Valerus Compression Servs. v. Gregg Cnty. Appraisal Dist.

Decision Date07 January 2015
Docket NumberNO. 12–13–00393–CV,12–13–00393–CV
Citation457 S.W.3d 520
PartiesValerus Compression Services, a Texas Limited Partnership and Valerus Compression Services Management, LLC, a Texas Limited Liability Company, General Partner, Appellants/Cross–Appellees v. Gregg County Appraisal District, Appellee/Cross–Appellant
CourtTexas Court of Appeals

Gwen J. Samora, for Appellant.

Christopher S. Jackson, for Appellee.

Panel consisted of Worthen, C.J., Griffith, J., and Hoyle, J.

OPINION

BRIAN HOYLE, Justice

This is an appeal of a dispute involving ad valorem taxation of certain equipment used to facilitate the production and processing of natural gas. Faced with dueling motions for summary judgment, the trial court granted each motion in part, holding that the taxable situs of the equipment at issue is Gregg County and that Texas Tax Code Sections 23.1241 and 23.1242 are applicable but unconstitutional as applied. Each side, Valerus Compression Services, a Texas Limited Liability Partnership, and Valerus Compression Services Management, LLC, General Partner, (collectively Valerus) and Gregg County Appraisal District (GCAD) appeals part of the judgment.

The issues presented on appeal concern the constitutionality of Sections 23.1241 and 23.1242, the taxable situs, and whether the equipment at issue meets the statutory definition required to make Sections 23.1241 and 23.1242 applicable. We affirm the portion of the trial court's judgment holding that the taxable situs is Gregg County and reverse the portion of the trial court's judgment holding that Valerus met its burden to prove that Sections 23.1241 and 23.1242 are applicable. We remand the case to the trial court for further consideration.

Background

Valerus filed a notice of protest with the Gregg County Appraisal District's Review Board regarding the 2012 appraisal rolls. Valerus contested the determination that the equipment at issue, natural gas compressor packages offered for lease, should be on Gregg County's appraisal rolls, and it contested the valuations placed on the equipment. The review board ruled against Valerus, and Valerus appealed that order to the trial court.

In its petition, Valerus asserted that since its principal place of business is in Harris County, its equipment should be taxed in Harris County. It also alleged that the equipment at issue meets the definition of “heavy equipment inventory” as that term is used in Tax Code Section 23.1241, and, because GCAD did not determine value based on the requirements of Section 23.1241, the valuations placed on the equipment are excessive. GCAD denied the allegations and asserted that Section 23.1241 is unconstitutional.

Valerus filed a motion for summary judgment claiming that it is entitled to judgment as a matter of law on all of its claims against GCAD. It argued that Section 23.1241(b), which provides the formula for determining market value of a dealer's heavy equipment inventory, applies to its leased natural gas compressor packages as a matter of law. It asserted that, because the compressor packages and coolers meet the definition of “heavy equipment” as defined by Section 23.1241(a)(6) and Valerus is a “dealer,” the compressor packages and coolers are equipment, taxable as personal property, as a matter of law. Valerus also argued that Section 23.1241 does not violate the Texas Constitution. Finally, Valerus asserted that all taxes it owes pursuant to Section 23.1241 are payable in Harris County, the home of Valerus's principal place of business.

Two days after Valerus filed its motion for summary judgment, GCAD filed a motion for summary judgment. GCAD claimed entitlement to judgment as a matter of law on the issue of taxable situs and also claimed that Sections 23.1241 and 23.1242 are unconstitutional facially and as applied.

The trial court granted Valerus's motion in part, holding that the compressor packages at issue are self-powered, that they are intended for use for industrial purposes, and that Valerus is a heavy equipment dealer as defined by Section 23.1241(a)(1). Therefore, the court held, Sections 23.1241 and 23.1242 of the Texas Tax Code are applicable to the compressor packages at issue. The court denied all other requests in Valerus's motion for summary judgment. The trial court also granted GCAD's motion for summary judgment in part, holding that Sections 23.1241 and 23.1242 of the Texas Tax Code are unconstitutional as applied to Valerus's compressor packages because they create a valuation that is not based on a reasonable market value. The court further granted GCAD's motion, holding that the compressor packages at issue had situs in Gregg County as of January 1, 2012. Both sides appealed, and each complains of the portions of the judgment that are adverse to it.

Standard of Review

We review a summary judgment de novo. Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding , 289 S.W.3d 844, 848 (Tex.2009). The party moving for traditional summary judgment bears the burden of showing no genuine issue of material fact exists and it is entitled to judgment as a matter of law. Tex. R. Civ. P . 166a(c) ; Amedisys, Inc. v. Kingwood Home Health Care, LLC , 437 S.W.3d 507, 511 (Tex.2014). Once the movant has established a right to summary judgment, the nonmovant has the burden to respond to the motion and present to the trial court any issues that would preclude summary judgment. Amedisys , 437 S.W.3d at 511. We review the evidence in the light most favorable to the party against whom the summary judgment was rendered, crediting evidence favorable to that party if reasonable jurors could, and disregarding contrary evidence unless reasonable jurors could not. See City of Keller v. Wilson , 168 S.W.3d 802, 827 (Tex.2005).

Applicable Law

Statutory construction is a legal question, which we review de novo. Tex. Lottery Comm'n v. First State Bank of DeQueen, 325 S.W.3d 628, 635 (Tex.2010) ; City of Rockwall v. Hughes , 246 S.W.3d 621, 625 (Tex.2008). In construing statutes, our primary objective is to give effect to the legislature's intent. Tex. Lottery Comm'n, 325 S.W.3d at 635. Where language in a statute is unambiguous, this court must seek the intent of the legislature as found in the plain and common meaning of the words and terms used. Monsanto Co. v. Cornerstones Mun. Util. Dist. , 865 S.W.2d 937, 939 (Tex.1993). If the legislature has failed to define a word or term, we will apply its ordinary meaning. Id .

Taxable Situs

In its second issue, Valerus contends that the trial court erred in determining that the taxable situs of the equipment at issue is Gregg County. Relying on Tax Code Section 23.124(f), Valerus argues that it should pay taxes on its heavy equipment to Harris County because that is the location of its principal place of business.

Analysis

In its motion for summary judgment, Valerus argued that application of the general tax situs statute, Tax Code Section 21.02(a), is problematic. See Tex. Tax Code Ann . § 21.02(a) (West Supp. 2014). Valerus explains, as though making a policy argument, that application of the traditional tax situs statute could lead to taxation at any of the locations outlined in Section 21.02(a), resulting in confusion and administrative difficulties. Valerus asserts that Section 23.1241(f) constitutes a specific situs provision that should be applied instead of Section 21.02(a) and, pursuant to Section 23.1241(f), the dealer's principal place of business is the sole tax situs.

Specifically, Valerus relies on Section 23.1241(f)'s directive to the state comptroller to adopt a dealer's heavy equipment inventory declaration form listing the address of each location where the declarant conducts business. See Tex. Tax Code Ann . § 23.1241(f) (West Supp. 2014). Valerus construes this provision together with the comptroller's Form 50–265, which instructs dealers to file a declaration that calls this location “the business location of the inventory.” Valerus concludes that the statute and the comptroller's form indicate that the “business location” is the appropriate tax situs for a dealer's heavy equipment inventory, and “business location” could include a dealer's principal place of business or principal yard location. Valerus argues that the equipment's physical location and its business location may not be the same location. It argues that [t]ethering the heavy equipment inventory's situs to the declarant's principal place of business is consistent with the Legislature's intent to comprehensively value heavy equipment inventory as a whole.”

In essence, Valerus uses Form 50–265 to interpret Section 23.1241, contending that Section 23.1241 specifically addresses situs and therefore trumps the general taxable situs statute, Section 21.02(a). In the case of an irreconcilable conflict between a general provision and a special provision, the special provision prevails. Tex. Gov't Code Ann . § 311.026 (West 2013). However, this rule of construction applies only when statutes are in pari materia, meaning they share a common purpose or object. Howlett v. Tarrant Cnty ., 301 S.W.3d 840, 846 (Tex.App.–Fort Worth 2009, pet. denied) (op. on reh'g). To determine whether two statutes share a common purpose, justifying their construction in pari materia, courts consider whether the two statutes were clearly written to achieve the same objective. Tex. State Bd. of Chiropractic Examiners v. Abbott , 391 S.W.3d 343, 348–49 (Tex.App.–Austin 2013, no pet.).

Chapter 21 of the tax code is entitled “Taxable Situs.” Section 21.02, entitled “Tangible Personal Property Generally,” specifies situations in which tangible personal property is taxable by a taxing unit. Tex. Tax Code Ann . § 21.02. There seems to be no dispute that Section 21.02 is the general statute governing the question of where tangible personal property is taxed. Determining taxable situs is the purpose of Section 21.02.

Section 23.1241 is entitled “Dealer's Heavy Equipment Inventory;...

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