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MCS Minerals, Ltd. v. Plains Exploration & Production Co.

Court of Appeals of Texas, Fifth District, Dallas

January 21, 2014

MCS MINERALS, LTD AND JOHN AND JULIE MARTIN, CO-TRUSTEES FOR THE MARTIN FAMILY REVOCABLE TRUST, Appellants
v.
PLAINS EXPLORATION & PRODUCTION COMPANY, Appellee

On Appeal from the 95th Judicial District Court, Dallas County, Texas Trial Court Cause No. DC-10-15627-D.

Before Justices Moseley, Lang, and Brown

MEMORANDUM OPINION

JIM MOSELEY, JUSTICE

Appellants MCS Minerals, Ltd. and John and Julie Martin, Co-Trustees for the Martin Family Revocable Trust, (collectively MCS) are non-operating working interest owners in an oil and gas lease operated by Plains Exploration & Production Company (Plains). Based on its interpretation of the JOA, MCS sued Plains to recover alleged overcharges to the joint account for "district and camp expenses."

The trial court determined the JOA provision was ambiguous and submitted a question about its meaning to a jury, which found in favor of Plains's interpretation of the JOA. The trial court rendered judgment that MCS take nothing on its breach of contract claim against Plains. MCS's motions for judgment notwithstanding the verdict and for new trial were overruled by operation of law.

MCS appeals. In two issues, it argues that under the unambiguous terms of the JOA, Plains overcharged it for district and camp expenses. The background of the case and the evidence adduced at trial are well known to the parties; thus, we do not recite them here in detail. Because all dispositive issues are settled in law, we issue this memorandum opinion. Tex.R.App.P. 47.2(a), 47.4. We conclude the JOA provision is ambiguous and the trial court did not err by submitting the question to the jury. We affirm the trial court's judgment.

Background

The lease is operated under a JOA signed in 1960. MCS acquired non-operating working interests in the lease in 1992 and 1999. Plains took over as operator in 2007 and resigned in 2012. However, in 2009 a dispute arose between MCS and Plains about charges to the joint account for district and camp expenses under Exhibit C to the JOA. MCS sued Plains in December 2010 for breach of the JOA.

MCS contends the accounting procedure exhibit to the JOA is unambiguous and paragraph 11 of the exhibit contains a specifically negotiated flat rate per well charge for all district, camp, and administrative overhead charges. Plains contends the exhibit is unambiguous and that the per well rates are in addition to the district and camp expenses calculated according to paragraph 11 of the exhibit. The trial court concluded the paragraph was ambiguous. Both parties agree that if we determine the paragraph is ambiguous, the trial court correctly submitted the issue to the jury and the judgment should be affirmed.

Standard of Review and Applicable Law

We review the denial of a motion for judgment notwithstanding the verdict under a no-evidence standard. See Tanner v. Nationwide Mut. Fire Ins. Co., 289 S.W.3d 828, 830 (Tex. 2009); Manley v. Wachovia Small Bus. Capital, 349 S.W.3d 233, 236–37 (Tex. App.—Dallas 2011, pet. denied). MCS argues the trial court should have disregarded the jury's verdict because the JOA is not ambiguous and the jury question should not have been submitted.

Whether an agreement is ambiguous is a question of law, which we review de novo. Coker v. Coker, 650 S.W.2d 391, 394 (Tex. 1983); D Design Holdings, L.P. v. MMP Corp., 339 S.W.3d 195, 201 (Tex. App.—Dallas 2011, no pet.). If a contract is not ambiguous, the court will construe the contract as a matter of law. Coker, 650 S.W.2d at 393. If a contract is ambiguous, the intent of the contracting parties is an issue of fact. Coker, 650 S.W.2d at 394.

A contract is unambiguous if it can be given a definite or certain legal meaning. J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex. 2003). On the other hand, if the contract is subject to two or more reasonable interpretations after applying the pertinent rules of construction, the contract is ambiguous, creating a fact issue on the parties' intent. Id. In construing a written contract, our primary concern is to ascertain the true intentions of the parties as expressed in the instrument. To achieve this objective, we must examine and consider the entire writing in an effort to harmonize and give effect to all the provisions of the contract so that none will be rendered meaningless. Id. No single provision taken alone will be given controlling effect; rather, all the provisions must be considered with reference to the whole instrument. Id.

A contract is not ambiguous simply because the parties advance conflicting interpretations of the contract. Dynegy Midstream Services, Ltd. P'ship v. Apache Corp., 294 S.W.3d 164, 168 (Tex. 2009); Columbia Gas Transmission Corp. v. New Ulm Gas, Ltd., 940 S.W.2d 587, 589 (Tex. 1996). If we are unable to harmonize the provisions and give effect to all clauses, and the contract is susceptible to more than one reasonable interpretation, we will find the contract ...


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