Parker Cnty. Appraisal Dist. v. Bosque Disposal Sys., LLC
| Decision Date | 01 December 2016 |
| Docket Number | NO. 02–15–00343–CV,02–15–00343–CV |
| Citation | 506 S.W.3d 665 |
| Parties | PARKER COUNTY APPRAISAL DISTRICT, Appellant v. BOSQUE DISPOSAL SYSTEMS, LLC, Agnus SWD Services, L.P., Gordon SWD Services, L.P., and Bob Phillips d/b/a Phillips Water Hauling, Appellees |
| Court | Texas Court of Appeals |
Peter G. Smith, Braden W. Metcalf, Nichols, Jackson, Dillard, Hager & Smith, L.L.P, Dallas, TX, for Appellant.
Joshua W. Carden, Joshua Carden Law Firm, P.C., Irving, TX, for Appellees.
Before the court en banc.
This appeal from a final judgment incorporating a summary judgment involves whether Appellant Parker County Appraisal District's assessment of four subsurface saltwater disposal wells separately from and in addition to the tracts of land on which the wells are located is void. The trial court granted summary judgment for the landowners, Appellees Bosque Disposal Systems, LLC; Agnus SWD Services, L.P.; Gordon SWD Services, L.P.; and Bob Phillips d/b/a Phillips Water Hauling (collectively, Owners), who contended that the value of the wells is subsumed within the value of their land; thus, the separate assessment and taxation of the income stream from the operation of those wells resulted in them being taxed twice on the same property. The Appraisal District challenges the trial court's ruling in a single issue. Because controlling authority compels the conclusion that Owners' real property interest in the saltwater disposal wells may be separately assessed and taxed, we will reverse the trial court's judgment, render a summary judgment for the Appraisal District on the controlling question of law, and remand the case to the trial court.
Owners own tracts of land in Parker County, Texas.2 Subsurface saltwater disposal wells are located underneath each Owner's tract.3 In 2012, 2013, and 2014, the Appraisal District appraised each of the subsurface saltwater disposal wells separately from Owners' tracts of land and any surface improvements. Owners filed protests with the Parker County Appraisal Review Board, challenging the separate valuation of the saltwater disposal wells on the appraisal rolls.4 See Tex. Tax Code Ann. § 41.41(a) (West 2015). After the Appraisal Review Board denied their protests, Owners filed petitions for review in the 415th District Court of Parker County, seeking de novo review of the Appraisal Review Board's decisions. See id. § 42.21 (West 2015), § 42.23 (West Supp. 2016).
In their petitions for review, Owners contended that because the Appraisal District had already appraised the real property upon which the wells are located, additional assessment based on the income stream from the wells subjected the land to "multiple appraisals for the same property."5 Owners sought several remedies: (1) a declaratory judgment that the separate appraisal accounts created for the assessment of the saltwater disposal wells are void; (2) a correction of the appraisal rolls in accordance with tax code 25.25(c) ; and (3) a reduction of the appraised value of the wells under tax code sections 42.24, 42.25, and 42.26. Id. §§ 42.24 –.26 (West 2015).
Because the factual basis upon which the Appraisal District separately assessed the wells is undisputed, Owners filed a joint motion for summary judgment contending that as a matter of law, the tax code does not authorize the Appraisal District to separately value and tax the saltwater disposal wells and the fee simple surface tracts. Thus, they sought to have the trial court render a declaratory judgment that the separate accounts and appraised values for the wells are void. After the Appraisal District filed a combined response and competing motion for summary judgment, the trial court granted Owners' motion and denied the Appraisal District's, declaring the four accounts related to the saltwater disposal wells "void as illegal double taxation." One month later, the trial court rendered a final judgment for Owners in which it denied their supplemental request for attorney's fees. The Appraisal District perfected a timely appeal from the final judgment.
We review a summary judgment de novo. Travelers Ins. Co. v. Joachim , 315 S.W.3d 860, 862 (Tex. 2010). We consider the evidence presented in the light most favorable to the nonmovant, crediting evidence favorable to the nonmovant if reasonable jurors could and disregarding evidence contrary to the nonmovant unless reasonable jurors could not. Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding , 289 S.W.3d 844, 848 (Tex. 2009). We indulge every reasonable inference and resolve any doubts in the nonmovant's favor.
20801, Inc. v. Parker , 249 S.W.3d 392, 399 (Tex. 2008). A plaintiff is entitled to summary judgment on a cause of action if it conclusively proves all essential elements of the claim. See Tex. R. Civ. P. 166a(a), (c) ; MMP, Ltd. v. Jones , 710 S.W.2d 59, 60 (Tex. 1986).
When both parties move for summary judgment and the trial court grants one motion and denies the other, the reviewing court should review both parties' summary judgment evidence and determine all questions presented. Mann Frankfort , 289 S.W.3d at 848. The reviewing court should render the judgment that the trial court should have rendered. See Myrad Props., Inc. v. LaSalle Bank Nat'l Ass'n , 300 S.W.3d 746, 753 (Tex. 2009) ; Mann Frankfort , 289 S.W.3d at 848.
When reviewing a summary judgment granted on specific grounds, the summary judgment can only be affirmed if the ground on which the trial court granted relief is meritorious. Cincinnati Life Ins. Co. v. Cates , 927 S.W.2d 623, 625–26 (Tex. 1996). But if a party preserves the other grounds presented that were not ruled on by the trial court, a court of appeals may consider these other grounds that the trial court did not rule on. Id. at 626. To preserve the grounds, the party must raise them in the summary judgment proceeding and present them in an issue or cross-point on appeal. Id. at 625–26.
Owners moved for summary judgment on two grounds: (1) the Appraisal District separately assessed and taxed a nonexisting separate interest in the saltwater disposal wells, and (2) even if a separate property interest exists, the tax code does not permit it to be taxed separately from and in addition to the surface tract. Owners argued that the saltwater disposal wells are not separate estates or interests in land because their surface and subsurface estates have not yet been severed by conveyance. Owners thus contend that the value attributable to the wells is subsumed in the already-appraised value of the land and that by separately appraising an interest related to the subsurface wells, the Appraisal District is essentially taxing the only properly taxable interest, i.e., the land, twice using different appraisal methods. They also contend that the saltwater disposal wells do not fit within any category of taxable real property set forth in the tax code.
The Appraisal District did not request specific relief in its motion for summary judgment and response—such as a final judgment in its favor or the dismissal of all of Owners' claims; therefore, it appears the Appraisal District sought to have the trial court determine the preliminary legal issue of whether the saltwater disposal well interests can be separately assessed and taxed under the law. See Rhone–Poulenc, Inc. v. Steel , 997 S.W.2d 217, 222 (Tex. 1999) ; Tri–County Elec. Coop., Inc. v. GTE Sw. Inc. , 490 S.W.3d 530, 546 n.8 (Tex. App.–Fort Worth 2016, no pet.). The arguments in its motion are directly responsive to Owners' arguments in their motion.
The summary judgment evidence shows that the Appraisal District valued the saltwater disposal wells on each Owner's tract based on an appraisal performed by Pritchard & Abbott, a tax consulting and appraisal firm that has been hired by several Texas counties. That firm is the only one in Texas that uniformly appraises these types of facilities using an income approach rather than simply placing a value on the personal property associated with the well. The wells were valued based on a uniform formula created by Pritchard & Abbott; the formula takes into account the well's past and forecasted revenue stream6 and deducts a uniform percentage for operating expenses. Pritchard & Abbott developed its income model around 2007 to 2008. Pritchard & Abbott did not take the fair market value of the surface estates into account when conducting the separate appraisals in the accounts associated with the wells.
Owners included in their summary judgment evidence a Pritchard & Abbott report explaining the firm's appraisal methods for these types of saltwater disposal facilities. According to the report, a commercial disposal well has both personal and real property requiring valuation. The personal property consists of the above-ground equipment and hardware; "[t]he real property is the interest or rights associated with injection into the subsurface of the land." In other words, Pritchard & Abbott's appraisal model values landowners' "right to inject into [the] subsurface formation" on their land. A Pritchard & Abbott employee testified by deposition that although the Appraisal District could "roll ... up" or include the value of an income-producing saltwater disposal well in an appraisal of the surface land, that "is not done."
The summary judgment evidence also shows that working interest owners of oil and gas leases often maintain saltwater disposal facilities on the leasehold itself. According to Pritchard & Abbott's report summary, "[a] leasehold disposal well's value is already captured in the working interest owner's mineral interest value which is enhanced by the costs savings derived by not using a commercial vendor (i.e., no middle-man fees)." Thus, Pritchard & Abbott, at least, appears to maintain that the only taxable value...
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