Iraan-Sheffield Indep. Sch. Dist. v. Pecos Cnty. Appraisal Dist.

645 S.W.3d 827

IRAAN-SHEFFIELD INDEPENDENT SCHOOL DISTRICT, Appellant,

v.PECOS COUNTY APPRAISAL DISTRICT and Kinder Morgan Production Co., LLC, Individually and as Successor in Interest to Kinder Morgan Production Co., LP, Appellees.

08-20-00122-CV

Court of Appeals of Texas, El Paso.

April 8, 2022

ATTORNEY FOR APPELLANT: D. Brent Lemon, Law Office Of D. Brent Lemon, 1201 Elm Street, Suite 4880, Dallas, TX 75270-2035.

ATTORNEYS FOR APPELLEES: James R. Evans, 1214 E. 7th Street, Austin, TX 78702, B. Jack Shepherd, Lynch, Chappell & Alsup PC, 300 N Marienfeld, Ste. 700, Midland, TX 79701.

Before Rodriguez, C.J., Palafox, and Alley, JJ.

OPINION

GINA M. PALAFOX, Justice

This appeal arises from an ad valorem tax dispute between appellant Iraan-Sheffield Independent School District¹ , a taxing unit, and a mix of appellees that include the Pecos County Appraisal District and Kinder Morgan Production Co., LLC, Individually and as Successor in Interest to Kinder Morgan Production Co., LP. (collectively, Kinder Morgan). Iraan-Sheffield ISD appeals from the trial court's dismissal of its claims with prejudice following its grant of Kinder Morgan's motion combining together a rule 12 motion to show authority² and a plea to the jurisdiction.

Finding error, we reverse the trial court's order and remand this cause for further proceedings.

I. BACKGROUND

In October 2017, Iraan-Sheffield ISD signed a contract (the Lemon Contract) hiring attorney D. Brent Lemon "to represent [its] interests in pursuing claims against Kinder Morgan, Inc. ... for the inaccurate valuation of property of Kinder-Morgan resulting in inadequate and insufficient ad valorem tax payments to the Iraan-Sheffield Independent School District ...." The Lemon Contract set counsel's compensation at 20% of gross recoveries received by Iraan-Sheffield ISD from any source related to or paid on behalf of Kinder Morgan related in any way to the claim of inadequate and insufficient ad valorem tax payments.

As represented by counsel, Iraan-Sheffield ISD filed a challenge with the Pecos County Appraisal Review Board (ARB) challenging the valuation of certain mineral interest real property owned by Kinder Morgan. The ARB denied that challenge and, on September 12, 2019, Iraan-Sheffield ISD filed a petition for review and writ of mandamus to pursue an administrative appeal from that denial. Iraan-Sheffield ISD specifically alleged that "mineral interest real property of Kinder Morgan in Pecos County was erroneously and incorrectly excluded and omitted from appraisal for years 2019, and 2013-2018."

Approximately four and a half months later, on January 24, 2020, Kinder Morgan filed a pleading titled, "Kinder Morgan's and Pecos County Appraisal District's motion to show authority and plea to the jurisdiction," alleging that counsel for Iraan-Sheffield ISD had been "unlawfully engaged to bring this tax ferret lawsuit on a contingent fee basis." Kinder Morgan asserted the Lemon Contract was void under Texas law. Given that circumstance, it further argued that, because the contract hiring counsel was void, attorney Lemon lacked authority to file the petition on Iraan-Sheffield ISD's behalf, and the trial court lacked subject matter jurisdiction because no proper petition was filed within the statutorily required time period.

Iraan-Sheffield ISD filed a response in which it objected that it was not given timely notice of the hearing under rule 12 of the Texas Rules of Civil Procedure. It also asserted defenses to the motion to show authority including waiver and laches. On the merits of the motion, Iraan-Sheffield ISD argued that Lemon was not a tax ferret and that he had both authority and permission to represent Iraan-Sheffield ISD in the litigation.

The trial court heard Kinder Morgan's motion to show authority and plea to the jurisdiction on February 5, 2020, at which time it overruled Iraan-Sheffield ISD's objection that it was not given sufficient notice of the hearing. The court heard argument from both sides and admitted eight exhibits offered by Iraan-Sheffield ISD, including the Lemon Contract and two affidavits by Iraan-Sheffield ISD's superintendent, Michael Meek.

The first Meek affidavit states that Iraan-Sheffield ISD engaged Lemon "relative to the investigation of possible exclusions or omissions of mineral interest real property from the tax rolls in Pecos County resulting in possible ad valorem taxes due on mineral interest real property." It further states, in relevant part, that Iraan-Sheffield ISD engaged and authorized Lemon:

• "... to pursue and obtain information and documents as to Pecos County mineral interest real property in a judicial or administrative proceeding pursuant to a lawful subpoena. TEX. TAX CODE § 22.27(b)(1)."

• "... to collect any outstanding delinquent taxes on mineral interest real properties believed to have resulted from property having been excluded or omitted, whether in toto or ab initio , from appraisal. TEX. TAX CODE § 22.27(b)(7)."

• "... [to be] responsible for auditing, monitoring, or reviewing the operations of the Pecos County Appraisal District to the extent necessary to identify and correctly value any mineral interest real property in Pecos County to determine if any property was excluded or omitted, whether in toto or ab initio , from appraisal. TEX. TAX CODE § 22.27(b)(8)."

The second Meek affidavit states that Iraan-Sheffield ISD engaged Lemon "relative to the collection of any outstanding delinquent taxes on mineral interest real properties of Kinder Morgan believed to have resulted from property having been excluded or omitted, whether in toto or ab initio , from appraisal." It further states that Iraan-Sheffield ISD authorized Lemon "to prosecute all possible claims and to fully represent the District in all aspects of the issues in [certain] claims and litigation[.]"

Other evidence submitted by Iraan-Sheffield ISD shows that it had made inquiry to the Pecos County Appraisal District concerning Kinder Morgan's renditions as early as March 2015 (over two-and-a-half years before Lemon was retained).³

Neither party presented any live testimony. The trial court ruled from the bench in Kinder Morgan's favor and, the following day, signed an order granting the combined motion to show authority and plea to the jurisdiction. The trial court's order dismissed Iraan-Sheffield ISD's claims with prejudice.

Iraan-Sheffield ISD filed a motion for new trial, which was overruled by operation of law. It also filed a request for findings of fact and conclusions of law.

Responding to the request for findings, the trial court noted it had reached determinations on the combined motion and plea based on uncontested facts, with the exception that certain of Iraan-Sheffield ISD's defenses raised fact issues which the court resolved against it. The court then entered findings of fact essentially stating that Iraan-Sheffield ISD had not established its defenses. Specifically, concerning the defenses of waiver and laches, the court found that Iraan-Sheffield ISD failed to show prejudice, neither from the timing of the hearing nor from Kinder Morgan's delay in filing its motion. In other words, the court found Iraan-Sheffield ISD failed to show that any delay in the filing of the motion was unreasonable in the circumstances.

In its conclusions of law relating to the motion to show authority, the court concluded:

• "The engagement between the Taxing Unit and Mr. Lemon is a tax-ferret engagement."

• "As a governmental entity, the Taxing Unit can exercise only those powers that the Legislature has expressly or impliedly conferred upon it."

• "Any action taken by the Taxing Unit in absence of Legislative authorization is void."

• "No Texas law expressly or impliedly authorizes the Taxing Unit to enter into a tax-ferret engagement or any engagement such as the one the Taxing Unit entered into with Mr. Lemon."

• "The Taxing Unit did not have authority to enter into the engagement with Mr. Lemon, and that engagement is void."

• "Mr. Lemon does not have authority to prosecute this suit on behalf of the Taxing Unit."

Concerning the plea to the jurisdiction, the court concluded:

• "The Taxing Unit purported to appeal the appraisal review board's decision by purporting to file a Petition in this Court within 60 days of that decision."

• "The Taxing Unit's purported appeal was prosecuted by Mr. Brent Lemon under an engagement that is not authorized under Texas law and is void."

• "Texas law does not authorize the Taxing Units to appeal the appraisal review board's decision through a void engagement."

• "The Taxing Unit's Petition is void and of no effect."

• "To date, the Taxing Unit has not filed a valid Petition from the appraisal review board's decision."

• "The Taxing Unit did not timely appeal the decision of the appraisal review board."

• "This Court lacks subject-matter jurisdiction over this lawsuit."

Next, Iraan-Sheffield ISD filed objections contending the trial court's findings of fact were conclusory and its conclusions of law were erroneous. It requested numerous additional specific findings but the court did not issue any further findings. Iraan-Sheffield ISD now appeals the order of dismissal.

II. ISSUES ON APPEAL

Iraan-Sheffield ISD presents three issues on appeal. In its first issue, the district contends the trial court abused its discretion and committed reversible error in granting the motion to show authority and plea to the jurisdiction. Along with a general assertion of error, the first issue includes sub-arguments asserting the following:

(A) that Kinder Morgan purposefully concealed material evidence proving the "tax ferret" assertion was completely false;

(B) that the motion to show authority was waived as untimely or barred by laches;

(C) that Lemon had authority to represent Iraan-Sheffield ISD; and

(D) that Iraan-Sheffield ISD had express and implicit authority to hire Lemon on a contingency fee basis.

In its second and third issues, Iraan-Sheffield ISD asserts...