Lona Hills Ranch, LLC v. Creative Oil & Gas Operating, LLC

549 S.W.3d 839
Court of Appeals of Texas·Decided April 19, 2018·No. NO. 03-17-00743-CV·Published·Cited by 6 cases

Opinion

Jeff Rose, Chief Justice *842Lona Hills Ranch, LLC, appeals from an interlocutory order denying a motion to dismiss brought under the Texas Citizens Participation Act (TCPA). See generally Tex. Civ. Prac. & Rem. Code §§ 27.001 -.011. The Ranch, which is the lessor under an oil-and-gas lease covering minerals in Lee County, Texas, brought suit against the operator of the well on the lease, Creative Oil & Gas Operating, LLC ("the Operator"), for trespass and trespass to try title, alleging that the lease had terminated. Creative Oil & Gas, LLC ("the Lessee"), intervened in the suit as a party to the lease. The Operator and the Lessee asserted counterclaims against the Ranch for breach of contract, which the Ranch sought to dismiss under the TCPA. For the reasons explained below, we will reverse in part the trial court's order denying the motion to dismiss and render judgment dismissing (1) all of the Operator's breach-of-contract counterclaims; and (2) the Lessee's breach-of-contract counterclaim that is based on the Ranch's communications with others regarding the validity of the lease. We will affirm the remainder of the trial court's denial of the motion to dismiss, leaving pending Lessee's breach-of-contract counterclaim that is based on the Ranch's complaint to the Railroad Commission and the filing of this lawsuit in alleged violation of the notice provision in the lease. We will remand the case for further proceedings consistent with this opinion.

Background

The Ranch filed a complaint with the Texas Railroad Commission in January 2017 to challenge the Operator's "good faith claim" to a continued right to operate the lease at issue in this case. The Ranch asserted that the Lease had expired by its own terms for lack of production. The Operator responded to the complaint by submitting various recorded instruments, production information, and operating history of the Lease. Ultimately, after a hearing, the Railroad Commission issued a final order concluding that the Operator had presented a "good faith claim" to operate the Lease and dismissing the complaint. This conclusion was based, in part, on the Railroad Commission's finding that the Operator's operations during the time the well was not producing had been "adequate to extend the term of the lease." Tex. R.R. Comm'n, The Complaint of Lona Hills Ranch , Docket No. 03-0303318 (May 2, 2017) (Proposal For Decision); see Tex. R.R. Comm'n, The Complaint of Lona Hills Ranch , Docket No. 03-0303318 (June 6, 2017) (final order adopting PFD and dismissing complaint).

The Ranch did not challenge the Railroad Commission's final order but instead filed the underlying trespass and trespass-to-try-title suit against the Operator. In support of its claims the Ranch again asserted that the lease had terminated under its own terms for lack of production.

*843The Operator filed an answer denying the Ranch's claims. Although contending that, as an operator only, it has no working interest in the lease, the Operator also asserted counterclaims for breach of the lease contract, alleging that the Ranch had breached the lease by (1) "claiming [to purchasers] that the Lease has terminated" and thereby "wrongfully preventing the purchasers of oil and gas production from the Lease from paying Creative for the proceeds of sales of production"; (2) "wrongfully complaining to the Commission that the Lease has terminated"; and (3) "filing this suit when [the Ranch] has failed to comply with § 11 of the Lease requiring notice and the opportunity to cure any alleged default prior to the commencement of any litigation seeking termination or forfeiture of the Lease."

The Lessee intervened in the suit and asserted its own breach-of-contract counterclaim. According to the Lessee's plea in intervention, the Ranch breached the lease "by the filing of this lawsuit in violation of the express terms of the Lease" and by "wrongfully claiming the Lease has terminated and wrongfully repudiating the Lease."

The Ranch timely filed a motion under the TCPA seeking to dismiss both the Operator's and the Lessee's breach-of-contract counterclaims. See Tex. Civ. Prac. & Rem. Code § 27.003(a) (authorizing motion to dismiss "[i]f a legal action is based on, relates to, or is in response to a party's exercise of the right of free speech, right to petition, or right of association"). The Ranch asserted that the counterclaims were subject to dismissal under the TCPA because they implicated the Ranch's "exercise of the right to free speech"-asserting its opinion to third parties that the lease has terminated-and its "exercise of the right to petition"-the filing of its complaint to the Railroad Commission and of this lawsuit. The Operator and the Lessee filed a joint response, urging that the TCPA does not apply because their counterclaims are premised on the Ranch's failure to give the Lessee notice and the right to cure as required by section 11 of the lease.

The trial court held a hearing on the Ranch's motion to dismiss but did not rule on the motion. As such, the motion was denied by operation of law. See id. § 27.008(a) (providing that motion to dismiss is overruled by operation of law if not ruled on by 30th day after hearing on motion). This interlocutory appeal followed. See id. § 51.014(a)(12) (authorizing interlocutory appeal from denial of TCPA motion to dismiss).

Discussion

In what it characterizes as two issues, the Ranch asserts on appeal that the trial court erred in denying its motion to dismiss both the Operator's and the Lessee's breach-of-contract counterclaims because (1) the Ranch met its initial burden under the TCPA of demonstrating the TCPA's "applicability," and (2) the Operator and the Lessee both failed to meet their burden of establishing by clear and specific evidence a prima facie case for each essential element of their counterclaims for breach of contract.

Parties

Before we consider the Ranch's issues, we must first address the Lessee's assertion that only it and the Ranch are parties to this appeal and, relatedly, that only its counterclaims for breach of contract remain pending.

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Lona Hills Ranch, LLC v. Creative Oil & Gas Operating, LLC, 549 S.W.3d 839 (Tex. Ct. App. 2018).

549 S.W.3d 839 (Lona Hills Ranch, LLC v. Creative Oil & Gas Operating, LLC) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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