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Haywood Wi Units, Ltd v. B&S Dunagan Investments, Ltd.

Court of Appeals of Texas, Thirteenth District, Corpus Christi-Edinburg

December 14, 2017

HAYWOOD WI UNITS, LTD, Appellant,
v.
B&S DUNAGAN INVESTMENTS, LTD, ET AL., Appellees.

         On appeal from the 253rd District Court of Liberty County, Texas. [1]

          Before Chief Justice Valdez and Justices Contreras and Benavides

          MEMORANDUM OPINION

          ROGELIO VALDEZ Chief Justice

         Appellant, Haywood WI Units, Ltd. ("Haywood"), appeals from a summary judgment rendered in favor of appellees, B & S Dunagan Investments, Ltd., James A. Dunagan III, Kathleen Dunagan, Blue Eyes, Ltd., Joseph Willis Hudson Sr., Garrow H. Crowley a/k/a Elsa Garrow Hudson Crawley, Joseph Willis Hudson Jr., Charles Albert Zipp III, Sailin' Shoes, Ltd., Robert von Weise Zipp (collectively the "Willis Heirs"), Crimson Exploration Inc., and Crimson Exploration Operating Inc. (collectively "Crimson"). By three issues, Haywood contends that (1) the trial court erred in granting summary judgment in favor appellees "with respect to the ownership of the disputed mineral interest and related merits issues, " and "with respect to attorney's fees (issues one and three), and (2) the trial court erred in denying Haywood's cross-motion for partial summary judgment "with respect to those same issues." We affirm.

         I. Background

         According to their pleadings, the Willis Heirs owned approximately 15, 000 acres of land. In 1972, the Willis Heirs granted to Marvey A. Finger the 15, 000 acres, which included, among other things, a 1/2 mineral estate interest in a 640-acre tract of land (the "1972 Deed"). Subsequently, Finger conveyed half of his interest in the minerals to a joint venture that he operated. In 1994, Finger sold 1/2 of the joint venture's mineral interest in the 640-acre tract to Haywood. Apparently the Willis Heirs, Finger, and others leased the mineral estate of the 640-acre tract to Crimson for production of oil and gas.[2] Crimson stated in its motion for summary judgment that the Willis Heirs negotiated and executed their own leases in 2001, 2005, and 2010, and Finger and Haywood did not join in executing those leases.[3] However, according to the Willis Heirs, production began and continued for some time, and Crimson paid royalties for production of oil and gas to all parties including the Willis Heirs and Haywood. The Willis Heirs were paid royalties of 1/4 payment until 2012-which is half of Finger's original 1/2 mineral estate interest. Finger and the joint venture each received royalties of 1/8 of the mineral estate, and Haywood received a 1/16 royalty payment, i.e., he received half of 1/8, which is 1/16.

         In 2011, a "Correction Deed" seeking to clarify the 1972 Deed was sent to all interested parties, including among others, the Willis Heirs, Haywood, Finger, and Joseph Hudson Sr., one of the original signatories to the 1972 Deed. Everyone involved signed the "Correction Deed, " except for Haywood. After receiving the "Correction Deed, " Haywood filed suit against the Willis Heirs claiming that the Willis Heirs have no executive rights and that in the 1972 Deed, the Willis Heirs granted their entire 1/2 mineral estate interest to Finger leaving the Willis Heirs with no mineral rights under the 1972 Deed. Haywood asserted that the Willis Heirs were entitled to royalty payments only if and when it signed a lease, and it had not done so; therefore, Haywood had a 1/8 interest in the mineral estate and Crimson had only paid him for a 1/16 interest. According to Haywood, Crimson owed it royalty payments for the 1/16 interest that it had paid to the Willis Heirs.[4]

         In its live pleading, Haywood sued appellees for the following: (1) a violation of section 91.401 of the Texas Natural Resources Code because Crimson had allegedly failed to pay it "all of the proceeds derived from the sale of the Haywood Mineral Interest Deep Rights Acreage"; (2) an accounting from Crimson "related to the past production and sale of its entire undivided mineral interest in the Deep Rights Acreage"; (3) conversion; (4) fraud; (5) conspiracy; (6) "[a]iding and [a]betting"; (7) the imposition of a constructive trust due to unjust enrichment; (8) money had and received; (9) suit to quiet title; (10) trespass to try title; and (11) declaratory judgment. The gist of Haywood's allegations stem from its belief that it owns a 1/8 interest in the minerals of the 640-acre tract of land as opposed to the 1/16 interest used by Crimson to calculate the royalties it paid it. Specifically, Haywood accused Crimson and the Willis Heirs of "knowingly, wrongfully, and maliciously exercis[ing] dominion and control over one half (1/2) of [its] minerals, " seeking "to deceive Haywood respecting what its mineral interest was, " and intending "to deprive Haywood of its mineral interest and to convert its minerals and the proceeds from the production of such minerals." Haywood further alleged that Crimson and the Willis Heirs "fraudulently conspired to accomplish an unlawful purpose, namely to deprive Haywood of its mineral interest and the proceeds from the production of its mineral interest, " and acted in concert "to deprive Haywood of its mineral interest and the proceeds from the production of its mineral interest" because both "knew that neither had a rightful claim to the Haywood Deep Rights minerals." Haywood alleged that "Crimson knew that the Willis Heirs did not have the right or authority to enter into a lease for the Haywood Deep Rights minerals, " and that it had suffered injury.

         All parties moved for summary judgment asking the trial court to declare under the Uniform Declaratory Judgment Act (UDJA) which party owned the disputed mineral rights. Appellees presented several grounds for their entitlement to summary judgment, which included the following: (1) the only reasonable interpretation of the 1972 Deed is that the Willis Heirs own a 1/4 interest in the royalties, bonuses, and delay rentals, plus the right to lease their share of the mineral interests on the 640-acre tract with Finger and Finger's grantees, which includes Haywood; (2) Haywood is estopped from arguing otherwise; (3) Haywood's interpretation would require reformation of the 1972 Deed because it would violate the rule against perpetuities; and (3) in the alternative, if the trial court determined that Haywood owned the disputed 1/16 interest, then Crimson and the Willis Heirs adversely possessed it under the five-year statute of limitations, or at minimum, the Willis Heirs adversely possessed the executive right.

         The trial court granted appellees' motions for summary judgment and denied Haywood's motion for summary judgment, and it declared that the Willis Heirs "reserved one-quarter of all bonuses, delay rentals, and royalties in the Disputed Acreage in and under the 1972 Deed" and "retained the executive right to lease the Disputed Acreage in and under the 1972 Deed." The trial court also determined that the statute of limitations and estoppel prevented Haywood from claiming royalties and executive rights on the disputed acreage. Finally, the trial court concluded that even assuming Haywood held the executive rights to the disputed acreage, the Willis Heirs were entitled to 1/4 of all bonuses, delay rentals, and royalties because Haywood's failure to lease "would breach a fiduciary duty to the Willis Heirs . . . ." The trial court also awarded attorney's fees to appellees. This appeal followed.

         II. Standard of Review

         In a traditional motion for summary judgment, the movant has the burden to show that no genuine issue of material fact exists and that it is entitled to judgment as a matter of law. Tex.R.Civ.P. 166a; Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548 (Tex. 1985). If the movant's motion and summary judgment proof facially establish a right to judgment as a matter of law, the burden shifts to the non-movant to raise a material fact issue sufficient to defeat summary judgment. Centeq Realty, Inc. v. Siegler, 899 S.W.2d 195, 197 (Tex. 1995). We review a summary judgment de novo to determine whether a party's right to prevail is established as a matter of law. Dickey v. Club Corp. of Am., 12 S.W.3d 172, 175 (Tex. App.-Dallas 2000, pet. denied). When both sides move for summary judgment and one is granted and the other denied, we determine all questions presented and render the judgment the trial court should have rendered. Lubbock Cty. v. Trammel's Lubbock Bail Bonds, 80 S.W.3d 580, 583 (Tex. 2002).

         III. The 1972 Deed

         By its first and second issues, Haywood contends that the trial court erred by "declaring that the Willis Heirs have an ownership interest in the Disputed 1/16." Haywood argues that the Willis Heirs granted all of their 1/2 mineral interest to Finger, do not possess any royalty or executive rights, and will only collect a share of the royalties, bonuses, and delay rentals if Haywood executes a lease. Appellees respond that Haywood focuses on isolated portions of the lease to support his arguments while omitting key provisions. And, appellees argue that although ...


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