EVELYN V. KEYES, Justice.
This case involves the interpretation of an assignment of rights to an oil and gas lease commonly known as the Hogg-Japhet Lease. Appellants Kenneth R. Lyle and Warbonnet Exploration Company ("Warbonnet") appeal the trial court's interlocutory order granting partial summary judgment in favor of appellees, the heirs of Dan A. Japhet, a party to the original assignment (collectively, "the Japhet heirs"). In seven issues, Lyle
We affirm.
Dan A. Japhet and others conveyed an oil, gas, and mineral lease (the "Hogg-Japhet Lease") to Humble Oil & Refining Company by executing an assignment ("1919 Assignment"). The 1919 Assignment provided an account of the passage of title to the property in question from its original owners, Ima Hogg, Mike Hogg, Will C. Hogg, and Tom Hogg to Dan A. Japhet with the Hoggs' reservation of a 1/8 royalty interest. Dan A. Japhet then conveyed parts of his interest in the lease to R.S. Coon, J.A. Williams, and T.W. Wilson. The 1919 Assignment provides, in relevant part:
The 1919 Assignment was executed on February 20, 1919 and recorded in the Deed Records of Brazoria County.
Dan A. Japhet and Humble Oil also executed a second agreement on February 20, 1919 conveying certain personal property and stored oil from Japhet to Humble Oil. That agreement provided, in relevant part:
In 1969, Humble Oil assigned the lease to Salmon Corporation, and the Humble Oil-Salmon assignment recited:
The lease was assigned several more times, and the same "subject to" language appeared in each of the assignments. Dan A. Japhet left his estate to his three sons, the last of whom died in 1990.
On November 21, 1990, Lyle purchased the portion of the "net profit interest" in the Hogg-Japhet lease belonging to the estate of E.C. Wilson, the heir of T.W. Wilson, who, along with Dan A. Japhet, was one of the parties to the 1919 Assignment.
The estate of Dan A. Japhet ("Japhet Estate") was listed as an owner of an interest in the Hogg-Japhet lease on the 2001-2002 Brazoria County tax rolls, and Dan R. Japhet paid the taxes on that interest on behalf of the Estate. Subsequently, Lyle sent the tax assessor a list of owners that excluded the Japhet Estate, resulting in the Japhet Estate's removal from the county tax rolls. In 2003, Dan R. Japhet contacted Lyle regarding the Japhet heirs' interest in the lease and demanded that Lyle give an accounting of the interest and pay one-fourth of the net profits to them. Lyle refused to do so.
On October 1, 2004, the Japhet heirs filed this lawsuit alleging causes of action to "recover title and possession of the Reserved NPI
Lyle generally denied the Japhet heirs' causes of action and asserted affirmative defenses of statute of limitations, laches, satisfaction and accord, waiver, and statute of frauds. Lyle also argued that he owned only 17.25% of the leasehold.
The Japhet heirs filed their motion for partial summary judgment seeking "judgment that they are entitled to ... an accounting by Defendants for 52/60 of 25% of any and all net profits from the Hogg-Japhet Lease and an order directing specific performance of their contract with Defendants." The Japhet heirs argued that they were the successors in interest of Dan A. Japhet's 52/60 of the reserved one-fourth net profit royalty. The Japhet heirs provided an abstract of title showing the chain of title from Dan A. Japhet to them.
Lyle responded to the Japhet heirs' summary judgment motion and filed his own motion for summary judgment arguing that the heirs did not have an interest in the leasehold because (1) the 1/4 net profit interest was "merely additional consideration" and not a reserved right from the leasehold and (2) their claims were barred by the statute of limitations and laches. In response to Lyle's motion for summary judgment, the Japhet heirs reasserted their argument that the 1919 Assignment is a valid and enforceable contract that unambiguously reserved a net profits interest in Dan A. Japhet, and that they, as heirs of Dan A. Japhet, are the record owners of the reserved interest.
The trial court granted the Japhet heirs' motion for summary judgment in part and denied Lyle's motion for summary judgment. The trial court's order specifically stated:
The trial court also found that the Japhet heirs are the "present-day successors in interest to Dan A. Japhet" and the "present-day owners of said 52/60 of the carried working interest of one fourth (1/4) of the net profit realized from operations on the Hogg-Japhet Lease." Regarding Lyle and Warbonnet, the trial court found:
The trial court signed an order for interlocutory appeal of the partial summary judgment pursuant to Texas Civil Practice and Remedies Code section 51.0014(d),
We review a trial court's grant or denial of summary judgment de novo. Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex.2003). To prevail on a traditional summary judgment motion, the movant has the burden of proving that it is entitled to judgment as a matter of law and that there are no genuine issues of material fact. TEX.R. CIV. P. 166a(c); Cathey v. Booth, 900 S.W.2d 339, 341 (Tex. 1995). A defendant who negates at least one essential element of the cause of action or establishes all of the elements of an affirmative defense is entitled to summary judgment. Cathey, 900 S.W.2d at 341. When both parties move for summary judgment and the trial court grants one motion and denies the other, the reviewing court should review the summary judgment evidence presented by both sides, determine all questions presented and render the judgment that the trial court should have rendered. Tex. Workers' Comp. Comm'n v. Patient Advocates, 136 S.W.3d 643, 648 (Tex.2004).
In his first four issues, Lyle argues that the trial court erred in granting the Japhet
The Japhet heirs claim that Dan A. Japhet reserved a one-fourth net profit interest in the lease in the 1919 Assignment and that Lyle is bound by the 1919 Assignment's covenants.
"[T]he general rule in oil and gas law [is] that controversies regarding assignors and assignees are governed by the construction and interpretation of the provisions of the assignment itself and the collateral contracts of the parties." EOG Res., Inc. v. Hanson Prod. Co., 94 S.W.3d 697, 702 (Tex.App.-San Antonio 2002, no pet.). If a contract is unambiguous, a court must enforce the contract as written. Heritage Res., Inc. v. NationsBank, 939 S.W.2d 118, 121 (Tex.1996); see EOG Res., 94 S.W.3d at 701 ("The interpretation of an unambiguous contract is a question of law and we are not required to defer to any interpretation afforded by the trial court.") (citing MCI Telecomm. Corp. v. Tex. Utils. Elec. Co., 995 S.W.2d 647, 650 (Tex.1999)). Whether a contract is ambiguous is itself a question of law. Id. The instrument alone will usually be deemed to express the intention of the parties, for it is the objective and not the subjective intent that controls. Sun Oil Co. v. Madeley, 626 S.W.2d 726, 731 (Tex.1981). When an instrument is not ambiguous on its face, extrinsic evidence may not be used to create ambiguity. Balandran v. Safeco Ins. Co., 972 S.W.2d 738, 745 (Tex.1998).
Here, the 1919 Assignment, by its plain language, conveyed the lease from Dan A. Japhet et al. to Humble Oil. Humble Oil paid $200,000 for the lease, the receipt of which Dan A. Japhet and the other assignors acknowledged in the assignment. Humble Oil received all of the assignors' "right, title and interest ... subject to ... the royalties herein reserved to assignors." The parties then set out the specific terms of the royalty and the method by which it would be calculated, providing that Humble Oil agreed "to carry [Dan A. Japhet et al.] for a working interest of one-fourth (1/4) of the net money profit realized by it from its operations" on the lease. The parties to the 1919 Assignment further
Lyle argues that the interest created by the 1919 Assignment is a "carried interest" or "net profit interest," not a royalty, and that the Japhet heirs do not have a present property interest in the lease. Lyle does not define "net profit interest," but he argues that "[i]t is customary for a carried interest arrangement to cease when all costs as to the carried party are satisfied" and that "[t]he carry in the Japhet/Humble Assignment would end when the total consideration of $200,000 was paid out of future production, which occurred in 1928." However, these arguments are refuted, as a matter of law, by the plain meaning of the 1919 Assignment.
A royalty is a "share of the product or profit reserved by the owner for permitting another to use the property. In its broadest aspect royalty is a share of profit reserved by the owner for permitting another the use of the property." Alamo Nat'l Bank v. Hurd, 485 S.W.2d 335, 338 (Tex.Civ.App.-San Antonio 1972, writ ref'd n.r.e.) (citing Griffith v. Taylor, 156 Tex. 1, 291 S.W.2d 673, 676 (1956)). In the oil and gas industry,
Id. "A royalty interest derives from the grantor's mineral interest and is a nonpossessory interest in minerals that may be separately alienated," and "[t]he interest conveyed or reserved is to be determined from all of the provisions of the instrument." Hamilton v. Morris Res., Ltd., 225 S.W.3d 336, 344 (Tex.App.-San Antonio 2007, pet. denied) (quoting Temple-Inland Forest Prod. v. Henderson Family P'ship, Ltd., 958 S.W.2d 183, 186 (Tex.1997)).
The 1919 Assignment expressly states that the assignment to Humble Oil is subject to "the royalties herein reserved to assignors." The 1919 Assignment provided that the royalty would be one-fourth of the profit realized. This is clearly a reservation of "the right to receive ... a stipulated fraction of the oil or gas produced and saved from the property ... free of all costs of development and production." See id. Furthermore, the 1919 Assignment expressly states that receipt of the full $200,000 was acknowledged by Dan A. Japhet and the other assignors at the time they executed the assignment, and the parties did not provide any indication that the interest was to terminate when a certain quantity of production or amount of profit was realized.
The royalty interest is also, as a matter of law, a property interest. "It is well-settled that a royalty interest in an oil and gas lease is an interest in real property, held to have the same attributes as real property." Kelly Oil Co. v. Svetlik, 975 S.W.2d 762, 764 (Tex.App.-Corpus Christi 1998, pet. denied) (citing Garza v. De Montalvo, 147 Tex. 525, 217 S.W.2d 988, 992 (1949)). The right to receive royalty payments is one of the five attributes comprising a severed mineral estate and is a "separate, distinct property interest that may be conveyed or reserved in connection with a conveyance of a mineral interest." Hamilton, 225 S.W.3d at 344.
Furthermore, Lyle's argument that his "assignments were only subject to the agreement of February 20, 1919, as amended, not the assignment itself" is not supported by the plain language of the 1919 Assignment and the collateral agreement of the parties entered on the same day. The collateral agreement conveyed the stored oil on the lease to Humble Oil in exchange for $20,000 paid to Dan A. Japhet et al. and conveyed other personal property on the lease to Humble Oil as part of the assignment of the lease in return for the $200,000 the assignors had already received. Nothing in the language of the collateral agreement can be construed as changing the terms set out in the 1919 Assignment.
We conclude that the 1919 Assignment reserved for Dan A. Japhet 52/60 of the one-fourth royalty interest in the profits realized from Humble Oil's operations on the lease and obligated Humble Oil to provide monthly accountings to Dan A. Japhet. We next consider whether the 1919 Assignment is binding on Lyle and obligates him to provide an accounting and make payments to the Japhet heirs.
"[A] purchaser is bound by every recital, reference and reservation contained in or fairly disclosed by any instrument which forms an essential link in the chain of title under which he claims." Westland Oil Dev. Corp. v. Gulf Oil Corp., 637 S.W.2d 903, 908 (Tex.1982). As stated in Westland Oil,
The 1991 assignment from Hablinski to Lyle clearly stated that the lease was "subject to ... an agreement dated February 20, 1919, as amended, between Humble Oil and Refining Company and Dan A. Japhet, et al.," as did every other assignment of the lease between 1969 and 1991. The 1919 Assignment itself was recorded in the Brazoria County property records and contained the specific details of the interests reserved by Dan A. Japhet and the other assignors when they conveyed the lease to Humble Oil. Therefore, Lyle had notice of the 1919 Assignment and the covenants it contained. See id.
Furthermore, Lyle is bound by the covenants recited in the 1919 Assignment as a matter of law because they are covenants that run with the land. "In order for the covenant to run with the land there must be privity of estate between the parties to the agreement. This means there must be a mutual or successive relationship to the same rights of property." Westland Oil, 637 S.W.2d at 910-11. The covenant must also "touch and concern" the land. Id. at 911. "If the promisor's legal relations in respect to the land in question are lessened—his legal interest as owner rendered less valuable by the promise—the burden of the covenant touches or concerns that land." Id. (quoting Bigelow, The Content of Covenants in Leases, 12 MICH. L.REV. 639 (1914), and Williams, Restrictions on the Use of Land: Covenants Running with the Land at Law, 27 TEX. L.REV. 419 (1949)). Here, Lyle, as the most recent assignee of the lease, has a "successive relationship to the same rights of property" as Humble Oil, and the Japhet heirs, as inheritors of Dan A. Japhet's interests, have a successive relationship to the same property rights as Dan A. Japhet. See id. The covenant to pay a one-fourth royalty also clearly touches and concerns the land as it affects the value of the lease. See id. Therefore, Lyle is bound by the covenants recited in the 1919 Assignment.
Lyle argues that the Japhet heirs "have failed to demonstrate record chain of title, much less superior title to [his] interest, [which] is verifiable through a clear chain of recorded Assignments." He further argues that the Japhet heirs rely on "unrecorded documents, out-of-county probates and other matters not filed in Brazoria County" in their attempt to assert a claim of title. The Japhet heirs argue that they "are the present owners of the rights vested in Dan A. Japhet by the 1919 Assignment" and that "[t]he summary judgment evidence contains a complete chain of title from Dan A. Japhet through his will to his three sons ... and their estates."
Lyle's argument is unavailing. As we have already discussed, the 1919 Assignment unambiguously and by its plain language reserved a royalty interest to Dan A. Japhet, and Lyle, as a successor to Humble Oil, is bound by Humble Oil's covenants to account for and pay the royalty interest. The 1919 Assignment was recorded in the Brazoria County Property records. The Japhet heirs had only to
We also conclude that Lyle's argument that he has "superior" title to the leasehold is unsuccessful. The Japhet heirs claim only their proportionate shares of the one-fourth royalty interest reserved to Dan A. Japhet in the 1919 Assignment—not any of the other interests in the mineral estate. See Hamilton, 225 S.W.3d at 344 ("A severed mineral estate is comprised of five attributes: (1) the right to develop (the right to ingress and egress), (2) the right to lease (the executive right), (3) the right to receive bonus payments, (4) the right to receive delay rentals, and (5) the right to receive royalty payments."). The assignment under which Lyle received his interest clearly stated that it was subject to the royalty interest reserved in the 1919 Assignment, so, as a matter of law, Lyle does not have "superior title" to that royalty interest. See id. ("A conveyance of a mineral estate need not dispose of all interests; individual interests can be held back, or reserved, in the grantor.... The interest conveyed or reserved is to be determined from all the provisions of the instrument.").
We conclude that the trial court did not err in holding, as a matter of law, that Lyle is bound by the 1919 Assignment and is obligated to account for and pay the Japhet heirs for their shares of the one-fourth royalty interest in his portion of the lease. TEX.R. CIV. P. 166a(c); Tex. Workers' Comp. Comm'n, 136 S.W.3d at 648; Cathey, 900 S.W.2d at 341.
We overrule Lyle's first, second, third, fourth, and fifth issues.
In his sixth issue, Lyle argues that the trial court erred in denying his motion for summary judgment because the Japhet heirs' claims are barred by the statute of limitations, laches, and the statute of frauds.
Lyle argues that the Japhet heirs' claim is barred by the statute of limitations. Lyle correctly points out that both a breach of contract claim and a claim for specific performance of a contract for conveyance of real property have
Therefore, we conclude that the Japhet heirs' claims are not barred by the statute of limitations.
Lyle also argues that the Japhet heirs' claims are barred by laches. Specifically, he argues that the royalty interest in the net profits had not been paid to the Japhets in over sixty years.
"Two essential elements of laches are (1) unreasonable delay by one having legal or equitable rights in asserting them; and (2) a good faith change of position by another to his detriment because of the delay." In re Jindal Saw Ltd., 264 S.W.3d 755, 760 (Tex.App.-Houston [1st Dist.] 2008, orig. proceeding). (quoting Rogers v. Ricane Enters., 772 S.W.2d 76, 80 (Tex.1989)). "As a general rule, laches is inappropriate when the controversy is one to which a statute of limitations applies." Graves v. Diehl, 958 S.W.2d 468, 473 (Tex.App.-Houston [14th Dist.] 1997, no pet.). Here, Lyle has presented no evidence or argument that laches should apply to the Japhet heirs' claims to recover the royalty interest or that he made "a good faith change of position" to his detriment because of the delay.
Therefore, Lyle failed to establish as a matter of law that the Japhet heirs' claims are barred by laches.
Lyle also argues that the Japhet heirs' claims are barred by the statute
We conclude that the Japhet heirs' claims are not barred by the statute of frauds.
We overrule Lyle's sixth issue.
Alternatively, in his seventh issue, Lyle argues that he presented evidence that raised genuine issues of material fact as to the proper construction of the assignment, payment, and discharge and satisfaction, and on his defenses of extinguishment of the production payment, laches, statute of limitations, and waiver. However, Lyle does not present any analysis or citation to authority for this issue beyond the arguments he presented on his first six issues.
As we have already held in analyzing his previous six issues, the Japhet heirs' rights were determined as a matter of law based on the 1919 Assignment between Humble Oil and Dan A. Japhet and the subsequent assignments of the Hogg-Japhet lease. See TEX.R. CIV. P. 166a(c); Cathey v. Booth, 900 S.W.2d 339, 341 (Tex.1995) (holding movant is entitled to summary judgment when it proves that it is entitled to judgment as a matter of law). To the extent that Lyle is attempting to raise new arguments in his seventh issue, they are waived for failure to adequately brief. See TEX.R.APP. P. 38.1(i).
We overrule Lyle's seventh issue.
We affirm the judgment of the trial court.
TEX. CIV. PRAC. & REM.CODE ANN. § 51.014(d) (Vernon 2008).