Travis Cent. Apprais. v. Signature Flight

• Decision Date: 01 July 2004
• Docket Number: No. 03-03-00707-CV.,03-03-00707-CV.
• Citation: 140 S.W.3d 833
• Parties: TRAVIS CENTRAL APPRAISAL DISTRICT and Travis Central Review Board, Appellants, v. SIGNATURE FLIGHT SUPPORT CORPORATION, Triple S Petroleum, Austin Aero, and R & J Aviation, Appellees.
• Court: Texas Court of Appeals

140 S.W.3d 833

TRAVIS CENTRAL APPRAISAL DISTRICT and Travis Central Review Board, Appellants, v. SIGNATURE FLIGHT SUPPORT CORPORATION, Triple S Petroleum, Austin Aero, and R & J Aviation, Appellees.

No. 03-03-00707-CV.

Court of Appeals of Texas, Austin.

July 1, 2004.

Appeal from the District Court of Travis County, 261st Judicial District, Patrick O. Keel, J Ernest C. Garcia, Judith A. Hargrove, Susan Feller Heiligenthal, Linebarger, Goggan, Blair & Sampson, LLP, Austin, for appellants.

Jayash M. Chadha, William J. Boyce, Hannah Sibiski, Fulbright & Jaworski, L.L.P., Houston, for Signature Flight.

Charles L. Eppright, Sam R. Perry, Patricia Otto, Sneed, Vine & Perry, P.C., Austin, for Austin Aero & R & J.

Ray Langenberg, Scott, Douglass & McConnico, LLP, Austin, for Triple S Petroleum.

Before Justices KIDD, B.A. SMITH and PEMBERTON.

OPINION

BEA ANN SMITH, Justice.

The dispute in this case centers upon the legal question of who is the owner of improvements on land owned by the City of Austin. Appellees — Signature Flight Support Corporation (Signature), Triple S Petroleum (Triple S), Austin Aero, and R & J Aviation (R & J)¹ — claim that the City owns the improvements they constructed at Austin-Bergstrom International Airport and that appellees merely lease or sublease them. If so, the improvements are exempt from property taxes. The appellants, Travis Central Appraisal District and Travis Central Review Board (collectively, TCAD), assert that appellees own the improvements and are liable for the property taxes assessed. For the reasons that follow, we hold that the City owns the improvements and affirm the trial court's summary judgment in favor of appellees.

BACKGROUND

In 1998, the City, as owner and operator of the Austin-Bergstrom International Airport, entered into fixed-based operator leases with Signature and Austin Aero for a term of forty years. The leases granted Signature and Austin Aero particular acres of unimproved land at the airport to construct facilities for a full service fixed-based operation for general aviation.

In 1999, Signature subleased a portion of the leased premises to Triple S for the purpose of building a storage and maintenance hangar facility. Austin Aero similarly subleased a portion of its leased premises to R & J for the purpose of constructing an airplane hangar, offices, and related facilities.

In 2001, TCAD assessed property taxes against each appellee, asserting that each owned or had a taxable ownership estate or interest in the improvements that had been constructed under the leases and subleases. After unsuccessfully challenging the assessments through TCAD's protest procedures, each appellee filed suit, seeking a declaratory judgment that the property taxes assessed against them were invalid. Appellees each filed motions for summary judgment, attaching the lease and sublease agreements and arguing that the City was the owner of the improvements pursuant to the language in the leases and that the improvements were therefore exempt from property taxes. TCAD filed a cross motion for partial summary judgment, asserting that appellees were liable for the taxes as owners. After consolidating the four pending causes, the district court granted appellees' motions, declaring the property tax exempt. The judgment ordered TCAD to remove the improvements and each appellee from the appraisal rolls for tax years 2001, 2002, and 2003. TCAD brought this appeal.

DISCUSSION

Standard of review

Because the propriety of a summary judgment is a question of law, we review the trial court's decision de novo. Natividad v. Alexsis, Inc., 875 S.W.2d 695, 699 (Tex.1994); Texas Dep't of Ins. v. American Home Assurance Co., 998 S.W.2d 344, 347 (Tex.App.-Austin 1999, no pet.). The standards for reviewing a summary judgment are well established: (1) the movant has the burden of showing that no genuine issue of material fact exists and that it is entitled to judgment as a matter of law; (2) in deciding whether there is a disputed material fact issue precluding summary judgment, evidence favorable to the nonmovant will be taken as true; and (3) every reasonable inference must be indulged in favor of the nonmovant and any doubts resolved in its favor. Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548-49 (Tex.1985).

When both parties file motions for summary judgment and the court denies one and grants the other, we must review the summary-judgment evidence presented by both sides and decide all questions presented and render the judgment that the trial court should have rendered. City of Garland v. Dallas Morning News, 22 S.W.3d 351, 356 (Tex.2000).

Ownership of the improvements

Improvements and land are separate estates or interests under Texas property law, see Tex. Tax Code Ann. § 25.04 (West 2001), and Texas recognizes the separate ownership of the improvements located on leased land, Wright v. Macdonnell, 88 Tex. 140, 30 S.W. 907, 909 (1895); Holly v. Craig, 334 S.W.2d 586, 587 (Tex.Civ.App.-Fort Worth 1960, no writ). If owned by different persons, improvements and land are to be listed separately on a taxing authority's tax rolls, in the names of the respective owners, except when otherwise provided by the property tax code. See Tex. Tax Code Ann. § 25.04; Harris County Appraisal Dist. v. Reynolds/Texas, J.V., 884 S.W.2d 526, 528 (Tex.App.-El Paso 1994, no writ).

Both TCAD and appellees agree that the dispositive issue is who owns the improvements — the City or appellees? If the City owns them, they are exempt from property taxation. See Tex. Tax Code Ann. § 11.11 (West Supp.2004) ("[P]roperty owned by this state or a political subdivision of this state is exempt from taxation if the property is used for public purposes.").² However, if appellees own the facilities, they are subject to taxation, and TCAD properly listed the improvements on the tax rolls in appellees' names. See id. § 25.08(b) (West Supp.2004) ("If a person who is not entitled to exemption owns an improvement on exempt land, the improvement shall be listed in the name of the owner of the improvement."). We thus consider the summary-judgment evidence to determine whether appellees were entitled to judgment that as a matter of law they did not own the improvements.

The general rule is that improvements become part of the land and belong to the landowner unless there is (1) an understanding between the parties that the improvements not become permanently annexed to the land, or (2) evidence showing intent of the improver that the improvements remain personalty with the right to be removed. See Lindsley v. Lewis, 125 Tex. 630, 84 S.W.2d 994, 995-96 (1935) (landowner's verbal agreement that brother could construct home and live on the land did not give brother any interest in improvements); Dennis v. Dennis, 256 S.W.2d 964, 966 (Tex.Civ.App.-Amarillo 1952, no writ) (absent agreement, son's house moved onto land owned by his mother became permanently affixed and belonged to mother); Op. Tex. Att'y Gen. No. O-4661 (1942) (structures erected by non-owners become part of realty and belong to landowner; agreement to contrary is necessary to prevent operation of this rule); see also Armstrong v. Mission Indep. Sch. Dist., 195 S.W. 895, 896 (Tex.Civ.App.-San Antonio 1917), rev'd on other grounds, 222 S.W. 201 (Tex. Comm'n App.1920) (improvements placed upon land by lessee with agreement that it could be removed was personal property of lessee).

A contrary intent must be clearly established:

Houses and other improvements placed [on land] by man may or may not be a part of the realty — depending upon contracts and intentions of parties thereto. Everyone knows that in many cases that have been before the courts men erect structures and even very valuable improvements on lands of another under contracts, agreements, and evident intentions that such improvements shall never be a part of the land and never become the property of the land owner. When such conditions arise the improvements do not become real property but remain personal.

Rogers v. Fort Worth Poultry & Egg Co., 185 S.W.2d 165, 167 (Tex.Civ.App.-Forth Worth 1944, no writ), cited in Holly, 334 S.W.2d at 587. Thus, the parties to a contract can elect to determine who will be the owner of improvements located on leased real property. See Holly, 334 S.W.2d at 587; Rogers, 185 S.W.2d at 167.

If a contract is unambiguous, its terms can be interpreted as a matter of law by the court. Coker v. Coker, 650 S.W.2d 391, 393 (Tex.1983). Where contract language is subject to two or more reasonable interpretations, it is ambiguous. National Union Fire Ins. Co. v. CBI Indus., Inc., 907 S.W.2d 517, 520 (Tex.1995). Whether a contract is ambiguous is a question of law for the court to decide by looking at the agreement as a whole in light of the circumstances present when the contract was entered. Coker, 650 S.W.2d at 394. We examine and consider the entire writing in an effort to harmonize and give effect to all the provisions of the contract so that none will be rendered meaningless. Id. at 393. No single provision will control; rather, all provisions must be considered with reference to the whole instrument. Id. When an issue turns on a question of law, we do not give any particular deference to legal conclusions of the trial court and apply a de novo standard of review. Trinity Indus., Inc. v. Ashland, Inc., 53 S.W.3d 852, 868 (Tex.App.-Austin 2001, pet. denied). We now turn to the lease contracts to determine if the City and appellees unambiguously decided who would be the owner of the improvements.

The City's leases with Signature and Austin Aero specifically provided, "Legal title to Facilities constructed by Tenant shall be held by the City after acceptance of the Facilities by the City and shall be completely vested in the City at the end of the term of this Agreement." The uncontroverted summary-judgment evidence indicates that the City accepted each of the...