Haider v. Jefferson Cnty. Appraisal Dist., No. 09-14-00311-CV, 2016 Tex. App. LEXIS 3936 (Tex. App.—Beaumont Apr. 14, 2016, no pet. h.)
In this case, the property owners appealed the trial court’s order denying their motion for summary judgment and granting summary judgment for the appraisal district. The property owners owned mineral rights to a 400+ acre tract lying outside the City of Beaumont’s tax boundary. The property owners pooled an 83.35 acre portion of the tract into a larger gas unit. The gas unit lies predominantly within the City’s tax boundary. After wells were completed to produce from the pool, the appraisal district assessed property taxes on behalf of the City on the minerals associated with the property owners’ 83.35 acre tract. After receiving notice of the property taxes, the property owners filed suit against the appraisal district. The property owners argued that because their mineral interest was associated with a tract falling outside the City’s boundary, their interest could not be taxed. The appraisal district argued that the property owners owned minerals within the tax boundary as a result of the pooling agreement. Both sides filed motions for summary judgment, and the trial court granted the appraisal district’s motion and denied the property owner’s motion. The trial court further dismissed the claims of two of the property owners because those two owners failed to timely pay the tax assessment on the mineral interests.
The Texas Property Tax Code makes taxable any real property, including a mineral, which is located within the taxing unit as of January 1. However, the Tax Code does not provide direction on how to treat pooled mineral interests. On appeal, the court of appeals noted that the parties agreed that the property owners’ tract was located outside of the City’s boundary but that the pooled gas unit was located predominantly within the boundary. The court of appeals stated that whether the pooling of mineral interests results in ownership by the property owners would be dictated by the leases signed by the property owners and the language regarding pooling contained therein. If the lease provides for cross-conveyance by all owners in the pool, then all owners would own undivided interests in the pooled mineral interests, and the interests located within the tax boundary would presumably be taxable. In contrast, if the lease does not provide for cross-conveyance, then it would not create a taxable ownership interest in the pooled interests located within the tax boundary. Because the parties did not produce the leases as part of the summary judgment evidence, the court of appeals ruled that summary judgment could not be granted on behalf of either party.
The court of appeals next addressed the trial court’s alternate holding that the doctrine of quasi-estoppel prevented the property owners from claiming they could not be taxed because they had benefitted from the pooling arrangement. The court of appeals disagreed, stating that there was no evidence that the property owners had acquiesced to taxation of the pooled interests in Jefferson County, and reiterating that the appraisal district’s authority to assess taxes on the interests depended on the language in the unproduced leases. Finally, the court of appeals overruled the trial court’s dismissal of the claims of the two property owners who did not file their taxes timely. The court of appeals reasoned that it could be proven that those owners did not own interests subject to taxation within the City’s tax boundary, and under that scenario they would be able to contest the taxes even without payment of the taxes. The court of appeals reversed the trial court’s judgment and remanded the case to the trial court for further proceedings.