HOLLIS HORTON, Justice.
We issued our original memorandum opinion in this cause on August 27, 2015, and afterwards, the appellant and the appellees filed motions for rehearing. The court denies the motions for rehearing; however, the panel withdraws its opinion and judgment and issues this opinion and judgment in their stead.
In this oil and gas case, filed by several stakeholders with interests in two pooled gas units, we are asked to decide two principal issues. First, whether the stakeholders participating in one of the pooled units can recover damages from the operator of the unit when the operator amended the boundaries of the unit to exclude a well that was within the boundaries of the original unit, and where the stakeholders accepted royalties attributable to the amended unit without challenging the operator's authority to amend the original unit's boundaries. Second, whether the stakeholders in another unit, based on their claims for breach of contract, can recover
With respect to the stakeholders in the first unit, given their actions following the amendment to boundaries of the unit, we conclude they ratified the operator's amendment to the boundaries of the first unit. Based on their ratification of the amendment to the unit, we hold they are entitled to recover nothing on their claims. With respect to the stakeholders in the second unit at issue in the appeal, and given the operator's failure to file an amendment to the description defining the unit's boundaries to correct its alleged mistake, we hold the stakeholders in that unit can recover damages from the operator for its alleged breach of their leases. However, with respect to these stakeholders, we also conclude the trial court's awards are excessive, as the awards include royalties on production that occurred before the date their unit first existed.
This case involves numerous plaintiffs,
Samson created the first of the units that are at issue in this appeal in 2001, when it filed a declaration creating the "Black Stone Minerals A No. 1 Gas Unit."
In late 2002, Samson successfully completed a third gas well that was perforated
In 2004, six of the stakeholders in the Joyce DuJay Unit sued Samson claiming that Samson had breached its duties under leases by refusing to allocate any of the gas produced by the Black-Stone-lease well for their accounts. Subsequently, additional plaintiffs, some of them stakeholders in the Joyce DuJay Unit and some of them stakeholders in the DuJay-A Unit, joined the suit.
Samson and the DuJay-A claimants timely filed appeals; both complain about various aspects of the trial court's final judgment. Tex.R.App. P. 26.1 (Time to Perfect Appeal). Generally, Samson argues the trial court erred in granting judgment in the plaintiffs' favor, and it contends the trial court should have granted its motion for summary judgment as to all of their claims. Alternatively, Samson argues that the trial court should have denied the motions for summary judgment filed by the Joyce DuJay and DuJay-A claimants because fact issues existed that require a trial. With respect to their cross-appeal, the DuJay-A claimants argue the trial court failed to properly calculate their respective awards under the provisions of the lease to which they all trace their interests.
We review a trial court's ruling on a motion for summary judgment using a de novo standard of review. See Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). With respect to the Joyce DuJay and DuJay-A claimants' motions for summary judgment, they were required to demonstrate to the trial court that no genuine issue of material fact existed, and to show that they were entitled
With respect to Samson's motion for summary judgment, it was required, as a defendant moving for summary judgment, to conclusively negate at least one essential element on each of the plaintiffs' causes of action, or through its own summary judgment evidence, it was required to conclusively establish each of the elements on an affirmative defense that would create a bar to the plaintiffs' recovery. See Sci. Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 911 (Tex. 1997). To prevail on its traditional motion, Samson was required to demonstrate that no genuine issues of material fact existed that prevented the trial court from rendering judgment in its favor. Tex.R. Civ. P. 166a(c); Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009).
When both the plaintiffs and defendants in a case move for summary judgment, and the trial court grants one motion and denies the other, all of the summary judgment evidence before the trial court is reviewed in the appeal to determine the questions that are presented by the competing motions. Mann Frankfort, 289 S.W.3d at 848. When possible, in cases involving cross-motions for summary judgment, the appeals court is required to render the judgment the trial court should have rendered in the case. Id.
According to Samson, the Joyce DuJay claimants ratified the amendment of the Black Stone Unit by accepting royalties that were paid to the stakeholders of the Joyce DuJay Unit based on the acreage within the amended unit's boundaries. Samson contends that the Joyce DuJay claimants' ratification of its amendment to the Black Stone Unit bars the Joyce DuJay claimants from a recovery on all of their claims. On appeal, Samson contends the trial court erred by failing to grant its motion for summary judgment because the summary judgment evidence conclusively establishes that the Joyce DuJay claimants ratified its decision to amend the Joyce DuJay Unit's boundaries.
In response to Samson's defense of ratification, the Joyce DuJay claimants assert that Samson waived its right to complain about the trial court's ruling in their favor on their breach of contract claims because it failed to timely assert its defense of ratification. The Joyce DuJay claimants note that Samson did not raise its ratification defense before the trial court ruled, in 2008, that they were entitled to prevail on their claims. In reply, Samson contends that it did not waive its defense by virtue of any delays because it presented its defense and obtained a ruling on it before the date the trial court rendered judgment. Having secured a ruling on its claim before the trial court rendered judgment, Samson argues that it properly preserved its right to our review of the merits
First, we address the Joyce DuJay claimants' argument that Samson's failure to raise its ratification defense before the trial court ruled on its motion in 2008 resulted in a waiver of the defense. See generally Tex.R.App. P. 33 (Preservation of Appellate Complaints). In this case, the record shows that Samson filed pleadings claiming ratification and obtained a ruling on its defense before the date the trial court's judgment became final. See Tex.R. Civ. P. 301 ("Only one final judgment shall be rendered in any cause except where it is otherwise specially provided by law."). Additionally, because the trial court's 2008 ruling did not resolve all of the claims and defenses raised by all of the parties to the case, the 2008 order granting the Joyce DuJay claimant's motion for summary judgment was interlocutory. Consequently, the trial court was authorized to change the rulings it made before it lost jurisdiction over the case, including its 2008 ruling on the Joyce DuJay claimants' motion. In other words, the court had the power to find the Joyce DuJay claimants ratified the amended boundaries of the unit, even though it actually ruled to the contrary, denying that they had ratified the amendment to the unit. See Rush v. Barrios, 56 S.W.3d 88, 98 (Tex.App.-Houston [14th Dist.] 2001, pet. denied).
Because the trial court's 2008 order was interlocutory, and because Samson secured a ruling on its affirmative defense of ratification, the record shows that Samson presented its complaint to the trial court in a timely motion and that the trial court ruled on its request. See Tex.R.App. P. 33.1 (providing that to preserve error for appellate review, the complaining party must show that it presented its complaint to the trial court in a timely request, objection, or motion and that the trial court ruled on the request). We hold that Samson did not waive its right to appellate review regarding its defense of ratification.
Next, we consider the law related to ratification and the evidence of the circumstances that relate to Samson's decision to amend the Black Stone Unit. A doctrine of agency law, ratification is a common law doctrine that binds a person to another's unauthorized act if the person who is arguably bound is aware of the other's act, and, after becoming aware of the act, chooses to retain the benefits of the unauthorized act. See Willis v. Donnelly, 199 S.W.3d 262, 273 (Tex. 2006). According to Samson, the Joyce DuJay claimants were notified of the amendment to the Black Stone Unit's boundaries, and afterward, they accepted royalty payments that were calculated based on the boundaries established for the Joyce DuJay Unit, whose boundaries did not include the gas and condensate being produced by the Black-Stone-lease well. Additionally, according to Samson, the Joyce DuJay claimants never challenged its authority to amend the boundaries of the original unit.
In cases that concern the purchase and sale of minerals and mineral interests, the doctrine of ratification is used to hold a party to the terms of an amended contract when the party complaining about the amendment accepted the benefits of the new agreement, even though it could have resisted doing so. See Fortune Prod. Co. v. Conoco, Inc., 52 S.W.3d 671, 676 (Tex. 2000) ("We agree with the courts below that there may be circumstances under which a party who was induced to enter a contract by fraud may ratify that contract in such a manner that a claim for damages is foreclosed."); Thomson Oil Royalty, LLC v. Graham, 351 S.W.3d 162, 166 (Tex. App.-Tyler 2011, no pet.) ("A party that accepts changed terms of a contract is deemed to have made its own decision that
In this case, it is undisputed that the Joyce DuJay claimants accepted royalties attributable to another well that Samson successfully completed on the Joyce DuJay lease that were calculated based on the smaller number of surface acres that are contained in the amended unit. The Joyce DuJay claimants also do not dispute that they never sought to have the amendment rescinded or to have it declared void, even though the amendment redefined the boundaries of the unit's pool and changed the surface acres of their unit.
In Hooks v. Samson Lone Star, Limited Partnership, 457 S.W.3d 52, 65-66 (Tex. 2015), the Texas Supreme Court held that a group of similarly situated stakeholders in the Black Stone Unit, who through the amendment became stakeholders in the Joyce DuJay Unit, had ratified the same amendment that is at issue in this case. In Hooks, the similarly situated group of plaintiffs asserted that Samson owed them royalties based on the production from the Black-Stone-lease well. Like the Joyce DuJay claimants, the stakeholders in the Joyce DuJay Unit in Hooks were aware that Samson had amended the Black Stone Unit. After the unit's amendment, the stakeholders in Hooks regularly accepted royalties on gas and condensate production that occurred from the Joyce DuJay Unit's pool. Id. Based on similar conduct as the conduct that is at issue here, the Texas Supreme Court held that the stakeholders in Hooks could not claim they were due additional royalties based on the production from the Black-Stone-lease well which was no longer within the amended unit's boundaries because by their acts, they had ratified the amendment to the Black Stone Unit. Id. at 66. Under these circumstances, the Supreme Court rendered judgment in Samson's favor based on the conclusive evidence before it of the stakeholders' acts.
After carefully reviewing the summary judgment evidence, we find no significant distinction between the acts of the stakeholders in the Joyce DuJay Unit that are at issue here and the acts the Supreme Court relied on in Hooks to conclude that by such acts, Samson's amendment was ratified and had been accepted. Because the summary judgment evidence conclusively establishes that the Joyce DuJay claimants ratified the amendment to their unit, Samson was no longer obligated to attribute any of the production from the Black-Stone-lease well to the Joyce DuJay Unit. We reverse the principal and interest awards the trial court awarded to the Joyce DuJay claimants on their claims that are based on the production of the Black-Stone-lease well,
Next, we turn to the claims of the DuJay-A claimants, which concern whether they are entitled to share in the production from a well
In its appeal, Samson advances several arguments to support its claim that the trial court's judgment in favor of the DuJay-A claimants should be reversed. First, Samson argues that the trial court erred in failing to apply the statute of limitations as a bar to the DuJay-A claimants' breach of contract claims. Second, Samson contends that the trial court erred in rejecting its arguments that the doctrines of estoppel, ratification, and waiver applied to the DuJay-A stakeholders' claims. Third, Samson suggests that to require it to pay royalties on the production from the well on the Joyce DuJay lease to the unitholders of both the Joyce DuJay and DuJay-A Units is impracticable. Fourth, Samson asserts the trial court improperly construed the agreements when determining the boundaries of the DuJay-A Unit's pool. It argues that a proper construction of the documents relevant to the boundaries of the DuJay-A Unit's pool reveals that the two pools do not share a common zone. Fifth, Samson suggests that the trial court erred in failing to excuse what it characterizes as a mistaken description of the DuJay-A Unit's boundaries. Sixth, and as an alternative to its arguments that suggest the pools do not overlap, Samson argues that it is entitled to a trial on its claim seeking reimbursement for overpaying royalties to the Joyce DuJay claimants.
The DuJay-A claimants contend the trial court did not err in granting a summary judgment in its favor on all of Samson's defenses, including Samson's claim for reimbursement. By cross-appeal, the DuJay-A claimants contend that the damages they were awarded are too small. According to the DuJay-A claimants, the trial court erred by discounting their awards based on their ownership of less than all of the minerals in the T.S. Reed tract.
According to Samson, the four-year statute of limitations applies to the DuJay-A claimants' suit. See Tex. Civ. Prac. & Rem.Code Ann. § 16.004 (West 2002) (providing for a four-year limitations period for actions for debt). Based on a four-year limitations period, Samson argues that by July 2007, the DuJay-A claimants should have filed a pleading that gave Samson fair notice of their theory that Samson had breached the lease by failing to attribute any of the production from the well on the Joyce DuJay lease to the DuJay-A Unit. While Samson acknowledges that all of the DuJay-A claimants were parties to the suit before July 2007, it contends that the pleadings filed by the DuJay-A claimants before July 2007 did not fairly assert a claim for breach on a theory involving the minerals being produced by the well on the Joyce DuJay lease, which is the theory under which the DuJay-A claimants ultimately, in 2013, recovered.
The record shows that the DuJay-A claimants were parties to the case by November 16, 2006, the date they filed their Fifth Amended Original Petition. Under the Texas Rules of Civil Procedure, a pleading of a claim for relief is required to
In their Fifth Amended Petition, the DuJay-A claimants alleged that Samson designated a zone for a unit without designating a lower boundary, they identified that production occurred in a zone produced by a well completed on the Joyce DuJay lease, they alleged that the Hardin County tracts that Samson pooled into the DuJay-A Unit include the same tracts that were pooled into the Joyce DuJay Unit, and they alleged that Samson had breached its lease because it failed to pay them the royalties they were owed. In our opinion, the Fifth Amended petition raises a claim for nonpayment of royalties that is consistent with the claim on which the trial court awarded damages.
The Tenth Amended Petition contains more specific pleadings regarding the DuJay-A claimants' theory that Samson had breached its lease by refusing to allocate any of the production occurring from the well on the Joyce DuJay lease to the DuJay-A Unit. Section 16.068 of the Texas Civil Practice and Remedies Code creates a relation back rule for claims, as it provides:
Tex. Civ. Prac. & Rem.Code Ann. § 16.068 (West 2015). In our opinion, the claims in the Fifth Amended Petition are not wholly based on different transactions or occurrences than those that are described by the Tenth Amended Petition. See Lexington Ins. Co. v. Daybreak Exp., Inc., 393 S.W.3d 242, 244-45 (Tex. 2013) (explaining that claims that are not wholly based upon different transactions or occurrences are not barred if the more recently filed pleading relates to the same occurrence and damages asserted in older pleadings filed before the proscriptive period runs). Because the claims alleged in the DuJay-A claimants' Fifth Amended Petition were broad enough to encompass the claim on which they ultimately recovered, Samson's limitations arguments are without merit.
According to Samson, the summary judgment evidence was conclusive or raised fact issues on its defenses alleging theories of estoppel, ratification, and waiver. Samson contends that the evidence shows: (1) it advised the DuJay-A claimants that they had no interest in the well located on the Joyce DuJay lease, (2) the DuJay-A claimants expressly agreed to pool 213.038 acres of their land into a unit that it created "in order to form the Unit for the [DuJay-A] Unit Well," (3) Samson
Samson discusses its defenses of waiver, ratification, and estoppel as a single group as if the three theories are all based on the same elements; its brief does not address the elements of the defenses, which are not identical, separately. Consequently, we interpret Samson's argument regarding these defenses as asserting a defense of quasi-estoppel, a doctrine that "precludes a party from asserting, to another's disadvantage, a right inconsistent with a position previously taken." Lopez v. Muñoz, Hockema & Reed, L.L.P., 22 S.W.3d 857, 864 (Tex. 2000). "The doctrine applies when it would be unconscionable to allow a party to maintain a position inconsistent with one to which the party acquiesced, or from which the party accepted a benefit." Cimarron Country Prop. Owners Ass'n v. Keen, 117 S.W.3d 509, 511 (Tex.App.-Beaumont 2003, no pet.).
Samson relies heavily on the Texas Supreme Court's decision in Hooks v. Samson Lone Star Limited Partnership and the First Court of Appeals' decision in that same case, which the Supreme Court reversed, to support its quasi-estoppel arguments. See Samson Lone Star, Ltd. P'ship v. Hooks, 389 S.W.3d 409 (Tex. App.-Houston [1st Dist.] 2012), rev'd in part, Hooks v. Samson Lone Star, Ltd. P'ship, 457 S.W.3d 52 (Tex. 2015). However, there are significant differences between the facts in Hooks, which concerned the Black Stone Unit and Samson's amendment of that unit and the facts regarding the actions of the parties as related to the DuJay-A Unit. See Hooks v. Samson Lone Star, Ltd. P'ship, 457 S.W.3d at 65-66.
Unlike the facts that surround Samson's amendment to the original Black Stone Unit, Samson never filed an amendment in the property records of Hardin or Jefferson County to change the boundaries of the pool that created the DuJay-A Unit. Thus, unlike Hooks, Samson never clearly placed the DuJay-A claimants on notice that it was offering them another bargain. See id. Instead, Samson acts as if its decision to create overlapping units should simply be overlooked, even though it never filed a document to amend the boundaries of the DuJay-A Unit to correct its alleged mistake. Instead, by allocating all of the production from the well that produces from a common zone to only the Joyce DuJay Unit, Samson simply ignores its own filing as if the pool it described created boundaries different than those reflected by its filings.
Samson also argues that by cashing their royalty checks, the DuJay-A claimants acted in a manner that is inconsistent with the terms of the division orders that are in the record that is before us. The division orders relevant to the DuJay-A Unit share the following language, which states: "THIS DIVISION ORDER DOES NOT AMEND ANY LEASE OR OPERATING
Finally, in this case, Samson never amended the declaration that it filed with respect to the boundaries of the DuJay-A Unit's pool. Instead, even after the suit was filed, and Samson was placed on notice of the claims that it was not properly allocating production in the common zone to both units, Samson did not suspend the disputed royalties pending the outcome of the case. Instead, it proceeded as if the DuJay-A Unit's pool did not overlap with the Joyce DuJay Unit's pool.
We conclude that Samson calculated that it would derive a greater benefit from refusing to amend the boundaries of the DuJay-A Unit's pool to correct its alleged mistake. Given that circumstance, it is not unconscionable that Samson be required to answer in damages based strictly on the DuJay-A claimant's theory that Samson had breached the T.S. Reed lease. We hold that there is no dispute on any material fact regarding the elements of a claim of quasi-estoppel, and that under the circumstances of this case, equitable relief is not proper, expedient, or necessary. See State v. Tex. Pet Foods, Inc., 591 S.W.2d 800, 803 (Tex. 1979) (explaining that the jury decides if there are questions of fact in dispute but that it does not determine the expediency, necessity, or propriety of equitable relief); Cimarron, 117 S.W.3d at 512. We hold the trial court did not err granting the DuJay-A claimants' motion for summary judgment on Samson's claims based on waiver, ratification, and estoppel.
Samson argues that performing under the terms of its written agreement was impossible
In response to Samson's claim of impracticability,
Significantly, the case at bar was not tried as a trespass to try title case; instead, the trial court awarded contract damages under the DuJay-A claimants' breach of contract theory. Additionally,
Nonetheless, we are required to address whether the T.S. Reed lease restricted Samson's authority to create the pool that Samson described in the declaration that it filed to create the DuJay-A Unit. Whether Samson was authorized to create the pool at issue concerns a matter of contract law. See Wagner & Brown, Ltd. v. Sheppard, 282 S.W.3d 419, 424 (Tex. 2008) (noting that "oil and gas leases in general, and pooling clauses in particular, are a matter of contract"). Therefore, we look to the language of the parties' lease and the lease amendment to determine the scope of Samson's authority regarding its pooling of the T.S. Reed lease.
Under the lease between Samson and T.S. Reed, Samson could not pool T.S. Reed's tract unless all of the acreage of the tract was pooled. In August 2002, Samson and T.S. Reed agreed to amend the pooling provision, and T.S. Reed's president gave "Samson the right to pool 213.038 acres of land ... to form the Unit for the [DuJay-A] Unit Well." However, the amendment does not describe the boundaries of the proposed unit. When the lease was amended in 2002, Samson had not yet designated the boundaries of the DuJay-A Unit's pool, although it is clear that the pool was to include the well on the DuJay-A lease. However, there is no indication in the amendment that the well on the DuJay-A lease was the only well that Samson intended to include in the pool. Significantly, the only restrictions on Samson's pooling authority regarding the 213-acre tract are that Samson was required to pool the entire 213-acre tract and the tract was to be pooled into the DuJay-A Unit.
In this case, none of the parties has claimed that Samson exercised its pooling authority in bad faith, and Samson never amended the boundaries of the DuJay-A Unit's pool. Because there is no claim the tract was pooled in bad faith, and in light of the broad pooling authority T.S. Reed gave Samson in the amendment to pool the tract, we conclude that the parties' agreement did not restrict Samson from pooling the lease into a pool that overlapped the pool of another preexisting unit. See Se. Pipe Line Co., Inc. v. Tichacek, 997 S.W.2d 166, 170 (Tex. 1999) ("A lessee's pooling decision will be upheld unless the lessee pools in bad faith.").
Next, we consider Samson's argument that enforcing its obligations under its lease, which requires it to account for production that occurred in a shared zone, is impossible. Under Texas law, a defendant may defend a claim for breach of contract by showing that the obligation it undertook to perform was rendered impracticable. See Centex Corp. v. Dalton, 840 S.W.2d 952, 954 (Tex. 1992) (relying on the defense of supervening impracticability, as stated in the Restatement (Second) of Contracts § 261 (1981), the court held
Restatement (Second) of Contracts § 261 (1981); see Centex, 840 S.W.2d at 954. The sections that follow, Sections 262-266, address the various contexts in which the defense applies to excuse a defendant's breach of its duty to perform the obligations required by its contract. Restatement (Second) of Contracts §§ 262 (Death or Incapacity of Person Necessary for Performance), 263 (Destruction, Deterioration or Failure to Come into Existence of Thing Necessary for Performance), 264 (Prevention by Governmental Regulation or Order), 265 (Discharge by Supervening Frustration), 266 (Existing Impracticability or Frustration) (1981).
Under the circumstances presented in this case, none of the summary judgment evidence shows that any of the DuJay-A claimants were involved in the decisions Samson made to establish the boundaries of the pools at issue, nor was there any evidence that the DuJay-A claimants were on notice of the unit's boundaries before Samson filed the document that declared them. Additionally, not any of the Restatement exceptions apply, as the condition frustrating Samson's performance is wholly based on its own fault in creating overlapping pools. Id. Under the circumstances shown by the summary judgment evidence, the trial court did not err when it granted the DuJay-A claimants' motion for summary judgment on Samson's defense of impossibility.
Samson argues the T.S. Reed lease should be construed so the boundaries of the DuJay-A Unit's pool are established as existing at 12,000 feet to 12,399 feet subsurface. In response, the DuJay-A claimants contend that the provisions in the T.S. Reed lease are not relevant to the boundaries that Samson established for the DuJay-A Unit's pool.
Prior to the amendment previously discussed, T.S. Reed's lease required that each production unit "shall be limited to a depth of one hundred feet (100') below the total depth to which the first productive well is drilled on the unit, which depth shall be determined by a Schlumberger, Halliburton, or other electrical log, which Lessee shall cause to be run." Samson notes that the well on the DuJay-A lease was drilled to a depth of 12,500 feet, and it relies on the above provisions to conclude that T.S. Reed's lease "created an automatic depth limitation on the [DuJay-A Unit] of 12,600 [feet]."
Samson's argument is presented in an effort to rewrite the unambiguous boundaries of the pool that it declared when it created the DuJay-A Unit. Additionally, if the question is one of authority, the DuJay-A claimants ratified Samson's act to create the overlapping pools when they
Nevertheless, even if the terms of the original T.S. Reed lease are relevant to determining the boundaries of the DuJay-A Unit's pool, Samson's argument does not prevent the pools from overlapping so that they share the zone of production that is at issue here. The first productive well in the DuJay-A Unit is the well located on the Joyce DuJay lease, as it was completed before the well was completed on the DuJay-A lease. Thus, the bottom for the DuJay-A Unit's pool would still overlap the zone that includes the level being produced by the well on the Joyce DuJay lease. While Samson raises other arguments regarding other provisions in the original T.S. Reed lease in an effort to rewrite the boundaries for the pool that it declared for the DuJay-A Unit, Samson never explains how any of the restrictions upon which it relies survived the lease's 2002 amendment that specifically authorized Samson to pool the 213 acre tract at issue into the DuJay-A Unit.
Given the unambiguous language in the unit declaration that established the boundaries of the DuJay-A Unit's pool, the trial court properly rejected Samson's arguments that the language in other documents was relevant to establishing the pool's boundaries. See Sheppard, 282 S.W.3d at 422 ("A lease is not necessarily required for pooling; mineral owners can join a pool even if no lease exists."). We overrule Samson's arguments that suggest the trial court did not properly construe the documents relevant to defining the DuJay-A Unit's pool.
Samson also argues that the trial court erred by failing to reform the boundaries of the DuJay-A Unit's pool because it mistakenly created a pool for the unit that shared a zone with another pool. Samson suggests the mistake that was made to define the boundaries of the pool was that of its attorney, and it suggests that the document it filed should have indicated that the pool was bottomed at approximately 12,400 feet.
In response, the DuJay-A claimants argue that pool's boundaries cannot be reformed because Samson failed to request they be reformed within four years of the date that Samson declared the pool to exist.
First, we consider Samson's claim that it should be allowed to avoid the terms of its declaration, which defined the boundaries of the pool, based on the doctrine of mutual mistake.
In its response to the DuJay-A claimants' no-evidence motion, Samson did not present any evidence showing that the DuJay-A claimants were acting under any misunderstanding about the depth of the pool either when their leases were pooled or when Samson filed the document that declared the pool's boundaries. Instead, the summary judgment evidence shows that the mistake was Samson's alone.
With respect to the circumstances explaining why the boundaries are declared as stated in the document that Samson filed, Samson's summary judgment evidence includes the unsworn declarations
Koenig's unsworn declaration also reveals no involvement of the DuJay-A claimants in the drafting of the documents to create the DuJay-A Unit's pool. His declaration, like Lindahl's, shows that Samson and its agents were solely responsible for the filing of the document declaring the pool's boundaries. According to Koenig, Samson always intended "to designate the [DuJay-A Unit] to have a bottom limitation of 12,400 feet subsurface." Koenig's declaration is silent about the intentions of the DuJay-A claimants and if they were consulted on sizing the DuJay-A Unit's pool. In his declaration, Koenig explains that Samson's file on the DuJay-A Unit contains an interoffice memo, dated May 2003, that contains the notation "`[r]e-routed 7-2-03 12,000' & below.'" Koenig concludes that it was a mistake not to include a lower `boundary for the DuJay-A Unit's pool, but his declaration does not further discuss why Samson made the decision to change the pool's lower depth to 12,000 feet and below.
Generally, "[a] mistake by only one party to an agreement, not known to or induced by acts of the other party will not constitute grounds for relief." Johnson v. Snell, 504 S.W.2d 397, 399 (Tex. 1973). Additionally, the acts of Samson's attorney are attributed to Samson. See Gavenda v. Strata Energy, Inc., 705 S.W.2d 690, 693 (Tex. 1986). Lindahl's suggestion that he committed a scrivener's error is also no evidence to show that the alleged mistake is one that was made by the parties mutually. See Elizondo v. Krist, 415 S.W.3d 259, 264 (Tex. 2013) ("[A]n attorney-expert, however well qualified, cannot defeat summary judgment if there are fatal gaps in his analysis[.]"); McIntyre v. Ramirez, 109 S.W.3d 741, 749-50 (Tex. 2003) ("A conclusory statement of an expert witness is insufficient to create a question of fact to defeat summary judgment."). Brown v. Havard, 593 S.W.2d 939, 942 (Tex. 1980). While the declarations of Samson's attorney and its land manager suggest that Samson made a mistake, the declarations are no evidence to show that the mistake was one that was mutual. We conclude that the trial court did not err by granting the DuJay-A claimants' no-evidence motion with respect to Samson's claimed mistake.
Samson also asked the trial court to order the Joyce DuJay claimants to reimburse it for a portion of the damages the DuJay-A claimants were awarded in the judgment. According to Samson, the Joyce DuJay stakeholders were unjustly enriched because they benefitted from Samson's decision to attribute all of the production from the well on the Joyce DuJay lease to the Joyce DuJay Unit. Samson contends the Joyce DuJay claimants
In response to Samson's equitable reimbursement claim, the Joyce DuJay claimants, as counter-defendants, filed a motion for summary judgment on traditional and no-evidence grounds. See Tex.R. Civ. P. 166a(c), 166a(i). The trial court granted the Joyce DuJay motion that asserted Samson was not entitled to recover on its claim of equitable reimbursement without specifying the grounds for its ruling. When a trial court grants a motion for summary judgment without specifying the grounds on which the motion is granted, the appeals court must affirm the trial court's ruling if any of the theories presented in the summary judgment motion have merit. See Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 216 (Tex. 2003).
On appeal, Samson argues the trial court's ruling should be reversed because it established its claim for money had and received as a matter of law, or because the evidence in the summary judgment proceedings relevant to its claim presented issues of fact that should be resolved by a trial. A party asserting a claim for money had and received must prove that the opposing party is holding money that in equity and good conscience belongs to it. See Staats v. Miller, 150 Tex. 581, 243 S.W.2d 686, 687-88 (1951); Edwards v. Mid-Continent Office Distrib., L.P., 252 S.W.3d 833, 837 (Tex.App.-Dallas 2008, pet. denied).
First, we address Samson's argument that it presented more than a scintilla of evidence to support its claim that the Joyce DuJay claimants had money that belongs to it. See Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 600 (Tex. 2004). In their no-evidence motion, the Joyce DuJay claimants challenged Samson to produce evidence that they had money that in equity belonged to Samson. In response to their no-evidence motion, Samson referred the trial court to several declarations signed by Samson's chief financial officer, C. Philip Tholen. Samson contends that Tholen's declarations demonstrate that the Joyce DuJay claimants received greater royalties than they would have received
In our opinion, Tholen's declarations are some evidence showing that the royalty payments to the Joyce DuJay claimants would have been smaller had Samson attributed the production for the well to both units.
Next, we consider the grounds on which the Joyce DuJay claimants obtained summary judgment on their traditional motion. See Knott, 128 S.W.3d at 216; see also Ridgway, 135 S.W.3d at 600. With respect to their traditional motion, the Joyce DuJay claimants argued that Samson's decision to allocate the production was a decision that it made voluntarily. The Joyce DuJay claimants point out that Samson continued to allocate the production from the well on the Joyce DuJay lease solely to the Joyce DuJay Unit even after it was presented with claims and sued over whether it was properly calculating the royalties due the stakeholders in the two units.
In part, as a defense to Samson's claim for reimbursement, the Joyce DuJay stakeholders' motion for summary judgment relies on the voluntary-payment rule. The voluntary-payment rule operates as a defense to a claim seeking restitution, and can be stated as follows: "`Money voluntarily paid on a claim of right, with full knowledge of all the facts, in the absence of fraud, deception, duress, or compulsion, cannot be recovered back merely because the party at the time of payment was ignorant of or mistook the law as to his liability.'" BMG Direct Mktg., Inc. v. Peake, 178 S.W.3d 763, 768 (Tex. 2005) (citing Pennell v. United Ins. Co., 243 S.W.2d 572, 576 (1951)) (quoting 40 Am. Jur. § 205 (1942)).
The summary judgment motions reflect Samson's confidence in its position that the courts would revise the boundaries of the DuJay-A Unit's pool to create a pool that did share any zones with the Joyce DuJay Unit's pool. The summary judgment evidence also shows that although Samson asked the court to revise the boundaries of the DuJay-A Unit's pool, it never exercised its authority to amend the designation of the declaration, even though the designation that it filed expressly provided that Samson reserved the right to do so "in order to correct any error herein[.]" We conclude that the summary judgment evidence conclusively shows that Samson's
Samson did not allege that any of the Joyce DuJay claimants were guilty of any acts of fraud, that it paid the royalties under duress, or that it was compelled to pay royalties over its objection to doing so. Instead, Samson continued to pay the royalties at issue to the Joyce DuJay claimants after it became involved in this litigation, which questioned whether it had properly accounted for the royalties between the two units. Under the circumstances, the summary judgment evidence conclusively established that Samson's payments of royalties to the Joyce DuJay claimants were voluntary. See Pennell, 243 S.W.2d at 576. We hold that the trial court did not err in granting the Joyce DuJay claimants' traditional motion for summary judgment on the grounds that Samson's payments were voluntary.
In its appeal, Samson contends the trial court erred when it concluded that eight of the parties (NPRI parties),
Before evaluating the merits of Samson's argument that the awards were excessive, we consider the NPRI parties' suggestion that Samson failed to properly preserve its argument on this issue for our review on appeal. To support their claim of waiver, the NPRI parties rely on City of Houston v. Clear Creek Basin Authority, 589 S.W.2d 671 (Tex. 1979). However, in Clear Creek, the party that moved for summary judgment was the defendant, and the error preservation argument concerned whether the plaintiff waived its argument on appeal regarding a theory of liability that it failed to present at trial. Id. at 672-75.
In this case, the question is whether the NPRI parties, as the parties who moved for summary judgment, conclusively proved the amounts of their accrued unpaid royalties, which form the royalty amounts on which their awards of interest
In evaluating whether the evidence on the awards to the NPRI parties was conclusive, we note that their awards are based on royalties that are calculated beginning with the date the well on the DuJay-A lease first began to produce gas. However, the NPRI owners did not act to ratify the T.S. Reed lease or the lease's amendment for several years after the well on the DuJay-A lease first produced gas.
In Montgomery v. Rittersbacher, the Texas Supreme Court explained that an NPRI owner may ratify a lease that the holder of the executive rights made with a lessee by signing the lease or by filing suit to enforce the lease. 424 S.W.2d at 214-15. In resolving an appeal that arose from a non-jury trial, the Montgomery Court noted that the NPRI owner "ratified the lease in question by filing suit; consequently, he is only entitled to receive royalties accruing from and after [] the date this suit was filed." Id. at 215.
In this case, the interest awards were calculated based on royalties that would have become due assuming the NPRI parties ratified the T.S. Reed lease as of September 2002; however, by September 2002, they had not done so and would not do so for years. Therefore, the interest awards are excessive because they exceed the amounts supported by the summary judgment evidence. We reverse the interest awards with respect to the NPRI parties, and we remand these claims to the trial court for further proceedings.
Samson also challenges the amounts the trial court awarded in interest to two of the stakeholders in the Joyce DuJay Unit, the Simpson-Omohundro Foundation and the Marlborough School.
Ultimately, Samson recognized that the Simpson-Omohundro Foundation and the
The Simpson-Omohundro Foundation's and the Marlborough School's claims are based on a lease between Samson, the Simpson-Omohundro Foundation, and Nancy Long.
We find nothing in the lease to support Samson's argument that its obligation to pay interest on suspended royalties was excused. The summary judgment evidence does not show that there was a bona fide dispute regarding the Simpson-Omohundro Foundation's or Nancy Long's title to the minerals in the tract that Long and the Foundation leased to Samson. There was also no evidence of a bona fide dispute that Long, through her will, had not given her interest in the lease to the Marlborough School.
Samson relies on section 91.402(b) of the Texas Natural Resources Code to justify its decision to refuse to pay any interest on the royalties that it placed in suspense. See Tex. Nat. Res.Code Ann. § 91.402(b) (West 2011) (allowing payment to be withheld without interest under certain circumstances, such as when there is reasonable doubt that the payee has clear title to the interest in the proceeds of production). According to the Simpson-Omohundro Foundation and the Marlborough School, the Texas Natural Resources Code does not cancel the terms requiring Samson to pay interest on suspended royalties.
We do not read Section 91.402(b) to restrict the freedom of the parties to a lease to contract for interest payments on suspended royalties. See id. § 91.402(b). In this case, the leases required that Samson pay interest on suspended royalties after having determined that the royalties were due. We hold that Samson's argument reading Section 91.402(b) as canceling the interest terms of the lease is without merit.
With respect to the judgment's award of interest on suspended royalties,
Samson raises three additional arguments that suggest the evidence does not support the amount the trial court awarded in damages to the DuJay-A claimants.
In resolving whether the trial court properly calculated the royalty payments at issue, we look to the terms of the parties' lease. Tittizer v. Union Gas Corp., 171 S.W.3d 857, 860 (Tex. 2005). The T.S. Reed lease established the deadlines by which royalties became due.
Samson also argues that the trial court's damages awards include damages for production that dates from January 2002, despite the fact that the DuJay-A Unit was created months later and the filing that created the unit made the unit effective as of first production from the well on the DuJay-A lease, a well that Samson did not complete until September 2002. See generally Hooks, 457 S.W.3d at 65 (noting that the language in a unit designation made the designation of the unit effective as of date of first production). However, the designation Samson filed to create the DuJay-A Unit declares that the Unit is "effective as of the date of first production of the [DuJay-A] Well," even though the declaration was actually filed after the date the well on the DuJay-A lease began producing gas. From the information in the summary judgment evidence, it appears that the well on the
In this case, the trial court's damages awards include damages that are calculated based on the royalties the DuJay-A claimants were owed on gas produced before the date the DuJay-A Unit existed. We agree with Samson that the damages awarded to the DuJay-A claimants exceed the amounts the summary judgment evidence supports. We reverse the principal and interest awards to the DuJay-A claimants because the awards are excessive, and we remand the case for further proceedings so the awards can be calculated properly.
Third, with respect to the damages award, Samson also contends that the DuJay-A claimants were awarded interest at rates that are higher than the rates allowed by Texas law. According to Samson, the prime rate of interest, at the time, exceeded the interest rate found in section 91.403 of the Texas Natural Resources Code. Tex. Nat. Res.Code Ann. § 91.403 (West 2011) (providing for the payment of interest at "two percentage points above the percentage rate charged on loans to depository institutions by the New York Federal Reserve Bank, unless a different rate of interest is specified in a written agreement between payor and payee").
Under the T.S. Reed lease, which provides a rate of interest that Samson was obligated to pay on royalties, the parties agreed that Samson would pay interest at "the prime rate of interest at Chase-Manhattan Bank in New York City, New York, plus 2% (not to exceed legal Texas interest rate)[.]" According to the DuJay-A claimants, the "not to exceed" language of the provision was intended to reference the maximum interest allowable under section 303.009 of the Texas Finance Code. See Tex. Fin.Code Ann. § 303.009 (West Supp. 2014) (providing a maximum ceiling for interest rates that vary, based on sections 303.009(a)-(f), from eighteen percent to twenty-eight percent a year).
In our opinion, the "not to exceed" provision of the lease was intended to reference the Texas Finance Code, not the Texas Natural Resource Code. Under the Texas Natural Resource Code, the interest rate provided by that Code does not apply if the parties have specified a rate of interest under their written agreement. See Tex. Nat. Res.Code Ann. § 91.403(a). The T.S. Reed lease specifies a rate of interest, so the parties presumably did not intend for the provisions in the Texas Natural Resource Code to apply. Id.
The Texas Finance Code creates a maximum rate of interest that generally applies to all contracts, unless the parties have provided for another rate that is specified by the contract. See Tex. Fin.Code Ann. art. § 302.001(b) (West 2006); Id. § 303.001 (West. Supp. 2014). Given that the Texas Finance Code provides for a maximum rate of interest unless some other maximum rate is provided for by contract, and that the parties specified a rate of interest that was to apply to past due royalties that became due, we conclude that "not to exceed" provision refers to the maximum interest rate provided under the Texas Finance Code.
Samson does not argue that the interest rates applied by the trial court were rates in excess of the ceilings found in the Texas Finance Code. We conclude Samson's argument that the trial court applied the
In a cross-appeal, the DuJay-A claimants argue that the trial court's awards underestimate the damages they conclusively proved that they suffered based on Samson's breach. According to the DuJay-A claimants, the trial court erred by adjusting their damages to reflect the fact that they do not own all of the minerals on the 213 acre tract that Samson leased. In response, Samson contends the lease required the trial court to account for the DuJay-A claimant's partial ownership of the minerals to the tract.
Section VIII(b) of the T.S. Reed Properties lease provides that Samson was to compute the royalty on production from wells within the pooled unit as follows:
In addition to this provision, the lease between Samson and T.S. Reed includes a proportionate reduction clause. Section XIII, the proportionate reduction clause, provides:
The DuJay-A claimants contend that section XIII does not apply because T.S. Reed Properties leased only the "net mineral acres" to Samson when it leased the tract. While the attachments to the lease do describe the net mineral acres in the tract that T.S. Reed Properties owned, the lease also has a proportionate reduction clause that applies to the royalties due to the lessor under the lease. Essentially, the DuJay-A claimants argue that the proportionate reduction clause is superfluous.
T.S. Reed relies primarily on Texas Co. v. Parks, 247 S.W.2d 179 (Tex.Civ.App.-Fort Worth 1952, writ ref'd n.r.e), to support its construction of the lease. In Parks, the Fort Worth Court of Appeals held that a proportionate reduction clause did not apply to reduce the lessor's obligation to pay delay rentals of $160, yearly. Id. at 182. Given the purpose of the delay
With respect to the T.S. Reed lease, the description of the tract in a document the parties attached to the lease describes the tract as "all that certain land," which is then described in another exhibit to the lease. The exhibit referenced by the attachment describes the tract's surface acreage, the survey where the tract is located, the abstract number associated with the tract, the volume and page number of the deed records where a deed describing the tract can be found, and T.S. Reed's net mineral interest in the tract. In other words, the exhibit is descriptive of the property conveyed; it does not alter the parties' bargain that T.S. Reed was to be paid royalties on the only minerals that it owned and leased in the tract.
The Texas Supreme Court has explained that "`[l]and' is the physical earth in its natural state, while an estate in land is a legal unit of ownership in the physical land." Averyt v. Grande, Inc., 717 S.W.2d 891, 894 (Tex. 1986) (citing 1 Thompson, THOMPSON ON REAL PROPERTY § 52 (1939)). Given the language of the T.S. Reed Properties lease, the lease conveyed to Samson the right to use the entire surface for the purpose of exploring and producing oil and gas. Looking at the lease as a whole, from the granting clause to the reservation clause, it is evident that the term "all that certain land" does not refer to T.S. Reed's mineral estate but to the entire tract. Compare King v. First Nat'l Bank of Wichita Falls, 144 Tex. 583, 192 S.W.2d 260, 263 (Tex. 1946).
Although Samson and the DuJay-A claimants interpret the lease differently, neither argues that the proportionate reduction provision of the lease is ambiguous. When an oil and gas lease is unambiguous, the lease must be enforced based on its unambiguous terms. Tittizer, 171 S.W.3d at 860. We hold that the trial court did not misconstrue the lease, and that it properly applied the proportionate reduction clause in calculating the DuJay-A claimants' damages. The DuJay-A claimants' issue in its cross-appeal is overruled.
We reverse and render judgment in favor of Samson with respect to the trial court's order granting awards to Patricia Belden; Roger Craddock and Iris Klorer Craddock, Individually and as Trustees of the Craddock Family Trust; Thomas Klorer; Valerie Klorer; Marlborough School, Simpson-Omohundro Foundation, the Sara Wilson Carlson Exempt Trust, through Capital One, N.A., its trustee; the Mark C. Wilson Grantor Trust, through Capital One, N.A., its trustee; Thomas Edwin Doran; and Gary Cruse, as Executor of the Estate of Vivian Burch.
We also reverse all of the trial court's awards to the DuJay-A claimants because the awards are excessive, and they are remanded to the trial court for further proceedings consistent with the Court's opinion. Finally, with respect to those parties to the judgment who did not appeal, the judgment is affirmed.
AFFIRMED IN PART, REVERSED AND RENDERED IN PART, REVERSED AND REMANDED IN PART.
James T. Taylor & Son, Inc. v. Arlington Indep. School Dist., 160 Tex. 617, 335 S.W.2d 371, 373 (Tex. 1960). The Texas Supreme Court has repeatedly cautioned against addressing unassigned error. See, e.g., Pat Baker Co. v. Wilson, 971 S.W.2d 447, 450 (Tex. 1998); Allright, Inc. v. Pearson, 735 S.W.2d 240 (Tex. 1987). "Except for fundamental error, appellate courts are not authorized to consider issues not properly raised by the parties." Mack Trucks, Inc. v. Tamez, 206 S.W.3d 572, 577 (Tex. 2006) (citing In re B.L.D., 113 S.W.3d 340, 350-52 (Tex. 2003)). In its brief, Samson does not rely on any cases that were decided based on a claim of unilateral mistake; instead, it relies on Gail v. Berry, 343 S.W.3d 520, 524-25 (Tex.App.-Eastland 2011, pet. denied), a case that involves a claim of mutual mistake. Thus, whether the trial court erred with respect to denying relief on Samson's theory of unilateral mistake is inadequately briefed, so the claim is not further discussed. See Tex.R.App. P. 38.1(f), (h); Tex.R.App. P. 44.1.
