Background
Between 2012 and 2019, Neiman Marcus Group remitted $915,157 in unredeemed merchandise credits to the Texas Comptroller of Public Accounts as unclaimed property. These credits were issued on plastic cards redeemable for merchandise but not cash. The merchandise credit policy allowed Neiman Marcus to issue credits to customers who returned merchandise without a receipt or after 30 days.
On August 10, 2020, Neiman Marcus claimed it had mistakenly remitted these credits and requested reimbursement. The Comptroller denied the request on March 29, 2021. After corresponding with the Comptroller for over three years without resolution, Neiman Marcus sued on August 9, 2024, seeking declaratory relief that the Comptroller unlawfully collected and retained the merchandise credits as unclaimed property. Neiman Marcus requested return of the credits and an injunction prohibiting future collection of similar credits. The Comptroller filed a plea to the jurisdiction asserting sovereign immunity, which the trial court denied.
The Court’s Holding
The Texas Court of Appeals reversed the trial court’s denial of the Comptroller’s plea to the jurisdiction and rendered judgment dismissing Neiman Marcus’s claims entirely. The court held that Neiman Marcus’s claim was barred by the two-year statute of limitations under Texas Civil Practice and Remedies Code § 16.003(a), which applies to claims for “taking or detaining the personal property of another.”
The court determined that Neiman Marcus’s cause of action accrued on March 29, 2021—the date the Comptroller denied its refund request—not October 2, 2023, when Neiman Marcus claimed to have exhausted its remedies. The statute of limitations therefore expired in March 2023, making the August 2024 lawsuit time-barred. The court rejected Neiman Marcus’s argument that accrual should be measured by exhaustion of efforts, holding that accrual occurs when the wrongful act causes injury, regardless of when the plaintiff learns of it or exhausts non-judicial remedies.
Critically, the court held that the statute of limitations is jurisdictional—not merely an affirmative defense—in suits against government entities, relying on the Texas Supreme Court’s decision in Texas State University v. Tanner, 689 S.W.3d 292 (Tex. 2024). The court also denied Neiman Marcus an opportunity to replead because its pleadings affirmatively negated the existence of jurisdiction by showing the claim was time-barred on its face.
Key Takeaways
- Statutes of limitations function as jurisdictional requirements—not merely affirmative defenses—in suits against government entities and may be raised for the first time on appeal.
- A cause of action accrues when the wrongful act causes injury, not when a claimant exhausts informal remedies or learns of the injury.
- A claimant pleading facts that affirmatively demonstrate the claim is time-barred is not entitled to an opportunity to replead.
- The Comptroller’s retention of merchandise credits qualifies as “detaining” personal property under the statute of limitations statute.
Why It Matters
This decision reinforces the jurisdictional status of statutes of limitations in governmental entity litigation, making timing critical for any plaintiff suing a state agency. Businesses holding merchandise credits, gift cards, or similar instruments as unclaimed property should note that dispute resolution must commence within the applicable limitations period from the point of denial, not from the date efforts to resolve the dispute have been exhausted. The ruling clarifies that the Comptroller has authority to collect merchandise credits as unclaimed property under the Texas Unclaimed Property Program, though it does not resolve whether merchandise credits should be exempt from the program entirely.
The decision also illustrates the interplay between the Uniform Declaratory Judgment Act (used as a procedural mechanism here) and the underlying substantive claims: seeking declaratory relief does not reset the statute of limitations clock or change the nature of the underlying claim. For businesses considering challenges to the Comptroller’s unclaimed property determinations, this decision signals that prompt litigation is essential—administrative remedies and informal negotiations do not toll or delay accrual.