ACCEPTED
12-15-00201-CV
TWELFTH COURT OF APPEALS
TYLER, TEXAS
9/16/2015 1:28:43 PM
Pam Estes
CLERK
NO. 12-15-00201-CV
_____________________________________ FILED IN 12th COURT OF APPEALS
IN THE COURT OF APPEALS OF TEXAS TYLER, TEXAS FOR THE TWELFTH CIRCUIT 9/16/2015 1:28:43 PM PAM ESTES
TYLER, TEXAS Clerk
____________________________________
Oliver Lane Chambers, Donna Kay Chambers-Jones, Rhonda Thompson, Clinton L. Chambers and wife, Brandi N. Chambers Appellants
v.
San Augustine County Appraisal District Appellee
___________________________________
On Appeal From Cause No. CV-13-9481 RD
In the 273 Judicial District Court of San Augustine County, Texas
APPELLANTS’ BRIEF
METTAUER LAW FIRM, PLLC
Attorneys & Counselors at Law April Gregston Prince
State Bar No. 24047247
april@mettauerlaw.com
Lead Counsel
Gavin I. Midgley
State Bar No. 24092832
gavin@mettauerlaw.com
403 Nacogdoches Street, Suite 1 P.O. Box 2016
Center, Texas 75935
(936) 598-9400 (Phone)
(936) 598-6122 (Facsimile)
Identity of Parties and Counsel Pursuant to TEX. R. APP. P. 38.1(a), the parties to this suit are as follows: (1) OLIVER LANE CHAMBERS, DONNA KAY CHAMBERS-JONES, RHONDA THOMPSON, CLINTON L. CHAMBERS AND WIFE, BRANDI N. CHAMBERS, c/o Mettauer Law Firm, PLLC, 403 Nacogdoches Street, Suite 1, Center, Texas 75935, are Appellants and were Plaintiffs in trial court.
(2) SAN AUGUSTINE COUNTY APPRAISAL DISTRICT, c/o Jeff Bates, 118 E. Hospital St., Suite 100, Nacogdoches, Texas 75963, is Appellee and was Defendant in the trial court.
The trial attorneys were as follows: (1) Oliver Lane Chambers, Donna Kay Chambers-Jones, Rhonda Thompson, Clinton L. Chambers and wife, Brandi N. Chambers were represented by APRIL GREGSTON PRINCE, Mettauer Law Firm, PLLC, 403 Nacogdoches Street, Suite 1, Center, Texas 75935.
(2) San Augustine County Appraisal District was represented by JEFF BATES, 118 E. Hospital St., Suite 100, Nacogdoches, Texas 75963.
The appellate attorneys are as follows: (1) Oliver Lane Chambers, Donna Kay Chambers-Jones, Rhonda Thompson, Clinton L. Chambers and wife, Brandi N. Chambers are represented on
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appeal by APRIL GREGSTON PRINCE, Mettauer Law Firm, PLLC, 403 Nacogdoches Street, Suite 1, Center, Texas 75935.
(2) San Augustine County Appraisal District is represented on appeal by JEFF BATES, 118 E. Hospital St., Suite 100, Nacogdoches, Texas 75963.
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Table of Contents
Page
Identity of Parties and Counsel . . . . . . ii Table of Contents . . . . . . . . iv Table of Authorities . . . . . . . vi Statement on Oral Argument . . . . . . vii References to the Record . . . . . . . vii Statement of the Case . . . . . . . 1 I. Nature of the Case . . . . . . 1 II. Course of Proceedings . . . . . 1 Issue Presented . . . . . . . . 4 Statement of Facts . . . . . . . . 4 Summary of the Argument . . . . . . 7 Argument . . . . . . . . . 7
The Trial Court Erred in Granting Appellee’s Motion for Summary Judgment Because the Appellants’
Interest was Not Cross Conveyed. . . . . 8
The Trial Court Erred in Granting Appellee’s Motion for Summary Judgment Because, Absent a Cross Conveyance of Appellants’ Interest, Appellee Had No Authority to Tax Minerals not Located in its Jurisdiction . . . 10
Conclusion and Prayer . . . . . . . 12 Certificate of Service . . . . . . . 15
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Certificate of Compliance . . . . . . 15 Appendix . . . . . . . . . 16
Lease Between Hunt Petroleum Corporation and Oliver Lane Chambers . . . 17
Lease Between Hunt Petroleum Corporation and Donna Kay Chambers-Jones . . 20
Lease Between Hunt Petroleum Corporation and Rhonda Thompson . . . . 23
Texas Constitution Article 8, § 11 . . . . 24 Texas Tax Code § 1.04 . . . . . . 25 Texas Tax Code § 6.02 . . . . . . 29 Texas Tax Code § 21.01 . . . . . . 30
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Table of Authorities
RULES TEX. R. CIV. P. 166A(C) ....................................................................................... 7 TEXAS CONSTITUTION TEX. CONST. ART. VIII, § 11 ............................................................................... 11 STATUTES PAGE TEX. TAX CODE §1.04(2) ................................................................................... 11 TEX. TAX CODE §6.02(a) ................................................................................... 11 TEX. TAX CODE §21.01...................................................................................... 11 CASES PAGE Carr v. Brasher, 776 S.W.2d 567, 569 (Tex. 1989) ........................................ 8
Chesapeake Exploration, L.L.C. v. Hyder, 427 S.W.3d 472 (Tex. App.—San Antonio 2014, pet. filed). ..............................9
Cincinnati Life Ins. Co. v. Cates, 927 S.W.2d 623, 626 (Tex. 1996). .................................................................... 8
FM Props. Operating Co. v. City of Austin, 22 S.W.3d 868, 872 (Tex. 2000) ....................................................................... 7
Haase v. Glazner, 62 S.W.3d 795, 797 (Tex. 2001)......................................... 8 Jones v. Killingsworth, 403 S.W.2d 325, 327 (Tex.1965)................................ 8 Oak v. Collin County, 692 S.W.2d 454, 455 (Tex. 1985) ................................ 11 Sheffield v. Hogg, 77 S.W.2d 1021, 1030 (Tex. 1934) ..................................... 11
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Southeastern Pipe Line Co. v. Tichacek, 997 S.W.2d 166, 170(Tex. 1999) ...................................................................... 9
Southwestern Elec. Power Co. v. Grant, 73 S.W.3d 211, 215 (Tex. 2002) ....................................................................... 7
STATEMENT REGARDING ORAL ARGUMENT Appellants do not request oral argument at this time. Appellants believe that the issues are easily understood and are clearly presented in their written brief and that oral argument is not necessary and would not further assist the Court in making its ruling.
REFERENCES TO THE RECORD
Clerk’s Record: There is 1 Volume of the Clerk’s Record. All references to
the Clerk’s record will be made in the following fashion: CR Vol. v, p, where v represents the volume of the record and p represents the page number found in same.
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This brief is filed on behalf of Appellants, Oliver Lane Chambers, et al, by April Gregston Prince, Attorney at Law.
Statement of the Case
Nature of the Case
This appeal is from a grant of summary judgment in favor of Appellee, San Augustine County Appraisal District, regarding the application of the Texas Tax Code to certain mineral interest, specifically the geographic reach of a taxing unit when mineral interest which lie entirely in another county have been pooled with minerals inside the taxing unit’s authority.
Course of Proceedings
On August 30, 2013, Appellants filed suit against San Augustine
County Appraisal District seeking judicial review of the San Augustine County Appraisal Review Board’s decision to tax certain mineral interests owned by Appellants in Shelby County, Texas. (C.R. Vol. 1, pg. 5).
On September 30, 2013, San Augustine County Appraisal District filed its Original Answer asserting a general denial. (C.R. Vol. 1, pg. 52).
On January 20, 2015 San Augustine County Appraisal District filed its Motion for Summary Judgment asserting that because Appellants had “cross-conveyed, pooled and unitized their mineral interests with other
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mineral interests lying within the boundaries of San Augustine, Texas, [Appellants] had the obligation to pay taxes on said mineral interests within the Unit to the extent they lie within the boundaries of San Augustine [County] Texas”. (C.R. Vol. 1, pg. 91-94).
On March 20, 2015, Appellants filed a response to San Augustine County Appraisal District’s Motion for Summary Judgment. (C.R. Vol. 1, pg. 125).
On April 2, 2015, San Augustine County Appraisal District filed a reply to Appellants’ Response to Motion for Summary Judgment. (C.R. Vol. 1, pg. 151).
San Augustine County Appraisal District’s Motion for Summary Judgment was heard by submission on March 27, 2015. (C.R. Vol. 1, pg 72).
On June 23, 2015, the Court granted San Augustine County Appraisal District’s Motion for Summary Judgment. (C.R. Vol. 1, pg. 166).
On July 15, 2015, the Court entered a Final Judgment in favor of San Augustine County Appraisal District. (C.R. Vol. 1, pg. 166).
On July 7, 2015, Appellants filed a Notice of Appeal. (C.R. Vol. 1;
pg. 170).
On July 17, 2015, Appellants filed an Amended Notice of Appeal to
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reflect the date the Final Judgment was signed by the trial court. (C.R. Vol. 1, pg. 172).
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Issues Presented
Appellants’ First Point of Error The Trial Court Erred in Granting Appellee’s Motion for Summary Judgment Because the Appellants’ Interest Was Not Cross Conveyed.
Appellants’ Second Point of Error The Trial Court Erred in Granting Appellee’s Motion for Summary Judgment Because Absent a Cross Conveyance of Appellants’ Interest, Appellee Had No Authority to Tax Minerals not Located in its jurisdiction.
Statement of Facts
On August 31, 2007, Oliver Lane Chambers, Donna Kay Chambers-
Jones, Rhonda Thompson, Clinton L. Chambers and wife, Brandi N. Chambers (collectively “Appellants” herein) each entered into Oil and Gas Leases (hereinafter collectively “the Leases”) with Hunt Petroleum Corporation (Hunt Petroleum Corporation was subsequently acquired by XTO Energy, Inc.). (C.R. Vol. 1, pg. 81- 90).
The Leases covered Appellants’ interest in 652 acres of land, more or less, all of said land lying solely within the boundaries Shelby County, Texas (hereafter the “Chambers Interest”). (C.R. Vol. 1, pg. 81-90). Appellee does not dispute that all of Appellants’ surface interest (from which Appellants’ minerals arise) lies solely within Shelby County, Texas
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and that none of Appellants’ surface interest (and thus none of their mineral interest) is located in San Augustine County, Texas. (C.R. Vol. 1, pg. 91, paragraph 2).
Contained in the terms of the Leases was a provision that stipulated:
“[t]he formation of any unit hereunder which includes land not covered by this lease shall not have the effect of exchanging or transferring any interest under this lease (including, without limitation, any shut-in royalty which may become payable under this lease) between parties owning interest in land covered by this lease and parties owning interests in land not covered by this lease.” (C.R. Vol. 1, pg. 131, 135, and 139)(emphasis added).
On July 2, 2010, the Chambers Interest was included in two production units, the Tigers DU No. 1H (“Tigers Unit”) and the Wolfpack (SL) DU No. 1H (“Wolfpack Unit”). (C.R. Vol. 1, pg. 11-12). Also contained in the Tigers Unit and Wolfpack Unit were interest from land located in San Augustine County. Id.
The Tigers Unit contains 714.839 acres in total with 39.959 of those acres (5.59%) located in San Augustine County and the remainder located in Shelby County, Texas. (C.R. Vol. 1, pg. 114-120).
The Wolfpack Unit contains 694.9611 acres in total with 15.289 of
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those acres (2.2%) located in San Augustine County and the remainder located in Shelby County, Texas. (C.R. Vol. 1, pg. 97-113).
San Augustine County Appraisal District (“SCAD”) assessed ad valorem taxes on all of the royalty interest owners whose interest were included in both the Wolfpack Unit and Tigers Unit. As a result, SCAD taxed each owner in the Tigers Unit as if 5.59% of their interest was located in San Augustine, and each owner in the Wolfpack Unit as if 2.2% of their interest was located in San Augustine, regardless of the actual situs of the owners interest.
On May 24, 2013, Appellants timely filed a notice of protest with the Appraisal Review Board of San Augustine County to dispute the assessment. (C.R. Vol. 1 pg. 22-36). After a hearing, the Appraisal Review Board of San Augustine County issued a written order upholding the authority of San Augustine County Appraisal District to assess taxes on the Chambers Interest.
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Summary of Argument
The Texas Tax Code gives a taxing authority the power to tax property that lies within its jurisdictional boundaries only. Absent cross conveyance of royalty interests with royalty interest located in its jurisdiction, a taxing authority has no ability to tax royalty interest appurtenant to land which is not located within its jurisdictional boundaries.
In the case at hand, because the royalty interest at issue is appurtenant to land located entirely outside the jurisdictional authority of the SCAD, and because the Leases in question expressly prevented cross conveying of any interests, SCAD has no authority to tax Appellants’ royalty interest and thus, the trial court’s grant of summary judgment in favor of SCAD in this case was erroneous.
ARGUMENT
The trial court's grant of summary judgment in favor of Appellee should be reviewed de novo. See FM Props. Operating Co. v. City of Austin, 22 S.W.3d 868, 872 (Tex. 2000). When reviewing a summary judgment, the Court should take as true all evidence favorable to the nonmovant, and indulge every reasonable inference and resolve any doubts in the non- movant's favor. Southwestern Elec. Power Co. v. Grant, 73 S.W.3d 211, 215 (Tex. 2002). Under TEX. R. CIV. P. 166a(c), the party moving for
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summary judgment bears the burden to show that no genuine issue of material fact exists and that it is entitled to judgment as a matter of law. Haase v. Glazner, 62 S.W.3d 795, 797 (Tex. 2001).
Because the trial court's order does not specify the grounds for its summary judgment, we must affirm the summary judgment if any of the theories presented to the trial court and preserved for appellate review are meritorious. Cincinnati Life Ins. Co. v. Cates, 927 S.W.2d 623, 626 (Tex. 1996); Carr v. Brasher, 776 S.W.2d 567, 569 (Tex. 1989).
For the reasons stated below, the Trial Court erred in granting Appellee’s Motion for Summary Judgment.
A. The Trial Court Erred in Granting Appellee’s Motion for Summary Judgment Because the Appellants’ Interest was Not Cross Conveyed.
The trial court erred in this case by granting summary judgment in favor of SCAD by finding that the Chambers Interest was cross conveyed with other royalty interests located in San Augustine County, Texas.
The unitization of the Chambers Interest is a form of voluntary pooling made possible only by the pooling clause contained in the Leases, thus any pooling or unitization must comply with the express conditions found in the Leases. A lessee has no power to pool without the lessor's express authorization, which is contained in the lease's pooling clause. See Jones v.
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Killingsworth, 403 S.W.2d 325, 327 (Tex.1965). For pooling to be valid, it must be done in accordance with the method and purposes specified in the lease. See Southeastern Pipe Line Co. v. Tichacek, 997 S.W.2d 166, 170 (Tex. 1999), citing Jones v. Killingsworth, 403 S.W.2d 325, 327-28 (Tex. 1965). A lessor’s land may be pooled only to the extent stipulated in the lease. Jones v. Killingsworth, 403 S.W.2d 325, 327.
In the case at hand, the Leases authorized the pooling of the Chambers Interest, however, the Leases, by their express language, limited the effect of such pooling. The exact text of the limitation on pooling contained in the Leases is as follows:
“[t]he formation of any unit hereunder which includes land not covered by this lease shall not have the effect of exchanging or transferring any interest under this lease (including, without limitation, any shut-in royalty which may become payable under this lease) between parties owning interest in land covered by this lease and parties owning interests in land not covered by this lease.” (C.R.
Vol. 1, pg. 131, 135, and 139).
An oil and gas lease is a contract and must be interpreted as a contract.
Chesapeake Exploration, L.L.C. v. Hyder, 427 S.W.3d 472, 475 (Tex. App.— San Antonio 2014, pet. filed). Contract language that can be given a certain or definite meaning is not ambiguous and is construed as a matter of law. Id. In construing an unambiguous lease, the court's primary duty is to ascertain the parties' intent as expressed by the words of their agreement. Id. In doing so,
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the court considers the wording of the lease in light of the circumstances surrounding its adoption and applies the rules of construction to determine its meaning. Id. A court must give contractual terms their plain and ordinary meaning unless the instrument shows the parties' intent to use the terms in a different sense. Id.
In the case at hand, neither Appellants nor Appellee raised any issue of ambiguity in the Leases that would require the trial court to determine if the Leases were ambiguous; accordingly, the Leases should be given their plain, ordinary, and generally accepted meaning.
Consequently, because the terms of the Leases expressly prevented any cross conveyance from occurring when a unit was formed, the Chambers Interest could not have been cross conveyed with any interests in San Augustine County.
Appellee’s sole argument for the grant of summary judgment in its favor was the fact that the taxing authority had the ability to tax the Chambers Interest, which was solely located in Shelby County, Texas, because it was cross conveyed by virtue of pooling. Based on the express terms of the Leases cross conveying of the interest was not possible, thus, the Court erred in granting summary judgment in favor of Appellee.
B. The Trial Court Erred in Granting Appellee’s Motion for Summary Judgment Because, Absent a Cross Conveyance of
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Appellants’ Interest, Appellee Had No Authority to Tax Minerals not Located in its Jurisdiction.
The Texas Constitution provides that all property shall be assessed for taxation in the county where it is located. TEX. CONST. ART. VIII, § 11.
It is undisputed that royalty interests, like the Chambers Interest are an interest in real property, and taxable as such. Sheffield v. Hogg, 77 S.W.2d 1021, 1030 (Tex. 1934); and TEXAS TAX CODE § 1.04(2).
Section 21.01 of the TEXAS TAX CODE provides that "real property is taxable by a taxing unit if located in the unit on January 1." The burden of proof lies with the taxing unit to prove that the property it seeks to assess is located in its jurisdictional limits. Oak v. Collin County, 692 S.W.2d 454, 455 (Tex. 1985).
The Texas Tax Code further defines the boundaries of an appraisal district as being the same as the boundaries of the county. TEX. TAX CODE § 6.02(a)
As such, the Chambers Interest may only be taxed by SCAD, if it is located in San Augustine County. See TEXAS TAX CODE §21.01.
In the case at hand, SCAD does not dispute that the surface estate out of which the Chambers Interest was created lies exclusively in Shelby County, Texas, outside the jurisdictional taxing unit for SCAD. (C.R. Vol. 1, pg. 91).
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As such, because the Leases contain a contractual provision preventing cross conveyance of the Appellants’ royalty interest, SCAD has no authority, be it constitutional, statutory or otherwise, to tax the Appellants’ interest.
Because SCAD does not have the ability to tax the Appellants’
interest, the trial court erred in granting summary judgment in favor of SCAD.
It is important to note that in the case at hand, Appellants are not attempting to avoid paying tax on all their royalty interest. Appellants simply want to pay all of the taxes owed on their royalty interest to the County in which their property is located, pursuant to the requirements of the Texas Constitution and Texas Tax Code as set forth hereinabove.
CONCLUSION AND PRAYER
WHEREFORE PREMISES CONSIDERED, Appellants, Oliver Lane Chambers, Donna Kay Chambers-Jones, Rhonda Thompson, Clinton L. Chambers and wife, Brandi N. Chambers respectfully request that the Court reverse the Trial Court’s grant of Summary Judgment in favor of Appellee San Augustine County Appraisal District and render Judgment in favor of Appellants, Oliver Lane Chambers, Donna Kay Chambers-Jones, Rhonda Thompson, Clinton L. Chambers and wife, Brandi N. Chambers, or in the
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alternative reverse and remand this case back to the trial court on all causes for further proceedings. Appellant further respectfully requests that this Court grant Appellant any and all such other and further relief to which it may be justly entitled.
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Respectfully Submitted,
METTAUER LAW FIRM, PLLC Attorneys & Counselors at Law
___/s/ April Gregston Prince____ April Gregston Prince State Bar No. 24047247 april@mettauerlaw.com Lead Counsel Gavin I. Midgley State Bar No. 24092832 gavin@mettauerlaw.com 403 Nacogdoches Street, Suite 1 P.O. Box 2016 Center, Texas 75935 (936) 598-9400 (Phone) (936) 598-6122 (Facsimile) ATTORNEYS FOR APPELLANTS, OLIVER LANE CHAMBERS, DONNA KAY CHAMBERS-JONES, RHONDA THOMPSON, CLINTON L. CHAMBERS AND WIFE, BRANDI N. CHAMBERS
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CERTIFICATE OF SERVICE
I hereby certify that on the 16 day of September, 2015, I served a copy of the foregoing document on the following counsel and/or interested parties by Certified Mail Return Receipt Requested:
Jeff Bates Guidry, Bates & Hoyt 118 E. Hospital Street, Ste. 100 Nacogdoches, Texas 75961
__/s/ April Gregston Prince____ April Gregston Prince
CERTIFICATE OF COMPLIANCE
I hereby certify that, pursuant to TEX. R. APP. P. 9.4(i)(3), the number of words contained in this document is 3,339.
___/s/ April Gregston Prince___ April Gregston Prince
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APPENDIX