Iraan-Sheffield Indep. Sch. Dist. v. Kinder Morgan Prod. Co.
| Decision Date | 30 August 2022 |
| Docket Number | 08-19-00090-CV |
| Parties | IRAAN-SHEFFIELD INDEPENDENT SCHOOL DISTRICT, Appellant, v. KINDER MORGAN PRODUCTION COMPANY LLC, Individually and as successor in Interest to KINDER MORGAN PRODUCTION COMPANY, LP, Appellee. |
| Court | Court of Appeals of Texas |
Appeal from the 83rd District Court of Pecos County, Texas (TC# P-7943-83-CV)
Before Rodriguez, C.J., Palafox, and Alley, JJ.
This appeal arises out of a taxing unit's challenge of the appraised values of mineral interest in Pecos County, Texas. The pivotal question is whether Appellant Iraan-Sheffield Independent School District (ISISD) exhausted its administrative remedies by raising the issue of taxpayer fraud during the appraisal review board hearing. The trial court concluded ISISD did not exhaust its administrative remedies, granted Appellee Kinder Morgan Production Company LLC's (Kinder Morgan) plea to the jurisdiction, and dismissed ISISD's petition. Finding ISISD exhausted its administrative remedies, we reverse the trial court's dismissal and remand the case for further proceedings.
Before we set forth the factual and procedural background of this case, we must address the state of the appellate record. After the parties completed briefing, ISISD filed a first and second supplemental designation of items to be included in the clerk's record of this appeal. The first supplemental request sought to include a letter from Kinder Morgan's counsel to the members of the Pecos County Appraisal Review Board (ARB) dated after the trial court's ruling on the plea to the jurisdiction. The second supplemental request sought to include pleadings from the lawsuit captioned ISISD v. Pecos County Appraisal District and Kinder Morgan Production Co., LLC, Individually and as Successor in Interest to Kinder Morgan Production Co., LP, cause no P-8133-83-CV, which is a separate and different lawsuit filed in the 83rd Judicial District of Pecos County between the same parties involved in this matter. Kinder Morgan filed a motion to strike these subsequent filings from the record contending ISISD had improperly designated part of the record on appeal. Kinder Morgan argues both requests for supplementation of the clerk's record improperly designate records not before the trial court when it granted Kinder Morgan's plea to the jurisdiction at issue here.
An appellate court may only consider the record as it appeared before the trial court at the time the court made the decision in question. Hogg v. Lynch, Chappell & Alsup, P.C., 480 S.W.3d 767, 774 (Tex.App.-El Paso 2015 no pet.)(citing In re Bristol-Myers Squibb Co., 975 S.W.2d 601, 605 (Tex. 1998)(a reviewing court must "focus on the record that was before the court" when it rendered its decision); In re Allstate Ins. Co., 232 S.W.3d 340, 343 (Tex.App.-Tyler 2007, no pet.). Having reviewed the proposed supplementation, we agree the records ISISD seeks to include in the appellate record were not before the trial court when it considered Kinder Morgan's plea to the jurisdiction. ISISD argues the contested records show Kinder Morgan made subsequent filings and admissions relevant to the disputed issues of this appeal. Regardless of whether these records are relevant, which we do not determine at this juncture, we are not permitted to consider records not before the trial court at the time it rendered the ruling under appellate review. See Hogg, 480 S.W.3d at 774. Accordingly, we grant Kinder Morgan's motion to strike notices of subsequent filing from the record of this appeal.
With that understanding, we turn to the background of this appeal as reflected by such appellate record.
ISISD is a taxing unit and independent school district located in Iraan, Texas. In May 2018, it filed a Texas Comptroller of Public Accounts Form 50-215 "Petition Challenging Appraisal Records" (Original Challenge Petition) with the ARB. It selected two of the five statutory grounds listed on the form as the basis for its challenge: (1) "the level of appraisals of any category of property in the district or in any geographical area in the district, but not the appraised value of a single taxpayer's property," and (2) "an exclusion of property from the appraisal records." It described the category of property involved in the challenge as "Category G property: Oil and Gas, Minerals, and other subsurface interests - Pecos County." ISISD also provided the following brief explanation of why its challenge was necessary:
ISISD asserts the levels of appraisal for Cat. G property located within Pecos County for years 2017, and 2012-2016 were erroneous, inconsistent, and insufficient. ISISD asserts that Cat. G property was erroneously and incorrectly omitted from appraisal for 2017, and 2012-2016. Beck & Masten Pontiac-GMC, Inc. v. Harris Co. Appraisal Dist., 830 S.W.2d 291, 294-95 (Tex. App.-Houston [14th Dist.] 1992, writ denied). ISISD asserts back-appraisal is required for Cat. G property for years 2012-2016. Atascosa Co. v. Atascosa Co. Appraisal Dist., 990 S.W.2d 255, 257 (Tex. 1999). ISISD challenges the level of Cat. G property appraisals for 2017, and 2012-2016; the omission of taxable Cat. G property for 2017, and 2012-2016; and requests back-appraisal of Cat. G property for 2012- 2016. Id.; In re ExxonMobile Corp., 153 S.W.3d 605, 619 (Tex. App.-Amarillo 2004); Tex. Tax Code Ch. 25, 41.
ISISD filed a supplemental Petition Challenging Appraisal Records Form 50-215 (Supplemental Challenge Petition) challenging the appraisal records for tax years 2012-2018. The Supplemental Challenge Petition identified the same two statutory grounds for the challenge as it did in the Original Challenge Petition and contained the same description of the property involved. ISISD provided the following brief explanation for why its challenge was necessary in its Supplemental Challenge Petition:
The taxing unit is challenging all current and past appraisals of Cat. G property from present back to and including 2012, including any that are currently pending. Tex. Tax. Code 25.21 and 41.03. The taxing unit challenges the levels of appraisals for Cat. G property located within Pecos County for years 2012-2018 as being erroneous, inconsistent, and insufficient; challenges that Cat. G property was erroneously and incorrectly omitted (in toto and ab initio) from appraisals for years 2012-2018; and requests back-appraisal for Cat. G property for all previous years as allowed by law. Atascosa Co. v. Atascosa Co. Appraisal Dist., 990 S.W.2d 255, 257 (Tex. 1999).
The ARB held a hearing on ISISD's Original and Supplemental Challenge Petitions. ISISD did not present any witnesses. But through its attorney it presented data compiled by Louis Posgate, a private appraiser, that purports to show the appraised value of Kinder Morgan's mineral interests in Pecos County varies significantly from the value Kinder Morgan claims for the same mineral interest in publicly available filings it is required to make with various public state and federal entities. ISISD indicated it had asked the Pecos County Appraisal District (PCAD) for the data underlying the Kinder Morgan appraisals to confirm Posgate's calculations, but it did not get anything in response. It proceeded to argue, however, the ARB should trust the data used in Posgate's calculations because it was derived from what Kinder Morgan swore was true in its public filings: "This is a case of these are Kinder Morgan's statements to the different agencies.
So, you know, do you trust the one that they've sworn to and given to the SEC or do you go with one that is not sworn to" that is provided to the appraisal district. ISISD then argued that while it did not have specific evidence to back up its claims because of PCAD's refusal to provide it with any underlying data, the ARB could presume fraud because the appraised value of Kinder Morgan's mineral interests was more than 25% less than its purported actual value:
So they make all these filings with these other entities-or with these other agencies and if you take the information . and you plug it into . . . the mandatory formula that is required by law and by the Comptroller, the value is significantly more as to the oil that is in Pecos County than what . . . the Appraisal District came up with. So what that leads to is the Comptroller has-and it's by statute-a general position that if taxes were over 25 percent underpaid, . . . that it is considered to be fraud or misrepresentation that the Panel or a court would consider.
ISISD's counsel concluded by asking the ARB to order a reappraisal of Kinder Morgan's mineral interests for the years 2012 through 2018 because "either there was an error by [PCAD] or there was a misrepresentation by Kinder Morgan."
PCAD, the only party opposing ISISD before the ARB, realized the issue before the board was whether Kinder Morgan committed fraud. In its closing, it asserted "the whole focus of this hearing's been on Kinder Morgan." It then argued "[t]here's no fraud, there is nothing there," and "[T]here is no fraud proven or even insinuated here."
The ARB members, none of whom are attorneys or judges, also believed the issue before them was fraud. At the close of evidence and argument, an unidentified board member motioned for the board to make a finding there was no fraud committed:
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