Peter J. Dragon v. Charles E. Harrell and Hollis R. Harrell

Court of Appeals of Texas·Decided July 8, 2015·No. 04-14-00711-CV·Published

Opinion

ACCEPTED

04-14-00711-CV

FOURTH COURT OF APPEALS

SAN ANTONIO, TEXAS

7/8/2015 4:25:04 PM

KEITH HOTTLE

CLERK

NO. 04-14-00711-CV

IN THE COURT OF APPEALS FILED IN FOURTH DISTRICT OF TEXAS 4th COURT OF APPEALS SAN ANTONIO, TEXAS

SAN ANTONIO, TEXAS 07/8/2015 4:25:04 PM KEITH E. HOTTLE

Clerk

PETER J. DRAGON,

Appellant

v.

CHARLES E. HARRELL AND HOLLIS R. HARRELL, Appellees

APPELLANT’S REPLY BRIEF

CLINTON M. BUTLER

State Bar No. 24045591

cbutler@langleybanack.com ELIZABETH R. KOPECKI

State Bar No. 24087859

ekopecki@langleybanack.com 114 N. Panna Maria Ave.

Karnes City, Texas 78118

Telephone: (830) 780-2700 Telecopier: (830) 780-2701

ATTORNEYS FOR APPELLANT,

PETER J. DRAGON

TABLE OF CONTENTS

INDEX OF AUTHORITIES ........................................................................................................ 2 ARGUMENT AND AUTHORITIES IN REPLY ............................................................... 3

I. The language in the Harrell Deed relied upon by Appellees does not create a fractional royalty interest. ...................................................... 3

II. Courts cannot contract for the parties. ...................................................... 5

III. The Reservation in the Harrell Deed does not contain “parentheticals” or “qualifiers” that change the nature of the interest reserved into a fractional royalty interest.............................. 8

IV. The impact on future leasing should be considered. ....................... 12

V. A finding of ambiguity is not required prior to application of rules of construction. .......................................................................................... 15

VI. The attorneys-fees issue should be remanded. ................................... 16 PRAYER ............................................................................................................................................... 17 CERTIFICATE OF COMPLIANCE ....................................................................................... 17 CERTIFICATE OF SERVICE ................................................................................................... 18

INDEX OF AUTHORITIES

Cases

Anadarko Petroleum Corp. v. Thompson, 94 S.W.3d 550 (Tex. 2002) ................................................................................................. 5 Arnold v. Ashbel Smith Land Co., 307 S.W.2d 818 (Tex. Civ. App.—Houston 1957, writ ref’d n.r.e.)................................. 13, 14 Coghill v. Griffith, 358 S.W.3d 834 (Tex. App.—Tyler 2012, pet. denied) ............................................... 9, 10, 12 Dupnik v. Hermis, No. 04-12-00417-CV, 2013 WL 979199 (Tex. App.—San Antonio March 13, 2013, pet. denied) (mem. op.) ................................................................................................ 16 Frost Nat’l Bank v. L & F Distribs., Ltd., 165 S.W.3d 310 (Tex. 2005) ............................................................................................... 12 Gavenda v. Strata Energy, Inc., 705 S.W.2d 690 (Tex. 1986) .............. 13, 14 Harriss v. Ritter, 279 S.W.2d 845 (Tex. 1955)....................................... 10, 11 Helms v. Guthrie, 573 S.W.2d 855 (Tex. Civ. App.—Fort Worth 1978, writ ref’d n.r.e.) ............................ 10, 11 Houston Exploration Co. v. Wellington Underwriting Agencies, Ltd., 352 S.W.3d 462 (Tex. 2011)........................................................................ 7 Medina Interests, Ltd. v. Trial, No. 04-14-00521-CV, 2015 WL 3895902 , __ S.W.3d __(Tex. App.—San Antonio June 24, 2015, no. pet. h.) ................................................................................ 7, 8, 15 Moore v. Noble, 374 S.W.3d 644 (Tex. App.—Amarillo 2012, no pet.) ..................................................................................................... 12 Reilly v. Rangers Mgmt., Inc., 727 S.W.2d 527 (Tex. 1987) ....................... 12 Schlittler v. Smith, 101 S.W.2d 543 (Tex. 1937) ................................. 9, 10, 13 Terrill v. Tuckness, 985 S.W.2d 97 (Tex. App.—San Antonio 1998, no pet.) ..................................................................................................... 16 White v. White, 830 S.W.2d 767 (Tex. App.—Houston [1st Dist.] 1992, writ denied)..................................................................................... 14 Wynne/Jackson Development, L.P. v. PAC Capital Holdings, Ltd., No. 13-12-00449-CV, 2013 WL 2470898 (Tex. App.—Corpus Christi June 6, 2013, pet. denied) (mem. op.)............................................... passim

ARGUMENT AND AUTHORITIES IN REPLY

I. The language in the Harrell Deed relied upon by Appellees does not create a fractional royalty interest.

Appellees’ brief to this Court misrepresents the very nature of a “non-

participating royalty interest.” Appellees have provided this Court with certain background information regarding the interest held by Appellees’ predecessors at the time the Harrell Deed was executed. Appellees’ Br. at 12–13. This information provides the sole basis for Appellees’ conclusion that the interest reserved by their predecessors in the Harrell Deed was a one-half (1/2) fractional royalty interest. See Appellees’ Br. at 13 (“One-half (1/2) of a one hundred percent (100%) royalty interest is logically and unambiguously a fifty percent (50%) fractional royalty interest.”).

Appellees’ assertion is misplaced because, as mineral interest owners, Appellees’ predecessors had the right to either self-develop the minerals or lease the property to an oil and gas company to explore and develop the mineral estate. E.g., Wynne/Jackson Development, L.P. v. PAC Capital Holdings, Ltd., No. 13-12-00449-CV, 2013 WL 2470898, at *3 (Tex. App.— Corpus Christi June 6, 2013, pet. denied) (mem. op.) (“A mineral fee owner has a possessory estate in the land. As such, he has the right to develop the minerals himself or the exclusive power to lease the land to another for mineral development.”). Because it is doubtful that Appellees’ predecessors

had the requisite knowledge of the oil and gas industry to self-develop the minerals, Appellees’ predecessors likely would have leased their property to an oil and gas company for exploration and development of the mineral estate. In doing so, Appellees’ predecessors would have retained a right to receive royalties under their oil and gas lease (i.e., the landowner’s royalty). This right to receive royalties pursuant to their lease would not be a fractional royalty interest, but a fraction of royalty interest.

Therefore, when Appellees predecessors conveyed the property to Appellant and retained only a non-participating interest in the royalties on oil, gas, and other minerals, their use of the phrase “consisting of one-half of the royalty interest now owned by” did not automatically reserve a fractional royalty interest as Appellees would have this Court hold. See Appellees’ Br. at 13. Rather, the Reservation entitled Appellees to receive one-half (1/2) of the royalties payable under any oil and gas lease that Appellant entered into on behalf of Appellant and Appellees. See also Wynne/Jackson Development, L.P. v. PAC Capital Holdings, Ltd., No. 13- 12-00449-CV, 2013 WL 2470898, at *3 (Tex. App.—Corpus Christi June 6, 2013, pet. denied) (mem. op.).

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Related

Frost National Bank v. L & F Distributors, Ltd.
165 S.W.3d 310 (Texas Supreme Court, 2005)
Gavenda v. Strata Energy, Inc.
705 S.W.2d 690 (Texas Supreme Court, 1986)
White v. White
830 S.W.2d 767 (Court of Appeals of Texas, 1992)
Helms v. Guthrie
573 S.W.2d 855 (Court of Appeals of Texas, 1978)
Anadarko Petroleum Corp. v. Thompson
94 S.W.3d 550 (Texas Supreme Court, 2003)
Harriss v. Ritter
279 S.W.2d 845 (Texas Supreme Court, 1955)
Arnold v. Ashbel Smith Land Company
307 S.W.2d 818 (Court of Appeals of Texas, 1957)
Reilly v. Rangers Management, Inc.
727 S.W.2d 527 (Texas Supreme Court, 1987)
Terrill v. Tuckness
985 S.W.2d 97 (Court of Appeals of Texas, 1998)
Medina Interests, Ltd v. William Paul Trial
469 S.W.3d 619 (Court of Appeals of Texas, 2015)
Schlittler v. Smith
101 S.W.2d 543 (Texas Supreme Court, 1937)
Coghill v. Griffith
358 S.W.3d 834 (Court of Appeals of Texas, 2012)
Moore v. Noble Energy, Inc.
374 S.W.3d 644 (Court of Appeals of Texas, 2012)