in Re: ExxonMobil Corporation F/K/A Exxon Corporation A/K/A Exxon Company, USA, Relators

IN THE COURT OF APPEALS

FOR THE SEVENTH DISTRICT OF TEXAS

AT AMARILLO

PANEL A

AUGUST 26, 2004

______________________________

NO. 07-04-0285-CV

IN RE EXXONMOBIL CORPORATION, ET AL., RELATORS

________________________________

NO. 07-04-0286-CV

IN RE CHEVRONTEXACO CORPORATION, ET AL., RELATORS

__________________________________

Before JOHNSON, C.J., and REAVIS and CAMPBELL, JJ.

ON PETITION FOR MANDAMUS

Amerada Hess Corporation, et al. and ChevronTexaco Corporation, et al., as

relators,1 have filed petitions seeking writs of mandamus directing respondent, the

1
Relators in cause number 07-04-0285-CV are Amerada Hess Corporation;
Amerada Hess Trading Company; BP Corporation North America, Inc., f/k/a Amoco
Corporation; BP America Production Company f/k/a Amoco Production Co.; Arco Oil & Gas
Co.; Atlantic Richfield Company a/k/a ARCO Permian; Altura Energy Ltd. n/k/a Occidental
Permian Ltd.; Altura Energy LLC n/k/a Occidental Permian Manager LLC; Marathon
Petroleum Company; and Marathon Oil Company.

Relators in cause number 07-04-0286-CV are ChevronTexaco Corporation; Chevron
U.S.A., Inc. a/k/a Chevron Products Company; Texaco Inc.; Texaco Exploration &
Production, Inc.; Four Star Oil & Gas Company; Texaco Trading and Transportation, Inc;
Texaco Refining and Marketing, Inc. a/k/a Texaco U.S.A.; ExxonMobil Corporation f/k/a
Exxon Corporation a/k/a Exxon Company, USA; Mobil Producing Texas & New Mexico,
Honorable Kelly G. Moore, judge of the 121st District Court, Yoakum County, to vacate a

May 3, 2004, order entered in cause number 8198 pending in that court. The order denied

pleas to the jurisdiction. Real parties in interest are Yoakum County, Denver City

Independent School District and Plains Independent School District.

In cause 8198, Yoakum County and Denver City ISD sued some twenty-eight

companies, including relators,2 that they allege own or operate3 oil properties4 in Yoakum

County, asserting causes of action for fraud and conspiracy with respect to the valuation

of the properties for ad valorem tax purposes. Plains ISD intervened, making the same

assertions.

Inc.; ExxonMobil Oil Corporation a/k/a Exxon f/k/a Mobil Oil Corporation; Shell Oil
Company; Shell Exploration & Production Company; Shell Western E&P, Inc; Shell Oil
Products Company; Equilon Enterprises, LLC; Ashland Inc.; and Plains Marketing L.P.

The two petitions for mandamus are not identical, but they are not inconsistent. We
do not consider it necessary to distinguish between them in our discussion of the issues
presented.

2
All the defendants in trial court cause number 8198 except one, Shell Frontier Oil
& Gas, Inc., are included among the relators in one or the other of the two mandamus
proceedings.
3
Mineral interests may be listed in appraisal records in the name of the operator
designated with the Railroad Commission of Texas. Tex. Tax Code Ann. § 25.12(b)
(Vernon 2001).
4
In their pleadings, the taxing units use the term “fixed oil interests” for the oil-
producing mineral interests owned or operated by relators.

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 Concluding that the district court does not have jurisdiction over the suit brought by

local taxing units5 and that mandamus is available to correct the trial court’s erroneous

contrary conclusion, we will conditionally grant the writs relators seek.

Taxing Units’ Pleadings

The taxing units’ pleadings state that appraisal districts, and the independent

appraisers whose services they utilize, use historical sales prices for oil as a part of their

calculation of the income projected to be received in the future from oil properties. That

estimate of future income, in turn, is used in valuing the oil properties for ad valorem tax

purposes. The historical price data used by appraisers includes, the taxing units allege,

“posted” prices for oil and sales prices reported to the Texas Comptroller of Public

Accounts. The taxing units allege that the defendant companies, knowing and intending

that appraisers rely on this information, engaged in a conspiracy and fraud carried out by

misrepresentations of the market price for oil through various transactions, including posted

price sales;6 sales of oil to subsidiary or affiliated companies at below-market prices; and

5
We will use the term “taxing units” for the real parties in interest, following
nomenclature used by the parties and by the Tax Code. Section 1.04(12) defines “taxing
unit” to include counties and school districts, as well as other political units authorized to
impose ad valorem taxes on property.

6
The petition alleges that “Posted prices are the prices that purchasing oil
companies publish by bulletin to express the amount that the company is willing to pay for
crude oil at the lease. Defendants fraudulently misrepresented that transactions based on
posted prices reflected the market value of oil, when in fact these transactions understated
market value.”

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“buy/sell” or “swap sales.”7 The taxing units allege that the defendants or their subsidiaries

or affiliates fraudulently misrepresented that each of these types of transactions reflected

the market value of oil when the transactions actually understated market value, thereby

knowingly and intentionally misrepresenting the market value of oil to the Comptroller, to

independent appraisers hired by appraisal districts, to appraisal districts and to the taxing

units. The taxing units further allege the defendants used affiliates and subsidiaries to

report fraudulently undervalued prices for oil, deliberately using thousands of transactions

with them to “generate non-arms length, non-market prices,” which they then reported as

the market value of oil. In some instances, the taxing units’ pleadings allege, the affiliates

and subsidiaries had no separate corporate existence, but “existed only on paper,”

furthering the fraud and concealing it from taxing authorities. The taxing units also allege

the defendants conspired together to defraud the taxing units, inter alia, by misrepresenting

that posted price sales, affiliate sales and buy/sell or swap sales reflected the market value

of oil, all of which constituted a “systematic price undervaluation” that reduced the taxable

value of their mineral interests and caused the taxing units to lose tax revenue. It is alleged

that each of the affiliated companies participating in the fraud did so for the benefit of the

defendants, and that the defendants accepted monetary benefits from the scheme, and

ratified the fraudulent conduct of their agents. The taxing units allege these actions caused

7
The petition alleges: “Buy/sell or swap sales occur when two parties to a transaction
swap a certain volume of commodity in one geographic area in exchange for the
agreement to do the same in another geographic area, accounting for transportation costs
by cash payment. The parties record these transactions as actual sales of oil and provide
a reported price for these transactions that understates the market value of oil. Often,
Defendants reported revenues based on posted price as the price at which buy/sell or
swap sales occurred . . .”

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the appraisal district8 to undervalue, for ad valorem tax purposes, mineral interests owned

or operated by the defendants resulting in an “underassessment and undercollection of

taxes” by the taxing units, thereby causing them damage by “depriving them of substantial

amounts of revenues.” Alleging the defendants’ conduct was willful and malicious, the

taxing units seek compensatory and exemplary damages, interest, costs and attorneys

fees.

The suit is not one to collect delinquent taxes. There is no allegation the defendants

failed to pay the taxes assessed them with respect to the oil interests.

Relators contend the trial court’s determination that it had jurisdiction was an abuse

of its discretion because it was a misapplication of Tax Code provisions giving exclusive

original jurisdiction over property appraisals to the appraisal district and the appraisal

review board. The taxing units respond that their suit is one asserting common law tort

causes of action and nothing in the Tax Code deprives them of their right to assert such

claims against tortfeasors such as the defendant companies or deprives the district court

of jurisdiction to hear them. They emphasize the general jurisdiction of district courts under

our state constitution and statutes.

Standards for Plea to Jurisdiction and Mandamus

In reviewing the trial court’s ruling on a plea to the jurisdiction, we review the

pleadings and any evidence relevant to the jurisdictional issue. See Texas Dep’t of

8
The Yoakum County Appraisal District is not a party to the suit.
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Transportation v. Ramirez, 74 S.W.3d 864, 867 (Tex. 2002). We will construe the

pleadings liberally in the taxing units’ favor. Id. at 867. The pleadings must allege facts,

however, that affirmatively demonstrate the court’s jurisdiction to hear the cause. See

Texas Ass’n of Bus. v. Texas Air Control Board, 852 S.W.2d 440, 446 (Tex. 1993).

Whether the trial court has subject matter jurisdiction is a legal question that is reviewed

de novo. State ex rel. State Dep’t of Highways and Public Transp. v. Gonzales, 82 S.W.3d

322, 327 (Tex. 2002).

A writ of mandamus is an extraordinary remedy that will issue only to correct a clear

abuse of discretion or the violation of a duty imposed by law, when there is no other

adequate remedy by law. Canadian Helicopters, Ltd. v. Wittig, 876 S.W.2d 304, 305 (Tex.

1994). In regard to analyzing the law or application of the law to the facts, a trial court has

no “discretion,” and must both properly analyze and apply the law to the facts. Therefore,

a clear failure to correctly analyze or apply the law will constitute an abuse of discretion.

Walker v. Packer, 827 S.W.2d 833, 840 (Tex. 1992). An erroneous legal conclusion, even

in an unsettled area of the law, is an abuse of discretion. Perry v. Del Rio, 66 S.W.3d 239,

257 (Tex. 2001).

Tax Code Provisions

Article VIII, section 1 of our state constitution requires that all real property, which

includes mineral interests, unless exempt, be taxed “in proportion to its value, which shall

be ascertained as may be provided by law.” Tex. Const. art. VIII, § 1(b). The same section

requires that taxation be “equal and uniform.” Tex. Const. art. VIII, § 1(a). The constitution

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further requires that “all lands and other property not rendered for taxation by the owner

thereof shall be assessed at its fair value by the proper officer.” Tex. Const. art. VIII, § 11.

By a 1980 amendment, article VIII, section 18 of the constitution requires that a “single

appraisal” within each county of property subject to ad valorem taxation is to be provided

by general law. The general law passed by the Legislature to codify the single appraisal

concept was the Property Tax Code.9 Wilson v. Galveston County Cent. Appraisal Dist.,

713 S.W.2d 98, 100 (Tex. 1986). The Tax Code thus codifies the constitutional obligation

of our state government to appraise and assess property for purposes of taxation. See

Atascosa County v. Atascosa County Appraisal Dist., 990 S.W.2d 255, 257 (Tex. 1999).

As a part of this codification, the Legislature in the Tax Code created appraisal districts to

begin operation January 1, 1982, as political subdivisions of the state. Id.; see § 6.01

(establishing an appraisal district in each county and declaring it “responsible for appraising

property in the district for ad valorem tax purposes of each taxing unit that imposes ad

valorem taxes on property in the district”). The Tax Code also established an appraisal

review board for each district. §§ 6.41, 41.01.

An appraisal district is governed by its board of directors, who are district residents

selected by the taxing units in the district.10 See §§ 6.03-6.035. The district’s board of

9
The Property Tax Code is the short title of Title I, consisting of Chapters 1 through
43, of the Tax Code. Tex. Tax Code Ann. § 1.01 (Vernon 2001). All references to the Tax
Code in this opinion are to sections of Title I; for simplicity, we will refer to it as the Tax
Code. Unless otherwise indicated, all section references refer to the Texas Tax Code
Annotated (Vernon 2001).

10
The county tax assessor-collector may serve as a director under some
circumstances. See § 6.03(a).

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directors appoints the chief appraiser, see § 6.05(c), and the appraisal review board, also

consisting of individuals residing in the district. See § 6.41.

Among the duties of the chief appraiser is the preparation each year of appraisal

records listing all property taxable in the district and stating the appraised value of each.

§ 25.01. The form of appraisal records is prescribed by the Comptroller.11 Generally,

taxable property is appraised at its market value as of January 1. Market value, defined

by section 1.04(7), is to be determined by the application of generally accepted appraisal

methods and techniques. § 23.01. Real property12 must be reappraised at least as often

as every three years. § 25.18. Section 25.01(b) authorizes an appraisal district to contract

with a private appraisal firm to perform appraisal services. The taxing units’ pleadings

indicate that Yoakum County Appraisal District has engaged an appraisal firm to value oil

and gas properties.

11
The Tax Code provides for substantial involvement of the Comptroller, both direct
and indirect, in the work of appraisal districts. It requires the Comptroller, inter alia, to
adopt rules establishing minimum standards for administration and operation of a district,
to provide for training for appraisal review board members and appraisers, to prescribe the
contents of forms and a uniform record system, to issue appraisal manuals and other
publications, to publish an annual report of the operations of appraisal districts, and to
conduct an annual study of appraisal levels in each district. §§ 5.03-5.101. It further
requires the Comptroller to review the standards, procedures and methodology used by
certain districts to determine compliance with generally accepted appraisal standards and
practices and, if a district is not in compliance, to initiate corrective action. § 5.102. It
mandates performance audits of appraisal districts by the Comptroller under certain
conditions. § 5.12. Section 5.10, requiring the annual study of appraisal levels in each
district within each major category of property, authorizes the Comptroller’s representatives
to inspect property used for the production of income to determine its existence and market
value. § 5.10(c). An appraisal review board may request the Comptroller to assist in
determining the accuracy of the district’s appraisals, and the Comptroller may provide other
professional and technical assistance. §§ 5.08, 41.65.
12
Defined to include minerals in place. § 1.04(2).

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 Following notice to the property owner of the appraised value, if required,13 the chief

appraiser submits the completed appraisal records to the appraisal review board “for

review and determination of protests.” § 25.22. Property owners may protest before the

appraisal review board adverse actions, including the chief appraiser’s determination of the

value of property. § 41.41. The Tax Code contains provisions for the board’s hearing

procedures, including provisions for issuance of subpoenas and taking of evidence. See

§§ 41.61, et seq. Under section 25.24, the appraisal records, as changed by order of the

appraisal review board and approved by that board, constitute the appraisal roll for the

district. § 25.24. The chief appraiser certifies to the tax assessor of each taxing unit in the

district the part of the appraisal roll listing the property taxable by that unit, which part

becomes the appraisal roll for that unit. § 26.01(a). The chief appraiser also certifies the

appraisal district appraisal roll, or a summary, to the Comptroller.14 § 26.01(b).

Section 41.01 of the Tax Code sets out the duties of the appraisal review board,

which, as relevant here, include the duties to determine protests initiated by property

owners, determine challenges initiated by taxing units and “take any other action or make

any other determination that this title specifically authorizes or requires.” § 41.41. Taxing

units are entitled to bring challenges of designated actions before the appraisal review

board, among them, challenges to the level of appraisals of any category of property in the

district and challenges to an exclusion of property from the appraisal records. § 41.03.

13
See § 25.19.
14
Compare Tex. Gov’t Code Ann. § 403.302 (Vernon 1998) (requiring Comptroller
to conduct annual study to determine total taxable value of all property in each school
district).

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 Pursuant to section 25.21, the chief appraiser is to enter in the appraisal records

real property that was omitted from an appraisal roll in any of the five preceding years,

appraising the property as of January 1 of the year it was omitted. Except as provided by

section 25.25, providing for correction of errors, chapter 41, generally providing for the

hearing of protests and challenges by the appraisal review board, and chapter 42,

providing for judicial review, once approved by the appraisal review board, the appraisal

roll may not be changed. § 25.25(a).

Chapter 42 of the Tax Code provides for trial de novo in the district court on appeal

of orders of the appraisal review board determining, inter alia, protests of property owners

and challenges by taxing units. §§ 42.01, 42.02, 42.031. Chapter 43 authorizes suits by

taxing units against the appraisal district to compel the district’s compliance with Code

provisions, rules of the Comptroller or other applicable law. § 43.01.

Threshold Conclusions

Two threshold conclusions guide our dispositions of these proceedings. The first

concerns the nature of the underlying suit. Relators call the taxing units’ suit an ad valorem

tax case. The taxing units call it a fraud and conspiracy case. They disclaim any intention

to change the tax appraisals or tax rolls. They note their suit seeks common law damages

for fraud and conspiracy, and point out the Tax Code nowhere prohibits counties or school

districts from bringing suit to recover damages from those committing tortious acts. The

taxing units do not deny, though, that the compensatory damages they seek necessarily

would be measured by the reduction in tax revenue caused by the defendants’ tortious

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conduct. That determination, of course, cannot be made without finding the amount of ad

valorem taxes that would have been received by the taxing units if the defendants’ minerals

had been properly valued. The district court therefore cannot adjudicate the claims

asserted in the taxing units’ pleading and award the relief they seek without determining

the market value, for ad valorem tax purposes, of the mineral interests in question. See §

26.09.

The Texas Supreme Court considered an analogous circumstance in Ector County

v. Stringer, 843 S.W.2d 477 (Tex. 1992). There, constables sued in district court for

additional compensation for past services. The court of appeals held the district court had

jurisdiction over the suits, despite the holding of Vondy v. Commissioners Court of Uvalde

County, 620 S.W.2d 104, 109 (Tex. 1981), that the constitution entrusts the duty to set

reasonable salaries for constables to the discretion of the commissioners court and a

district court is without jurisdiction to perform that task. The court of appeals distinguished

Vondy on the ground that Stringer sought a judgment for services rendered in the past, in

an amount measured by a reasonable salary. Reversing the court of appeals, the

Supreme Court held that the district court would necessarily substitute its judgment for that

of the commissioners court by awarding damages in an amount determined by the district

court without deference to the commissioners court’s authority to set a reasonable salary.

It said: “Reclassifying the compensation due for the past services of a constable as a debt

is ineffective to circumvent the authority of the commissioners court to set the salary of a

constable.” Stringer, 843 S.W.2d at 480.

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 Likewise, a suit to recover damages measured by the ad valorem taxes not received

by a taxing unit because of undervaluation of property necessarily involves substituting the

district court’s determination of the proper value of the property for that determined by the

appraisal district and approved by the appraisal review board. And, just as reclassifying

the claim in Stringer as one for a debt did not remove it from the constitutional and

statutory provisions vesting authority in the commissioners court, we cannot consider the

trial court’s jurisdiction over the taxing units’ claims here outside the constitutional and

statutory provisions governing appraisal of property for ad valorem tax purposes.

Secondly, we conclude the Tax Code provided a remedy for the taxing units. In

Atascosa County, the Supreme Court held that the chief appraiser’s duty under section

25.2115 to add to the appraisal roll real property omitted in any one of the five preceding

years is a nondiscretionary duty. 990 S.W.2d at 257. For purposes of section 25.21,

property “omitted” from the appraisal roll includes that undervalued by virtue of taxpayer

fraud. See Beck & Masten Pontiac-GMC, Inc. v. Harris County Appraisal Dist., 830 S.W.2d

291, 294-95 (Tex.App.–Houston [14th Dist.] 1992, writ denied). The taxing units attempt

to distinguish Beck & Masten. The distinctions they point out do not weaken, though, the

applicability of its holdings that because of taxpayer fraud the property assessments there

15
The current version of section 25.21, which was effective January 1, 1992, reads
as follows:

(a) If the chief appraiser discovers that real property was omitted from an
appraisal roll in any one of the five preceding years or that personal property
was omitted from an appraisal roll in one of the two preceding years, he shall
appraise the property as of January 1 of each year that it was omitted and
enter the property and its appraised value in the appraisal records.

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involved were void ab initio16 and thus the property “escaped taxation” (in the wording then

appearing in section 25.21). 830 S.W.2d at 295. We see no reason why mineral interests

undervalued by the fraudulent activity alleged in the taxing units’ pleadings would not be

subject to similar treatment.17

The challenge procedures provided a further remedy for the taxing units in the event

the chief appraiser failed to address the oil companies’ actions that they considered

fraudulent. Section 41.03 specifically authorizes taxing units to bring to the appraisal

review board challenges to the level of appraisals of any category of property and to an

exclusion of property from the appraisal records. Failing a satisfactory result at the

appraisal review board, de novo judicial review of its decision was available. See §§

42.031, 42.21, 42.23; Atascosa County, 990 S.W.2d at 259.18

The taxing units elsewhere point to deadlines in Tax Code procedures as indicating

the Legislature cannot have intended the appraisal review board to provide a remedy for

16
In so holding, Beck & Masten is consistent with the long-cited precept that fraud
will negate an otherwise final assessment. See, e.g., Tex. & Pac. Ry. Co. v. City of El
Paso, 85 S.W.2d 245, 250 (Tex. 1935); Yamini v. Gentle, 488 S.W.2d 839, 842
(Tex.Civ.App.–Dallas 1972, writ ref’d n.r.e.).
17
Granted, the “back-appraisal” of property under section 25.21 is limited to the five
years preceding the chief appraiser’s action. See Harris County Appraisal Dist. v.
Reynolds/Texas, J.V., 884 S.W.2d 526, 529 (Tex.App.–El Paso 1994, no writ). Legislative
attention to that section leaves no doubt, though, that the five-year limitation is intentional.
By a 1991 amendment to section 25.21, the back-appraisal period was shortened from ten
years to five. See Act of June 7, 1991, H.B. 507, § 1, 72nd Leg., R.S. 1991 Tex. Gen. Laws
1417.
18
As an alternative, section 43.01 authorizes a taxing unit to bring suit directly
against the appraisal district to compel its compliance with Code provisions, rules of the
Comptroller or other applicable law.

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fraud and conspiracy claims such as those they seek to pursue here. They note section

41.04 requires challenge petitions to be filed with the review board within fifteen days after

the chief appraiser submits completed appraisal records to the review board, and that

sections 41.11 and 41.12 would permit only fifty days to complete the hearing at the review

board, obtain the board’s order and allow the board to notify the mineral owners of a tax

increase. For several reasons, the argument is not persuasive. First, the Tax Code

expressly provides for challenges by taxing units, and it contains no indication that

challenges based on the appraisal district’s failure to deal with tortious conduct by

taxpayers are excluded. Secondly, the argument ignores the availability of judicial review,

by which a weakness in the outcome of appraisal review board action, whether due to

press of time or other causes, may be addressed, de novo. Under section 42.23, the

district court is to “try all issues of fact and law raised by the pleadings in the manner

applicable to civil suits generally.” Thirdly, the argument ignores the express provision in

sections 5.08 and 41.65 for the Comptroller’s professional and technical assistance to

appraisal review boards. Lastly, that the statutory procedures applicable to appraisal

review boards might be strained by an adjudication of the magnitude presented by this

case19 does not suggest the Legislature did not intend the procedures to provide a remedy

in cases of this nature. The taxing units’ argument does not explain how the Tax Code

procedures can be adequate to deal with fraud raised in the context of a taxpayer protest

19
The taxing units’ allegations here involve, from the statements in one paragraph
of their pleadings, hundreds of thousands of transactions occurring over a ten- to fifteen-
year period.

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case, see Beck & Masten, 830 S.W.2d at 295, but the same procedures are so inadequate

as to be inapplicable when the issue is presented by a taxing unit.

Exclusive Jurisdiction

Our threshold conclusions lead to the question whether the Tax Code’s remedies

are the exclusive means by which a taxing unit must address claims of fraud and

conspiracy occurring in the appraisal process.

The Government Code states that a district court has the jurisdiction provided by

article V, section 8 of the Texas Constitution, and further states that the district court “may

hear and determine any cause that is cognizable by courts of law or equity and may grant

any relief that could be granted by either courts of law or equity.” Tex. Gov’t Code Ann. §§

24.007-08 (Vernon 2004). Article V, section 8 of the constitution provides district courts

with jurisdiction consisting of “exclusive, appellate, and original jurisdiction of all actions,

proceedings, and remedies, except in cases where exclusive, appellate, or original

jurisdiction may be conferred by this Constitution or other law on some other court, tribunal,

or administrative body.” Tex. Const. art. V, § 8. Our district courts are courts of general

jurisdiction, presumably having subject matter jurisdiction unless a contrary showing is

made. Subaru of America, Inc. v. David McDavid Nissan, Inc., 84 S.W.3d 212, 220 (Tex.

2002); Dubai Petroleum Co. v. Kazi, 12 S.W.3d 71, 75 (Tex. 2000). Consistent with the

language of article V, section 8 of the constitution, that contrary showing may be that the

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Legislature has provided the claim must be heard elsewhere.20 See In re Entergy Corp.,

47 Tex. Sup. Ct. J. 729, 731-32 (June 25, 2004); Dubai Petroleum,12 S.W.3d at 75.

Relators contend the Legislature has granted the appraisal district and appraisal

review board exclusive jurisdiction to address, as an initial matter, the taxing units’ claims.

Whether an administrative body has been given the sole authority, or exclusive jurisdiction,

to make an initial determination in a dispute depends on statutory interpretation. See

Subaru, 84 S.W.3d at 221. When interpreting a statute, we “consider the entire act, its

nature and object, and the consequences that would follow from each construction.”

Atascosa County, 990 S.W.2d at 258, quoting Sharp v. House of Lloyd, Inc., 815 S.W.2d

245, 249 (Tex. 1991). We must also “reject interpretations of a statute that defeat the

purpose of the legislation so long as another reasonable interpretation exists.” Atascosa

County, 990 S.W.2d at 258, quoting Nootsie, Ltd. v. Williamson County Appraisal Dist., 925

S.W.2d 659, 662 (Tex. 1996).

In support of their contention that the appraisal review board has no jurisdiction over

the claims they assert against relators, the taxing units correctly note that in an analysis

of a claim of exclusive administrative agency jurisdiction, the administrative body is limited

to the powers clearly and expressly given it and courts will not imply additional agency

authority. See, e.g., Subaru, 84 S.W.3d at 220. We have stated our conclusion that the

Tax Code provided the taxing units a remedy for the infection of the appraisal process by

20
Thus, as Entergy makes clear, 47 Tex. Sup. Ct. J. at 731-32, the exclusive
jurisdiction doctrine is grounded in article V, section 8 of the constitution as well as in
traditional administrative law concepts. See Cash America Int’l Inc. v. Bennett, 35 S.W.3d
12, 15 (Tex. 2000).

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fraud. We do not consider that conclusion requires us either to imply authority of the

appraisal review board to ensure that mineral interests in Yoakum County are appraised

based on market value, unreduced by fraud, or to imply authority of taxing units to bring

a challenge if necessary to insist that the appraisal review board do so. We find, to the

contrary, that the provisions of the Tax Code expressly provide the necessary authority.

See, e.g., §§ 6.01, 6.03, 23.01, 25.21; see also Atascosa County, 990 S.W.2d at 257

(appraisal review board is “charged with ensuring that property is properly appraised”).

The taxing units effectively propose an interpretation of the Tax Code that denies

the appraisal review board and taxing units the power to address and remedy, through

Code procedures, fraudulent conduct that reduces the appraised value of mineral interests

below the statutorily-required market value. Such an interpretation would defeat the Tax

Code’s purpose. It also would require us to conclude the Legislature has only partially

satisfied the constitutional requirement that it provide, by general law, for a single appraisal

of property in each county. The Tax Code hardly can be said to meet that requirement if

it leaves individual taxing units the duty to correct appraisals based on fraud through suits

for damages against property owners.

Recent supreme court opinions considering exclusive jurisdiction issues look for the

presence of a “pervasive regulatory scheme” indicating legislative intention that the

regulatory process be the “exclusive means of remedying the problem to which the

regulation is addressed.” Entergy, 47 Tex. Sup. Ct. J. at 732; Subaru, 84 S.W.3d at 221.21

21
Both opinions quote Humphrey, Comment, Antitrust Jurisdiction and Remedies in
an Electric Utility Price Squeeze, 52 U. Chi. L. Rev. 1090, 1107 n.3 (1985).

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The supreme court has referred to the tax scheme embodied in the Tax Code as

comprehensive, Atascosa County, 990 S.W.2d at 259, and certainly it is so in scope and

detail.22 With respect to appraisal, the Code created two new bodies, appraisal districts

and appraisal review boards, prescribing their duties,23 standards24 and procedures.25

Without belaboring the point, we find the Tax Code’s provisions governing appraisal of

properties for ad valorem tax purposes, with its procedures for resolving disputes over

valuation, clearly create the type of regulatory scheme discussed in Entergy and Subaru.

The comprehensive nature of the Tax Code is consistent with the object it serves.

As we have noted, through its enactment the Legislature carried out specific constitutional

mandates. See, e.g., Tex. Const. art. VIII, § 18(b) (requiring provision by general law of

a single appraisal in each county); Id., § 18(d) (requiring the Legislature to prescribe by

general law “methods, timing and administrative process” to implement section’s

requirements). The Tax Code does not reflect merely a legislative decision to regulate

22
Tax Code provisions governing appraisal of oil and gas interests are especially
detailed. Section 23.175, added in 1993, prescribes the manner in which the average price
of oil or gas is to be calculated for use in an appraisal of oil or gas in place by a method
that takes into account the future income anticipated from the sale of oil or gas to be
produced. (The taxing units’ pleadings indicate that oil and gas interests in Yoakum
County are appraised by such a method.) That Code section also requires the Comptroller
to develop methods and procedures to be used when appraisers discount future income
from the sale of oil or gas to present value, and requires appraisal offices to use the
methods and procedures specified by the Comptroller. The Comptroller’s manual for that
purpose appears at 34 Tex. Admin. Code § 9.4031.

23
See, e.g., §§ 6.01, 41.01.
24
See, e.g., §§ 23.01, 41.07, 41.47.
25
See, e.g., §§ 25.01, et seq., 41.01, et seq.

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otherwise private business activity; it constitutes the exercise of the public function of

taxation. See Atascosa County, 990 S.W.2d at 257, Wilson; 713 S.W.2d at 100; Tri-City

Fresh Water Supply Dist. No. 2 v. Mann, 142 S.W.2d 945, 948 (Tex. 1940) (power to tax

belongs to sovereignty; can only be exercised by subordinate corporate body when so

delegated by constitution or legislature).

The taxing units contend the Legislature’s 2003 addition of section 22.29 to the Tax

Code supports their position that the Code is not a “pervasive regulatory scheme” providing

administrative remedies that are exclusive with respect to taxing units. See Cash America

Int’l, Inc. v. Bennett, 35 S.W.3d 12, 17 (Tex. 2000) (recent amendment to statute

suggested administrative jurisdiction not intended to be exclusive). Effective January 1,

2004, section 22.29 authorizes the chief appraiser to impose a tax penalty of fifty percent

on a taxpayer who commits certain actions, including the filing of a false rendition

statement with the intent to commit fraud or evade tax. The taxing units point out that

determination of a taxpayer’s liability under section 22.29(c) is made by a court, not by the

appraisal review board. We do not agree that the addition of section 22.29 supports the

taxing units’ argument. As relators point out, the specific provision in that section for court

determination of liability would be unnecessary if the taxing units were correct that the Tax

Code does not preclude common law actions for taxpayer fraud outside the Code

procedures.

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 The Tax Code does not contain language like that in the former Motor Vehicle

Commission Code26 discussed in Subaru, 84 S.W.3d at 219, or that in the former Public

Utility Regulatory Act27 discussed in Entergy, 47 Tex. Sup. Ct. J. at 732, by which the

administrative bodies there involved expressly were given “exclusive original jurisdiction”

over matters arising under those statutes. The taxing units point out that the only reference

in the Tax Code to the exclusiveness of remedies appears in section 42.09, which declares

the prescribed procedures for adjudication of grounds of protest by property owners

authorized by the statute to be exclusive and, with two exceptions, prohibits a property

owner from raising those grounds in defense to a suit for collection of delinquent taxes or

as a basis of a claim for relief in a suit by the property owner. The taxing units note that

the section by its wording is applicable only to taxpayer protests and the Code contains no

comparable provision expressly providing that taxing units are limited to the remedies

provided by the Code.

Other courts have examined the legislative intention behind section 42.09. See

Watson v. Robertson County Appraisal Review Board, 795 S.W.2d 307, 310

(Tex.App.–Waco 1990, no writ); Valero Transmission Co. v. Hays Consol. Indep. Sch.

Dist., 704 S.W.2d 857, 859 n.1, 861-62 (Tex.App.–Austin 1985, writ ref’d n.r.e.). Those

opinions describe the efforts of taxpayers under prior law to interpose common law claims

and remedies in ad valorem tax cases. See Watson, 795 S.W.2d at 310; Valero

26
Now codified in Chapter 2301 of the Occupations Code. See Tex. Occ. Code Ann.
§ 2301.151 (Vernon 2004) (providing board with exclusive original jurisdiction).

27
Now codified in the Utilities Code. See Tex. Util. Code Ann. § 32.001 (Vernon
1998) (granting commission exclusive original jurisdiction).

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Transmission, 704 S.W.2d at 859 n.1, 861-62. See generally Yudof, The Property Tax in

Texas Under State and Federal Law, 51 Tex. L. Rev., 885, 896 et seq. (1973). Given that

history, it is not surprising the Legislature would specify that the Code remedies and

procedures for taxpayers were being made exclusive. By contrast, there is no history

under pre-Code law of local taxing bodies appraising property and assessing taxes through

common law causes of action. The absence of a Code provision applicable to taxing units

comparable to section 42.09 is not evidence of legislative intent to exempt the claims the

taxing units assert in the underlying suit from adjudication through Code procedures.

Our review of the entire Tax Code leads us to conclude it is no less comprehensive

with respect to the rights and duties of taxing units than those of property owners, at least

with respect to the claims the taxing units assert in the underlying suit. Significantly, for

example, the Tax Code contains several provisions indicating the legislative intent that a

taxing unit’s direct involvement with the appraisal process is limited. Taxing units are

expressly prohibited by section 1.15 from directly employing appraisers for the purpose of

appraising property for taxation. Section 25.20, though, requires chief appraisers to give

a taxing unit’s assessor access to appraisal records. While a taxing unit may challenge,

under section 41.03(a), the level of appraisals of a category of property, it may not

challenge the appraised value of a single taxpayer’s property. A 1989 amendment to

section 42.031 provides that a taxing unit may not intervene in or otherwise be made a

party to an appeal of an order of an appraisal review board determining a taxpayer protest

if the appeal is brought by the property owner.

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 As the supreme court stated in Entergy, specific legislative expressions of intent

may make a court’s exclusive jurisdiction inquiry uncomplicated. 47 Tex. Sup. Ct. J. at 732.

Despite the absence from the Tax Code of specific language so providing, the nature of

the governmental function exercised through the Tax Code, the constitutional mandates

it implements, its comprehensive and detailed provisions concerning appraisal of property,

and its provision of remedies combine to require the conclusion that the Legislature

intended the Code procedures to be the exclusive means through which the taxing units

may seek a remedy for the injuries caused them by the tortious conduct alleged here.

When the Legislature has given exclusive jurisdiction to an administrative body, a

litigant’s failure to exhaust all administrative remedies before seeking judicial review of the

administrative body’s action deprives the court of subject matter jurisdiction over claims

within the body’s exclusive jurisdiction, and the court must dismiss such claims without

prejudice. Subaru, 84 S.W.3d at 221; Cash America, 35 S.W.3d at 15. At the hearing on

relators’ pleas to the jurisdiction, the Yoakum County Appraisal District chief appraiser

testified she had held that position since its creation, and the taxing units had never

submitted a challenge to the appraisal roll or filed a suit against the appraisal district. The

taxing units have thus failed to exhaust remedies the Legislature has made exclusive under

the Tax Code, depriving the trial court of jurisdiction. The trial court’s conclusion to the

contrary and its denial of relators’ pleas to its jurisdiction were a clear error of law and

failure to apply the law correctly, thus an abuse of its discretion. See Walker, 827 S.W.2d

at 840.

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 Adequacy of Remedy by Appeal

Denial of a plea to the jurisdiction traditionally has been treated as an incidental trial

court ruling, not reviewable by petition for writ of mandamus when there is an adequate

remedy by appeal. Bell Helicopter Textron, Inc. v. Walker, 787 S.W.2d 954, 955 (Tex.

1990); Abor v. Black, 695 S.W.2d 564, 566-67 (Tex. 1985); see Canadian Helicopters, 876

S.W.2d at 306. The mere cost to the parties and delay involved in pursuing an appeal do

not render an appellate remedy inadequate. Entergy, 47 Tex. Sup. Ct. J. at 731; Canadian

Helicopters, 876 S.W.2d at 306. Our supreme court has issued mandamus, though, when

the exercise of jurisdiction by a trial court in the face of exclusive jurisdiction held by an

administrative body would work “a clear disruption of the orderly processes of government.”

Entergy, 47 Tex. Sup. Ct. J. at 731, citing State v. Sewell, 487 S.W.2d 716, 719 (Tex.

1972). In Entergy, electric utility ratepayers brought suit alleging that, by entering into an

inconsistent later agreement, the utility had breached an agreement that called for a rate

proceeding providing certain rate savings to be filed with the Public Utility Commission.

Both the agreement the ratepayers sought to enforce and the later agreement had been

approved by the PUC and implemented through PUC orders. Before determining that the

Public Utility Regulatory Act gave the PUC exclusive jurisdiction over the dispute between

the utility and its ratepayers, the court discussed the issue of the appropriateness of

mandamus relief, noting that if the PUC’s jurisdiction was exclusive, “permitting a trial to

go forward would interfere with the important legislatively mandated function and purpose

of the PUC.” 47 Tex. Sup. Ct. J. at 731. In short, the court said, if the PUC had exclusive

jurisdiction in the dispute, “the judicial appropriation of state agency authority would be a

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clear disruption of the ‘orderly processes of government.’” Id. The court concluded that

disruption, coupled with the hardship to the defendant of postponing appellate review of

the jurisdictional issue, warranted mandamus relief. We conclude that permitting trial to

go forward of a case brought by taxing units, the end of which involves the judicial re-

appraisal of mineral properties for ad valorem tax purposes,28 would constitute no less of

an interference with the function and purpose of the appraisal district and appraisal review

board.

There is present here another factor that argues in favor of mandamus relief. The

record reflects that there are 36 similar cases pending in other district courts of our state,

all brought by taxing units and many involving common defendants. Finding that the cases

involve common material questions of fact and law, the presiding judges of the

administrative judicial regions involved have assigned them to two pretrial judges pursuant

to Rule 11 of the Rules of Judicial Administration. Early appellate resolution of the

exclusive jurisdiction issue in this case may aid in the adjudication of those cases and thus

help minimize the disruption of processes of government.

Taken together, the burden of expense and delay that would result from trial and

appeal of the case, the interference with appraisal district and appraisal review board

28
ChevronTexaco Corporation, et al. state in a brief filed in this court that the taxing
units’ suit asserts claims only through the late 1990's. The taxing units’ petition in the trial
court alleges at one point that the transactions through which relators conducted their
fraudulent scheme took place from the mid- to late-1980's through the mid- to late-1990's,
but we do not read their pleadings to limit their claims to those arising by that time. Nor do
we perceive that the taxing units have in this court characterized their claims as being so
limited.

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functions and the presence of a number of other cases involving common questions justify

the conclusion that appeal is not an adequate remedy for the trial court’s error of failing to

grant relators’ pleas to the jurisdiction.

Conclusion

We conditionally grant the petition for writ of mandamus, directing the trial court to

vacate its order of May 3, 2004, and to dismiss the underlying suit. Confident the trial court

will comply with this opinion, only in the event the trial court does not do so will we direct

this court’s Clerk to issue the writ.

James T. Campbell
Justice

Reavis, J., Concurring

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 IN THE COURT OF APPEALS

FOR THE SEVENTH DISTRICT OF TEXAS

AT AMARILLO

PANEL A

AUGUST 26, 2004

______________________________

NO. 07-04-0285-CV

IN RE EXXONMOBIL CORPORATION, ET AL., RELATORS

________________________________

NO. 07-04-0286-CV

IN RE CHEVRONTEXACO CORPORATION, ET AL., RELATORS

__________________________________

Before JOHNSON, C.J., and REAVIS and CAMPBELL, JJ.

CONCURRING OPINION

The taxing units allege that the defendant companies engaged in a conspiracy and

fraud to fix posted prices for oil. However, because they did not seek relief under sections

15.05(c) and (h) and 15.21 of the Texas Business and Commerce Code Annotated, and

without expressing any opinion whether these provisions may provide them a remedy, I

concur in the decision of the majority opinion.

Don H. Reavis

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 Justice

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