A new development in the long-running Axberg vs. Kilgore ISD lawsuit came to light this week as plaintiffs filed a class-action lawsuit against the district, seeking monetary damages to cover the cost of taxes they allege were collected improperly, as well as the cost of attorney fees.
According to Gregg County court records, on Tuesday, Feb. 11, plaintiffs filed an amended motion which sought to expand the scope of the original lawsuit in Cause No. 2016-1850-CCL2.
Originally, the lawsuit was filed by Gregg County residents Darlene Axberg, John Axberg and Sheila Anderson. The new motion includes plaintiffs Sheila Anderson, John Mills, Brenda Mills, James Nicks, Judy Nicks, Philip Eugene Patterson, Dale Hedrick, Laura Hedrick, Karen Wilson, and Patrick R. Gatons.
Their lawsuit is filed against the Kilgore ISD school district as well as school board members. Notably, the new lawsuit includes two board members, Lloyd Vanderwater and Dana Sneed, who were not on the board when the lawsuit was first filed in 2016.
The defendants are now as follows, according to the text of the lawsuit: Kilgore Independent School District, Reggie Henson, Dereck Borders, Trey Hattaway, Alan Clark, Lloyd Vanderwater, Joe Parker, and Dana Sneed, in their official capacities as members of the Board of Trustees of Kilgore Independent School District.
The lawsuit claims the district’s 2015 repeal of their long-standing Local Option Homestead Exemption was done in violation of new state laws and KISD acted “ultra vires”, or beyond their legal capacity, in carrying out the repeal.
“In violation of Section 1-b(e), Article VIII, of the Texas Constitution and Section 11.13(n-1) of the Texas Tax Code, Defendants in 2015 repealed the local option homestead exemption that they had adopted under Section 11.13(n) of the Texas Tax Code for the 2014 tax year,” the lawsuit read.
“They have also illegally assessed and collected taxes that are subject to this exemption. Plaintiffs, whose residence homesteads lie within the boundaries of the school district, are entitled to the same exemption for the 2015, 2016, 2017, 2018, and 2019 tax years. Plaintiffs seek declaratory relief that Defendants’ actions were ultra vires and violate their due process and due course of law rights under the Texas Constitution. Plaintiffs further request a permanent injunction mandating that Defendants reinstate the exemption for application in the 2015 through 2019 tax years. Plaintiffs also seek a refund of illegally collected taxes which Plaintiffs paid to the school district as a result of duress.”
Parties in the case met in Gregg County Judge Vincent Dulweber’s County Court at Law No. 2 Monday, Jan. 27, in an attempt to reach a motion for summary judgment.
At the January hearing, KISD attorney Dennis Eichelbaum argued KISD’s LOHE, which was established in the 1980s, should have been exempt from Senate Bill 1 and Senate Joint Resolution 1, the laws forbidding LOHE repeal, because the bills as written only addressed LOHEs established in Fiscal Year 2014.
Representing the plaintiffs, attorney Jonathan Mitchell of Austin countered there was no information in the case which contradicted the rulings of higher state courts and there was no confusion over whether or not KISD fell under the terms used in SB-1 and SJR-1.
At the conclusion of the hearing, Dulweber allowed final arguments before announcing he would personally review the attorney’s arguments and the case information before returning his decision in seven to 10 days.
Also on Feb. 11, the court rejected KISD’s argument for summary judgment, stating “the Court cannot find, as a matter of law, that SB-1 did not apply to Defendant (KISD) for the reason that Defendant did not take any action to adopt a local optional homestead exemption for the 2014 tax year, and therefore, Defendant’s Traditional Motion for Summary Judgment under Texas Rules of Civil Procedure 166a© is hereby denied.”
The ruling also denied KISD’s argument claiming there was no evidence showing the district illegally rescinded their LOHE.
With this judgment, KISD may have to repay more than $4 million in taxes gathered following the LOHE’s repeal. The district has been keeping those funds in an untouched bank account awaiting the decision of the court.
In the new motion filed by the plaintiffs, financial restitution to the original plaintiffs, as well as others, was sought.
“Plaintiffs request that Defendants be cited to appear and answer and that, upon final trial, the Court render judgment awarding Plaintiffs and the class the declaratory relief and injunctive and mandamus relief requested herein along with the requested class-wide refund, Plaintiffs’ reasonable and necessary attorney’s fees, and all other relief to which Plaintiffs and the class may be entitled,” the document read.