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Martin v. Newfield Exploration Co.

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

April 5, 2018

KEVIN MARTIN, JAMIE MARTIN, AND ASHLEY LUSK, Appellants,
v.
NEWFIELD EXPLORATION COMPANY; ROSETTA RESOURCES OPERATING, L.C. AND DYNAMIC PRODUCTION, INC., Appellees.

          On appeal from the 156th District Court of Live Oak, Texas.

          Before Justices Benavides, Longoria, and Hinojosa

          MEMORANDUM OPINION

          GINA M. BENAVIDES, Justice.

         This is an appeal from orders granting appellees Newfield Exploration Company and Dynamic Production Inc.'s (collectively Newfield, unless otherwise noted) no-evidence and traditional motions for summary judgment in an oil and gas dispute with appellants Kevin Martin, Jamie Martin, and Ashley Lusk (collectively the Martins). By two issues, which we treat as one, Martin asserts that the trial court erred by granting summary judgment in favor of Newfield. We affirm.

         I. Background

         In 2001, the Martins entered into oil, gas, and mineral leases with Mesquite Development (the Martin Leases) for a term of five years, concerning approximately 600 acres of land located on Block 84 of the Dr. Charles F. Simmons Nueces River Farm.[1] In 2006, the Martins extended and amended those same lease agreements with Mesquite Development. As provided by Newfield in its briefing, the Martin Leases are best illustrated by the attached graphic to this opinion labeled "Appendix 1" and shaded in light gray.

         In 2007, Mesquite Development assigned the Martin Leases to Rosetta Resources Operating, L.P.[2] In October 2007, Rosetta, Newfield, and Dynamic agreed to a "Designation of Pooled Unit" created by Block 76 and Block 84 of the Dr. Charles F. Simmons Nueces River Valley Subdivision to form a "675-acre pooled unit" with the purpose to explore, develop and produce gas (the Martin Unit). The Martin Unit is composed of four tracts of land, which includes 315 acres of the Martin Leases and other non-Martin properties. Not all of the tracts composing the Martin Leases were incorporated into the Martin Unit. As gathered from the record and provided by Newfield in its brief, the Martin Unit is best illustrated by the attached graphic to this opinion labeled "Appendix 2" and shaded in black. The non-unitized acreage from the Martin Leases remains shaded in light gray.

          In 2008, Rosetta assigned a partial interest of: (1) fifty-five percent of all rights, title, and interest in and to the oil, gas, and mineral leases to Newfield Exploration Company of the Martin Leases that were included in the Martin Unit; and (2) five percent of all rights, title, and interest in and to the oil, gas, and mineral leases to Dynamic Production, Inc. of the Martin Leases that were included in the Martin Unit.

         In 2009, Newfield filed a designation of pooled unit on various other properties totaling 570 acres located near the Martin Unit to establish Newfield Exploration Company-Simmons Subdivision Unit No. 1 Well (the Simmons Unit). According to the record, the Simmons Unit's northwest corner was separated from the southwest corner of the Martin Leases by one tract of land known as Farm Tract 3584. As provided by Newfield in its briefing, the Simmons Unit's location is best illustrated by the attached graphic to this opinion labeled "Appendix 3." The Simmons Unit is shaded in dark gray, the Martin Unit remains shaded in black, and the non-unitized portion of the Martin Leases remains shaded in light gray.

         In 2014, Martin sued Newfield for failing to protect against drainage of the Martin Unit as mandated by the 2006 lease agreements, and for failing to spud an offset well or release Martin Unit within the time period required by the 2006 lease agreements. Martin further alleged that in the event that Newfield was not liable under the 2006 lease agreements, Newfield was liable under the 2001 lease agreements. In the alternative, Martin pled that Newfield wrongfully pooled the Martin Unit, and that it "did not hold all of the required acreage or have the authority to drill to the depth" of the Martin Well. In their lawsuit for damages, Martin asserted causes of action for: (1) breach of contract, (2) common-law fraud, (3) negligence, (4) negligent misrepresentation, (5) conversion, (6) wrongful pooling and mineral trespass, (7) violations of the Texas Theft Liability Act, (8) breach of fiduciary duty, and (9) breach of implied covenants.

         Subsequently, Newfield filed no-evidence and traditional motions for summary judgment claiming that:

(1)no evidence showed that: (a) the 2006 lease agreements were in effect at the time of the lawsuit; or (b) Newfield has any interest in the 2006 lease agreements; and
(2) Newfield established as a matter of law that: (a) it had no duty to fulfill the drainage covenant relied upon by Martin because they were not assigned to them; and (b) even if such a duty existed, because the Simmons Unit does not "adjoin" the Martin Leases, Newfield's duty to prevent drainage was never triggered.

         After response and hearing, the trial court granted Newfield's summary judgment. Newfield later moved for another no-evidence and traditional motion for summary judgment on Martin's added claims of ...


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