YVONNE T. RODRIGUEZ, Justice.
Appellants—three business associations that were purportedly assigned oil and gas leases on certain land in Crockett County—appeal the trial court's partial grant of summary judgment and merits verdict naming Appellee Oz Gas Corporation as the true leaseholder of the disputed land and assessing damages against Appellants for bad faith trespass. We affirm.
In 1974, Emma Lou Phillips Adams, Camille Adams Jones, and Jane Adams Garlitz (collectively, "the Adams Family") executed five oil and gas leases ("the 1974 Leases") conveying mineral interests in certain tracts of land on the Adams-Baggett Ranch near Ozona to Chesapeake Bay Gas Gathering Company, an entity owned by Jane's husband, C. Gary Garlitz. One such lease ("the Third Lease") covered a 320-acre parcel of land known as the Eastern Half of Section 155 ("E/2 of Sec. 155" or "the Third Lease Estate").
Relevant to this appeal is a 160-acre tract of land located on the southern half of the Third Lease Estate referred to by the parties as the Southeast Quarter of Section 155 ("SE/4 of Sec. 155" or "the Tract").
The Commission later modified the Adams-Baggett field rules on August 30, 1982, by reducing the size of individual proration units around wells to 160 acres. See Tex.R.R.Comm'n, Final Order Amending Rule 2 of the Field Rules Adopted in Special Order No. 7-60,233 Issued Effective November 1, 1970, As Amended for the Adams-Baggett Ranch (Canyon Sand) Field, Crockett County, Texas, Docket No. 70-78,467 (Oil & Gas Div. Aug. 30, 1982). The modifications also allowed a well operator, at its discretion, to further subdivide a 160-acre proration unit into two 80-acre "fractional" proration units. Id. Apparently pursuant to the special field rules, the Tract was sub-divided into two jigsaw-shaped, equal-sized eighty-acre units, with a well drilled on each unit respectively. Argee Oil Company operated an oil well ("Argee # 1-155" or "the Argee Well") on the eastern eighty acres of the Tract ("the East Unit") at the behest of Chesapeake. Crockett Gas, Ltd.—a company of which Gary Garlitz was the managing partner—operated another well ("Crockett 1-155," "Adams 155-1," or "the Crockett Well") on the western eighty acres of the Tract ("the West Unit"). Both Crockett and Argee Oil filed forms with the Railroad Commission informing it of their respective claimed acreage within the Tract.
The Crockett Well on the West Unit was not seen as very productive, and from January 31, 1998, to September 2000, the well was shut-in with a bridge plug to prevent further production. As of April 28, 2011, the Argee 1-155 well has continued to produce hydrocarbons, save for a brief cessation of production in February 1992.
In July 1986, almost twelve years after it signed the Third Lease, Chesapeake, acting through Garlitz, executed a $2.5 million promissory note to Abbott Laboratories that was personally guaranteed by Garlitz and secured by a deed of trust ("the Deed of Trust") on portions of the original 1974 Leases as listed in an attached exhibit, including Chesapeake's interest in the the Tract (i.e. the SE/4 of Sec. 155, the southern half of the Third Lease Estate). In essence, Chesapeake mortgaged the Tract and other quarter-unit portions of the 1974 Leases to Abbott, agreeing to repay the advance in kind with
Chesapeake later defaulted on the agreement, although the specifics of how or when are unclear. In any event, Abbott assigned the promissory note and deed of trust to Detroit-Texas Gas Gathering Company. A flurry of litigation ensued against both Chesapeake and Garlitz in his personal capacity before Chesapeake filed for bankruptcy. Oz Gas Company later assumed Detroit-Texas' interest in the leasehold estates while foreclosure had been stayed by the bankruptcy proceedings.
On November 1, 1997, the bankruptcy trustee abandoned the Chesapeake properties subject to the Deed of Trust, placing them outside the aegis of the bankruptcy stay. Oz then began foreclosing on the Deed of Trust Property. Before Oz could complete foreclosure, however, Oz, Chesapeake, Garlitz, and certain members of the Adams Family then entered into a Settlement Agreement relating to the disposition of the rest of the mortgaged leases. As part of the settlement, the parties agreed, inter alia, to relinquish any claims they had to leases upon which Oz Gas had already foreclosed. The parties also agreed that Oz Gas would foreclose on the leaseholds listed in an appended Exhibit B in the future, including the Argee Well located on the "W/2 SE/4 § 155."
As part of the Settlement Agreement, Oz Gas required Jane Garlitz and her mother to sign a revival and ratification ("the Revivor") of all the original 1974 Leases in Oz Gas' name.
In February 1998, the substitute trustee foreclosed on the properties, issuing an Amended Substitute Trustee's Deed ("the Trustee's Deed") to Oz, who purchased the properties at foreclosure. The Trustee's Deed makes no mention of the Settlement Agreement that presumably governed the terms of the foreclosure sale. The Trustee's Deed purported to convey "[a]ll of the property more particularly described on Exhibit `A' attached hereto and incorporated herein by reference for all purposes." A list containing a description of all foreclosed properties was appended to the Trustee's Deed as Exhibit A. The attached exhibit breaks up the description of the foreclosed lands into several "parcels" containing descriptions of quarter-sections of land, leases, and wells. The parcel at issue here is Parcel 3. We reprint the text from the Trustee's Deed Parcel 3 grant below verbatim:
PARCEL 3:
Lessor Lessee Date Recording Data Volume Page Emma Lou Phillips Chesapeake Bay Gas 10/23/74 288 162 Adams, et al. Gathering Co.
Wells Working Net Revenue
Interest Interest
Argee Oil Company #1-155 75% .5791670
and #1-166
Crockett Gas, Ltd. #2-166 100% .7468200
Chesapeake Bay (Crockett 100% .7668496
Gas) #2-126
Under Parcel 3, the Tract (i.e. the SE/4 of Section 155) is identified along with other quarter-sections of land, as well as Argee Well # 1-155 on the East Unit, in which Chesapeake reportedly had a 75 percent interest at the time of conveyance. Once again, the Crockett Well on the West Unit is not explicitly mentioned in the document.
In fall 1999, more than a year after the lease foreclosures, Garlitz re-entered the Tract's West Unit, removed the bridge plug to the Crockett Well located on the southern half of the Unit, and began laying pipeline to put the formerly defunct Crockett Well back into production. Garlitz maintained at trial that he did so because Oz Gas had failed to place the Crockett Well into production within the six month period required by the Revivor Agreement. However, Garlitz also acknowledged that neither his wife nor his mother-in-law had made any request, written or otherwise, to Oz pertaining to that well. Garlitz also admitted that he never informed the Texas Railroad Commission that he intended to put Crockett Well back into production. Oz Gas continued to operate the Argee Well on the East Unit several hundred feet away for several years, allegedly unaware that Garlitz was attempting to produce hydrocarbons from the West Unit.
On November 1, 2007, Garlitz, claiming to be the agent for "Adams Fee Properties, Inc.," executed an oil and gas lease subject to a special warranty that purportedly conveyed a 100 percent interest in twenty acres of the West Unit to Universal Energy Resource, Inc. ("Universal"), owned by Jim Dial. Texas Secretary of State records indicate that Adams Fee Properties Inc. is the assumed name of Adams Ranch, Inc., an entity dissolved by the Texas Secretary of State in 2004 for non-payment of taxes. No evidence exists in the record to suggest that this entity was ever conveyed any interest in the property. In an affidavit, William Wade Garlitz, president of Adams Ranch, Inc., prior to its dissolution, explained that Gary Garlitz did not act as Adams Ranch's authorized agent during the purported sale of the lease, nor did Adams Ranch Inc., ever own or claim to own any of the leases at issue in this lawsuit. Gary Garlitz later claimed in an affidavit submitted to the trial court that he "forgot" Adams Ranch, Inc., had claimed "Adams Fee Properties" as an official assumed name with the Secretary of State, and maintained that he did not intend to act as an agent for Adams Ranch, Inc., or for his children.
Following the sale, Universal hired Remuda Operating Company ("Remuda") to drill two additional wells on the West Unit—Adams 155-2 and Adams 155-3.
Victory Energy Corporation ("Victory"), HCP Investments, L.L.C. ("HCP Investments"
Appellants HCP Investments and SmartGas are family-owned L.L.C.'s managed by John Callis on behalf of his father-in-law. Callis was employed by BP Financial and claimed that prior to these deals, he had never been personally involved in oil and gas transactions before. Callis testified at trial that he had participated in prior real estate transactions before, and that each time he had been involved in one of those transactions, he had always ensured title was good before purchase.
Callis further testified that Dial, the owner of Universal whom he met first, introduced him to Garlitz. Prior to the SmartGas Adams 155-3 deal, when Callis asked Garlitz about title issues, Garlitz assured Callis he owned the lease and showed Callis the 1986 Childress Title Opinion, which had been prepared prior to the execution of the Abbott Mortgage and the subsequent Oz Gas Settlement Agreement. That title opinion listed Chesapeake as the owner of the land, not Adams Fee Properties. That title opinion also did not reflect the pre- and post-bankruptcy foreclosure of land subject to the Deed of Trust. Apart from that title opinion, Callis did not seek any other assurances on title before entering into the transaction with both of his companies and investing $6 million. Likewise, in an interrogatory, Victory also admits it had "reason to believe" that Universal had title based on the 1986 Childress opinion, and for this reason it did not conduct its own separate title search or commission and independent title opinion prior to purchase.
In an affidavit submitted by Tom Aylesworth, Remuda's president, for the first three production months, Remuda distributed 74 percent of the working interest in the two wells to Universal and 12.75 percent to Adams Fee Properties, Inc., "based upon representations made to Remuda" that those companies owned the interest in the wells. Universal received $137,897.13 for the first three months of production. Callis testified that HCP Investments received one payment from Jim Dial before Oz brought suit. Callis did not know whether the money he received from Dial came from the working interest on the West Unit wells, or from some other source. Victory and HCP both deny ever having received any payments at all.
Remuda claims that later the three months' pay to Universal was placed into Remuda's Suspense Account pursuant to court order. A second court order placed
Oz filed a trespass to try title suit against Remuda, Universal, 1st Texas Natural Gas Company, and Millennium Midstream Partners, L.P., alleging that the defendants trespassed on Oz's oil and gas lease and requesting injunctive relief. The parties eventually came to an agreement to have Remuda continue operating the West Unit wells during the course of litigation, with funds from the working interest of the wells deposited into the court's registry.
The defendants moved for hybrid summary judgment. Oz later added SmartGas as a party, who joined in the defendant's hybrid motion for summary judgment. Oz cross-moved for partial summary judgment on the issue of title. The trial court initially denied all motions for summary judgment. Oz re-urged its summary judgment motion, and Victory intervened as a party prior to the trial court's reversal of its previous order and rendition of partial summary judgment in favor of Oz. In its summary order, the trial court found that Oz owned a leasehold interest in the entire 160 acres of the Tract—both East Unit and West Unit—by virtue of the Trustee's Deed. Damages were to be assessed at trial.
Following rendition of summary judgment, HCP was joined as a defendant. Oz re-urged its motion for summary judgment against Victory and HCP, seeking to extend the title judgment to include Victory and HCP as a "housekeeping" matter based on the two defendants' contention that the summary judgment order did not reach them. The trial court declined to rule on Oz's renewed motion for summary judgment against Victory and HCP, stating that it wanted to hear where Victory and HCP thought their interest came from at trial. After trial, the court found that Victory, HCP, SmartGas, and the other remaining defendants were all bad faith trespassers.
Victory, HCP, and SmartGas appealed.
The critical issue in this case is whether by virtue of the Trustee's Deed, Oz possesses the leasehold to the entire Tract, or merely the East Unit. Appellants bring ten largely overlapping issues that ultimately advance two general arguments on appeal. First, Appellants contend that the trial court erred, both in its partial summary judgment against SmartGas and at trial against Victory and HCP, in determining that they trespassed on Oz's land, since Oz failed to establish that it obtained rights to the Tract's West Unit from either the Trustee's Deed or the Revivor Agreement. Second, in the alternative, Appellants maintain that the trial court's assessment of joint and several liability for bad faith trespass damages was erroneous, given that (1) Oz failed to bring forth sufficient evidence that Appellants physically invaded the property, (2) all Appellants had an honest and reasonable belief as to the superiority of their title to the West Unit, and (3) the evidence failed to show that individual Appellants actually obtained royalty payments from wells they did not personally manage. We address these issues in turn.
In Issues One and Two, Appellant SmartGas challenges the trial court's partial grant of summary judgment in favor of Oz establishing that Oz had a 100 percent undivided interest in the Tract by virtue of
Because these issues all hinge on resolution of title, we address them together. We first address trespass to try title before turning the mineral trespass analysis.
Appellant SmartGas challenges the trial court's grant of Oz's traditional motion for summary judgment and denial of Smart-Gas' hybrid cross-motion for summary judgment on the issue of lease ownership. A party moving for traditional summary judgment is entitled to receive it where the movant shows there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. TEX.R.CIV.P. 166a(c). "A no-evidence summary judgment motion under Rule 166a(i) is essentially a motion for a pretrial directed verdict; it requires the nonmoving party to present evidence raising a genuine issue of material fact supporting each element contested in the motion." Timpte Indus., Inc. v. Gish, 286 S.W.3d 306, 310 (Tex.2009). "When reviewing a no-evidence summary judgment, we review the evidence presented by the motion and response in the light most favorable to the party against whom the summary judgment was rendered, crediting evidence favorable to that party if reasonable jurors could, and disregarding contrary evidence unless reasonable jurors could not." Id. [Internal quotations marks omitted].
When a party moves for summary judgment on both no-evidence grounds, TEX.R.CIV.P. 166a(i), and traditional grounds, TEX.R.CIV.P. 166a(c), we first review the ruling under the more stringent no-evidence standard before analyzing proof under the traditional standard, if necessary. Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 600 (Tex.2004). "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 and determine all questions presented and render the judgment the trial court should have rendered." Tex. Workers' Comp. Comm'n v. Patient Advocates of Tex., 136 S.W.3d 643, 648 (Tex.2004).
Appellants Victory and HCP challenge the legal and factual sufficiency of the trial court's adverse verdict on the issue of lease ownership in relation to them. The standard of review for factual and legal sufficiency challenges remains the same whether a judge or a jury served as fact-finder. Raman Chandler Properties, L.C. v. Caldwell's Creek Homeowners Ass'n, Inc., 178 S.W.3d 384, 390 (Tex.App.-Fort Worth 2005, pet. denied).
We sustain a legal sufficiency challenge when the trial court's decision is unsupportable as a matter of law because
In a factual sufficiency challenge, we review the entire record in a neutral light and set aside the trial court's ruling only where it rests on evidence so weak or the finding is so contrary to the great weight and preponderance of the evidence that it shocks the conscience or is manifestly unjust. Dow Chemical Co. v. Francis, 46 S.W.3d 237, 242 (Tex.2001); El Paso Healthcare System, Ltd. v. Carmona, 160 S.W.3d 267, 274 (Tex.App.-El Paso 2005, pet. granted, judm't vacated w.r.m.). While the overlap between legal and factual sufficiency is substantial, a legally sufficient verdict may still be overturned as factually insufficient. See In re Commitment of Myers, 350 S.W.3d 122, 130 (Tex.App.-Beaumont 2011, pet. denied); In re Estate of Russell, 311 S.W.3d 528, 532 (Tex.App.-El Paso 2009, no pet.). Where an appellate court reverses a verdict or judgment on factual insufficiency grounds, it "must detail the evidence relevant to the issue and state in what regard the contrary evidence greatly outweighs the evidence in support of the verdict." Francis, 46 S.W.3d at 242 [Internal quotation marks omitted].
In its first count in the live pleading against Appellants, Oz brought a trespass to try title claim. "The trespass-to-try-title statute was originally enacted in 1840 to provide a remedy for resolving title issues." Martin v. Amerman, 133 S.W.3d 262, 265 (Tex.2004). "The statute is typically used to clear problems in chains of title or to recover possession of land unlawfully withheld from a rightful owner." Id. The plaintiff bears the burden of establishing superior title by a preponderance of the evidence in a trespass to try title suit. Omohundro v. Jackson, 36 S.W.3d 677, 680 (Tex.App.-El Paso 2001, no pet.). The plaintiff "must recover, if at all, on the strength of his own title and may not simply rely on the weakness of another party's claim." Id. The burden is met where the plaintiff shows: "(1) title emanating from the sovereignty of the soil; (2) a superior title in itself emanating from a common source; (3) title by adverse possession; or (4) title by prior possession coupled with proof that possession has not been abandoned." Id.
We note that although this is a trespass to try title action, neither side challenges the validity of the Trustee's Deed or argues that there is some defect in the chain of transfers. Instead, both point to the same document as proof that each has rights to the West Unit. As such, we address only the construction of the deed issue presented before us. The dispositive
We review questions of deed construction de novo. Boulanger ex rel. Westlum Trust v. Waste Mgmt. of Tex., Inc., 403 S.W.3d 1, 5 (Tex.App.-Houston [1st Dist.] 2012, pet. denied). "[I]ntent is the benchmark for judicial interpretation of deeds." Id. We discern the parties' intent through the language expressed in the deed in its entirety, "striving to harmonize all of its parts and give effect to all of its provisions." Id.
The threshold legal question in interpreting a deed is whether the instrument is ambiguous or not. Id. Ambiguity in the deed's language alters the scope of our evidentiary review. Id. "[I]f a written instrument remains reasonably susceptible to more than one meaning after the established rules of interpretation have been applied, then the instrument is ambiguous and extrinsic evidence is admissible to determine the true meaning of the instrument." Gore Oil Co. v. Roosth, 158 S.W.3d 596, 599 (Tex.App.-Eastland 2005, no pet.); see also Bruce M. Kramer, The Sisyphean Task of Interpreting Mineral Deeds and Leases: An Encyclopedia of Canons of Construction, 24 TEX.TECH L.REV. 1, 12 (1993)(noting court decisions holding that parol evidence generally should not be admitted unless "pertinent rules of interpretation leave a real uncertainty as to which of two or more possible meanings represent the true intention of the parties"). Where a deed is clear and unambiguous, interpretation is a pure question of law, and we are limited to construing it within the four corners of the deed itself. Boulanger, 403 S.W.3d at 5. Even so, where the deed contains a "nucleus of description" referencing other existing writings, "parol evidence may be introduced to explain the descriptive words in order to locate the land." Gout v. Daniel, 293 S.W.3d 764, 767 (Tex.App.-San Antonio 2009, pet. denied). This integration approach is limited in scope. While "details which merely explain or clarify the essential terms appearing in the instrument may ordinarily be shown by parol," the deed's "skeleton" or
The threshold question here is whether the language of the Trustee's Deed is amenable to more than one reasonable interpretation. We find it is not.
To be sure, Oz and the Appellants offer conflicting interpretations of the deed as an unambiguous document, with each accusing the other's interpretation of rendering certain portions of the deed nugatory or improperly referencing parol evidence. Oz dismisses the Introductory Proviso as being "odd" and of no significance, and claims that Oz possesses the entire SE/4 of Sec. 155. Appellants maintain the same proviso radically limits the leasehold grants to the size of the proration unit around the wells listed therein and nothing else. While neither side's reading is completely correct, we believe Oz's reading of the deed is closer to the parties' intent.
Appellants cite Sunwest Operating Co, L.L.C., v. Classic Oil & Gas, Inc., 143 Fed.Appx. 614, 618 (5th Cir.2005)(unpublished)(interpreting Texas law), for the proposition that the Introductory Proviso in Exhibit A serves to limit the subsequent
Here, the deed in question is less descriptive and far more spartan. The Parcel 3 granting clause contains only bare identifications of certain quarter-units of land and wells contained on those units without expounding, as in Sunwest, on how the land and the wells are related. Compare id. (granting clause explicitly identifies the particular unit in question, specifically limits the grant to any well acreage contained inside that unit, and mentions original leasehold estates for the explicit purpose of showing that only portions of those two estate are being conveyed). Also unlike in Sunwest, where limiting language was explicit and contained in the specific granting clause itself, here all of Exhibit A is subject to the general, vague Introductory Proviso stating, among other things, that oil and gas leases are limited to the size of the proration units surrounding the wells. Reading that general proviso as limiting the conveyances to only wells and their surrounding proration units renders the inclusion of the quarter-unit descriptions in the specific Parcel 3 granting clause essentially meaningless.
The radical effect of this reading becomes even clearer when the Introductory Proviso is read in relation to the other parcels listed in Exhibit A. For example, the parties agree that the seven quarter-units of land listed in Parcel 2 cover 1,120 acres. Yet Appellants maintain that by virtue of the Introductory Proviso, the Trustee's Deed only conveyed the 160 acres around the Argee 1-117 well listed in Parcel 2, with the quarter-unit land descriptions included so as to make it easier on the reader to identify which well the parcel referenced. Since the location of a well can easily be identified by consulting with Railroad Commission records, Appellants' reading of the Trustee's Deed renders the inclusion of the seven quarter-unit descriptions virtually nugatory. Furthermore, other parcels in the Trustee's Deed indicate that if the parties had intended to convey only the proration units that surround the well, they certainly knew how to draft a granting clause reflecting that intent. As Oz points out, the description for Parcel 4 indicates that it conveys "80 acres out of the NW/4 of Section 155, A-1652, GH & SA Ry. Co. Survey (being the proration unit assigned to the Argee Oil Company # 2-155 well) and being all of said NW/4 SAVE AND EXCEPT the 80 acre proration unit assigned to the Regency # 1-155 well. . . ." [Emphasis added]. If the Introductory Proviso functioned as Appellants contend, the Parcel 4 language specifically identifying the conveyance as being the Argee # 2-155 well's proration unit is nothing more than excess verbiage.
Appellants dismiss Oz's question regarding the insertion of quarter-unit land descriptions into Exhibit A as rhetorical,
Instead, we believe that the more natural reading and the only tenable reading of the Trustee's Deed, the Introductory Proviso, and the Parcel 3 granting clause is that the quarter-unit descriptions in the Parcel 3 granting clause operate as conveyances, and that the parties intended to convey the rights to those units of land, as well as any rights the grantor had in wells and their respective proration units explicitly listed on that land. To state it another way, Parcel 3 in Exhibit A of the Trustee's Deed deals with the disposition of the three quarter-units of land identified therein, including the Tract. The identification of the 1974 Lease between the Adams Family and Chesapeake shows that these quarter-units of land are subject to the terms of that lease (i.e. depth restrictions, other conditions on use of land, etc.). The identification of wells on those quarter-units of land shows what working interest the parties retained with respect to those wells, since as the listing for Argee Well 1-155 shows, the working interest lessee Chesapeake retained in wells located on the land it leased from the Adams Family was occasionally less than 100 percent. Assuming the language at the beginning of Exhibit A is not merely boilerplate as Oz contends, the Introductory Proviso serves to clarify that (1) the working interest in operative wells is "limited in area to . . . proration units surrounding the oil and/or gas wells referenced below. . .," and (2) the overall interest in both the quarter-unit tracts and the wells being conveyed in Parcel 3 is no larger than the original interest conveyed in the original 1974 Lease (i.e., that they "are subject to the depth restrictions and the other provisions of these leases").
This reading renders all the language in the granting clauses of the Exhibit A meaningful and internally consistent without having to resort to the use of extrinsic evidence to divine the deed's meaning. We are particularly convinced that this reading is correct given that the Trustee's Deed purports to convey "all of the property" listed in Exhibit A. [Empahsis added]. The Trustee's Deed conveyed Chesapeake's 75 percent interest in the Argee 1-155 well to Oz at foreclosure. The Trustee's Deed also conveyed any other remaining leasehold interests on the SE/4 of Sec. 155 to Oz as well. Since this is the only reasonable reading of the conveyances after construing the Trustee's Deed as a whole, giving effect to all its provisions, and applying the relevant canons of construction, we find the Trustee's Deed is unambiguous.
Here, it is clear that the proration unit around the Argee well is limited to the 80 acres on the East Unit claimed in the Railroad Commission records.
Having established that the trial court did not err in finding that Oz had exclusive title to the West Unit, we next turn to the issue of whether Oz provided sufficient evidence proving that Appellants committed a mineral trespass on land to which they lacked title. We find sufficient evidence to support the trial court's findings.
As a threshold matter, Appellant Victory contends a fatal variance between Oz's pleadings and the judgment the trial court rendered requires us to reverse the trial court's ruling that Victory was a bad faith trespasser. Specifically, Victory argues that although Oz sought a judgment of superior title against Victory, Oz never alleged a cause of action for trespass that
"The judgment of the court shall conform to the pleadings. . . ." TEX. R.CIV.P. 301. "[A] finding made without supporting pleading will not sustain a judgment." Bray v. Bray, 1 S.W.2d 525, 525 (Tex.Civ.App.-Galveston 1927, no writ). "Customarily, a general prayer for relief will support any relief raised by the evidence that is consistent with the allegations and causes of action stated in the petition." Nelson v. Najm, 127 S.W.3d 170, 177 (Tex.App.-Houston [1st Dist.] 2003, pet. denied). "However, a prayer for `other and further relief to which the plaintiff may be entitled at law or in equity' cannot enlarge the recovery to embrace a cause of action not within the pleadings." 47 Tex.Jur.3d Judgments § 92 (2014); see also Starr v. Ferguson, 140 Tex. 80, 86, 166 S.W.2d 130, 133 (Tex.Com.App. 1942)("The prayer for general relief cannot be construed as being a prayer for anything which is expressly excepted therefrom by other portions of the pleading.")[Internal quotation marks omitted].
The pleading excerpts relevant to this issue are as follows:
Based on our reading of the pleadings, Victory's point that it was excluded from Oz's pleaded cause of action in Count Two for mineral trespass appears to be correct. However, Victory was included in the trespass to try title cause of action in Count One. While the first sentence of Paragraph 25 makes clear that Oz is alleging that all the defendants excluding Victory conspired to enter into the West Unit and actually did so, the second sentence of Paragraph 25 makes clear that all defendants, whether they participated in the initial trespass or not, are liable for continuing mineral trespass on the West Unit by producing hydrocarbons. Paragraph 27 further makes clear that based on this
"The plaintiff in a trespass to try title suit, by pleading facts showing it is entitled, may recover rents and profits or damages incurred from loss of use." United Sav. Ass'n of Tex. v. Villanueva, 878 S.W.2d 619, 623 (Tex.App.-Corpus Christi 1994, no writ)(citing TEX.R.CIV.P. 783(f)). Even assuming arguendo that pleading a trespass to try title claim would not authorize damages for continuing mineral trespass, in reading the pleadings as a whole, it is clear that Oz complained about Victory dispossessing it of its mineral interests, and sought damages for it. Because Oz pleaded sufficient facts, the trial court could properly find that Victory was a trespasser in bad faith and assess damages accordingly without varying fatally from the pleadings. Victory's sub-argument on fatal pleading variance.
All three Appellants maintain in part of Issue Three and the entirety of Issue Seven that even if we find Oz had actual title to the West Unit, there is no legally or factually sufficient proof that Appellants actually trespassed on the land. Appellants HCP and SmartGas argue that there is no proof they ever actually entered the property or directed Remuda to begin drilling the property, meaning that they could not have trespassed. Appellant Victory urges us to find that it could not have trespassed because it only "purchased" the West Unit after Remuda had already finished drilling operations. We disagree.
"[L]iability for trespass is not dependent upon personal participation. . . ." Parker v. Kangerga, 482 S.W.2d 43, 47 (Tex.Civ.App.-Tyler 1972, writ ref'd n.r.e.). "[O]ne who aids, assists, advises or gives encouragement to the actual trespasser, or concert and cooperation in the commission of a trespass, or subsequent ratification or adoption by one of an act of another for his benefit or in his interest is equally liable. . . ." Id. Here, although the specifics of who hired Remuda and how the arrangement worked in actuality are unclear, all parties admit that they had interests in the wells Remuda drilled, with HCP and SmartGas purchasing the lease to their wells prior to completion, which makes them parties to the trespass by clear implication. The fact that no Appellant appears to have received actual payments from oil production is irrelevant. Cf. Meyers v. Ford Motor Credit Co., 619 S.W.2d 572, 573 (Tex.Civ.App.-Houston [14th Dist.] 1981, no writ), abrogated on other grounds by Qantel Business Systems, Inc. v. Custom Controls Co., 761 S.W.2d 302 (Tex.1988)("a trespasser is liable to the property owner even though there is no proof of actual damages in any specific amount."). Further, Victory's assertion that it only acquired land after Remuda had drilled the wells is irrelevant. By purchasing the lease after Remuda committed a trespass, Victory essentially ratified the trespass and positioned itself to gain materially from that trespass. Parker, 482 S.W.2d at 47. As such, there is legally and factually sufficient evidence that all Appellants committed trespass on Oz's land by participating in the Adams 155-2 and Adams 155-3 drilling ventures.
Because the Trustee's Deed establishes that Oz holds title to the lease on the West Unit of the Tract as a matter of law, and because the evidence supports the trial court's finding that Appellants committed trespass as parties to the unauthorized drilling venture on the West Unit, we overrule Issues One, Two, Three, Six, and Seven.
In Issues Four and Eight, Appellants contend that there is no legally and factually
As we previously stated, we sustain a legal sufficient point when, in viewing the evidence in the light most favorable to the verdict, there is no evidence, more than a scintilla, establishing proof of a vital fact. City of Keller, 168 S.W.3d at 810. We sustain an appellant's factual sufficiency point when the trial court's ruling is against the great weight and preponderance of the evidence. Carmona, 160 S.W.3d at 274. "When a producer trespasses and extracts oil, gas, or other minerals, the method by which damages are calculated depends on whether the producer's actions are in good faith." Moore v. Jet Stream Inv., Ltd., 261 S.W.3d 412, 428 (Tex.App.-Texarkana 2008, pet. denied). A good faith trespasser with "an honest and a reasonable belief in the superiority" of his own title is liable for value of minerals extracted minus drilling and operating costs. Id. A bad faith trespasser is liable for the value of extracted minerals "at the time of severance without making deduction for the cost of labor and other expenses incurred in committing the wrongful act" or for any other value added. Id. at 428-29.
As a preliminary matter, Appellants assert that Oz should be quasi-estopped from seeking damages for bad faith trespass under Moore, 261 S.W.3d at 429, because Oz agreed to have Remuda pay drilling proceeds into the Crockett County court registry during the pendency of litigation. By presenting an agreed order, Appellants contend that Oz essentially ratified Remuda's conduct, precluding it from taking the position that Remuda—and by extension Appellants—drilled in bad faith.
"Quasi-estoppel precludes a party from asserting, to another's disadvantage, a right inconsistent with a position previously taken." Lopez v. Munoz, Hockema & Reed, L.L.P., 22 S.W.3d 857, 864 (Tex. 2000). "The doctrine applies when it would be unconscionable to allow a person to maintain a position inconsistent with one to which he acquiesced, or from which he accepted a benefit." Id.
In Moore, the appellee—plaintiff in the trial proceeding—filed a petition for a temporary restraining order that would prevent the trespasser from stopping production on a drilled well. Eventually, the plaintiff agreed to a temporary injunction in which production would continue. The Texarkana Court held that the landowner was quasi-estopped from seeking bad faith damages against the driller because the landowner's bad faith argument contradicted (1) his TRO request for production to continue, and (2) his agreement to a temporary
Moore leaves it unclear whether the funds went to the plaintiff or into receivership pending the outcome of litigation. To the extent Moore holds that a landowner is quasi-estopped from claiming bad faith trespass where funds the well produces are placed into receivership with the trial court, we respectfully disagree with our sister court. Oz has not "accepted a benefit" as the result of the agreed order. Instead, the parties agreed to place proceeds into the hands of a neutral third party—the trial court—pending the outcome of litigation. Any interest Oz has in those funds is entirely contingent on it prevailing at trial. Further, unlike in Moore, where the plaintiff specifically sought to compel the driller to continue production, Oz initially objected to having Remuda continuing operations and originally sought to have Adams 155-2 and Adams 155-3 shut in. We find nothing unconscionable about such an arrangement, nor is there any direct, non-contingent benefit being conferred on Oz. As such, quasi-estoppel does not preclude Oz from seeking bad faith damages against Appellants.
Finally, turning to the merits on this point, Appellants assert that the evidence is legally and factually insufficient to uphold the trial court's finding of bad faith. We disagree.
In its third conclusion of law, the trial court held that Appellants were bad faith trespassers because "the defendants relied upon a twenty-year old title opinion that showed title to the SE/4 of § 155 in a different company than the company from whom they were acquiring an interest. . . ." The trial court also stated that it considered Appellants' failure to investigate title by commissioning a title opinion or researching the records themselves to be evidence of bad faith. We agree with the trial court's reasoning and its ultimate legal conclusion, whether viewing the evidence underpinning it from a legal or factual sufficiency standpoint.
Oz Gas presented evidence from attorney Allen Cumming, who testified that it is standard practice in the oil and gas industry to perform title research before entering into a particular transaction. All Appellants admitted that they failed to perform even a cursory check of title. Although Appellants attempt to portray Callis, the manager of HCP and SmartGas, as an unsophisticated investor, Callis admitted to having participated in prior non-mineral real estate transactions before in which he had sought title information. Secretary of State records confirm that Adams Fee Properties, Inc., the entity purported to convey the lease, had been defunct for years before this transaction even took place. Further, the stale title opinion Appellants relied upon in entering the transaction was more than two decades old, and even then, it listed Chesapeake and not Adams Fee Properties, Inc., as the holder of the lease in question. Taking all these factors in the aggregate, we find that the trial court justifiably found that Appellants did not have an honest and reasonable belief in the superiority of their title. Oz presented more than a scintilla of evidence supporting the trial court's finding, and such a ruling did not go against the great weight and preponderance of the evidence.
Issues Four and Eight are overruled.
Appellants present three general complaints pertinent to damages in the body of their brief. We note these complaints do
In its second damages argument in Issue Five, Appellants assert that the trial court's finding of fact that they were actually paid must be reversed, since there is no legally or factually sufficient evidence to support it. Oz responds that the issue is irrelevant to this appeal, given that Appellants are liable to Oz for bad faith trespass damages regardless of whether Remuda paid them or not. We agree that the record does not appear to contain evidence affirmatively demonstrating that Remuda ever paid HCP or Victory, although Callis testified that SmartGas had received one payment. However, since the issue of liability does not hinge on whether Remuda actually paid the Appellants, cf. Parker, 482 S.W.2d at 47 (liability adheres where there is ratification of another's party's trespass), we decline to reach this issue under TEX.R.APP.P. 47.1.
Finally, Appellants argue that the trial court erred by failing to segregate the damages and allocate them by well with respect to the parties, since there was no legally or factually sufficient evidence to show that HCP and Victory trespassed with respect to the 155-3 Well or that SmartGas trespassed upon the 155-2 Well.
In support of their argument, Appellants cite one Texas Supreme Court case from 1883, Walker v. Read, 59 Tex. 187, 191, 1883 WL 9129 (Tex.1883). That case generally discusses joint and several liability, stating that a defendant who is sued along with others for a tract of land who "put[s] in a defense restricted to so much of the land as he does assert title to" to believe "relieve[d] . . . from liability for rent of or damage to any part of the land to which he did not assert claim to. . . ." Id. at *3. However, that case also appears to belie their point in that when a defendant:
Later, in 1884, we are instructed that "all who aid or abet the commission of a trespass are liable jointly or severally. . . ." Cunningham v. Coyle, 2 Wilson 371, 1884 WL 8399, *1 (Tex.Ct.App.1884). The imposition of joint and several liability turns upon the actions of the joint-trespassers as parties to the trespass. Thus, the legal or factual insufficiency of the evidence showing whether appellants actually
Oz counters that appellants failed to object to the trial court's imposition of joint and several liability as to the damages. Therefore, error was not preserved and is waived. TEX.R.APP.P. 33.1. The record reveals Appellants did not object either to the judgment which held appellants jointly and severally liable nor was it raised in their motion for new trial. In fact, Appellants acknowledge this issue was never raised in the trial court. Their position is that in a non-jury case, such as this, they were not required to raise legal or factual sufficiency points for error preservation. TEX.R.APP.P. 33.1(d).
We find Appellants' have waived error given that their sufficiency point is immaterial to the imposition of joint and several liability under the facts of this case.
Issues Five, Nine, and Ten are overruled. The judgment of the trial court is affirmed.
Rivera, J. (Not Participating)
