Hydrogeo, LLC v. Quitman Indep. Sch. Dist., et al, No. 06-15-00007-CV, 2016 Tex. App. LEXIS 20 (Tex. App.—Texarkana Jan. 6, 2016, no pet.)
Hydrogeo owned two interests in oil and gas leases and timely paid the ad valorem taxes on those interests during its period of ownership. After Hydrogeo acquired the interests, the local taxing districts sued for unpaid back taxes on the interests for the years prior to Hydrogeo’s ownership. After a trial, the trial court ruled that Hydrogeo was the current owner of the interests and entered an in rem judgment in favor of the taxing districts enforceable as a lien against the interests. On appeal, Hydrogeo claims that the trial court erred in admitting a previously undisclosed tax statement and that the judgment improperly included personal property taxes which cannot be enforced as a lien against the oil and gas interests.
Addressing Hydrogeo’s first complaint, the court of appeals held that it was not an abuse of discretion for the trial court to admit the previously undisclosed tax statement. While the taxing districts had produced tax statements in discovery, the tax statement offered at trial was updated to reflect the current amounts of all unpaid taxes, penalties and interests and it reflected that Hydrogeo was the current owner of the interests. The court of appeals acknowledged that the taxing districts should have supplemented their discovery responses and produced the updated tax statement. However, noting that the taxing districts’ pleadings and discovery responses made clear that the districts were seeking all of the delinquent taxes due on the property and that Hydrogeo admitted it currently owned the property, the court of appeals held that Hydrogeo could not have been unfairly surprised by the updated tax statement.
The court of appeals next addressed Hydrogeo’s complaints that it could not be held personally liable for taxes owed outside its period of ownership and that any lien would be unenforceable because it attached to both real and personal property. The court of appeals clarified that the judgment was not a personal judgment against Hydrogeo but an in rem judgment attaching to the property interests. Additionally, the court of appeals held that there was no evidence supporting Hydrogeo’s claim that the taxes were assessed against personal property. Having found Hydrogeo’s complaints without merit, the court of appeals affirmed the trial court’s in rem judgment.