ANNE GARDNER, Justice.
Appellants Vinson Minerals, Ltd., Johnny H. Vinson, and Chisholm 2000, L.P. (the Vinsons) and Appellee XTO Energy, Inc. (XTO) filed cross-motions for summary judgment on the Vinsons' claims relating to ten oil and gas leases covering the Vinsons' ranch in Wise County, Texas. The trial court granted XTO's motion and denied the Vinsons' motion. The Vinsons, as one or more of the lessors in each of the leases, contend that they are entitled to terminate the leases with XTO, as successor lessee, because XTO failed to make "undisputed payments" after demand. Because we hold that the Vinsons presented no evidence that they provided XTO with a proper written notice or demand for payment as required by the leases, we affirm.
The oil and gas leases at issue originated in 2001 between Johnny Vinson, Vinson Minerals, Ltd., and others as lessors and Threshold Development Company as lessee. Threshold is a Vinson family company
In early 2005, the Vinsons began disputing Antero's calculations of royalty payments to the Vinsons from 2003 to 2005 and commenced an audit of Antero's accounting records of royalties. By letter of January 25, 2005, the Vinsons informed Antero that they were "waiting on requested information to complete [the] audit of production and royalty payments" and that the Vinsons' "potential claim" for royalty underpayment was $2 million. In March 2005, the Vinsons provided Antero with audit exceptions listing, among other complaints, improper deductions from royalty payments for compression, fuel, treating, and transportation charges by an "affiliated" pipeline owned by Antero "to be determined" but "estimated . . . to be in the range of $600,000."
The relationship between the parties deteriorated as the Vinsons raised other issues, including claims for reassignment of undeveloped acreage, drill site issues, and road and surface damage issues. On July 11, 2005, the Vinsons filed suit against Antero for numerous claims—including trespass, breach of contract, incorrect calculation and underpayment of royalties and other production costs, surface damages, and failure to develop—seeking an unspecified amount of damages and attorney fees.
In the meantime, two months before the Vinsons filed suit, XTO acquired Antero and the leases. XTO was made aware of the outstanding issues claimed by the Vinsons at the time it acquired the leases. In March 2005, the Vinsons faxed XTO a copy of its January 25 letter to Antero regarding the status of their claims. By letter dated August 5, 2005, XTO's outside litigation counsel initiated settlement dialogue with the Vinsons' counsel, requesting that the Vinsons (1) amend their pleadings to substitute XTO as the sole defendant, (2) agree to suspend their ongoing audit during litigation, and (3) consider opening discussions with XTO "to see if some or all of these issues can be resolved, and good working relations restored, before pursuing litigation aggressively."
In a January 18, 2006 letter to the Vinsons' counsel, confirming delivery of documents in response to discovery, XTO's counsel reaffirmed its "intention to resolve the royalty payment issues both prospectively and [as] to past months, by an agreed method of changed payment and a lump sum settlement for past months once the new payment method is agreed upon." A few days later, XTO's and the Vinsons' accountants and legal counsel met to discuss settlement of all issues in the suit, including the issue of the new methodology to be agreed upon in order to recalculate the disputed royalties. Under the methodology proposed by XTO, its "estimated" preliminary calculation of royalty payments owed to the Vinsons for the period from November 2003 through April 2005 (the Antero period) totaled $643,548.19. XTO described this number as an estimate, subject to adjustment as XTO continued reviewing Antero's boxes of accounting
On March 16, 2006, XTO's counsel wrote the Vinsons' counsel, summarizing the current status of the ongoing settlement discussions on all issues and proposing that XTO recalculate all prior royalties under a revised methodology and format and "in due course, make a retroactive payment to bring all prior periods up to the new payment methodology." The letter requested that the Vinsons present a settlement demand "to resolve all issues in the case" as follows:
On May 12, 2006, the Vinsons' counsel responded with a three-page letter faxed to XTO's counsel (the May 12 letter). The letter began with the following paragraph:
In the May 12 letter, the Vinsons' counsel characterized their claims as falling into two major categories, summarized as "surface/lessor issues" and "working interest/reassignment issues," with four main causes of action. He discussed those issues in detail, including the following:
The letter concluded with the following paragraph:
On May 25, 2006, XTO paid the Vinsons the amount of $103,047.68, representing underpayments for royalties owed for the XTO period, and using the new methodology that had been discussed.
Sixty days after sending the May 12 letter, the Vinsons filed an amended petition substituting XTO as the defendant. In addition to the claims for damages previously asserted, the Vinsons alleged that XTO was in breach of contract by failing to make "undisputed royalty payments" demanded by the Vinsons in the May 12 letter. By the new pleading, the Vinsons added a request for a declaratory judgment seeking termination of the leases under the following portion of Section 3 (entitled "Royalty Payment") of the leases:
On October 16, 2006, the Vinsons filed a partial motion for summary judgment asking the trial court to declare the leases terminated under Section 3(e) of the leases because of XTO's failure to comply with the Vinsons' alleged May 12 demand that "all undisputed amounts" be paid within sixty days.
On November 1, 2006, XTO paid the Vinsons $725,942—the "estimated" amount of $643,548.19 in royalty underpayments during the Antero period for improper transportation charges on the Antero affiliated pipeline, plus $61,006 in interest and $21,387 in surface damages. XTO made subsequent payments of $16,972.79 and $2,380.82 to the Vinsons later in November 2006 as further adjustments for the underpaid amounts by Antero, as well as $150,000 in attorney's fees. After a hearing, the trial court denied the Vinsons' motion for partial summary judgment. Eventually, the parties settled all other claims and issues, with the Vinsons reserving their right to pursue the lease forfeiture claim.
XTO then filed a motion to exclude the May 12 letter under Texas Rule of Evidence 408, together with a motion for no-evidence summary judgment. XTO's no-evidence summary judgment motion asserted that the Vinsons had no evidence
The Vinsons responded to XTO's motion and also requested that the court reconsider their motion for partial summary judgment. The trial court granted XTO's motions to exclude and for summary judgment without specifying the grounds relied on, denied the Vinsons' motion for reconsideration, and dismissed the Vinsons' case with prejudice. This appeal followed.
On appeal, the Vinsons raise three issues. First, they contend that the trial court erred by denying their motion for summary judgment and granting XTO's motion for summary judgment because the Vinsons made written demand for payment of undisputed sums in the May 12 letter, XTO failed to pay those sums within sixty days, and the leases expressly provide that they may be terminated if "undisputed" sums are not paid within sixty days of written demand. Second, the Vinsons assert that the trial court abused its discretion by excluding from evidence the May 12 letter, which they contend was their "written demand" pursuant to the terms of the leases. Third, the Vinsons argue that the trial court erred by excusing XTO from complying with the leases and by
XTO responds that the trial court correctly excluded the May 12 letter from evidence and that the trial court correctly granted its summary judgment motion because the Vinsons produced no evidence of a proper demand, no evidence that unpaid royalties were "undisputed," no evidence that amounts claimed were "wrongfully or unreasonably" withheld, and no evidence that the Vinsons gave proper notice "fully describing" any breach or default by XTO as required by the leases for forfeiture. XTO further asserts that the Vinsons were made whole by the payments they accepted, which foreclosed any election to sue for forfeiture of the leases.
At the core of the Vinsons' appeal is their complaint that the trial court abused its discretion by excluding from evidence and refusing to consider the May 12 letter, which the Vinsons characterize as their "Demand Letter." The Vinsons contend that the May 12 letter was admissible and was a proper written demand that met the requirements of Section 3(e) of the leases. We will first consider whether the trial court abused its discretion by excluding the May 12 letter from evidence.
The Vinsons argue that the trial court abused its discretion by excluding the May 12 letter from evidence under Texas Rule of Evidence 408 as a compromise offer because the letter was not a compromise settlement demand but was clearly a "Demand Letter" notifying XTO of its obligation to pay an amount that XTO knew it owed but was withholding until all issues could be resolved. The Vinsons point out that the letter contained wording from Section 3(e) of the leases making "demand . . . for all undisputed payments due" and that it expressly referred to the Wise County leases, which was, according to the Vinsons, sufficient language to put XTO on notice that the leases gave it sixty days to respond in order to defeat forfeiture of the leases. Thus, the Vinsons argue that the letter was admissible as evidence of a demand. XTO replies that the language of the letter is couched as a global settlement demand offering to compromise all issues in the case for a total specific amount (the only amount demanded in the letter); that the amount owed for royalties was disputed; that if the Vinsons intended a demand for payment in the letter, it was not recognized as such by XTO's forty-year veteran oil and gas litigation attorney; and that the alleged demand was misleading and surreptitious with no specified amount to cure a default and did not specify a time within which to pay but, instead, indicated it would remain open until settlement. Thus, XTO argues the May 12 letter was properly excluded by the trial court.
Offers of settlement are not admissible to prove liability or invalidity of a claim or its amount. Tex.R. Evid. 408; Ford Motor Co. v. Leggat, 904 S.W.2d 643, 649 (Tex.1995) (orig. proceeding); Tatum v. Progressive Polymers, Inc., 881 S.W.2d 835, 837 (Tex.App.-Tyler 1994, no writ). In an offer of settlement or compromise, a party concedes some right to which he believes he is entitled in order to bring about a mutual settlement. Mercedes-Benz of N. Am. v. Dickenson, 720 S.W.2d 844, 857 (Tex.App.-Fort Worth 1986, no writ). But rule 408 does not bar the admission of settlement offers when offered for another relevant purpose. Tex.R. Evid. 408; Barrett v. U.S. Brass Corp., 864 S.W.2d 606, 633 (Tex.App.-Houston [1st Dist.] 1993), rev'd on other grounds sub
The burden is on the party objecting to evidence under rule 408 to show that it was a part of settlement negotiations and not offered for another purpose. TCA Bldg. Co. v. Nw. Res. Co., 922 S.W.2d 629, 636 (Tex.App.-Waco 1996, writ denied); Haney v. Purcell Co., Inc., 796 S.W.2d 782, 790 (Tex.App.-Houston [1st Dist.] 1990, writ denied). Whether the evidence is being impermissibly offered as evidence of liability or for some other valid reason is a matter within the trial court's discretion. Tatum, 881 S.W.2d at 837. Only when the trial court abuses its discretion will its ruling be disturbed on appeal.
XTO contends that, when the "demand" language is properly viewed in the context of the remainder of the May 12 letter and the parties' ongoing negotiations, the letter was clearly a part of settlement negotiations, not a demand for payment of undisputed amounts triggering forfeiture of the leases if not paid.
Then, as XTO notes, the letter closes with a straightforward compromise settlement demand for the entire case, stating that the Vinsons value the case at more than $30 million, but "[r]ecognizing the risks of litigation and the costs associated therewith, I have been authorized to settle all claims in exchange for a payment in the amount of $9,500,000." [Emphasis added.] The Vinsons deny that the last paragraph of the letter was intended to constitute a settlement demand for all claims—including their claim for unpaid royalties—and insist that the letter made clear that the Vinsons' counsel was only authorized to settle all other matters for a specified amount. We disagree with the Vinsons' post hoc interpretation. "All claims" necessarily includes the Vinsons'
The May 12 letter speaks for itself. It begins with a discussion of settlement, states that it is in response to XTO's request for a settlement demand, clearly and unambiguously concludes with a settlement demand for "all claims," and was written during the parties' ongoing negotiations for settlement of an existing lawsuit that included the Vinsons' claim for underpayment of royalties. The May 12 letter also concludes by conceding a right to which the Vinsons believe they are entitled. See Mercedes-Benz, 720 S.W.2d at 857 (holding that an offer of compromise exists when a party concedes some right to which he believes he is entitled to bring about a mutual settlement). Specifically, the letter concludes with a valuation of "this case" greatly in excess of $30 million and an offer to settle "all claims" for $9.5 million. The language and context of the letter negate any reasonable interpretation of the language buried in the middle of a sentence, buried in the middle of a paragraph, and buried in the middle of the three-page letter as a stand-alone "demand" for payment under Section 3(e) of the leases that can be considered separate and apart from the rest of the letter.
The purpose of rule 408 is to encourage settlement. See MG Bldg. Materials, Ltd. v. Moses Lopez Custom Homes, Inc., 179 S.W.3d 51, 61 (Tex.App.-San Antonio 2005, pet. denied); State Farm Mut. Auto. Ins. Co. v. Wilborn, 835 S.W.2d 260, 261 (Tex.App.-Houston [14th Dist.] 1992, orig. proceeding) (noting settlement offers are excluded to allow a party to "buy his peace and encourage settlement of claims outside the courthouse"). Permitting a party to recharacterize, after the fact, what was clearly a settlement demand as a "Demand Letter," to use the Vinsons' label, based upon part of a sentence inserted in the middle of a letter otherwise ostensibly devoted from beginning to end to compromise and settlement, in order to invoke the harsh consequences of forfeiture, would reward obfuscation and "gotcha" tactics and would chill rather than encourage parties to negotiate in good faith toward a compromise and settlement of their claims.
By granting XTO's motion to exclude, the trial court could have found, within its discretion, that the May 12 letter was not a "demand letter" sufficient to trigger a forfeiture under the terms of the leases but was part of a settlement demand inadmissible under rule 408 offered solely to prove XTO's liability for forfeiture of its leases. Cf. Mercedes-Benz, 720 S.W.2d at 857 (holding trial court was within its discretion to determine a letter "was more in the nature of an ultimatum than an offer to compromise" and, therefore, admissible into evidence). We will not disturb the exercise of the trial court's discretion in excluding the May 12 letter from the summary judgment evidence. See id.; Allen v. Avery, 537 S.W.2d 789, 791 (Tex.Civ. App.-Texarkana 1976, no writ) (upholding trial court's exclusion of compromise settlement from evidence). We overrule the Vinsons' second issue.
The Vinsons contend in their first issue that the trial court erred by denying their motion for summary judgment and granting XTO's motion for summary judgment because the May 12 letter constituted written demand for payment, XTO failed to pay those sums within sixty days, and the leases expressly provide that they may be terminated if "undisputed" sums are not paid within sixty days of written
The promise to pay royalties is generally a covenant,
Upon breach of a condition subsequent, the lessor must elect between seeking damages or forfeiture; the lease is not automatically terminated upon breach. Blackmon, 276 S.W.3d at 605; see Chicago, T. & M.C. Ry. Co. v. Titterington, 84 Tex. 218, 223-24, 19 S.W. 472, 474 (1892). The lessor must take affirmative steps by re-entering or seeking a judicial declaration of forfeiture as the Vinsons did in this case. See Barbee, 45 Tex. L.Rev. at 159.
The rule of strict construction disfavoring forfeiture applies when a forfeiture is claimed for breach of a condition subsequent. Coastal Oil & Gas Corp. v. Roberts, 28 S.W.3d 759, 763 (Tex.App.-Corpus Christi 2000, pet. granted, judgm't vacated w.r.m.); Tickner v. Luse, 220 S.W. 578, 580 (Tex.Civ.App.-El Paso 1920, writ ref'd); see Patrick H. Martin & Bruce M. Kramer, 3 Williams & Meyers, Oil and Gas Law § 656.2 (2008) (stating that strict construction "governs forfeiture provisions based on failure to make proper and timely payment of royalty"). It is settled law that the rule of construction against the right of forfeiture applies to oil and gas leases. Wisdom v. Minchen, 154 S.W.2d 330, 334 (Tex.Civ.App.-Galveston 1941, writ ref'd w.o.m.) (citing Ryan v. Kent, 36 S.W.2d 1007, 1011 (Tex. Comm'n App.1931, judgm't adopted)). Thus, if the lease contract is susceptible of two reasonable interpretations, it should be construed as to prevent a forfeiture. Ryan, 36 S.W.2d at 1011; Wisdom, 154 S.W.2d at 334.
Additionally, if the lease contains a provision giving the lessee a right of notice of any breach or default before declaring any forfeiture, it must be "literally complied with." Coastal, 28 S.W.3d at 763 (citing Deace v. Stribling, 142 S.W.2d 564, 566 (Tex.Civ.App.-Austin 1940, no writ)). Under such a provision, the lessor cannot claim a forfeiture without giving the lessee the benefit of notice of any default and an opportunity to remedy it. Wisdom, 154 S.W.2d at 334.
The Vinsons contend that this case is controlled by Coastal Oil & Gas Corp. v. Roberts, in which a global demand referencing no stated amount of royalties due, and not mentioning termination, was nevertheless held sufficient to entitle the lessor to forfeiture of a lease under a provision that, according to the Vinsons, is almost identical to Section 3(e) of their
Paragraph 3 of the Coastal leases, specifically regarding royalties and other payments for production, and similar to section 3(e) of the Vinsons' leases, provided:
Id. at 761-62.
Litigation had been pending by the lessor against Coastal for several years for underpaid royalties on several other leases, but not for the "E" or "F" lease. See id. at 761. Coastal, as lessee, failed to pay any royalties due on the F-6 well on its "F" lease by the 120th day after first production of gas from the well it drilled on that property. See id. at 762. Coastal suspended payment of any royalties due on the F-6 well while it awaited return of a signed division order from the lessor. See id. Without returning the division order, the lessor sent a written demand letter that read, in toto, as follows:
Id. The lessor subsequently amended its pleadings in the existing suit and sought to terminate the lease based upon Coastal's "wrongful or unreasonable" failure to pay royalties after written demand for payment. See id. Coastal contended that the lessor failed to give proper notice because the generic written demand letter did not explain the amounts owed, how Coastal had improperly calculated royalties, or how the lessor wished royalties to be calculated, and was thus "insufficient, deliberately vague and written in such a way as to keep [Coastal] from being able to adequately respond." Id. The Corpus Christi Court of Appeals affirmed a summary judgment for the lessor, holding that the written demand sufficed to invoke the right of the lessor to terminate, despite the rule that oil and gas leases must be construed against forfeiture,
Id. at 764 n. 3.
The leases in this case, unlike the one in Coastal, do contain such a clause as the example cited in the footnote, requiring the Vinsons, as lessors, to provide written notice "fully describing the breach or default" to entitle them to forfeiture of the leases. Section 11 of the leases, applicable to all breaches or defaults, states:
The lease in Coastal contained no such provision, and the court refused to write into the contract a requirement that it did not provide. Id. at 764-65. Compare Ridl, 553 N.W.2d at 784 (lessor's demands not "specifying in what respects" lessee breached lease, as required by notice clause, not appropriate demand entitling lessor to forfeiture), and Savoy v. Tidewater Oil Co., 218 F.Supp. 607, 610 (W.D.La.1963) (notice required lessor to "point out the particulars in which they were deemed deficient" to allow forfeiture), aff'd, 326 F.2d 757 (5th Cir.1964), and Mont. E. Pipe Line Co. v. Shell Oil Co., 216 F.Supp. 214, 221 (D.Mont.1963) (notice should "express clearly the dereliction of which complaint is made"), with Sowell v. Natural Gas Pipeline Co. of Am., 789 F.2d 1151, 1156 (5th Cir.1986) (applying Texas law) (notice and demand clause contained no condition requiring specific facts of breach but demand letter identified proper royalty as based upon six-county average gas price specified in division order).
The Vinsons did not comply with Section 11's notice provision requiring them to "fully describe" the breach or default. They offered no answer to the prerequisites of notice and cure under Section 11 of the leases in their opening brief except to assert that Sections 11 and 3(e) involve "different circumstances." For the first time in their reply brief, they argue that they repeatedly made their complaints
The Vinsons' May 12 letter states neither a time limit within which XTO is to make the payments nor notice of any amount other than the $9.5 million proposed for settlement of all claims. See id. Moreover, the Vinsons have never identified any amount that was "undisputed" either in the trial court or in this court. The Vinsons acknowledge as much in their reply brief in this court, conceding that they "could not know what was undisputed by XTO; thus, [they] could not demand a specific amount." If the Vinsons could not know the amount they were demanding to be paid by XTO, it is difficult to see how they can argue that XTO had notice of what amount was "undisputed."
The Vinsons' solution to this conundrum is to argue that "[e]ven if XTO was uncertain as to exactly how much money it owed, it clearly knew (from the parties' prior dealings and discussions) that it owed [the Vinsons] in excess of $600,000; accordingly, it had a duty to tender the portion that was undisputed." The Vinsons also quote from the September 25, 2006 deposition of XTO's accounting representative, in which she stated that upon recalculating the monies due to the Vinsons, she came up with an amount "in the neighborhood of $650,000 to $700,000," that she estimated the amount owed for the Antero period for transportation charges was $643,548.19, and that she agreed with the Vinsons' counsel's estimate that XTO recognized since at least January of 2006 that it owed "something north of $600,000" for past due royalty. The Vinsons cite no authority defining "undisputed" to include an "estimated" amount, nor do we agree that "in the neighborhood of" or "something north of" a particular amount equates to an "undisputed amount."
The May 12 letter is insufficiently specific to constitute "written notice fully describing the breach or default" as required
The May 12 letter also fails to give XTO notice that the Vinsons intended to seek the drastic remedy of forfeiture of the leases if payment was not made within any certain time. Specifically, written notice seeking to invoke the harsh remedy of termination or forfeiture must be clear and unambiguous. See Ogden v. Gibraltar Sav. Ass'n, 640 S.W.2d 232, 233-34 (Tex. 1982) (holding that equity demands clear and unequivocal notice be given of a party's intent to exercise such harsh consequences as acceleration or foreclosure); see also Shumway v. Horizon Credit Corp., 801 S.W.2d 890, 891-92 (Tex.1991) (holding harshness of option of accelerating maturity of extended indebtedness requires both strict reading of terms of option and notice to debtor, and notice of intent and notice of acceleration must be clear and unambiguous); Outdoor Sys., Inc., 105 S.W.3d at 71 ("The cases in this State hold that a landlord cannot forfeit the lease of his tenant for failure to comply with the provisions without first making demand upon the tenant for performance."); Barbee, 45 Tex. L.Rev. at 161 (stating terms of a claim for forfeiture of an oil and gas lease must be clear and unambiguous and lessor is held to strict proof of compliance with notice and demand requirements).
The Vinsons argue that the reference in the letter to the Wise County leases and the words "undisputed payments" and "demand" were sufficient to alert XTO that the Vinsons were seeking to invoke Section 3(e) of the leases, which allowed an election for forfeiture. Even if the letter was sufficient to invoke Section 3(e) as a demand for payment, it was not sufficient for them to invoke termination under Section 11. The May 12 letter was written in the context of settlement negotiations for numerous claims for alleged breaches of covenants and conditions. At best, an analogy may be made to cases under the Uniform Commercial Code, where attempted notices of termination of a contract—"mixed" with words of negotiation and compromise—have been held ineffective as a matter of law. See, e.g., Stovall v. Pub. Paper Co., 284 Or. 53, 584 P.2d 1375, 1380 (1978) (holding notice of termination insufficient where it mixed words of termination with words of compromise, negotiation, and present obligation); Morris Silverman, 284 F.Supp.2d at 974 (holding notice of termination ineffective where
Because we have determined that the trial court did not abuse its discretion by excluding the May 12 letter from evidence, and because we conclude that the May 12 letter was also insufficient as a matter of law to constitute a proper written notice fully describing the breach or default in order for the Vinsons to seek forfeiture, we hold that the May 12 letter is no evidence that the Vinsons provided XTO with a proper "written demand" for payment or notice of default as required by the leases, entitling them to a declaratory judgment forfeiting the leases.
Alternatively, the Vinsons argue that they made a sufficient demand by filing their amended petition and attaching the May 12 letter with all three pages of text redacted except the few words in the middle of the letter that they contend is a demand. However, by precluding initiation of litigation until notice has been provided, the lease agreements effectively prevent the use of a pleading to make a demand. Moreover, the Vinsons did not make a "demand" by their amended pleading. Rather, they used XTO's alleged failure to pay within sixty days after May 12, 2006, as the reason to assert their election to terminate.
As previously discussed, Section 11 of the leases precluded the Vinsons from "initiat[ing] litigation" unless XTO had received "written notice fully describing the breach or default" and had "fail[ed] to remedy the breach or default within" sixty days of receiving the notice. Because suit could not be filed until XTO had at least sixty days after notice in which to remedy the breach or default, the letter's attachment to the Vinsons' amended petition could not serve as the required notice of default. See Deace, 142 S.W.2d at 566 (holding prerequisite of thirty days' written notice to cancel or terminate lease prior to filing of suit not literally complied with and, therefore, ineffective where suit was brought twenty-five days after notice); see also Westwind Exploration Inc. v. Homestate Sav. Ass'n, 696 S.W.2d 378, 382 (Tex.1985) (holding that contracting parties intend every clause to have some effect); Lacquement v. Handy, 876 S.W.2d 932, 937 (Tex.App.-Fort Worth 1994, no writ) (stating that language in contracts is given its plain, ordinary meaning).
Moreover, we do not agree that attaching the redacted letter to XTO's amended petition was sufficient to meet the leases' pre-suit notification requirement. See Huff v. Fid. Union Life Ins. Co., 158 Tex. 433, 443, 312 S.W.2d 493, 500 (1958) (holding that neither the filing of a lawsuit "arising out of a contract nor the allegation of a demand in the pleadings constitutes presentment of a demand" to entitle a party to attorney fees as required by Chapter 38 of the Texas Civil Practice and Remedies Code); see also Richardson v. Foster & Sear, L.L.P., 257 S.W.3d 782, 785 (Tex.App.-Fort Worth 2008, no pet.) (stating that the filing of a lawsuit does not constitute the sixty-day pre-suit notice of a Deceptive Trade Practices Act claim as
Absent proper notice under Section 11 of the leases, the Vinsons are not entitled to forfeiture of the leases, even if the May 12 letter constituted a proper "written demand" for payment. Finding no evidence that the Vinsons provided XTO legally sufficient written notice or demand for payment of undisputed sums as required by the terms of the leases, we hold that the trial court correctly granted XTO's no-evidence motion for summary judgment. For the same reasons, we hold that the Vinsons failed to establish entitlement to a traditional summary judgment declaring the leases forfeited for XTO's failure to pay undisputed amounts within sixty days of a written demand. We overrule the Vinsons' first issue.
Having overruled the Vinsons' first and second issues and having found it unnecessary to address the Vinsons' third issue, we affirm the trial court's judgment.
LIVINGSTON, C.J. filed a concurring opinion.
TERRIE LIVINGSTON, Chief Justice, concurring.
I respectfully concur with the majority opinion and write separately only to make some distinctions regarding the rule 408 admissibility question raised by the Vinsons' May 12, 2006 "demand" letter and the sufficiency of their "election of forfeiture." See Tex.R. Evid. 408.
Texas Rule of Evidence 408 mandates exclusion of evidence of settlement offers unless offered for some reason other than to establish liability. Id. Additionally, the burden is on the objecting party to show that the evidence was not offered for some other reason or purpose allowed by rule 408. See In re Univar USA, Inc., 311 S.W.3d 175, 182 (Tex.App.-Beaumont 2010, orig. proceeding). And courts have recognized the admission of some portions of settlement agreements if relevant for proof of some other element than liability. Id.
Because the letter was written in response to XTO's request to provide such a "settlement demand," the Vinson demand letter must be read in context with that preceding request. Basically, XTO asks, "What will it take to settle all the various other/remaining claims [other than the accounting/royalty issues] asserted in the Vinsons' latest pleading?" In other words, XTO's letter implies that it believes they have basically resolved the accounting/royalty issues. And apparently, the May 12, 2006 Vinson letter acknowledges this: "[T]his issue should be resolved." However, that belief is clearly contingent upon XTO's performance in accordance with the representations it had made to the Vinsons regarding the accounting/royalty issues. Furthermore, the Vinsons follow this statement with a clear demand for "all undisputed payments due under the Wise County leases." As the Vinsons point out, XTO admits that it has calculated and is ready to pay undisputed amounts, amounts that necessarily can only be fully determined by XTO. Thus, I believe that this
As to the forfeiture issue, we are to construe oil and gas leases disfavoring forfeiture. See Coastal Oil & Gas Corp. v. Roberts, 28 S.W.3d 759, 763 (Tex.App.-Corpus Christi 2000, pet. dism'd by agr.). If a lease states how to give notice of demand or forfeiture, such notice must comport with the lease. Id. at 764.
Here, the remaining question is whether this portion of the letter is a sufficient demand and whether it made clear that failure to perform within a certain time would result in the Vinsons exercising their forfeiture rights. I would agree with the majority as to the insufficiency of the forfeiture. The accounting/royalty demand portion gave no notice of a time limit within which to perform, which the lease states can be no less than sixty days with prior written notice. Furthermore, and more importantly, the last paragraph of the letter, which would have also had to have been admitted, includes the value of the entire "case" and is an offer to settle "all claims." Again, there is no notice or mention of the possibility of forfeiture. And as XTO points out, the last paragraph refutes the claim of forfeiture because the Vinsons offered to settle all aspects of the case for a sum certain. Thus, I believe, and would conclude, that the letter, although admissible in part, provided insufficient notice of what performance was required and when and insufficient notice that the failure to timely perform would result in the exercise of the election to forfeit the leases.
Because my analysis would result in the same affirmance of the trial court's granting of XTO's motion for summary judgment, I join in the judgment of the court and concur only to set forth these distinctions.