Jim Wells County v. El Paso Production Oil & Gas Co.

TERRY JENNINGS, Justice,

concurring.

In their second amended plea to the jurisdiction, appellees, the oil companies, sought to dismiss the lawsuits' of appellants, the taxing units, on the ground that, under the Texas Tax Code,1 the pertinent appraisal review boards have exclusive jurisdiction over the claims of the taxing units. The oil companies argue that the trial court did not have subject matter jurisdiction over the claims of the taxing units because the units did not exhaust their administrative remedies with the appraisal review boards before filing their lawsuits in various district courts. Alternatively, the oil companies assert that there is no basis for original jurisdiction in the district courts over the claims of the taxing units.

In four issues, the taxing units argue that the trial court erred in granting the plea to the jurisdiction because the trial court had original jurisdiction over their “common law remedy,” them “cause of action” is not found in the Tax Code, and the Tax Code “is not a ‘pervasive regulatory scheme’ meant to vest exclusive jurisdiction of all matters pertaining to property taxes” with appraisal review boards.

Exclusive Jurisdiction

Our analysis as to whether an entity such as an appraisal review board has exclusive jurisdiction over certain administrative determinations must begin with a recognition of the presumption that Texas courts are authorized to resolve disputes. In re Entergy, 142 S.W.3d 316, 322 (Tex.2004). A district court’s jurisdiction “consists of exclusive, appellate, and original jurisdiction of all actions, proceedings, and remedies, except in cases where exclusive, appellate, or original jurisdiction may be conferred ... on some other court, tribunal, or administrative body.” Tex.Const. art. V, § 8. Thus, these courts of general jurisdiction will “generally have subject matter jurisdiction over a dispute absent a showing to the contrary.” In re Entergy, 142 S.W.3d at 322; Dubai Petroleum Co. v. Kazi, 12 S.W.3d 71, 75 (Tex.2000). “[A] similar presumption does not exist for administrative agencies, which may exercise only those powers the law confers upon them in clear and express statutory language and those reasonably necessary to fulfill a function or perform a duty that the Legislature has expressly placed with the agency.” In re Entergy Corp., 142 S.W.3d at 322. “Courts will not imply additional authority to agencies, nor may agencies create for themselves any excess powers.” Subaru of Am., Inc. v. David McDavid Nissan, Inc., 84 S.W.3d 212, 220 (Tex.2002).

Under the exclusive jurisdiction doctrine, “the Legislature grants an administrative agency the sole authority to make an initial determination in a dispute.” Subaru of Am., Inc., 84 S.W.3d at 221. The Texas Supreme Court has explained that “[a]n agency has exclusive jurisdiction ‘when a pervasive regulatory scheme indicates that [the Legislature] intended for the regulatory process to be the exclusive means of remedying the problem to which the regulation is addressed.’ ” Id. (quoting Andrew G. Humphrey, Comment, Antitrust Jurisdiction and Remedies in an Electric Utility Price Squeeze, 52 U.CHI. L.REV. 1090, 1107 n. 73 (1985)). If an agency has exclusive jurisdiction, typically, “a party must exhaust all administrative remedies before seeking judicial review of the agency’s action.” Id. “When exhaustion is required, courts have only limited review of the administrative action.” Id.

Here, “[the]he Texas Constitution creates the obligation to appraise and assess property for purposes of taxation,” and the *874Legislature codified this obligation in the Tax Code. Atascosa County v. Atascosa County Appraisal Dist., 990 S.W.2d 255, 257 (Tex. 1999). All real property, which includes mineral interests, unless exempt, shall be taxed “in proportion to its value, which shall be ascertained as may be provided by law.” Tex.Const. art. VIII, § 1(b). “Taxation shall be equal and uniform.” Id. § 1(a). Moreover, “all lands and other property not rendered for taxation by the owner thereof shall be assessed at its fair value by the proper officer.” Id. § 11. The Tax Code creates appraisal districts and requires each district to appraise property for the ad valorem taxing units within the district. Tex. Tax Code Ann. § 6.01 (Vernon 2001). It also establishes an appraisal review board for each district, which is charged with ensuring that property is properly appraised. Id. § 6.41 (Vernon Supp. 2005), § 41.01 (Vernon 2001).

Appraisal review boards shall “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.” Id. § 41.01(a)(1),(2),(6). Taxing units are entitled to bring challenges of designated actions before the appraisal review board, including 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. Id. § 41.08(a) (Vernon 2001). Moreover, Chapter 42 of the Tax Code provides for trial de novo in a district court on appeal of orders of the appraisal review board determining, inter alia, protests of property owners and challenges by taxing units. Id. §§ 42.01, 42.02, 42.031 (Vernon 2001). Chapter 48 authorizes suits by taxing units against the appraisal district to compel a district’s compliance with Tax Code provisions, rules of the Texas Comptroller, or other applicable law. Id. § 43.01 (Vernon 2001). Thus, as quoted in the majority opinion, the Amarillo Court of Appeals concluded that

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.

In re ExxonMobil Corp., 153 S.W.3d 605, 618 (Tex.App.—Amarillo 2004, orig. proceeding). I agree with this conclusion.

Here, specifically, the taxing units allege that the oil companies defrauded them by manipulating reported sales prices so as to undervalue oil and gas reserves. The Tax Code provides that if real property interest in oil and gas is appraised by a method that takes into account future income from the sale of oil and gas to be produced from the interest, “the method must use the average price of the oil and gas from the interest for the preceding year as the price at which the oil or gas produced from the interest is projected to be sold in the current year of the appraisal.” Tex.Tax Code Ann. § 23.175 (Vernon 2001). Although the taxing units allege fraud in their lawsuits against the oil companies, the entire basis of their fraud claims, as asserted in their briefing to this Court, is that the oil companies “manipulated the Texas Tax Code so as to produce significant under-valuations of their oil and gas reserves for the purposes of ad valorem (property) taxes.” As noted above, the Tax Code specifically provides that the taxing units are entitled to make such challenges in front of the pertinent appraisal review boards, and *875the boards have the duty to determine such challenges. Id. §§ 41.01(a), 41.03.

Accordingly, I would hold that the pertinent appraisal review boards in this case had exclusive jurisdiction over the taxing units’ claims, which actually constitute a challenge to the appraised values of the oil companies’ oil and gas reserves for the purpose of ad valorem taxes. Based on this holding, I would overrule the second, third, and fourth issues of the taxing units and affirm the order of the trial court granting the oil companies’ plea to the jurisdiction.

Original Jurisdiction

In additional briefing to the trial court in support of their second amended plea to the jurisdiction, the oil companies asserted that there is “no such thing as a common law action for collecting taxes.” The taxing units, in their first issue, argue that the trial court erred in granting the oil companies’ plea to the jurisdiction on the grounds that “they have no common law right to sue for damages arising from fraud.” On appeal, certain oh companies contend that “the Legislature has not given the district courts original jurisdiction to determine appraised values of property in disregard of the official appraisals of the appraisal districts.” The other oil companies argue that because no Texas court “has ever recognized a common law cause of action for damages resulting from an underpayment of taxes,” this Court “should affirm on grounds that the district court is without original jurisdiction.” They further argue that “because there is no basis for original jurisdiction, the Court need not reach the issue of exclusive jurisdiction to affirm.”

Here, the parties’ arguments depend on how the claims of the taxing units are characterized. The taxing units allege that they were unlawfully deprived of tax revenue through the fraudulent actions of the oil companies. The oil companies characterize the claims simply as an action to recover underpaid taxes. Regardless of how the claims are characterized, as noted above, the trial court did not err in granting the oil companies’ plea to the jurisdiction on the grounds that the pertinent appraisal review boards in this case had exclusive jurisdiction over the claims of the taxing units. Thus, it is not necessary for this Court to address the taxing units’ first issue, and counsel for certain oil companies conceded this point at oral argument.

Conclusion

Accordingly, I concur in the judgment of the Court.

. Tex.Tax Code Ann. §§ 41.01-41.71 (Vernon 2001 & Supp. 2005).