San Saba Energy, L.P. v. Crawford

171 S.W.3d 323, 2005 WL 1430620
CourtCourt of Appeals of Texas
DecidedAugust 25, 2005
Docket14-03-00980-CV
StatusPublished
Cited by312 cases

This text of 171 S.W.3d 323 (San Saba Energy, L.P. v. Crawford) 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
San Saba Energy, L.P. v. Crawford, 171 S.W.3d 323, 2005 WL 1430620 (Tex. Ct. App. 2005).

Opinion

OPINION

KEM THOMPSON FROST, Justice.

This case involves various claims by appellants/plaintiffs San Saba Energy, L.P., R.L. Zinn, Ltd., Gilbert Goldstein, and Nanzin Family Limited Partnership (hereinafter collectively “Interest Owners”) against their fellow working interest owner in certain oil and gas leases, appellee/de-fendant Marshall H. Crawford, II d/b/a Pursuit Exploration Company. After Crawford moved for summary judgment on the Interest Owners’ contract and tort claims, the trial court struck most of the Interest Owners’ summary-judgment response, sustained all of Crawford’s objections to their summary-judgment evidence, and granted Crawford’s motion for summary judgment. Concluding that the trial court erred in striking the Interest Owners’ summary-judgment response, we consider the response in evaluating the propriety of the summary judgment. Because we conclude the trial court erred in granting summary judgment as to one of San Saba’s contract claims against Crawford under the Operating Agreement, we reverse the trial court’s summary judgment as to that claim, and we remand it to the trial court for further proceedings consistent with this opinion. We affirm the judgment in all other respects.

I. Factual and PROCEDURAL Background

The Interest Owners, Crawford, and others were working interest owners in oil and gas leases in Jim Hogg County, Texas. These owners entered into an Operating Agreement dated November 5, 1997 (hereinafter “Operating Agreement”). The Operating Agreement created an area of mutual interest (hereinafter “AMI”) and required the parties thereto to immediately give written notice, with all pertinent details and information, to the other par *326 ties upon acquiring an oil and gas interest affecting any lands in the AMI or upon acquiring the right to acquire any such interest. Under the Operating Agreement, after such notice is given, each receiving party has either twenty days, exclusive of weekends and legal holidays, or forty-eight hours, exclusive of weekends and legal holidays, to evidence in writing an election to acquire a proportionate interest by paying a proportionate share of the acquisition costs. The twenty-day period applies unless a well is being drilled in the AMI when the notice is given, in which case the forty-eight-hour notice period applies. If a receiving party fails to timely give notice of its election, then it is deemed to have elected not to acquire.

Crawford testified at his deposition that by August 15, 1998, he had a deal worked out for him to buy a term assignment of an oil and gas lease as to a tract of approximately 605 acres of land, part of which was in the AMI. On August 20,1998, O’Sullivan Oil and Gas Company, Inc. and Crawford executed this Term Assignment (hereinafter “Term Assignment”). On August 24, 1998, Crawford had the Term Assignment recorded in the official records of Jim Hogg County. Crawford testified that on August 25, 1998, he received a report showing that a well had been spudded in the AMI on August 24,1998. On Wednesday, August 26, 1998, Crawford sent out his notice, attempting to comply with his obligations under the Operating Agreement. Because a well was being drilled in the AMI when the notice was given, the Interest Owners had forty-eight hours to give written notice of their election to acquire a proportionate interest by paying a proportionate share of the acquisition costs. The Interest Owners never gave notice of an election to acquire a proportionate interest.

Irrespective of any election to acquire a proportionate interest in the Term Assignment, it is undisputed that the Operating Agreement, by its own terms, provided that Blacklake, L.L.C., San Saba’s predecessor-in-interest, was entitled to share with Crawford an overriding royalty interest in the lands covered by the oil and gas lease that was the subject of the Term Assignment (hereinafter “Lease”). Crawford, however, testified that he conveyed this interest to David and Sandra Doughtie because David Doughtie told Crawford that Blacklake had agreed in a settlement agreement that this overriding royalty interest should be conveyed to him.

The Interest Owners brought suit against Crawford and others. They alleged, among other things, that Crawford breached the Operating Agreement by failing to give them immediate written notice of his right to acquire the Term Assignment and of his acquisition of the Term Assignment and by failing to include in his notice all pertinent details and information. The Interest Owners allege that if Crawford had provided timely notice, then they would have had twenty days to respond. They also assert that if Crawford had provided all pertinent details and information, then they would have used the twenty-day period to investigate the Term Assignment and would have elected to acquire a proportionate interest. The Interest Owners assert that as a result of this alleged breach of the Operating Agreement, they suffered substantial damages. San Saba also asserts that it suffered substantial damages as a result of Crawford’s breach of the Operating Agreement by failing to convey to San Saba’s predecessor-in-interest an overriding royalty interest in the lands covered by the Lease (hereinafter “Overriding Royalty”). Contrary to Crawford’s assertions, San Saba asserts that the settlement agreement in question does not *327 affect San Saba’s entitlement to this Overriding Royalty.

The Interest Owners asserted the following claims, among others, against Crawford:

• Crawford breached his fiduciary and contractual duties relating to a letter agreement of February 12,1997.
• Crawford breached the Operating Agreement by failing to give immediate and adequate notice to the Interest Owners regarding his right to acquire the Term Assignment and regarding his acquisition of the Term Assignment. Crawford’s notice was inadequate under the Operating Agreement because it did not include all pertinent details and information.
• Crawford breached the Operating Agreement by failing to convey to San Saba’s predecessor-in-interest, Black-lake, the Overriding Royalty to which Blacklake was entitled under the Operating Agreement.
• Crawford tortiously interfered with San Saba’s rights under its settlement agreement with Doughtie and breached his fiduciary duty to hold these interests for San Saba.

The trial court granted Crawford a partial summary judgment, ruling that the Interest Owners take nothing regarding the February 12, 1997 letter agreement because it is invalid. Crawford then filed a single instrument in the trial court entitled “Special Exceptions and Motion for Final Summary Judgment on all Remaining Claims.” Despite this title and Crawford’s citation to Texas Rule of Civil Procedure 91, entitled, “Special Exceptions,” this motion does not point out with particularity any alleged defect or other insufficiency in the allegations in the Interest Owners’ petition. Crawford’s motion, however, does assert the following summary-judgment grounds:

(1) Crawford asserts various challenges against the Interest Owners’ claims based on alleged contractual and fiduciary duties arising from the February 12,1997 letter agreement.

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Bluebook (online)
171 S.W.3d 323, 2005 WL 1430620, Counsel Stack Legal Research, https://law.counselstack.com/opinion/san-saba-energy-lp-v-crawford-texapp-2005.