SCOTX Asked To Decide “Jarndyce v. Jarndyce” Boundary Dispute

By Janet Elliott

(AUSTIN) – (Sept. 11) – Dale Wainwright stepped to the podium at the Texas Supreme Court on Monday, looked at his former colleague Nathan Hecht and made a simple request.

End a dispute between Nueces and San Patricio counties over who can tax two massive commercial piers, a legal fight that Wainwright said has “gone on for longer than our chief justice’s tenure as a judge.” The boundary battle began in 1972 and Hecht started his judicial career as a district judge in Dallas in 1981.

But, like the Dickensian case of Jarndyce v. Jarndyce referenced in an amicus brief, there is nothing simple about the tug-of-war over which of the two counties should collect property taxes from Occidental Chemical Corp.

Several justices seemed baffled by being asked to act as fact-finders in deciding the tax dispute. The fact that they were hearing the case on the first day of their new term owes to the urgency set by an unusual law passed by the Texas Legislature last year aimed at the long-running case.

SB 2242, quietly passed on local and consent calendars in both the Senate and House, added a section to the Local Government Code giving the Supreme Court original jurisdiction to hear and determine the outcome of a property owner’s lawsuit involving the tax boundary issue not later than 90 days after it is filed.

Justice Jimmy Blacklock, the court’s newest member, referred to the legislation as “the likes of which I don’t think any of us have ever seen.”

Wainwright, who served on the high court from 2003 to 2012, said his client has paid taxes to both counties under protest and just wants its $3 million in excess taxes returned. Oxy doesn’t care which county wins the tax dispute.

The tortured history of the case includes being assigned to Refugio County, transferred over San Patricio County’s objection to Nueces County, and sent back to Refugio County. Judge Kemper Stephen Williams of the 135th Judicial District has scheduled a summary judgment hearing for Oct. 24.

Why shouldn’t the Supreme Court wait for the district court’s decision, asked Justice Jeffrey Boyd.

The Legislature decided for the first time to allow taxpayers to get involved in a boundary dispute in a bill that should be presumed constitutional, said Wainwright. It triggers a 180-day deadline for the losing county to pay Oxy its refund. The alternative of waiting again for the district court to decide the boundary could lead to another lengthy appeal.

“The Legislature saw what you see and decided this must stop,” said Wainwight, a shareholder at Greenberg Traurig.

Next up to the podium was John J. Hightower, who represents San Patricio. The county believes the Supreme Court has jurisdiction over Oxy’s lawsuit via the new law but questions the court’s jurisdiction to determine which county should collect the taxes.

Hightower, senior counsel at Houston’s Olson & Olson, illustrated how difficult the decision could be given unspecific laws and court opinions involving the ever-changing Texas shoreline.

“We’d be happy to get any kind of answer so our corporate citizens know how to plan,” he said.

Corpus Christi lawyer Audrey Mullert Vicknair provided a spirited presentation of Nueces County’s position that the statute is unconstitutional and the court does not have jurisdiction.

How is deciding the boundary dispute different than other fact determinations the court makes through its mandamus authority, asked Justice Debra Lehrmann.

Vicknair referred to previous tax cases in which the court held there must be a strong and special reason for the Legislature to confer original jurisdiction in cases involving fact disputes.

“This is not the time and this is not the place to have this dispute decided,” she said.

Kristofer Monson of the Attorney General’s Office made brief remarks for the General Land Office. He asked the court to “be circumspect in discussing the process for how county lines are drawn and archived,” noting the potential for disrupting Land Office records involving county lines.

The case is being closely watched by Corpus Christi Liquefaction, which is constructing a $15.5 billion natural gas liquefaction and export facility on the north shore of Corpus Christi Bay. In 2014, before construction had begun, the company received appraisal notices from both San Patricio and Nueces for the same property. The company has filed suit in both counties to contest the duplicate taxation.

In an amicus brief filed by Thomas R. Phillips, the former chief justice said comparisons to the never-ending “Bleak House” case are relevant.

“Just as the real-life cases on which Dickens based Jarndyce v. Jarndyce led to the reform of the English Chancery Court, San Patricio County v. Nueces County led the Texas Legislature . . . to say enough is enough, and ask that this Court resolve the matter once-and-for-all,” said Phillips, now a partner at Baker Botts.

Watch the arguments for In re Occidental Chemical Corp. here.