Chaney v. Union Producing, LLC
| Decision Date | 03 December 2020 |
| Docket Number | No. CV-19-962,CV-19-962 |
| Citation | 2020 Ark. 388,611 S.W.3d 482 |
| Court | Arkansas Supreme Court |
| Parties | Bear CHANEY, in His Official Capacity as Director of the Arkansas Assessment Coordination Division of the State of Arkansas, Appellant v. UNION PRODUCING, LLC; J. David Reynolds Company ; J. David Reynolds III; Panther Creek Properties, LLC ; E&L Oil, LLC; Jerry Langley Oil Company, LLC; James Langley Operating Company, Inc.; James Wallace Langley; Berg Laney & Brown Company ; Berg Royalty Company; Arkansas Production Services, LLC ; Smackover Resources, Inc. ; TOC, LLC; and Dan Reynolds Company, Appellees |
Leslie Rutledge, Att'y Gen., by: William C. Bird, Sr. Ass't Att'y Gen., for appellant.
Harrell, Lindsey & Carr, P.A., Camden, by: Paul E. Lindsey, for appellees.
Appellant Bear Chaney, in his official capacity as Director of the Arkansas Assessment Coordination Division ("AACD") of the State of Arkansas, filed an interlocutory appeal from the Ouachita County Circuit Court's order denying his motion for summary judgment. For reversal, Chaney argues that the circuit court erred as a matter of law in finding that he was not entitled to sovereign immunity and that the circuit court lacked subject-matter jurisdiction to award injunctive relief against him. We reverse and remand in part and dismiss in part.
Appellees, the plaintiffs in the underlying case, include Union Producing, LLC; J. David Reynolds Company; J. David Reynolds III; Panther Creek Properties, LLC; E&L Oil, LLC; Jerry Langley Oil Company, LLC; James Langley Operating Company, Inc.; James Wallace Langley; Berg Laney & Brown Company; Berg Royalty Company; Arkansas Production Services, LLC; Smackover Resources, Inc.; TOC, LLC; and Dan Reynolds Company. They own certain interests in mineral properties ("working interests") located in Ouachita County.
Chaney is the director of the AACD, which is responsible for the statewide supervision and coordination of the assessment of real property made by county tax assessors for ad valorem tax purposes.1 Each year, the AACD issues its "Guidelines for Mass Appraisals of Minerals" ("AACD Guidelines") to the county tax assessors in Arkansas's seventy-five counties. According to the AACD Guidelines, its "[v]alues ... should be used by all counties and applied to all producing mineral interests in the county each year."
Debbie Lambert, Tax Assessor of Ouachita County ("Assessor"), assesses the value of real property, including appellees’ working interests, and bases her assessments on the AACD Guidelines. Those assessments are based on a yearly price per barrel of oil ("$Factor"), which the AACD calculates, and the Assessor applies the $Factor in certain mathematical formulas to calculate the assessed values of appellees’ working interests.
For tax years 2016, 2017, and 2018, appellees disputed the assessed values of their working interests as determined by the Assessor. Each year, appellees appealed their working-interest values to the Ouachita County Board of Equalization, which denied their claims. Appellees appealed the Board's rulings to the Ouachita County Court, which also denied their claims. Appellees then appealed the county court's rulings to the Ouachita County Circuit Court.
On February 23, 2017, when appellees first appealed to the Ouachita County Circuit Court, they added claims for injunctive relief against Chaney in his official capacity as the director of the AACD. They sought to appeal the county court's order and requested for relief that the 2016 assessed values of the appellees’ working interests calculated by the Assessor be "stricken, set aside, and declared void as being erroneous, excessive, arbitrary, and not representative of the true market value of the working interests." They alleged that the AACD should be enjoined from (1) mandating the tax assessors of the state to use the AACD computer program and the $Factor in valuing mineral property beginning in 2016; (2) using the three-year rolling average of oil prices as the current market value of oil properties in the assessment of the working interests; and (3) using or mandating the use of its computer program and mathematical formula in the valuation of mineral property. They also sought injunctive relief from the Assessor and claimed that the Assessor failed to reduce the value of the working interests derived from the AACD formula to a 20 percent value. They further requested that the AACD be enjoined from defining "newly discovered property" to include an increase in the barrels of production of an existing oil well or oil lease, pursuant to amendment 79 to the Arkansas Constitution. Appellees made similar claims relating to their 2017 and 2018 assessments in subsequent appeals to the circuit court.
On May 1, 2017, Chaney responded separately to appellees’ appeal and petition and stated that the "AACD's Guidelines are not mandatory, and county assessors are under no legal duty to follow them." He asserted that appellees’ claims against the AACD were barred by the doctrine of sovereign immunity pursuant to article 5, section 20 of the Arkansas Constitution.
Chaney also moved for summary judgment on December 3, 2018, and argued, inter alia , that the claims against him were barred because, as Director of the AACD, he had no authority to direct how the county assesses the taxes pursuant to Arkansas Code Annotated section 26-26-1101 (Repl. 2020). On January 18, 2019, the circuit court held a hearing on Chaney's motion for summary judgment at which time it took the matter under advisement. During the course of the litigation, Chaney also filed motions to dismiss on sovereign-immunity grounds, asserting that he was not a proper party to the lawsuit because he had no legal authority to mandate how taxes are assessed at the county level.
Chaney timely filed this interlocutory appeal.
On appeal, Chaney argues that the circuit court erred in denying summary judgment on the issue of his entitlement to sovereign immunity. He contends that appellees’ efforts to enjoin the AACD's lawful issuance of guidelines to assist local tax assessors in assessing minerals are barred by sovereign immunity. Chaney also claims that the circuit court erred in finding that a genuine issue of material fact exists concerning whether the AACD Guidelines are discretionary or directory.
An order denying a motion to dismiss or for summary judgment based on the defense of sovereign immunity or the immunity of a government official is an appealable order. See Ark. R. App. P.–Civ. 2(a)(10) ; City of Little Rock v. Dayong Yang , 2017 Ark. 18, at 4, 509 S.W.3d 632, 634. When the refusal to grant a summary-judgment motion has the effect of determining that the appellant is not entitled to immunity from suit, an interlocutory appeal is permitted because the right of immunity from suit is effectively lost if a case goes to trial. Id. , 509 S.W.3d at 634–35. Whether a party is immune from suit is purely a question of law and is reviewed de novo on appeal. Id. , 509 S.W.3d at 635.
The law is well settled on our standard of review in granting summary judgment. Muccio v. Hunt , 2016 Ark. 178, at 4–5, 490 S.W.3d 310, 312. A circuit court will grant summary judgment only when it is apparent that no genuine issues of material fact exist requiring litigation and that the moving party is entitled to judgment as a matter of law. Id. at 5, 490 S.W.3d at 312. The burden of proof shifts to the opposing party once the moving party establishes a prima facie entitlement to summary judgment; the opposing party must demonstrate the existence of a material issue of fact. Id. , 490 S.W.3d at 312. Whether a party is immune from suit in a summary-judgment procedure is purely a question of law. Repking v. Lokey , 2010 Ark. 356, at 5, 377 S.W.3d 211, 216.
The question in this interlocutory appeal is whether Chaney is immune from suit. The Arkansas Constitution expressly adopts the doctrine of sovereign immunity in article 5, section 20, which provides that "[t]he State of Arkansas shall never be made defendant in any of her courts." The sovereign-immunity doctrine bars suit if a judgment for the plaintiff will operate to control the action of the State or subject it to liability. Bd. of Trs. of Univ. of Ark. v. Andrews , 2018 Ark. 12, at 5, 535 S.W.3d 616, 619. We have extended the doctrine of sovereign immunity to include state agencies, and we have recognized that a suit against a public official in his or her official capacity is essentially a suit against that official's agency. Ark. State Med. Bd. v. Byers , 2017 Ark. 213, at 3, 521 S.W.3d 459, 462.
Sovereign immunity may be overcome when the State is the moving party seeking relief and when the state agency is acting illegally or if a state officer refuses to do a purely ministerial act required by statute. Ark. Dep't of Human Servs. v. Harris , 2020 Ark. 30, at 3, 592 S.W.3d 670, 673. We have held that a state agency or officer may be enjoined from acting arbitrarily, capriciously, in bad faith, or in a wantonly injurious manner. Id. , 592 S.W.3d at 673. We have also recognized that a state agency or officer may be enjoined from pending action that is ultra vires. Id. , 592 S.W.3d at 673.
With this precedent in mind, we turn to the present...
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