United States District Court, S.D. Texas
In re Aztec Oil & Gas, Inc., et al, Debtors.
Short OG III, Ltd., et al., Appellees. Fort Apache Energy, Inc., et al, Appellants, Adversary No. 16-03173
OPINION ON SUPERIOR TITLE
N. Hughes, United States District Judge.
property in dispute is 112.174 acres in Tyler County, Texas.
In 1971, H.G. Hrivnatz, Sr. - as trustee - acquired an
undivided one-half interest in the oil, gas, and minerals. No
trust agreement nor known beneficiaries exist. In 1974,
H.G.H. conveyed the land, including the mineral interests, to
three men who executed a deed of trust for H.G.H.'s
benefit. The deed of trust foreclosed in 1976, reverting the
land to H.G.H.
1992, H.G.H. died. His will devised his estate: 50% to his
wife, Vannie King Hrivantz, and 25% to each of his sons,
Harry Hrivantz, Jr. and David A. Hrivantz "to be held in
trust by my wife as long as she is alive." This devised one-half of
his % of the community property in the minerals to Vannie.
Altogether, Vannie owned 75% of the minerals.
executed two durable powers of attorney - in 2003 and 2007
-granting Harry Jr. the authority to act as her
attorney-in-fact. Neither of these powers is recorded in
January 1, 2009, Harry Jr. executed a lease to Miller Energy,
Inc. He signed his name as "Harry G. Hrivnatz." The
lease did not refer to the use or existence of powers of
attorney. It also did not indicate that Harry Jr. was acting
in anything other than his own individual capacity.
Resources, Inc. - operator of the wells - relies on the two
powers of attorney in arguing that the powers vested Harry
Jr. with the authority to act as Vannie's
January 1, 2009, when Harry Jr. signed the Miller lease,
neither power had been recorded in Tyler County. Harry Jr.
says that he was acting (a) individually and as trustee of
the testamentary trust created by H.G.H.'s will; (b) as
trustee of the Vannie revocable trust; and (c) as
attorney-in-fact for both Vannie and David.
Apache Energy, Inc., says that Harry Jr. had questionable
authority at best to convey an interest on behalf of Vannie
or David in the Miller lease. It also argues that the Miller
lease is invalid because it did not lease their interests;
Harry Jr. signed it as "Harry G. Hrivnatz" and the
lease did not refer to Vannie, David, trusts, or powers of
Southern Star Lease.
November 2010 through early February 2011, Southern Star
Exploration, IXC, and its agent, Fort Apache, searched
property records preparing to lease a tract adjoining the
Miller tract. They determined that the Miller lease was
defective and that the mineral interest was not leased.
February 10, 2012, Harry Jr. - as trustee of the testamentary
trust, as trustee for the Vannie revocable trust, and
attorney-in-fact for Vannie and David - signed the Southern
Star lease. Fort Apache says that the Southern Star lease is
valid because it was leased "from the Hrivantz family in
all relevant capacities."
same day, Vannie executed a third power of attorney making
Harry Jr. her attorney-in-fact. Southern Star promptly
recorded the power of attorney.
Star (a) ratified the lease on March n, 2012; (b) assigned
its leasehold to Fort Apache on April 12, 2012; and (c)
recorded it on April 18, 2012. On May 12, 2014, and again on
September 8, 2014, Fort Apache assigned working interests.
All of Fort Apache's assignments are recorded.
David Jacob "Jay" ...