Kast Trust Farms v. Twyman, Case No. 116,882

Decision Date27 September 2019
Docket NumberCase No. 116,882
Citation453 P.3d 922
Parties KAST TRUST FARMS, Petitioner/Appellant, v. Clayton TWYMAN, Washita County Assessor, Respondent/Appellee.
CourtUnited States State Court of Criminal Appeals of Oklahoma. Court of Civil Appeals of Oklahoma

Donelle H. Ratheal, Jason Gresham, Eric P. Warner, RATHEAL, MAGGARD & FORTUNE, PLLC, Oklahoma City, Oklahoma, for Petitioner/Appellant,

Mart Tisdal, Luke Adams, Michael Housley, TISDAL & O'HARA, Clinton, Oklahoma, for Respondent/Appellee.

OPINION BY ROBERT D. BELL, JUDGE:

¶1 This is an appeal from the district court's de novo review and denial of the ad valorem tax protest filed by Petitioner/Appellant, Kast Trust Farms (Taxpayer). The district court upheld the determinations of Clayton Twyman, Washita County Assessor (Assessor) and the Washita County Board of Equalization (Board) to reclassify and assess ten (10) acres of Taxpayer's agricultural real property as commercial property. Assessor reclassified the property after Taxpayer granted a surface site easement on the 10-acre tract to Chesapeake Midstream Gas Services (Chesapeake) and Chesapeake built a gas compressor facility thereon. Having reviewed the record, we hold the district court erred when it denied Taxpayer's protest. The district court's judgment is reversed and this matter is remanded to the district court with instructions to grant Taxpayer's protest. The district court shall also order Assessor to correct the tax rolls in accord with this opinion and refund all excess ad valorem taxes paid by Taxpayer.

¶2 Taxpayer owns several farms in Washita County. In 2002, Taxpayer bought a 160-acre farm from the Janzen family. From 2002 through 2015, Janzen Farm was classified as agricultural land and the farm's assessed value was $44,213. In July of 2010, Petitioner granted a surface site easement to Chesapeake over 10 acres of the 160-acre tract. Taxpayer was paid a one-time $60,000.00 surface damages sum. The easement recites the consideration paid for the easement settles "any and all damages, temporary and/or permanent, to the Easement at any time" resulting from the taking and use of the 10 acres. Chesapeake built a gas compressor facility on the 10-acre tract, graveled the area, and placed a fence around the facility. The easement provides Chesapeake has the absolute right to remove any and all property placed or maintained on the easement. If Chesapeake abandons the site, the easement reverts to Taxpayer.

¶3 In 2016, Assessor sent notice to Taxpayer that the 10-acre tract of land was being reclassified as commercial property because it was the situs of the gas collection facility. The reclassification of the 10 acres increased the 160-acre Farm's assessed value to over double the previous value, from $44,213 to $96,333. Assessor claims he determined the fair cash value of the entirety of the 160-acres to be $96,333, the taxable value at $96,333, and the assessed value at $10,597. Prior to trial, Assessor admitted he erroneously failed to use the five percent (5%) cap as required by the Okla. Const. Art. X, § 8(b) and he adjusted the taxable value of the 160 acres to $44,374 to follow the 5% Constitutional cap. The taxable value will increase each year by 5% until it matches the fair cash value assessed by Assessor.

¶4 According to Taxpayer, the 2016 reclassification increased the 10-acre's value from $2,763.00 to $55,000.00. Taxpayer timely protested the reclassification and increase in value. At the informal hearing, Assessor produced comparable land sales, by warranty or quit claim deed, to gas production companies as support for the reclassification and denied the protest.

¶5 Taxpayer appealed the assessment to the Board. The Board affirmed Assessor's decision. Taxpayer appealed the Board's decision to the district court. At a trial de novo , the district court heard testimony from Taxpayer's expert, Wes Cabaniss, a licensed Oklahoma general appraiser, Dr. Wollman, the trustee/representative of Kast Trust Farm, and Assessor. Assessor testified only the 10-acres was reclassified from agricultural to commercial. Based on the presence of a gas compressor station, gravel and the perimeter fence, Assessor testified that he categorized the actual use of the 10-acre tract as commercial property.

¶6 The court held the 10-acre tract upon which the facility was built is commercial real estate and upheld Assessor's reclassification of the 10-acre tract as commercial land. Because Taxpayer has a right of reversion in the easement, the court held Taxpayer is responsible for the commercial tax liability on the 10 acres. The district court's journal entry noted, "A distinction must be made between the ten acres used for the gas compressor facility and the remaining farmland." Taxpayer now appeals the district court's decision to this Court.

¶7 This is an appeal in a special statutory proceeding to ascertain whether Taxpayer is entitled to a refund of ad valorem taxes paid under protest. See In the Matter of the Assessment of Pers. Prop. Taxes Against Mo. Gas Energy, Div. of S. Union Co., for Tax Years 1998, 1999 and 2000 , 2008 OK 94, ¶17, 234 P.3d 938. In such an appeal, the district court's judgment should be affirmed unless it is against the clear weight of the evidence or is contrary to law or equity. Id. The district court's statutory construction is reviewed de novo . Id.

¶8 While Taxpayer raises several assignments of error on appeal, we find the resolution of this appeal depends on the impact of Chesapeake's easement on the value of Taxpayer's property for ad valorem tax purposes. "An easement creates a legal relationship between two parties. The easement holder is referred to as the dominant estate; and the owner of land subject to an easement is known as the servient estate." Logan Cty. Conservation Dist. v. Pleasant Oaks Homeowners Ass'n, 2016 OK 65, ¶14, 374 P.3d 755 (citations omitted). Chesapeake, the easement holder, is the dominant estate and Taxpayer, the land owner, is the servient estate. An easement affords its titleholder a limited non-possessory right to use a parcel of land for a specific purpose. Id.

¶9 Oklahoma law recognizes that an easement burdens the servient estate. These burdens include, among other things: (1) decreased property value, (2) increased noise and traffic or interference with the servient owner's peace and enjoyment of the land, and (3) physical damage to the servient estate. Burkhart v....

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