The appellant, an oil and gas producer, executed two mineral leases to produce oil and gas from the same mineral estate. The producer appeals an adverse summary judgment in its declaratory judgment action. Under a plain language analysis and considering surrounding circumstances, the lease is unambiguous and calls for an unallocated $1, 750 per acre bonus. The negotiations inform and confirm the lease terms; they do not vary from or contradict the lease provisions. The trial court's judgment is affirmed in part, and reversed and remanded in part. San Antonio Court of Appeals, No. 04-11-00550-CV, 08-30-2013.
September 20, 2013 at 04:08 PM
X
Thank you for sharing!
Your article was successfully shared with the contacts you provided.
From the 49th Judicial District Court, Webb County, Texas Trial Court No. 2010CVF000798D1 The Honorable Joe Lopez, Judge Presiding
This is an appeal from the trial court’s judgment denying Appellant’s motions for summary judgment and granting Appellees’ motions for summary judgment in a suit involving the construction of an oil and gas lease. Appellant BP America Production Company executed two separate leases to produce oil and gas from the same mineral estate in Webb County. When a dispute arose over one of the leases, BP filed a declaratory-judgment action and various claims against all the lessors. In turn, the lessors counterclaimed against BP. Later, BP and the lessors filed competing summary judgment motions. The trial court denied BP’s motions, granted the lessors’ motions, and BP appealed. We affirm in part and reverse in part the trial court’s judgment, render in part, and remand the cause to the trial court for further proceedings consistent with this opinion.
Background
BP executed two separate leases to produce oil and gas from the same mineral estate on approximately 7, 520 acres of the Santa Elena Ranch in Webb County. It first executed a lease with Diana Solis (Solis lease) for her 30% interest in the undivided mineral estate. Shortly thereafter, BP intensified its negotiations with the lessors holding the remaining 70% interest; we refer to the combined 70% interest holders as Lessors.[1]
After BP executed the Solis lease, it continued negotiations with Lessors: Solis’s family members, some others, and Carlos M. Zaffirini Sr. BP initially offered Lessors a $1, 300 per acre bonus. Lessors countered by asking for a $1, 300 per acre bonus and a separate $700 per acre consent-to-assignment fee that the parties would not treat as bonus. BP increased their offer to $1, 750 per acre and proposed specific bonus provision language. After more negotiations, Lessors accepted BP’s payment offer and the bonus provision language, and the parties executed the Zaffirini lease.
C. BP’s Payment to Solis
Immediately after the parties executed the Zaffirini lease, BP sent Solis a payment for approximately $1, 026, 000. According to BP, under the Solis lease Favored-Nations clause, BP was obligated to pay Solis an additional $450 per acre bonus because it had granted Lessors a more favorable bonus term than it had negotiated with her. After BP paid Solis, Lessors demanded that BP pay them another $450 per acre as bonus under the Zaffirini lease Favored-Nations clause claiming they had been paid only $1, 300 per acre bonus.
D. BP Sues Lessors
BP rejected Lessors’ demand and sued Lessors. BP’s original petition sought declaratory relief, costs of suit, and attorney’s fees; BP later added fraud and other claims against Lessors. In its fifth amended petition, BP asked the court to declare that, inter alia, Lessors were not entitled to any additional bonus, BP was entitled to a lease extension, and BP was entitled to costs and attorney’s fees.
BP argued in the alternative—in case the court found that only $1, 300 per acre of its payment to Lessors was bonus—that Solis was not entitled to an additional bonus payment, Solis must return the overpayment, and Lessors are not entitled to any additional bonus.
BP pled in the further alternative that the lease was ambiguous and extrinsic evidence should be considered. BP sued Solis to recover the additional $450 per acre it paid her; BP claimed money had and received, unjust enrichment, and unilateral mistake.
E. Lessors’ Counterclaims
Lessors counterclaimed for breach of contract, specifically alleging that BP failed to pay Lessors the additional bonus it owed them under the Zaffirini lease’s Favored-Nations clause. They sued BP for damages based on BP’s alleged breach of "utmost good faith and fair dealing" standard of conduct that was provided in a lease clause. Lessors also alleged that BP’s conduct was fraudulent, malicious, and grossly negligent, and they were entitled to exemplary damages.
The Zaffirini Lessors moved for traditional summary judgment on their counterclaim that BP breached the lease and the Zaffirini Lessors were entitled to damages, additional damages under lease paragraph 36.14, and attorney’s fees. The Zaffirini Lessors also moved for summary judgment against BP’s claim that the Zaffirini Lessors had a duty to cooperate and BP’s claims of fraud, fraudulent inducement, promissory estoppel, fraud by nondisclosure, and negligent misrepresentation. Finally, the Zaffirini Lessors moved for traditional summary judgment against BP’s declaratory-judgment claim that it was entitled to a lease extension.
2. Zaffirini Lessors’ No-Evidence Motion
In their no-evidence motion, the Zaffirini Lessors asserted that BP produced no evidence of the Zaffirini Lessors’ breach of contract, breach of duty to cooperate, fraud, fraudulent inducement, fraudulent concealment, fraud by nondisclosure, or negligent misrepresentation. The Zaffirini Lessors also asserted that BP produced no evidence that it was entitled to damages based on promissory estoppel or was entitled to a lease extension.
3. Jones Lessors’ Joinder
The Jones Lessors joined the Zaffirini Lessors’ traditional and no-evidence motions for summary judgment.
4. BP’s Traditional Motion
In its traditional motion, BP moved for summary judgment against Lessors on its claims for declaratory judgment, breach of contract, breach of the duty to cooperate, fraud, fraudulent inducement, fraud by nondisclosure, promissory estoppel, and negligent misrepresentation, and sought attorney’s fees and costs. BP also moved for summary judgment on its challenges to Lessors’ claims that BP breached the lease, that BP breached its duty of utmost good faith and fair dealing, and that BP was liable for exemplary damages.
5. BP’s No-Evidence Motion (Jones Lessors)
BP moved for no-evidence summary judgment against the Jones Lessors. It asserted they provided no evidence on their claims against BP for breach of contract, breach of the duty of good faith and fair dealing, fraud, gross negligence, and liability for additional damages under lease section 36.14.
6. BP’s No-Evidence Motion (Zaffirini Lessors)
BP also moved for no-evidence summary judgment against the Zaffirini Lessors’ claims. It asserted there was no evidence of BP’s alleged breach of contract, breach of the duty of good faith and fair dealing, fraud, gross negligence, and liability for additional damages under lease section 36.14. BP’s no-evidence motion also asserted that the Zaffirini Lessors presented no evidence on their affirmative defenses of BP’s alleged non-reliance on their representations, BP’s non-reliance disclaimer condition, BP’s alleged failure to use due diligence or its own actions caused its injury, or contractual disclaimer. Finally, BP’s no-evidence motion contended that the Zaffirini Lessors presented no evidence on their affirmative defenses of estoppel, promissory estoppel, quasi-estoppel, waiver, acquiescence, or release.
7. Jones Lessors’ Summary Judgment Responses
The Jones Lessors also sought to join and adopt as their own the Zaffirini Lessors’ June 27, 2011 response to BP’s traditional and no-evidence motions for summary judgment.
G. Summary Judgment
After a June 30, 2011 hearing on the motions, the trial court granted the Zaffirini Lessors’ and Jones Lessors’ traditional and no-evidence motions and granted Solis’s traditional motion. It declared that the disputed $450 per acre payment was not bonus and stated that "Solis is entitled under equity and good conscience to retain the $1, 026, 000 that BP voluntarily paid [her]." It awarded to the lessors the following amounts:
Zaffirini Lessors
Jones Lessors
Damages
$2, 062, 179.00
$294, 789.93
Attorneys’ Fees
$687, 393.00
$110, 546.22
Additional Damages (Lease paragraph 36.14)
$687, 393.00
$73, 697.43
The trial court awarded Diana Solis $160, 000.00 for attorneys’ fees through trial, and additional amounts in case of appeal or petition.
This premium content is reserved exclusively for Law.com subscribers.
With this subscription you will receive unlimited access to high quality, online, on-demand premium content from well-respected faculty in the legal industry. This is perfect for attorneys licensed in multiple jurisdictions or for attorneys that have fulfilled their CLE requirement but need to access resourceful information for their practice areas. View Now
Our Team Account subscription service is for legal teams of four or more attorneys. Each attorney is granted unlimited access to high quality, on-demand premium content from well-respected faculty in the legal industry along with administrative access to easily manage CLE for the entire team. View Now
Gain access to some of the most knowledgeable and experienced attorneys with our 2 bundle options! Our Compliance bundles are curated by CLE Counselors and include current legal topics and challenges within the industry. Our second option allows you to build your bundle and strategically select the content that pertains to your needs. Both options are priced the same. View Now
Law.com Compass includes access to our exclusive industry reports, combining the unmatched expertise of our analyst team with ALM’s deep bench of proprietary information to provide insights that can’t be found anywhere else.
Law.com Compass delivers you the full scope of information, from the rankings of the Am Law 200 and NLJ 500 to intricate details and comparisons of firms’ financials, staffing, clients, news and events.
