Mhcb (Usa) Leasing v. Galveston Cent. Appr.

• Decision Date: 20 September 2007
• Docket Number: No. 01-06-00529-CV.,01-06-00529-CV.
• Citation: 249 S.W.3d 68
• Parties: MHCB (USA) LEASING AND FINANCE CORP. and Valero Refining-Texas, L.P., Appellants, v. GALVESTON CENTRAL APPRAISAL DISTRICT and Galveston Central Appraisal District Review Board, Appellees. Galveston Central Appraisal District and Galveston Central Appraisal District Review Board, Appellants, v. MHCB (USA) Leasing and Finance Corp. and Valero Refining-Texas, L.P., appellees.
• Court: Texas Court of Appeals

249 S.W.3d 68

MHCB (USA) LEASING AND FINANCE CORP. and Valero Refining-Texas, L.P., Appellants, v. GALVESTON CENTRAL APPRAISAL DISTRICT and Galveston Central Appraisal District Review Board, Appellees.

Galveston Central Appraisal District and Galveston Central Appraisal District Review Board, Appellants, v. MHCB (USA) Leasing and Finance Corp. and Valero Refining-Texas, L.P., appellees.

No. 01-06-00529-CV.

Court of Appeals of Texas, Houston (1st Dist.).

September 20, 2007.

Rehearing Overruled November 6, 2007.

Daryl L. Moore, Moore & Kelly, P.C., JoAnn Storey, JoAnn Storey, P.C., Denman

H. Heard, Lance H. Lubel, Justin R. Goodman, Heard, Robins, Cloud & Lubel, LLP, Houston, TX, for Appellants.

Anthony P. Brown, Michael B. Hughes, McLeod, Alexander, Powel & Apffel, P.C., Galveston, TX, for appellees.

Panel consists of Justices TAFT, KEYES, and HANKS.

OPINION

TIM TAFT, Justice.

In these interlocutory appeals, MHCB (USA) Leasing and Finance Corp. ("MHCB") and Valero Refining-Texas, L.P. ("Valero Refining") (together, "the protesting parties"), who were plaintiffs below, and Galveston Central Appraisal District ("the District") and Galveston Central Appraisal District Review Board ("the Board"), who were defendants below, each appeal from the trial court's order granting in part and denying in part the District's and Board's joint plea to the jurisdiction. See TEX. CIV. PRAC. & REM.CODE ANN. § 51.014(a)(8) (Vernon Supp.2006). We determine (1) whether either or both of the protesting parties lacked standing to protest, and to seek judicial review of, the District's and Board's complained-of actions and (2) whether the trial court lacked jurisdiction over the protesting parties' requests for declaratory and injunctive relief when, at their core, those claims sought a determination of whether the District had the statutory authority unilaterally to rescind an appraisal agreement between itself and the protesting parties. We reverse the order and remand the cause for the trial court to render an order dismissing certain claims asserted by MHCB and to deny the District's and Board's jurisdictional plea against certain of the claims of Valero Refining.

Background

This dispute concerns the 2004 appraised value, for ad valorem tax purposes, of Valero Refining's Delayed Coker Unit ("the Coker Unit"), which is a refinery unit located in Texas City, Texas.

Valero Refining did not always own the Coker Unit. Before March 2004, MHCB owned the Coker Unit, and Valero Refining leased the unit from MHCB. Under its lease agreement with MHCB, Valero Refining was contractually obligated to pay property taxes on the Coker Unit. It was not until March 9, 2004 that Valero Refining purchased the Coker Unit from MHCB.

In December 2003, while MHCB still owned the Coker Unit, Robert T. Lehn, working for a private appraisal company on behalf of the District's chief appraiser,¹ wrote Valero Refining to begin the 2004 appraisal process for Valero Refining's Galveston County facilities, including the Coker Unit that it rented. Specifically, Lehn wrote to Roy G. Martin Jr., who was the vice president of Valero Corporate Services Company ("Valero Corporate"), the general partner of Valero Refining. Both Valero Corporate and Valero Refining were subsidiaries of Valero Energy Corporation ("Valero Energy").

The appraisal process for the Coker Unit that had begun in December 2003 was part of a larger appraisal of what appears to have been all of the Valero Energy corporate family's Galveston County industrial properties. Starting in March 2004, after Valero Refining had purchased the Coker Unit, Lehn and Trey Novosad, the Director of Ad Valorem Tax for Valero Energy, worked together on the appraisal values for all of the pertinent properties in Galveston County, including Valero Refinery's Coker Unit. In early May 2004, Lehn and Novosad reached an agreement to appraise the Valero Refinery Coker Unit at $60,525,090 for the 2004 tax year ("the Appraisal Agreement"). The protesting parties provided evidence that the Appraisal Agreement was memorialized in two documents: in an initial appraisal worksheet, in which Lehn had hand-written the words "MHCB—Delayed Coker Unit 60[&check]," and in a second appraisal worksheet, which in typed print listed the "Coker Unit at Valero Refining" as having a "grand total" value of $60,525,090.00.

On May 18, 2004, the District issued a notice of appraised value ("the first notice"), appraising the Coker Unit at $60,525,090. The protesting parties did not contest the appraised value set by the first notice, even though the new value significantly exceeded the Coker Unit's 2003 appraised value, because the 2004 appraised value was consistent with that required by the Appraisal Agreement.

Within days of the first notice's issuance, Lehn contacted Novosad to explain that the Texas City appraisal office was "under pressure" to explain certain appraisal figures. Then, on June 14, 2004, the Board held a meeting at which the District's chief appraiser submitted the 2004 records for all industrial accounts, including those for the Coker Unit. At that meeting, the Board appears to have questioned the $60,525,090 appraisal value for the Coker Unit because, shortly thereafter, on June 21, 2004, Lehn contacted Novosad to advise him that

[s]ome are laughing at the values I put on Y'all and on BP in Tx City, but more are very unhappy—saying anyone else would've put more on you two. I'm getting threatened by HCAD protests being blamed on equity and I'm getting what appears to be a possible tax unit challenge from Tx City—it's your new Coker [Unit]....

On June 22, 2004, Lehn contacted Novosad to inform him that the 2004 appraisal for the Coker Unit would have to be increased by $100 million because of "information being brought to light" that Lehn "hadn't properly considered," among other things. That same day, the District issued a revised notice of appraised value for the Coker Unit ("the second notice"), which appraised the Coker Unit at $193,370,890. The record does not show that the second notice was issued upon order of the Board; rather, the evidence indicates that the second notice issued before any protest had been filed concerning the 2004 appraisal of the Coker Unit and that the second notice may have been based on revised appraisal figures submitted to the District by Lehn.

The protesting parties filed a joint protest of the District's 2004 reappraisal and second notice on July 19, 2004.² After having held a hearing, the Board denied the protesting parties' protest in August 2004, at which time the Board also ordered the District's chief appraiser to correct the appraisal rolls to reflect an appraised value of $240,000,000 for the Coker Unit for 2004. The protesting parties then filed suit for judicial review of the Board's decision in the protest and asserted claims, within the same suit, against the District based on its unilaterally having rejected the Appraisal Agreement.

In their live petition, the protesting parties asserted two alternative sets of allegations. Primarily, they alleged as follows:

• that the District had acted "outside its statutory authority" and "abused its discretion" by having issued the second notice in violation of the Appraisal Agreement, rendering the second notice invalid, and

• "because [the District] acted outside its authority" in rejecting the Appraisal Agreement, the Board also "acted outside its authority and abused its discretion by denying [the protesting parties'] protest regarding the invalidity and void character" of the second notice that the District issued after having rejected the Appraisal Agreement.

We will refer to these allegations as the protesting parties' "Primary Allegations." In conjunction with the Primary Allegations, the protesting parties sought declarations that

• the Appraisal Agreement was a "binding contract" for an appraisal value of $60 million;

• the District's second notice of the appraised value was void;

• the District's chief appraiser had abused his discretion and exceeded his authority by having issued the second notice, and that notice was thus "invalid and void";

• the District had "breached its contractual agreement with [the protesting parties]";

• the Board had "exceeded its authority" by having taken any action that resulted from the second notice or increased the amount appraised in the first notice; and

• the District and Board were estopped from valuing the Coker Unit at more than the value in the Appraisal Agreement.

The protesting parties also sought injunctive relief in the following forms:

• "enforcement" of the Appraisal Agreement by correcting the 2004 tax rolls to reflect the value for the Coker Unit reached in the Appraisal Agreement;

• "relief from the Second Notice and [the District's] assessment of taxes" based upon the second notice, including the cancellation and setting aside of the Board's pertinent final order; and

• "reimbursement of other fees and fines that have accrued and/or have been assessed against [the protesting parties] because of [the District's and Board's] improper and void conduct."

The protesting parties further sought attorney's fees and court costs.

Alternatively, in the event that the trial court determined that the second notice and the Board's final determination of appraised value were valid, the protesting parties alleged that the District's and Board's actions in reappraising the Coker Unit's value were unfair and discriminatory because of a "fundamentally erroneous and unlawful plan, method and formula of valuation and assessment" that resulted in an excessive valuation that was unequal with the values assessed for comparable properties. The protesting parties further alternatively alleged that the resulting appraisal was "an unlawful levy" that created an "illegal lien" on the Coker Unit. We will refer to these allegations as the protesting parties' "Alternative...