Saratoga Resources, Inc. v. Baker

59 S.W.3d 411, 151 Oil & Gas Rep. 483, 2001 Tex. App. LEXIS 7234, 2001 WL 1298834
CourtCourt of Appeals of Texas
DecidedOctober 25, 2001
DocketNo. 01-00-00149-CV
StatusPublished

This text of 59 S.W.3d 411 (Saratoga Resources, Inc. v. Baker) 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
Saratoga Resources, Inc. v. Baker, 59 S.W.3d 411, 151 Oil & Gas Rep. 483, 2001 Tex. App. LEXIS 7234, 2001 WL 1298834 (Tex. Ct. App. 2001).

Opinions

OPINION

LEE DUGGAN, JR., Justice (Assigned).

In this appeal, appellant Saratoga Resources, Inc. (“Saratoga”) contends the trial court erred by granting a motion for summary judgment in favor of appellees, Pat Baker d/b/a Baker Exploration Company and Bexco Operating, Inc. (“Baker”), and denying appellant’s own motion for summary judgment. The issue before us on appeal is whether Saratoga is entitled to recover a refund of certain expenses it paid pursuant to an oil and gas operating agreement. We affirm.

BACKGROUND

1.The Operating Agreement Between Saratoga and Baker

On July 25, 1994, Saratoga entered into an agreement with Baker, which (1) conveyed Saratoga’s interest in certain oil and gas interests, as well as a gas gathering line and salt water disposal system, and, in return, (2) Baker became the operator for all drilling and production efforts in the property. In connection with the conveyance, Baker and Saratoga executed an “Operating Agreement”, which provided in relevant part:

Baker shall take over operations of the gas gathering system and salt water disposal well.... Normal operating expenses of the salt water disposal well and the gas gathering line shall be borne 75% by Baker and 25% by Saratoga until other arrangements may be agreed to.

Shortly after this agreement was entered into, Baker expanded the system and hooked on wells that received the benefit of the system, but in which Saratoga had no interest. Thus, Saratoga believed that it was paying a disportionate amount of the costs associated with the salt water disposal system and gas gathering system.

Saratoga objected to the situation and requested an audit and adjustment, but Baker refused any adjustment or audit until Saratoga came current on its debts to Baker.

2. Saratoga Sells Out to Prime Energy

In May 1996 (but effective as of January 1, 1996), Saratoga conveyed all of its interest in the properties to Prime Energy Corporation (“Prime”). The agreement between Saratoga and Prime conveyed, among other things:

all accounts receivable, security deposits, prepayments, refunds, right to refunds, and rebates in favor of, owing to, or possessed or controlled by the Saratoga Companies....

The agreement provided that Saratoga retained “[a]ll revenues, proceeds, receipts, and income (“Revenues”) attributable to production from the Wells and the sale of the properties prior to [January 1, 1996]

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3. The Post-Conveyance Audit

In late 1996, after the sale to Prime, Saratoga had Buck Services, Inc. conduct an audit, pursuant to the audit provisions of the Operating Agreement. Mr. Buck, of Buck Services, Inc., concluded that Sarato-ga should have paid 8% of the operating [413]*413costs, rather than the 25% it had actually paid, and so informed Baker by letter dated June 25, 1997, that Saratoga was entitled to a refund in the amount of $100,359.82. Baker did not respond to the “Buck exceptions” letter within 180 days, as required by the terms of the Operating Agreement. Instead, Baker responded on the 190th day and denied Saratoga’s claim.

4. The Normalization Agreement

In July 1996, after Saratoga’s sale to Prime, the working interest owners, including Prime, entered a “Normalization Agreement.” Under this agreement, Prime’s ownership interest in the facilities, thus, its share of the expenses, was reduced from 25% to 8%. The Normalization Agreement specifically stated that the adjustments made to Prime’s working interest and expense responsibility were prospective only. Saratoga was not a party to the Normalization Agreement, because it had already sold out to Prime at the time the agreement was reached.

5. The Lawsuit and Following Quitclaim Deed

In May 1998, Saratoga filed this suit, seeking a refund from Baker of the expenses it claimed it had overpaid. After the suit was filed, Prime executed a quitclaim deed, in which it gave Saratoga all its rights, if any, to recover a refund of pre 1996 audit claims.

THE MOTIONS FOR SUMMARY JUDGMENT

1. The Grounds Asserted

Baker filed a motion for summary judgment contending that (1) Saratoga’s sale to Prime extinguished its right to recover a refund, and (2) the 1996 Normalization Agreement, which provided only for prospective application, settled the issue of expense refunds. Put simply, Baker contends that any refund due would have been owed to Prime, and that Prime, by agreeing to the Normalization Agreement, agreed that no refund would be paid.

Saratoga filed a cross-motion for summary judgment contending that, because Baker failed to respond to its audit exceptions within 180 days, as required by the Operating Agreement, Saratoga’s claim for a refund was “incontestable.” Alternatively, Saratoga claimed that it had reached an oral agreement with Baker that an adjustment should be made and refund given, and that the court should supply a “reasonable price” because the parties had not reached an agreement as to price.

The trial court denied Saratoga’s motion and granted Baker’s motion.

2. The Standard of Review

We apply well-known standards when reviewing a motion for summary judgment. See Nixon v. Mr. Property Mgm’t Co., 690 S.W.2d 546, 548-49 (Tex.1985). When both parties move for summary judgment, each must carry its own burden of proof. Benchmark Bank v. State Farm Lloyds, 893 S.W.2d 649, 650 (Tex.App.—Dallas 1994, no writ). That burden is to show an entitlement to summary judgment as a matter of law by conclusively proving all the elements of the cause of action or defense. Odeneal v. Van Horn, 678 S.W.2d 941, 941 (Tex.1984).

When both parties move for summary judgment and the trial court grants one motion and denies the other, the unsuccessful party may appeal both the prevailing party’s motion, as well as the denial of its own. See Holmes v. Morales, 924 S.W.2d 920, 922 (Tex.1996); Cigna Ins. Co. v. Rubalcada, 960 S.W.2d 408, 411-12 (Tex.App.—Houston [1st Dist.] 1998, no pet.). In that situation, we should review the summary judgment evidence presented [414]*414by both sides, determine all questions presented, and render such judgment as the trial court should have rendered. See Commissioners Court v.. Agan, 940 S.W.2d 77, 81 (Tex.1997).

C. Propriety of Trial Court’s Order Granting Baker’s Motion

We begin with Baker’s assertion that the 1996 sale from Saratoga to Prime extinguished any claim Saratoga might have to a refund. We agree. The sale agreement between Saratoga and Prime conveyed “all accounts receivable, security deposits, prepayments, refunds, right to refunds,

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Benchmark Bank v. State Farm Lloyds
893 S.W.2d 649 (Court of Appeals of Texas, 1994)
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811 S.W.2d 931 (Texas Supreme Court, 1991)
Commissioners Court of Titus County v. Agan
940 S.W.2d 77 (Texas Supreme Court, 1997)
Nixon v. Mr. Property Management Co.
690 S.W.2d 546 (Texas Supreme Court, 1985)
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Holmes v. Morales
924 S.W.2d 920 (Texas Supreme Court, 1996)
Odeneal v. Van Horn
678 S.W.2d 941 (Texas Supreme Court, 1984)

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Bluebook (online)
59 S.W.3d 411, 151 Oil & Gas Rep. 483, 2001 Tex. App. LEXIS 7234, 2001 WL 1298834, Counsel Stack Legal Research, https://law.counselstack.com/opinion/saratoga-resources-inc-v-baker-texapp-2001.