BBX Operating, LLC v. American Fluorite, Inc., GeoSouthern Energy Partners, LP, and GeoSouthern Energy Corp.

• Court: Court of Appeals of Texas
• Decided: July 29, 2021
• Docket: 09-19-00278-CV
• Status: Published

Opinion

In The

Court of Appeals

Ninth District of Texas at Beaumont

________________

NO. 09-19-00278-CV ________________

BBX OPERATING, LLC, Appellant

V.

AMERICAN FLUORITE, INC., GEOSOUTHERN ENERGY PARTNERS, LP, and GEOSOUTHERN ENERGY CORP., Appellees ________________________________________________________________________

On Appeal from the 1st District Court Jasper County, Texas Trial Cause No. 35155 ________________________________________________________________________

MEMORANDUM OPINION

The underlying litigation arises from a dispute over revenue payments, joint

interest billings, and expenses incurred in the development of oil and gas prospects.

In six issues, BBX Operating, LLC (BBX) appeals the trial court’s summary

judgments in favor of American Fluorite, Inc. (AFI), GeoSouthern Energy Partners,

LP (GSEP), and GeoSouthern Energy Corp. (GSEC) (collectively, “GeoSouthern”

1 or “Appellees”). For the following reasons, we affirm the trial court’s judgment in

part and reverse and remand in part.

I. Background

A. Parties’ Relationship

BBX and GeoSouthern had a lengthy relationship pursuing oil and gas drilling

opportunities within various East Texas counties. As a means to develop these

prospects and achieve producing wells within defined geographical areas, the parties

entered into joint development agreements (JDAs), which preceded the joint

operating agreements (JOAs). 1 The JDAs at issue are the Neches II AMI (or “area

of mutual interest”) and Make My Day JDA. Pursuant to these agreements, BBX

acted as the operator, and the GeoSouthern entities held working interests in varying

percentages. 2

The underlying lawsuit involved a dispute over BBX withholding

GeoSouthern’s production revenues, GeoSouthern’s payment of joint interest

billings to BBX (“JIBs”), and amounts sought by BBX through “Cash Call” letters,

which BBX characterized as “Prospect Development Costs.” 3 BBX incurred the

1 The parties also referred to these as “areas of mutual interest” or “AMIs” throughout the trial record. 2 There are also other working interest owners, which are not parties to this litigation. 3 The parties also referred to these expenses as “unproposed well costs” and “pre-development costs” throughout the record. 2 costs delineated in the “Cash Call” letters after the acquisition of the leasehold

interests but before drilling wells.

1. Neches II AMI

The Neches II agreement designated BBX as the operator and provided that

any party to the agreement could acquire leasehold interests within the AMI.

Likewise, any party to the agreement could propose wells by giving written notice

as follows:

WELL PROPOSALS: Well proposals shall include a) a plat showing the proposed surface and bottom hole locations, b) a geological prognosis to include the intended target zone (or zones), and c) AFE. Each Party will either elect to participate in the proposed well within thirty (30) days of receipt of the well proposal or go non-consent in the proposed well pursuant to the terms of the JOA. All operations on each well drilled on the subject lands or lands pooled therewith shall be governed by the terms of the JOA. Although the designated Operator shall use its best efforts to prepare and provide to each Party for execution a separate JOA for each well and unit in which each Party elects to participate, the terms of such JOA will apply to and be binding on the Parties regardless of whether same is actually executed. If there are any conflicts between the terms of the JOA and this Agreement, the terms of this Agreement shall super[s]ede and control. Upon the completion of any well, each non-operating Party shall timely receive all geological well information, permits, and government reports.

2. Make My Day JDA

The Make My Day agreement also designated BBX as the operator, and BBX

would “have the sole option to propose units and wells within the defined areas;

however, the JOA shall govern the right to propose wells within defined units.” The

contract provided wells would be proposed as follows: 3 INITIAL WELL PROPOSALS. Any proposal of a well will include, but will not be limited to, the selection of the drill site, a good faith estimate of the size and configuration of the proposed unit for said well(s), the approximate total acreage to be included in the unit, a geological prognosis to include the intended target zone or zones, and an Operating Agreement, which will govern all operations conducted within such boundaries of the unit (“Proposed Unit”), identical to the form attached hereto as Exhibit B, as to those Parties electing to participate in the drilling of the proposed well and all operations to be conducted within the proposed unit. The proposed well will be designated as the “Initial Well” as that term is described and used in article VI, A. of the JOA. Additionally, such notice will contain the surface location of the well, the objective depth of the well and an estimate of the cost of drilling and completing the well for production.

The parties receiving the Initial Well proposal shall have thirty (30) days after receipt of the proposal to notify the proposing party in writing, whether they elect to participate in the cost of the Initial Well (“Participating Parties”) or elect to relinquish their interest in the proposed well, and all future well(s) proposals, along with rights to any future leasehold purchased, within the proposed unit area. All parties electing to participate in the Initial Well will immediately execute and return the Operating Agreement provided in the proposal. If one (1) or more Parties elect not to participate in the Initial Well, then the proposing party shall give written notice of same to those Participating Parties within twenty (20) days following the expiration of the thirty (30) day election period set forth above. The Participating Parties shall then have the option for ten (10) days, following receipt of such written notice to elect to participate for their proportionate share of the interest available. ...

All future proposals and operations conducted within any established JOA contract area following the drilling of the Initial Well in a unit shall be governed by the terms and conditions of the JOA which will supersede the provisions in this Agreement.

(Emphasis added.) The Make My Day JDA further provided that “[p]articipation in

any of the Areas of Mutual Interest identified may be reduced, relinquished or 4 otherwise limited based on elections not to participate or any failure to submit any

payments required as provided elsewhere in this agreement.”

3. Prospect Development

AMIs or JDAs precede JOAs; once a well is put on production, a JOA is

usually the next contract. Under the terms of the JDAs, well proposal submissions

to the interest owners contained certain requisite information, along with an

“authorization for expenditure” (“AFE”), which broke down the costs incurred in

pursuing the well. The well proposal also included an election where the interest

owner could consent or non-consent the well. If the interest owner consented,

thereby electing to participate, they signed the operating agreement included with

the proposal. If participating, the interest owner also sent payment for its

proportionate share of the costs in the AFE. If an interest owner elected to non-

consent the well, it would not pay the AFE costs, but it relinquished any interest in

the well and any subsequent wells in the unit, and its interest would be offered to the

other interest owners; if the other interest owners elected to participate, they would

then pick up that share of the costs.

After the parties agreed to a well proposal and the JOA was in place, BBX

began sending JIBs for monthly costs associated with each well to the participating

interest owners. According to BBX’s accountant, Laurel Vance, “Cash Calls” were

handled as “off book” transactions, but if a party consented to a well, those were

5 handled as prepayment. 4 Once the participating parties executed a JOA, that

agreement governed the payment of revenues, as well as remedies for non-payment

of JIBs. According to BBX’s accountant, JIBs are generated on a well-by-well basis.

Under the JOA, BBX, as the operator, had the right to offset or net JIBs if any party

defaulted only within that particular contract area. 5

4. “Cash Calls” and Dispute

In May 2015, BBX sent nine “Cash Call” letters to the GeoSouthern entities

for costs it purportedly incurred in the areas covered by these two agreements,

totaling $4,219,597.55, and asserted in the letters that the AMIs/JDAs gave them the

authority to do so. Each “Cash Call” letter cited to the applicable JDA, and stated

that the agreement “allows BBX Operating, LLC to “Cash Call” partners for the

expenses incurred for brokers fees, title examination, title curative and other

expenses incurred for preparing tracts of land to be included in a future Drilling

Unit(s).” The letters further advised:

[The GeoSouthern entity] has 30 days from receipt [of] this notice to elect and pay its share of expenses. Under our agreement, if [the GeoSouthern entity] elects not to pay its share of the expenses then [the GeoSouthern entity] shall be deemed to have elected not to participate in the Leasehold Acquisition and deemed to have elected not to participate in any drilling and development of the leasehold within the AMI. Based on the deemed elections, [the GeoSouthern entity’s]

4 “Off book” transactions were costs accumulated by the operator for which no division of interest had been created to bill out on a joint interest billing. 5 The record reflects that GeoSouthern does not dispute BBX’s right to net or offset JIB payments against revenues. 6 leasehold and right to participate in a future Drilling Unit will be offered to any participating parties within the [Prospect Area].

GeoSouthern contended that the Neches II and Make My Day JDAs did not

permit BBX to recover these costs in the absence of a specific well proposal.

GeoSouthern further argued it was not liable for costs submitted with a well proposal

if they non-consented the proposal. Beginning in August 2015, BBX withheld

GeoSouthern’s revenue payments. While GeoSouthern refused to pay the prospect

development costs demanded in the “Cash Call” letters, it continued paying JIBs

until Estis Compression placed liens on certain wells. GeoSouthern then withheld

JIB payments only on the wells with liens. On December 17, 2015, GeoSouthern

sent a letter demanding BBX release their revenue payments and filed suit against

BBX shortly thereafter.

B. Procedural History

1. Original Petition

On December 23, 2015, the plaintiffs filed their original petition against BBX.

In it, they alleged that BBX is the operator of certain oil and gas leases (the “Subject

Leases”) in Jasper, Tyler, and Polk County, Texas. The GeoSouthern entities also

alleged that they own undivided mineral leasehold working interests in the Subject

Leases and that BBX and AFI, among other entities, are parties to certain joint

operating agreements and related development agreements. In support of its claims,

GeoSouthern attached its demand letter to BBX and BBX’s “Cash Call” letters dated 7 May 27, 2015, alleged to represent costs incurred and paid by BBX in conjunction

with the Neches II Prospect which include the Turkey Creek, Lake Tejas, Frog Pond,

and Fish Camp Prospects in Tyler County; Make My Day and Swamper Prospects

in Jasper County; and the Ollie East Prospect in Polk County. GeoSouthern asserted

claims for breach of contract, conversion, statutory lien, declaratory judgment, and

a Texas Natural Resources Code claim. On January 29, 2016, BBX filed its original

answer, asserting a general denial.

2. Rule 11 Agreement

On March 7, 2016, less than three months after GeoSouthern sued BBX, the

parties entered into a Rule 11 Agreement, 6 providing in relevant part:

4. Payment of Revenue to GeoSouthern for March 2016 and thereafter. Beginning March 25, 2016 and continuing on the 25th day of each month thereafter (or the next business day if the 25th day falls on a weekend or legal holiday), BBX shall wire transfer in immediately available funds GeoSouthern’s revenue payment for production for the preceding month; provided however, nothing herein shall modify or alter GeoSouthern’s right to take in kind or seek division orders respecting payment of revenue or any other rights of GeoSouthern under the applicable joint operating agreements or related documents or applicable law.

5. Payment of joint interest billing charges for August 2015 through January 2016. Provided that GeoSouthern receives the payments referenced in paragraph 3 by 12:00 p.m., central standard time, on the same day that GeoSouthern receives the payments in paragraph 3 herein, GeoSouthern shall wire transfer immediately available funds of

6 During oral argument, the parties explained that the Rule 11 agreement was intended to provide for agreeable payment schedules of all expenses and revenues, save and except the Prospect Development Costs. 8 $1,295,761.29 to BBX for GeoSouthern’s joint interest billings for August, September, October, November, and December 2015, and January 2016, after adjustments for cash call payments, as set forth on Exhibit C. Otherwise, GeoSouthern will wire transfer such funds the next business day. Such payment shall not waive, impair, prejudice or otherwise affect GeoSouthern’s right to audit or dispute any joint interest billing charges under the terms of the applicable joint operating agreements or related agreements or applicable law.

6. Payment of joint interest billings for February 2016 and thereafter. GeoSouthern will pay joint interest billings from BBX for the month of February 2016 and thereafter in accordance with the terms of the applicable joint operating agreements.

A dispute subsequently arose regarding the Rule 11 Agreement, with each

party alleging the other failed to perform. 7 Beginning with the October 25, 2016

payment, BBX withheld revenue payments from GeoSouthern and began netting

their JIBs. Although BBX’s corporate representative, John Gaines, and accountant,

Laurel Vance, testified that GeoSouthern’s JIB amounts had been netted and

GeoSouthern did not owe any JIB amounts, BBX continued to withhold revenue

payments from GeoSouthern.

7 Both parties filed motions to enforce the Rule 11 Agreement, with the trial court ruling in GeoSouthern’s favor. BBX filed a petition for writ of mandamus, which this Court conditionally granted. See In re BBX Operating, LLC, No. 09-17- 00079-CV, 2017 WL 1437135, at *1–2 (Tex. App.—Beaumont Apr. 20, 2017, orig. proceeding) (mem. op.). 9 3. Third Amended Petition

According to their third amended petition, 8 the Appellees and BBX entered

into certain joint operating agreements and related development agreements (the

“Subject Contracts”) that govern the parties’ rights and obligations with respect to

operations on the Subject Leases. GeoSouthern alleged that they had fully paid all

undisputed JIBs, but that BBX improperly withheld and continued to withhold

GeoSouthern’s proceeds from hydrocarbon sales. GeoSouthern asserted various

claims against BBX: (1) breach of contract; (2) conversion; (3) section 91.402(a) of

the Natural Resources Code; (4) foreclosure of a statutory lien; (5) breach of Rule

11 Agreement; and (6) declaratory judgment pertaining to the amounts lawfully

owed, the authority to withhold, net, or offset revenue, and for BBX’s removal and

replacement as operator.

4. First Motion for Partial Summary Judgment and Order

In its first motion for partial summary judgment, GeoSouthern addressed its

affirmative claims, including its claim for breach of contract based on the JDAs and

Rule 11 Agreement and its claim for declaratory judgment. The summary judgment

record included GeoSouthern General Land Manager Doug Dahmann’s affidavit,

the Neches II JDA, the Make My Day JDA, the parties’ Rule 11 Agreement, the

8 The third amended petition was the live pleading on file at the time GeoSouthern filed its first and second partial summary judgment motions. 10 deposition testimony of BBX corporate representative John Gaines, Turkey Creek

Well Proposal dated August 24, 2015, AFI’s letter indicating it “elected to go non-

consent” to the Turkey Creek Well Proposal, BBX General Counsel Mark

Helmueller’s Affidavit dated December 13, 2016, BBX’s authenticated “Statement

of Account” reflecting what GeoSouthern and BBX owed, and BBX’s May 2015

“Cash Call” Letters.

In response, BBX objected to the affidavit testimony of Dahmann and argued

GeoSouthern’s summary judgment evidence was not sufficient to entitle it to

judgment as a matter of law on its claims for breach of contract.

The trial court granted GeoSouthern a partial summary judgment as to the

breach of contract claims and found the summary judgment record conclusively

showed the amount of $1,714,547.65 for production revenues was owed to

GeoSouthern as of July 31, 2017, and awarded it damages in that amount. The trial

court also rendered declaratory judgment in GeoSouthern’s favor:

2. Non-joint operating agreements and/or demands which are included in the summary judgment record including the (i) “Cash Call Letters” (attached as Exhibit A-2 to the MPSJ); (ii) Area of Mutual Interest Agreement Neches II Prospect Area Tyler County, Texas (attached as Exhibit A-3 to the MPSJ); or (iii) Make My Day Joint Venture Development Agreement Tyler and Jasper Counties, Texas (attached as Exhibit A-4 to the MPSJ) do not authorize BBX to withhold oil and gas revenues from GeoSouthern;

3. Non-joint operating agreements and/or demands which are included in the summary judgment record including the (i) “Cash Call Letters” (attached as Exhibit A-2 to the MPSJ); (ii) Area of Mutual Interest 11 Agreement Neches II Prospect Area Tyler County, Texas (attached as Exhibit A-3 to the MPSJ) or (iii) Make My Day Joint Venture Development Agreement Tyler and Jasper Counties, Texas (attached as Exhibit A-4 to the MPSJ); do not authorize BBX to net or offset revenues that BBX owes to GeoSouthern against any non-joint interest billing amounts asserted by BBX; and

4. GeoSouthern has no obligation under the Area of Mutual Interest Agreement Neches II Prospect Area Tyler County, Texas (attached as Exhibit A-3 to the MPSJ) to pay any pre-development or unproposed well costs that BBX claims in connection with the Turkey Creek Prospect.

5. BBX’s Counterclaims

In February of 2018, BBX filed its amended counterclaim against

GeoSouthern and brought breach of contract claims under the Neches II and Make

My Day agreements, in addition to claims for quantum meruit seeking to recover

those portions of the unproposed well service expenses it attributed to GeoSouthern.

6. Second Motion for Partial Summary Judgment and Order

GeoSouthern’s second motion for partial summary judgment addressed

BBX’s counterclaims for breach of contract and quantum meruit. GeoSouthern

sought dismissal of BBX’s breach of contract claims because the JDAs expressly

provided for the recovery of the costs BBX sought in the “Cash Call” letters; that is,

only after a written well proposal was presented to the working interest owners and

the working interest owners expressly elected to participate in the proposed well

would a party pay its portion of such expenses when it returned a signed agreement.

GeoSouthern also argued that the trial court should dismiss BBX’s quantum meruit 12 “Cash Call” Claims since the JDAs expressly provided for the sharing of those costs

between interest owners who elected to participate thereby barring the claims by the

express contract rule. GeoSouthern finally contended that GeoSouthern did not

accept or benefit from the unproposed well services and BBX did not reasonably

notify GeoSouthern it expected payment for them. Only if the working interest

owners elected to participate in a proposed well, at that point, each participant would

pay for their share of the costs associated with the development and drilling of the

well. If the interest owners elected not to participate, they would not be responsible

for their proportionate share of expenses, but in doing so, they forfeited their right

to participate in that well, as well as future wells within the leasehold, with their

share being offered for reallocation to the other working interest owners.

In response, BBX argued a) there was no express contract, specifically a JOA,

that could address BBX’s recovery of prospect development costs, and b) there

remained genuine issues of material fact regarding the elements of its quantum

meruit claim that would preclude summary judgment. BBX contended that neither

the JOAs or JDAs address how prospect development costs—those costs incurred to

develop and operate wells within the prospect areas after leasehold interests are

acquired—are to be incurred and paid for by the interest owners. BBX contended

that the JDAs covered leasehold acquisitions costs and well proposals, but the

payment of prospect development costs was to be addressed by a separate contract,

13 the JOAs. BBX argued that expenses incurred after leasehold acquisition but before

a well proposal were not expressly covered under the JDA provisions pertaining to

well proposals but were informally consented to by the parties and subsequently

reimbursed to BBX by the interest owners.

The summary judgment evidence included the Neches II JDA and Make My

Day JDA, the “Cash Call” letters, BBX’s notice of withdrawal as operator,

deposition testimony from BBX corporate representative John Gaines, BBX General

Counsel Mark Helmueller’s deposition testimony, BBX Accountant Laurel Vance’s

deposition testimony, October 16, 2015 correspondence from Mark Helmueller,

Lake Tejas Well Proposal and JOA, Turkey Creek Well Proposal and non-consent,

and Doug Dahmann’s affidavit. The trial court again granted GeoSouthern’s

summary judgment motion ruling that the JDAs were written contracts that expressly

covered the costs associated with the prospect development expenses, the contracts

did not permit the recoupment of the prospect development costs in the manner

sought by BBX and therefore, GeoSouthern did not breach the JDAs by its refusal

to pay the “Cash Call” Claims. Finally, the trial court granted GeoSouthern’s second

motion for partial summary judgment in its entirety and dismissed all counterclaims

BBX asserted.

14 7. BBX’s Second Amended Counterclaim

In October 2018, BBX filed its second amended counterclaim. In addition to

its breach of contract and quantum meruit claims, BBX added affirmative claims for

promissory estoppel.

8. Fourth Amended Petition

On March 4, 2019, GeoSouthern filed its fourth amended petition, asserting

(1) breach of contract claims for damages based on the JOAs and Rule 11

Agreement, (2) a claim pursuant to Texas Natural Resources Code section 91.402,

(3) a statutory lien claim pursuant to Texas Business and Commerce Code section

9.343, and (4) declaratory judgment for all amounts lawfully owed by GeoSouthern

based on the AMI Agreements, the Turkey Creek proposal and non-consent, and

Rule 11 Agreement. In addition to liquidated damages, GeoSouthern sought pre-

judgment and post-judgment interest, costs, and attorneys’ fees.

9. Motion for Final Summary Judgment and Order

GeoSouthern’s motion for final summary judgment addressed its outstanding

affirmative claims against BBX and BBX’s outstanding counterclaim for promissory

estoppel against GeoSouthern. Specifically, GeoSouthern set out in the motion that

it sought final judgment on all revenues from hydrocarbon sales BBX owed

GeoSouthern, because the first partial summary judgment only addressed revenues

through July 31, 2017. In relation to this claim, GeoSouthern sought total revenues

15 due in the “Principal Amount” of $2,659,473.20 or the “Alternate Principal Amount”

of $2,441,732.24, dependent on whether BBX was authorized to withhold

$217,740.96 in revenues that Murphy Energy Corp. had refused to pay BBX for the

sale of hydrocarbons. 9 In the further alternative, GeoSouthern sought the “Admitted

Principal Amount” of $2,436,547.65 based on BBX corporate representative’s

deposition testimony. With respect to prejudgment interest on the unpaid revenues,

GeoSouthern sought:

(i) $261,548.32 in prejudgment interest on the Principal Amount under the Texas Finance Code, (ii) $249,266.38 in prejudgment interest on the Alternate Principal Amount, or (iii) $145,789.28 on the Admitted Principal Amount.

OR

GeoSouthern seeks (i) $158,202.54 in prejudgment interest under the Texas Natural Resources Code on the Principal Amount, (ii) $152,387.66 in prejudgment interest on the Alternate Principal Amount, or (iii) $69, 199.52 on the Admitted Principal Amount.

GeoSouthern also sought post-judgment interest on all amounts BBX owed at the

rate of five percent per annum. Finally, GeoSouthern sought “reasonable and

necessary attorneys’ fees” of not less than $550,060, and “such other and further

relief to which they show themselves justly entitled.”

9 The record reflected that purchaser Murphy Energy filed for bankruptcy and failed to pay BBX the of amount $217,740.96 attributable to GeoSouthern’s revenues. 16 With respect to BBX’s promissory estoppel counterclaim, GeoSouthern

sought summary judgment based on the “legal ground that promissory estoppel is

not recognized as an affirmative cause of action[.]” GeoSouthern incorporated the

“findings and rulings” of the trial court’s prior summary judgment orders into its

motion for final summary judgment and argued that “[i]n addition to the reasons set

forth in the Court’s 10/2018 MPSJ Order, the Court should dismiss BBX’s

promissory estoppel claims” because “promissory estoppel is defensive only, and

cannot constitute a basis for affirmative relief.”

The summary judgment evidence included: (a) the affidavit of GeoSouthern

Controller David Post with supporting exhibits, including revenue statements from

BBX, a summary of the revenue statements, interest calculations under the Texas

Natural Resources Code and Texas Finance Code; (b) GeoSouthern General Land

Manager Doug Dahmann’s affidavit with supporting exhibits, including the JDAs

and JOAs, “Cash Call” letters, well proposal payment chart, GeoSouthern’s demand

letter, BBX’s response to demand letter, Rule 11 Agreement with JOAs and

accounting procedures; (c) Kenneth Green’s Affidavit with supporting exhibits

including fee chart, redacted invoices, and interest calculations; and (d) Blake

Hamm’s affidavit with supporting exhibits including prior summary judgment

orders, orders for issuance of prejudgment writs of garnishment, Laurel Vance’s

17 deposition transcript, bankruptcy hearing transcripts, and Murphy Energy Corp.

bankruptcy schedules.

In its response to GeoSouthern’s final summary judgment motion, BBX

contended GeoSouthern failed to prove its breach of contract claim under the Rule

11 Agreement, specifically that GeoSouthern failed to conclusively establish its

performance and damages. BBX also argued that GeoSouthern failed to meet the

statutory requirements of the TNRC, and BBX had paid GeoSouthern an amount

exceeding its initial demand. BBX asserted its entitlement to bring an affirmative

claim for damages based on promissory estoppel as a matter of law. Finally, BBX

challenged GeoSouthern’s right to recover attorneys’ fees. Additional evidence BBX

included with its response was GeoSouthern General Land Manager Doug

Dahmann’s Deposition, Laurel Vance’s affidavit averring Murphy Energy still had

not paid $217,740.96 owed to BBX and attributable to GeoSouthern’s revenues,

BBX CEO Matthew Telfer’s Affidavit regarding the parties’ relationships and the

JDAs, and BBX’s counsel’s affidavit challenging the reasonableness and necessity

of attorneys’ fees.

The trial court granted GeoSouthern’s motion for final summary judgment

against BBX in its entirety. The trial court declared that neither the “Cash Call”

letters nor the JDAs authorized BBX to withhold GeoSouthern’s oil and gas

revenues nor net/offset revenues owed to GeoSouthern against any non-JIB amounts

18 asserted by BBX, and GeoSouthern had no obligation under the Neches II JDA to

pay any pre-development or unproposed well costs in connection with the Turkey

Creek Prospect. The trial court ordered that BBX was liable to:

• AFI in the principal amount of EIGHT HUNDRED FORTY-SIX THOUSAND ONE HUNDRED SIXTY-FOUR AND 84/100 U.S. DOLLARS ($846,164.84), plus (i) EIGHTY-ONE THOUSAND NINE HUNDRED AND 95/100 U.S. DOLLARS ($81,900.95) in prejudgment interest under the Texas Finance Code, (ii) ONE HUNDRED SEVENTY-FIVE THOUSAND TWENTY-NINE AND 09/100 U.S. DOLLARS ($175,029.09) in reasonable and necessary attorneys’ fees, (iii) an additional TWENTY THOUSAND AND NO/ 100 U.S. DOLLARS ($20,000.00) in reasonable and necessary attorneys’ fees if this Final Judgment is appealed and AFI is the successful party, (iv) an additional TWENTY-FIVE THOUSAND AND NO/IOO U.S. DOLLARS ($25,000.00) in reasonable and necessary attorneys’ fees if petition is made to the Texas Supreme Court and AFI is the successful party, and (v) post-judgment interest at the rate of five percent (5%) per annum on all foregoing amounts;

• GSEP in the principal amount of ONE HUNDRED EIGHT[Y]-SIX THOUSAND FIVE HUNDRED TWENTY AND 03/100 U.S. DOLLARS ($186,520.03), plus (i) SEVENTEEN THOUSAND FOUR HUNDRED SEVENTEEN AND 94/100 U.S. DOLLARS ($17,417.94) in prejudgment interest under the Texas Finance Code, (ii) Thirty-Eight Thousand Five Hundred Fifty-Nine and 20/100 U.S. Dollars ($38,539.20) in reasonable and necessary attorneys’ fees, (iii) an additional TWENTY THOUSAND AND NO/100 U.S. DOLLARS ($20,000.00) in reasonable and necessary attorneys’ fees if this Final Judgment is appealed and GSEP is the successful party, (iv) an additional TWENTY-FIVE THOUSAND AND NO/100 U.S. DOLLARS ($25,000.00) in reasonable and necessary attorneys’ fees if petition is made to the Texas Supreme Court and GSEP is the successful party, and (v) post-judgment interest at the rate of five percent (5%) per annum on all foregoing amounts;

• GSEC in the principal amount of ONE MILLION SIX HUNDRED TWENTY-SIX THOUSAND SEVEN HUNDRED EIGHTY-EIGHT 19 AND 33/100 U.S. DOLLARS ($1,626,788.33), plus (i) ONE HUNDRED SIXTY-TWO THOUSAND TWO HUNDRED TWENTY-NINE AND 43/100 U.S. DOLLARS in prejudgment interest under the Texas Finance Code, (ii) THREE HUNDRED THIRTY-SIX THOUSAND FOUR HUNDRED SEVENTY-ONE AND 70/100 U.S. DOLLARS ($336,471.70) in reasonable and necessary attorneys’ fees, (iii) an additional TWENTY THOUSAND AND NO/100 U.S. DOLLARS ($20,000.00) in reasonable and necessary attorneys’ fees if this Final Judgment is appealed and GSEP is the successful party, (iv) an additional TWENTY-FIVE THOUSAND AND NO/100 U.S. DOLLARS ($25,000.00) in reasonable and necessary attorneys’ fees if petition is made to the Texas Supreme Court and GSEP is the successful party, and (v) post- judgment interest at the rate of five percent (5%) per annum on all foregoing amounts.

BBX timely appealed the trial court’s final summary judgment order.

II. Standard of Review

We review a trial court’s decision to grant summary judgment de novo.

See Shell Oil Co. v. Writt, 464 S.W.3d 650, 654 (Tex. 2015) (citation omitted). We

view the evidence in the light most favorable to the nonmovant. Id. (citing City of

Keller v. Wilson, 168 S.W.3d 802, 824 (Tex. 2005)). In doing so, we indulge every

reasonable inference and resolve any doubts against the motion. See City of Keller,

168 S.W.3d at 824. “Undisputed evidence may be conclusive of the absence of a

material fact issue, but only if reasonable people could not differ in their conclusions

as to that evidence.” Buck v. Palmer, 381 S.W.3d 525, 527 (Tex. 2012) (citation

omitted).

20 When a no-evidence motion has been filed, it “is essentially a pretrial directed

verdict, and we apply the same legal sufficiency standard in reviewing a no-evidence

summary judgment as we apply in reviewing a directed verdict.” King Ranch, Inc.

v. Chapman, 118 S.W.3d 742, 750–51 (Tex. 2003) (citations omitted).

A no evidence point will be sustained when (a) there is a complete absence of evidence of a vital fact, (b) the court is barred by rules of law or of evidence from giving weight to the only evidence offered to prove a vital fact, (c) the evidence offered to prove a vital fact is no more than a mere scintilla, or (d) the evidence conclusively establishes the opposite of the vital fact.

Merrell Dow Pharms., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex. 1997) (citation

A party moving for traditional summary judgment has the burden of

establishing there is no genuine issue of material fact as to at least one requisite

element of the asserted cause of action and that it is entitled to judgment as a matter

of law. See Tex. R. Civ. P. 166a(c); Lightning Oil Co. v. Anadarko E&P Onshore,

LLC, 520 S.W.3d 39, 45 (Tex. 2017) (citations omitted). When the trial court fails

to specify the grounds on which it granted summary judgment, we must affirm if any

of the summary judgment grounds are meritorious. FM Props. Operating Co. v. City

of Austin, 22 S.W.3d 868, 872–73 (Tex. 2000) (citation omitted).

If a defendant files a combined traditional and no-

evidence summary judgment motion, we first review the judgment under the no-

evidence standards of Rule 166a(i). Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 21 600 (Tex. 2004); Werth v. Johnson, 294 S.W.3d 908, 909 (Tex. App.—Beaumont

2009, no pet.). When the underlying facts are undisputed, the analysis becomes a

question of law for the judge; however, if the facts are disputed, it is a question for

the trier of fact. See Richey v. Brookshire Grocery Co., 952 S.W.2d 515, 518 (Tex.

1997).

III. Analysis

A. Issue One: Breach of Contract

In its first issue, BBX challenges GeoSouthern’s entitlement to summary

judgment on its breach of contract claim. BBX contends that GeoSouthern failed to

conclusively establish its damages and that it failed to establish its performance or

excuse from performance.

A Rule 11 agreement can be enforced as a contract. See Ford Motor Co. v.

Castillo, 279 S.W.3d 656, 663 (Tex. 2009) (explaining that “party seeking

enforcement of the settlement agreement must pursue a separate claim for breach of

contract[]”). To be entitled to traditional summary judgment on its breach of contract

claim, GeoSouthern was required to prove all elements of its claim. See Tex. R. Civ.

P. 166a(c). The essential elements of a breach of contract cause of action are: “(1)

the existence of a valid contract; (2) the plaintiff performed or tendered performance

as the contract required; (3) the defendant breached the contract by failing to perform

or tender performance as the contract required; and (4) the plaintiff sustained

22 damages as a result of the breach.” USAA Tex. Lloyds Co. v. Menchaca, 545 S.W.3d

479, 501 n.21 (Tex. 2018) (citations omitted).

1. Damages

BBX makes three sub-arguments in support of this issue: (1) GeoSouthern

employee Dahmann’s affidavits were conclusory; (2) GeoSouthern failed to prove

its entitlement to additional damages including the “Murphy Amount;” and (3) the

damages, as awarded in the final summary judgment order, were not requested in

the motion.

As proof of its damages with its first partial motion for summary judgment,

GeoSouthern included evidence in the form of an affidavit from Douglas Dahmann.

Additionally, the summary judgment evidentiary record included, in part, BBX’s

Corporate Representative John Gaines’s deposition testimony, which BBX

submitted with its response. In support of its final motion for summary judgment,

GeoSouthern included as evidence another affidavit from Dahmann authenticating

and attaching the various JDAs, 10 GeoSouthern’s demand letter, the Rule 11

Agreement, BBX’s response to the demand letter, and an affidavit from David Post,

GeoSouthern’s Controller. Post’s affidavit authenticated and included revenue

10 The Make My Day JDA in the final summary judgment record included a copy of “A.A.P.L. Form 610-1982 Model Form Operating Agreement Modified to Provide for Horizontal Wells” as well as the COPAS accounting procedures for the JOA. 23 statements received from BBX, as well as internal GeoSouthern accounting records.

These records showed the amounts of monthly revenues owed by BBX to each

GeoSouthern entity and the JIB amounts that BBX offset against the revenues. Post’s

affidavit explained how he used the attached accounting records to calculate the

amounts owed to GeoSouthern from BBX.

BBX objected to Dahmann’s affidavit and argues Dahmann’s testimony

regarding damage amounts is conclusory and not supported by documentary

evidence or otherwise how he arrived at the damage amounts. In its brief, BBX

contends “Mr. Dahmann’s affidavit is devoid of means to calculate how

GeoSouthern arrives at approximately $2.6M in claimed damages[,]” and “[n]o

documents are attached to assist in or verify the calculation.”

A conclusory affidavit is substantively defective. See Brown v. Brown, 145

S.W.3d 745, 751 (Tex. App.—Dallas 2004, pet. denied). Rule 166a(f) governs

affidavits submitted in support of summary judgments and provides as follows:

Supporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence . . . [s]worn or certified copies of all papers or parts thereof referred to in an affidavit shall be attached thereto or served therewith. The court may permit affidavits to be supplemented or opposed by depositions or by further affidavits.

Tex. R. Civ. P. 166a(f).

BBX further disagrees with the amounts set forth in the affidavit of

GeoSouthern’s Controller, David Post. Post’s affidavit attached the revenue 24 statements from BBX, explained what the various amounts in those statements were,

and specified how he used those to calculate the amount BBX owed GeoSouthern.

BBX does not dispute that it owes and has withheld revenues from GeoSouthern.

Despite disagreeing with the amounts claimed to be owed by GeoSouthern, BBX

failed to provide any contrary evidence to substantiate the revenue amounts it

collected on behalf of GeoSouthern for the months in question.

Even if we agree that Dahmann’s affidavit is conclusory as to damage

amounts, the trial court may also consider the evidence attached to BBX’s summary

judgment responses to make its ruling. See Wilson v. Burford, 904 S.W.2d 628, 629

(Tex. 1995); see also Schlumberger Tech. Corp. v. Pasko, 544 S.W.3d 830, 835

(Tex. 2018) (“Rule 166a(c) plainly provides for the court to consider evidence in the

record that is attached either to the motion or response[]”). BBX included the

deposition testimony of its corporate representative, John Gaines, as evidence with

its response to GeoSouthern’s first motion for partial summary judgment. In that

deposition, Gaines testified that in October 2016, BBX made the decision to begin

netting JIB amounts GeoSouthern owed against the revenues due. Gaines testified

that BBX did so pursuant to Article XV, Section D of the JOAs, and the Rule 11

Agreement incorporated the JOAs by reference. Gaines testified that after netting

JIB amounts GeoSouthern owed between October 2016 and July 2017 against the

revenues BBX owed GeoSouthern, the net revenue amount BBX owed GeoSouthern

25 was $1,714,547.65. Therefore, with respect to damages, the evidence in the first

partial summary judgment record conclusively established that as of July 2017, BBX

owed GeoSouthern $1,714,547.65 in revenues.

In response to GeoSouthern’s motion for final summary judgment, BBX

complains that GeoSouthern incorporated the $1,714,547.65 revenue amount from

the first motion but failed to account for how the additional amount of $727,184.59

or $944,925.55 was derived. However, Post’s affidavit clearly explains that between

August 2016 through October 2017, “BBX owe[d] GeoSouthern not less than the

total principal amount of $2,659,473.20” or alternatively, if BBX rightfully withheld

the “Murphy Oil Payments” from GeoSouthern’s revenue in an amount of

$217,740.96, then the revenue amount owed GeoSouthern was $2,441,732.24. Post

explains how he calculated these “net revenues” with specificity using the revenue

statements BBX sent to GeoSouthern. The BBX statements and the summaries

contained data for these amounts that included JIB deduction amounts, and Post

attached these statements and summaries to his affidavit. BBX complains that the

calculations in the affidavits for the motion for final summary judgment did not but

should have accounted for JIBs; however, the testimony of BBX’s accountant,

Laurel Vance, conclusively established that GeoSouthern did not owe any additional

JIB payments, because BBX had netted them or offset them against GeoSouthern’s

26 revenues, and the “unnetted revenue” remains in BBX’s revenue account until the

check clears the bank.

“[I]ssues a non-movant contends avoid the movant’s entitlement to summary

judgment must be expressly presented by written answer to the motion or by other

written response to the motion[.]” McConnell v. Southside Indep. Sch. Dist., 858

S.W.2d 337, 341 (Tex. 1993) (citing City of Hous. v. Clear Creek Basin Authority,

589 S.W.2d 671, 678 (Tex. 1979)). In its response to GeoSouthern’s motion for final

summary judgment, BBX only disputed that it owed $944,925.55, because it

disputed that it owed the “Murphy Amount” of $217,740.96 as it had never received

those funds from the purchaser. BBX did not challenge the remaining revenue

amounts GeoSouthern claimed. Therefore, to the extent that BBX disputes the

revenue amounts owed in the final judgment beyond the “Murphy Amount,” BBX

failed to address the remaining revenue damages in its summary judgment response.

See id.

The summary judgment evidence conclusively established the total damage

amount of $2,659,473.20, less the amount awarded in the first summary judgment

order of $1,714,547.65, totaled $944,925.55, which was the exact amount

GeoSouthern claimed to be owed. Evidence in the summary judgment record also

supported that the alternate number of $2,441,732.24 was derived by deducting the

“Murphy Amount” of $217,740.96, should the trial court determine BBX lawfully

27 withheld this amount, then subtracting the $1,714.547.65 awarded in the initial

summary judgment, totaled $727,184.59. Despite BBX’s complaint that there

remained a genuine issue of material fact regarding the proper calculation of any

damages, the trial court was able to decide as a matter of law whether Murphy Oil’s

failure to pay BBX by its subsequent bankruptcy excused BBX from including the

“Murphy Amount” of $217,740.96 in the revenue calculations from a plain reading

of the Rule 11 Agreement.

Finally, BBX argues that GeoSouthern did not request the itemized measure

of damages awarded to each separate GeoSouthern entity in the final summary

judgment order. Generally, a judgment for damages exceeding the pleaded amount

is erroneous, even when the evidence supports a larger award. Lehmann v. Har-Con

Corp., 39 S.W.3d 191, 202 (Tex. 2001); see also Tex. R. Civ. P. 301 (requiring

judgment to conform to pleadings); Garrett v. Brinkley, No. 03-17-00295-CV, 2017

WL 6503043, at *2 (Tex. App. —Austin Dec. 12, 2017, pet. denied) (mem. op.)

(explaining how the rule developed). However, when appellate courts have reversed

summary judgments because a trial court granted more relief than a party requested

in its motion for summary judgment, the summary judgment motion “wholly failed

to address a claim for relief or theory of liability.” Levertov v. Hold Props., Ltd., No.

11-11-00284-CV, 2014 WL 887225, at *5–6 (Tex. App.—Eastland Feb. 27, 2014,

no pet.) (mem. op.) (affirming summary judgment granting damages for more

28 months’ rent than specifically requested in motion where evidence supported award,

body of motion referenced more months than specifically requested in prayer) (citing

Science Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 911–12, (Tex. 1997); Bever

Props., L.L.C. v. Jerry Huffman Custom Builder, L.L.C., 355 S.W.3d 878, 886–87

(Tex. App.—Dallas 2011, no pet.); Rust v. Tex. Farmers Ins. Co., 341 S.W.3d 541,

552 (Tex. App.—El Paso 2011, pet. denied); Muston v. Nueces Cty. Sheriff’s Dep’t,

122 S.W.3d 469, 473 (Tex. App.—Corpus Christi 2003, no pet.)).

BBX has failed to cite any cases, nor have we found any, where an appellate

court reversed a trial court for awarding the amount of damages sought in a summary

judgment motion but itemized the damage awards among the various plaintiff

movants, who were related entities. Here, GeoSouthern identified the three separate

entities as Plaintiffs, AFI, GSEP, and GSEC in its summary judgment motion, which

it collectively referred to as “GeoSouthern.” It incorporated the trial court’s prior

partial summary judgment award to GeoSouthern in the amount of $1,714,547.65

through July 31, 2017. GeoSouthern asserted the entities were owed total additional

revenues of $944,925.55 between August 2017 through January 2018 if the trial

court determined as a matter of law that BBX improperly withheld the “Murphy

Amount” or alternatively, $727,184.59 if BBX was excused from including the

“Murphy Amount” in revenue payments. The evidence in the form of Post’s

affidavit, supporting revenue statements, and summaries expressly enumerated the

29 revenue amounts owed to each GeoSouthern entity and supported the exact amount

of revenues awarded by the trial court, which importantly, BBX does not contest.

BBX only disputes that the “Murphy Amount” should be included in the revenue

payments. Finally, in its summary judgment motion prayer, GeoSouthern sought

“such other and further relief to which they show themselves justly entitled.”

GeoSouthern conclusively established its damages, and the summary judgment

evidence supports the trial court’s delineation of the amounts owed to each Plaintiff.

2. Performance

On appeal, BBX argues that GeoSouthern failed to prove it performed under

the contract or that its performance was excused and that BBX asserted the

affirmative defense of prior material breach. Only a party’s material breach will

excuse the other contracting party’s performance. See Hernandez v. Gulf Group

Lloyds, 875 S.W.2d 691, 692 (Tex. 1994); see also Mustang Pipeline Co., Inc. v.

Driver Pipeline Co., Inc., 134 S.W.3d 195, 196 (Tex. 2004) (“It is a fundamental

principle of contract law that when one party to a contract commits a material breach

of that contract, the other party is discharged or excused from further

performance.”). “Generally, the issue of whether a breach rises to the level of a

material breach that will render the contract unenforceable presents a dispute for

resolution by the trier of fact.” Hiles v. Arnie & Co, P.C., 402 S.W.3d 820, 831 (Tex.

App.—Houston [14th Dist.] 2013, pet. denied) (citation omitted). However,

30 materiality of a breach and the agreement’s resulting unenforceability can present

questions for the court to resolve as a matter of law. See id.; see also Mustang

Pipeline Co., 134 S.W.3d at 199–200 (determining that when contract provided time

was of the essence and a party failed to perform, other party’s performance was

excused as a matter of law).

In determining the materiality of a breach, courts consider, among other

factors, the extent to which the nonbreaching party is deprived of the benefit it could

have reasonably expected from the other party’s full performance. Hernandez, 875

S.W.2d at 693. “The less the non-breaching party is deprived of the expected benefit,

the less material the breach.” Id. at 693.

BBX’s corporate representative admitted that GeoSouthern paid JIB amounts

on wells where there was no lien and only withheld JIB amounts on those properties

which had a lien filed by a subcontractor. The same corporate representative testified

that BBX netted GeoSouthern’s JIB amounts against the revenues and the “JIBs are

now current as a result of the cumulative netting.” The summary judgment record

likewise established that BBX’s accountant testified GeoSouthern was current on

their JIB amounts and owed no further JIBs because BBX had netted or offset against

all JIB amounts owed.

In the Rule 11 Agreement, the parties agreed to pay the JIBs and revenues in

a manner consistent with the JOAs but set forth a monthly deadline by which BBX

31 had to pay the prior month’s revenues. GeoSouthern does not dispute BBX’s right

to net or offset JIB payments against revenues. The JOAs contained a provision

allowing BBX to offset or net late JIB payments owed to them against revenues due

the working interest owner. Since the Rule 11 Agreement required JIBs to be paid

in accordance with the JOAs, the remedy of offsetting or netting those amounts owed

to BBX against the revenues due to GeoSouthern was a remedy available and one

BBX exercised to make itself whole with respect to the JIBs. GeoSouthern

conclusively established that the summary judgment evidence showed BBX netted

the entire JIB amounts against GeoSouthern’s revenues, it no longer owed any JIB

amounts, and therefore, BBX received the benefit of the bargain. BBX presented no

evidence establishing a genuine issue of material fact existed as to the materiality of

any alleged breach by GeoSouthern to the extent it failed to pay JIBs on liened

properties. Therefore, BBX was still required to pay revenue amounts owed under

the contract.

Having determined that GeoSouthern conclusively established its damages

and BBX failed to present evidence creating a genuine issue of material fact as to

the materiality of a breach, we overrule BBX’s first issue.

32 B. Issue Two: Declaratory Judgment

BBX challenges the trial court’s entry of declaratory judgment for

GeoSouthern and specifically contests “that certain agreements [did] not authorize

BBX to net or offset revenues.” BBX argues GeoSouthern failed to establish as a

matter of law its entitlement to a declaratory judgment that BBX is not allowed to

net or offset revenues, therefore the burden never shifted to it to show the existence

of a material fact issue exists. BBX claims that it pleaded the affirmative defenses

of usage and trade and recoupment, and even if the burden shifted, it presented

evidence that every other working interest owner paid or agreed to pay the prospect

development costs. BBX further asserts that GeoSouthern failed to bring forth any

evidence other than the agreements and Dahmann’s affidavit, which BBX maintains

is conclusory.

GeoSouthern pleaded claims for declaratory judgment pursuant to Texas Civil

Practice and Remedies Code Chapter 37 and sought among other things,

declarations: 11 (1) “determining amounts lawfully owed under the Subject Contracts

and Rule 11 Agreement, including production revenues, JIBs, Unproposed Well

11 GeoSouthern’s fourth amended petition contained the same claims for declaratory relief as the third amended petition. The third amended petition was the live pleading when it filed its first motion for partial summary judgment, and the fourth amended petition was the live pleading when GeoSouthern filed its motion for final summary judgment, which incorporated the trial court’s rulings from the first summary judgment. 33 Costs and related charges. Such determination should also include an accounting of

all amounts billed and paid by GeoSouthern, including cash call prepayments;” 12 (2)

“an election by AFI to go non-consent on BBX’s Turkey Creek Well Proposal under

the Neches II AMI Agreement results in no obligation for AFI to pay the Unproposed

Well Costs for that prospect, and specifically that AFI did elect to go non-consent

on the Turkey Creek Well Proposal and therefore has no obligation to pay either

Unproposed Well Costs or Well AFE[;]” (3) “[t]he AMI Agreements, Rule 11

Agreement and Subject Contracts do not authorize BBX to withhold revenue

payments, offset or net against revenue payments in connection with the Unproposed

Well Costs. To the extent BBX has limited authority under the JOAs to offset/net

JIBs against revenue payments (as opposed to Unproposed Well Costs), such

authority is limited to offsetting/netting for specific JIB charges owed under the

applicable joint operating agreement against revenue payments from wells governed

by such joint operating agreement.”

When a cause of action seeks a declaratory judgment of a contract’s

construction, the only evidence of the contract’s interpretation may be the contract

itself. See Piranha Partners v. Neuhoff, 596 S.W.3d 740, 743–44 (Tex. 2020) (an

unambiguous contract’s meaning is determined as a matter of law, looking to the

12 GeoSouthern’s petitions defined “Subject Contracts” as “certain joint operating agreements and related development agreements” between GeoSouthern and BBX. 34 parties’ intent as expressed in the written agreement); IE.Com Ltd. v. Peeler, No. 05-

19-00496-CV, 2020 WL 3424913, at *3 (Tex. App.—Dallas June 23, 2020, no pet.)

(mem. op.) (noting that in a declaratory action regarding contract construction, the

only evidence may be the contract itself). No party asserts that the Subject Contracts

are ambiguous. With its first motion for partial summary judgment, GeoSouthern

included the relevant JDAs and Rule 11 Agreement, “Cash Call” letters, BBX’s

Turkey Creek Well Proposal dated August 2015, and AFI’s election to “go non-

consent” in response to the Turkey Creek Well Proposal. With its motion for final

summary judgment, GeoSouthern included these same documents and the JOAs. In

the absence of any claim of ambiguity, these contracts alone can conclusively

establish the parties’ rights. See Piranha Partners, 596 S.W.3d at 743–44. The

construction of an unambiguous contract is a question of law for the court. Tawes v.

Barnes, 340 S.W.3d 419, 425 (Tex. 2011). When discerning the parties’ intent, we

examine the entire agreement, giving effect to each provision so that none is

rendered meaningless. See id.

GeoSouthern requested that the trial court determine the parties’ rights under

the Subject Contracts and Rule 11 Agreement. The “Cash Call” letters indicate they

were sent under the Make My Day JDA and Neches II AMI Agreements,

respectively. The applicable provisions in these agreements make clear that they

governed the parties’ relationships before a JOA came into place and that to the

35 extent the JOA was inconsistent with the Make My Day JDA or the Neches II JDA,

the JDAs would supersede.

The Neches II JDA, the agreement covering the Turkey Creek Well Proposal,

addressed leasehold acquisitions and well proposals in a defined area. The Neches

II JDA did not limit leasehold acquisitions to BBX. Instead, any party to the

agreement could be an acquiring party, and while the agreement required “acquiring

parties” to complete title and curative work, the agreement also stated that the parties

to the agreement “shall have the right to participate in any acquisitions within the

AMI[.]” With respect to leasehold acquisitions, the Neches II required the acquiring

party to give written notice within thirty (30) days of completing such acquisition to

the other parties and provide them with a “complete description of the Lease(s) or

Farmout Agreement(s) acquired and a copy of the Instrument(s) by which such

interest was acquired and all other pertinent information, including the number of

gross and net lease acres, the costs incurred in making the acquisition . . . .”

(Emphasis added.) The contract further provides that “[i]f the election is to

participate in the purchase of a Lease, the notice of election shall be accompanied

by a check for the cost of the proportionate interest such Party elects to take based

upon the costs specified in the original notice.” (Emphasis added.) The clear and

unambiguous language of the agreement provides for the parties’ right to participate

by way of election. The conditional language makes clear that sending a check for

36 the proportionate share of costs was to occur if the party elected to participate. The

contract notes that the parties shall have the “right” to participate rather than the

“obligation” to participate. The Neches II AMI also provided a consequence for

parties electing not to participate in leasehold acquisitions: a party’s “[f]ailure to

timely deliver a written election to purchase (and payment) or to participate will

constitute a conclusive relinquishment of the right to acquire an interest in the

Lease[.]” Pursuant to the Neches II JDA Well Proposals likewise could be submitted

by any party and gave the parties the right to “elect” to participate.

Unlike the Neches II, the Make My Day JDA provided that BBX “will have

the sole option to propose units and wells in the defined areas[]” and that “[w]ell

proposals will be proposed under the terms and conditions of section B of this

Agreement and shall be governed by the terms of the JOA attached hereto and made

a part hereof as Exhibit B.” The Make My Day JDA also required written notice of

well proposals and “such notice will contain the surface location of the well, the

objective depth of the well and an estimate of the cost of drilling and completing the

well for production.” The Make My Day JDA stated as follows:

The parties receiving the Initial Well proposal shall have thirty (30) days after receipt of the proposal to notify the proposing party, in writing, whether they elect to participate in the cost of the Initial Well (“Participating Parties”) or elect to relinquish their interest in the proposed well, and all future well(s) proposals, along with rights to any future leasehold purchased, within the proposed unit area. All parties electing to participate in the Initial Well will immediately execute and return the Operating Agreement provided in the proposal. If one (1) or 37 more Parties elect not to participate in the Initial Well, then the proposing party shall give written notice of same to those Participating Parties within twenty (20) days following the expiration of the thirty (30) day election period set forth above. The Participating Parties shall then have the option for ten (10) days, following receipt of such written notice to elect to participate for their proportionate share of the interest available.

With respect to leasehold acquisitions, the Make My Day JDA provided that

any interest 13 acquired by any party within the defined AMI “shall be offered to the

other Parties” to the agreement. Further,

[t]he Party acquiring any such Interest (“Notifying Party”) shall notify the other Parties (“Receiving Parties”) in writing within 30 days of completing such acquisition and shall provide the Receiving Parties with a Lease Purchase Report containing a complete description of the Lease(s) acquired or a copy of the Farmout Agreement entered into, including the number of gross and net lease acres, the costs incurred in making the acquisition, the amount of any known overriding royalties or other existing lease burdens affecting the Interest, the obligations associated with or required to earn such Interest, a mineral ownership report, and a copy of any agreements(s) by which the Leases were acquired, including the Oil and Gas Lease, filed Memorandum of Oil and Gas Lease, and any electronic shape files or other plat identifying the acquisition. For thirty (30) days from receipt of notice, the Receiving Parties shall have the right to acquire their Participating Interest (hereinafter defined) share in such Leases(s) or Farmout Agreement by providing written notice to the Notifying Party within such 30 day period accompanied by a check or wire transfer to the Notifying Party’s bank account for the cost of all of its Participating Interest based upon the costs specified in the original notice. If the election to participate in a Farmout Agreement is made by any of the Receiving Parties, it shall send its notice of election to the Notifying Party and shall include an agreement to assume and be bound by the obligations imposed by the Farmout Agreement to the extent of all of the Receiving Parties’ Participating Interests. Failure to timely deliver

13 Interest was defined as “Leases” in Section C of the agreement. 38 a written election to purchase or to participate as required above or the failure to pay for the cost of the Participating Interest at the time the written election is delivered will constitute a conclusive relinquishment of all of the right to acquire an interest in the Lease or to participate in the Farmout Agreement.

(Emphasis added.)

We are cognizant that our primary concern is to give effect to the parties’

intent as expressed in the contract by considering the entire agreement and

harmonizing all provisions so none are rendered meaningless. See Seagull Energy

E&P, Inc. v. Eland Energy, Inc., 207 S.W.3d 342, 345 (Tex. 2006). To adopt BBX’s

position would render these election provisions meaningless. See id. The JDAs

provided consequences of non-participation or non-consenting to leasehold

acquisitions or drilling, whether that non-consent was an affirmative written election

or a deemed non-consent for failure to timely provide a written election to consent.

The express and clear consequence provided in these agreements did not include

BBX’s offsetting or netting revenues, rather the consequence was the loss of the

party’s right to participate in future drilling or leasehold acquisitions under the

agreements. See id. (explaining that dispute under a JOA turned on whether the

parties expressly agreed upon consequences of election). Even though BBX sent the

“Cash Call” letters with express language citing the JDAs, BBX creatively attempted

to carve out the costs from the agreements by calling them “prospect development

costs.” The “Cash Call” letters also stated that if the GeoSouthern entity elected not

39 to pay their share of expenses, they will be deemed to have elected not to participate

in future drilling or leaseholds. This was consistent with the language contained in

the Subject Contracts that the consequence for electing not to pay the costs resulted

in a forfeiture of the right to participate in future drilling or leasehold acquisition

rather than BBX having the right to withhold, net, or offset revenues from already

producing wells. Finally, the Rule 11 Agreement unconditionally required BBX to

pay GeoSouthern its revenues and was devoid of any mention of “Cash Call” costs.

BBX contends on appeal that it pleaded usage of trade and recoupment, and

the fact that all other working interest owners agreed to pay the “Cash Call” costs

created a fact issue. “[W]hen a contract is unambiguous, we do not consider outside

evidence, including industry custom and usage, to alter or contradict the terms.”

Barrow-Shaver Res. Co. v. Carrizo Oil & Gas, Inc., 590 S.W.3d 471, 486 (Tex.

2019) (citing URI, Inc. v. Kleberg Cty., 543 S.W.3d 755, 757-58 (Tex. 2018); Nat’l

Union Fire Ins. of Pittsburgh v. CBI Indus., Inc., 907 S.W.2d 517, 520-21 (Tex.

1995) (per curiam)). Likewise, an unambiguous contract silent as to an immaterial,

non-essential term, requires no further supplementation. Id. We decline to

supplement clear and easily understood provisions with extrinsic evidence. See id.

We overrule this issue.

40 C. Issue Three: Quantum Meruit and BBX’s Expenses

BBX argues that the trial court erred by granting summary judgment in favor

of GeoSouthern regarding BBX’s quantum meruit claim for prospect development

costs. BBX contends that GeoSouthern failed to meet its summary judgment burden

to prove its affirmative defense of express contract. BBX asserts that the trial court

erred by concluding the Neches II and Make My Day JDAs expressly addressed

recovery of the expenses sought.

A party may plead breach of contract and quantum meruit as alternate theories

of recovery. See Tex. R. Civ. P. 48. Generally, though, the existence of an express

contract covering the subject matter of the dispute precludes recovery in quantum

meruit. See In re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 740 (Tex. 2005);

see also Hill v. Shamoun & Norman, LLP, 544 S.W.3d 724, 733 (Tex. 2018).

“Whether an express contract covers the services at issue is a legal question

for the court.” Young v. Dimension Homes, Inc., No. 01-14-00331-CV, 2016 WL

4536407, at *3 (Tex. App.—Houston [1st Dist.] Aug. 30, 2016, no pet.) (citation

omitted). If the evidence shows that no contract covers the services at issue, then the

question of the party’s recovery in quantum meruit is for the trier of fact. See Gulf

Liquids New River Project, LLC v. Gulsby Eng’g, Inc., 356 S.W.3d 54, 70 (Tex.

App.—Houston [1st Dist.] 2011, no pet.).

41 In addition to the written JDAs, GeoSouthern submitted BBX’s “Cash Call”

letters for unproposed development costs in support of its motion for summary

judgment. The “Cash Call” letters contained language that either of the applicable

JDAs “allows BBX Operating LLC to Cash Call partners for the expenses incurred

for brokers fees, title examination, title curative and other expenses incurred for

preparing tracts of land to be included in a future Drilling Unit(s).” The evidence

supporting GeoSouthern’s second motion for partial summary judgment also

included Gaines’s deposition testimony. Gaines testified that the prospect

development costs or unproposed well costs “are owed pursuant to the underlying

AMI agreements as costs that were incurred by BBX Operating on behalf of the non-

op partners primarily for title, curative – title examination, curative expenses.”

This evidence established that BBX’s representatives sent the “Cash Calls”

pursuant to the express contracts. Most importantly, the plain language of the

agreements covered the services that BBX tried to recover via “Cash Calls.” Those

agreements unequivocally contained election provisions whereby the working

interest owners could choose to participate in the costs, and if so, they reaped the

rewards when a well produced. Their election not to participate resulted in the

consequence of forfeiture of future participation rights.

The summary judgment record supports the trial court’s determination that

GeoSouthern conclusively established that the Neches II and Make My Day JDA

42 contracts expressly covered the services at issue and therefore, barred BBX’s

quantum meruit recovery. 14 See Fortune Prod. Co. v. Conoco, Inc., 52 S.W.3d 671,

684–85 (Tex. 2000) (no recovery under a quasi-contract or unjust enrichment theory

where valid express contract covers the subject matter of parties’ dispute). We

overrule BBX’s third issue.

D. Issue Four: Dismissal of BBX’s Counterclaim for Promissory Estoppel

BBX advances several arguments challenging the trial court’s dismissal of its

promissory estoppel claim, which GeoSouthern affirmatively addressed in its final

motion for summary judgment. For the reasons explained above, the JDAs were

express contracts covering the subject matter of the “Cash Call” costs sought by

BBX and expressly provided for therein. If a valid contract covers the alleged

promise, the plaintiff cannot recover for the promise under promissory estoppel.

Fertic v. Spencer, 247 S.W.3d 242, 250 (Tex. App.—El Paso 2007, pet. denied); see

also Subaru of Am., Inc. v. David McDavid Nissan, Inc., 84 S.W.3d 212, 226 (Tex.

2002) (promissory estoppel doctrine presumes no contract exists); Fortune Prod.

Co., 52 S.W.3d at 684 (Tex. 2000). BBX’s promissory estoppel claim is barred as a

matter of law because an express contract governs the subject matter of the parties’

dispute. We overrule issue four.

14 Having concluded express contracts cover the services at issue, thus barring recovery under this theory, we do not address the evidence of the individual quantum meruit elements. See Tex. R. App. P. 47.1. 43 E. Issue Five: TNRC Claim

In its fifth issue, BBX contends that GeoSouthern failed to prove its Texas

Natural Resource Code claim as a matter of law. Texas Natural Resource Code

sections 91.402 and 91.403 require a payor of oil and gas revenues to pay interest to

the payee if the revenue payments are not paid timely. See Tex. Nat. Res. Code Ann.

§ 91.402(a) (requiring timely payment), § 91.403(a) (requiring payment of interest);

Valence Operating Co. v. Anadarko Petroleum Corp., 303 S.W.3d 435, 445 (Tex.

App.—Texarkana 2010, no pet.) (discussing Texas Natural Resources Code

provisions governing timely payment of revenues). Pre-suit notice is a condition

precedent to instituting a legal action under these provisions. See id. § 91.404(a)

(requiring written notice as a prerequisite to beginning judicial action against

nonpayor for nonpayment).

BBX seems to complain about the adequacy of GeoSouthern’s pre-suit notice

and that the Rule 11 Agreement was insufficient evidence to establish

GeoSouthern’s entitlement to revenue payments under the statute. BBX further

argues that it has raised a fact issue about whether GeoSouthern’s demand was

satisfied by the Rule 11 Agreement or by BBX’s payment of the amounts owed in

satisfaction of the demand.

GeoSouthern’s summary judgment evidence included a December 2015 letter

sent to BBX wherein it notified BBX of non-payment of revenues that BBX had

44 wrongfully withheld and cited to the pertinent Texas Natural Resource Code

provisions. GeoSouthern subsequently filed suit to collect those revenues. The

summary judgment evidence also included the executed Rule 11 Agreement wherein

BBX agreed to pay revenues it owed GeoSouthern on a specific timeline. BBX’s

argument that because GeoSouthern agreed to accept an amount different than the

demand letter and BBX’s payment of a portion of the revenues precluded the

recovery under the Texas Natural Resources Code lacks merit. The evidence shows

that while BBX may have paid an initial sum that addressed the amounts of revenues

when GeoSouthern sent the demand, BBX had an ongoing obligation to pay

revenues pursuant to the Rule 11 Agreement on a set schedule. Despite making an

initial payment, BBX’s corporate representative admitted BBX continued to

withhold revenues after the parties entered into the Rule 11 Agreement. Moreover,

the evidence established the prejudgment interest amount GeoSouthern sought was

limited to those additional revenue amounts that BBX had not paid and was

consistent with the Principal Amount of $2,659,473.20. We overrule this issue.

F. Issue Six: Prejudgment Interest

In its sixth issue, BBX challenges the trial court’s award of prejudgment

interest. In its motion for final summary judgment, GeoSouthern moved for

prejudgment interest under Texas Finance Code section 302.002 and Texas Natural

Resources Code section 91.403(a). See Tex. Fin. Code Ann. § 302.002; Tex. Nat.

45 Res. Code Ann. § 91.403(a). The trial court awarded prejudgment interest at a rate

of six percent pursuant to Texas Finance Code section 302.002. 15 BBX argues a

question of fact existed regarding the “Murphy Amount,” which put the total

principal amount in question, and therefore, GeoSouthern failed to conclusively

establish its entitlement to prejudgment interest on any theory.

As explained above, the trial court decided as a matter of law whether BBX

lawfully withheld the “Murphy Amount” by interpreting the Rule 11 Agreement and

the applicable JDAs. The trial court determined BBX improperly withheld the

“Murphy Amount,” and the Subject Principal Amount of $2,659,473.20 was readily

ascertainable given the summary judgment evidence. GeoSouthern provided

prejudgment interest calculations in Post’s affidavit with supporting documentation

including the “Murphy Amount” and without the “Murphy Amount.” The

prejudgment interest calculation did not include the initial amount BBX paid

pursuant to the Rule 11. Rather, the calculation only included the amounts for the

payment of ongoing revenues BBX failed to pay.

15 A Texas Natural Resources Code claim allows a payee to recover prejudgment interest. See Tex. Nat. Res. Code Ann. § 91.403(a). In its brief, BBX incorrectly states that the trial court awarded pre-judgment interest under both the Texas Natural Resources Code and the Finance Code, in the alternative. This is incorrect. Although the trial court’s Order noted that GeoSouthern was entitled to prejudgment interest at the rate of six percent under the Texas Finance Code section 302.002 and, in the alternative, the rates specified under Texas Natural Resources Code section 91.403, the trial court only awarded pre-judgment interest at the Finance Code rate of six percent. See Tex. Fin. Code Ann. § 302.002. 46 Texas Finance Code section 302.002 provides as follows:

If a creditor has not agreed with an obligor to charge the obligor any interest, the creditor may charge and receive from the obligor legal interest at the rate of six percent a year on the principal amount of the credit extended beginning on the 30th day after the date on which the amount is due. If an obligor has agreed to pay to a creditor any compensation that constitutes interest, the obligor is considered to have agreed on the rate produced by the amount of that interest, regardless of whether that rate is stated in the agreement.

Tex. Fin. Code Ann. § 302.002. The Texas Finance Code defines “creditor” as “a

person who loans money or otherwise extends credit. The term does not include a

judgment creditor.” Id. § 301.002(a)(3). A “loan” is defined as “an advance of

money that is made to or on behalf of an obligor, the principal amount of which

the obligor has an obligation to the pay the creditor. The term does not include a

judgment.” Id. § 301.002(a)(10). An obligor is “a person to whom money is loaned

or credit is otherwise extended. The term does not include . . . a judgment

debtor[.]” Id. § 301.002(a)(13); see Smith v. Huston, 251 S.W.3d. 808, 827–28 (Tex.

App.—Fort Worth 2008, pet. denied) (discussing statutory definitions and

applicability of 302.002). The summary judgment record in this case does not

include any evidence establishing that GeoSouthern is a creditor as that term is

defined in the Finance Code, that it loaned money to BBX, or that BBX had credit

extended to it by GeoSouthern. The trial court erred by awarding prejudgment

interest under Texas Finance Code section 302.002 at a rate of six percent pursuant

47 when the evidence did not establish that GeoSouthern met the statutory definition of

a creditor.

GeoSouthern pleaded in the alternative that it was entitled to prejudgment

interest pursuant to Texas Natural Resources Code section 91.403. See Tex. Nat.

Res. Code Ann. § 91.403(a). Although the trial court did not award prejudgment

interest under Texas Natural Resource Code, the trial court determined, in the

alternative, that GeoSouthern established its entitlement to prejudgment interest in

accordance with that provision. The Texas Natural Resources Code requires that

“proceeds derived from the sale of oil or gas production from an oil or gas well located in this state . . . must be made to each payee on a timely basis according to the frequency of payment specified in a lease or other written agreement between payee or payor.”

See Tex. Nat. Res. Code Ann. § 91.402(a). The Rule 11 Agreement expressly

provided that BBX agreed to pay the previous month’s revenues by the 25th day of

each month, which it failed to do. See id. BBX’s failure to pay the revenues in a

timely manner entitled GeoSouthern to the recovery of prejudgment interest at the

specified statutory rate. See id. § 91.403(a). As explained elsewhere in this opinion,

BBX does not contest that it owed GeoSouthern revenues or that it failed to pay

these revenues. Moreover, the trial court determined as a matter of law that BBX

improperly withheld the “Murphy Amount.” GeoSouthern is entitled to prejudgment

interest as specified in the Texas Natural Resources Code.

48 We sustain issue six as it applies to the recovery of prejudgment interest under

Texas Finance Code section 302.002 but overrule it with respect to recovery of

prejudgment interest pursuant to Texas Natural Resource Code section 91.403.

G. Issue Seven: Attorney’s Fees

In its final issue, BBX challenges the trial court’s award of attorney’s fees. 16

GeoSouthern moved for summary judgment on the issue of attorney’s fees,

requesting the total amount of $550,060, which the trial court awarded by splitting

it among the three GeoSouthern entities based upon the Principal Amount awarded

to each. The trial court also awarded conditional attorney’s fees in the event BBX

appealed. 17 The trial court’s order further reflected that GeoSouthern was entitled to

recovery of “reasonable and necessary” attorney’s fees from BBX pursuant to Texas

Civil Practice and Remedies Code Chapter 37 and Texas Natural Resources Code

section 91.406. In support of this issue, BBX asserts that: (1) a fact issue exists as to

the reasonableness of the amount of attorneys’ fees; (2) since it is a limited liability

company, no attorneys’ fees can be awarded against it pursuant to Texas Civil

16 BBX’s controverting affidavit does not mention the anticipated fees awarded in the event of an appeal, and those fees remain uncontested. See Cammack the Cook, L.L.C. v. Eastburn, 296 S.W.3d 884, 895 (Tex. App.—Texarkana 2009, pet. denied) (noting failure to mention anticipated fees awarded in the event of an appeal meant “those fees remain uncontested”). 17 Although the Order indicated that GeoSouthern was entitled to the $550,060 in “reasonable and necessary” fees, the individual amounts the trial court awarded to the three entities totaled $550,039.99. 49 Practice and Remedies Code chapter 38; (3) “a declaratory judgment plea does not

transform an unviable Chapter 38 claim for attorneys’ fees into a viable one[;]” and

(4) the trial court erred in awarding attorneys’ fees under the Texas Natural

Resources Code for the same reasons damages are not recoverable.

Texas follows the American Rule, which provides that a prevailing party has

no inherent right to recover attorney’s fees from the non-prevailing party absent

specific statutory or contractual authority allowing it. See Rohrmoos Venture v.

UTSW DVA Healthcare LLP, 578 S.W.3d 469, 487 (Tex. 2019); In re Nat’l Lloyds

Ins. Co., 532 S.W.3d 794, 809 (Tex. 2017) (orig. proceeding).

[T]o secure an award of attorney’s fees from an opponent, the prevailing party must prove that: (1) recovery of attorney’s fees is legally authorized, and (2) the requested attorney’s fees are reasonable and necessary for the legal representation, so that such an award will compensate the prevailing party generally for its losses resulting from the litigation process.

Rohrmoos Venture, 578 S.W.3d at 487.

1. Authorization for Attorney’s Fees

At issue in this case is statutory authorization for attorney’s fees. Texas

Natural Resources Code section 91.406 provides that for suits filed under that

subchapter, “the court shall include in any final judgment in favor of the plaintiff an

award of . . . reasonable attorney’s fees.” Tex. Nat. Res. Code Ann. § 91.406(1).

GeoSouthern filed a claim pursuant to this subchapter, and this provision provides

the statutory authority for recoupment of GeoSouthern’s reasonable attorney’s fees. 50 See id. The use of “shall” indicates that such an award is required should the plaintiff

receive a judgment in its favor, as GeoSouthern did here. See id.

GeoSouthern filed for a declaratory judgment seeking interpretation of the

parties’ written agreements and responsibilities thereunder, including the JDAs and

Rule 11 Agreement. The trial court entered judgment in GeoSouthern’s favor and

determined GeoSouthern was entitled to its reasonable attorney’s fees pursuant to

Texas Civil Practice and Remedies Code Chapter 37. Under the Uniform

Declaratory Judgment Act, “the court may award costs and reasonable and necessary

attorney’s fees as are equitable and just.” Tex. Civ. Prac. & Rem. Code Ann. §

37.009. To be entitled to recover fees under the UDJA, “[t]he declaratory judgment

claim must do more ‘than merely duplicate the issues litigated’ via the contract or

tort claims.” Etan Indus., Inc. v. Lehmann, 359 S.W.3d 620, 624 (Tex. 2011)

(quoting MBM Fin. Corp. v. Woodlands Operating Co., 292 S.W.3d 660, 669 (Tex.

2009)). In other words, where a claim for declaratory relief is merely “tacked onto”

other claims that do not allow for the recovery of fees, permitting the recovery of

fees pursuant to the UDJA would defeat the rule that specific provisions prevail over

general. See id.

Here, we cannot say that GeoSouthern’s claims for declaratory relief simply

repleaded its breach of contract action. Although the issues were intertwined,

GeoSouthern’s breach of contract claim dealt with the recovery of its revenues,

51 which necessarily implicated BBX’s offsetting JIB amounts, whereas the claims for

declaratory relief primarily dealt with the questionable “Cash Calls” for “prospect

development” or “unproposed well costs.” In theory, those declarations resolve

BBX’s ability to rightfully net or offset those amounts against revenues and the

viability of BBX’s counterclaims for breach of contract. Moreover, GeoSouthern’s

Texas Natural Resources claim for revenue payments permitted the recovery of

attorney’s fees. Thus, the claims were not merely “tacked onto” other claims that did

not permit recovery of fees.

The trial court correctly concluded that Texas Natural Resources Code section

91.406 and Texas Civil Practice and Remedies Code section 37.009 statutorily

authorized GeoSouthern to recover attorney’s fees. 18

2. Reasonableness

We next determine whether such fees were reasonable. BBX contends a fact

issue exists as to the reasonableness of the fees. The reasonableness of attorney’s

fees is generally a fact question. See, e.g., Bocquet v. Herring, 972 S.W.2d 19, 21

(Tex. 1998). However, it is settled that “the affidavit of the attorney representing a

claimant constitutes expert testimony that will support an award of attorney’s fees

in a summary judgment proceeding.” Haden v. David J. Sacks, P.C., 332 S.W.3d

18 As the trial court’s final Order does not reflect that such fees were recoverable pursuant to Chapter 38 of the Texas Civil Practice and Remedies Code, we do not address this issue. See Tex. R. App. P. 47.1. 52 503, 513 (Tex. App.—Houston [1st Dist.] 2009, pet. denied); Tesoro Petroleum

Corp. v. Coastal Refining & Mktg., Inc., 754 S.W.2d 764, 767 (Tex. App.—Houston

[1st Dist.] 1988, writ denied). If a movant presents expert testimony in support of

attorney’s fees, the burden shifts to the non-movant to raise a fact issue. Jordan v.

Centerpoint Energy Hous. Elec., LLC, No. 14-18-00663-CV, 2019 WL 5565978, at

*10 (Tex. App.—Houston [14th Dist.] Oct. 29, 2019, pet. denied) (mem. op.).

Absent controverting evidence, the movant’s affidavit will support summary

judgment. Id.; Tesoro, 754 S.W.2d at 767. “If an attorney’s affidavit regarding fees

is properly controverted by an opposing attorney, a fact issue is raised on

reasonableness and summary judgment is precluded.” Sun Tec Computer, Inc. v.

Recovar Grp., LLC, No. 05–14–00257–CV, 2015 WL 5099191, at *5 (Tex. App.—

Dallas Aug. 31, 2015, no pet.) (mem. op.); see also Jordan, 2019 WL 5565978, at

*10.

GeoSouthern’s summary judgment evidence supporting its request for

attorneys’ fees included the affidavit of GeoSouthern’s attorney, along with itemized

billing records and invoices. He explained his experience, his familiarity with the

case and subject matter, the hourly rate charged explaining that it was reasonable

considering the location and subject matter of the litigation. He also described the

various claims in the litigation, the tasks performed, and the billing records showed

who worked on what tasks, how long each worked on the task, and the hourly rate

53 each charged. He outlined the lodestar factors and averred he considered them in

determining the reasonable hourly rate. See El Apple I, Ltd. v. Olivas, 370 S.W.3d

757, 761-63 (Tex. 2012) (discussing lodestar method). He also averred the total

number of hours reasonably worked on the litigation and that $550,060 was a

reasonable fee for the work performed. 19 The billing records also specified with great

particularity the individual tasks performed, the length of time each took, the person

working on the task, and the rate of the billing individual.

To constitute competent summary judgment evidence, an affidavit must be

based on personal knowledge, set forth facts that would be admissible in evidence,

and affirmatively show the affiant’s competence to testify as to the matters contained

therein. Tex. R. Civ. P. 166a(f). BBX’s counsel included a controverting affidavit in

its summary judgment response. BBX’s attorney described his qualifications,

experience, and stated he knew the history of the case. He also averred that it was

his opinion that GeoSouthern’s fees were not reasonable and necessary. Although

he did not specifically contest the reasonableness of the $350 hourly rate, the

affidavit contained testimony that the total sum of $550,060 was unreasonable given

the causes of action involved. As a basis for this, BBX’s attorney averred that the

19 While the affidavit stated GeoSouthern’s attorneys spent more than 2,000 hours working on the file, the affidavit also stated that “1,571.6 hours is a reasonable amount of time for attorneys providing similar services to have spent[]” and multiplied that by a “reasonable hourly” rate of $350, which provided the $550,060 figure. 54 billing invoices of GeoSouthern’s attorney contained duplicative entries and wholly

unnecessary entries. He testified that

[n]othing incurred evaluating, analyzing or conducting research on any claims for relief by BBX was reasonable or necessary to pursue any claims by GeoSouthern. Nothing pertaining to Trinity River Resources’ bankruptcy proceeding or dealings with any party’s bankruptcy counsel was reasonably or necessarily incurred to prosecute a breach of contract, declaratory judgment action or claim under the TNRC. Nothing incurred pursuing the separate garnishment action was reasonable or necessary to pursue the claims in this case.

Finally, BBX’s counsel averred that the number of depositions taken in the case was

less “compared to most cases that have lasted this long.”

The controverting affiant noted his legal experience generally and his

experience with this specific case. Likewise, he averred the statements were based

on his personal knowledge. Although he did not point to specific time entries, he

based his dispute regarding the reasonableness of GeoSouthern’s fee on particular

tasks GeoSouthern performed and challenged whether they advanced

GeoSouthern’s claims. The expert’s specific complaint that tasks performed

defending BBX’s counterclaims are unavailing as a matter of law. See, e.g., Tony

Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 314 (Tex. 2006) (explaining that

some recoverable and non-recoverable tasks are so intertwined as a matter of law

that they cannot be segregated and to prevail on a contract claim a party must

overcome all affirmative defenses like prior material breach, and the opposing party

who raises them should not be allowed to suggest to the jury that overcoming those 55 defenses was unnecessary). Yet, we agree that work performed on a garnishment

proceeding or other entities’ bankruptcy proceedings are not so clear cut. BBX’s

controverting affidavit raised a genuine issue of material fact as to reasonableness

and specifically, whether fees for certain tasks should have been segregated or were

so interwoven with claims having recoverable attorney’s fees they could not be

segregated. See id. at 313–14 (“[O]nly when discrete legal services advance both a

recoverable and unrecoverable claim that they are so intertwined that they need not

be segregated.”). Given the existence of a genuine fact issue regarding the

reasonableness of the attorney’s fees, remand is necessary. See Wich v. Fleming, 652

S.W.2d 353, 358 (Tex. 1983) (“the determination of the disputed fact issue of

attorney’s fees was improper in a summary judgment proceeding.”). We sustain this

issue.

Conclusion

We determine GeoSouthern conclusively established its breach of contract

claim, declaratory judgment claim, and Texas Natural Resources claim.

GeoSouthern was entitled to statutory prejudgment interest under Texas Natural

Resources Code section 91.403. GeoSouthern further conclusively established that

express contracts provided for recovery of payment for the services BBX sought in

its “Cash Call” letters, precluding any recovery by BBX in quantum meruit and

conclusively negating BBX’s right to recover under promissory estoppel. We

56 reverse the prejudgment interest award under Texas Finance Code section 302.002,

and we remand to the trial court for a prejudgment interest calculation under Texas

Natural Resources Code section 91.403. We reverse the attorney’s fees award and

remand to the trial for further proceedings consistent with this opinion.

AFFIRMED IN PART, REVERSED AND REMANDED IN PART.

________________________________ CHARLES KREGER Justice

Submitted on June 10, 2021 Opinion Delivered July 29, 2021

Before Kreger, Horton and Johnson, JJ.