Oliver Lane Chambers, Donna Kay Chambers-Jones, Rhonda Thompson, Clinton L. Chambers and Wife, Brandi N. Chambers v. San Augustine County Appraisal District

ACCEPTED
12-15-00201-CV
TWELFTH COURT OF APPEALS
TYLER, TEXAS
9/16/2015 1:28:43 PM
Pam Estes
CLERK

NO. 12-15-00201-CV

_____________________________________ FILED IN
12th COURT OF APPEALS
IN THE COURT OF APPEALS OF TEXAS TYLER, TEXAS
FOR THE TWELFTH CIRCUIT 9/16/2015 1:28:43 PM
PAM ESTES
TYLER, TEXAS Clerk
____________________________________

Oliver Lane Chambers, Donna Kay Chambers-Jones, Rhonda Thompson, Clinton
L. Chambers and wife, Brandi N. Chambers
Appellants

v.

San Augustine County Appraisal District
Appellee
___________________________________
On Appeal From Cause No. CV-13-9481
RD
In the 273 Judicial District Court of San Augustine County, Texas

APPELLANTS’ BRIEF

METTAUER LAW FIRM, PLLC
Attorneys & Counselors at Law
April Gregston Prince
State Bar No. 24047247
april@mettauerlaw.com
Lead Counsel
Gavin I. Midgley
State Bar No. 24092832
gavin@mettauerlaw.com
403 Nacogdoches Street, Suite 1
P.O. Box 2016
Center, Texas 75935
(936) 598-9400 (Phone)
(936) 598-6122 (Facsimile)
 Identity of Parties and Counsel

Pursuant to TEX. R. APP. P. 38.1(a), the parties to this suit are as follows:

(1) OLIVER LANE CHAMBERS, DONNA KAY CHAMBERS-JONES,

RHONDA THOMPSON, CLINTON L. CHAMBERS AND WIFE,

BRANDI N. CHAMBERS, c/o Mettauer Law Firm, PLLC, 403

Nacogdoches Street, Suite 1, Center, Texas 75935, are Appellants and were

Plaintiffs in trial court.

(2) SAN AUGUSTINE COUNTY APPRAISAL DISTRICT, c/o Jeff Bates,

118 E. Hospital St., Suite 100, Nacogdoches, Texas 75963, is Appellee and

was Defendant in the trial court.

The trial attorneys were as follows:

(1) Oliver Lane Chambers, Donna Kay Chambers-Jones, Rhonda Thompson,

Clinton L. Chambers and wife, Brandi N. Chambers were represented by

APRIL GREGSTON PRINCE, Mettauer Law Firm, PLLC, 403

Nacogdoches Street, Suite 1, Center, Texas 75935.

(2) San Augustine County Appraisal District was represented by JEFF

BATES, 118 E. Hospital St., Suite 100, Nacogdoches, Texas 75963.

The appellate attorneys are as follows:

(1) Oliver Lane Chambers, Donna Kay Chambers-Jones, Rhonda Thompson,

Clinton L. Chambers and wife, Brandi N. Chambers are represented on

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 appeal by APRIL GREGSTON PRINCE, Mettauer Law Firm, PLLC, 403

Nacogdoches Street, Suite 1, Center, Texas 75935.

(2) San Augustine County Appraisal District is represented on appeal by JEFF

BATES, 118 E. Hospital St., Suite 100, Nacogdoches, Texas 75963.

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 Table of Contents
Page

Identity of Parties and Counsel . . . . . . ii

Table of Contents . . . . . . . . iv

Table of Authorities . . . . . . . vi

Statement on Oral Argument . . . . . . vii

References to the Record . . . . . . . vii

Statement of the Case . . . . . . . 1

I. Nature of the Case . . . . . . 1

II. Course of Proceedings . . . . . 1

Issue Presented . . . . . . . . 4

Statement of Facts . . . . . . . . 4

Summary of the Argument . . . . . . 7

Argument . . . . . . . . . 7

The Trial Court Erred in Granting Appellee’s Motion for
Summary Judgment Because the Appellants’
Interest was Not Cross Conveyed. . . . . 8

The Trial Court Erred in Granting Appellee’s Motion for
Summary Judgment Because, Absent a Cross Conveyance
of Appellants’ Interest, Appellee Had No Authority to
Tax Minerals not Located in its Jurisdiction . . . 10

Conclusion and Prayer . . . . . . . 12

Certificate of Service . . . . . . . 15

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Certificate of Compliance . . . . . . 15

Appendix . . . . . . . . . 16

Lease Between Hunt Petroleum
Corporation and Oliver Lane Chambers . . . 17

Lease Between Hunt Petroleum
Corporation and Donna Kay Chambers-Jones . . 20

Lease Between Hunt Petroleum
Corporation and Rhonda Thompson . . . . 23

Texas Constitution Article 8, § 11 . . . . 24

Texas Tax Code § 1.04 . . . . . . 25

Texas Tax Code § 6.02 . . . . . . 29

Texas Tax Code § 21.01 . . . . . . 30

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 Table of Authorities

RULES

TEX. R. CIV. P. 166A(C) ....................................................................................... 7

TEXAS CONSTITUTION

TEX. CONST. ART. VIII, § 11 ............................................................................... 11

STATUTES PAGE

TEX. TAX CODE §1.04(2) ................................................................................... 11

TEX. TAX CODE §6.02(a) ................................................................................... 11

TEX. TAX CODE §21.01...................................................................................... 11

CASES PAGE

Carr v. Brasher, 776 S.W.2d 567, 569 (Tex. 1989) ........................................ 8

Chesapeake Exploration, L.L.C. v. Hyder,
427 S.W.3d 472 (Tex. App.—San Antonio 2014, pet. filed). ..............................9

Cincinnati Life Ins. Co. v. Cates,
927 S.W.2d 623, 626 (Tex. 1996). .................................................................... 8

FM Props. Operating Co. v. City of Austin,
22 S.W.3d 868, 872 (Tex. 2000) ....................................................................... 7

Haase v. Glazner, 62 S.W.3d 795, 797 (Tex. 2001)......................................... 8

Jones v. Killingsworth, 403 S.W.2d 325, 327 (Tex.1965)................................ 8

Oak v. Collin County, 692 S.W.2d 454, 455 (Tex. 1985) ................................ 11

Sheffield v. Hogg, 77 S.W.2d 1021, 1030 (Tex. 1934) ..................................... 11

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Southeastern Pipe Line Co. v. Tichacek,
997 S.W.2d 166, 170(Tex. 1999) ...................................................................... 9

Southwestern Elec. Power Co. v. Grant,
73 S.W.3d 211, 215 (Tex. 2002) ....................................................................... 7

STATEMENT REGARDING ORAL ARGUMENT

Appellants do not request oral argument at this time. Appellants believe

that the issues are easily understood and are clearly presented in their written brief

and that oral argument is not necessary and would not further assist the Court in

making its ruling.

REFERENCES TO THE RECORD
Clerk’s Record: There is 1 Volume of the Clerk’s Record. All references to

the Clerk’s record will be made in the following fashion: CR Vol. v, p, where v

represents the volume of the record and p represents the page number found in

same.

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 This brief is filed on behalf of Appellants, Oliver Lane Chambers, et

al, by April Gregston Prince, Attorney at Law.

Statement of the Case

Nature of the Case

This appeal is from a grant of summary judgment in favor of

Appellee, San Augustine County Appraisal District, regarding the

application of the Texas Tax Code to certain mineral interest, specifically

the geographic reach of a taxing unit when mineral interest which lie

entirely in another county have been pooled with minerals inside the taxing

unit’s authority.

Course of Proceedings
On August 30, 2013, Appellants filed suit against San Augustine

County Appraisal District seeking judicial review of the San Augustine

County Appraisal Review Board’s decision to tax certain mineral interests

owned by Appellants in Shelby County, Texas. (C.R. Vol. 1, pg. 5).

On September 30, 2013, San Augustine County Appraisal District

filed its Original Answer asserting a general denial. (C.R. Vol. 1, pg. 52).

On January 20, 2015 San Augustine County Appraisal District filed

its Motion for Summary Judgment asserting that because Appellants had

“cross-conveyed, pooled and unitized their mineral interests with other

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mineral interests lying within the boundaries of San Augustine, Texas,

[Appellants] had the obligation to pay taxes on said mineral interests within

the Unit to the extent they lie within the boundaries of San Augustine

[County] Texas”. (C.R. Vol. 1, pg. 91-94).

On March 20, 2015, Appellants filed a response to San Augustine

County Appraisal District’s Motion for Summary Judgment. (C.R. Vol. 1,

pg. 125).

On April 2, 2015, San Augustine County Appraisal District filed a

reply to Appellants’ Response to Motion for Summary Judgment. (C.R. Vol.

1, pg. 151).

San Augustine County Appraisal District’s Motion for Summary

Judgment was heard by submission on March 27, 2015. (C.R. Vol. 1, pg

72).

On June 23, 2015, the Court granted San Augustine County Appraisal

District’s Motion for Summary Judgment. (C.R. Vol. 1, pg. 166).

On July 15, 2015, the Court entered a Final Judgment in favor of San

Augustine County Appraisal District. (C.R. Vol. 1, pg. 166).

On July 7, 2015, Appellants filed a Notice of Appeal. (C.R. Vol. 1;

pg. 170).

On July 17, 2015, Appellants filed an Amended Notice of Appeal to

2
reflect the date the Final Judgment was signed by the trial court. (C.R. Vol.

1, pg. 172).

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 Issues Presented

Appellants’ First Point of Error

The Trial Court Erred in Granting Appellee’s Motion for Summary

Judgment Because the Appellants’ Interest Was Not Cross Conveyed.

Appellants’ Second Point of Error

The Trial Court Erred in Granting Appellee’s Motion for Summary

Judgment Because Absent a Cross Conveyance of Appellants’ Interest,

Appellee Had No Authority to Tax Minerals not Located in its jurisdiction.

Statement of Facts

On August 31, 2007, Oliver Lane Chambers, Donna Kay Chambers-

Jones, Rhonda Thompson, Clinton L. Chambers and wife, Brandi N.

Chambers (collectively “Appellants” herein) each entered into Oil and Gas

Leases (hereinafter collectively “the Leases”) with Hunt Petroleum

Corporation (Hunt Petroleum Corporation was subsequently acquired by

XTO Energy, Inc.). (C.R. Vol. 1, pg. 81- 90).

The Leases covered Appellants’ interest in 652 acres of land, more or

less, all of said land lying solely within the boundaries Shelby County,

Texas (hereafter the “Chambers Interest”). (C.R. Vol. 1, pg. 81-90).

Appellee does not dispute that all of Appellants’ surface interest (from

which Appellants’ minerals arise) lies solely within Shelby County, Texas

4
and that none of Appellants’ surface interest (and thus none of their mineral

interest) is located in San Augustine County, Texas. (C.R. Vol. 1, pg. 91,

paragraph 2).

Contained in the terms of the Leases was a provision that stipulated:

“[t]he formation of any unit hereunder which includes land not covered by

this lease shall not have the effect of exchanging or transferring any interest

under this lease (including, without limitation, any shut-in royalty which

may become payable under this lease) between parties owning interest in

land covered by this lease and parties owning interests in land not covered

by this lease.” (C.R. Vol. 1, pg. 131, 135, and 139)(emphasis added).

On July 2, 2010, the Chambers Interest was included in two

production units, the Tigers DU No. 1H (“Tigers Unit”) and the Wolfpack

(SL) DU No. 1H (“Wolfpack Unit”). (C.R. Vol. 1, pg. 11-12). Also

contained in the Tigers Unit and Wolfpack Unit were interest from land

located in San Augustine County. Id.

The Tigers Unit contains 714.839 acres in total with 39.959 of those

acres (5.59%) located in San Augustine County and the remainder located in

Shelby County, Texas. (C.R. Vol. 1, pg. 114-120).

The Wolfpack Unit contains 694.9611 acres in total with 15.289 of

5
those acres (2.2%) located in San Augustine County and the remainder

located in Shelby County, Texas. (C.R. Vol. 1, pg. 97-113).

San Augustine County Appraisal District (“SCAD”) assessed ad

valorem taxes on all of the royalty interest owners whose interest were

included in both the Wolfpack Unit and Tigers Unit. As a result, SCAD

taxed each owner in the Tigers Unit as if 5.59% of their interest was located

in San Augustine, and each owner in the Wolfpack Unit as if 2.2% of their

interest was located in San Augustine, regardless of the actual situs of the

owners interest.

On May 24, 2013, Appellants timely filed a notice of protest with the

Appraisal Review Board of San Augustine County to dispute the assessment.

(C.R. Vol. 1 pg. 22-36). After a hearing, the Appraisal Review Board of San

Augustine County issued a written order upholding the authority of San

Augustine County Appraisal District to assess taxes on the Chambers

Interest.

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 Summary of Argument

The Texas Tax Code gives a taxing authority the power to tax

property that lies within its jurisdictional boundaries only. Absent cross

conveyance of royalty interests with royalty interest located in its

jurisdiction, a taxing authority has no ability to tax royalty interest

appurtenant to land which is not located within its jurisdictional boundaries.

In the case at hand, because the royalty interest at issue is appurtenant

to land located entirely outside the jurisdictional authority of the SCAD,

and because the Leases in question expressly prevented cross conveying of

any interests, SCAD has no authority to tax Appellants’ royalty interest and

thus, the trial court’s grant of summary judgment in favor of SCAD in this

case was erroneous.

ARGUMENT

The trial court's grant of summary judgment in favor of Appellee

should be reviewed de novo. See FM Props. Operating Co. v. City of Austin,

22 S.W.3d 868, 872 (Tex. 2000). When reviewing a summary judgment, the

Court should take as true all evidence favorable to the nonmovant, and

indulge every reasonable inference and resolve any doubts in the non-

movant's favor. Southwestern Elec. Power Co. v. Grant, 73 S.W.3d 211,

215 (Tex. 2002). Under TEX. R. CIV. P. 166a(c), the party moving for

7
summary judgment bears the burden to show that no genuine issue of

material fact exists and that it is entitled to judgment as a matter of law.

Haase v. Glazner, 62 S.W.3d 795, 797 (Tex. 2001).

Because the trial court's order does not specify the grounds for its

summary judgment, we must affirm the summary judgment if any of the

theories presented to the trial court and preserved for appellate review are

meritorious. Cincinnati Life Ins. Co. v. Cates, 927 S.W.2d 623, 626 (Tex.

1996); Carr v. Brasher, 776 S.W.2d 567, 569 (Tex. 1989).

For the reasons stated below, the Trial Court erred in granting

Appellee’s Motion for Summary Judgment.

A. The Trial Court Erred in Granting Appellee’s Motion for
Summary Judgment Because the Appellants’ Interest was Not
Cross Conveyed.

The trial court erred in this case by granting summary judgment in favor

of SCAD by finding that the Chambers Interest was cross conveyed with other

royalty interests located in San Augustine County, Texas.

The unitization of the Chambers Interest is a form of voluntary pooling

made possible only by the pooling clause contained in the Leases, thus any

pooling or unitization must comply with the express conditions found in the

Leases. A lessee has no power to pool without the lessor's express

authorization, which is contained in the lease's pooling clause. See Jones v.

8
Killingsworth, 403 S.W.2d 325, 327 (Tex.1965). For pooling to be valid, it

must be done in accordance with the method and purposes specified in the

lease. See Southeastern Pipe Line Co. v. Tichacek, 997 S.W.2d 166, 170

(Tex. 1999), citing Jones v. Killingsworth, 403 S.W.2d 325, 327-28 (Tex.

1965). A lessor’s land may be pooled only to the extent stipulated in the

lease. Jones v. Killingsworth, 403 S.W.2d 325, 327.

In the case at hand, the Leases authorized the pooling of the Chambers

Interest, however, the Leases, by their express language, limited the effect of

such pooling. The exact text of the limitation on pooling contained in the

Leases is as follows:

“[t]he formation of any unit hereunder which includes land not
covered by this lease shall not have the effect of exchanging or
transferring any interest under this lease (including, without
limitation, any shut-in royalty which may become payable under this
lease) between parties owning interest in land covered by this lease
and parties owning interests in land not covered by this lease.” (C.R.
Vol. 1, pg. 131, 135, and 139).

An oil and gas lease is a contract and must be interpreted as a contract.

Chesapeake Exploration, L.L.C. v. Hyder, 427 S.W.3d 472, 475 (Tex. App.—

San Antonio 2014, pet. filed). Contract language that can be given a certain or

definite meaning is not ambiguous and is construed as a matter of law. Id. In

construing an unambiguous lease, the court's primary duty is to ascertain the

parties' intent as expressed by the words of their agreement. Id. In doing so,

9
the court considers the wording of the lease in light of the circumstances

surrounding its adoption and applies the rules of construction to determine

its meaning. Id. A court must give contractual terms their plain and

ordinary meaning unless the instrument shows the parties' intent to use the

terms in a different sense. Id.

In the case at hand, neither Appellants nor Appellee raised any issue of

ambiguity in the Leases that would require the trial court to determine if the

Leases were ambiguous; accordingly, the Leases should be given their plain,

ordinary, and generally accepted meaning.

Consequently, because the terms of the Leases expressly prevented

any cross conveyance from occurring when a unit was formed, the

Chambers Interest could not have been cross conveyed with any interests in

San Augustine County.

Appellee’s sole argument for the grant of summary judgment in its

favor was the fact that the taxing authority had the ability to tax the

Chambers Interest, which was solely located in Shelby County, Texas,

because it was cross conveyed by virtue of pooling. Based on the express

terms of the Leases cross conveying of the interest was not possible, thus,

the Court erred in granting summary judgment in favor of Appellee.

B. The Trial Court Erred in Granting Appellee’s Motion for
Summary Judgment Because, Absent a Cross Conveyance of

10
 Appellants’ Interest, Appellee Had No Authority to Tax Minerals
not Located in its Jurisdiction.

The Texas Constitution provides that all property shall be assessed for

taxation in the county where it is located. TEX. CONST. ART. VIII, § 11.

It is undisputed that royalty interests, like the Chambers Interest are an

interest in real property, and taxable as such. Sheffield v. Hogg, 77 S.W.2d

1021, 1030 (Tex. 1934); and TEXAS TAX CODE § 1.04(2).

Section 21.01 of the TEXAS TAX CODE provides that "real property is

taxable by a taxing unit if located in the unit on January 1." The burden of

proof lies with the taxing unit to prove that the property it seeks to assess is

located in its jurisdictional limits. Oak v. Collin County, 692 S.W.2d 454,

455 (Tex. 1985).

The Texas Tax Code further defines the boundaries of an appraisal

district as being the same as the boundaries of the county. TEX. TAX CODE §

6.02(a)

As such, the Chambers Interest may only be taxed by SCAD, if it is

located in San Augustine County. See TEXAS TAX CODE §21.01.

In the case at hand, SCAD does not dispute that the surface estate out

of which the Chambers Interest was created lies exclusively in Shelby

County, Texas, outside the jurisdictional taxing unit for SCAD. (C.R. Vol. 1,

pg. 91).

11
 As such, because the Leases contain a contractual provision

preventing cross conveyance of the Appellants’ royalty interest, SCAD has

no authority, be it constitutional, statutory or otherwise, to tax the

Appellants’ interest.

Because SCAD does not have the ability to tax the Appellants’

interest, the trial court erred in granting summary judgment in favor of

SCAD.

It is important to note that in the case at hand, Appellants are not

attempting to avoid paying tax on all their royalty interest. Appellants

simply want to pay all of the taxes owed on their royalty interest to the

County in which their property is located, pursuant to the requirements of

the Texas Constitution and Texas Tax Code as set forth hereinabove.

CONCLUSION AND PRAYER

WHEREFORE PREMISES CONSIDERED, Appellants, Oliver Lane

Chambers, Donna Kay Chambers-Jones, Rhonda Thompson, Clinton L.

Chambers and wife, Brandi N. Chambers respectfully request that the Court

reverse the Trial Court’s grant of Summary Judgment in favor of Appellee

San Augustine County Appraisal District and render Judgment in favor of

Appellants, Oliver Lane Chambers, Donna Kay Chambers-Jones, Rhonda

Thompson, Clinton L. Chambers and wife, Brandi N. Chambers, or in the

12
alternative reverse and remand this case back to the trial court on all causes

for further proceedings. Appellant further respectfully requests that this

Court grant Appellant any and all such other and further relief to which it

may be justly entitled.

13
 Respectfully Submitted,

METTAUER LAW FIRM, PLLC
Attorneys & Counselors at Law

___/s/ April Gregston Prince____
April Gregston Prince
State Bar No. 24047247
april@mettauerlaw.com
Lead Counsel
Gavin I. Midgley
State Bar No. 24092832
gavin@mettauerlaw.com
403 Nacogdoches Street, Suite 1
P.O. Box 2016
Center, Texas 75935
(936) 598-9400 (Phone)
(936) 598-6122 (Facsimile)
ATTORNEYS FOR
APPELLANTS, OLIVER LANE
CHAMBERS, DONNA KAY
CHAMBERS-JONES, RHONDA
THOMPSON, CLINTON L.
CHAMBERS AND WIFE,
BRANDI N. CHAMBERS

14
 CERTIFICATE OF SERVICE

I hereby certify that on the 16 day of September, 2015, I served a
copy of the foregoing document on the following counsel and/or interested
parties by Certified Mail Return Receipt Requested:

Jeff Bates
Guidry, Bates & Hoyt
118 E. Hospital Street, Ste. 100
Nacogdoches, Texas 75961

__/s/ April Gregston Prince____
April Gregston Prince

CERTIFICATE OF COMPLIANCE

I hereby certify that, pursuant to TEX. R. APP. P. 9.4(i)(3), the number
of words contained in this document is 3,339.

___/s/ April Gregston Prince___
April Gregston Prince

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APPENDIX

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