Court of Appeals of Texas, Eighth District, El Paso
from the 112th District Court of Reagan County, Texas (TC
Rodriguez, J., Palafox, J., and McClure, C.J. (Senior Judge)
M. PALAFOX, JUSTICE
appeal, we are asked to interpret a 1951 mineral deed to
determine whether grantors conveyed their entire mineral
interest without reservation, or instead, reserved from the
conveyance at least one incident of mineral ownership-the
royalty interest-either in whole or in fractional share.
Appellant WTX Fund, LLC (WTX), the successor-in-interest to
the grantors' heirs, appeals the trial court's
rulings on cross motions for summary judgment. WTX asserts
the trial court erred in granting judgment in favor of the
heirs of grantee J.F. Holt-namely, Appellees Ray Holt Brown,
Jay F. Holt, Cheryl Jones, Judy Brown Wadsworth, Janie H.
Giddiens as Trustee of the Janie H. Giddiens Trust, Debra
Lynn Morgan as Trustee of the Debra Lynn Morgan Revocable
Trust, Susan G. Wesson as Trustee of the Susan G. Wesson
Revocable Living Trust, Patti Holt Elkins, Bobby Van Holt as
Trustee of the Bobby Van Holt Revocable Living Trust, and
John Thomas Holt (collectively, the Holt heirs). Because we
construe the 1951 deed as expressly excluding grantors'
royalty right in its entirety from the conveyance, we reverse
the trial court's judgment and render partial judgment in
favor of WTX. Additionally, we remand the cause to the trial
court for reconsideration of WTX's remedy and to consider
an award of attorney's fees, if any.
October 18, 1951, Hamilton S. Roach and his wife, Billie
Roach (grantors), signed a deed titled, "MINERAL
CONVEYANCE," (the deed or 1951 deed), which conveyed to
J.F. Holt and his heirs and assigns, grantors' rights,
title, interest and estate to certain rights to oil, gas, and
other minerals in and under described land in Reagan County,
Texas. The land was more particularly described in the
instrument as "Survey 114, Block 2, T & P Ry
Company, Certificate No. 1/226." By use of a
multi-clause structure, the deed expressly lists the rights
being conveyed, followed by expanded details, and then
concludes with a final paragraph of further substance.
years prior to signing the 1951 deed, grantors had granted
two separate royalty deeds to O.L. Johnson, for a total
undivided share of the size of 201.56/643.12, with each deed
setting a primary term of twenty years and continuing
thereafter for as long as oil, gas or other minerals were
produced on the property. With each of the Johnson royalty deeds,
grantors expressly retained all other non-royalty rights to
include their executive or leasing rights. Notably, the
reservation of the executive right provided that any future
leases must "provide for at least a royalty on oil of
the usual one-eighth[.]"
same day of the signing of the 1951 deed, Hamilton and Billie
Roach joined with J.F. Holt and his wife, Ella Holt, and,
together, the two couples signed an Oil, Gas and Mineral
Lease with S.L. Parham (lessee) pertaining to "[t]he
East Half of Section 114, Block 2, T. & P. Ry. Co.
Survey." The Parham lease provided for a 1/8 royalty to
be paid to lessors and oil payments up to the cumulative
amount of $128, 664. Of note, the lease also stipulated that
"[i]t is agreed and understood that the bonus for this
lease, and all royalties, rentals and other payments provided
for herein are to be paid to J.F. Holt, his heirs, successors
and assigns." In addition to the 1/8 royalty, the lease
provided for a production payment based on oil and gas
production up to a cumulative cap. The Parham lease provided
for a primary term of ten years and continued thereafter as
long as oil, gas or other minerals were produced from the
land. At present date, the parties agree that the Parham
lease has since terminated and is no longer in effect.
Instead, the property is currently held by new leases which
provide for different terms and royalty rates. One such lease
is held by Laredo Petroleum while the other is held by
Pioneer Natural Resources, USA (Pioneer). The Pioneer lease
provides for a 1/6 royalty, while the Laredo lease provides
for a 1/4 royalty.
2015, Pioneer filed an interpleader action in the 112th
District Court of Reagan County, Texas, pursuant to Rule 43
of the Texas Rules of Civil Procedure. Pioneer owned and
operated various oil and gas properties in Reagan County on
which it explored for oil and gas deposits. As a well
operator, Pioneer described that it ordinarily paid proceeds
to royalty owners. Pioneer was then paying royalties to ten
distinct payees pertaining to land situated at SE/4 of Sec
114, Block 2, T&P Ry Co Survey, Reagan County, Texas.
Pioneer described that it had since received notice from WTX
informing Pioneer that it was disputing its payment of
royalties for proceeds derived from the described property.
To avoid multiple liability on the same debt, Pioneer filed
the interpleader action against all payees who were then
asserting competing royalty interests. Pioneer named WTX and
the Holt heirs among the parties whom it listed as contesting
royalty payments owed by Pioneer. Pioneer also made an
unqualified tender of disputed funds with its interpleader
WTX filed not only a general denial of the action but also a
crossclaim and counterclaim against all other parties.
Against Pioneer, WTX asserted violations of the Texas Natural
Resources Code based on nonpayment of oil and gas proceeds
and other interests.Against all parties, WTX asserted an action
for a declaratory judgment seeking relief from the
uncertainty and insecurity regarding the parties'
respective rights, status, and other legal relationships. WTX
requested a declaration that the 1951 deed neither conveyed
the mineral estate in whole nor the royalty interest owned by
the grantors. WTX asserted that only leasing rights, bonuses,
and delay rentals were conveyed from grantors Hamilton and
Billie Roach to grantee J.F. Holt. WTX described that it
became a successor-in-interest in 2015 to the grantors'
reserved interest by way of a conveyance and assignment of a
mineral-and-royalty interest from Y-Royalty Partners, LLC
its claims, WTX asserted it informed Pioneer by letter that
it owned a royalty interest that it had acquired from
Y-Royalty, who had obtained its interest through a series of
conveyances from the heirs of Hamilton and Billie Roach,
grantors of the 1951 deed. WTX further described that its
interest was based on the royalty rate that was provided for
in the existing oil and gas lease(s), as opposed to the fixed
1/8 interest stated in the 1951 deed. WTX further described
that the lease providing a 1/8 royalty that was in effect at
the time of the 1951 deed had since terminated, and a new
lease with a 1/6 royalty was currently in effect. WTX claimed
that Pioneer had incorrectly credited the Holt heirs with
owning title to the royalty interest of the subject property.
WTX sought a declaratory judgment to determine the respective
rights as between WTX and the Holt heirs, and to recover
monetary relief and other damages.
after arrangements were made for Pioneer to make regular
deposits into the registry of the court, the parties
dismissed Pioneer by agreement. With Pioneer dismissed, the
controversy over royalty payments proceeded as between WTX,
as successor-in-interest of grantors, and the Holt heirs, as
successors-in-interest of grantee. Thereafter, WTX filed a
motion for partial summary judgment. WTX characterized the
claim as a dispute as to (1) whether the 1951 deed conveyed
only leasing rights, bonuses and delay rentals, and
accordingly, the grantors retained the full royalty interest;
or (2) whether the deed conveyed the full mineral estate,
including the royalty interest, such that grantors reserved
no interest of the mineral estate. WTX asserted in its motion
that its present interest was based on the royalty rate in
the existing oil and gas lease(s), rather than a fixed 1/8.
In support of its motion, WTX relied on the 1951 deed and
other documents to show it had acquired its interest from a
series of transactions tracing back to the grantors of the
WTX, the Holt heirs also filed a motion for partial summary
judgment. By their motion, the heirs asserted that WTX was
attempting to divest them of the royalty interest conveyed in
whole to their predecessors-in-interest by the 1951 deed. The
Holt heirs asserted the deed conveyed all mineral rights in
and under the land to J.F. Holt, and his heirs and assigns.
Trial Court's Decision
trial court agreed with the Holt heirs that the 1951 deed
conveyed all of grantors' mineral interests-including the
royalty interest-to grantee J.F. Holt. Accordingly, the trial
court entered final judgment incorporating its earlier order
granting a partial summary judgment in favor of the Holt
heirs and contemporaneously denying WTX's cross motion
for summary judgment. The trial court also ordered that WTX
pay the Holt heirs damages for the recovery of improperly
received royalties in the amount of $93, 309.22,
attorney's fees and costs in the amount of $80, 000, and,
further, the court made provision for additional
attorney's fees in the event of later appeals. The trial
court also entered further orders pertaining to the release
of interpleaded funds and related fees charged for the
interpleader suit. Lastly, the trial court ordered pre-and
post-judgment interest in accordance with the law. Following
entry of the judgment, WTX timely filed this appeal.
single issue, WTX broadly asserts that the trial court erred
in denying its motion for partial summary judgment and in
granting the cross motion of the Holt heirs. WTX asserts the
trial court erred by declaring that the 1951 deed conveyed
all of grantors' mineral interest including the royalty
interest. WTX argues the deed reserved grantors'
non-participating royalty interest while conveying all other
attributes of their mineral estate. Correlated with its
primary argument, WTX further argues that the trial court
erred in awarding attorney's fees to the Holt heirs.
Countering, the Holt heirs assert the trial court properly
granted judgment in their favor by construing the deed as
conveying grantors' entire undivided mineral interest
address the arguments in turn.
review a summary judgment de novo. Provident
Life & Acc. Ins. Co. v. Knott, 128 S.W.3d 211, 215
(Tex. 2003). Traditional summary judgment is appropriate
where there is no genuine issue of material fact and a party
is entitled to judgment as a matter of law. See Tex.
R. Civ. P. 166a(c). When both parties move for summary
judgment on the same issue and the trial court grants one
motion and denies the other, the reviewing court should
review the evidence presented by both sides, determine all
questions presented, and render the judgment the trial court
should have rendered. Texas Workers' Compensation
Com'n v. Patient Advocates of Texas, 136 S.W.3d 643,
648 (Tex. 2004).
of Deed Construction
determine whether the trial court erred in its interpretation
of the 1951 deed, the first issue we address is whether the
deed is ambiguous. Although neither party asserts the deed is
ambiguous, both parties clearly diverge on its proper
interpretation. Ambiguity is a question of law for the court.
ConocoPhillips Co. v. Koopmann, 547 S.W.3d 858, 874
(Tex. 2018). Texas courts recognize that ambiguity does not
arise merely because parties assert differing
interpretations. N. Shore Energy, LLC v. Harkins,
501 S.W.3d 598, 602 (Tex. 2016). If a deed is worded in such
a way that it can be given a certain or definite meaning,
then the deed is not ambiguous. Endeavor Energy Res.,
L.P. v. Discovery Operating, Inc., 554 S.W.3d 586, 601
(Tex. 2018). Only when a deed remains susceptible to two or
more reasonable interpretations, after application of rules
of interpretation, does an ambiguity of interpretation arise.
ConocoPhillips, 547 S.W.3d at 874.
construction of an unambiguous deed is reviewed as a question
of law. Luckel v. White, 819 S.W.2d 459, 461 (Tex.
1991); Clayton Williams Energy, Inc. v. BMT O & G TX,
LP, 473 S.W.3d 341, 348 (Tex. App.-El Paso 2015, pet.
denied). When conducting our review, we apply our own
judgment and accord no deference to the trial court's
decision. Quick v. City of Austin, 7 S.W.3d 109, 116
(Tex. 1998). Our primary duty is to ascertain the intent of
the parties from the four corners of the instrument.
Wenske v. Ealy, 521 S.W.3d 791, 794 (Tex. 2017)
(citing Luckel v. White, 819 S.W.2d 459, 461 (Tex.
1991)). We must examine the entire instrument seeking to
harmonize and give effect to all its provisions such that no
provision is rendered meaningless. Luckel, 819
S.W.2d at 462; Altman v. Blake, 712 S.W.2d 117, 118
(Tex. 1986). In so doing, we reject rules of construction
which give priority to certain clauses over others or require
the use of so-called "magic words."
Wenske, 521 S.W.3d at 794. As a fundamental
principle, "[t]he parties' intent, when ascertained,
prevails over arbitrary rules." Id. (citing
Luckel, 819 S.W.2d at 462).
recently, in a case of a will dispute that necessarily
involved the construction of a mineral deed, the Texas
Supreme Court reaffirmed that courts must employ a holistic
approach aimed at ascertaining intent from all words and all
parts of the conveying instrument. Hysaw v. Dawkins,
483 S.W.3d 1, 13 (Tex. 2016). Importantly, Hysaw
eschewed reliance on mechanical or bright-line rules as a
substitute for "an intent-focused inquiry rooted in the
instrument's words." Id. When discerning
intent, courts construe words and phrases together and in
context, not in isolation. Id. "[A]pparent
inconsistencies or contradictions must be harmonized, to the
extent possible, by construing the document as a whole."
Id. Words and phrases bear their ordinary meaning
unless the context supports a technical meaning or a
different understanding. Id. (citing In re
Office of the Att'y Gen. of Tex., 456 S.W.3d 153,
155-56 (Tex. 2015) ("Given the enormous power of context
to transform the meaning of language, … the import of
language, plain or not, must be drawn from the surrounding
context, particularly when construing everyday words and
phrases that are inordinately context-sensitive.")).
When applicable, Hysaw further confirmed that
"the estate-misconception theory and the historical use
of 1/8 as the standard royalty may inform the meaning of
fractions stated in multiples of 1/8, but these
considerations are not alone dispositive." Id.
Interest Ownership, ...