its unequal valuation expert's testimony and (2) this expert's research and analysis were not reliable. We afllrm.

Background Property owners Houston Laureate sued HeAD

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--- S.W.3d ----, 2010 WL 3341 BSO (Tex.App.-Ilous. (14 Disc» (Cile as: 2010 WI, 3341880 (Tex.App.-Hous. (14 Dis!.)))

under Chapter 42 of the Texas Properly 'Tax Code-. Houston Laureate alleged, that IleAD had unequally appraised their property, located on Memorial Drive in Houston, for tax year 2006. 'rl1c case \vas tried to the bench in December 2008. AI trial, only two witnesses testified: Gary Levering, the president of Houston Laureate Associates, Ltd., and De-lain Goddard, a certified appraiser employed by Property Evaluation Services.

Levering testified that Houston Laureate has a contingency fcc agreement with tax consultants O'Connor & Associates. According to L,cycring, Houston Laureate pays O'Connor & Associates a fcc contingent on O'Connor & Associates's ability to get Houston Laurcate's property tax lowered. L,cvcring testified that he believed the contingency Ice was twenty-five percent. I-Ie further stated that he "assumed" O'Connor & Associates hired and paid the altorney and the expert witness for this trial. He explained that he had consulted v·,rith O'Connor & Associates before filing suit, but that the property manager of this particular property, Todd Casper, had actually been the individual involved in the decision-making process regarding the lawsuit. Todd Casper did not testify at trial.

Goddard testified and described his background and experience as a certified appraiser.FN' He testified thaI he had formerly been employed by O'Connor & Associates, but in 2005, he and two colleagues formed Propelty Evaluation Services as "a separate business venture outside of O'Connor." According to Goddard, he and his collcagues left O'Connor & Associates because they were concerned about "an issue in the cOUlis with attorneys using expeli ... witnesses who were employed by companies that had a contingency interest in the cases that they were assigned to." The following exchange on cross-examination between HCAD's attorney and Goddard sets out the salient points regarding the relationship between Property Evaluation Services and O'Connor & Associates:

Q. Can you explain for the Court what exactly is PES's arrangement or contract with O'Connor;

Page 4 or 8

how it works?

1\. Well, through the ongoing agreement, we have pretty much a standing order to analyze all the property cases that they have in litigation to determine if they're unequally assessed in regards to how any particular appraisal district assesses their values. We'll perform market value studies from time to time. And, then, \ve are to serve as expert witnesses either in deposition or at trial over the cascs that \ve've prepared.

*2 And, then, part or our arrangement, like I had mentioned before, allows us access to a group of clerical administrative people that help to schedule the \vork, the actual production part of it as far as the paperwork and that type of thing. We have assistance in assembling the data and somctinles the exhibits that might be included in particular \vork-file supplementation. And, then, the agreement for subleasing the office space and office furniture and computers.

Q. And how is PES compensated for the work that it does for O'Connor?

A. I think iI'S simply a monthly flat fee that is designed to accommodate the salaries of the appraisers who work for Property Evaluation Services.

Q. Are there any bonuses or commissions that are realized by any of your appraisers'>

A. No. The only expert fees are just Iypical expert witness fees that would be invoiced, for example, in this case I'll invoice O'Connor through PES for a fee for appearing here, but it's a flat fee.

Q. What is Ihal flat fee?

A. $1,500.


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or 8

--- S.W.3d----, 2010 WL 3341880 (Tcx.App.-llous. (14 LJisl.)) (Cite as: 2010 WL 3341880 (Tcx.App.-Holis. (14 Dist.)))

Q. Is thaI a Oat fee thaI is paid to all the experts thaI testify at trial at PES?

A. Currently that's our standard trial testimony fee that we invoice to O'Connor.

Regarding the methodology underlying his unequal appraisal determination, Goddard explained that he found comparable properties using criteria including physical and geographic characteristics. lle relied on HeAD's own property designations to find other high-rise "Class A" properties within a ten mile radius of the subject property. He located eighteen comparable properties, which he opined was a "reasonable" number. He explained the various adjustments he made to these properlies' appraised values so they would be comparable to the Memorial Drive property, including adjustments for size, age, and location. Several of the properties he identified as com parables had changes to their appraised values during the pendency or the suit. Goddard adjusted his calculations based on the newer appraised values. In addition, HeAD established that several of the comparable properties had separately accounted-for parking garages, but the Memorial Drive property had a parking garage included in its appraised value; again Goddard adjusted his calculations to include the appraised value of the parking garages for those buildings for which the parking garages were separately accounted. Ultimately, Goddard opined that the subject property had been unequally appraised in relation to the comparable properties. He further calculated the median appraised value of the comparable properties at $86.96 per square foot.

After hearing the testimony and argument of counsel, the trial court found in favor of Houston Laureate and reduced the 2006 appraised value of the Memorial Drive property. On March II, 2009, the trial court entered findings of fact and conclusions of law in support of its judgment. This appeal followed.

Analysis *3 [I] In its first issue, HCAD asserts that the

presentation of' Goddard's testimony violHtcd the prohibitions or Texas Rule of Professional Conduct 3.04(b) and Professional Ethics Committee for the Stale Bar of Texas Opinion No. 553 and thus constituted no evidence to support the trial court's judgment We disagree.

I-leAD cites no authority for the proposition that an attorney's alleged violation of an ethical rule provides a basis for excluding evidence. Indeed, the Court of Criminal Appeals has held that violation or attorney disciplinary rules in obtaining evidence 1'01' a criminal proceeding docs not bal' introduction of that evidence at trial. Gentry v. Slate, 770 S. W.2d 780, 790-91 (Tcx.Crim.App.1988); c/ TEX. DISCIPLINARY R. PROF'L CONDUCT Preamble 1111 14-15, reprinted in TEX. GOY'T CODE ANN., tit. 2, subtit. G app. A (Vernon 2005) (''IT]hese rules are not designed to be standards for procedural decisions. Furthermore, the purpose of these rules can be abused when they are invoked by opposing parties as procedural weapons.").

Further, we sec no violation of the ethical rule upon which HCAD relies in this case. Rule of Professional Conduct 3.04(b) provides, in pertinent part, as follows: "A lawyer shall not ... pay, offer to pay, or acquiesce in the offer or payment of COl11~ pensation to a witness or other entity contingent upon the content of the testimony of the witness or the outcome of the case." TEX. DISCIPLINARY R. PROF'L CONDUCT 3.04(b). In turn, Ethics Opinion No. 553 addresses the following question, "Is a lawyer prohibited from offering the testimony of an expert witness whose employer has entered into a contingent fee contract with the lawyer's client regarding the subject matter of the litigation?" Op. Tex. Ethics Comm'n No. 553 (2004). The Professional Ethics Committee for the State Bar of Texas concluded that "[i]t is a violation of the Texas Disciplinary Rules of Professional Conduct for a lawyer to use in a case as an expert witness an employee of a business entity that has a contingent fee interest in the outcome of the case." ld.

Here neither Goddard nor his employer, Prop-


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crt)' Evaluation Services, had a contingency interest in the outcome of this ](\\vsuit. Indeed, Goddard testified unequivocally that he was employed by Property Evaluation Services and that his employer was to be paid a nat Icc for his services as an expert witness. This ilat fec \vas to be paid by O'Connor & Associates, which presumably had a contingency interest in the litigationYN7 Such an arrangement is similar to an attorney with a contingency-fcc mTangement hiring, for a nat fcc, an expert to testify at his client's trial. Such an arrangement is perfectly acceptable, so long as the payment of the expert's tee is not contingent upon the COll

tent of the testimony or the outcomc- of the trial. TEX. DISCIPLINARY R PROF'L CONDUCT 3.04(b)(3) (providing that a lawyer may advance, guarantee, or acquiesce in the payment of a reasonabJe fcc for the professional services of an expert witness).

*4 In short, there is simply nothing in the record to suggest that Goddard's fcc was contingent upon the content of his testimony. 1n fact, the following questions by the trial court clariiled that the expert's fee was not contingent upon the outcome of the case:

The Court: The-as I appreciate it, the experl was paid, period. Now, whether the original property agent to challenge the appraisal gets a fee or not, that person still has to pay the expert.

[Houston Laureate's Counsel]: Yes, Yes. The expert has been paid,

The Court: And if-if r '" enter a take-nothing judgment for the plaintiffs, the expert doesn't return the money.

[Houston Laureate's Counsel]: No. He's been paid,

The Court: And if r end up entering a judgment in favor of the plaintiffs, does the expert get any additionalmoney?

[Houston Laureate's Counsel]: No,

Thus, Goddard had no contingency interest ill the outCOl1iC or the case and Vias paid his Icc regardless or whether O'Connor & Associates received its contingency fee. Under these circumstances, we overrule HeAD's llrst issue.

1n issue two, HeAD contends that C')odc\ard's testimony was inadmissible and constituted no evidence because his research and analysis were nol reliable, Specifically, HCAD asserts that Goddard's expert report contained mUltiple errors and omissions, Goddard included no support for his assumptiems in making the adjustments to the comparable properties' appraised values, and he lacked knO\VH

ledge of the individual characteristics of either the subject property or the properties he selected as comparables.

l2][3] We review a trial court's decision to admit or exclude an expert witness ror an abuse of discretionYN, Weingarten Rea/~y lnveSfOl'i'; v. Harris COlll1ly Appraisal Dis/., 93 S.W.3d 280, 283 (Tex,App.-Houston [14th Dis!.] 2002, no pe!.) (citing Helena Chem. Co. v. Wilkins, 47 S. W.3d 486,499 (Tex.2001)). Under this familiar standard, the trial court abuses its discretion when its ruling is arbitrary, unreasonable, or made without reference to any guiding rules or legal principles. Id Expert testimony is adlnissible only if the expert is qualified and the evidence is relevant and based on a reliable foundation. lei. at 284 (citing 10.1. du /'0111

de Nemours & Co. v, Robinson, 923 S. W.2e1 549, 556 (Tex.1995)).

[4][5] Here, HeAD only challenges the reliability of Goddard's research and analysis, In nonscientific cases such as this one, the trial court ultimately has discretion to determine how to assess reliability. ld In determining whether an expert's research and analysis is based on a reliable foundation, the trial COUlt does not decide whether the expert's conclusions are correct; instead, the trial court must determine whether the analysis used to reach those conclusions is reliable. lJa,.,.;s County Appraisal Disi. v. Kempwood Plaza Ltd, 186 S.W.3d 155, 159 (Tex.App,-Houston [1st Dis!.]

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2006, pc\. rcj1 d) (citing Gall/Illil/ F. JocA IYilliams Chevl'oie/. inc., 972 S.W.2cl713, 728 (Tcx.19n)).

*5 HeAD identifies the follO\ving "errors" !ll

Goddard's report and testimony:

• One of the properties Goddard claimed was comparable had to be eliminated from the list because it \Vn$ exempt from property tax.

• The appraised values of several of the comparable properties were incorrect.

• Severa! of the comparable properties had separate appraisal accounts for their parking garages, although the subject property had a parking garage included in its appraised value.

Each of these issues was, however, addressed by Goddard's testimony. First, the property that was exempt f)'om propelty tax was removed (i'oln the Jist of comparable properties. Second, the pr()per~

tics HCAD refers to as having "incorrect" appraised values had their appraised values adjusted downward during the pendency of this suil. In fact, Goddard explained the tluidity of appraised values as follows:

[T]he values, especially of properties at this value level, are constantly changing due to litigation process, correction motions, And I don't consider value when I'm doing these comparisons, so I'm not relying on those values, I'm simply showing the value that the appraisal district is carrying on the property at the time I do the m1alysis.

It's not unlikely that during the beginning of the analysis to the final resolution that some of those comparable property's values may very well indeed change, which in this case we've seen.

Third, Goddard testified that adding the appraised values of the parking garages to the appraised values of the two buildings with separately accounted-for parking garages did not change the median appraised value of the comparable properties. Goddard further opined that none of these adjustments in value changed his ultimate opinion that

the subject property had been unequally appraised.

1"6] In sum, Goddard testified that he identil1ed numerous comparable properties. HeAD classified these properties with the same land lise codcs"Class A" high-rise properties. C;/ id (explaining that appraiser selected properties from HeAD's tax rolls with the same land llse code and building class as the subject property). According to HeAD's description of this type of properties, Class A properties are income-producing properties with similar physical characteristics, including both nev-/ and older properties in desirable locations that command high rental rates, attract top quality tenants, and have well-maintaincd finishes, with excellent design and above-average \vorkmanship allli materials. Goddard adjusted these appraised valucs based Oil factors such as size, age, and location. At trial, HeAD did not challenge the specific adjustments Goddard made to these properties (other than those issues identified supra ), and an appraiser may usc his experience and expertise to make these types of adjustments. See ic!. at 161, Further, these adjustments are contemplated by the statutory scheme. See TEX. TAX CODE ANN. § 42.26(a)(3) (Vernon 2008) (requiring the dist!'ict court to grant !'clief based on unequal appraisal if the "appraised value of the property exceeds the median appraised value of a reasonable number of comparable properties appropriately adjusted "); see also Kempw()od Plaza Ltd., 186 S.W.3d at 159-60; Harris Coul1/Y /lppraisa! Dis!. v. United InvestOl's Really 7i,ltsl, 47 S.W.3d 648, 650 n. 4 (Tex.App.-Houston [14th Dis!.] 2001, pet. denied) (noting that appraiser made adjustments based Oil, inter alia, location, age, and physical characteristics of comparable properties).

*6 In sum, we cannot say the trial court abused its discretion in determining that Goddard's testimony was reliable. The fact that some of the appraised values of the comparable properties Goddard identified may have changed during the pendency of the suit does not make his data unreliable, and Goddard changed his conclusions to reflect the

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--- S.W.3d ----, 20 I 0 WI, 33418XO (Tcx.i\pp.-Ilolls. (1,1 Dis!.)) (Cite as: 2010 WL 3341880 (Tex.App.-Holls. (14 Dis!.)))

morc curren! data. This data \vas obtained using 1--ICAI),s records and properly classif'icalions, and HeAD provided no competing expert testimony that the properties used by Goddard \h,'crc not comparable. S'ee Kell1jJwood /)/ozo Ltd., 186 S. W.3d at 160-6:2. Moreover, because this evidence v·,1as ad-1T1issiblc, the trial courl's judgment is supported by the evidence. Accordingly, we overrule HCAD's second issue.

Conclusion I-laving ovcrlllled each of' HeAIYs issues, we

afflrm the trial courl's judgment.

IC'N I. Before Goddard testified, the trial court granted HeAD running objections to his testimony on the grounds asserted on appeal.

FN2. The record docs not reflect the exact nature of the relationship betwecn O'Connor & Associates and Houston Laureate, but such a contingcncy interest may be inferred from the testimony and evidence presented at trial.

FN3. Although HCAD asserts that there is no evidence to support the trial court's judgrnent because the expert's testimony was unreliable, there would be no evidence only if we determined that the trial court erred in admitting this expert's testimony. Thus, the appropriate standard of review for this particular issue is abuse of discretion. See, e.g., Helena Chem. Co. v. Wilkins, 47 S.W.3d 486, 499 (Tex.2001).

Tex.App.-Houston [14 Dist.],2010. Harris County Appraisal Dist. v. Houston Laureate Associates Ltd.

S.W.3d 2010 WL 3341880 (Tex.App.-Hous. (14 Dis!.))

END OF DOCUMENT


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August 26, 20 I 0

JUDGMENT

BARRIS COUNTY APPRAISAL DISTRICT, Appellant

NO. 14-09-00380-CV V.

HOUSTON LAUREATE ASSOCIATES LTD. AND LEVERING & COMPANY, Appellees

This cause, an appeal from the judgment in favor of appellees Houston Laureate

Associates Ltd. and Levering & Company, signed January 30, 2009, was heard on the

transcript of the record. We have inspected the record and find no error in the judgment.

We order appellant Harris County Appraisal District to pay all costs incurred in

this appeaL We further order this decision certified below for observance.

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Wcstlaw

Effcclivc: September 1) 2003

Vernon's 'fcxas Statlltes and Codes Annotated ~_~HTQDtnQ"':iS Tax Code n\grS_~&' __ AnnQ;;)

Title I. Properly Tax Code Subtitle F. Remedies

~~ .. Lhfln.tgL_42 . .J uc\ic la 1 Rcvi cw (l\9j~ __ &_./I,_lJ1}Sl.§) ... ~§LS __ lL\)5;J}JmJQIJ}. Review by District Court ~ § 42.26. Re.medy for Unequal Apprais,ll

(a) The district court shall grant relief OJ) the ground that a properly is appraised unequally if:

(I) the appraisal ratio of the property exceeds by at least 10 percent the median level or appraisal or a reasonable and representative sample of other properties in the appraisal district;

(2) the appraisal ratio OJ the property exceeds by at least 10 percent the median level of appraisal of a sample or properties in the appraisal district consisting of a reasonable number of other properties similarly situated to, or of the same general kine! or character as, the property subject to the appeal; or

(3) the appraised value of the property exceeds the median appraised value of a reasonable number of comparable properties appropriately adjusted.

(b) If a property owner is entitled to relief under Subsection (a)(l), the court shall order the property's appraised value changed to the value as calculated on the basis of the median Jevel of appraisal according t.o Subsection (a)(I). If a property owner is entitled to relief under Subsection (a)(2), the court shall order the property's appraised value changed to the value calculated on the basis of the median level of appraisal according to Subsection (a)(2). If (l property owner is entitled to relief uncler Subsection (a)(3), the court shall order the property's appraised value changed to the value calculated on the basis of the median appraised value according to Subsection (a)(3). Ifa prop·· erty owner is entitled to relief under mare than one subdivision of Subsection (a), the court shall order the properly's appraised value changed to the value that results in the lowest appraised value. The court shall determine cilch applicable median level of appraisal or median appraised value according to law, and is not required to adopt the median level of appraisal or median appraised value proposed by a party to the appeaL The court may not limit or deny relief to the property owner entitled to relief under a subdivision of Subsection (a) because the appraised value determined according to another subdivision of Subsection (a) results in a higher appraised value.

(c) For purposes of establishing the median level of appraisal under Subsection (a)(l), the median level of appraisal in the appraisal district as determined by the comptroller under 3.~cti.g.!15.1 0 is admissible as evidence of the median level of appraisal of a reasonable and representative sample of properties in the appraisal district for the year of the comptroller's determination, subject to the Texas Rules of Evidence and the Texas Rules of Civil Procedure.

(d) For purposes of this section, the value of the property subject to the suit and the value of a comparable property or sample property that is used for comparison must be the market value determined by the appraisal district when the property is a residence homestead subject to the limitation on appraised value imposed by ii,C;..Ql1QH .. 2;.L2J ..

© 2011 Thomson Reuters. No Claim. to Orig. US Gov. Works.

V.TCA , Tax Code ~ !U 2()

CJUiUJ'J'(S)

Acts 1979, 66th [,eg., p. 231 I, ell. 841, § I, efT. Jan. I, 1982. Amended by Acts 1981, 67til Leg., 1 s( C.S., p. 174, ch. 13, § 153, err. Jan, I, 1982; Acts 1983, 681h Leg., p, ~924, c!l. 8n, § 3, ciT. Jan, I, 1984; Acts 1985, 691h Leg" cil, 823, § 3, err. Jan, I, 1986; Acts 1989,'LIst)"'ILc:ILI96,§j5,~ll ,!tllle 15,., 1~)8(J; !\cts L99L 7;!llciLcg,ch 843,§ I), "IT,Sc:J2U, 192J; AcLsl9.97 ,.7.5t]JL"g". el! lQ}9, § J2,c.fL .lalli, 1998; ACls 2003, 71)IilLeg,ch, JQ4L§'1, [JI:)q],L. 1,2003

r t.~/·,

V.TeA., Tax Cod(: § LUll Page I

c Effective: January 1) 2010

Vernon's Texas Statutes and Codes Annolntcd Gl!rr.~;n{m!.;:;.~ Tax Code (ECJeik;\11I1Q,)

Tille 1. Property Tax Code Sllb(ille D. Appraisal and AsseSS1Hcnl (B.gJ3 .. _&, . .6..ll!.ln§) ~~ .. ~h.(}12l~J.23 .. Appraisal M.ctll0ds and Procedurcs n.'\'(;f~ .. &-._AIJ.n.Q.s.)

~~ .. S.llb~tE\12~~;L.L\. Appraisals Generally

• .... § 23.0 I. Appraisals Generally

(a) Except as otherwise provided by this chapter, a!1 taxable property is appraised at its market value as of January 1.

(b) The market value of property shall be determined by the application of generally accepted appraisal methods and techniqucs. If the appraisal district determines tile appraiscd value of a property using mass appraisal standards, the mass appraisal standards must comply with the Unifonn Standards of Professional Appraisal Practice. The same or similar appraisal methods and tecbniq·llcs shall be used in appraising the same or similar kinds of property. Uowcvcr, each properly shall be appraised based upon the individual characteristics tilat affect the properly's market value, and all available evidence that is specific to the value of the property shall be taken into account in determining thc property's lnarket value.

<Text of subsec. (e), as added by Acts 2009, 81st Leg., ch. 619, § 1>

(c) Notwithstanding .Qy..c;.J!.QD .. JJl1.CD.(C}' in del.ern1ining the market value of a residence homestead, the chier appraiser may not exclude from consideration the value of other residential property that is in the same neighborhood as the residence homestead being appraised and would otherwise be considered in appraising the residence homestead because the other residential properly:

(1) was sold at a foreclosure sale conducted in allY of the three years preceding the {ax year in which the residence homestead is being appraised and was comparable at the time of sale based on relevant characteristics with other residence homesteads in lhe same ncighborhood; or

(2) has a market value that has declined because of a declining economy.

<Text of subsec. (e), as added by Acts 2009, 81st Leg., ch. 1211, § 1>

(c) Notwithstanding any provision of this subchapter to the contrary, if the appraised value of property in a tax year is lowered under Subtitle F, the appraised value of the property as finally determined under that subtitle is considered to be the appraised value of the property for that tax year. In the following tax year, the chief appraiser may not increase the appraised value of the property unless the increase by the chief appraiser is reasonably supported by substantial evidence when all of the reliable and probative evidence in the record is considered as a whole. If the appraised value is finally determined in a protest under Secti.Q!L41,1l{lllGi.l or an appeal under SectiQ!LAf"J~Q, the chief appraiser may satisfy the requirement to reasonably support by substantial evidence an increase in the appraised value of the property in the following tax year by presenting evidence showing that the inequality in the appraisal of property has been corrected with regard to the properties that were considered in determining the value of


V.I'.C /\. Tax C\J(\t- 0 :d,O! p;\gc)

tile subject properly. The burden or proof' is 011 the chicI' appraiser to support an increase. ill the "ppraiscd value or properly lllHit:.r the CiICI111ISI<lnCCS described by this subsection.

<Text orsubscc. (c), ,IS added hy Acts 2.009, 81st Leg., ell. \(105, § 2>

(c) The. nWI'kc! value or a residence homestead shall be determined solely Oil the b;lSis or the. properly's v,due as il

residence homestead, regardless or whether the resident!"\ usc of' the property by the. OWller IS cOllsidered to be till' highest and best usc of the property.

CREDIT(S)

Acts 1979, 66th Lep,., p. ),252, ell. 841, § 1, efT Jan. 1) 1982. Amended by Acts ]985, 69th Leg., ell. 823, § 5, efl.

Jan. I, InIJ; /\r;I, ISl97,},\Lh I,eg., <;11 IQ~9,§?I,cfr)i!l1, I,J9Q~;t\<;J,}QQ?,gLstl;:g, ell ,6.19,§ l,efT Jan I, ]DIQ; f\eI, 2QQ'),Slsl.leg,<;II.I.2JJ,§L.<;fJJanJ,Z!)J(); t\clsJOQQ,8IsLL-cr,,(;I\, .140S,.§ 2,eITJ'"1.1 ,2()1 O.

Rna»

Westlaw V.T.e.A., CiOVL Code T.!, Sub!. C; !\pp. A, Art. 10,0 l), Rule 3.0.'1

C Vernon's Texas StMll\CS and Codes Annotated Currentness

Government Code (Refs & Annas) Title 2. ludieial Branch (Refs & Annos)

Subtitle (). Attorneys Title 2, Subtitle G·· Appendix

A. State Bar Rules Article X. Discipline and Suspension of Members

fZ@lSection9. Texas Disciplinary Rules of Professional Conduct (Refs & Annas) _:.-... '1jJ Ill. Advocate .~ ..... Rule 3.04. Fairness in Adjudicatory Proceedings

A lawyer shall not:

(a) unlawf-ully obstruct another party's access to evidence; in anticipation ofa dispute unlawhlily alter, destroy or conceal a document or other material that a competent lawyer would believe has potential Or actual evidentiary value; or counselor assist another person to do any such act.

(b) falsify evidencc, counselor assist a witness to testify falsely, or pay, offer to pay, or acquiesce in the offer or payment of compensation to a witness or other entity contingent upon the content of the testimony of the witncss or the outcome of the case. But a lawyer may advance, guarantee, or acquiesce in the payment of:

(1) expenses reasonably incurred by a witness in attending or testifying;

(2) reasonable compensation t6 ;:i""v,/ilifes~;--r6fli'iln6ss-bt time in attending or testifying;

(3) a reasonable fee for the professional services of an expert witness.

(c) except as stated in paragraph (d), in representing a client before a tribunal:

(1) habitually violate an established rule of procedure or of evidence;

(2) state or allude to any matter that the lawyer does not reasonably believe is relevant to such proceeding or that will not be supported by admissible evidence, or assert personal knowledge of facts in issue except when testifying as a witness;


I'age 2 of II

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V.l.C.I\., C.iov\. Code T. 2, Subl. C; J\pp. A, Art. 10, ~ 9, Ruk 3.0:4

(3) state a persona! opinion as to the justness ora cmlSC, the credibility ora wilness, the culpability or a civil litigant or the guilt or innocence or an accused, except tbat a lawyer may argue 011 his analysis oftbc evidence and other permissible considerations for any position or conclusion with respect to the matters stated herein;

(4) ask any question intended to degrade a witness or other person except where the lawyer reasonably believes that the qllestion will lead to relevant and admissible evidence; or

(5) engage in conduct intended to disrupt the proceedings.

(d) knowingly disobey, or advise the client to disobey, an obligation under the standing rules ar ar a ruling by a tribunal except far an apen refusal based either on an assertion that na valid obligation exists or on the client1s willingness to accept any sanctions arising from such disobedience.

(e) request a person other than a client to refrain from voluntarily giving relevant information to another party unless:

(l) the person is a relative or an employee or other agent of a client; and

(2) the lawyer reasonably believes that the person's interests will not be adversely affected by refraining from giving such information.

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Expert Testimony Before Opinion 553 1

I. 0' Connor & Assoc. contingency fee

2. Suit filed by O'Connor

3. o 'Connor provides expert witness

4. Expert employed by O'Connor

• Salary paid by O'Connor

• Offlces provided by O'Connor

• Offlce furniture provided by

O'Connor

• Administrative staff provided

by O'Connor

• Proprietary computer

programs by 0' Connor

• Research databases by

O'Connor

• Computers by O'Connor

• Client database by O'Connor

• Goddard & co-workers

handled 100% 0' Connor

litigation

• Advertising by 0' Connor

5. Goal to lower taxes

6. Lawyer paid by O'Connor

7. Couri costs paid by O'Connor

'(3 RR at 16, lines 17-25; at 17, lines 1-19; at 21, lines 6-15; D. Ex. 5.) (3 RR at 17, lines, 20-25; al 18, lines 1-10.)

I~xpert Testimony After Opinion 5532

I. O'Connor & Assoc. contingency fee

2. Suit filed by O'Connor

3. O'Connor provides expel·t witness

4. Expert Employed by PES

• Salary and fees paid by

O'Connor

• Offices provided by O'Connor

• Offlce furniture provided by

O'Connor

• Administrative staff provided

by 0' Connor

• Proprietary computer

programs by 0' Connor

• Research databases by

O'Connor

• Computers by O'Connor

• Client database by O'Connor

• Goddard & co-workers

handled 100% O'Connor

litigation

• Advertising by O'Connor

5. Goal to lower taxes

6. Lawyer paid by O'Connor

7. Court costs paid by O'Connor

2 (2 RR at 20, lines 6-25; at 21, lines 1-9; see also D. Ex. 1, 3, and 5.) (3 RR at 20, lines 22-25; al21thru 22, lines 1-19.)

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'rorlc;ty.Tax Reduction Planning Texas - O'Connor and Associates Appraisal District Page 1 0[2

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RESEARCH &. CONSULTING fEDERAL TAX REDUCTION INTHE NEWS

If you are not satisfied with your Appraisal Review Board (ARB) decision, there is still another

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To make sure property owners are taxed on the most fair and accurate value for their property "fexas law makes

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are no upfront costs! You pay only a percentage of savings as defined In our agreement.

We arc the only property tax consulting firm in Texas with surficient technical support and skilled personnel to

effectively tackle and win a substantial number of judici<il appeals. Property owners choose O'Connor more than

any other consultant when an appeal beyond ARB is indicated. We are currently coordinating more Ulan 3,200

cases statewide. And, we're successful 80-90% of the time.

O'Connor coordinates the entire litigCltion process

• Analyzing and comparing existing aSsessments,

• Engaging specialized legal council.

• Providing expert witness testimony at mediation or trial as needed.

• Assisting you with schedules and allle9al paperwork.

A frequent and effective approach is (In appeal based on your properly's value being uniform and equ51 when

compared to similar properties. Our firm developed proprietary software to locate and analyze the values of

comparable properties and we've been repeatedly successful using this informat"lon in informal, formal and

judicia! protests. In fact, O'Connor is the statewide leader in uniform and equal appeals.

"Uniform and Equal" appeals are effective -- even when property values ol'"c below market!

Frequently Asked Questions Abouttax protest lawsuits

How can O'Connor guarantee r won't owe anything unless I save tax dollars?

We engage outside council and expert witnesses who have been negotiating property tax cases for years and are

familiar with typical county appraisal district melhodologies and defenses. In addition, our resources for research

and analysis are unsurpassed. These reasons have contributed to our 80-90% success ratc. You risk nothing

because you don't p.Jy onything until or unless you receive [[J!LlII,:!r vdlue reduction .

How much will it cost me if O'Connor saves me taxes through it judicial appeal?

lto://www.eutmvtaxes.eom/nron tax iurlicial Hnneaka~n 411 <;n()n~

),(\jlerLy,'!'ax Reduction Planning Texas - O'Connor and Associates Appraisal District Page 2 of2

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Corpor<lte Office 2200 North Loop West, Suite 200 Houston, lX 77018 driving directions to all locations (I) 713.686.9955 Il.BOO.S56.REAL (f) 713.686.33n

., Whilt is this?

For generol questions not relate\! to property tax, e-mail U~. For property tax Questions e.·malilhe Properly Tax Department.

Copyright @ 2008 O'Conn(lr & Associates. All Rights Reserved.

Our fee is 50% of the potential property taxes saved as a result of Illigalion. For calculuUon of the litigation fcc,

the initio I asscs..<;ed value for each year is the assessed v()lue set by the Appraisal Review Board. O'Connor &

Associates will be responsible for <)11 expenses, including court costs, appraisal, engineering reports, expert

witness fees and legal fees associaled with litigation and for handling aU correspondence with the county

ilppraisal clislTict. If the result does not represent tax savings to you, you won't receive an invoice!

Do I need lo.pay my tax bill on the higher value?

Yes. Until your value is offiCially lowered on the county records, all taxes must be paid timely.

What if I miss the 45~d<)y dC<'Idline to <'lppeal my ARB value?

Contact O'Connor immediately to determine actual time requirements for your account. If it is In fact too lote,

sign up for us to present a thorough, well-dowmented protest next year.

wtwt <Ire O'Connor's credentials to help me with a judicial appeal?

We coordinate more judicia! appeals than any other Texas firm. We're the largest property tax consulting firm in

the state. Our staff of over 125 employees utitizes full time state-licensed prope!ty tax consultants and appraisers

and supplements with additionnllicensed staff on a seasonal basis. O'Connor & Associates Is a nationally

recognized and highly regarded source or commercia! real estate market trends and publications. Patrick

O'Connor, president, Is a design(lted member of the Appraisal Institute and authored Cut Yoor Texas Property

Taxes.

How much of my time will it take?

Our goal is to simplify the process for you while achieving positive results. Our staff will keep track of aU court

and filing dates for you, ,md prepare necessary documents for submission. If it becomes necessnry for you to

appear at a mediat"!on or court deposHion appointment, we'!! assist you to prepare for that meetklg.

Office loc~tiol1s DaUas, TX

Houston,1X (corpornte) san Anlonlo, 1)(

los Angeles, CA Newport (leoch, CII

Chicago, IL Atlanta, GA

Services: Cost Scgrcgation I rlepelty Tax I Apprais"ls I Res~arch & Consulting

Sitemap Privacy Policy I legal NoUce

ttn://www.cut1llvtaxeR.COln/nr'()n hTX illdic:iFll ::Innf':flk ~.(,:n

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(J S-Ethics Opinions \ TBJ J

Issued b,Y the Projession.fxl glhics (]ol1unitteefor the State Bar (~f Texas

Up/NfDAl No, 5S-_3 __ /_S_D7_'V-~ ~-r -"'\--=-c:'-(!-__ -_ emplo~-~:-or lhe lawye,'s Ia\:'~,~,~,-~~e de;:'e~~ or d;ssern;--~

, Reque'ls lor .lhle5 Oplnlon$$bouid hesenil~ Ihe Pr¢; : Ie.slonol ~Ihlcs C<immlilee fcirlhe' Stal. Bar ofTexas, c/o', ':ranya Beckham"Slole 8aiC)fT.~Qs; 'P.O. Bcix 12487,' 'Austin 78711-2487. for'linmedlale, "on.blndlngaIMe,'

'.advlee, 'callih. lowyer Elhle'l-l0llineolt6001532~94?: ,. " . . '. -... ' ...... ' .. "c.,-. ", .' .. , ..... ";.'_ .

• E ics Opinion No. 55'2, August 2004

Question resented Is it permissi und~r tile Texas Disciplif1(J(Y RU/fJS of Pmfes-

sionol Conduct a /o'W)'ef, who has been retained by an insurance compnoy deFend lIs inwred, /0 (1) (umish 10 11)0 insuronce company's I . d'PQ(ty oudilor Ihe lao,.vyer's fee slo/c

menls via electronic moil cI (2) poy /0 Jile Ihirdpatfy (Juditor o purcenJage of the lawyer's .e for auditing well sto!ernenls?

Statement of focts A lawyer rcp!'e~enUng 1m ins\,lml1c comp'1oy'S insured Is

required by the insurance compilny to . jumit Ihe lawyer's fcc $U-ItCnHmt via eleclronic mail to a third- arty auditor in a specified oomp~Jtcr formnt. The third-pany a \lor &\lbject." the fee statemont to a computer prollram for the tJq)OSC of oetcHlIlning if the lawyer's fees are !n 00mptiancc ith lhe insuran0c compnny's "ciainl-handlin!l guidelines.' The lawyer is lllso required by the Insurance company to pay 0 the third·party auditor {or (:onchlCllng the audit a percentage of llw lawyer's fcc.

Discussion The question presented raiSes i,~Sucs cOllocmlll/l disclo

Sure of confidential information llod fee splitting. R~llc 1.0S of the 'texas DiSCiplinary Rules of Professional Conduet (the "DiscipllnMY !tules") ,1ddn.!.'lscS the disclosllrc of confidential informatIon to a third j)(lrty. Rule 5.0<1 addresses the Issue of fcc splitting.

Professiorllli Ethics Committee Opinion 532 (September 2000) denlt with a fact sltuation very similar to that Imder consideration. Citing Rule l.OB(e), Opinion 532 states that a lawyer I'Iwy not a.ccept compcl)sl'Ition from tl person other thllll the client unless (here Is no Interference with tllC

lawyer's independent judgment or with the client-lawyer relationship and information relating to the relationshIp is prOlected as required by Rule 1.0S.

nation by any nlc:ans or media of confidential information, in this Instance (he lnwyer's fcc: statement, ocher (brill as per-mitted by Rule 1.05 is prohibited.

Under the facts presented, the lawyer must advise the insured that the delivery of conildcntlal information to a third party may adversely Itff~et the insured's legal position

in order for the insured to be able to give an informed COIl

sent for the lawyer to send hif> fee statement to the auditor. A consent by the insured to tlw delivery or the lawyer's fer. sliltcmcot, or any other confidential information, to a third party obtained at the time the policy is purchased, or otherwise in advance, could not be fin informed conscnt afwl' CO\)

sultation. fn ordel' thal tile client's consent be made on an informed basis, the lawyer's cOllsutWtiOI1 ncccssnrily mUH include a discussion of the dis<idvantages to the client's \egal pos!t!on which may nrise should the conf!dentlili In{orll1f1-tioll lose its protected status through the lawyer's disclosure of {he inionn;ltioo to the al1ditor. The natme of the ca:>c $Inti

the fact situation mUst be knowll by the lawyer for this consultation to be effective.

A lawyer's lwymenl of a perccnull~c of the lnwyer's fee to

the third-party aUditor for its (IUtlit is prohibited by Rlllc 5.0<1(0'1), which stales that, with exceptions not here applicable, "(allawyl2r or law finn shall not share Or promise to shure legal fees with fl non-lawyer .... " The Insurance company has nol f(~quircd the lawyef to pay pll.rt or ll.1I of the cllIal expense of the third-party audit, Il has required that

t lawycr split his or her fcc with the third-party Iluditor Oil

a pc enlnge basis, The paY\l\ent of a percentage of the lawyer eo to the third-pan)" auditor constltutes a violation of Rule 5. (a).

The Cotm 'W~e expressCf; no opinion regarding the rc\a~ ti()(1ship betwee the insured and the il1:'Hlrer Of retal'diJ1L~ any contractual d s or dulles owed by one to the other or eontractualobligntion of the insurance: company to pay for le~al services rendered t< 'ts insured. Those matters involve legal issucs that this Co 1lttee is not authorized to nddrc$s. Although an insuran cOlllpnny and its Insured can enter into varlo~ul [onns of c tracts, such a~reeillent~ cllnnot diminish n lawyer's rMpons lliHcs to the instlrcd under the Disciplinary Rules once the' Isurcd becOIllcs a lawyer's client

Rule 1.0S(b)(1)(ii) provides tiHlt, ahsent the consent of Conclusion th(~ cHent nfter eonsuitlltion as provideJ by Rule 1.05(0)(2) A lawy~r's fee swtcmcnl or invoice is confident llnior· and except as otherWise authorized by the provisions o( mation, which the lawyer must protect, nolwi.(hstantiil the parag,raphs (e) and (d) or reqUired by paraltraphs (e) "nd (f) payment of the lawyer's fees by the insured's insurance .co -of Rule 1.05, a lawyer shall not lmowingly reveal confidential pany. The delivery of conritientillj Information to a third

informotlon of n client to Hnyonc other than the clie:nt, the party, by any me.alls or medi:l, without the informed consent

client's represenlotivcs, or the members, t\i;soeiatcs or of the insured client Violates Rule 1.05 of the Texas Disoipb-

('W~'''''b''~'_' -----------c~~ ~) -------E« OVj''''''''67 ,,,,,,,,, .. ,'llOfii}.

00059

~~\W,~

TIU I Ethios Opinions l"ssued by the ProJes$fonal Et.hics GorrnnitteG f01" the S(r.ae 13m" of Texas

nary Rules of Profe);Sional Conduct. The pnymcn~~cr~ ccntag.~ of tb~ lawyer's fee by the law :-crat1l\rd~party auditor of the insurance c constitutes fcc splitting In Vi()lat~, of the Texa~ Disciplinary Rilles of I'ro

£oo-st6nal Oonduct.

• Ethics Opinion No. 553, August 2004

QU(~5tion Pn:~serHed

/5 (J lawyer prollihiled from offering Ill(! los/imany of on expert witness wllOse employer has cntered into a conlingcnl fee conlwei willi the lawyer's client regardjng the 5tJbieci molle/' of ,118 litigolion?

Statement of Facts f.. property lax consulting oompany (the "Company") rep

resenU; owners of real property in protesting find (Ippealing ad valo,'c!:li.- tax fI::;~cSijll1ents on ~hclr property. 'ff\~racl cntered into between thc Company and a property owner provides thnt the Company wHl file a notice of protC);l ~l1\d

<lppcnl of the {(IX assessment and prepare ~nd present appeals to eounty apprfllsa! district and vdmlnistrfltive review boards, !~or this $~rYicc the Company's written cornp~ns<ltlon agreement with l>roperty owners provides that it Is to receive n fee of $$00, plus a cOIHinl1ency fce in an amount equal to 12 percent of all property taxcs sflved by Ihe property owner. f{

the prolCst is not ,~uccessfuJ or does not achieve an acccpt~ ~Ihle reduction In taxer., the property owner may I\grce with the Company to the filint of a lawsuit. If a lawsuit is filed, the propcny owner agrees to ptl.y the Company a contingent fec

in an amount equal to 50 percent of the property taxes saved f1S H result of the lowsult. The Compnny a~recs to pay nIl expenses associated with the iitigation, Including court costs,

_ ~s. englnccrln$ reports, expert witness fees, and legal ~ The Company Informs the lawyer handllng the lawt:uH

. "'" No Merit· No Charge

~ E ~ D I Witness, Ltd, n:etlJCil10~pOJl.tcs\lmonylllmodlC't3lmolp'aet\ca. pCIse:n31 rnJ\J!Vad!s:\bl~lyttalm~

MedWllnessprovldes . quality medIcal experts In

.. ,'. . . .anVlleldofhea!\b'ltre• : . . . . .' ",. ,.,;. ~ ~ ':', "',

. ' .. ' .... ..;~47~r~~~~2$!.> '~ We~te (l\f\lll.C<lmp\llln~eVlilh~be'10\VrCKas ~s~~~, ~u.~~,~~~ ~I)~ectton '3~O1:~

on behalf of the property owner thut one of the Company's employ(~es! who Is R licensed real estate. appraiser, can serve as fin expert witness to provide testimony in the ease as to the value of the propeny for tax assessment purposes,

Discussion EllIe 3,04 of the 'l'exas Di~cip1illury Rules of Profesf;ional

Conduct provides in pertinent part: A lawyer shall no!:

(b) ... pay, offer to pay, or tlcqtliescc in the offer or payment of compcll.';aUon to a witness or other entity conLin~ellt upOn the Content of the teStimony of the witness or the outcome of the casco nut n lawyer may advance, guarantee, or acquiesce \n the payment of: (1) expenses rcmwnlluly incurred by a witm~s~ in

a.ttending or testifying; (Z) reasonable compensation to a witness for bIt>

loss of lime in attending or tcstlfyinf,;

(3) <l re,\so[};\b\c fcc (or the pro(cs:;ionnJ services of all experl witness.

It \g clear ullder Rule J.04(b) tlwt a lawyer ()annot flcQuicscei'O'"il1epiiYli)C'iiT(ifCompunsauoil to a witnc.'ls contin~cnt upon the content of the witness's leS(~ or upon the Ollt

come of the cast;, AI) expert witness can be paid (l. reasonable Tee' (or hl~ or ber scrvlcct: llnder Rule 3.0<1(1))(3), but Rule

3,04(b) prohihit.s usc of 1m expcrt witllest: who has a cOntil)

gent Inten~sl ill the o\\tcomc of the case. gXpcrt('; provide speCialized lmowledgc to assist the trier of fact in understandlnr, the evidence or determining fl fflct in lSS11(\ An expert witness who is paid bnsco on a percentage of the reCOVCIY in a litigated matter would have an obvlo\\s R\.ah.e In the outcome of the litigation, which is inconsistent with an expert's role.

In the circumslnt)ces presented, the contingent payment

is not made directl>.:!.? the expert witness but rather is made to the Compalw, which Is the employer o( the expert wit~ ness. fZu1e 3.04(b) expressly prohibits a lawyer from paylng,

...,or acquiescinG in the payment of, compensation (0 un witoess 01' aliter entity contingent upon the contcnt of the testi~ mony of the witness or the outcome of the ca.~eH (emphRsis

add cd), The payment of a conlintcnt fee to an entity that i~ ~ployer of fm expert witness clearly COll1es withlilibe prohlbillon of Rule 3,Q'1(b), particularly In view of ~

thflt tho employing entity- could Itself be a witness only ,t.hrough an employee or other agent. Accordingly, it would

be a violation of Rule J.04(b) for a lawyer to use flll en)jlloyce of the Company as nn expert witness ill the property owner's laWSUit when the Company hM II cont.\nCent fee

interc);t in the outcome of the casc, L" { ___ <0---.. Co .)J'q AJ{).f? , ~ cf- \'NNI,lc)(osbor.<.om

, ,

00060

Ethios Opinions I TB.J Issued by the Professional Ethics Committee for the S

fi£/JJ/DrJ Lf5'iJ) CA

rtr\ ~..J!L. the r~8ult reached under Rule 3.04(b) Is coos\.sten Ith

tile result. reach III Pro Mslonru Ethlos COlUmittee 0 llnlon 458 (Maroh 1988),'whtoh wa.s issued prior to the adoption of the Oltrr~nt Tex(lG Disciplinary Rules or Professional Con· duct. In thnt oplnioll, a medlcaiMlegai oonsu.Itfn& finn entered into conUngent fee oontraots with platnUfis and, tn return 1

~provlded aorvloes including expert tC6timony, Tho 106ue presented Wns whether 0. lawyer was prohtbited from pa.rtlclpnllug In Ot reoommending thlll l\ c1lc.nt enler Into suoh nn ngroemeflt with the oonsulting finn. The Oommlttee "lied, clting Dlsclplinal), Rule 7-109(C) of tho Tcxo.a Code of 'fIroCC86ionnl Responslbllity then In effeot, that the eayment or a fee based on n p<:roent.a.ge of the recovery to a oonsulting finn providing expert witnesses would neoosBttrlly Involve pnyln/l for testimony tn violation of that mle. Dlsolplinnry Rule 7r l09(C) of the Texa.s Codu of ProfeSSional Responsibility Is the predecessor ot the Provisions at Rule 3.04(b) of the 'I'eXfJ.6 Disciplinary Rules of Profusaiontll Conduct quoted above. It should be noted tha.t the result that was renohcd ,under the old TextlA Code of Professional Respousibillty 16 ~cven clc&rer under current Rule 3.04(b) because the current Rule makes exp1101t that the prohibition of the R\1\c appllca to p(lym~llt8 of contingent compensation to an "other Ct~~," M well as directly to n witness.

Cond\J~ion It is n. violatlon of the Texas DlsoipUno.ry Rules of hofes

stonal Conduct for a lawyer to use in a O£l8e fUllin expert wit·

ncs~ an employee of (I buelne66 entlty that hM a contingent fec Interest in the outcome of the cnse.

• Et •• Opinion No. 554, August :1004

QUadicm

ls it penn!ssib ndar the Taxos DiSCiplinary Rvlos of Profa$slon· 01 Condl)ct for a wyer cvmmlly serving as a stale senator or ~tato repres.onlotivo ropre${lnt clionts Mfof& (I <:ityl countyl or state court b:olod t the \awyor's legislative dhlrict?

Statomcmt of Facti A lawyer elccted ruld ourr tly serving tIS a state Senator

or stale 'Represcntntlve deslres 0 represent clients in the

va.rious courts looated within his 0 lor leg.l.slative dlstriot.

DiscuSs.ion

Ion 497 (Allg,,,, 1994),0 100 40 (February 2002), cons lercd the representt .. __ . __ rv¥'_' __ •• ~~ ..... .." ......... , .... ,

who 8 alao a city commission.er, a county comml.ssloner, a

county Idge, or a munlolpal Judge before OOurtil wuhln the jurl&dlct! of the particular publio office Involved. In Moh prior orin 11, the lawyer as fI. publio offlc1nl had direct bud~ ~etnry and! I}QI1'Ionnol auulOrlty affeoting the oourt andlor its offlcClll. T at direot a~tthorlty regArding peraonnel or tllC fundIng of t.'01l opcrnHoIls reneonnbly appeared to lldver(je~

ly limit the Itlwy 1"s responsibilltica to the private olienl and the public. Such 'IroumstallcclI would, '101eJ.l8 the require. ments for the exec tlm1 of Rule 1.06(c) of tho Texilo Disoiplinary Rltles ()f Pro ~ional Conduct were met, OOllstltute a violatioo of Rule 1. 6(b)(2), 1\\\Ie l,06(b)(2) prohibl(.s (absent the applicnbllU of the Rule 1.06(0) cx(.,"CpUon) representation of a person f that representation "roa8onably appears to be or beoome fl versely ltmtted by the lawyer'tl Or law firm'a responslblliti('.8 to mother client or to n tlllrd per-60n or by the lawyer's or law rot'S own intcrClltil,tl

The budgctiuy tLud perSOnn authority of ule lllwyer acting in the capnc1ty of a 8t'1tc uc tOr or state l'eprcsuntatlv{J has only general Ilnd Indirect u }licntion to all oonrta In Texn.'1 nnd ill not apeclOc to (IllY 0 e court. BccalHw of this lac\( (jf direct budgetnry and pcraom 1 authority at tho local

level) the lawyerAeglslntors reaponol iliUes to the private client and to tlH~ p\lbllc nrc not fl.dvera ly limited such that Rute 1.06(b)(2) would be Violated. How vcr, til the case of eaoh proposed reprea~ntntlon of n p vate chcnt, the lawycr/le.glslntor must consider the requl. mcnliJ of alate statutea Ilnd the ethical rules apl)licable to he leglalator'o elected omoo,

Condusion Under the Texas DlaclplintU)' Rules of Professl

duot, a In.wyer who Is ah~o a state senalOr or reprcse! a.Uvc Is not prohiblted beoause he or 6ho holds leglslntlvc om from representing clients tn the oUy. oounty. find state eOll 6 In 'fexll8, Including those within his or her legIslative dlstfl t.

Thill Committee has addressed the cth 1 issues remtlng

to laWY~r8 who have been cleoted to oity 0 unty ptlbHo o{fJoe aud who pfOp<lse to represent private c·' nta before courts iocated in tho JurtGdtoUonnl dtutrlctII: in 11011 the

\nwyC!rs were elected, Pro(essionol EthiCS comml~~.

~,Ioxa,bo'lo,,,,al.,,,,,, ~ Vol\lllle 67 1 Number 111911;>,

00061

Texas Cenlel for Legal LIb!:,. ·"eI Professionali,m1 Page I of2

TEXAS

ETHICS

tM':t.U3EHSHIP CONTACf us SHEIv'IAP

ABOUT THE CENTER COlJHSI'S & [VEinS HEFEIU,NCES HESOUI1CES BOOI\STOi<E MEMBEI<S ONLY

Texas Professional Ethics Opinions

OPINION 45U

March 1888

Tex. Comm. on Professional Ethics, Op. 453, V. 51 Tex. B.J. 942 (1988)

FACTS

A rnedicaHena! consulting finn has engaged in substantial advertislnn involving U"\o use of contingent fce contracts wherein the firm en\IJrs into a contingent contract with a particular plaintiff Dnd In roturn provides various services Including the providing of expert tesllmony.

poes tlw Texas Code of Professional He~~ponsibiHty,.j specificallY DH UJ1QiQl...m:9Jibit [In attorney fron2..~icipat\ng in~Q!...rn.~m.ling~ a C\k~ll~JiDJ.Qr.in\o .. f!S&lltlnqQngyjtt ~i.qreemenl with a mcdiCal-lei1~~.£~n~~!!~lL.!}!!!:?_

DISCUSSION

There arc four basic Issues which must be considered in ligt'lt of the Texas COde of Professional Responsibility, Firs\, is tho contingent fee agreement I) mc}re subterfuge for fee splitting with nonlawyers? Second, is (he attomey g"ivlng up complete or partial control of the case? Third, does the contingency contract resutt in the paYlnont of excessive fees by the client? And fourtll, (joes the contract result in the payment of <:l contingent (ec to () witness In exchange for his or her testimony?

Opln!ons from various lurisdictions, while showing thal a slight majority of slates allow such contracts, tend to fall on two sides of a very narrow line, Those Jurisdictions allowing such contracts do so hesitantlY1 expressing concern over possible violations of the Code of Professional Responsibility, Such seems to be tho rule in Indiana (Opi!'lion 1 of 1901): Arizona (Opinion 849), and Conneclicut, (Informal Opinion 827), The ABA Informal Opinion 1375 (1976) Is fairly represontativo In Ihis area. rhe ABA would allow such an arrangement so long as:

"(1) the lay person or agency (medlcal.legol consulting servIce and experts provldod by Ihe same) is nol 10 engage In Ihe unaulhorized practice o( law, OR 3101(A): (2) Ihe lawyer does nol share legal (eos wilh Ihe lay person or agency, DR 3102(A)(1)(3): and (3) Iho contingent fee is nol payable for tho testimony of tho lay person or agency, DR 7109(C)."

All of the jurisdictions which allow such fee arrangements have expressed Similar reservations for attorneys who recommend or participate in such arrangements, These states see these as potential violations and not as violations per so, Thesa Slates scem to havc come to U1c conclusion that with careful contracting and diligenco on !)ehalf of tile attorney in maintaining control of the case, ethical violations can be avoided,

Other states, however, havo seen theso prol)lenls as too serious to bo cornpletely ovoidcd.ln Opinion 57? or the New York Stn\e Bar Associ~:lL9f) Commillce on

hit p:llwww,lxelhics,argilerercl\cc_opi niolls.nsp? opini(lI\l\\lIlF1 S8 0~ _ .•. -._-_.-_ ... .-' 1112/2009

q, 00062

Texas Ccoler Cor Legal Hili' q(\ Professionalism Page I 0[2

TEXAS

ETHICS

MEMl')EHSH1P CONlACT us SlTEM!\P

ABOUT THE Ct::NTEH CQUHS!:S & EVENtS 11.r:[:EREt~CES HESOURCES BOOKSTOfH: MEMBERS OtiLY

Texas Professional Ethics Opinions

or SH'l1'ch for specific keywords.

, , 'C!SiY.~21:d,~,O

OPINION 45B

March 1988

Tex. Cornrn. on Profession,d Ethics, Op. 4581 V. 51 Tex. B.J. 942 (1988)

FACTS

A nH~dic81-1cga\ consulting firm has cn~!8gcd in substanlinl (lclvertising involving tiH:: tlscof contingent fee contracts wherein the finn enters into a contingent contract with a particular plaintiff and in return provides various *,erviccs lnc!ucling {he providing of expert testimony.

Docs the Texas Code of Profes?ionall\e.:ill0nsH~iillYI_§pecifjca\ly 013 71.QQLQ.LQ!.9hi1.ill.~n attor~ey fr~~~.£.~·ticiIpting in or recornmendingj!lsUl cllent.Qill.Q.rjr\tQJli,-o.nli.ng~.n~.YJri~t ~agreemenl ,!"iU~'?_!'1].£~.\~iI.!:leq8! consulting fi~?_

DISCUSSION

There are four basic issues which must be considered in light of the T eX8S Code of Professional Responsibility. First, is the contingent fee agreement a mOre subterfuge for fee splitting with nonlawyers? Second, is the attorney gIving up complete or partial control of the case? Third, do os tho contingency contract result in the payment of excessive fees by the client? And fourth, does the contract result in the payment of a contingent fee to i1 witness in exchange for his or IlGr testlmony?

Opinions from valious jurisdictions, while showing that a sHght majority of states allow such contracts, tend to fall on two sides of a very narrow line. Those JurisdictIons allowing such contracts do so hesItantly, expressing concern over possible violations of the Code of Professional RespollslbHity. Such seems to be tho rule il11ndlana (OpinIon 1 of 1981): Arizona (Opinion 849), and Conneclicul, (Informal Opinion 827), The ABA Informal Opinion 1375 (1976) Is fairly represGotative In IhiB area. The ABA would allow such an arrangement so long as:

"(1) the lay person or agency (medical-legal consulling service and experts provided by the same) is not to engage in Ihe unaulhorized practice of law, DR 3101(A); (2) the lawyer does not share legal feos with the lay person or agency, DR 3102(A)(1)(3); and (3) Ih. contingenl fee is nol payable for Ihe testimony of tho lay person or agency, DR 7109IC)."

AU of the jurisdictions which allow such fee armngements have expressed sImilar reservations for attomeys who recommend or participate in such arrangements. These states see these as potential violations and not as violations per se, These states seem to have come to the conclusion that with careful contracting and diligence on behalf of tho attorney in maintaining control of Ihe case, ethical violations can be avoided.

Other slates, !1Owcver, have seen theso problems as too serious to be completely avoided. In Opinion 572 of the New York SIDle Bar Associati90 Committee on

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r~' ~ ')~)sjonal Uhics, \lIe COlnrnilt8() concluded that ~o wore serious eth(C(l1 probloms in (o\8\ion to the 20%30'% contingent foo In addition to tho attornoys contlngonl f08. This v .... as ospocially true in light of tho fnct thot U10 consuWn<J firm porfonns many of tho function:; normally dono by tho oltorney for his or her foc alone.

nut tho most tJDubling pmblorn in this area comes in light of DR 7109(C) which states:

~A iOVl'Yor shall not pay, offor \0 pay, or acqu!esCQ In tho pnymonl of componsaUon to a witness contingent upon tl10 contont of his tosUmoriy or tilO outcomo of Uw casa, Bul a lawyer may advance, guarentoo. or acquiesce In Uw payment of:

(1) Expanses reasonably incurred by a witness in aUondlng ortostlfying;

(2) Roasonablo C01YlpCflsation to a witness for his loss of timo in attending or testifying;

(3) A reasonable foo for tho professional sOrvlCBS of an oxperV

In Idaho Formal Opinion 104, 1110 oUllcs commillee found that lhe paying of a contingent foo to a "findor" was tho functional oqulvalont of paying fl contingent foo to a wttnos8, 1110(0 dOBS oxlst a financlallncontivo to Influence tho tosllmony of U10 witnessos provided, Idaho found these conlingonl foo contracts to viola to DR 7109{C) ond thorofore prohibited attorneys from partlclpatlng In or rocommondlng S~lch contracts.

CONCLUSION

Sovom.! states have hoedod tho warnings of olhor slatos Hnd havo held such contingent (00 arwng€lments to bo unethical. Boyond Ul0 problem prosontod In tho uroas of (1) foo splitting, (2) excessive fees, (3) loss of attorney control, (4) preventing tho unautholized practlco of law (not dealt with by Ulls committee), Hnd (5) paymonl of conlingent fees In exchango for oxport testimony, tho ontlre arrangement gives tho appearanco of Improprioty.

Thus, an altome who aids, assists, or OlmIto a client to entor into such a contract v 0 atoB . wou SGeln 0 0 0 on y on en con us on aval a. 0, )8 wtlcm you pay a roo bused on a PQrcontage ot me reeovery to a conSUltlrm]ltl! p!ovl<lhlg expert wltnessos In essence ou are a' for tosUmon , Theoretically. tho bottor the tostimony. tho larger U\O recovery an lonce, 0 urger tiv.) foe to tho witness, Under 728, 'wItnesses Should always testify truUlfully and should be froe from any flnanclol Inducemonts that might tempt them to do otheiWlsa."

Tnis Committee does not offer an opinion on the legitimacy or enforceability of a contract between e client and e medical-legal consulllng Orm, It merely addrosses the Issue of an attorney's participation In such an agreement and tho ethical Implications artGing therefrom.

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F~~)ssiona! Ethics, tlw Corfllnittco conduded U,at ~o woro seriolls ethical prot)lems in rolation to the 20%30% conlingonl joo In uddltion to tho attorneys conUngclflt f08. This was especlaUy true in light of U10 fact that tho consulting firm porforms many of tho functions normally done by the attorney for hIs or hor foe alono.

Bul [ho [nost troublinu problom in thIs area comos In light of DR 7109(C) which slates:

"A lawyor shall not pay, offer to pay, or acquIesce In tho payrnont of componsation 10 a wilnof,s contingont upon the contont of hIs testlmohy or the outcome of the case. Gut a lawyer may odvanco, guarantoG, or acquiesC{) in tho payment of:

(1) Expensos reasonabty incu""d by a witness In attondln;J or testifying;

(2) R08sonable compensation to a wltnoss for Ills loss of time in attending or testifying;

(3) A reasonable foe for tile professional servlcas of an expo It"

In Idaho Fonnal Opinion 104. ti18 oUlles committee found that the peying of a c<lOUngenl feo to a "find or" was the nmctional equivalont of paying a contlngent foo to n wltnoss. 11wro dOGS exist a financ!allncontive to influencG tho tantimony of tho wilnoS60S provided. Idaho found these conlingont fee contracts to violate DR 7109(C) and therefore prohibito(! attorneys from particlpating In or rocommcmdlng such contracts,

CONCLUSION

Sovoml stalos have hoodod tho warnings of other states and havo held such contingent foo arrangoments to bo uneUlicaL Boyond tho problem presentod \n UH~ areas of (1) feo splillln\), (2) excosslYe fees. (3) 1033 of attornoy control. (4) preventing tilO unauthonzcd practice of law (not dealt wllh by this commtttee). and (5) paymant of contingent fees In oxchango for oxport testimony, tho entire arrangemont gIves tho appcomnco of Improprlefy.

Thus, an attomo~ who aids, assists, or ormlts a client to onter into such a contracl vlolatos DR 710 ( . wou seem 0 0 eon y og cal conclusion avaIlable, Ulat when you pay n foo 5nsod on a percentage of the rocoVory to a MmmttlnrrnmrpTUV1dlnrrygr<lrt witnesses, In eS8enco you am paying lortestlmon(" TIleoreticaliy, tile battorthe testimony, tho larger the recovory end fience. the arger tile (oe to tho witness, Under 728. "wltnessos should always testify lruU)(ully and shoukl be (rea (rom any financial Inclucoments that might ternptthem to do oUlerwise."

This Commltteo does not offer an opinion on tile legitimacy or anforcoablilty 01 a contract belwoen a client and a medical-legal consulting finn. tt meroly addresGes the Issuo of on attorney's participation In such an agroement and tho ethical Implications arising therefrorn.

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CAUSE NO. 2006·6408)

HOUSTON UIlJREATFC ASSOC LTD § IN THE DISTRICT COURT OF LEV1,RINCJ & COMPANY, AS TIlE? § PROPERTY OWNERS AND TIlE .{i '4 PROPERTY OWNlon.S (o"n D})

) Dls(r /Ck.~ let;;;, SOl)

~ ~~ ""~ PlainLiff', &y "' ... ~ R.2 Ii ~OS

~,.,..~~ HARRIS COUNTY, TEXAS , . HARRIS COUNTY APPRAISAL Y

v

DISTRICT AND THE APPRAISAL § REVIEW BOARD OF HARRIS COUNTY § APPRAISAL DISTRICT, §

Defendan\. § § 234th JUDICIAL DlSlRICT

REQURSTYOR ADDITIONAL FlNI~INGS OF_FACT

TO THE HONORABLE JUDGE OF SAID CmJRT:

NOW COMES the Harris County Appraisal District ("HCAD"), Defendant in the above ..

styled and numbered cause, and make and file the following Additional Findings of Fac\.

l.

Defendant HeAD respectfully requests that the COUli make these additional findings of

fact as set forth in Exhibit "A" attached hereto,

II.

These proposed findings reflect facts established at trial, were not disputed, and are

necessary to address the Court's decision and ruling on the issue of admissibility of Plaintiffs

expert's testimony.

Ill.

WHEREFORE, PREMISES CONSIDERED, Defendant respectfully prays that the Court

approve additional findings of fact and that same be filed with the Clerk of the Court.

00059

Respeclfully submitted,

OLSON & OLSON, L.U'.

By: ~~-',l~[~ Tammy White q/u[ el ptale r dI' No. ).4008)' W'{J\i1am Tower, Suite 600 2727 Allcn Parkway Houston, Texas 770 \ 9-2 \ 33 Te\ephone: (7 \ 3) 533,3800 Facsimile: (713) 533-3888

ATroRNEYS FOR DEFENDANT

CERTIFICATE OF SltRV[CE %nX

I hereby certify that on the OJ day of March, 2009, a true and con'cct copy of the

foregoing Defendant's Request for Additional Findings of cact was sel'vcd via facsimile

transmission to Hugh L. McKenney, MCKENNEY & ASSOClATES, p.e., 2200 North Loop

West, Suite 333, Houston, Texas 77018, (7\3) 688-0\99.

2

00061

CAUSE NO. 200GMOW7

HOUSTON LAUREA'lT': ASSOC LTD § LEVERING & COMPANY, AS THE § PROPERTY OWNERS AND THE § PROPERTY OWNERS, §

§ Plaintiff, §

§ Y, §

§ BARRlS COUNTY APPRAISAL § DISTRICT AND THE APPRAlSAL § REVIEW BOARD OF HARRIS COUNTY § APPRAISAL DISTRICT, §

§ Defendant. § 2J4lh JUDICIAL DISTRICT

A])DlTl9NAL FINDINGS OF FACT

The COllrt in the alJove .. styled and [lumbered euuse, makes and files the following

Additional Findings of Fact:

1, Plaintiff's tax agent, C)'Connor & Associates, a tax consulting finn, has a contingency fee

interest in this ease and wi1\ receive a percentage ortlle tax reduction. (Yol. \, R,R, at pg,

20, lines 6-12),

2. PrOpetty Evaluatioll Services ("PES") has a cOlltract with O'COllllor & Associates to

provide expert testimony in lawsuits that O'Connor & Associates manages as a tax

consultant. (Vol. 2, H..H., at pg, \ 7, lines 4-19; p. 21, lines 1.6-25),

3, O'Collllor & Associates, through PES, provided the expert witness, Delain Goddard in

this case. (YoL 2, H..R. at pg, 17, lines 22-25; p, 19, lines 1-9; p, 20, lines 4-18; p, 20,

line 19, thru p. 22, line 25, lines 1-14; p. 38, lines I-II).

,lUDGE PRESIDING

EXHlBlT _.(\

NO. 200G· 640B!

HOUSTON LI\UHF;I\TE: I\SSOC LTD, ct a1.

VS.

HARRIS COUNTY I\PPRAISAL DISTRICT, et aJ ..

)

1 ) ) )

1 )

IN TI·IE

HARIUS COUNTY, T E X 1\ S

231th JUDICII\L DISTRICT

ORDER ON DEFh~ANT'S REQUEST FOR ADDITIONAl. FINDINGS OF FACT

Came on to be heard the Defendant's Request for Additional

Findings of ,'act and the Court, after consi.dering the request and

the Response filed by the Plaintiffs, was of the opinion that the

request should be denied. It is therefore,

ORDERED, I\DJUDGED and DECREED that the Defendant's Request

:Cor I\dditional E'ind.i.~ of Fact be and is hereby DENIl::D.

Signed the ..... & ...... day of ..... 4ci.L __ ... _ ......... _, 2009.

/Vfl2JJJ--/ DIS'l'RICT JUDGE ---..... --.-~-.----

P~RE :

~ W1/;-> 'i!UG:;-;-.~"=.=jMcK8 B¥./SBOT*1370610·0· 220 North Loop West, Suite 333 H ston, Texas 77018 (713) 688-6767 (713) 688-0199 telefax FILED

loren JBckson District Clerk

00059

I certify that a copy of the abovc documcnt was ckl.i.vered to:

.. ~_Til!\lmy Whi.t.c··Chilffer Olson & Oisort, LLP 2727 Allen Parkway. Suite Houston, Tcxas 77019

on the

hlm/g3/honl(l\ll;'or.d. wpd

600

00061

in the supreme court of texas - amazon s3s3.amazonaws.com/docketdb/scotx/briefs/11007801.pdfpetition...

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