Hydrogeo, LLC, First Bank & Trust East Texas v. Quitman Independent School District

Court: Court of Appeals of Texas
Date filed: 2015-08-11
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                                                                                           ACCEPTED
                                                                                       06-15-00007-CV
                                                                            SIXTH COURT OF APPEALS
                                                                                  TEXARKANA, TEXAS
                                                                                  8/11/2015 4:01:54 PM
                                                                                      DEBBIE AUTREY
                                                                                                CLERK


                             No. 06-15-00007-CV

                          In the Court of Appeals for the             FILED IN
                                                               6th COURT OF APPEALS
                          Sixth Judicial District of Texas       TEXARKANA, TEXAS
                                 Texarkana, Texas              8/11/2015 4:01:54 PM
                                                                   DEBBIE AUTREY
                                                                       Clerk

            HYDROGEO, LLC AND FIRST BANK & TRUST EAST TEXAS
                             Appellants
                                 AND
                  DEBERRY 3 OPERATING COMPANY, LLC,
                                    Appellants

                                         v.

 QUITMAN INDEPENDENT SCHOOL DISTRICT, WOOD COUNTY, UPPER SABINE
WASTE DISPOSAL DISTRICT, AND WOOD COUNTY CENTRAL HOSPITAL DISTRICT,
                              Appellees
             _______________________________________

               On Appeal from the 402nd Judicial District Court
                           Wood County, Texas


 HYDROGEO, LLC and FIRST BANK & TRUST EAST TEXAS’ REPLY TO
QUITMAN INDEPENDENT SCHOOL DISTRICT, WOOD COUNTY, UPPER
SABINE WASTE DISPOSAL DISTRICT, AND WOOD COUNTY CENTRAL
                HOSPITAL DISTRICTS’ BRIEF


                                              J. DON WESTBROOK
                                              Texas Bar No. 21215500
                                              COGHLAN CROWSON, LLP
                                              1127 Judson Road, Suite 211
                                              Longview, Texas 75601
                                              (903) 758-5543
                                              (903) 753-6989 (fax)
                                              dwestbrook@ccfww.com
ORAL ARGUMENT REQUESTED                       Attorneys for Hydrogeo, LLC and
                                              First Bank & Trust East Texas
                                     TABLE OF CONTENTS
                                                                                                         Page

INDEX OF AUTHORITIES.......................................................................... iii

SUMMARY OF REPLY ................................................................................ 1

ARGUMENT AND AUTHORITIES ............................................................. 3

         A. Issue No. 1 ....................................................................................... 3

         B. Issue No. 2 ....................................................................................... 9

GOOD CAUSE DOES NOT EXIST .............................................................. 7

COURT’S ERROR CAUSED IMPROPER JUDGMENT ............................ 8

TAXES WERE ASSESSED ON BOTH REAL AND PERSONAL
PROPERTY ................................................................................................... 9

CONCLUSION ............................................................................................. 12

PRAYER ....................................................................................................... 12

CERTIFICATE OF COMPLIANCE ............................................................ 13

CERTIFICATE OF SERVICE ..................................................................... 14

INDEX OF APPENDICES ........................................................................... 15




                                                            ii
                                     INDEX OF AUTHORITIES

Cases                                                                                                 Page

Williams vs. County of Dallas 194 S.W.3d 29
      (Tex. App.—Dallas 2006 pet den’d) ................................................ 4, 5

Lopez vs. La Madeleine of Texas, Inc., 200 S.W.3d. 854
      (Tex App. —Dallas 2006, no pet.) ....................................................... 6

Alvarado v. Farah Mfg. Co., 830 S.W.2d 911
      (Tex. 1992) ..................................................................................... 7, 8

Perry Homes v. Cull, 258 S.W. 3d 580
      (Tex. 2008) .......................................................................................... 8




Other                                                                                                 Page


TEX. R. CIV. P. 193.6 ...........................................................................1-3, 6-8

TEX. R. CIV. P. 193.1 ..................................................................................... 4

TEX. R. CIV. P. 193.6 (b) ............................................................................... 4

Rule 44.4, Tex. R. App. P. .............................................................................. 8

Tex. Tax Code Ann. § 33.47(a) (Vernon 1992) ............................................. 8

Texas Attorney General Opinion No. DM-438, May 2, 1997 ..................... 10

Tex. Tax Code Ann. § 33.05 (Vernon 1992) ............................................... 10

Tex. Tax Code Ann. § 32.03 (Vernon 1992) ............................................... 11




                                                          iii
                             SUMMARY OF REPLY

       In Reply to Appellee QUITMAN INDEPENDENT SCHOOL DISTRICT,

WOOD COUNTY, UPPER SABINE WASTE DISPOSAL DISTRICT, AND

WOOD COUNTY CENTRAL HOSPITAL DISTRICT (hereinafter referred to as

either “Appellees” or “Taxing Entities”), Appellants HYDROGEO, LLC AND

FIRST BANK & TRUST EAST TEXAS, (hereinafter referred to as “Hydrogeo”)

offer the following argument.

      Regarding Issue number 1 relating to the improperly admitted Exhibit “A”,

Taxing Entities concede the document in question was not produced prior to trial,

and apparently concede their failure to produce violated Texas Rules of Civil

Procedure 193.6. They also acknowledge the plain language of the Rule requires

exclusion, but nevertheless they argue the trial court’s admission of Exhibit “A” was

proper because there was good cause or because its admission did not cause unfair

surprise to Hydrogeo. Appellees’ Brief at 8-10.

      Contrary to Taxing Entities’ statements to the trial court and in their Brief,

Exhibit “A” did not consist only of updated tax statements of previously produced

documents. Exhibit “A” contains seven pages, two of which (p. 4 and 7) were never

produced by Taxing Entities. Significantly, those two pages were emphasized by

Taxing Entities during the trial, and in Appellee’s Brief at p.15. Because at least a

portion of the documents was never produced, and because Taxing Entities’
                                         1
intentional withholding of the applicable documents caused Appellants to be at a

disadvantage during trial, Taxing Entities are unable to carry their burden of proving

a lack of unfair surprise.

      Along those same lines, Taxing Entities wholly fail to show good cause for

their refusal to supply the documents prior to trial. In order to prevail on this

exception, they must show in the record some legitimate reason explaining their

failure to comply with Rule 193.6. Since Exhibit “A” shows Appellees had these

documents in their possession seventeen days prior to trial, but still chose not to

produce them, good cause does not exist. The improperly admitted Exhibit “A”

constitutes the only evidence offered by Taxing Entities at trial. Without it, their

claims must fail as a matter of law. The trial court’s decision to admit this document

in contravention of Rule 193.6 caused it to render an improper judgment, which

should be reversed and rendered.

      Regarding Issue Number 2, Appellees apparently concede they had no right

to foreclose Hydrogeo’s personalty, but argue that since the Judgment forecloses on

only real property, Hydrogeo’s arguments are neither “relevant nor applicable”.

Brief p. 17. Hydrogeo has shown that Taxing Entities are required to tax the

personalty and realty separately, and in this case, should have segregated the portion

of the alleged tax lien which was unenforceable. Contrary to Taxing Entities’




                                          2
representations, they did tax some of Hydrogeo’s personalty, at least according to

their own records.

      Since at least a portion of the foreclosed tax lien originates from taxes on

Hydrogeo’s     personalty,   which     apparently    Appellees     acknowledge     was

unenforceable, the trial court was required to segregate that portion of the lien from

the realty. Taxing Entities offered no evidence allowing the trial court to segregate

the lien. The trial court’s decision to render the entire lien enforceable was error.

                                    ARGUMENT

                                     ISSUE NO. 1

      Did the trial court commit reversible error by admitting Plaintiffs’
Exhibit “A” into evidence when the document had not been timely produced
prior to trial, and when Taxing Entities failed to show good cause for its failure
to timely supplement discovery responses.


      Appellees miss the point of this issue. Part of the disagreement arises from

Taxing Entities’ misunderstanding of their violation of Rule 193.6. Hydrogeo’s

discovery request was not a request for disclosure as referenced in Appellees’ Brief

and as dealt with in the case relied upon by Appellees. Hydrogeo sent a request for

production of documents specifically asking for copies of “each and every tangible

piece of evidence you plan to use at the trial of this cause”. 2 R.R. p. 8, line 21 – p.

9, line 1. A request for disclosure seeks information, not documents. A request for

production seeks specific documents, in this case all documents to be used as

                                           3
evidence at trial. Taxing Entities’ failure to provide these documents negatively

impacted Hydrogeo’s trial preparation and presentation. As stated in Rule 193.1,

“when responding to written discovery, a party must make a complete response,

based on all information reasonably available to the responding party.”

       Taxing Entities, without question failed to comply with Rule 193.1 in that they

did not produce the evidence they intended to offer at trial. They admit as much in

their Brief. Additionally, Taxing Entities failed to offer any basis for good cause

explaining why the documents in question were not produced prior to trial, instead

focusing primarily on the defense of lack of unfair surprise. As a reminder, the

burden of establishing lack of unfair surprise rests with Appellees, as the party

offering the discovery, and such proof must be supported by the record. Rule 193.6

(b).

       Taxing Entities use as their foundational defense the case of Williams vs.

County of Dallas 194 S.W.3d 29, 33 (Tex. App.—Dallas 2006 pet den’d), a case

distinguishable on several important grounds. First, Williams dealt with a request

for disclosure which only asks for information. Our request required production of

all evidence you intend to offer at trial. Hydrogeo had no way to know ahead of

time what documents Appellees planned to introduce as evidence, or whether

Appellees planned to use any, all or none of the documents previously produced in

discovery. The purpose of generating a request for production such as the one at

                                          4
issue here is to determine what documents will be considered by the Court and to

properly prepare responses, cross examination and rebuttal, if needed, of any

documents presented.       By intentionally withholding the requested documents,

Appellees sought, and eventually were allowed, an unfair advantage.

      Also, in the Williams case, the trial court conducted an examination

comparing the information offered as evidence with the information previously

produced by the offering party. In our case, the trial court never conducted such an

examination.

      By its nature, a failure to produce a document introduced at trial constitutes

some surprise.     Appellees argue that their discovery responses, which were

improperly filed with the district clerk, prevent Hydrogeo from being surprised by

the Exhibit “A” which was offered into evidence. Appellees’ Brief at 10-12. There

is no evidence in the record that the trial court had access to, or consulted the district

clerk’s file prior to admitting Exhibit “A”.

      Moreover, at least two of the documents, pages 4 and 7 of Exhibit “A”, were

never produced in discovery or as an exhibit to pleadings. Significantly, those two

documents constitute the foundation of Appellees’ argument on appeal, as well as

during the testimony of Carol Taylor, Wood County Tax Assessor. Appellees’ Brief

at 15 and R.R. Volume 2, p. 80, line 4-11 and p.85, line 24 - P. 86, line 6. These two

documents are significant, in that they were used by Taxing Entities to connect

                                            5
Hydrogeo as the record owner of the specific leases in question and as the owner of

specific percentages of the interest involved for the years 2009 - 2011. Appellees’

Brief at 15 and R.R. Volume 2, p. 83, line 21-p. 84, line 5. But for the trial court’s

improper decision to admit pages 4 and 7 of Exhibit “A”, Taxing Entities had no

documentation showing Hydrogeo as the subsequent owner of specific lease I.D.

number N366491 and I.D. number N366493. Since ownership of the lease was a

contested issue, to allow this improper evidence to be admitted led to an improper

judgment.    Even if Hydrogeo’s subsequent testimony acknowledged current

ownership, there was no connection of Hydrogeo to the specific tax ID numbers.

Appellees would not have been successful without relying on the rebuttable

presumption created by the introduction of Exhibit “A”.

      As stated in Lopez vs. La Madeleine of Texas, Inc., 200 S.W.3d. 854, (Tex

App. —Dallas 2006, no pet.), Rule 193.6 is mandatory and the penalty is automatic,

absent a showing of good cause and/or unfair surprise. Rule 193.6 relates to the

discovery of evidence, not the issues. Its principle purpose is to protect a party from

surprise, whether or not such evidence relates to an issue both parties knew existed

in the case. As the Court stated, “we are concerned not only with whether or not

[Lopez] should have prevailed, but also the effect of opponents’ introduction of the

undisclosed evidence on his preparation for trial and presentation of his case, both

of which were undeniably impacted by the trial court’s decision to admit the

                                          6
evidence.” Id. The Lopez court further states that it is not necessary for the

complaining party to prove that “but for” the exclusion of the evidence, a different

judgment would necessarily have resulted. They are only required to show that the

exclusion of evidence probably resulted in the rendition of an improper judgment.

In short, Appellees failed to show lack of unfair surprise.

                       GOOD CAUSE DOES NOT EXIST

      Appellees also argue there is an “implied” finding of good cause, despite the

plain wording of Rule 193.6 which states that a finding of good cause must be

(explicitly) supported by the record. Appellees’ Brief at 10-12. The Supreme Court

in Alvarado v. Farah Mfg. Co., 830 S.W. 2d 911, 914 (Tex. 1992), states “the good

cause exception permits the trial court to excuse a failure to comply with discovery

in difficult or impossible circumstances” (emphasis added). The Rule as

interpreted by the Supreme Court requires Taxing Entities to offer evidence as to

why complying with the Rule was difficult or impossible. A review of Exhibit “A”

shows the documents were generated and printed on “August 22, 2014 at 11:43

a.m.”. Appendix A. Since the trial did not take place until September 8th, the

documents themselves prove they existed and were in the Taxing Entities’

possession seventeen days prior to trial. Therefore any attempt to show good cause

rings hollow.




                                          7
           COURT’S ERROR CAUSED IMPROPER JUDGMENT

      Pursuant to Rule 44.4, Texas Rules of Appellant Procedure, no judgment may

be reversed on appeal unless the error complained of probably caused rendition of

an improper judgment.       Appellee argues there was testimony to support the

Judgment, even if Exhibit “A” had not been admitted. Appellees’ Brief at 15.

Contrary to Appellees’ argument, all of the testimony cited was simply the tax

assessor reading Exhibit “A” itself verbatim. R.R. Volume 2, p. 79, line 8 – 13; p.

80, line 4-11; and p. 85, line 24-p.86, line 6. Simply stated, Taxing Entities must

stand or fall on the information and alleged presumption represented by the

documents referred to as Exhibit “A”. If they were improperly admitted, their case

fails due to a lack of any evidence to support the trial court’s judgment.

      The test is whether the trial court acted without reference to any guiding rules

or principals, or arbitrarily or unreasonably. Perry Homes v. Cull, 258 S.W. 3d 580,

602 (Tex. 2008). As stated by the Supreme Court in Alvarado, Rule 193.6 is

mandatory and the trial court has no discretion to admit testimony excluded by the

Rule without a showing of good cause. Id. Since there was no other admissible

evidence offered at trial by Taxing Entities, and the Exhibit “A” described herein

should not have been admitted, and the testimony of Ms. Taylor was simply

recitation of the data referenced in Exhibit “A”, the Taxing Entities are not entitled

to the legal presumption created by Section 33.47(a) Tax Code. Therefore, there is

                                          8
no evidence to support the trial court’s judgment in favor of the Taxing Entities. As

such, the trial court’s judgment should be reversed and rendered.



                                       ISSUE NO. 2

      Did the trial court err by holding Taxing Entities’ entire alleged tax lien
enforceable against Hydrogeo, LLC, and First Bank & Trust East Texas when
Taxing Entities failed to segregate that portion of the lien which was
unenforceable against Hydrogeo.


                 TAXES WERE ASSESSED ON BOTH REAL
                      AND PERSONAL PROPERTY


      It should be pointed out that if this Court of Appeals upholds Appellants’

position on Issue No. 1, then this issue becomes moot because the only evidence

offered by Taxing Entities attempting to prove their case comes from either the

improperly admitted Exhibit “A” or from witnesses reading information from

Exhibit “A”.

      Appellees concede in their Brief they had no right to foreclose on Hydrogeo’s

personalty, but argue that no personalty was included in this lawsuit and foreclosure.

Appellees’ Brief at 16-17. Taxing Entities misunderstand how oil and gas properties

are described. A description of the leasehold estate as mentioned in Plaintiffs’

Second Amended Petition includes oil and gas in place, but also includes the

personalty necessary to produce, store and transport the oil and gas. C.R. Volume 3

                                          9
Exhibit #1. The Black Diamond Exhibit 1 is an assignment describing the leases in

question, and states that the lease includes “all tangible personalty, property,

equipment, …” Id.

      As stated in a 1997 Texas Attorney General Opinion, “irrespective of whether

production equipment is real or personal property it must be appraised separately

from its corresponding mineral leasehold interest. Opinion No. DM-438, May 2,

1997. As the Opinion also recognizes, the classification of property as real or

personal is material to such matters as the statute of limitations because the statute

treats real and personal property differently. Texas Tax Code Annotated §33.05

(Vernon 1992).

      Contrary to their Brief, Taxing Entities did appraise and tax at least some of

the personal property existing on the leases made the basis of this lawsuit. According

to its 2011 Tax Statement (C.R. Vol. 3, Exhibit HB-10), the I.E. Robinson Lease is

appraised at $340,070. A review of C.R. Vol. 1, page 137, which is Pritchard and

Abbott’s appraisal sheet for the year 2011 on the I.E. Robinson Lease, the appraised

value for the leasehold shows a specific amount credited to “equipment value”,

which constitutes a part of the $340,070 total appraised value. In other words, at

least a portion of the appraised value upon which the taxes were rendered on the I.E.

Robinson Lease, and upon which the Taxing Entities rely for their tax lien, comes

from the personalty.

                                         10
      While the actual appraised amount for the equipment is not determinative, it

is evidence in the record disputing Taxing Entities’ claim that they did not tax or

foreclose on Hydrogeo’s personalty. Assuming a portion of the alleged tax lien

consisted of taxes for personalty, it was incumbent on Taxing Entities to segregate

that portion of the alleged lien that was unenforceable. Since they made no attempt

to distinguish between the enforceable part and the unenforceable part, the trial court

had no evidence to support a judgment allowing foreclosure of the entire tax lien.

      In our case, Hydrogeo, because of the undisputed evidence offered at trial, is

exempt from having any lien foreclosed on its personalty. Tex. Tax Code Ann.

§32.03, (Vernon 1992). Since Hydrogeo filed a verified denial contesting ownership

of the property during the applicable years in question and questioning the

sufficiency of the lien on the property, both real and personal, the burden of proof to

plead and prove all the elements of Taxing Entities’ claims shifted to them.

      For the reasons shown in Appellants’ Brief, Taxing Entities were required to

prove how much of their underlying tax lien was enforceable. Since the amount of

the debt was not proved, the underlying lien which was supported by the debt failed

also. The burden of proof belonged to Taxing Entities as plaintiffs and they failed to

carry the burden. Thus, it was error for the trial court to hold that the entire tax lien

was enforceable.




                                           11
                                 CONCLUSION

      As shown herein, the one piece of evidence offered by Taxing Entities was

improperly admitted because it had not been provided to opponents prior to trial and

because no effort was made by Taxing Entities to prove good cause allowing its

admission. By definition, as the one document proffered by Taxing Entities, the trial

court’s error was harmful. The only document relied upon by Taxing Entities was

improperly admitted.

      Even if it should have had been admitted, Exhibit “A” failed to segregate the

amount of taxes assessed for personalty. Segregating the portion of taxes assessed

for personalty was essential because the amount of the tax lien was unenforceable

against a buyer in the ordinary course of business, such as Hydrogeo. The evidence

cannot support Taxing Entities’ desire to foreclose on the entire claimed lien on the

two oil and gas leases in question. The trial court’s judgment therefore should be

reversed and rendered.


                                     PRAYER

      Wherefore premises considered, the Court should reverse the trial court’s

judgment, and render judgment in favor of Appellants Hydrogeo, LLC and First

Bank and Trust East Texas and hold that the Taxing Entities take nothing against

Appellants.


                                         12
                                      Respectfully submitted,

                                        /s/ J. Don Westbrook
                                      J. Don Westbrook
                                      Texas Bar No. 21215500
                                      COGHLAN CROWSON, L.L.P.
                                      1127 Judson Road, Ste. 211
                                      Longview, Texas 75605
                                      (903) 758-5543
                                      (903) 753-6989 Facsimile
                                      email: dwestbrook@ccfww.com
                                      Attorneys for Appellants Hydrogeo, LLC
                                      and First Bank & Trust East Texas



                      CERTIFICATE OF COMPLIANCE

     Counsel certifies that this reply brief contains, as counted by Microsoft Word,
2934 words. It was typed in 14-point Times New Roman.

      Dated: August 11, 2015

                                             /s/ J. Don Westbrook
                                             J. Don Westbrook




                                        13
                        CERTIFICATE OF SERVICE

      I hereby certify that the above and foregoing Reply Brief of Appellants has

been served on all counsel of record in this appeal in accordance with the Texas

Rules of Appellate Procedure on August 11, 2015.


                                     /s/ J. Don Westbrook
                                     J. Don Westbrook




                                       14
                             Index of Appendices


A.   Plaintiffs’ Exhibit “A”, Certified Copy of Tax Records, dated August 22,
     2014 (7 pages).




                                      15
Appendix A
..
                         CERTIFIED COPY OF TAX RECORDS
                                      FOR
       QUITMAN INDEPENDENT SCHOOL DISTRICT, WOOD COUNTY, UPPER SABINE
      WASTE DISPOSAL DISTRICT AND WOOD COUNTY CENTRAL HOSPITAL DISTRICT

                                                SUIT NO. T-3625

            QUITMAN INDEPENDENT SCHOOL DISTRICT, ET AL VS. BLACK DIAMOND
                             OPERATING CO LLC, ET AL

     THE STATE OF TEXAS                                  x
     WOOD COUNTY                                         x

     I hereby certify that the following exhibit (ensuing page(s)) is a true and correct copy of entries in the
     tax records of my office. The penalty and interest amounts were calculated according to Section 33.01
     and 33.07 of the Texas Property Tax Code.
                                                                              r..&l
     In testimony whereof, witness my hand and seal of office this     O? ~     day of_-'~~_,,'--"='----'
     20.l!f__.



                                                          Carol Taylor
                                                          Tax Assessor-Collector and Custodian of the Tax
                                                          Records for: QUITMAN INDEPENDENT
                                                          SCHOOL DIS1RICT, WOOD COUNTY, UPPER
                                                          SABINE WASTE DISPOSAL DIS1RICT and
                                                          WOOD COUNTY CENTRAL HOSPITAL
                                                          DIS1RICT




                                                EXHIBIT "A"



      Suit No. T-3625                                                                          Suit Key No. 2137912
                                             Account Summary
Carol Taylor, Tax Collector
Wood County Tax Office
P.O. BOX 1919
Quitman, TX 75783
Ph: (903)763-2261 Fax: (903)763-5753

                                                               Property:            0154550-0001055-5-RI
                                                               Quick Ref ID:        N355851
                                                               Owner:               BLACK DIAMOND OPERATING CO LLC
                                                               Legal Description:   0.833335 0154550 WHITE DENTON BLACK
                                                                                    DIAMOND OPER RI (ROYALTY INTERESl)

    BLACK DIAMOND OPERATING CO LLC
    4420 VALLEY RANCH RD
    LONGVIEW, TX 75602-6671

Tax Bill (Effective Date: 09/15/2014)              Balance Due if Paid By September 30, 2014:                          29,131.29
Bill                                          Levy                       Disc/Credi
                                   Levy    Balance      P & I Atty Fees           t Date Paid              Amt Paid     Balance
2009
  Quitman lsd                 10,679.32   10,305.12     7,082.29     2,664.25          0.00   09/2212010      516.38    19,909.48
  Waste Disposal District       169.36       163.42      112.33         42.24          0.00   09/2212010        8.20       315.73
  Wood county                  4,375.23    4,221.93     2,901.57     1,455.37          0.00   09/2212010      220.76     8,511.41
  yyao~. ~unty Central          211.70      204.28       140.39         52.82          0.00   09/2212010       10.24       394.67
  Totals                      15,435.61   14,894.75    10,236.58     4,214.68          0.00                   755.58    29,131.29

Totals                       15,435.61    14,894.75   10,236.58     4,214.68           0.00                  755.58    29,131.29

                                                      Balance Due if Paid By September 30, 2014:                       29,131.29

                                                                         Pay By                                        Total Due
                                                                         October 31, 2014                              29,304.68
                                                                         November 30, 2014                             29,478.09
                                                                         December 31, 2014                             29,651.50




PrintedonB/2212014 11:43AM                                                                                    Page     1 of 1
                                           Account Summary
Carol Taylor, Tax Collector
Wood County Tax Office
P.O. BOX 1919
Quitman, TX 75783
Ph: {903)763-2261 Fax: (903)763-5753

                                                              Property:            0154550-0715543-WI
                                                              Quick Ref ID:        N357528
                                                              Owner:               RHEATA RESOURCES LLC
                                                              Legal Description:   0.833335 0154550 WHITE DENTON BLACK
                                                                                   DIAMOND OPER WI

     RHEATA RESOURCES LLC
     PO BOX921
     KILGORE, TX 75663


Tax Bill (Effective Date: 09/10/2014)                Balance Due if Paid By September 30, 2014:                     22,099.47
Bill                                         Levy                          Disc/Credi
                                   Levy   Balance         P&I Atty Fees             t Date Paid        Amt Paid      Balance
2010
  Quitman lsd                  5,309.68   5,309.68     2,973.42     1.242.47          0.00                   0.00     9,525.57
  Waste Disposal District        89.10      89.10        49.89         20.85          0.00                   0.00        159.84
  Wood County                  2,415.20   2.415.20     1,352.51       753.54          0.00                   0.00      4,521.25
  ~oo_~. saunty Central         104.58     104.58         58.57         24.47         0.00                   0.00        187.62
   Totals                      7,918.56   7,918.56     4,434.39     2,041.33          0.00                   0.00    14,394.28
 2011
   Quitman lsd                 3,070.38   3,070.38     1,350.97       663.20          0.00                   0.00     5,084.55
   waste Disposal District       53.48      53.48        23.53          11.55         0.00                   0.00        88.56
   Wood County                 1,405.18   1,405.18      618.28        404.69          0.00                   0.00     2,428.15

   ........
   Wood County Central
   Totals
                                 62.76
                               4,591.80
                                            62.76
                                          4,591.80
                                                         27.61
                                                       2,020.39
                                                                       13.56
                                                                    1,093.00
                                                                                      0.00
                                                                                      0.00
                                                                                                             0.00
                                                                                                             0.00
                                                                                                                         103.93
                                                                                                                      7,705.19

Totals                       12,510.36 12,510.36      6,454.78     3,134.33           0.00                  0.00    22,099.47

                                                     Balance Due if Paid By September 30, 2014:                     22,099.47

                                                                        Pay By                                      Total Due
                                                                        October 31, 2014                            22,245.25
                                                                        November 30, 2014                           22,391.03
                                                                        December 31, 2014                           22,536.79




Printedon8/22/2014 11:44AM                                                                                 Page      1 of 1
                                            Account Summary
Carol Taylor, Tax Collector
Wood County Tax Office
P.O. BOX 1919
Quitman, TX 75783
Ph: (903)763-2261 Fax: (903)763-5753
                                                             Property:            0154550-0716237-WI
                                                             Quick Ref ID:        N366493
                                                             ONner.               HYDROGEO LLC
                                                             legal Description:   0.833335 0154550 WHITE DENTON HYDROGEO
                                                                                  LLCWI

       HYDROGEO LLC
       PO BOX 921
       KILGORE, TX 75663

Tax Bill (Effective Date: 08/22/2014)                Balance Due if Paid By August 31, 2014:                                0.00
Bill                                          Levy                         Disc/Credi
                                   Levy    Balance        P & I Atty Fees           t Date Paid          Amt Paid       Balance
2012
  Quitman lsd                    473.88       0.00        0.00          0.00         0.00   01/03/2013       473.88          0.00
   Waste Disposal District          8.12      0.00        0.00          0.00         0.00   01/03/2013          8.12         0.00
   Wood County                   213.14       0.00        0.00          0.00         0.00   01/0312013       213.14          0.00
   yyood. sounty Central            8.88      0.00        0.00          0.00         0.00   01/0312013          8.88         0.00
   Totals                        704.02       o.oo        0.00          0.00         o.oo                    704.02          0.00
 2013
   Quitman lsd                  3,086.91      0.00        0.00          0.00         0.00   02/06/2014     3,086.91          0.00
   Waste Disposal District        53.67       0.00        0.00          0.00         0.00   02/06/2014        53.67          0.00
   Wood County                  1,394.67      0.00        0.00          0.00         0.00   02/0612014     1,394.67          0.00
   Wood County Central            56.18       0.00        0.00          0.00         0.00   02/06/2014        56.18          0.00
   "   .......
   Totals                       4,591.43      0.00        0.00          0.00         0.00                 '. 4,591.43        0.00

 Totals                         5,295.45      0.00        0.00          0.00         0.00                 5,295.45          0.00

                                                     Balance Due if Paid By August 31, 2014:                                0.00




Printed on 8122/2014 11:44 AM                                                                                Page       1 of 1
                                             Account Summary
Carol Taylor, Tax Collector
Wood County Tax Office
P.O. BOX 1919
Quitman, TX 75783
Ph: (903)763-2261 Fax: (903)763-5753

                                                                Property:            0133400.0713907-WI
                                                                Quick Ref ID:        N310883
                                                                Owner.               BLACK DIAMOND OPERATING CO LLC
                                                                legal Description:   0.875000 0133400 ROBINSON IE BLACK
                                                                                     DIAMOND OPER WI

       BLACK DIAMOND OPERATING CO LLC
       4420 VALLEY RANCH RD
       LONGVIEW, TX 75602-6671


Tax Bill (Effective Date: 09/23/2014)                  Balance Due if Paid By September 30, 2014:                         9,423.15
Bill                                           levy                          Disc/Credi
                                    Levy    Balance         P&I Atty Fees             t Date Paid           Amt Paid      Balance
2007
  Quitman lsd                    5,187.91       0.00      933.82        918.26          0.00   0712212008     7,039.99         0.00
   Waste Disposal District         77.36        0.00       18.84          14.41         0.00   0512112009      110.61          0.00
   Wood County                   2,138.87       0.00      520.67        531.91          0.00   05/2112009     3,191.45         0.00
   ~od. c,ounty Central           112.40        0.00       27.35         20.98          0.00   05/21/2009      160.73          0.00
   Totafs                        7,516.54       0.00     1,500.68     1,485.56          0.00                 10,502.78          0.00
2008
  Quitman lsd                       92.43       0.00        12.02          0.00         0.00   05121/2009       104.45         0.00
   Waste Disposal District           1.32       0.00        0.17           0.00         0.00   05/21/2009         1.49         0.00
   Wood County                      37:17       0.00         4.83·         0.00         0.00   05/21/2009        42.00         0.00
   Wood County Central               1.78       0.00        0.23           0.00         0.00   05121/2009         2.01         0.00
   "   .......
   Totals                          132.70       0.00       17.25           0.00         0.00                   149.95          0.00
2009
  Quitman lsd                    3,704.18   3,333.42     2,338.38       906.37          0.00   09/2212010      508.76      6,440.17
   Waste Disposal District          58.74      52.86       37.07          14.37         0.00   0912212010         8.06       102.12
   Wood County                   1,517.57   1,365.67      958.02        495.12          0.00   0912212010      217.51      2,753.20
   ~oOO.. c,ounty Central           73.43      66.08       46.35          17.97         0.00   09/22/2010        10.09       127.66
   Totals                        5,353.92   4,818.03     3,379.82     1,433.83          o.oo                   744.42       9,423.15

Totals                          13,003.16   4,818.03    4,897.75     2,919.39           0.00                11,397.15     9,423.15

                                                       Balance Due if Paid By September 30, 2014:                         9,423.15

                                                                          Pay By                                         Total Due
                                                                          October 31, 2014                                9,479.25
                                                                          November 30, 2014                               9,535.33
                                                                          December31,2014                                 9,591.43




Printed on 8/22/2014 11:42 AM                                                                                  Page       1 of 1
..
                                                    Account Summary
      Carol Taylor, Tax Collector
     Wood County Tax Office
      P.O. BOX 1919
      Quitman, TX 75783
      Ph: (903)763-2261 Fax: (903)763-5753

                                                                      Property:            0133400-0715543-VVI
                                                                      Quick Ref ID:        N357525
                                                                      owner:               RHEATA RESOURCES LLC
                                                                      Legal Description:   0.875000 0133400 ROBINSON IE BLACK
                                                                                           DIAMOND OPER WI

          RHEATA RESOURCES LLC
          PO BOX921
          KILGORE, TX 75663


     Tax Bill (Effective Date: 09/10/2014)                Balance Due if Paid By September 30, 2014:                        21,750.06
     Bill                                            Levy                       Disc/Credi
                                        Levy      Balance      P&I Atty Fees             t Date Paid           Amt Paid      Balance
     2010
       Quitman lsd                    4,480.57    4,480.57     2,509.11     1,048.45          0.00                   0.00        8,038.13
        Waste Disposal District          75.19       75.19       42.10          17.59         0.00                   0.00         134.88
        Wood County                   2,038.06    2,038.06     1,141,32        635.88         0.00                   0.00        3,815.26
        '!'!".°":.~aunty Central         88.25       88.25       49.42          20.65         0.00                   0.00         158.32
        Totals                        6,682.07    6,682.Ql     3,741.95     1,722.57          0.00                   0.00       12,146.59
      2011
        Quitman lsd                   3,826.81    3,826.81     1,683.80        826.59         0.00                   0.00        6,337.20
        Waste Disposal District         66.65        66.65       29.33          14.40         0.00                   0.00         110.38
        Wocx! County                  1,751.36    1,751.36       no.60         504.39         0.00                   0.00        3,026:35
        'f'!".od. ~unty Central          78.22       78.22       34.42          16.90         0.00                   0.00         129.54
        Totals                        5,723.04    5,723,04     2,518.15     1,362.28          o.oo                   0.00        9,603.47

     Totals                          12,405.11   12,405.11    6,260.10     3,084.85           0.00                   0.00   21,750.06

                                                             Balance Due if Paid By September 30, 2014:                     21,750.06

                                                                                Pay By                                      Total Due
                                                                                October 31, 2014                            21,894.61
                                                                                November 30, 2014                           22,039.17
                                                                                December 31, 2014                           22,183.73




     Printed on 812212014 11:42 AM                                                                                 Page     1 of 1
..
                                                 Account Summary
      Carol Taylor, Tax Collector
      Wood County Tax Office
      P.O. BOX 1919
      Quitman, TX 75783
      Ph: (903)763-2261 Fax: (903)763-5753

                                                                   Property:            0133400-0716237-WI
                                                                   Quick Ref ID:        N366491
                                                                   Owner:               HYDROGEO LLC
                                                                   Legal Description:   0.875000 0133400 ROBINSON I E HYDROGEO
                                                                                        LLCWI

          HYDROGEO LLC
          POBOX921
          KILGORE, TX 75663

      Tax Bill (Effective Date: 08/2212014)             Balance Due if Paid By August 31, 2014:                                 0.00
      Bill                                         Levy                       Disc/Credi
                                         Levy   Balance      P & I Atty Fees           t Date Paid             Amt Paid     Balance
      2012
        Quitman lsd                  1,376.69      0.00        0.00           0.00         0.00   01/03/2013     1,376.6~        0.00
        Waste Disposal District        23.58       0.00         0.00          0.00         0.00   01103/2013        23.58        0.00
        Wood County                   619.20       0.00         0.00          0.00         0.00   01/03/2013      619.20         0.00
        y:ro_o~. scunty Central        25.81       0.00         O.DD          0.00         0.DD   01/03/2013        25.81        0.00
        Totals                       2,045.28      0.00         0.00          0.00         0.00                  2,045.28        o.oo
      2013
        Quitman lsd                  4,142.30      0.DD         0.00          0.00         0.00   02106/2014     4,142.30        0.00
        Waste Disposal District        72.02       0.00        0.00           0.DD         0.00   02/06/2014       72.02         0.00
        Wood County                  1,871.50      0.00        0.00           0.00         0.00   02/06/2014     1,871.50        O.DD
        ~"