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Conocophillips Co. v. Ramirez

Court of Appeals of Texas, Fourth District, San Antonio

June 7, 2017

CONOCOPHILLIPS COMPANY, Rodolfo C. Ramirez, Individually and as Independent Administrator of the Estate of Ileana Ramirez, and El Milagro Minerals, Ltd., Appellants
v.
Leon Oscar RAMIREZ, Jr., Individually, and Jesus M. Dominguez, as Guardian of the Estate of Minerva Clementina Ramirez, an Incapacitated Person, Appellees

         From the 49th Judicial District Court, Zapata County, Texas Trial Court No. 7, 637 Honorable Jose A. Lopez, Judge Presiding

          Sitting: Karen Angelini, Justice, Marialyn Barnard, Justice, Rebeca C. Martinez, Justice.

          OPINION

          Rebeca C. Martinez, Justice.

         ConocoPhillips Company and Rodolfo C. Ramirez, Individually and as Independent Administrator of the Estate of Ileana Ramirez, and El Milagro Minerals, Ltd. appeal the trial court's judgment declaring that appellees Leon Oscar Ramirez, Jr., individually, and Jesus M. Dominguez, as Guardian of the Estate of Minerva Clementina Ramirez, an Incapacitated Person, each own a 1/12 mineral interest in the Las Piedras Ranch, and that ConocoPhillips's three leases are not binding on their mineral interests because, as contingent remaindermen, they were required to sign the leases and did not. ConocoPhillips also challenges the amount of cotenancy accounting awarded and the award of attorneys' fees. Based on our analysis set forth below, we affirm the trial court's judgment in its entirety, [1] except for a reformation to correct a clerical error.

         Background and Procedural History

         This appeal arises out of a dispute over the ownership of a ¼ interest in the mineral estate underlying a 1, 058-acre tract of land known as "Las Piedras Ranch" in Zapata County, Texas. ConocoPhillips owns several leases on the land which have produced oil and gas since 1995. ConocoPhillips has been paying royalties on the production to the members of the Ramirez family who signed the leases in 1993 and 1997. Appellees Leon Oscar Ramirez, Jr. and his sister Minerva Clementina Ramirez, whose estate is represented by a guardian due to her incapacity, (collectively, "the Grandchildren") are not signatories on the leases and sued ConocoPhillips, as well as their uncle Rodolfo Ramirez and his company El Milagro Minerals, Ltd., to recover damages for their share of production from Las Piedras Ranch.

         The early part of the chain of title to the mineral estate in Las Piedras Ranch is undisputed. Leon Juan Ramirez and his sister Felicidad each inherited a ½ undivided interest (surface and minerals) in seven tracts of land totaling 7, 016 acres located in Zapata County, Texas. In 1941, they partitioned the surface estate so each fully owned 3, 508 surface acres, but they expressly reserved their ½ undivided interests in the mineral estate underlying the whole 7, 016 acres. In the surface partition, Leon Juan received the land that includes the 1, 058-acre Las Piedras Ranch. Leon Juan died in 1966 and his will devised half of his real property interests to his wife Leonor and half to their three children, Rodolfo, Ileana, and Leon Oscar, Sr. Therefore, Leonor inherited a ½ interest in the 3, 508-acre surface estate, which includes Las Piedras Ranch, and a ¼ undivided mineral interest (half of Leon Juan's undivided ½ mineral interest) in the entire 7, 016 acres, which includes Las Piedras Ranch. The three children as a group inherited the same, with each owning a 1/6 interest in the 3, 508-acre surface estate and a 1/12 undivided mineral interest in the whole. The three children, Rodolfo, Ileana, and Leon Oscar, Sr., are referred to by the parties as "the Older Generation."

         Ownership of the surface estate of Las Piedras Ranch is not at issue in this case. It is important to note, however, that, during the 1970s, Leonor and her three children, i.e., the Older Generation, engaged in a series of partitions and exchanges of the surface estate they co-owned, with each partition and exchange agreement containing an express reservation of their undivided mineral interests in the whole 7, 016 acres. In the 1975 Partition Agreement, Leonor and the Older Generation partitioned the 3, 508-acre surface estate they inherited from Leon Juan into separate tracts of farm and ranch land using names such as "Headquarters Ranch, " "East El Milagro Pasture, and "Las Piedras Pasture." As a result of the partition, Ileana and Leon Oscar, Sr. jointly and equally owned the full surface estate of the 1, 058 acres "situated partly in the north one-half . . . of Porcion 21 and partly in Porcion 22, known as Las Piedras Pasture." In the 1978 Exchange Deed, Leonor exchanged her full interest in the surface estate of Headquarters Ranch for Ileana's ½ surface interest in the "1, 058 acres of land . . . known as 'Las Piedras Ranch.'" Both Leonor and Ileana expressly reserved their undivided mineral interests. Thus, at the time Leonor executed her Will in 1987, she owned a ½ interest in the surface estate of Las Piedras Ranch (with the other ½ interest owned by her son Leon Oscar, Sr.), and an undivided ¼ mineral interest in the whole 7, 016 acres, which included Las Piedras Ranch. Each of the Older Generation's 1/12 undivided mineral interest in the whole similarly remained unchanged by the partition and exchange deeds.

         The disputed portion of the chain of title to Leonor's ¼ mineral interest in Las Piedras Ranch begins in 1990, when Leonor's Will was probated. In her Will, Leonor devised to her son Leon Oscar, Sr. "all of my right, title and interest in and to Ranch 'Las Piedras' out of Porciones 21 & 22 . . . during the term of his natural life." (emphasis added). Leonor's Will further provided that, upon Leon Oscar, Sr.'s death, "the title shall vest in his children then living in equal shares." (emphasis added). Finally, Leonor's Will contained a residuary clause providing that the residue of her estate would pass in equal shares to her three children, Leon Oscar, Sr., Ileana, and Rodolfo (i.e., the Older Generation). Leon Oscar, Sr.'s life estate terminated when he died in 2006. The current dispute concerns whether "the title" inherited by Leon Oscar, Sr.'s three children, Leon, Jr., Minerva, and Rosalinda (who are Leonor's grandchildren and are referred to collectively as "the Grandchildren")[2] was only to Leonor's ½ interest in the surface estate of Las Piedras Ranch, or also included Leonor's ¼ mineral interest in Las Piedras Ranch.

         In 2010, the Grandchildren filed suit against ConocoPhillips[3] and their uncle Rodolfo and his company El Milagro Minerals, Ltd., seeking the following declarations: (1) together the Grandchildren own a ¼ mineral interest in Las Piedras Ranch pursuant to the chain of title; (2) the three oil and gas leases with ConocoPhillips that were signed by the Older Generation in 1993 and 1997 (the "Leases") are not binding on their collective ¼ mineral interest because, as contingent remaindermen of their father's life estate at that time, their signatures on the leases were required; and (3) they are entitled to a cotenancy accounting and payment for their proportionate share of production by ConocoPhillips pursuant to the Leases. In addition to their request for declaratory judgment on the above matters, the Grandchildren pled a trespass to try title claim and a cotenancy accounting claim for their share of gas proceeds under the Texas Natural Resources Code, and pled for recovery of their attorney's fees under the Natural Resources Code. The Grandchildren also pled other claims for fraud and bad faith cotenancy, which were dismissed.

         Multiple summary judgment motions were filed by all parties and ruled on by the trial court over the four-year course of the litigation. In relevant part, the trial court granted partial summary judgment in favor of the Grandchildren on their trespass to try title claim and held that the Leases are not binding as to their mineral interests. The trial court denied ConocoPhillips's motion for partial summary judgment on "will construction, " and denied summary judgment on ConocoPhillips's affirmative defenses of limitations, ratification, and estoppel. Finally, the trial court granted the Grandchildren's summary judgment motions on cotenancy accounting and denied ConocoPhillips's competing motion. After summary judgment was granted in the Grandchildren's favor on their declaratory judgment, trespass to try title, and cotenancy accounting claims, the issue of attorney's fees was decided in a bench trial.

         On May 11, 2015, the trial court signed its final judgment, which referred to and incorporated the prior summary judgment orders, and declared that (1) Leon Jr. and Minerva are each the "fee simple owner of 1/12 of the minerals underneath the 1058 acres of land . . . known as Las Piedras Ranch . . . more particularly described on the attached Exhibits 'A' and 'B, '" and (2) the three oil and gas leases signed in 1993 and 1997 and owned by ConocoPhillips "are not binding and are ineffective against the above mentioned mineral interests." The judgment further declared that the Grandchildren are entitled to recover a cotenancy accounting from ConocoPhillips and awarded them approximately $3.7 million each for their share of production through October 2012. In addition, the Grandchildren were awarded approximately $950, 000 in prejudgment interest and $1, 125, 000 in attorney's fees through the judgment date. The total amount of the judgment awarded against ConocoPhillips is approximately $11.7 million. ConocoPhillips appealed, as did Rodolfo Ramirez and El Milagro Minerals.

         ConocoPhillips's Appeal

         On appeal, ConocoPhillips raises the following issues asserting the trial court erred in: (1) granting partial summary judgment for the Grandchildren on their trespass to try title claim and denying ConocoPhillips's request for partial summary judgment on its "surface only-will construction" theory; (2) denying ConocoPhillips's motion for summary judgment on its affirmative defense of limitations, and granting Leon Jr.'s cross motion on limitations; (3) denying ConocoPhillips's motion for summary judgment on its affirmative defenses of ratification and estoppel; (4) granting summary judgment for the Grandchildren on their cotenancy accounting claim and denying ConocoPhillips's cross-motion; (5) awarding attorney's fees and basing the award on insufficient evidence to support the amount; and (6) making other miscellaneous errors in the judgment. We first address the question of who owns title to Leonor's ¼ mineral interest in Las Piedras Ranch, as all of the other issues are dependent on our resolution of the title issue.

         Title to Leonor's ¼ Mineral Interest in Las Piedras Ranch

         In ConocoPhillips's view, "this is a will construction case" because title to the disputed ¼ mineral interest turns on what Leonor meant by the name "Ranch Las Piedras" in her Will when she conveyed a life estate in "all of my right, title, and interest in and to Ranch Las Piedras" to her son Leon Oscar, Sr. ConocoPhillips bases its challenges to the Grandchildren's summary judgment on title, and to the denial of its summary judgment motion on "will construction, " largely on this premise.

         Grandchildren's Partial Summary Judgment Motions on Trespass to Try Title

         With respect to the Grandchildren's summary judgment motions on their trespass to try title claim, ConocoPhillips argues the trial court erred in granting their motions because they failed to expressly move for summary judgment on "construction of Leonor's Will." See Tex. R. Civ. P. 166a(c) (motion for summary judgment must state the specific grounds); see also McConnell v. Southside Indep. Sch. Dist., 858 S.W.2d 337, 339 (Tex. 1993) (same).

         We disagree with ConocoPhillips's premise that this is a "will construction case." At its heart, this is a title dispute in which the chain of title includes Leonor's Will, as well as Leon Juan's will, among the deeds and other documents in the chain. No party brought suit to contest or construe Leonor's Will. See, e.g., San Antonio Area Found. v. Lang, 35 S.W.3d 636, 639 (Tex. 2000) (action to construe a will brought in probate court). The claim which the Grandchildren pled and specifically moved for summary judgment on was trespass to try title, which is the method for determining title to real property. See Tex. Prop. Code Ann. § 22.001(a) (West 2014); see also Martin v. Amerman, 133 S.W.3d 262, 265 (Tex. 2004) (trespass to try title is typical method used to "clear problems in chains of title"). We have held that an action to resolve a dispute over title to real property is, in effect, a "trespass to try title action" regardless of the form the action takes and the type of relief sought. Longoria v. Lasater, 292 S.W.3d 156, 165 (Tex. App.-San Antonio 2009, pet. denied). To recover in a trespass to try title action, the plaintiff must recover on the strength of his or her own title, not a weakness in the opponent's title. Id. The plaintiff has the burden to prove its title to the disputed property and may do so by proving "a regular chain of conveyances from the sovereign." Martin, 133 S.W.3d at 265; Longoria, 292 S.W.3d at 165.

         In support of their summary judgment motions, the Grandchildren submitted the abstract of the chain of title, a supplement to the abstract with copies of the title documents, plus other summary judgment evidence such as affidavits. It is axiomatic that, in examining the documents in the chain of title to determine whether the Grandchildren conclusively proved their right to title, the trial court necessarily read and interpreted the relevant language in each document in the chain, including Leonor's Will, according to the applicable rules of construction. See Longoria, 292 S.W.3d at 166 (trial court construes the deeds and other instruments in the chain of title according to the rules of contract construction as a matter of law); see also Netherton v. Cowan, No. 04-12-00627-CV, 2013 WL 4091773, at *3 (Tex. App.-San Antonio Aug. 14, 2013, no pet.) (mem. op.) (in construing a will, court must ascertain testator's intent from "four corners" of will, relying on the "plain, ordinary, and generally accepted meanings, unless the instrument itself shows such terms to have been used in a technical or a different sense"). It is not uncommon for a will to be one of the documents in the chain of title used to prove ownership in a trespass to try title action. It was not necessary for the Grandchildren to separately move for summary judgment on "construction" of Leonor's Will, or construction of any other document contained in the chain of title, in order to obtain summary judgment on their trespass to try title claim. We conclude that ConocoPhillips's argument that the Grandchildren were not entitled to summary judgment on their trespass to try title claim because they failed to expressly request construction of Leonor's Will is without merit.

         Scope of Life Estate Conveyed by Leonor's Will - Did It Include the ¼ Mineral Interest?

         ConocoPhillips alternatively asserts on appeal that, by granting summary judgment for the Grandchildren on title, the trial court misconstrued the scope of the life estate granted by Leonor's Will. ConocoPhillips also argues the trial court erred in denying its partial summary judgment motion presenting its "surface only-will construction" ground. ConocoPhillips asserts that it conclusively established, based on surrounding circumstances at the time Leonor executed her Will, that Leonor intended the name "Ranch Las Piedras" to refer to the surface estate only. The Grandchildren argue that ConocoPhillips failed to preserve its "surface only" argument because it did not timely present that specific argument to the trial court; they also argue the trial court did not rule on the merits of ConocoPhillips's motion. Based on the record before us, [4] it is apparent that the trial court considered the "surface only" argument made by ConocoPhillips and rejected it prior to entering the final judgment in this case. We will therefore consider ConocoPhillips's "surface only" argument on appeal.

         Arguments of the Parties

         The parties agree the plain language of the life estate devise in Leonor's Will is not ambiguous, but each side argues a different interpretation as a matter of law. The Grandchildren argue the life estate Leonor devised to Leon Oscar, Sr. included her ¼ mineral interest in Las Piedras Ranch, while ConocoPhillips argues the life estate was limited to Leonor's ½ interest in the surface estate of Las Piedras Ranch. Both sides generally rely on the same summary judgment evidence, primarily the chain of title documents, plus affidavits and deposition excerpts supporting each side's competing interpretation of the scope of the life estate. On appeal, ConocoPhillips does not challenge any of the summary judgment evidence submitted by the Grandchildren, other than their "assumed meaning" of Leonor's Will.

         In its responses to the Grandchildren's summary judgment motions on title, ConocoPhillips argued that Leonor's Will did not provide a description of "Ranch Las Piedras, " and that the Grandchildren had failed to present any summary judgment evidence establishing the meaning of the phrase. Therefore, ConocoPhillips asserted the Grandchildren did not conclusively establish their title to the disputed mineral interest, and were not entitled to summary judgment on their trespass to try title claim.

         In moving for summary judgment on its argument that the life estate Leonor devised to Leon Oscar, Sr. was only in her ½ surface interest, ConocoPhillips asserted that because Leonor's Will did not define the name "Ranch Las Piedras, " the trial court was required to look to "surrounding circumstances" to construe Leonor's intent with respect to the term's meaning. See Lang, 35 S.W.3d at 639 (when construing a will, if a term is open to more than one construction, court may consider extrinsic evidence outside the four corners of written will, such as surrounding circumstances at time of execution, to ascertain testator's intent). ConocoPhillips argued in its motion and argues on appeal that, at the time Leonor executed her Will in 1987, the family had a history of severing the surface from the mineral estate, and then partitioning and exchanging the various surface estates among themselves while leaving the undivided mineral interests in the whole 7, 016 acres untouched. In support, ConocoPhillips attached the affidavit of its land title expert, Mr. Cummings, who stated that the chain of title documents showed the 7, 016-acre surface estate had been severed from the underlying mineral estate and then partitioned among the Ramirez family members. Cummings further stated that the Ramirez family had historically treated the severed mineral estate, including the mineral estate under Las Piedras Ranch, as an undivided interest belonging to the entire family. ConocoPhillips stresses that the Ramirez family, and Leonor herself, used express reservation clauses in the 1975 Partition and 1978 Exchange Deed to clarify that their undivided interests in the mineral estate underlying the whole acreage were not affected by the partition and exchange. ConocoPhillips highlights the absence of any inclusive reference to her mineral interest in Leonor's Will as showing that she did not intend the life estate to extend to her mineral interest. ConocoPhillips further relies on the fact that Leonor used the name "Ranch Las Piedras" when referring to the surface estate in the 1975 Partition and 1978 Exchange Deed, arguing that shows the name means only the surface estate. ConocoPhillips asserts that, based on these "surrounding circumstances, " Leonor only intended to devise a life estate in the surface of Las Piedras Ranch to Leon Oscar, Sr. As a result, Leon Oscar, Sr.'s children (i.e., the Grandchildren) did not inherit Leonor's ¼ mineral interest in Las Piedras; rather, the ¼ mineral interest passed under the residuary clause of Leonor's Will to her children (i.e., the Older Generation).

         The Grandchildren's argument in their summary judgment motion was that because Leonor's Will plainly conveyed a life estate in "all of my right, title and interest . . . in Ranch Las Piedras, " their father Leon Oscar, Sr. received a life estate in Leonor's full interest in Las Piedras Ranch, i.e., her ½ surface interest and her ¼ mineral interest. The Grandchildren reason that the meaning of the phrase "all my interest" is plain and clear, and there is no need to go outside the four corners of Leonor's Will to understand the scope of her devise. See, e.g., Lang, 35 S.W.3d at 639 (term "real property" in will was not susceptible to more than one understanding, and thus did not require extrinsic evidence to understand). The Grandchildren stress that there was no express reservation of Leonor's ¼ mineral interest from the life estate devise, and point out that Leonor knew how to make an express mineral reservation and had done so in the past. The Grandchildren rely on the general principle that, absent an express reservation, a conveyance of land includes both the surface and the underlying minerals. See Sharp v. Fowler, 151 Tex. 490, 252 S.W.2d 153, 154 (1952). In response to ConocoPhillips's assertion that the name "Ranch Las Piedras" is not defined in the Will and must be construed by looking to extrinsic evidence, the Grandchildren point out that "Ranch Las Piedras" was described by its physical location, "out of Porciones 21 & 22, and situated in Zapata County, Texas, " in Leonor's Will. They also assert the name had an accepted meaning to Leonor. Therefore, the Grandchildren assert that, based on the plain language of the life estate devise in Leonor's Will, and the other documents in the chain of title, they inherited Leonor's ¼ mineral interest in Las Piedras Ranch in equal shares, i.e., 1/12 each, upon the death of their father Leon Oscar, Sr.

         Analysis

         As to whether the trial court misconstrued the scope of the life estate devise in Leonor's Will, we hold it did not. The meaning of the words "all of my right, title and interest in and to Ranch Las Piedras" can be ascertained according to their plain language within the four corners of the Will; therefore, the use of extrinsic evidence is inappropriate. See Lang, 35 S.W.3d at 639. Leonor's use of the word "all, " with no qualifiers or reservations, is comprehensive by its nature and does not require explanation. Moreover, the general principle of conveyances is that absent an express reservation of a mineral interest, it is conveyed along with the surface; an inclusive reference to the mineral interest is not required. See Sharp, 252 S.W.2d at 154. We also disagree that the name "Ranch Las Piedras" is open to more than one reasonable construction. The Will identifies "Ranch Las Piedras" by its physical location as "out of Porciones 21 & 22, and situated in Zapata County, Texas." Use of a name to refer to the physical land on the surface does not mean the conveyance excludes the minerals beneath it. Id. ("To describe land is to outline its boundaries so that it may be located on the ground, and not to define the estate conveyed therein."). Extrinsic evidence may not be used to create doubt as to the meaning of the name when the words used in the Will are unambiguous. See Lang, 35 S.W.3d at 639; see also Longoria, 292 S.W.3d at 166 (mere disagreement about interpretation of deed does not make it ambiguous; an instrument is ambiguous only if, after application of the rules of construction, it is unclear which meaning is the correct one).

         Having reviewed all the summary judgment evidence de novo, we conclude the Grandchildren conclusively established their record title to Leonor's ¼ mineral interest in Las Piedras Ranch as a matter of law. See Tex. R. Civ. P. 166a; see also Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005) (when both sides move for summary judgment on the same issue and the trial court grants one motion and denies the other motion, the appellate court reviews the summary judgment evidence presented by both sides and determines all questions presented); see Hejl v. Wirth, 161 Tex. 609, 343 S.W.2d 226, 226 (Tex. 1961) (plaintiff must recover on strength of his own title in a trespass to try title case); see also Cross v. Thomas, 264 S.W.2d 539, 542 (Tex. Civ. App.-Fort Worth 1953, writ ref'd n.r.e.) (whether a particular person owns record title is a question of law). Based on the plain language on the face of the documents in the chain of title, we hold the trial court properly granted summary judgment for the Grandchildren on their claim of title to the disputed ¼ mineral interest in Las Piedras Ranch, and properly denied summary judgment for ConocoPhillips on the issue of title.[5]

         ConocoPhillips's ...


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