Marrs & Smith Partnership v. Sombrero Oil & Gas Co.

511 S.W.3d 53, 2014 Tex. App. LEXIS 5332, 2014 WL 1999006
CourtCourt of Appeals of Texas
DecidedMay 16, 2014
DocketNo. 08-12-00372-CV
StatusPublished
Cited by2 cases

This text of 511 S.W.3d 53 (Marrs & Smith Partnership v. Sombrero Oil & Gas Co.) 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
Marrs & Smith Partnership v. Sombrero Oil & Gas Co., 511 S.W.3d 53, 2014 Tex. App. LEXIS 5332, 2014 WL 1999006 (Tex. Ct. App. 2014).

Opinion

OPINION

YVONNE T. RODRIGUEZ, Justice.

In this breach-of-contract action, Marrs and Smith Partnership and its general partner, Rickey Smith, appeal the trial court’s judgment in favor of Sombrero Oil [56]*56and Gas Company, L.L.C.1 That judgment incorporates the partial summary judgment for Sombrero on the issue of liability—and a concomitant award of restitution damages—and the jury’s award of attorney’s fees, but not consequential damages, to Sombrero. The Partnership argues the trial court erred in granting summary judgment and in awarding damages and attorney’s fees. Smith likewise argues the trial court erred in those respects but also contends the trial court erred in denying his no-evidence motion for summary judgment. Sombrero, on the other hand, presents three cross-issues in the event we reverse the trial court’s judgment.2 For the reasons that follow, we affirm.

FACTUAL AND PROCEDURAL BACKGROUND

This case marks the fourth chapter of protracted litigation involving the mineral development of the Frying Pan Ranch, which lies in parts of Loving, Winkler, and Andrews Counties, Texas, and Lea County, New Mexico. See Pagosa Oil and Gas, L.L.C. v. Marrs and Smith P’ship, 323 S.W.3d 203 (Tex.App.-El Paso 2010, pet. denied); Marrs and Smith P’ship v. D.K Boyd Oil & Gas Co., Inc., 223 S.W.3d 1 (Tex.App. El Paso 2005, pet. denied); Marrs and Smith P’ship v. D.K. Boyd Oil & Gas Co., Inc., No. 08-00-00386-CV, 2002 WL 1445334 (Tex.App.-El Paso 2002, no pet.) (not designated for publication). As in the third chapter of litigation, the primary issue here is whether Sombrero established its right to summary judgment on its cause of action.

In the third chapter of litigation, Sombrero sued Appellants for breaching an oil and gas lease (“Lease”) executed in August 1999 by D.K. Boyd Land & Cattle Company, as lessor, and D.K. Boyd Oil & Gas Co., Inc., as lessee.3 See Pagosa Oil and Gas, 323 S.W.3d at 208-09. In executing the Lease, D.K. Boyd Land & Cattle exercised the executive rights held by the Partnership and another entity known as the Black Family Partnership Ltd. The Partnership ratified the Lease, but approximately seven months later informed Boyd it intended to rescind the Lease. One week thereafter, Appellants sued to rescind the Lease. Despite the lawsuit, Boyd tendered a bonus payment in July 2000 to extend the Lease beyond its initial one-year term. The Partnership, however, returned the check the following month. In August 2001, Boyd tendered the bonus payment for the final extension period. That check was also returned by the Partnership. The Lease expired in July 2002, and no minerals were developed during its duration. Instead, a well was drilled in another section of land not leased by the Partnership. Sombrero alleged Appellants breached the Lease by attempting to rescind it.4 See Pagosa Oil and Gas, 323 S.W.2d at 209. Both sides moved for summary judgment: Sombrero on its breach-of-contract claim and Appellants on no-evidence grounds and on their affirmative defenses. See id. The trial court denied Sombrero’s motion and granted Appel[57]*57lants’ motions. See id. On appeal, we concluded:

(1) that- [Appellants] [were] not entitled to ... no-evidence summary judgments] on [Sombrero’s] breach of contract cause of action; (2) that ... Sombrero did not satisfy its traditional summary judgment burden regarding its claim for breach of contract; and (3) that [Appellants] were not successful in establishing any of their affirmative defenses as a matter of law.

See id. at 219-220. Accordingly, we reversed and remanded the case for trial on the merits. See id. at 220.

On remand, Sombrero filed a second amended petition, in which it alleged:

16. Because of Defendants’ breach, no wells were drilled on the sections covered by the Lease during the term of the Lease, despite scientific data showing substantial oil and gas reserves under those sections. Boyd, along with other working interest owners, were financially and physically able to drill, but Defendants’ breach prevented them from doing so. Drilling on those sections has subsequently confirmed the existence of substantial oil and gas reserves in the property covered by the Lease.

Sombrero then moved for partial summary judgment on its cause of action and on Appellants’ affirmative defenses. With regard to its cause of action, Sombrero sought summary judgment as to liability, choosing to litigate “the full measure of its damages at trial.” Sombrero alleged it was entitled to summary judgment “as to liability on its breach of contract claim because it ha[d] conclusively established every element of its claim, including showing ‘a monetary injury’....” According to Sombrero, the monetary injury it suffered as a result of the breach was the sum Boyd paid in leasing bonuses to the Partnership and Black Family Partnership under the lease: $68,692.18. As evidence, Sombrero attached several documents, including Boyd’s affidavit, the Lease, copies of two deposited checks totaling $49,193.71, and the letters from the Partnership’s counsel indicating its intent to rescind the lease.

Appellants responded, asserting Sombrero was not entitled to summary judgment on its breach-of-contract claim because Boyd “did not suffer any out-of-pocket monetary injury related to the leasing bonuses[,]” since it was reimbursed for those expenses by a third-party, Rutter & Wilbanks. Appellants also asserted Sombrero failed to prove that: (1) it suffered damages; (2) they caused the purported damages; and (3) their affirmative defenses were inapplicable. In addition, Appellants raised objections to some of Sombrero’s summary judgment evidence, including Boyd’s affidavit.5

In conjunction with this response, Smith moved for summary judgment on both traditional and no-evidence grounds.6 Smith sought a traditional summary judgment on his cause of action against Sombrero for breach of a compromise and settlement agreement executed by him, the Partnership, and Boyd concerning other litigation pending in Winkler County, Texas. Like Sombrero, Smith sought summary judgment as to liability on its cause of action. Smith also sought a no-evidence summary judgment on Sombrero’s claim for breach of contract. Echoing [58]*58his and the Partnership’s joint response, Smith alleged Sombrero had “failed to provide evidence supporting each element of a breach of contract claim, specifically breach of a contract and damages ....

The trial court granted Sombrero’s motion for partial summary judgment on the liability portion of its breach-of-contract claim and denied both of Smith’s motions. Sombrero filed a third-amended petition, and the case proceeded to a jury trial on the issue of Sombrero’s damages.

At trial, the issue was the amount of lost profits, if any, Sombrero suffered as a result of Boyd’s inability to drill a well during the duration of the Lease. Sombrero argued that but for the Partnership’s breach, Boyd would have made drilled a well and recovered in excess of $5 million in lost profits. The jury was not convinced, declining to award any lost profits to Sombrero. The jury, however, did award Sombrero approximately $570,000 in attorney’s fees.

SUMMARY JUDGMENT

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

Related

Cimarex Energy Co. v. Anadarko Petroleum Corporation
574 S.W.3d 73 (Court of Appeals of Texas, 2019)

Cite This Page — Counsel Stack

Bluebook (online)
511 S.W.3d 53, 2014 Tex. App. LEXIS 5332, 2014 WL 1999006, Counsel Stack Legal Research, https://law.counselstack.com/opinion/marrs-smith-partnership-v-sombrero-oil-gas-co-texapp-2014.