### NUM BER 13-02- 237- CV 

## COURT OF A PP EA LS T H I R T E E N T H D I S T R I C T O F T E X AS C O R P U S C H R IS T I - 

## EDI NBURG
COASTA L LIQUI DS PA RTNERS, L.P. , A ppe l l a n t , v . M A TAGOR DA

C OUN TY

A PPRA ISA L DIST RIC T, A pp ellee.
On ap pe al f rom th e 1 30t h Dist rict C ou rt o f Matago rda Co un ty , T exas . 

## MEMORA NDU M OPINION ON REMA ND Be fo re Ju stice s Y añ ez, Garza, a nd B en av ide s M emo rand um Opin ion On R eman d by Ju stice B en av ide s In ou r orig inal op inion in this case, we h eld tha t und erground salt caverns in w hich natural g as is st ored c oul d notbe a pprais ed and t a x ed s eparatel y from t he s ur

face l and abov e the m. Coa sta l Liq uid s Par tner s, L.P. v. M

atago rda C o u nty

Appr ais al Di st. , 118 S.W .3d 4 64, 4 69 ( Tex . Ap p.–C or pus Chr is ti 2003) , re v’ d and re m anded , 165 S.W .3d 3 29, 336 (T ex. 2 00 5)

. Th e Tex as S up rem e C ou rt rev ers ed , ho l di ng t ha t th e c av er ns w ere “i mprov ements ” w hic h c oul d be v alu ed s eparatel y , and remanded t o us to address theT he t wo cav er ns are pa rt of a hy dr ocar bon st or age f aci l i t y i n M at agor da Count y known as t he 1 M ark ha m F aci l i t y . I n t ot al , t he f aci l i t y cont ai ns f our t een cav er ns, sev en o fwhi ch ar e use d f orhy dr ocar bon s to r a g e . O n ly tw o o fth e c a v e r n s a r e a t is s u e in th is a p p e a l.

T h e c o n tr a c t r e a d th a t C o a s ta l w a s r e s p o n s ib le f o r “ a d v a lo r e m t a x e s a p p lic a b le to C o a s ta l’s 2 p ro d u c ts s to r e d a n d C o a s ta l ’ s p ro d u c t h a n d l i n g fa c i l i ti e s a n d ta x e s a p p l i c a b l e to th e w e l l s to ra g e c a p a c i ty speci f i cal l y r el at ed t o Coast al ’ s st or age. ” O r i gi na l l y , t he sp ace wi t hi n t he ca v er ns was i nsuff i ci ent t o m eet C oast al ’ s capa ci t y nee ds, so T exas Br i ne l eached sal t offt he ca v er n wal l s i n or dert o i ncr ease t he a m ount ofst or age space. T he l eachi ng pr ocess added a capaci t y of 2. 5 m i l l i on bar r el s t o Hi l t pol d #1 and 1. 9 m i l l i on bar r el s t o H udson #3. I t was t hi s “ i m pr ov em ent ”

— t he expansi on of capaci t y — t hat l ed t o t he assessm ent of a d va l o re m ta x e s
. 2 re maini ng i ss ues. See M atagor da C ounty, 165 S.W .3d a t 336

. W e now address w hether t h e re i s s u f

f i c i e n te v i d e n c e t o u p h o l d t h e a p p ra i s a l v a l u e s re a c h e d b y t h e t r i a l c o u rt

. W e affi r m. I. F A CTUA L B A CKGRO UND T w o un derground sa lt c a ve rns in Matagorda Cou nty, Texas are at issue in this
case. The tw o salt caverns have relativ ely imp erme able and dura ble w alls; the refore, like

1 many ca v er ns alo ng the Tex as Gul f Coas t, they are us ed to sto re natural g as. One cav er n, cal led H il tpol d #1, i s o w ned by Tex as Br ine C or porati on ( “Tex as Br ine ”) ; t he s econd
cav er n, c all ed H udson #3, is ow ned by Law re nce J. Peterson and is le a sed by Tex as Br ine

. Both cav er ns, i n tur n, are l eased b y t he appe ll ant, Coa sta l Liq uid s P artners, L.P. (“ Coa sta l” ). U nder

the lea si ng co ntra ct betw een C oast al and Tex as Br ine , C oast al
ass umed respon si bil ity for a d v alo re m tax es ow ed to the appel lee , t he M atag orda C ounty App raisal Distri ct (“the District”)

. 2 In order to ass ess the property tax es, the Di str ict nee ded t o as cer tai n the mar ket
v a l u e o f t h e c a v er ns. See T EX
. T A X C OD E A NN . § 23. 01(a ) ( Verno n 20 08). T he District hired Pr it chard & Abbott( “P &A” ), an e ng ine er ing fir m in Aus ti n, Tex as, to condu ct an apprais al. F or

eac h of the y ears from 1996 to 1999, P&A apprais ed H il tpol d #1 atT he st at ut e r eads: 3 I ft he ch i efapp r ai seruses t he co st m et hod ofapp r ai s al to d eter m i ne t he m ar k et v al ue o fr eal p r o p e r ty, th e c h ie fa p p r a is e r s h a ll: ( 1) use co st dat a ob t ai ned f r om gen er al l y accep t ed so ur ces; ( 2) m ake any app r opr i at e ad j ust m ent f orphy si cal , f unct i onal , orecon om i c obso l escence; ( 3) m ake av ai l abl e t o t he publ i c on r equest cost dat a dev el oped and used by t he ch i efapp r ai ser a s a p p l i e d to a l l p ro p e rti e s w i th i n a p ro p e rty c a te g o ry a n d m a y c h a rg e a re a s o n a b l e fe e to t he p ubl i c f ort he d at a; ( 4 ) c le a r ly s ta te th e r e a s o n f o r a n y v a r ia tio n b e tw e e n g e n e r a lly a c c e p te d c o s t d a ta a n d lo c a lly

pr oduced cost dat a i ft he d at a v ar y bym or e t han 10 p er cent ; and (5 ) m a k e a v a i l a b l e to th e p ro p e rty o w n e r o n re q u e s t a l l a p p l i c a b l e m a rk e t d a ta th a t d e m o n s tra te t he d i ff er ence bet ween t he r epl acem ent cost of t he i m pr ov em ent s t o t he p rop ert y and t he depr eci at ed v al ue o ft he i m pr ov em ent s. T EX
. T AX C OD E A NN
. § 2 3.01 1 (V ern on 20 08 ). 3 $1, 525 ,00 0 an d Hudso n #3 at $81 5,0 00. To calcu late th ese f igures, P&A ap plied th e “cost method,” an a pprais al method tha t is co mmonly us ed th ro ug hout the U nit ed St ates and sp e ci fical ly

recog niz ed i n Tex as by st atute

. See i

d. § 23 .0 11 ( Ve r no n 20 08 )

. The cost 3 method i nv olv es “a se t of proc e d u re s throug h w hic h a v alu e i ndi cat ion i s d er iv ed .

. . by est imat ing the cur re nt c ostto cons tr uct a re product ion of, or repl acementfor, the e x is ti ng str uct ure; de duct ing ac cr ued dep re ci ati on from the reproduct ion or repl acementco st; and addi ng the est imat [ed] lan d v alu e pl us an entre preneur ial profit. ” Ell iott W . W ein ste in, The Ar t of the Tes ti

m ony:T he R eal Es tate Ap p ra ise r, the Appr ais al and t

he Ex per ti se of t he Expe rt W

itness , avai

lab le at 15-8 ABIJ 32 (1996 ). Coa sta l dis puted the D is tr ict’ s a pprais als , arg uin g thatthey ex ceede d the tr ue mark et v alu e of

the cav er ns. Coa sta l re tai ned an in dependentapprais er , Bo lt on & Baer (“ B&B” ), w hic h ar ri v ed at different v alu ati ons by usi ng the mark et data compar is on metho d,T he m ar k et dat a com par i son m et hod i s al so known as t he sa l es com par i son m et hod. C oast al used 4 t he t er m “ sal es” i n t he t r i al cour t and i n i t s br i ef i ng, but w e w i l l use t he t er m “ m ar k et dat a” beca use i t i s t he t erm us ed i n t he t ax c o d e
. S ee id. § 23. 013 ( Ver non 2008)

. T he t ax cod e pr ov i des: “ I ft he ch i efapp r ai ser uses t he m ar k et dat a com par i son m et hod ofappr ai sal t o det er m i ne t he m ar k et v al ue o fr eal pr oper t y , t he ch i ef a p p ra is e r s h a ll u s e c o m p a ra b l e s a l e s d a ta a n d s h a l l a d ju s t t h e c o m p a ra b l e s a l e s to th e s u b je c t p ro p e rty. ” I d. T h e s ta tu te re a d s : “If t h e c h i e f a p p ra i s e r u s e s th e m a rk e t d a ta c o m p a ris o n m e th o d o f a p p ra i s a l to

5 d e te r m in e th e m a r k e t v a lu e o fr e a l p r o p e r ty, th e c h ie fa p p r a is e r s h a ll u s e c o m p a r a b le s a le s d a ta a n d s h a ll ad j us t t he co m pa rab l e s al es t o t he su bjec t prop ert y . ” I d. 4 w hic h i s a ls o s peci fical ly re cog niz ed by a Tex as sta tute. See i d. § 23.0 13 (Ve rnon 200 8). 4 5 This me t h o d “ i n v o l v e s t h e d e t e r mi n a t i o n o f v a l u e fo r a s p e c i fi c p a rc e l o f p ro p e rtyby inferen ce f rom th e sales prices of comp arab le prope rties.” See W ein ste in, 15- 8 ABI J 32. Coa sta l a rg u e d t h a t a p p l y i n g t h e ma r k e t d a t a c o mp a r i s o n me t h o d w o u l d h a v e y i e l ded a
v alu e of $590,0 00 for Hi lt pol d #1 and $58 5,000 for H udson #3. Coa sta l filed a Notic e of Protes t w it h the M atag orda C ounty Apprais al Rev iew Board. See i

d. § 41.413( a) (V er non 2008) (“ A person lea si ng tang ibl e personal proper ty
w ho i s c ontract ual ly

obl ig ated to reimburs e the proper ty ow ner for t ax es impos ed on the prop erty is e n t it le d to prote st before the app raisal rev iew boa rd . . .”). Th e revi ew boa rd deni ed th e protes t, how ev er , and C oast al filed su iti n di str ict c our t s eeki ng t o hav e the apprais al amount reduce d. See i d. § 42.015( a) (Ver non 2008) ( “A perso n l easi ng proper

ty
w ho is cont ra ctu all y

obl ig ated to reimburse the p ro per ty ow ner for t ax es impos ed on the prop erty is ent itled to app eal an orde r of the app raisal rev iew boa rd dete rmining a prote st brou ght bythe pe rson un der Se ction 4 1.4 13. ”). A benc h tr ial w as held on Dec ember 11 and 12, 2001. At the tri al, the Di str ict c all ed tw o w it ness es to t est ify

aboutthe detai ls of the cos t method used byP&A w hen it ass ess ed the H il tpol d #1 and H udson #3 cav er ns: Vince Mal oney , the Chi ef Apprais er for t he D is tr ict,B o lto n w a s n o t th e o n ly w itn e s s o ff e r e d b y C o a s ta l, b u t h e is t h e o n ly w itn e s s r e le v a n t t o th is a p p e a l. 6 T wo wi t nesses t est i f i ed a bout t he f i r st i ssue i n t hi s case t hat w as r esol v ed b y t he T exas Supr em e Cour t ; one wi t ness t est i f i ed a bout t he i ssue o fapp r opr i at e at t or ney ’ s f ees.

T hi s i s a t y pogr aphi cal er r or ; Fi ndi ng o fFact #9 shoul d be r ef er enced, not Fi ndi ng o fFact #10

. 7 5 and S a m H a r r i s , a re p re s e n t a t i v e fro m P & A

. O n c ro s s - e x a mi n a t i o n , C o a s t a l d i d not q uest ion thes e w it ness es about the rela ti v e mer it s a nd flaws o f the c ostmethod. I nst ead, Coa sta l offere d a wit n e ss o f its ow n, D av id Bol ton o f B&B, w ho ex pla ine d the deta il s o f B&B’ s mar ketdata co mpari son method. 6 On Januar

y 23, 2002, the tr ial co urt s ig ned a jud g ment i n fav or of the D is tr ict. On Apr il 22, 2002, t h e t ri al cour t i ss ued findi ng s o f factand conc lus ion s o f law

. Among the f indings of

fact w ere the followi ng th ree, w hich are now cha llenged by Coast al on a ppe al: 7. For the ta x

y ears 19 96 th rough 199 9, inclusive, P laintif f [ Coasta l Liq uids] adduc ed no ev ide nce, or al ter nati v ely , i nsuffici ent e v ide nce, to suppo rta deter minat ion by

the Cou rtthat the as ses sed v alu e of the subj ectproper ty acc ord i n g t o t h e D e fe n d a n t ’ s [ t h e D i s t r i c t ’ s ] a p p ra i s a l ro l l s e x c e e d e d the m a rk e tva lu e o f

t h e p ro p e rt y.

. . . . 10. Ex ceptas prov ide d in Fin din g of Fact #10 [si c.] , for

the tax y ears 1 996 7 throug h 1999, i ncl usi v e, t he ev ide nce suppo rt s a de ter minat ion thatthe as s es s ed v al ue o f t he s ub j ect prop er

ty a c c ordi ng t o th e D efe nd an t’ s a p p ra is a l ro ll s d o e s n o te xc e e d t h e m a rk e tva lu e o f t h a tp ro p e rt y. 11. For eac h of the tax

y e a rs 1996 throug h 1999 inc lus iv e, t he apprais al rolls shall ref lect a value of $1,0 25, 000 .00 for the Hiltpo ld #1 sto rage cav ern and $82 5,000 for th e H udson #3 s torag e c av er n. Among the conc lus ion s o f law w ere the foll ow ing two, w hic h are now chal len g ed by Coasta l on app eal: 1. For the tax

y ears 1 996 t hroug h 1999, i ncl usi v e, t here i s n o ev ide nce as a matter of l aw (a ) that the subj ect proper ty ’s ass ess ed v alu e i s g re ater than the mar ket

v alu e of the proper

ty for a ny rele v ant t ax

y ear (ex ceptas st ated in Fi ndi ng of Fact #10 [s ic . [ 9]], (b) that the sub ject proper

ty ’s as ses sed v alu e6

for any rele v ant t ax

y ear sh oul d be reduce d bec ause the D efendant ass ess ed th e proper

ty uneq ual ly , ( c) thatthe subj ectproper ty i n any rele v ant taxy e a r w a s s u bj e c t e d t o a m u l t i p l e a p p ra i s a l , o r ( d ) t h a tt h e D e fe n d a nt improper ly

i ncl uded no n- tax abl e el ements of v alu e in its asses sment of the subj ectproper

ty i n any of the t ax

y ears 1 996 t hroug h 1999, i ncl usi v e. 2. The su bje ct proper ty w as proper ly

su bje cte d to ad v alo re m tax ati on p u rs u a n tt o T e xa s la w. T he quest ions now before us on rema nd a re w het her the re w as legally and factu ally suffici ent e v ide nce for

the tr ial co urt t o hav e uphel d the D is tr ict’ s v alu ati on of H il tpol d #1 and H udson #3 at $1,025,0 00 and $815,00 0, respecti v ely , and w hether C oast al is enti tl ed to recov er

att or ney ’s fees. See i

d. II. S TA NDA RD OF R EVI EW Coa sta l, as the pla int iff in t his ca se, bore the b urden of prov ing at tr ial thatthe Di str ict’ s a pprais al w as inc or re ct. Se e D ow Che m
. C o. v . F r ancis , 46 S.W .3d 2 37, 2 41 (Tex . 200 1) ; see als o Hodge v . D all as Ce n t. Appr

ais al Di st. , N o. 05 -0 6- 01418- CV , 200 7 Tex . Ap p
. L E X I S 9 0 8 5 , a t* 8 ( Te x . A p p
. – D a l l a s N o v . 1 9 , 2 0 0 7 , p e t

. d e n i e d )

. Att he conclu sion of the ben ch trial, the court issued f indings of fact w hich ha v e the same force and effect as a j ur

y ’s v erdict. Gr

egor y v . Su nbelt Sa v., F.S.B

. , 8 3 5 S

. W

. 2 d 1 5 5 , 1 5 8 (T e x. App.–D all as 1992, w ri t den ied ). C oast al now ch all eng es cer

tai n adv erse findi ng s o n l eg al and factu al suf

f iciency groun ds. W hen w e revi ew for legal suf f iciency, w e rev iew

t he record to det ermin e if there is
ev ide nce to s uppor

t t he findi ng , credi ti ng fav orabl e ev ide nce if reason abl e j urors c oul d and dis re g ardin g co ntrar

y ev ide nce unl ess reason abl e j urors coul d not. City of K eller v. Wils on , 168 S. W .3d 802, 811 (Tex . 2005). W hen t he pl ain ti ff bears t he burden of proof at tr ial and
re cei v es a neg ati v e findin g, we wil l onl y rev erse that findi ng for l eg al ins uff ic ien cy i f the7

pla int iff on appeal co ncl usi v ely es tabl is hes the o pposi te of the findi ng
. Id. W hen rev iew ing factual su ff ic ien cy poi nts , w e do not merel y subs ti tute our opi nio n
w it h tha t of the tr ial court , but rather w e “con si der

and w eig h al l of the ev ide nce and w il l set asi de th e v erdict onl y

i f the ev ide nce is so w eak or the findi ng so ag ain st the g re at w eig ht and prepo nde rance of

the evidence thatit is clearlyw rong and u njust. ” Id. at 82 6. W e r e v iew

the conc lus ion s o f law de n ov o. State v

. Heal , 917 S.W .2d 6, 9 (Te x. 1 9 9 6 ). Un d e r a d e n o vo re v iew , w e ex erci se our ow n j udg ment and redeter mine each leg al is sue. Quick v. City of Austin , 7 S.W .3d 109 , 116 (T ex. 19 99). A conclusio n w ill be u phe ld on appe al if the jud g ment c an be sus tai ned on any leg al theor y suppo rt ed by

the ev ide nce. BM C Soft ware Bel

giu m , N.V. v. Ma rchand , 83 S. W .3d 789 , 794 (Tex. 2002 ).

III . A N AL Y S IS For the reason s g iv en below , w e beli ev e the re i s s uff ic ien t ev ide nce to up hol d the tr ial co urt’ s fin din g s t hat H il tpol d #1 is proper ly v alu ed at$1,0 2 5 ,0 0 0 a n d H udson #3 a t $815,00 0. A . Rev iew in g th e F in di ng s for L egal Su ff icien cy W e f irst note th at all taxable prop erty mu st be “app raised at its m arket value.” T EX
. T A X C OD E A NN . § 23.01( a) ( Ver non 200 8). M ar ketv alu e means the pr ic e at w hic h a p ro p e rt y w o u l d t ra n s fe r

fo r c a s h o r i t s e q u i v a l e n tu n d e r

p re v a i l i n g m a r k e tc o n d i t i o n s i f: (A ) ex posed for s ale i n t h e open mark et w it h a reason abl e ti me for t he seller to f ind a pu rchase r; (B ) both the s ell er

and the p urchas er

kn ow of al l the uses and pur poses to w hic h the proper

ty is adapt ed and for w hic h i t i s c apabl e of bei ng used and of the enforc eabl e rest ri cti ons on i ts use; and (C ) both the s ell er

and purchas er

se ek to max imi z e the ir gai ns and8 nei ther i s i n a p o sit io n t o tak e adv antag e of the ex ig enci es of the oth er. T EX
. T A X C OD E A NN . § 1.0 4(7) (Vernon 200 8). Te x as law provi des th ree com mo nly
acc e p t e d m e t h o d s fo r a p p ra i s i n g m a r k e tv a l u e : t h e c o s tm e t h o d , t h e m a r k e tdata
co m par is on metho d, an d the i ncome method. Hou s to n R .E

. In c om e Pr op s
. XV , Ltd . v. W aller County Apprai sal D is t. , 123 S.W .3d 8 59, 8 61 ( Tex . Ap p.–H oust on [1 D is t.] 2003, st
n o pe t. ) (ci ti n g Rel

igi ous of t he Sacre d Hear

t v . Cit y o f Houston , 836 S.W .2d 6 06, 6 15- 17 (Tex . 199 2) ). The c hie f apprai ser g enerall y

se lects w hic h apprais al method t o us e. T EX
. T A X C OD E A NN
. § 23.0101 (V er non 2008) (“ In de ter mini ng the mark et v alu e of proper ty , t he chi ef appra is er

sh all cons ide r the cos t, inc ome, and mar ketdata co mpari son methods of app raisal and use the mostapp ropriate met hod .”). Appl y ing the cos t meth od, t he D is tr ict det er mined thatHil tpol d #1 and Huds on #3 shoul d be v alu ed at$1,0 25,000 and $81 5,000, respecti v ely , and the tr ial co urt i ss ued findi ng s o f factuphol din g thes e fig ures. Attr ial , t he D is tr ict present ed two w it n e sses
w hose tes ti mony

prov ide d sig nific ant ev ide nce suppo rt ing the tr ial co urt’ s fin din g
. F irst, the Di str ict cal led Ma lon ey , the Chi ef A pprais er for th e D is tr ict. H e tes ti fied th at ac cordin g to t he c ontractbetw een t he Dis tr ict and P&A , t he pay ment due to P&A for apprais al
ser v ic es did not depend upon t he ex actfig ure i t as ses sed. Ma lon ey furth er tes ti fied to the reliability of P&A by ex plainin g tha t it w as the resp onsib ility o f P &A to defend its ap praisals in cour t atno e xtra ex pense to the D is tr ict. T he Distric tn e xtcalled Harris, a represen tative of P&A w ho h ad e x perien ce ap prai s i ng o r

a s s i s ti ng i n th e ap prai s al o f be tw ee n s i xty a nd s ev en ty

s to rag e c av erns. Har ri s’ s t est imony , w hic h c onsi ste d of a reason abl y deta i l e d e x p l a n a ti on of P&A’ s a pprais alT he w eb s i t e o f t he U ni t ed S t ates D ep art m en t of E ne rgy p rovi de s a h el pfu l e x pl an ati on of t hi s t erm , 8 whi ch i s com m onl y used i n t he d r i l l i ng i ndust r y : “ [ S] om e na t ur al gas f l ows f r eel y t o wel l s beca use t he n at ur al p r e s s u r e o ft h e u n d e r g r o u n d r e s e r v o ir f o r c e s t h e g a s t h r o u g h t h e r e s e r v o ir r o c k s . T h e s e typ e s o fg a s w e lls req ui re on l y a ‘ C hri s t m as t ree ’ , or a s eri es of pi pe s a nd va l ves o n t he s urfac e, t o c on t rol t he fl ow of ga s
. ” See U n ite d S ta te s D e p a r tm e n t o fE n e r g y, G e t tin g G a s f ro m th e G ro u n d

. . . a n d th e Se a , a v a il abl e at htt p:// fos s i l

. en erg y . go v/ ed uc ati on / en erg y l es s on s / ga s / ga s _p rod uc t i on
. htm l

. (l as t vi s i t ed A pri l 25 , 20 08 ).

T h e D i s tri c t s u b m i tte d th i s s c h e d u l e a s a n e x h i b i t t o th e tri a l c o u rt. 9 H arri s te st i f i ed t hat al t hough t hi s sched ul e was o r i gi nal l y agr eed upon i n 19 86 o r 198 7, i t was 10 updat ed i n 19 93. 9 methodol og y , w as per haps the mos t i mport ant e v iden ce prese nted to t he tr ial co urt. Har ri s e x pla ine d tha t i n 1986 or 1987, P&A

attempted to establ is h a v alu ati on metho d for und erground ca v erns tha t w ould be acce pta ble th roughou t the natu ral g as indu stry . He tes ti fied th at P& A focus ed on g ather ing i nformati on abou t t he proces s a nd ex pense s inv olv ed i n nat ural g as sto ra g e: [W e] ta lked to ev ery one thatw ould talk to us abo ut w hat it cost to drill a w ell, w hat i t c ost to outfit itw it h the pi pin g v alv es and fitti ng and Chr is tmas tree, 8 and from that w e ar ri v ed atw hat w e tho ug ht w as a reason abl e v alu ati on for th e dri lli n g an d pi p in g in t h e w e ll a n d th e n th e le a ch in g. Acc ordin g to Har ri s, P&A then ass embled re present ati v es from each o f the compani es that had underg ro und storag e faci li ti es at that time, and the part ies se ttl ed upon usi ng a cos t method, w hic h essent ial ly determi ned marke t v alu e byagg re g ati ng the cur re nt
cos ts for th e c onst ru cti on of repl acement s o f the c av er ns. T he par ti es ag re ed to a
sc hedul e of the cos ts for al l aspects of the c av er n—i ncl udi ng pi pin g valv es, fitt ing s, and drills, amo ng othe r things. M oreo v er, the parties agreed thatthe costof l e achin g salt 9
cav er ns in order

to ex pand t hei r si z e w as fiftyce nts for t he first one mi ll ion b a rre ls of nat ural gas capacity and th irty -f iv e cen ts for all barrels therea f ter. Acc ordin g to Har ri s, upon reachi ng thes e fig ures and as sembli n g t h e m i nto a
sc hedul e, the v alu ati on of the cav er n bec ame l ittl e more tha n the per form a n ce of

an 10Al t hough H ar r i s di d not i nser t t he r el ev ant f i gur es i nt o t he equat i on a nd p er f or m m at hem at i cs on 11 t he st and, t he a ppel l ee’ s br i efdoe s app l y t he e quat i on, and i t expl ai ns pr eci sel y how t he co st app r i sal m et hod y i el ded t he p ar t i cul arv al ues i t di d.

[F ]o r H iltp o ld # 1 , t h e v a l u e o ft h e p r o p e r ty w a s c a lc u la te d b y m u ltip lyin g 1 ,0 0 0 ,0 0 0 b a r r e ls t i m es 50 c en t s (eq ua l s $5 00 , 00 0) pl us 1,50 0,00 0 ba rr el s t i m es 35 ce nts (eq ua l s $5 25 , 00 0); t ot al equ al s $1, 025, 000. ForH udson #3, t he v al ue o ft he p rop er t y was cal cul at ed b y m ul t i pl y i ng 1 , 000, 000 bar r el l s t i m es 50 cent s ( equal s $50 0, 000) pl us 90 0, 000 bar r el s t i m es 35 ce nt s ( equal s $31 5, 000) ; t ot al equ al s $81 5, 000. B rie f o f R e s p o n d e n t-A p p e l l e e a t 2 8 , C o a s ta l L iq u i d s P a rtn e rs , L .P . v . M a ta g o rd a C o u n ty A p p ra is a l

D is t. , N o. 13 -02 -00 23 7-C V (T ex
. A pp
. –C orp us C hri s t i D ec
. 4, 20 02 ). 10 eq uati on: “ P&A deter mined how bi g a c av er n w as and th en mul ti pli ed c apaci ty ti mes t he
cos t es ti ma te s, l e ss a ca paci ty factor .” The ap pli cat ion of thi s e q uati on, h e ex pla ine d, y iel ded t he apprais al v alu es anno u n ce d b y P&A and subs eq uentl y

uphel d by

the tr ial
cour t. 11 On c ro ss -exam in a ti on, C oast al did not ask H ar ri s a si ng le q uest ion aboutany defici enci es in thi s met hod. Ins tead, C oast al q uest ion ed w hether ce rt a in el ements of Har ri s’ s t est imony

may hav e c onst it uted hearsay
. For ex ample, C oast al o bjected that Harris did no t have f irst-hand kn owl edge of the cap acity of

the caverns, an d the refore, his tes ti mony

on t his poi nt c onst it uted hearsa y. T h e tr ial co urt ov er ru led thi s o bje cti on, a nd Coasta l does no t app eal on this groun d. Furthe rmore , w hen Coasta l present ed e v iden ce at trial, it called a w itness, B olton , w hose t estim ony did not e x plain d ef iciencies in the cost apprais al method ex pla ine d byHar ri s. Instead , Bolt on merely tes ti fied th at he apprais ed the s altca v er ns usi ng a d if fe rent meth od—t he mar ketdata method— and obt ain ed a different re sul t. This tes ti mony

from Bolt on—w hic h w as the o nly ev ide nce from C oast al that re lat edAs we hav e exp l ai ned, C oast al ’ s ot herwi t nesses gener al l y add r essed i ssues t hat ar e not r el ev ant 12 i n th i s o p i n i o n
. See n . 6 , s up ra
. 11 si g nific antl y

to the iss u e of the cav er n’s v alu ati on —di d not“ conc lus iv ely es tabl is h” the 12
o p p o s it e o f

t h e t r i a l c o u rt ’s f in d in gs o f fa c tin fa vo r o f

t h e Di s t ri c t , a n d t h e re fo re we
conc lud e tha t t he findi ng s were l eg all y su ff ic ien t. See Cit

y o f Ke ller

, 168 S.W .3d at 81 1. B. R ev iew in g th e F in di ng s for F act ual Su ff icien cy In ou r factual su ff ic ien cy rev iew , we are obl ig ated to c onsi der the ev ide nce both fav orabl e and unf a v orabl e to the t ri al cour t’ s fin din g s, and w e may onl y rev erse if the f inding is so against the great w eight and prepo nde rance of the evidence as to be clearly
w ro ng and unj ust

. Id. at 826. The unfav orabl e ev ide nce, how ev er , is li ttle m o re than tes ti mony

from C oast al’ s i ndependen t a p p ra iser , Bo lt on, s tati ng thatthe mark et da ta compar is on metho d to apprais ing sa ltca v er ns is su per ior to the c ostmethod. Coa sta l’ s met hod of apprais al is as co mp e lling as the Di str ict’ s met hod, and bot h methods are recog niz ed unde r Tex as law

. Housto n R.E. In com e Prop s. , 123 S. W .3d a t 861

. T he fa ct tha t one met hod w as select ed o v er the o the r by the District’s chief

app raiser, and t his w as uphel d b y t h e t ria l cour t, hardly st ri kes us cl ear ly

w ro ng and unj ust

. City of Kel ler , 1 6 8 S

. W

. 3 d a t8 2 6

. B e c a u s e b o t h a p p ra is a l m e t h o d s a re e qu a ll y a p p li c a b le , we
are obl ig ated to de fer to the findi ng made by the tr ial co ur

t, w hic h w as bette r si tuate d to anal yz e the ev ide nce present ed by each par ty

. Housto n R.E. Inco m e Prop s. , 123 S.W .3d at 86 4. IV. A TTO R N EY ’ S F EES Coa sta l seek s re asona ble attor ney ’s fees, but suc h fees are onl y per mitt ed unde r the t ax code if “a prop erty owner . . . prevails i n an app eal to the cou rt.” T EX
. T A X C ODE12

A NN . § 42. 29 (Ve rnon 200 8). Becau se Coast al has no t prevailed in this case, the trial court prop erly den ied at torne y ’s fe es. IV. C ONCL US I ON Beca use we find factu ally a nd legally

su f f icient evidence supp orting th e trial court’s f indings of fact as to the v alua tion of the salt caverns and no basis upo n w hich to a w ard attor ney ’s fees t o C oast al, w e aff ir m the jud g ment of the tr ial co urt.

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__ GIN A M . BE NA

VID ES, J u s t i c e
Me moran dum Opi nio n On Remand del iv ered and fil ed th is the 30th day of Apr il , 200 8.