Copyright International Association of Assessing Officers May/Jun 200085. Underground Storage Caverns Harris County Appraisal v. Coastal Liquids. 7 S.W.3d 183 (Tex.App.-Houston [1" Dist.] 1999 [September 30]).
Coastal Liquids Transportation appealed the 1994 assessment of six underground storage facilities and, after the review board issued its decision, filed a suit for judicial review. The following year, Coastal appealed the 1995 assessments of the same properties and, after the review board issued its decision, amended the 1994 petition, seeking review of the 1995 order. Both Coastal and the Harris County Appraisal District (HCAD) appealed the trial court's granting of summary judgment for HCAD for the 1994 tax year and for Coastal for the 1995 tax year. The Court of Appeals of Texas, after issuing an opinion on June 24, 1999, granted Coastal's motion for rehearing and affirmed the decisions of the trial court. The opinion issued September 30, 1999, replaces the earlier opinion.
Because the summary judgment for the 1994 tax year did not state the grounds on which summary judgment was granted, Coastal was required to negate each ground on which the judgment may have been rendered. HCAD contended that Coastal lacked standing to file a suit because it had not registered in Texas as required of foreign limited partnerships transacting business in Texas. However, failure to register does not impair defense of an action or suit. On rehearing, Coastal argued that its tax challenge was defensive, and the court agreed, ruling the assessment of the property was an action against which Coastal could only defend by filing a suit. HCAD also maintained that Coastal did not have standing to appeal because it did not own the storage caverns but only leased them. At the time, a plaintiff had to be a property owner to appeal. As of August 28, 1995, the tax code was amended to allow a lessee contractually obligated to pay property taxes to file a suit for judicial review of an assessment. Coastal argued that the amendment should be applied retroactively, but the court disagreed. Texas law presumes a statute to be prospective only unless expressly made retroactive. This rule does not apply when the amendment is merely procedural, but this amendment speaks to the primary rights of individuals and is, therefore, substantive. Coastal maintained it had standing to appeal as the agent of the owner, but the required papers designating Coastal as the agent had not been filed. Thus, the appeals court affirmed the trial court's summary judgment in favor of HCAD.
For the 1995 tax year, Coastal, as a lessee, did have standing to appeal for the 1995 tax year. HCAD argued that the trial court erred in granting summary judgment for Coastal because the storage caverns were "improvements"; thus, they were subject to appraisal separately from the land, and HCAD had appraised them separately. Coastal contended that the caverns were a characteristic of the land that enhanced the value of the land. The Hazardous Liquid Salt Dome Storage Facilities Act distinguishes a salt formation storage cavern from any equipment associated with the cavern. The court agreed. The cavern by itself is not an improvement. Thus, the appeals court affirmed the trial court's summary judgment for Coastal, ruling that underground storage caverns are not improvements and, therefore, not subject to separate assessment.
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