Walter Bounds and Wife, Carolyn B. Bounds, Appellants/Cross-Appellees v. John Thomas Prud'Homme, Appellees/Cross-Appellants

Opinion

ACCEPTED

12-15-00177-CV

TWELFTH COURT OF APPEALS

TYLER, TEXAS

9/24/2015 9:40:01 AM

Pam Estes

CLERK

NO. 12-15-00177-CV

__________________________________________________

FILED IN

12th COURT OF APPEALS

TYLER, TEXAS

IN THE TWELFTH COURT OF APPEALS9/24/2015 9:40:01 AM TYLER, TEXAS PAM ESTES Clerk

__________________________________________________

WALTER BOUNDS and wife, CAROLYN BOUNDS, Appellants and Cross-Appellees

v.

JOHN THOMAS PRUD'HOMME, JOSEPH GILBERT PRUD'HOMME, JOSEPH LYNN PRUD'HOMME, PETER A. BREEN, Individually and as Successor Trustee of the BREEN FAMILY TRUST, JANET M. SUTRO, SUSAN E. BREEN, and TERRANCE E. BREEN, Individually and d/b/a E.G. AND M.A. PRUD'HOMME BENEFICIARIES PARTNERSHIP,

Appellees and Cross-Appellants

__________________________________________________

BRIEF OF CROSS-APPELLANTS

__________________________________________________

Robert G. Hargrove

State Bar No. 24032391

rob@texasenergylaw.com

Osborn, Griffith & Hargrove 515 Congress Avenue, Suite 2450 Austin, Texas 78701

(512) 476-3529

(512) 476-8310 Facsimile

IDENTITY OF PARTIES AND COUNSEL Defendants-Appellees/Cross Appellants:

John Thomas Prud'homme Joseph Gilbert Prud'homme Joseph Lynn Prud'homme Peter A. Breen, Individually and as Successor Trustee of the Breen Family Trust Janet M. Sutro Susan E. Breen Terrence E. Breen The E.G. and M.A. Prud'homme Beneficiaries Partnership

Trial and Appellate Counsel for Appellees/Cross Appellants:

Robert G. Hargrove Osborn, Griffith & Hargrove 515 Congress Avenue, Suite 2450 Austin, Texas 78701

Additional Trial Counsel for Appellees/Cross Appellants:

J. Keith Stanley Russell R. Smith Fairchild, Price, Haley & Smith, LLC P.O. Drawer 631668 Nacogdoches, Texas 75963

Plaintiffs-Appellants/Cross Appellees: Walter Bounds and wife, Carolyn Bounds Trial and Appellate Counsel for Appellants/Cross Appellees:

Thomas R. McLeroy, Jr. P.O. Box 668 Center, Texas 75935

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TABLE OF CONTENTS

IDENTITY OF PARTIES AND COUNSEL…………………………….….ii INDEX OF AUTHORITIES……………………………………………......iv STATEMENT OF THE CASE……………………………………………...v STATEMENT REGARDING ORAL ARGUMENT……………………... vi RECORD AND APPENDIX……………………………………………… vi ISSUES ON APPEAL……………………………………………………..vii BACKGROUND…………………………………………………………….1 STATEMENT OF FACTS…………………………………………………..2 ARGUMENT………………………………………………………………. 5 I. The Five Subsequent Deeds are not ambiguous, and they reserve the mineral estate to their grantors…............................6 A. Standard of Review………..............................................6 B. The unambiguous terms of the five later executed deeds make the grantors' intent to reserve the minerals clear….......... 7 CONCLUSION AND PRAYER………………………………………….. 10 CERTIFICATE OF COMPLIANCE………………………………………11 APPENDIX………………………………………………………………...12

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INDEX OF AUTHORITIES

Cases

Concord Oil Co. v. Pennzoil Exploration & Prod. Co., 966 S.W.2d 451, 455 (Tex. 1998) ................................................................................. 7,8 Dynegy Midstream Services Ltd. P'ship v. Apache Corp., 294 S.W.3d 164 (Tex. 2009). ........................................................................................... 6 Fisher v. Wynn, No. 12-11-00008-CV, 2011 WL 3338771 (Tex. App.

-- Tyler 2011, no pet.) (mem. op.). ............................................................... 6 Harris v. Windsor, 294 S.W.2d 798 (Tex. 1956) ............................................. 7 Johnson v. Connor, 260 S.W.3d 575 (Tex. App. -- Tyler 2008, no pet.) ............................................................................................................... 6 Luckel v. White, 819 S.W.2d 459, 461 (Tex. 1991) ...................................... 7,8 National Union Fire Ins. v. CBI Indus., Inc., 907 S.W.2d 517 (Tex.

1995), citing Coker v. Coker, 650 S.W.2d 391 (Tex. 1983) ......................... 6 Nevil v. TFW Management, Inc., No. 12-11-00023-CV, 2012 WL 220252 (Tex.App.—Tyler 2012, no pet.) (mem. op.) .................................. 8 R & P Enterprises v. LaGuarta, Gavrel & Kirk, Inc., 596 S.W.2d 517 (Tex. 1980) ................................................................................................... 7

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STATEMENT OF THE CASE

Nature of the Case: This is a deed construction case. Defendants-

Appellees/Cross-Appellants (the "Prud'homme Group") sold roughly 126 acres of property in San Augustine County to Plaintiffs-Appellants/Cross Appellees ("Bounds") in 2001. Supp.CR209-222.

The property was conveyed from the Prud'homme Group to Bounds by way of six Warranty Deeds.

Id. On October 8, 2013, Bounds filed his Original Petition in the trial court, asserting that the Warranty Deeds conveyed the mineral estate to Bounds, and asking, in the alternative, that they be reformed if the Court finds that the Warranty Deeds reserved the mineral estate to their grantors.

Supp.CR5-65. The Prud'homme Defendants answered, generally denying the Bounds claims, and asserting that the statute of limitations barred the potential reformation claim. Supp.CR66-69.

Trial Court: 1st District Court of San Augustine County, Texas;

The Honorable Craig M. Mixson presiding.

Course of Proceedings: The case was tried to the Court on February 25, 2015, and a Judgment was entered on March 9, 2015. Supp.CR202-208. By its Judgment, the Court found that one of the six deeds was unambiguous, that it reserved the mineral estate to its grantors, and that Bounds could not prevail on his attempt to reform the deed. Id. The Prud'homme Group does not appeal those rulings.

The Judgment also found that the other five deeds were ambiguous and did not reserve the mineral estate to their grantors. Id. The Prud'homme Group appeals those findings. Supp.CR225-226.

Findings of Fact and Conclusions of Law were signed by the Court on May 6, 2015.

Supp.CR209-222

v

STATEMENT REGARDING ORAL ARGUMENT This is a fairly straightforward case involving the construction of deeds and the application of the statute of limitations. The Prud'homme Group does not believe oral argument would significantly aid the decisional process, and so they do not request oral argument. However, if the Court decides that oral argument is appropriate, the Prud'homme Group would request that it be permitted to participate.

RECORD AND APPENDIX

The record in this appeal includes a Clerk's Record and a Supplemental Clerk's Record. Citations to each will be to page number: CR___ or Supp.CR___. The record in this appeal includes a two-volume Reporter's Record. Citations to it will be to volume and page number: ___RR___. The trial exhibits are found in Volume 2 of the Clerk's Record, and they will be cited as P.Ex.__ or D.Ex.__.

The Appendix to this brief includes the following items:

Apx. A: Final Judgment Apx. B: Findings of Fact and Conclusions of Law Apx. C: Deed Form A (the initial deed – P.Ex.5)

Apx. D: Deed Form B (one of the subsequent deeds – P.Ex.6)

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ISSUES ON APPEAL

1. Did the trial court err in ruling that a group of deeds from the Prud'homme Group to Bounds was ambiguous?

2. Did the trial court err in construing those deeds to not reserve the mineral estate to their grantors?

vii

TO THE HONORABLE COURT OF APPEALS:

BACKGROUND

This case, tried to the court, is a dispute over the construction of a series of warranty deeds executed in 2001 to consummate a real estate transaction in which the Prud'homme Group sold approximately 126 acres of land in San Augustine County to Bounds.

The parties prepared and executed the deeds in two phases. A single initial deed was prepared and executed which conveyed the majority of the interest in the property. Later, five additional deeds were prepared and executed, which conveyed the remainder of the interest in the property.

More than a decade after the transaction closed, Bounds asserted that the mineral estate should have been conveyed to him in the transactions and filed this lawsuit.

The trial court ruled in the Prud'homme Group's favor as to the initial deed, both that it unambiguously did reserve the minerals to the Prud'homme Group, and that Bounds could not reform it. The Prud'homme Group does not appeal those rulings.

The trial court also ruled that the five subsequent deeds were ambiguous, and the trial court construed them to convey the mineral estate to Bounds. The Prud'homme Group does appeal those rulings.

2

STATEMENT OF FACTS

Immediately prior to May 22, 1971, E.G. Prud'homme, Sr. and his wife, Mary Anderson Prud'homme, owned 100% of the surface estate, and an undivided 50% of the mineral estate, with respect to 126.632 acres of land in San Augustine County, Texas (hereafter the "126 acres"). CR83-96, FF No. 1.1 By way of a Deed dated May 22, 1971, Mr. and Mrs. Prud'homme conveyed 100% of their surface interest and 50% of their mineral interest in the 126 acres to Eck G. Prud'homme, Jr., Eleanor Prud'homme Breen, John Thomas Prud'homme, Joseph Gilbert Prud'homme, and Joseph Lynn Prud'homme DBA the E.G. and M.A. Prud'homme Beneficiaries Partnership. CR83-96, FF No. 1; P.Ex.3. The five named individuals, who were the partners in this Partnership, were their five children. 1RR109:3-110:1.

On or about July 4, 2001, The E.G. and M.A. Prud'homme Beneficiaries Partnership entered into a contract to sell its interest in the 126 acres to Walter and Carolyn Bounds. CR83-96, FF No. 12.

Walter and Carolyn Bounds were represented by counsel, Mr. John Griffin, with respect to their purchase of the 126 acres from the E.G. and

1 The Court's Findings of Fact and Conclusions of Law are in the Clerk's Record at Pages 83-96. The Prud'homme Group will cite to them by numbered Finding.

3

M.A. Prud'homme Beneficiaries Partnership. CR83-96, FF No. 13; P.Ex.27, 31:2-4.2 The Bounds' attorney, John Griffin, prepared the Warranty Deed, dated September 7, 2001, by and between Eck. G. Prud'homme, Jr., Al Joseph Breen, John Thomas Prud'homme, Joseph Gilbert Prud'homme, and Joseph Lynn Prud'homme, d/b/a E.G. and M.A. Prud'homme Beneficiaries Partnership, as Grantors, and Walter Bounds and wife, Carolyn B. Bounds, as Grantees. CR83-96, FF No. 14; P.Ex.5. That Deed was executed by its Grantors on September 8, 2001 and on September 12, 2001. CR83-96, FF No. 16; P.Ex.5.

The trial court ruled that this deed unambiguously reserved the minerals to its grantors.

John Griffin also prepared a series of additional warranty deeds, all executed about a month later by the descendants of Eleanor Prud’homme Breen, one of the five children of Mr. and Mrs. Prud’homme. They are described more specifically below.

John Griffin prepared the warranty deed dated September 7, 2001, by and between Hal Joseph Breen, a single person, Individually and as Trustee of the Breen Family Trust and Personal Representative under the Last Will of

2 Plaintiff's Exhibit 27 is a transcript of Mr. Griffin's deposition, the highlighted portions of which were admitted into evidence at trial.

4

Eleanor P. Breen, as Grantor, and Walter Bounds and wife, Carolyn B. Bounds, as Grantees. CR83-96, FF No. 20; P.Ex.6. That Deed was executed on October 9, 2001. CR83-96, FF No. 21; P.Ex.6.

John Griffin prepared the Warranty Deed dated September 7, 2001, by and between Peter A. Breen, Individually and as Successor Trustee of the Breen Family Trust, as Grantor, and Walter Bounds and wife, Carolyn B. Bounds, as Grantees. CR83-96, FF No. 23; P.Ex.7. That deed was executed on October 9, 2001. CR83-96, FF No. 24; P.Ex.7.

John Griffin prepared the Warranty Deed dated September 7, 2001, by and between Susan E. Breen, as Grantor, and Walter Bounds and wife, Carolyn B. Bounds, as Grantees. CR83-96, FF No. 26; P.Ex.8. That Deed was executed on October 5, 2001. CR83-96, FF No. 27; P.Ex.8.

John Griffin prepared the Warranty Deed dated September 7, 2001, by and between Terence J. Breen, as Grantor, and Walter Bounds and wife, Carolyn B. Bounds, as Grantees. CR83-96, FF No. 29; P.Ex.8A. That Deed was executed on October 17, 2001. CR83-96, FF No. 30; P.Ex.8A.

John Griffin prepared the Warranty Deed dated September 7, 2001, by and between Janet M. Breen Sutro, as Grantor, and Walter Bounds and wife, Carolyn B. Bounds, as Grantees. CR83-96, FF No. 32; P.Ex.9. That Deed was executed on October 9, 2001. CR83-96, FF No. 33; P.Ex.9.

5

The trial court ruled that this second group of deeds, executed in October, 2001, were ambiguous and did not reserve the mineral estate to their grantors.

Plaintiffs filed this lawsuit on October 8, 2013. CR83-96, FF No. 49;

Supp.CR5-65.

ARGUMENT

This transaction occurred in two phases. The first, which closed in early September, 2001, conveyed the bulk of the interest in the 126 acres, by way of a single Warranty Deed, which is Plaintiff's Exhibit 5.3 The Court ruled, properly, that that Deed was not ambiguous. The Court construed that Deed, properly, to reserve the mineral estate to the Prud'homme grantors.

The second phase of the transaction took place roughly one month later. In it, descendants of one branch of the Prud'homme family (the Breens) were asked to execute five subsequent deeds. Those Warranty Deeds are Plaintiff's Exhibits 6, 7, 8, 8A, and 9. These deeds are identical to the original deed with one exception. At the end of the property description section of the deed, they contain the following sentence: "This deed is intended to convey

3 Also included in the Appendix at Apx.3.

6

all of Grantor's interest in and to the above-described real property." P.Ex.6, for example.4 Since, as a matter of law, this added sentence neither renders the deeds ambiguous nor un-does the clear mineral reservation that follows, the trial court's rulings with respect to these deeds were incorrect.

I. The Five Subsequent Deeds are not ambiguous, and they reserve the mineral estate to their grantors.

A. Standard of Review Whether a deed is ambiguous is a question of law for the court, which the Court of Appeals reviews de novo. Johnson v. Connor, 260 S.W.3d 575, 579 (Tex. App. -- Tyler 2008, no pet.). "If a written contract is so worded that it can be given a definite or certain legal meaning then it is not ambiguous." National Union Fire Ins. v. CBI Indus., Inc., 907 S.W.2d 517, 520 (Tex. 1995), citing Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983). See also Fisher v. Wynn, No. 12-11-00008-CV, 2011 WL 3338771, *5 (Tex. App. -- Tyler 2011, no pet.) (mem. op.). "A contract is not ambiguous simply because the parties disagree over its meaning." Dynegy Midstream Services Ltd. P'ship v. Apache Corp., 294 S.W.3d 164, 168 (Tex. 2009).

4 Exhibits 6, 7, 8, 8A, and 9 are identical, other than their grantors.

7

Similarly, “The construction of an unambiguous deed is a question of law for the court.” Luckel v. White, 819 S.W.2d 459, 461 (Tex. 1991). A court’s primary goal when construing a deed is to ascertain the intention of the parties as expressed within the “four corners” of the instrument. Id. The four corners rule requires the court to ascertain the intent of the parties solely from the language of the instrument. See Concord Oil Co. v. Pennzoil Exploration & Prod. Co., 966 S.W.2d 451, 455 (Tex. 1998) (“[T]he intent of the parties must be determined from what they expressed in the instrument, read as a whole, and . . . the actual, subjective intent of the parties will not always be given effect even if we were able to discern that subjective intent.”). If a written instrument, such as a deed, is worded in such a way that “a court may properly give it a certain or definite legal meaning or interpretation, it is not ambiguous.” R & P Enterprises v. LaGuarta, Gavrel & Kirk, Inc., 596 S.W.2d 517, 519 (Tex. 1980).

B. The unambiguous terms of the five later-executed deeds make the grantors' intent to reserve the minerals clear.

To create a mineral reservation, no magic words are needed, and absence of specific language is not determinative. Harris v. Windsor, 294 S.W.2d 798, 800 (Tex. 1956); Concord Oil Co. v. Pennzoil Exploration and Prod. Co., 966 S.W.2d 451, 454 (Tex. 1998) (citing Luckel, 819 S.W.2d at

8

461-62); Nevil v. TFW Management, Inc., No. 12-11-00023-CV, 2012 WL 220252, *4 (Tex.App.—Tyler 2012, no pet.) (mem. opinion) (“absence of any specific language” not indicative of the framer’s intent).

Here, all of the warranty deeds expressly and unambiguously reserved all oil, gas, and other mineral rights to their grantors as follows:

Reservations from and Exceptions to Conveyance and Warranty: TITLE to any of the oil, gas and other minerals, in, under and that may be produced from the above-described real property, together with all rights, privileges and immunities relating thereto . . .

P.Exs. 5, 6, 7, 8, 8A, and 9. The trial court construed this language, and found that it unambiguously reserved the minerals, as to the original deed (Plaintiff's Exhibit 5).

The five subsequent Warranty Deeds differ from the initial deed only in that they include a sentence that states: “This Deed is intended to convey all of Grantor’s interest in and to the above-described real property.” P.Exs. 6, 7, 8, 8A, and 9. Under Texas law, this language must be harmonized with the other parts of the deeds. Luckel v. White, 819 S.W.2d at 462. When harmonized with the reservation-and-exception paragraph, the additional language is a confirmation of the grantors’ general intent to convey the property to the grantees, but as tempered by the mineral reservation.

9

This added sentence must be read in the context of the deed's organizational structure. The sentence is located in the "Property" section of the deed, immediately at the end of the metes and bounds description. The next section of the deed is the "Reservations from and Exceptions to the Conveyance and Warranty" section of the deed, which is set out above. Following both of these sections, and activating them, is the granting clause.

In order to construe these deeds, and harmonize the added sentence with the rest of the deeds, one must begin and end with the granting clause. The granting clause reads:

Grantor, for the consideration and subject to the reservations from and exceptions to the conveyance and warranty, grants, sells, and conveys to Grantee, the property . . .

P.Exs.6, 7, 8, 8A, and 9. "Property" is a defined term, and its definition includes the sentence which the trial court found created the ambiguity. The granting clause makes it clear that the Grantor conveys to the Grantee the Property, subject to the reservations. P.Exs. 6, 7, 8, 8A, and 9. By the express terms of the granting clause, the added sentence cannot trump the reservations. The property is conveyed subject to the reservations.

The language of the deeds themselves, then, resolves the issue that the trial court found created the ambiguity. The language of the deeds themselves also requires that the five subsequent deeds be construed just as

10

the initial deed must be: to reserve "TITLE to any of the oil, gas and other minerals" to the deeds' grantors.

CONCLUSION AND PRAYER

The trial court's ambiguity ruling as to the five subsequently-executed deeds cannot survive a careful reading of the deeds themselves, which make it clear that any language in the property description must be construed expressly subject to the mineral reservation. Accordingly, the Prud'homme Group respectfully requests that the Court of Appeals reverse that portion of the trial court's judgment that deals with these five subsequent deeds (Plaintiff's Exhibits 6, 7, 8, 8A, and 9), and render judgment that those deeds were unambiguous, and that they reserved any and all minerals to their grantors.

Respectfully submitted,

OSBORN, GRIFFITH & HARGROVE Robert G. Hargrove, SBN 24032391 515 Congress Avenue, Suite 2450 Austin, Texas 78701

(512) 476-3529

(512) 476-8310 Facsimile

rob@texasenergylaw.com

By: /s/ Robert G. Hargrove Robert G. Hargrove

ATTORNEYS FOR

PRUD’HOMME DEFENDANTS

11

CERTIFICATE OF SERVICE

I hereby certify that a true and correct copy of the foregoing document is being served on the following persons through the electronic filing and service system on this the 24th day of September, 2015.

Thomas R. McLeroy Jr. SBN 13766800 P.O. Box 668 Center, Texas 75935 ATTORNEY FOR CROSS-APPELLEES

By: /s/ Robert G. Hargrove Robert G. Hargrove

CERTIFICATE OF COMPLIANCE

I hereby certify that the foregoing instrument was prepared using Microsoft Word for Mac 2011, and that, according to its word-count function, the sections of the foregoing pleading covered by TRAP 9.4(i)(1) contain 2,054 words.

By: /s/ Robert G. Hargrove Robert G. Hargrove

12

APPENDIX

Apx. A: Final Judgment (CR70-76) Apx. B: Findings of Fact and Conclusions of Law (CR83-96) Apx. C: Deed Form A (the initial deed – P.Ex.5) Apx. D: Deed Form B (one of the subsequent deeds –P.Ex.6)

Apx. A

70

Cause No. CV-13-9488

WALTER BOUNDS and wife, § IN THE DISTRICT COURT CAROLYN B. BOUNDS, § Plaintiffs, § §

v. § §

JOHN THOMAS PRUD'HOMME, § JOSEPH GILBERT PRUD'HOMME, § SAN AUGUSTINE COUNTY, JOSEPH LYNN PRUD'HOMME, § TEXAS PETER A. BREEN, Individually and as § FILED Successor Trustee of the BREEN FAMILY §§ f(f'J,'ooo'CLOCK~M TRUST, JANET M. SUTRO, SUSAN E. BREEN, and TERRANCE E. BREEN, 2:TIO 20-1:£.

§ JEAN STEitTOE Dislict Clerk Individually and d/b/a E.G. AND M.A. ~ ~NAUGUST~S PRUD'HOMME BENEFICIARIES PARTNERSHIP, § Defendants. § 1st JUDICIAL DISTRICT

JUDGMENT

On February 25, 2015, this cause came on to be heard. Walter Bounds and wife, Carolyn Bounds, Plaintiffs, appeared in person and by attorney of record and announced ready for trial, and John Thomas Prud'homme, Joseph Gilbert Prud'homme, Joseph Lynn Prud'homme, Peter A. Breen, Individually and as Successor Trustee of the Breen Family Trust, Janet M. Sutro, Susan E. Breen, and Terrance E. Breen, Individually and d/b/a/ E.G. and M.A. Prud'homme Beneficiaries Partnership, Defendants, appeared in person and by attorney of record and announced ready for trial. No jury having been demanded, all questions of fact were submitted to the Court, and the case proceeded to trial.

The Court, after hearing the evidence and arguments of counsel, is of the opinion and finds that:

JUDGMENT PAGE 1

71

(a) the Warranty Deed dated September 7, 2001, by and between Eck. G.

Prud'homme, Jr., Al Joseph Breen, John Thomas Prud'homme, Joseph Gilbert Prud'homme, and Joseph Lynn Prud'homme, d/b/a E.G. and M.A. Prud'homme Beneficiaries Partnership, as Grantors, and Walter Bounds and wife, Carolyn B. Bounds, as Grantees, recorded in the Records of San Augustine County, Texas in Volume 24, Page 20, and admitted in evidence as Plaintiffs' Exhibit 5, is not ambiguous, and is hereby construed to reserve to its Grantors any and all oil, gas, and other minerals owned by its Grantors with respect to the property conveyed by the deed;

(b) the Plaintiffs should take nothing with respect to their cause of action to reform the deed described above and admitted as Plaintiffs' Exhibit 5;

(c) the Warranty Deed dated September 7, 2001, by and between Hal Joseph Breen, a single person, Individually and as Trustee of the Breen Family Trust and Personal Representative under the Last Will of Eleanor P. Breen, as Grantor, and Walter Bounds and wife, Carolyn B. Bounds, as Grantees, recorded in the Records of San Augustine County, Texas in Volume 24, Page 25, and admitted in evidence as Plaintiffs' Exhibit 6, is ambiguous, and is hereby construed to convey to its Grantees any and all oil, gas, and other minerals owned by its Grantor with respect to the property conveyed by the deed;

(d) the Warranty Deed dated September 7, 2001, by and between Peter A.

Breen, Individually and as Successor Trustee of the Breen Family Trust, as Grantor, and Walter Bounds and wife, Carolyn B. Bounds, as Grantees, recorded in the Records of San Augustine County, Texas in Volume 24, Page 28, and admitted in evidence as Plaintiffs' Exhibit 7, is ambiguous, and is hereby construed to convey to its Grantees any and all oil,

JUDGMENT PAGE2

72

gas, and other minerals owned by its Grantor with respect to the property conveyed by the deed;

(e) the Warranty Deed dated September 7, 2001, by and between Susan E.

Breen, as Grantor, and Walter Bounds and wife, Carolyn B. Bounds, as Grantees, recorded in the Records of San Augustine County, Texas in Volume 24, Page 31, and admitted in evidence as Plaintiffs' Exhibit 8, is ambiguous, and is hereby construed to convey to its Grantees any and all oil, gas, and other minerals owned by its Grantor with respect to the property conveyed by the deed;

(f) the Warranty Deed dated September 7, 2001, by and between Terence J.

Breen, as Grantor, and Walter Bounds and wife, Carolyn B. Bounds, as Grantees, recorded in the Records of San Augustine County, Texas in Volume 24, Page 34, and admitted in evidence as Plaintiffs' Exhibit 8A, is ambiguous, and is hereby construed to convey to its Grantees any and all oil, gas, and other minerals owned by its Grantor with respect to the property conveyed by the deed;

(g) the Warranty Deed dated September 7, 2001, by and between Janet M.

Breen Sutro, as Grantor, and Walter Bounds and wife, Carolyn B. Bounds, as Grantees, recorded in the Records of San Augustine County, Texas in Volume 24, Page 37, and admitted in evidence as Plaintiffs' Exhibit 9, is ambiguous, and is hereby construed to convey to its Grantees any and all oil, gas, and other minerals owned by its Grantor with respect to the property conveyed by the deed;

(h) for purposes of this cause, the Deed dated May 22, 1971, by and between E.G. Prud'homme, Sr. and wife, Mary Anderson Young Prud'homme, as Grantors, and Eck. G. Prud'homme, Jr., Eleanor Prud'homme Breen, John Thomas Prud'homme, Joseph

JUDGMENT PAGE3

73

Gilbert Prud'homme, and Joseph Lynn Prud'homme OBA the E.G. and M.A. Prud'homme Beneficiaries Partnership, as Grantees, recorded in the Records of San Augustine County, Texas in Volume 166, Page 239, and admitted in evidence as Plaintiffs' Exhibit 3, is the common source of title for the property described in Exhibit A to this Judgment. At the time of this Deed, E.G. Prud'homme, Sr. and wife, Mary Anderson Young Prud'homme owned an undivided fifty percent (50%) interest in the oil, gas, and other minerals in and to the property described in Exhibit A to this Judgment;

(i) as a result of the findings and conclusions set out above, the deeds referenced above and admitted in evidence as Plaintiffs' Exhibits 5, 6, 7, 8, 8A, and 9 conveyed to Plaintiffs ten percent ( 10%) of the oil, gas, and other minerals in and to the Property described in Exhibit A to this Judgment that the Defendants owned as of September 7, 2001.

IT IS THEREFORE ORDERED that the Plaintiffs recover from the Defendants title to and possession of an undivided five percent (5%) interest in and to the oil, gas, and other minerals in and under the property described in Exhibit A to this Judgment, and have a writ of possession.

IT IS FURTHER ORDERED that the Defendants recover from the Plaintiffs title to and possession of an undivided forty-five percent (45%) interest in and to the oil, gas, and other minerals in and under the property described in Exhibit A to this Judgment, and have a writ of possession.

All costs of court spent or incurred in this cause are adjudged against the party incurring same.

JUDGMENT PAGE4

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All writs and processes for the enforcement and collection of this Judgment may issue as necessary.

All relief requested in this cause and not expressly granted is denied. This judgment finally disposes of all parties and claims and is appealable.

SIGNED ON 3 I 9..

~~~~~~~~~~~-

'2015.

JUDGMENT PAGES

75

EXHIBIT A: PROPERTY DESCRIPTION

BEING a survey of 126.632 acres of land and being all of a called 115-1/2 acre tract recorded in Vol. 105, Page No. 20, Deed Records of San Augustine County, Texas, and being a part of the J. s. COLLINS PRE-EMPTION SURVEY, A-445, and being located approximately 15 miles SW of the courthouse in San Augustine, Texas, and being more particularly described by metes and bounds, to-wit: BEGINNING: At the NW corner of said 115-1/2 acre tract being the NE corner of a 72.00 acre tract now awned by w. L. Brown recorded in Vol. 133, Page No. 468, a 3/8." Rein.L Rod for corner in the NWBL of said J. S. Collins Surv'ey from which a 13" Sweetgum"found marked mx 11 brs. N. 11 1/4 1 W, 10.6 feet and a 9a Pine found marked axu brs. N 38-1/4 1 E, 18. 7 feet and a l()l!l Sweetgum. found marked "X" brs. S 43 E, 24.00 feet; THENCE; N 59" 0.9' 25" E, along the N'.BL of said 115-l/2 acre tract and the SBL of a tract now owned by Kirby Lumber Co. and a well marked line, 1364.63 feet a 3/8° Reinf. Rod for corner from which a 14" Post Oak found marked ux~1 hrs. N 48 E, S. 9 feet; THENCE: N 73° 43' OSN E, along a well marked line to a Pine knot foUD.d set for corner, a distance of 59.57 feet from which a 12" Sweetgum found :marked "X 11 bra. s 81 w, ll.3 feet;

THENCE: N 68° 31' 17ti B, along said well marked line to a Pine knot found set for corner, a distance of 161.ll feet from which a 24A Post. oak found marked "X" brs. N. 69-1/4 • E, 22. S .feet;

THENCE: N 72" 18' .18" E, along said well marked line to a Pine knot found set for corner, a distance of 110.1 feet from which a 14~ Post Oak found marked 0 xa hrs. S 81-1/4 W, 15.5 feet;

1

THENCE: N 65~ 59 1 25° E, along said well marked line, 177.64 feet a 3/8" Reinf. Rod. tor corner from which a is• Pine found marked rax• brs. N 32-3/4' E, 5.7 feet and a 16M Pine found marked "X• brs. N 62-1/4' W, 16. oo feet; THENCE: s sa~ 05 1 47 11 E, along said well marked line to a Pine knot. found set for corner, a distance of 273.35 feet from which a 14~ Blackgum found marked •xN brs. N 58-1/2' W, 15.2 feet; THENCE: S 49~ 38 1 48~ E, along said well marked line to a Pine knot found set for corner, a distance of 194.30 feet a 14" Sweet Bay found marked mxa brs. S 25 E, 25.7 feet; THB!NC'E: S 8° 06' 20 6 E, along said well marked line to a Pine knot found set for corner, a distance of 363.00 feet from which a 36" Pen Q.ak found marked 11 X" brs. N 33-1/2' W, 1. 5 feet and a 1B" Pen

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76

Oak found marked "X 0 hrs. S 46 E, lS.3 feet; THENCE: S 19 9 29 1 42" E, along said well marked line to a Pine knot found set for corner, a distance of l 90. 97 feet a 14" Pen Oak marked 11 ::< 11 brs. s. 79-l/2' w, 10.2 feet and a 5n Blackgurn marked "X 111 hrs. s 67 E, 8.7';

THENCE~ S is<> 30' 35 11 W, along .lilaid well m.a.I"ked line, 114.09 feet a 3/8 Reinf. Rod for comer from which a 12 11 Black.gum found marked

11

"Xm hrs. N 74-l/2' E, 4.5 feet;

THENCE: S 30° 55' ssm E, along said well marked line, 226.66 feet a 3/8" Reinf. Rod for corner from which a 3ou Pine marked 111 x 11 brs.

N 22-1/4' W, 6. 8 feet and a 12" Pine marked 11 x 11 brs. s 36 w, 26. 00 feet;

THENCE; s 30" 11' 35" ff, along sa.id well marked line, 367 .44 feet a J/8 11 Reinf. Rod tor corner from which a lS" Sweetgum found marked "X" hrs. S 58 w, 10.GO feet; THRNCE: B 2 9 09' 56" E, along said well marked line to a Pine knot found set for corner, a distance of 194.51 feet from which a au Sweetgum found marked 11 x 11 bra. s 82 E, 12.1 feet;

THENCE1 s 9° 14' ia• E1 along said well marked line to a Pine knot found set for corner, a distance of 230.23 feet from which a 14,0 Post oak found marked 11 x 11 brs. s 46-1/2' E, 5. 5 feet and a 121'1 Pen oak found marked •x• brs. 45-1/2 1 w, 5.9 feet;

THENCE~ S 55° 52' 00" E, along said well marked line, 122.59 feet; THl!!IifCEr s 39~ 57' 49" .E, along said well marked line, 298.43 feet a 3/8q Reinf. Rod for corner from which a 24° Pine found marked qxn hrs. N 56 E, 18.2 feet;

TlU3NCE: s 3"' 51 1 54 11 W, along said well marked line to a Pine knot found set for corner, a distance of 382. 75 feet from which a 10'' Pine marked 11 x 11 brs. s 33 w, 11.S feet; THENCE: S 31" 52' 54 11 E, along said well marked line to the SE corner of said 115-1/2 a.ere tract, a distance of 21 7. 09 feet a Mulberry atake: found set for corner from which a 24" Blackgum found marked axo brs. S 58-1/2' W, 12.5 faet and a 12m Beech founa marked "Xu brs. N 41 E, 9.5 feeti

THENCE: S 59° 12' 38 11 W, along the BBL of said 115-1/2 acre tract and the SBL of aaid J'. S. Collins Survey and the NBL of M. B. Griffith Survey, A-19 to the SW corner of said 115-1/2 acre tract being the SE corner of said w. L. Brown 72 acre tract, a distance of 1472.82 feet a flanged top axle found set for corner from which a 10° Black Jack found marked •tx 11 brs. s 20 tl, 33. l feet and a 9• Pine stump bra. N 70 w, 36.5 feet~ THENCE~ N 47~ 58 1 oon W, along a WBL of said 115-1/2 acre tract and a EBL of said W. L. Brown 72 acre tract, 1212.50 feet a iron pipe found set for corner from which a s• Hackhe.rry found marked "X" brs. S Sl-1/2' E, 84.6 feet 0

THENCE: N 11" 37' w, along a WBL of said 115-1/2 acre tract and a EBL of said w. L. Brown 72 acre tract, 1675.60 feet to the PLACB OF BEGINNING, coutaining 126.632 acres of land.

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Apx. B

83

Cause No. CV-13-9488

WALTER BOUNDS and wife, § IN THE DISTRICT COURT CAROLYN B. BOUNDS, § Plaintiffs, § §

v. § §

JOHN THOMAS PRUD'HOMME, § JOSEPH GILBERT PRUD'HOMME, § SAN AUGUSTINE COUNTY, JOSEPH LYNN PRUD'HOMME, § TEXAS PETER A. BREEN, Individually and as § FILED Successor Trustee of the BREEN FAMILY § ATill.5_ O'CLOCK _l?M TRUST, JANET M. SUTRO, SUSAN E. § .3.ZL-20~ JEAN STEPTOE Disiict Clerk BREEN, and TERRANCE E. BREEN, § ~NAUGUSTlm Individually and d/b/a E.G. AND M.A. § PRUD'HOMME BENEFICIARIES § PARTNERSHIP, § Defendants. § 1st JUDICIAL DISTRICT

FINDINGS OF FACT AND CONCLUSIONS OF LAW On February 25, 2015, this cause came on for trial before the Court without a jury.

Walter Bounds and wife, Carolyn Bounds, Plaintiffs, appeared in person and by attorney of record and announced n~ady for trial, and John Thomas Prud'homme, Joseph Gilbert Prud'homme, Joseph Lynn Prud'homme, Peter A. Breen, Individually and as Successor Trustee of the Breen Family Trust, Janet M. Sutro, Susan E. Breen, and Terrance E. Breen, Individually and d/b/a/ E.G. and M.A. Prud'homme Beneficiaries Partnership, Defendants, appeared in person and .by attorney of record and announced ready for trial. After considering the pleadings, the evidence, the argument and briefs from counsel, the Court, in response to a request from Plaintiffs, makes its findings of fact and conclusions of law as follows:

FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGEi

84

FINDINGS OF FACT

1. Immediately prior to May 22, 1971, E.G. Prud'homme, Sr. and wife, Mary Anderson Prud'homme, owned 100% of the surface estate, and an undivided 50% of the mineral estate, with respect to the 126.632 acres of land in San Augustine County, Texas, described in more detail in Exhibit A to the Judgment in this case and to these Findings of Fact and Conclusions of Law.

2. The property described in the attached Exhibit A will hereafter be referred to as the "126 acres."

3. By way of a Deed dated May 22, 1971, E.G. Prud'homme, Sr. and wife, Mary Anderson Prud'homme, conveyed 100% of their surface interest and 50% of their mineral interest in the 126 acres to Eck G. Prud'homme, Jr., Eleanor Prud'homme Breen, John Thomas Prud'homme, Joseph Gilbert Prud'homme, and Joseph Lynn Prud'homme DBA the E.G. and M.A. Prud'homme Beneficiaries Partnership.

4. By way of the 1971 Deed described in FF 3, E.G. Prud'homme, Sr. and Mary Anderson Prud'homme reserved to themselves one half of the minerals they owned in and under the 126 acres.

5. The 1971 deed described in FF 3 was admitted in evidence at trial as Plaintiffs' Exhibit 3.

6. E.G. Prud'homme, Sr. died in 1981.

7. When E.G. Prud'homme, Sr. died, his interest in the minerals reserved from the 1971 conveyance of the 126 acres to the E.G. and M.A. Prud'homme Beneficiaries Partnership passed one-half to Mary Anderson Prud'homme, and one-half to the Trustees of the E.G. and M.A. Prud'homme Trust Fund.

FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE2

85

8. Mary Anderson Prud'homme died on May 5, 1988.

9. When Mary Anderson Prud'homme died, her interest m the minerals reserved from the 1971 conveyance of the 126 acres to the E.G. and M.A. Prud'homme Beneficiaries Partnership passed to the Trustees of the E.G. and M.A. Prud'homme Trust Fund.

10. The E.G. and M.A. Prud'homme Trust Fund was established by a Trust Agreement dated October 14, 1966.

11. The E.G. and M.A. Prud'homme Beneficiaries Partnership 1s a Texas General Mercantile Partnership created as of the last day of January, 1971.

12. On or about July 4, 2001, The E.G. and M.A. Prud'homme Beneficiaries Partnership entered into a contract to sell its interest in the 126 acres to Walter and Carolyn Bounds.

13. Walter and Carolyn Bounds were represented by counsel, Mr. John Griffin, with respect to their purchase of the 126 acres from the E.G. and M.A. Prud'homme Beneficiaries Partnership.

14. John Griffin prepared a Warranty Deed, dated September 7, 2001, by and between Eck. G. Prud'homme, Jr., Al Joseph Breen, John Thomas Prud'homme, Joseph Gilbert Prud'homme, and Joseph Lynn Prud'homme, d/b/a E.G. and M.A. Prud'homme Beneficiaries Partnership, as Grantors, and Walter Bounds and wife, Carolyn B. Bounds, as Grantees.

15. The Warranty Deed dated September 7, 2001, by and between Eck. G.

Prud'homme, Jr., Al Joseph Breen, John Thomas Prud'homme, Joseph Gilbert Prud'homme, and Joseph Lynn Prud'homme, d/b/a E.G. and M.A. Prud'homme

FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE3

86

Beneficiaries Partnership, as Grantors, and Walter Bounds and wife, Carolyn B. Bounds, as Grantees was admitted in evidence as Plaintiffs Exhibit 5.

16. The Warranty Deed dated September 7, 2001, by and between Eck. G.

Prud'homme, Jr., Al Joseph Breen, John Thomas Prud'homme, Joseph Gilbert Prud'homme, and Joseph Lynn Prud'homme, d/b/a E.G. and M.A. Prud'homme Beneficiaries Partnership, _as Grantors, and Walter Bounds and wife, Carolyn B. Bounds, as Grantees, was executed by its Grantors on September 8, 2001 and on September 12, 2001.

17. The Warranty Deed dated September 7, 2001, by and between Eck. G.

Prud'homme, Jr., Al Joseph Breen, John Thomas Prud'homme, Joseph Gilbert Prud'homme, and Joseph Lynn Prud'homme, d/b/a E.G. and M.A. Prud'homme Beneficiaries Partnership, as Grantors, and Walter Bounds and wife, Carolyn B. Bounds, as Grantees was recorded in the Records of San Augustine County, Texas in Volume 24, Page 20.

18. Gilbert Prud'homme has at all times served as the Managing Partner of the E.G. and M.A. Prud'homme Beneficiaries Partnership.

19. At the time Gilbert Prud'homme executed the Warranty Deed dated September 7, 2001, by and between Eck. G. Prud'homme, Jr., Al Joseph Breen, John Thomas Prud'homme, Joseph Gilbert Prud'homme, and Joseph Lynn Prud'homme, d/b/a E.G. and M.A. Prud'homme Beneficiaries Partnership, as Grantors, and Walter Bounds and wife, Carolyn B. Bounds, as Grantees, he understood that it reserved the minerals in and under the 126 acres to its grantors.

20. John Griffin prepared a warranty deed dated September 7, 2001, by and between Hal Joseph Breen, a single person, Individually and as Trustee of the Breen

FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE4

87

Family Trust and Personal Representative under the Last Will of Eleanor P. Breen, as Grantor, and Walter Bounds and wife, Carolyn B. Bounds, as Grantees.

21. Hal Joseph Breen executed the Warranty Deed dated September 7, 2001, by and between Hal Joseph Breen, a single person, Individually and as Trustee of the Breen Family Trust and Personal Representative under the Last Will of Eleanor P. Breen, as Grantor, and Walter Bounds and wife, Carolyn B. Bounds, as Grantees on October 9, 2001.

22. The Warranty Deed dated September 7, 2001, by and between Hal Joseph Breen, a single person, Individually and as Trustee of the Breen Family Trust and Personal Representative under the Last Will of Eleanor P. Breen, as Grantor, and Walter Bounds and wife, Carolyn B. Bounds, as Grantees, was recorded in the Records of San Augustine County, Texas in Volume 24, Page 25, and admitted in evidence as Plaintiffs' Exhibit 6.

23. John Griffin prepared the Warranty Deed dated September 7, 2001, by and between Peter A. Breen, Individually and as Successor Trustee of the Breen Family Trust, as Grantor, and Walter Bounds and wife, Carolyn B. Bounds, as Grantees.

24. Peter A. Breen executed the Warranty Deed dated September 7, 2001, by and between Peter A. Breen, Individually and as Successor Trustee of the Breen Family Trust, as Grantor, and Walter Bounds and wife, Carolyn B. Bounds, as Grantees on October 9, 2001.

25. The Warranty Deed dated September 7, 2001, by and between Peter A.

Breen, Individually and as Successor Trustee of the Breen Family Trust, as Grantor, and Walter Bounds and wife, Carolyn B. Bounds, as Grantees, was recorded in the Records of San Augustine County, Texas in Volume 24, Page 28, and admitted in evidence as Plaintiffs' Exhibit 7.

FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGES

88

26. John Griffin prepared the Warranty Deed dated September 7, 2001, by and between Susan E. Breen, as Grantor, and Walter Bounds and wife, Carolyn B. Bounds, as Grantees.

27. Susan E. Breen executed the Warranty Deed dated September 7, 2001, by and between Susan E. Breen, as Grantor, and Walter Bounds and wife, Carolyn B. Bounds, as Grantees on October 5, 2001.

28. The Warranty Deed dated September 7, 2001, by and between Susan E.

Breen, as Grantor, and Walter Bounds and wife, Carolyn B. Bounds, as Grantees, was recorded in the Records of San Augustine County, Texas in Volume 24, Page 31, and admitted in evidence as Plaintiffs' Exhibit 8.

29. John Griffin prepared the Warranty Deed dated September 7, 2001, by and between Terence J. Breen, as Grantor, and Walter Bounds and wife, Carolyn B. Bounds, as Grantees.

30. Terence J. Breen executed the Warranty Deed dated September 7, 2001, by and between Terence J. ·Breen, as Grantor, and Walter Bounds and wife, Carolyn B. Bounds, as Grantees on October 17, 2001.

31. The Warranty Deed dated September 7, 2001, by and between Terence J.

Breen, as Grantor, and Walter Bounds and wife, Carolyn B. Bounds, as Grantees, was recorded in the Records of San Augustine County, Texas in Volume 24, Page 34, and admitted in evidence as Plaintiffs' Exhibit 8A.

32. John Griffin prepared the Warranty Deed dated September 7, 2001, by and between Janet M. Breen Sutro, as Grantor, and Walter Bounds and wife, Carolyn B. Bounds, as Grantees.

FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE6

89

33. Janet M. Breen Sutro executed the Warranty Deed dated September 7, 2001, by and between Janet M. Breen Sutro, as Grantor, and Walter Bounds and wife, Carolyn B. Bounds, as Grantees on October 9, 2001.

34. The Warranty Deed dated September 7, 2001, by and between Janet M.

Breen Sutro, as Grantor, and Walter Bounds and wife, Carolyn B. Bounds, as Grantees, recorded in the Records of San Augustine County, Texas in Volume 24, Page 37, and admitted in evidence as Plaintiffs' Exhibit 9.

35. On November 5, 2001, a title insurance policy was issued, in favor of Walter and Carolyn Bounds, with respect to the 126 acres.

36. The title insurance policy, described in FF 35, above, references "Mineral Reservation as set forth in multiple Warranty Deeds from Eck G. Prud'homme, et al, to Walter Bounds and wife, Carolyn Bounds, all dated September 7~ 2001, and recorded in the Real Property Records of San Augustine County, Texas, as follows: Vol. 24, Page 20; Vol. 24, Page 25; Vol. 24, Page 28; Vol. 24, Page 31; Vol. 24, Page 34; and Vol. 24, Page 37."

37. The title insurance policy, described in FF 35, above, was provided to Plaintiffs and their lawyer at or near the time of its issuance in November, 2001.

38. Plaintiff Walter Bounds, who owns and operates an insurance agency, reviewed the title insurance policy, described in FF 35, above, at the time it was issued.

39. Effective April 29, 2008, Elite Landworks Association entered into a series of oil and gas leases for the 126 acres with the various Prud'homme/Breen parties who had been the grantors of the 2001 deeds described above and admitted in evidence as Plaintiffs' Exhibits 5, 6, 7, 8, 8A, and 9.

FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE7

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40. By various assignments, XTO Energy acquired Elite Landworks Association's leasehold interest in the 126 acres.

41. The 2001 deeds executed in October, 2001 (i.e. Plaintiffs' Exhibits 6, 7, 8, 8A, and 9) contain a sentence in the property description not found in the first deed (Plaintiffs' Exhibit 5), executed in September 2001: "This deed is intended to convey all of Grantor's interest in and to the above-described real property."

42. The parties intended that these October-executed deeds (Plaintiffs' Exhibits 6, 7, 8, 8A, and 9) should not reserve the minerals to their grantors.

43. Plaintiffs Walter and Carolyn Bounds believed that, when they acquired the 126 acres from the Defendants in 2001, they were acquiring whatever mineral interest the Defendants owned with re.spect to the 126 acres.

44. Defendants believed that, when they conveyed the 126 acres to the Plaintiffs in 2001, they were reserving whatever mineral interest the Defendants owned with respect to the 126 acres.

45. Plaintiffs and Defendants did not have identical intent and understanding of the terms to be embodied in the 2001 deeds (Plaintiffs' Exhibits 5, 6, 7, 8, 8A, and 9) at the time those deeds were executed.

46. Plaintiffs Walter and Carolyn Bounds did not exercise reasonable diligence with respect to their review of the 2001 deeds (Plaintiffs' Exhibits 5, 6, 7, 8, 8A, and 9) by which they acquired their interest in the 126 acres.

47. To the extent Plaintiffs believed that the 2001 deeds (Plaintiffs' Exhibits 5, 6, 7, 8, 8A, and 9) should have conveyed the minerals to the Plaintiffs, they were on notice

FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGES

91

that the 2001 deeds (Plaintiffs' Exhibits 5, 6, 7, 8, 8A, and 9) did not do so, or were ambiguous, at the time the deeds were executed.

48. To the extent Plaintiffs believed that the 2001 deeds (Plaintiffs' Exhibits 5, 6, 7, 8, 8A, and 9) should have conveyed the minerals to the Plaintiffs, they were on notice that the 2001 deeds (Plaintiffs' Exhibits 5, 6, 7, 8, 8A, and 9) did not do so, or were ambiguous, no later than early November, 2001, when they received the title insurance policy.

49. Plaintiffs filed this lawsuit on October 8, 2013.

CONCLUSIONS OF LAW

1. The Warranty Deed dated September 7, 2001, by and between Eck. G.

Prud'homme, Jr., Al Joseph Breen, John Thomas Prud'homme, Joseph Gilbert Prud'homme, and Joseph Lynn Prud'homme, d/b/a E.G. and M.A. Prud'homme Beneficiaries Partnership, as Grantors, and Walter Bounds and wife, Carolyn B. Bounds, as Grantees, recorded in the Records of San Augustine County, Texas in Volume 24, Page 20, and admitted in evidence as Plaintiffs' Exhibit 5, is not ambiguous.

2. The Warranty Deed dated September 7, 2001, by and between Eck. G.

Prud'homme, Jr., Al Joseph Breen, John Thomas Prud'homme, Joseph Gilbert Prud'homme, and Joseph Lynn Prud'homme, d/b/a E.G. and M.A. Prud'homme Beneficiaries Partnership, as Grantors, and Walter Bounds and wife, Carolyn B. Bounds, as Grantees, recorded in the Records of San Augustine County, Texas in Volume 24, Page 20, and admitted in evidence as Plaintiffs' Exhibit 5, is construed to reserve to its Grantors any and all oil, gas, and other minerals owned by its Grantors with respect to the property conveyed by the deed.

FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE9

92

3. Plaintiffs' cause of action for reformation is barred by the statute of limitations, as it was not brought within four years of the date it accrued.

4. As a matter of law, Plaintiffs' cause of action for reformation accrued at the time the 2001 deeds (Plaintiffs' Exhibits 5, 6, 7, 8, 8A, and 9) were executed, as the deeds were duly recorded and in Plaintiffs chain of title.

5. Plaintiffs' c;ause of action for reformation could have accrued no later than early November, 2001, as at that time Plaintiffs knew, or in the exercise of reasonable diligence should have known, that the deeds did not convey the minerals to them, or were ambiguous.

6. Even if Plaintiffs' cause of action for reformation was not barred by limitations, Plaintiffs would still not be entitled to reformation, as they did not prove by clear, exact, and satisfactory evidence that that deeds' inclusion of language of mineral reservation was the result of a mutual mistake.

7. The Warranty Deed dated September 7, 2001, by and between Hal Joseph Breen, a single person, Individually and as Trustee of the Breen Family Trust and Personal Representative under the Last Will of Eleanor P. Breen, as Grantor, and Walter Bounds and wife, Carolyn B. Bounds, as Grantees, recorded in the Records of San Augustine County, Texas in Volume 24, Page 25, and admitted in evidence as Plaintiffs' Exhibit 6, is ambiguous, and is construed to convey to its Grantees any and all oil, gas, and other minerals owned by its Grantor with respect to the property conveyed by the deed.

8. The Warranty Deed dated September 7, 2001, by and between Peter A.

Breen, Individually and as Successor Trustee of the Breen Family Trust, as Grantor, and Walter Bounds and wife, Carolyn B. Bounds, as Grantees, recorded in the Records of San

FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 10

93

Augustine County, Texas in Volume 24, Page 28, and admitted in evidence as Plaintiffs' Exhibit 7, is ambiguous, and is hereby construed to convey to its Grantees any and all oil, gas, and other minerals owned by its Grantor with respect to the property conveyed by the deed.

9. The Warranty Deed dated September 7, 2001, by and between Susan E.

Breen, as Grantor, and Walter Bounds and wife, Carolyn B. Bounds, as Grantees, recorded in the Records of San Augustine County, Texas in Volume 24, Page 31, and admitted in evidence as Plaintiffs' Exhibit 8, is ambiguous, and is construed to convey to its Grantees any and all oil, gas, and other minerals owned by its Grantor with respect to the property conveyed by the deed.

10. The Warranty Deed dated September 7, 2001, by and between Terence J.

Breen, as Grantor, and Walter Bounds and wife, Carolyn B. Bounds, as Grantees, recorded in the Records of San Augustine County, Texas in Volume 24, Page 34, and admitted in evidence as Plaintiffs' Exhibit 8A, is ambiguous, and is construed to convey to its Grantees any and all oil, gas, and other minerals owned by its Grantor with respect to the property conveyed by the deed.

11. the Warranty Deed dated September 7, 2001, by and between Janet M.

Breen Sutro, as Grantor, and Walter Bounds and wife, Carolyn B. Bounds, as Grantees, recorded in the Records of San Augustine County, Texas in Volume 24, Page 37, and admitted in evidence as Plaintiffs' Exhibit 9, is ambiguous, and is construed to convey to its Grantees any and all oil, gas, and other minerals owned by its Grantor with respect to the property conveyed by the deed.

FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 11

94

12. For purposes of this cause, the Deed dated May 22, 1971, by and between E.G. Prud'homme, Sr. and. wife, Mary Anderson Young Prud'homme, as Grantors, and Eck. G. Prud'homme, Jr., Eleanor Prud'homme Breen, John Thomas Prud'homme, Joseph Gilbert Prud'homme, and Joseph Lynn Prud'homme DBA the E.G. and M.A. Prud'homme Beneficiaries Partnership, as Grantees, recorded in the Records of San Augustine County, Texas in Volume 166, Page 239, and admitted in evidence as Plaintiffs' Exhibit 3, is the common source of title for the 126 acres. At the time of this Deed, E.G. Prud'homme, Sr. and wife, Mary Anderson Young Prud'homme owned an undivided fifty percent (50%) interest in the oil, gas, and other minerals in and to the 126 acres.

13. As a result of the findings and conclusions set out above, the deeds referenced above and admitted in evidence as Plaintiffs' Exhibits 5, 6, 7, S, SA, and 9 conveyed to Plaintiffs ten percent (10%) of the oil, gas, and other minerals in and to the 126 acres that the Defendants owned as of September 7, 2001.

14. Since the Defendants owned '50% of the oil, gas, and other minerals in and to the 126 acres as of September 7, 2001, as a result of the deeds referenced above and admitted in evidence as Plaintiffs' Exhibits 5, 6, 7, S, SA, and 9, Plaintiffs acquired an undivided five percent (5%) interest in the oil, gas, and other minerals in and to the 126 acres, and Defendants reserved an undivided forty-five percent (45%) interest in the oil, gas, and other minerals in and to the 126 acres.

SIGNED ON _ _ 5i~'~·~-----·' 2015.

FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 12

95

EXHIBIT A: PROPERTY DESCRIPTION

BEING a survey of 126.632 acres of la.nd and being all of a called 115-1/2 acre tract recorded in Vol. 105, Page ~o. 20, Deed Records of San Augustine COWlt:y, Texas, and being a pa.rt. ·Of the J. s. COLLINS PRE~l!!MPTION SururEY, A-445, and being located approximately 15 miles sw of the courthouse in San Augu!!i!tine, Tex;ae, and being more particularly described by metes and bounds, to=wit: BE<lINNI:NG: At the NW corner of saidl 115-1/2 acre tract being the NE corner of a 72 . 00 acre tract now awned by iw. L. BrOWll recorded in Vol. 133, Page No. 468, a 3/8" Reinf + Rod for corner in the NWBL of sai.d J. S. Collins Survey from which a 13 IT Sweetgum ·found marked 11 X 1111 •N. 11 l/4. 1 W, 10.6 feet. and a 9 81 Pine found marked 11 x 0 brs. N 38-1/4 1 E, 18. 7 feet and a 10° sweetgum found marked "X" brs. S 43 E, ~4.00 feet, TlIBNC!g~ N 59'" 09' 25 11 E 1 al.ong the DL of said 115-1/.2 a.ere tr,act and the SBL of a t;ract II.OW' owned. by Kirby Lumber Co. and a Weill marked line., lJG4.63 feet a 3/8'' Reinf. Rod for corner from which a 14 111 Post Oak found marked 11X" brs. N 48 E., a.9 feet; THENCE: N 73"' 43 1 081i Ell, along a well marked line to a Pine knot found set for co:rDer, a distance of .59. 57 feet fro.m which a i2 rr Sweetgum fou:nd :marlked "X 11 brs. s 81 W, 11.3 feet; THENCB: N 68 11 :n 1 17 11 E:, along said well marked line to a. Pine knot found set for cornerJ a: distance of 161.11 feet from which a 24 11 Post Oak found marked 11 x 0 brs. N, G9-l/4 • E, 22. 5 feet;;

THENCB ~ N 72 ¢ 18' UP' El, along Baid well marked lin.e, to a Pine knot. found set for cornier, a distance of lJ.. O .1 feet from which a 14" Post Oak, found marked 11 x 11 hrs. s 1n~1/4 1 w, 15 .:5, feet;

THENCE! N 651) 59 1 :t5'1 '.!!:., a.long said well marked line 1 177.64 feet a 3/8 11 Reinf. Rod f.or corner from. which a 119 111 ·pine found marked 11 X"' brs. N 32-3/4 1 B, 5. 7 feet and a '.16 11 Pine found marked 11x 11 br:S. N 62-1/4 1 w, 16. oa feet; ,

THENCE!l: s sae 05• 4:7" E, a.long said well maikad line to a Pine knot found set for corner,. a distance of 273. 35 f e,et from which a 1.4 11 Blaokgurn found marked 11 xfj brs. N ss-1/2 1 W, 15.2 feet; THENCE: S 49"' 38 1 48 11 E, a.long said well marked line to a Pine knot found set for corner, a distance of 1:94. 30 feet a 14 •1 Sweet Bay found, mlilrked "X 1' brs. S 25 E, 25. 7 feet; THENCB: S S"' 06' 20 11 El, a.long said well marked. line to a Pina knot found set for co:rr1e:r, a distance of 363 • oo feet from which a .3 6 1r Pen Oak found marked 11 x 11 b:r;!L N 33-1/2 1 w, J. .!5 feet and a 18 1 Pen

FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 13

96

Oak found marked nxu hrs . .S 46 E, 18, J. feet;

"rFmNCE: S 19.;i; 29 1 42 11 E 1 along said well marked line to a Pine knot found set for corner, a distance. of 190. 97 feet a 14 n Pen Oak marked 11 X11 hrs. S.· 7.9-1/2 r W, 10.2 feet. and a. 6" Blackgum marked "X• brs. s 57 E, S.7 1 ;

THENCE~ s 1a<> 30' 35 11 W, along said well marked line, 114,09 feet a 3 / e Reinf. Rod for corner from which a l.2 11 Black.gum found marked 11

"X" brs. N 74-1/2' E, 4.S feet;

THEMCE; S 30" .55 1 58 11 E, along said well marked. line, 2.26.66 feet a 3/S" Reinf. Rod for corner from which a 3orr Pine marked 11 x 11 brs. N 22-l/4' W, 6. 8 feet and a 12" Pine marked 1rxu brs1. s 36 w, 26. 00 feet;

s 3Q" 11 1 35 11 ii, along said! "t>Tell marked line, 357.4.4 feet THE:NC:ii:: a 3/8" Reinf. :Rod for corner from which a 15" Sweet.gum fow::ld marked nxn hrs. s 58 w., 10 + 00 :feet;

THENCE: s 2" 09r 56 11 E, along said well marked line to a Pine knot. found set for cm:ner. a distance of 1.94. 5.1 feet from which a 8 11 Sweetgum fo11.Wd marked 11'X 1! brs. s 82 E, 12 .1 :feet; THENCB: S 9° i4r ISM~, along said well marked line to a Pine knot found set for corner, a. distance of 230.23 feet from which a 14 11 Post. oak found marked nxt1 brs. S 46-1/4' B.1 5.5 :feet and a 12lf Pen Oak found marked 0 x 11 brs. 45-1/2 1 w, 5.9 feet; THKNC!h S 55° 52 1 00 11 B, along said. well marked line, 122.59 feet;

'l'Hm.iJC.Et s. 39" 57 1 49" .E, along said well marked line, 298.43 feet a 3/8 11 Re.inf. Rod for <:lo?:Uer f;rom i'zhich a 24° Pine found :marked 11 X11 brs. N.515 E, .:u.2 feet;

THENCE~ S 3 ° 51 1 54 11 W, along said well marked line to a .Pine knot found set for corner, a distance of 382.75 feet from whiah a ion J?ine marked 11 x 11 .brs. s 33 W1 11.s feet; THENC:JS: S 31" 52 1 54m E, ·along said well :marked line to the BE corner of said 115-l/.:!l acre tract 1 a distance of 217. 09 feet a Mu1be:rry stake t:ound set for corner from which a 24n Bla.ckgum. found marked "Xlf brs ..S 58-1/2' ff, 12 .5 fa.et and a 12° Beach found marked lrj(U hrs. N 41. E, ~LS feet; THENCE: S 59° 1.2' JBli w. along the BBL of said 115-1/2 acre tract and the SBL of said J. S. Collins Survey and the NBL of M. B. Griffith Survey, A-19 to the sw corner of $iJlid 115-l/2 acre tract being the SE cor.ner of said ff. L. Brolffl 72 acre tract, a distance of 1472.82 feet a flanged. top axle found set for corner from which a 10 11 Bl.a.ck Ja.ck found marked 1tX 11 br.s. s 20 ff, 33.l feet and a 9 8 Pine stump brs. N 70 w, 36.5 feet; TH~CE: N 47° sa• 00 11 W, along a mlt of said llS-1/2 acre tract and a EBL of said W. L. Brown 72 acre tract, 1212.50 feet a iron pipe found set for corner from which a a~ Hackberry found marked ~x· brs. S S;l-1/:2:' E, 84.G feet; THENCE: N 11° 37 1 w, along a m3L of said 115~1/2 acre; tract and a EBL of said w. L. Brown '72 acre tra.ct, i675 . 60 feet to t.ll.e PLACE OF BEGINNING, containing 126.632 acres of land.

FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 14

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