The Supreme Court of Texas convened Oct. 29-31, 2024, and heard oral arguments from several Austin Bar members.
Austin Bar Member
Wallace B. Jefferson
Alexander Dubose & Jefferson
for Respondents
Myers-Woodward, LLC v. Underground Servs. Markham, LLC
Oil & Gas – Royalty Payments
This case raises questions of who owns the right to use underground salt caverns created through the salt-extraction process and how a salt royalty interest is calculated.
USM owns the mineral estate of the property at issue, together with rights of ingress and egress for the purpose of mining salt. Myers owns the surface estate and a 1/8 nonparticipating royalty in the minerals. USM sued Myers, seeking declaratory relief regarding the royalty’s calculation and the right to use the underground salt caverns, in which it stored hydrocarbons. Myers countersued, seeking, among other things, a declaration that USM cannot use the subsurface to store hydrocarbons. The parties filed competing summary-judgment motions.
The trial court granted USM’s motion in part, declaring USM the owner of the subsurface caverns, and granted Myers’s motion in part, holding USM may only use the caverns for the purposes specified in the deed, effectively denying USM the right to use the salt caverns for storing hydrocarbons. The trial court then held that Myers’s royalty is based on the market value of the salt at the point of production, and it entered a take-nothing judgment on Myers’s remaining claims. Both parties appealed.
The court of appeals reversed the judgment declaring that USM owns the subsurface caverns and rendered judgment that they belong to Myers. The court expressly declined to follow Mapco, Inc. v. Carter, 808 S.W.2d 262, 278 (Tex. App.—Beaumont 1991), rev’d in part on other grounds, 817 S.W.2d 686 (Tex. 1991) (per curiam) (holding that the salt owner owns and is entitled to compensation for the use of an underground storage cavern), holding instead that most authority in Texas requires a conclusion that the surface estate owner owns the subsurface. It affirmed the remainder of the judgment, including the holding that the Myers’s royalty interest is 1/8 of the market value of USM’s salt production at the wellhead.
Both Myers and USM petitioned for review, raising issues regarding the calculation of Myers’s royalty interest and the ownership of the caverns. The Supreme Court granted both petitions.
Case documents can be viewed at https://search.txcourts.gov/Case.aspx?cn=22-0878&coa=cossup
The recording of this argument can be found on YouTube at https://www.youtube.com/watch?v=o3d_DexC3P4
Austin Bar Member
Marshall A. Bowen
Butler Snow
Appointed amicus counsel to defend the Court of Appeals’ judgment
Stary v. Ethridge
Constitutional Law – Due Process
This case concerns the proper burden of proof to support a permanent protective order that prohibits contact between a parent and minor child.
Christine Stary and Brady Ethridge divorced in May 2018. In March 2020, Ethridge filed an application for a protective order, alleging that Stary had committed acts of family violence and abuse against their children, including an arrest for third-degree felony offense of injury to a child. The trial court granted the protective order, prohibiting Stary from having any contact with the children, stating that the order would remain in effect “in permanent duration for [Stary’s] lifetime” subject to the children filing a motion to modify the order.
Stary appealed, and the court of appeals affirmed. It held that the “permanent” protective order did not effectively terminate Stary’s parental rights, and, thus, due process did not require application of the “clear and convincing evidence” standard of proof; that the evidence is legally and factually sufficient to support the order; and that the trial court’s exclusion of Ethridge’s history of domestic violence was not reversible error.
Stary petitioned for review, arguing that due process requires a heightened standard of proof and that the evidence adduced does not rise to that level. The Supreme Court granted the petition.
Case documents can be viewed at https://search.txcourts.gov/Case.aspx?cn=23-0067&coa=cossup
The recording of this argument can be found on YouTube at https://www.youtube.com/watch?v=o3d_DexC3P4
Austin Bar Member
Danielle Ahlrich
Ryan Law Firm
For Petitioners
Austin Bar Member
Rance Craft
Office of the Attorney General
for Respondent
GEO Grp., Inc. v. Hegar LLC
Taxes – Sales Tax
The issue is whether companies that own and operate correctional and detention facilities qualify for a sales-tax exemption under state law.
During the relevant tax period, GEO operated correctional and detention facilities in Texas under contracts with both the State of Texas and the United States, providing services such as housing, feeding, monitoring, and transporting detainees held in government custody. The Comptroller later audited GEO’s payment of sales and use tax for the relevant period and assessed a deficiency. GEO requested redetermination, refunds, and audit reductions, but the Comptroller rejected GEO’s contention that certain purchases were exempt from taxation and denied the request. GEO then brought a taxpayer suit for refund.
In the trial court, the parties stipulated that GEO would be entitled to a refund of more than $3 million if it is an entity or organization eligible for exempt status under Rule 3.322(c) in Title 34 of the Administrative Code. So qualifying would then make GEO’s purchases eligible for the exemptions set forth in Section 151.309 of the Tax Code. Following a bench trial, the trial court rendered judgment that GEO is not entitled to the claimed refunds. The court of appeals affirmed.
GEO petitioned for review, arguing that the lower courts applied the wrong evidentiary standard and misconstrued the term “instrumentality” in Rule 3.322(c). The Supreme Court granted the petition.
Case documents can be viewed at https://search.txcourts.gov/Case.aspx?cn=23-0149&coa=cossup
The recording of this argument can be found on YouTube at https://www.youtube.com/watch?v=_z7qQ-rNSww
Austin Bar Member
Lanora C. Pettit
Office of the Attorney General
For Petitioners
Austin Bar Member
Amy Warr
Alexander Dubose & Jefferson
For Respondents
Tex. Dep’t of Fam. & Protective Servs. v. Grassroots Leadership, Inc.
Administrative Law – Judicial Review
This case concerns the validity of an administrative rule governing immigration detention centers and the mootness and reviewability of the rule challenge.
In 2014, U.S. Immigration and Customs Enforcement began to detain undocumented families with children at two immigration-detention centers in Texas. But a federal court ruled that ICE violated a consent decree requiring detained minors to be placed in facilities with appropriate state childcare licenses. After the ruling, the Texas Department of Family and Protective Services promulgated Rule 748.7, establishing licensing requirements for family residential centers.
The advocacy group Grassroots Leadership, several detained mothers, and a daycare operator sued the Department to challenge Rule 748.7. The private operators of the two detention centers intervened. After the trial court declared the rule invalid, the court of appeals dismissed the case for lack of standing. The Supreme Court reversed and remanded, holding that the detained mothers (and their children) sufficiently alleged concrete personal injuries traceable to the rule’s adoption.
On remand, the Department and private operators argued that the dispute is now moot because the plaintiff–detainees are no longer detained and are not reasonably likely to be detained at the centers again. The court of appeals agreed but applied a publicinterest exception to the mootness doctrine and affirmed the trial court’s judgment that Rule 748.7 is invalid because the Department lacked statutory authority to promulgate it.
The Department and the private operators petitioned for review, arguing that the rule challenge is moot, there is no publicinterest exception in Texas, and Rule 748.7 is valid. The Supreme Court granted the Department’s and the private operators’ petitions for review.
Case documents can be viewed at https://search.txcourts.gov/Case.aspx?cn=23-0192&coa=cossup
The recording of this argument can be found on YouTube at https://www.youtube.com/watch?v=Z1zCTvxjsLI