RGS, Cardox Recovery, Inc. v. Dorchester Enhanced Recovery Co.

700 S.W.2d 635, 1985 Tex. App. LEXIS 12321
CourtCourt of Appeals of Texas
DecidedOctober 31, 1985
Docket13-85-066-CV
StatusPublished
Cited by22 cases

This text of 700 S.W.2d 635 (RGS, Cardox Recovery, Inc. v. Dorchester Enhanced Recovery 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
RGS, Cardox Recovery, Inc. v. Dorchester Enhanced Recovery Co., 700 S.W.2d 635, 1985 Tex. App. LEXIS 12321 (Tex. Ct. App. 1985).

Opinion

OPINION

DORSEY, Justice.

This is an appeal from a summary judgment in an action for interpretation or reformation of the terms of a joint venture agreement. We affirm the judgment of the trial court.

The disputed language within paragraph 9.2 of the Joint Venture Agreement, entitled Management Committee, provides in part: “No Management Committee meeting may be held or action taken unless voting members representing aggregate venture percentages of at least seventy-five percent (75%) are present and voting, and all decisions except as otherwise herein provided shall be by majority vote....” Appellee urged, and the trial court agreed, that such language is unambiguous and means that at least seventy-five percent of the venture are present and voting on each issue in order to reach a decision. Appellant argues that this provision is a requirement for a quorum in order to transact business; that after the quorum of 75% has been initially reached, the committee can transact business based on a majority of the represented shares.

We first determine whether the contractual provision is ambiguous. If, after applying the rules of contract interpretation, the disputed contractual provision remains reasonably susceptible of more than one meaning, the provision is ambiguous. Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983). If the contract is ambiguous, extrinsic evidence may be admitted to show the circumstances surrounding the drafting of the disputed provision in order to glean the intentions of the parties. R & P Enterprises v. LaGuarta, Gavrel & Kirk, Inc., 596 S.W.2d 517 (Tex.1980).

*638 Transpetco I Joint Venture was formed on April 11, 1979, for the purpose of recovering oil and gas by means of carbon dioxide injection, and the joint venture agreement was executed. Under that agreement, field operations are to be conducted by an operator, who is selected or removed by the joint venture’s Management Committee. The composition and voting procedures for the Management Committee are set forth in paragraph 9.2 of the joint venture agreement:

9.2 Management Committee. The Management Committee shall consist of one representative of each of the Joint Venturers, together with representatives of CAI and RGS as hereinafter provided, which representatives shall sometimes be referred to herein as members. Each of the Joint Venturers may remove and replace its representative on the Management Committee at any time. No Management Committee meeting may be held or action taken unless voting members representing aggregate Venture Percentages of at least seventy-five percent (75%) are present and voting, and all decisions except as otherwise herein provided shall be by majority vote of those voting members present, with one vote being allocated to each representative with the vote being weighted or equal to their respective Venture Percentages in the Joint Venture _ (Emphasis added.)

On February 1, 1984, at a meeting of the Management Committee, a vote was called on the issue of whether appellant RGS should be installed as the operator instead of appellee Dorchester Enhanced Recovery Company. Dorchester Gas Producing Company, Halliburton Company, and Texas Energy Services, Inc., although voting on previous issues at the meeting, stated that with respect to changing operators each was “present, but not voting.” RGS, Com-ineo and Spearman, representing 54.0625% of the ownership interests in the joint venture, voted affirmatively on the motion to remove Dorchester as operator and to install RGS as operator. Appellees urge, and the trial court agreed, that because less than 75%. of the interests were both present and voting on the issue, it failed to carry. Appellant argues that the clause means a quorum requirement which, once met, would allow the committee to take action by a majority vote.

Appellants filed a declaratory judgment action to enforce the vote and to declare that appellees’ conduct was ineffective to block the change in operator, or in the alternative, for reformation of the disputed paragraph.

Appellees responded and filed their motions for summary judgment contending that Section 9.2 supported their position as a matter of law.

The propriety of the summary judgment is being attacked. As this is a case involving the interpretation of a contract, if the contract is found to be unambiguous, a summary judgment is proper. If the contractual provision in dispute is found to be ambiguous, the summary judgment proof will be examined to see if a material fact issue exists in order to determine whether the summary judgment was proper.

We must then examine the entire contract to attempt to harmonize the other relevant provisions with the one in dispute. If, after so doing, the provision remains reasonably susceptible to more than one interpretation, we must reach the conclusion that the provision is ambiguous. Coker, 650 S.W.2d at 393.

We agree with the rule that requires this Court to attempt to harmonize the other relevant provisions with the one in dispute if the provision is ambiguous, but here, there is only one provision dealing with two different matters; the second dependent on the first and not ambiguous. We find that both sections are in tne same sentence and when read together are not ambiguous.

The first phrase delineates clearly that “no meeting may be held or action taken unless voting members representing Aggregate Venture Percentages of at least *639 seventy-five (75%) are present and voting _” (Emphasis ours.) This provision controls when a meeting may be held and when action may be taken. The second section “... and all decisions except otherwise herein provided shall be by majority vote of those voting members present. ” (Emphasis ours.) This provides the percentage of vote necessary to carry a decision or decide what action may be taken. That is: one section declares when action may be taken and the other declares what vote is required to take such action. The vote must be by majority to carry a decision but such vote or decision cannot be had or held unless 75% are present and voting. The first phrase limits the second, but it does not contradict it or make it susceptible to two interpretations. The parties had a right to contract and place whatever limitations upon themselves as they might agree to in their contract. That the provision might be burdensome or awkward is not a problem for the courts. The appellants agreed to the provision and ap-pellees have the right to rely on compliance with the provision as agreed to by the parties. Appellants’ second and third points of error are overruled.

Appellants’ first point of error alleges that the trial court erred in granting Defendants’ Motion for Partial Summary Judgment on Count II of their petition, which sought reformation of the Joint Venture Agreement to represent the original agreement of the parties.

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Bluebook (online)
700 S.W.2d 635, 1985 Tex. App. LEXIS 12321, Counsel Stack Legal Research, https://law.counselstack.com/opinion/rgs-cardox-recovery-inc-v-dorchester-enhanced-recovery-co-texapp-1985.