Laborde Props., L.P. v. U.S. Shale Energy II, LLC

551 S.W.3d 740
CourtCourt of Appeals of Texas
DecidedOctober 12, 2016
DocketNo. 04-16-00168-CV
StatusPublished

This text of 551 S.W.3d 740 (Laborde Props., L.P. v. U.S. Shale Energy II, LLC) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Laborde Props., L.P. v. U.S. Shale Energy II, LLC, 551 S.W.3d 740 (Tex. Ct. App. 2016).

Opinion

Opinion by: Marialyn Barnard, Justice

This is an appeal from a trial court's order granting summary judgment in favor of appellees U.S. Shale Energy II, LLC ("U.S. Shale"), Raymond B. Roush, Ruthie Ann Roush Dodge, and David E. Roush (collectively "the Bryan Heirs") and awarding them attorney's fees. The underlying dispute involves the interpretation of a nonparticipating royalty interest reserved in a 1951 warranty deed. On appeal, appellants Laborde Properties, L.P. and Laborde Management, LLC (collectively "Laborde"), argue the trial court erred in: (1) granting summary judgment in favor of U.S. Shale and the Bryan Heirs, thereby declaring the 1951 warranty deed reserved a floating nonparticipating royalty interest ("NPRI") as opposed to a fixed NPRI; (2) denying its motion for summary judgment regarding its counterclaims to quiet title and recover overpayment of royalties to U.S. Shale and the Bryan Heirs; and (3) awarding attorney's fees to U.S. Shale and the Bryan Heirs. We reverse the trial court's summary judgment in favor of U.S. Shale and the Bryan Heirs and render judgment that the reserved NPRI is a fixed interest equal to one-sixteenth (1/16) of production. We also reverse the trial court's award of attorney's fees and remand the issue of attorney's fees to the trial court for reconsideration in light of this court's opinion relating to the nature of the reservation. As we discuss below, the issues relating to Laborde's claims to quiet title and recover alleged overpayments are not before this court, having been severed and abated in the trial court.

BACKGROUND

The crux of this dispute centers on the interpretation of a NPRI reserved in a 1951 warranty deed. Specifically, the parties agree a NPRI was reserved in the 1951 deed, but disagree whether the NPRI reserved therein is a fixed NPRI equal to one-sixteenth (1/16) of production or a floating NPRI equal to one-half (1/2) of royalty. Laborde asserts the NPRI is a fixed interest entitling U.S. Shale and the *743Bryan Heirs to one-sixteenth (1/16) of production; U.S. Shale and the Bryan Heirs contend it is a floating interest entitling them to one-half (1/2) of royalty or one-tenth (1/10) of production.

The underlying facts are not in dispute. On January 6, 1951, grantors J.E. Bryan and Minnie H. Bryan conveyed all right, title, and interest in a tract of Karnes County real property to grantee S.E. Crews. In that same deed, the grantors reserved a NPRI. The reservation provision states:

There is reserved and excepted from this conveyance unto the grantors herein, their heirs and assigns, an undivided one-half (1/2) interest in and to the Oil Royalty, Gas Royalty and Royalty in other Minerals in and under or that may be produced or mined from the above described premises, the same being equal to one-sixteenth (1/16) of the production. This reservation is what is generally termed a nonparticipating Royalty Reservation....

U.S. Shale and the Bryan Heirs are the successors-in-interest to the original grantors, i.e., they are current owners of the NPRI J.E. and Minnie reserved in the 1951 warranty deed. Laborde ultimately became the successor-in-interest to grantee S.E. Crews when, on July 9, 2010, it acquired a portion of the real property described in the 1951 deed. As successor-in-interest, Laborde acquired all right, title, and interest in the real property, subject to the NPRI owned by U.S. Shale and the Bryan Heirs. When Laborde acquired the property, the property was subject to an oil and gas lease, which provided for a twenty percent (20%) royalty. At the time the dispute arose between Laborde, U.S. Shale, and the Bryan Heirs, the oil and gas lease was held by EOG Resources, Inc. ("EOG Resources") and made up part of the Lake and Emerson Unit in Karnes County.

After receiving a division order from EOG Resources, Laborde disputed the amount of royalty payments it was receiving. According to Laborde, EOG Resources was improperly reducing the royalty payments due to Laborde under the lease because EOG Resources was erroneously categorizing U.S. Shale's and the Bryan Heirs' NPRI as a floating interest equal to one-half (1/2) of royalty rather than a fixed NPRI equal to one-sixteenth (1/16) of production. In other words, Laborde claimed that by categorizing the NPRI as a floating as opposed to a fixed interest, EOG Resources was over calculating the amount of royalty payments due to U.S Shale and the Bryan Heirs because it was calculating their payment as a floating one-half (1/2) of the lease's twenty percent (20%) royalty, i.e., one-tenth (1/10) of production, rather than a fixed one-sixteenth (1/16) of production. Thus, Laborde believed its royalty payments under the lease were being reduced by the improper overpayment of one-tenth (1/10) of production to U.S. Shale and the Bryan Heirs as opposed to one-sixteenth (1/16) of production to U.S. Shale and the Bryan Heirs.

By letter dated January 12, 2015, Laborde notified EOG Resources of its disagreement with the EOG Resources royalty payment. In response, EOG Resources suspended payments regarding the disputed interest pending proper construction of reservation language in the 1951 warranty deed. U.S Shale and the Bryan Heirs subsequently filed suit for declaratory judgment, asking the trial court to declare the 1951 warranty deed reserved a floating NPRI, and under the current oil and gas lease, their royalty is equal to one-half (1/2) of twenty percent (20%), i.e., one-tenth (1/10) of production. Laborde counterclaimed, asking the trial court to declare the 1951 warranty deed reserved a fixed NPRI equal to one-sixteenth (1/16) of *744production, or alternatively, to quiet title to its royalty interest. Laborde also sought recovery of the overpayment of royalty to U.S. Shale and the Bryan Heirs and attorney's fees. All parties filed motions for summary judgment requesting the trial court declare whether the NPRI reserved in the 1951 warranty deed was a fixed or floating interest. Laborde also sought summary judgment on its claim for recovery regarding the overpayment of royalties to U.S. Shale and the Bryan Heirs and its alternative claim to quiet title.

The trial court granted partial summary judgment in favor of U.S. Shale and the Bryan Heirs, declaring the 1951 deed reserved a floating NPRI equal to one-half (1/2) of royalty. According to the summary judgment, under the current lease, which provides for a one-fifth (1/5) or twenty percent (20%) royalty, U.S. Shale and the Bryan Heirs are entitled to a one-tenth (1/10) royalty, i.e., one-half (1/2) of twenty percent (20%). Subsequently, the trial court awarded U.S Shale and the Bryan Heirs attorney's fees, thereby rendering a final judgment. Laborde then perfected this appeal.

ANALYSIS

On appeal, Laborde first contends the trial court erred in granting summary judgment in favor of U.S. Shale and the Bryan Heirs on their declaratory judgment action, arguing the trial court misinterpreted the 1951 warranty deed by concluding the reserved NPRI was a floating as opposed to a fixed interest. According to Laborde, the 1951 deed-by its plain and unambiguous language and under the greatest possible estates rule-reserved a fixed NPRI equal to one-sixteenth (1/16) of production as opposed to a floating NPRI equal to one-half (1/2) of royalty, i.e., one-tenth (1/10) of production under the current lease. Laborde next contends the trial court erred in awarding attorney's fees to U.S.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

J.M. Davidson, Inc. v. Webster
128 S.W.3d 223 (Texas Supreme Court, 2003)
Valence Operating Co. v. Dorsett
164 S.W.3d 656 (Texas Supreme Court, 2005)
Seagull Energy E & P, Inc. v. Eland Energy, Inc.
207 S.W.3d 342 (Texas Supreme Court, 2006)
Coker v. Coker
650 S.W.2d 391 (Texas Supreme Court, 1983)
Hall v. City of Austin
450 S.W.2d 836 (Texas Supreme Court, 1970)
Law Offices of Wilson v. Texas Univest-Frisco, Ltd.
291 S.W.3d 110 (Court of Appeals of Texas, 2009)
Garrett v. Dils Company
299 S.W.2d 904 (Texas Supreme Court, 1957)
Luckel v. White
819 S.W.2d 459 (Texas Supreme Court, 1992)
Van Dyke v. Boswell, O'Toole, Davis & Pickering
697 S.W.2d 381 (Texas Supreme Court, 1985)
In Re EI Du Pont De Nemours and Co.
92 S.W.3d 517 (Texas Supreme Court, 2002)
Friendswood Development Co. v. McDade + Co.
926 S.W.2d 280 (Texas Supreme Court, 1996)
Columbia Gas Transmission Corp. v. New Ulm Gas, Ltd.
940 S.W.2d 587 (Texas Supreme Court, 1996)
Bocquet v. Herring
972 S.W.2d 19 (Texas Supreme Court, 1998)
Hausser v. Cuellar
345 S.W.3d 462 (Court of Appeals of Texas, 2011)
Medina Interests, Ltd v. William Paul Trial
469 S.W.3d 619 (Court of Appeals of Texas, 2015)
In the Interest of K.F., I.T. and K.L.H
351 S.W.3d 108 (Court of Appeals of Texas, 2011)
Watkins v. Slaughter
189 S.W.2d 699 (Texas Supreme Court, 1945)
Gibson v. Turner
294 S.W.2d 781 (Texas Supreme Court, 1956)
Moore v. Noble Energy, Inc.
374 S.W.3d 644 (Court of Appeals of Texas, 2012)

Cite This Page — Counsel Stack

Bluebook (online)
551 S.W.3d 740, Counsel Stack Legal Research, https://law.counselstack.com/opinion/laborde-props-lp-v-us-shale-energy-ii-llc-texapp-2016.