1 In The 

### Court of Appeals Ninth District of Texas at Beaumont

____________________ NO . 09 - 1 4 - 00 311 - C V



### ____________________ KATHRYN MANION HAIDER, COURTNEY Y. MANION CURTIS, EDWARD D. MANION JR., KRISTIN MANION ACU Ñ A, GENESIS WEALTH MANAGEMENT, AS INDEPENDENT EXECUTOR OF THE ESTATE OF MILDRED Y. MANION II , DECEASED, ET. AL. , Appellant s V. JEFFERSON COUNTY APPRAISAL DISTRICT AND JEFFERSON COUNTY APPRAISAL REVIEW BOARD, Appellee s

_______________________________________________________ ______________ On A ppeal from the 1 36th District Court Jefferson County, Texas Trial Cause No . D - 189,288

________________________________________________________ _____________ MEMORANDUM OPINION Th e principal issue in this ad valorem tax suit concerns whether the City of Beaumont is entitled to collect tax es from parties who own minerals associated with a tract that lie s outside the City’s tax boundary (the tract at issue). The parties do not dispute that owners of the mineral interest s in the tract at issue pooled their minerals, and they do not dispute that the pool created by the lessee of the minerals2 lies largely within the City’s tax boundary. However, the parties dispute whether the pooling of the minerals resulted in the owners of the tract at issue owning minerals that lie within the City’s tax boundary

. On cross

- motions for summary judgment, t he trial court granted the Appraisal District’s motion , reasoning that the pooling resulted in the owners of the tract at issue owning m inerals that were subject to the City’s right to collect ad valorem tax es . The trial court also denied the motion for summary judgment filed by owners of the Manion interest , 1 who asserted the minerals they own are not subject to the City’s ad valorem tax because their minerals lie outside the City’s tax boundary

. Because the summary judgment evidence does not include the mineral leases associated with the tract at issue, w e conclude neither party met its summary judgment burden to allow the trial court t o conclusively determine if the pool ing of the leases associated with the tract at issue resulted in a cross - conveyance of the minerals from those owning the minerals that are associated with the tracts lying in side the City’s tax boundary

. Because both parties failed to conclusively

1 The appellants in the case are Kathryn Manion Haider, Courtney Y. Manion Curtis, Edward D. Manion Jr., Kristin Manion Acuña, Genesis Wealth Management, as Independent Executor of the Estate of Mildred Y. Manion II, Deceased, Compass Bank, as Trustee of the Augustine Guillermo Acuña III, Education Trust, and the Ava Cherry Acuña Education Trust, (collectively, the “Manions”) and Cimarex Energy Co.3 establish the effect of the pooling o n the tract at issue , the trial court could not conclusively determine whether the minerals held by the owners of the Manion interest were subject to the City’s ad valorem tax

. W e remand the cause for further proceedings consistent with the Court’s opinion. Background The owners of the Manion interest own the mineral rights to a 400.76 acre tract that lies outside the City’s tax boundary. T he owners of the Manion interest subsequently pooled 83.35 acres of the ir 400.76 acre tract into a 425

- acre gas unit. The pool associated with the 425

- acre gas unit lies largely but not wholly within the City’s tax boundary. When Cimarex Energy successfully completed wel ls that produce from the pool, the Appraisal District, acting on behalf of the City of Beaumont , assessed an ad valorem tax on the minerals associated with the 83.35 acre tract at issue. The Appraisal District sent notices to the owners of the Manion inter est advising that they owed ad valorem taxes on their minerals in the 83.35 acre tract . In 2011, the owners of the Manion interest filed suit against the Appraisal District , claiming that their interest was associated with a tract that is not located within the City’s
tax boundary. Subsequently, b oth sides to the dispute filed cross

- motions for summary judgment, and following a hearing, t he trial court concluded that the4 minerals associated with the Manion interest were taxable based on the p ercentage the minerals associated with the 83.35 acre tract represented to the pool

. 2 In addition to granting the Appraisal District’s motion for summary judgment , t he trial court also dismissed the claims filed by the owners of the Manion interest against the Appraisal District

. It also determined that two of the individuals that own leases in the 83.35 acre tract at issue , Courtney Y. Manion Curtis and Kathryn M anion Haider , had forfeited their right s to contest the Appraisal District’s assessment for the taxes assessed in 2012 because they had failed to timely pa y the 2012 assessment before their liability for th at assessment became delinquent

. Subsequently, t h e owners of the Manion interest perfected their appeal from the trial court’s rulings

. 3
Standard of Review The appeal is based on the trial court’s rulings on a legal issue, the legal effect of the pooling of the leases that relate to the 83.35 acre tract . In this case, the

2 In its judgment, the trial court found that the Appraisal District was entitled to “proportionately assess property for taxes on the royalty interests based on the location of the rea l property to which the leases pertain.”
3 The owners of the Manion interest did not include any issues in their appeal raising a complaint regarding the trial court’s ruling that the Jefferson County Appraisal Review Board was entitled to be dismissed f rom the suit, and they did not complain on appeal that the trial court’s ruling denying their claim seeking to recover attorney’s fees. With respect to these rulings, which were not challenged in the appeal, the trial court’s judgment became final. See Tex. R. App. P. 44.1(b).5 summary judgment evidence included copies of the Oil, Gas and Liquid Hydrocarbon Lease Memo randa signed by the individuals who own the minerals to the 83.35 acre tract

. The L ease M emorand a , which was signed by the various lessors who own the minerals in the 83.35 acre tract, summarize s the terms of the lease and refe r s to a lease as being “incorporated herein by reference and made a part hereof as if set forth at length[

. ]” Importantly, with respect to the summary judgment proceeding s , the parties failed to submit the lease referenced in the L ease M emoranda to the tri al court so that its terms could be construed in evaluating which parties were entitled to judgment

. C onstruing a n unambig u ous oil and gas lease presents a question of law for the court. Anadarko Petrol eum Corp. v. Thompson , 94 S.W.3d 550, 554 (Tex. 2002). Accordingly, we review questions that involve the interpretation of a lease using a de novo standard. See i d

. When both sides to a case move for summary judgment, and the trial court grants one motion and denies the other, all of the summary judgment evidence before the trial court is reviewed in an appeal to determine the questions presented by the parties in their competing motions. Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding , 289 S.W.3d 844, 848 (Tex. 2009)

. I n cases arising from a ruling on cross - motions for summary judgment, the6 appeals court is required to render the judgment the trial court should have rendered when resolv ing the parties’ competing motions , if possible

. Id. Analysis The issue presented by the parties’ motion s required the trial court to determine whethe r the City of Beaumont could collect ad valorem taxes from the owners of the Manion inte rest
. I n the ir first three issues, the owners of the Manion interest assert that the City was not au thorized by the Legislat u re to collect a tax on the ir mineral interests , an interest that is associated with the 83.35 acre tract that lies outside the City’s tax boundary

. An appraisal d istrict’s authority to assess taxes on a City’s behalf is based on the Tax Code

. See Tex. Tax Code Ann. § 6.01 (West 2015) (providing that each county has an appraisal district which is responsible for appraising property in its district for ad valorem tax purposes for each taxing unit who imposes ad valorem taxes in the district). Under t he Tax Code, “ [r] eal property is taxable by a taxing unit if located in the unit on January 1[.]” Id. § 21.01 (West 2015)

. By definition, “real property” is defined by the Tax Code to include a “ mineral in place [

. ] ” Id. § 1.04(2)(D) (West 2015)

. Given thes e provisions, to collect taxes a n appraisal district must show “that the property it seeks to assess has a taxable situs within the limits of its boundaries.” Oake v. Collin Cty. , 692 S.W.2d 454, 455 (Tex. 1985).7 Otherwise, “the appraisal district has no a uthority to incorporate the realty into its assessment.” Devon Energy Prod., L.P. v. Hockley Cty. Appraisal Dist. , 178 S.W.3d 879, 883 (Tex. App.

— Amarillo 2005, pet. denied). In this case, there is no disput e that the surface of the 83.35 acre tract lies outside the City’s tax boundar y , and it is also undisputed that most of the acreage contained in the 425

- acre gas unit lies within the City’s tax boundary

. And, w hile the Tax Code authorizes a tax unit’s authority to tax “ minerals in place, ” it does

n ot indicate how minerals in pooled units should be treated when the unit’s pool crosses tax boundar ies

. Nonetheless, even though the Tax Code does not clearly provide taxing authorities guidance regarding how they should treat the taxation of a pooled unit, the Tax Code and cases interpreting it require that the taxed property lie within the tax boundary be fore the property can be subject ed to ad valorem
taxes
. See Tex. Tax Code Ann. § 21.01; Oake , 692 S.W.2d at 455. Based on the cross

- motions for summary judgment, the trial court was required to decide whether the owners of the Manion interest own minerals that lie within the City’s tax boundary. In this case, that issue revolves around the leases signed by the owners of the Manion interest that presumably include language relevant to pooling

. Under Texas law, t he effect of pooling on the question of whether the leaseholders who have agreed to pool their minerals acquire a legal8 interest in the minerals located elsewhere in the pool depends upon the language found in the lease that is being pooled. See Veal v. Th omas on , 159 S.W.2d 472, 476 (Tex. 1942) (holding that in Texas, whether the pooling of mineral interests resul ts in the cross

- conveyance of all of the interest amongst the pool, depends upon the terms of the lease). Generally, if the language in the lease being pooled affects a cross

- conveyance among the owners of minerals of the various tracts placed in the pool , the owners of the pooled leases “all own undivided interests under the unitized tract in the proportion their contribution bears to the unitized tract.” Montgomery v. Rittersbacher , 424 S.W.2d 210, 213 (Tex. 1968) (citing Veal , 159 S.W.2d at 472). O n the other hand, when a lease contains language that prevents a cross - conveyance of the lessor’s minerals to the other s who own the minerals being poo l ed , the lessor does not own a percentage of the minerals associated with the other tracts placed into the pool

. See , e.g. , Wagner & Brown, Ltd. v. Sheppard , 282 S.W.3d 419, 422 (Tex. 2008 ) ( discussing the effect of a lease
term that provided that pooling “ shall not constitute a cross

- conveyance of interests”). In this case, the summary judgment evidence did not include the lease that contained the agreement under which the owners of the Manion interest agreed to pool their leases. T he Lease M emoranda , which the Appraisal District filed , does9 not include language relevant to the pool ing by the owners of the Manion interest of the ir lease

. W ithout the mineral lease that govern s the pooling of the minerals in the 83.35 acre tract, the trial court did not h ave the evidence that it needed to decide whether a cross

- conveyance resulted when the lease held by the owners of the Manion interest was pooled , making them proportionate own ers of a portion of the minerals located within the City’s boundary

. Because the relevant mineral lease was not filed in support of either summary judgment motion, we conclude that both parties failed to conclusively establish whether a cross - conveyance of minerals occurred

. See Tex. R. Civ. P. 166a(c); Holy Cross Church of God in Christ v. Wolf , 44 S.W.3d 562, 566 (Tex. 2001)

. Given the summary judgment evidence before the trial court, we hold the trial court should have denied both parties’ motion s on the question of whether the owners of the minerals associated with the 83.35 acre tract own mineral s that lie within the City’s tax boundary

. To the extent issues one through three complain that the trial court erred in granting the Appraisal District’s motion, the issues are sustained

. See Mann Frankfort , 289 S.W.3d at 848. We need to address two other arguments in the parties’ briefs to resolve the appeal

. First, w e address one of the trial court’s alternate holdings, that the doctrine of quasi

- estoppel applied to prevent the owners of the Manion intere st from10 challenging the City’s decision to assess an ad valorem tax on their minerals. With respect to the issue of quasi

- estoppel, the Appraisal District asserted and the trial court agreed that the owners of the Manion interest could not contest the City ’s tax assessment because they had benefitted from the pool ing of their lease into the 425

- acre unit. T he owners of the Manion interest complain about this ruling in their fourth issue, arguing that the record demonstrates the doctrine of qua s i

estoppel do es not prevent them from challenging the City’s right to tax their minerals

. The doctrine of quasi

- estoppel “ precludes a party from asserting, to another ’ s disadvantage, a right inconsistent with a position previously taken. ” Lopez v. Muñoz, Hockema & Reed, L.L.P ., 22 S.W.3d 857, 864 (Tex. 2000). “ The doctrine applies when it would be unconscionable to allow a party to maintain a position inconsistent with one to which the party acquiesced, or from which the party accepted a benefit. ” Cimarron Country P rop. Owners Ass ’ n v. Keen , 117 S.W.3d 509, 511 (Tex. App.

— Beaumont 2003, no pet.). In this case, t he evidence d oes not show that the owners of the Manion interest acquiesced when they were asked to pay the tax at issue; instead, they exercised their admi nistrative rights to file tax protest s and filed suit to contest the City’s attempt to assess tax es on minerals that they claim lie outside the City’s tax11 boundary

. Moreover, accept ing revenues from the production of minerals from a pool ed unit is not necessarily inconsistent with claiming that the minerals associated with a tract are not taxable because they lie outside a taxing units boundaries, as whether the minerals being taxed lie within or outside the boundaries is a matter that depends on langua ge in a lease that has not yet been construed

. Whether th at lease resulted in a cross - conveyance remains

un determined. We hold that by accepting royalties on the production from the pooled unit, the owners of the Manion interest have not necessarily taken position s that are inconsistent with their claim that the ir minerals are not within the City’s tax boundary

. See State v. Tex. Pet Foods, Inc ., 591 S.W.2d 800, 803 (Tex. 1979) (explaining that courts determine the expediency, necessity, and propriety of equitable relief)

. We reverse the trial court’s holding that the doctrine of quasi

estoppel appl ies under the circumstances presented by this record

. L ast , we address whether Courtney Y. Manion Curtis and Kathryn Manion Haider forfeited their right to contest the Appraisal District’s assessment of the City’s ad valorem tax on their mineral interest for the tax year 2012 by failing to pay the 2012 assessment before their assessment became delinquent

. In the ir brief, Curtis and H a ider argue th e trial court erred in its holding that they forfeited their12 right to contest the taxes assessed on their mineral interest associated with the tract at issue

. See Tex. Tax Code Ann. § 42.08 (West 2015) ( providing for the forfeiture of remedies due to the nonpayment of taxes ). As the interests owned by Curtis and H a ider may be proven to indicate that their interest lies outside the City’s tax boundary, they are entitled to conte s t the tax even though they did not pay the assess ment
. See Cameron Appraisal Dist. v. Rourk , 194 S.W.3d 501, 502 & n.2 (Tex. 2006) (holding that individuals who failed to file administrative protests may still assert claims that their properties were outside the boundaries of the taxing unit and were not subject to being taxed). We hold the trial court erred in dismissing the claim s of Curtis and H a ider based on their failure to pay the City’s 2012 tax assessment

. Id. ; see also Jefferson Cty. Appraisal Dist. v. Morgan , No. 09

- 11

- 00517

- CV, 2012 Tex. App. LEXIS 1037, at **8

- 9 (Tex. App.

— Beaumont Feb. 9, 2012, no pet.) (holding that the portion of the taxpayer’s complaint pertaining to whether he owned the property was not barred by his failure to exhaust his administrati ve remedies). Conclusion We reverse the trial court’s ruling grant ing the motion for summary judgment of the Appraisal District on the propert ies identified in the judgment by account number , as listed in paragraph nine of the trial court’s final summary13 judgment. We also reverse the trial court’s ruling in paragraph three of the judgment, which foreclosed Curtis ’s and Haider ’s right to challenge the City’s assessment of ad valorem taxes on their minerals. Finally, w e reverse t he tri a l court’s ruling in paragraph seven of the judgment , which foreclosed the owners of the Manion interest from challenging the City’s right to assess an ad valorem tax on the 83.35 acre tract based on the doctrine of quasi

- estoppel

. Because we cannot conclusively determine whet her the pooling of the 83.35 acre tract resulted in a

cross - conveyance of the minerals between the lessors ow n ing the mineral s in the 425

- acre pool that lies partially within the City’s tax boundary , we conclude that
we cannot render judgment in favor of e ither party, and we remand the cause to the trial court for further proceedings. REVERSED AND RE MANDED

.

_________________________ HOLLIS HORTON Justice Submitted on April 9 , 201 5 Opinion Delivered April 14, 2016 Befor e Kreger, Horton, and Johnson, JJ.