Court of Appeals of Texas, Second District, Fort Worth
Devon Energy Corporation; Devon Energy Production Company, L.P.; and Devon Gas Services, L.P., Appellants
Iona Energy, L.P., Appellee
Appeal from the 271st District Court Wise County, Texas Trial
Court No. CV18-05-382
Gabriel, Womack, and Wallach, JJ.
Devon Energy Corporation (Devon Energy); Devon Energy
Production Company, L.P. (DEPCO); and Devon Gas Services,
L.P. (Devon Gas) (collectively, the Devon Parties) appeal
from the trial court's order denying their motion to
transfer venue of appellee Iona Energy, L.P.'s claims to
Tarrant County. The Devon Parties failed to establish their
pleaded mandatory-venue provision applicable to major
transactions. However, Iona similarly failed to prove that
Wise County was a county of permissive venue. Because the
Devon Parties, in turn, established that Tarrant County was a
county of proper, permissive venue, the trial court erred by
denying the Devon Parties' motion to transfer venue. We
reverse the trial court's order and remand the case with
instructions to sustain the motion and to transfer Iona's
claims to Tarrant County. See Tex. R. App. P.
43.2(d); Tex.R.Civ.P. 89.
2001, Iona entered into an individualized oil and gas lease
with DEPCO, allowing DEPCO to produce Iona-owned minerals on
7, 238.944 acres in Tarrant and Parker
Counties. The lease set venue in Tarrant County for
any disputes: "Jurisdiction and venue of any action
relating to this lease or the leased premises shall lie in
Tarrant County, Texas." The parties stipulated that the
wells at issue were located in Tarrant and Parker Counties
and that the gas produced from those wells was
"primarily processed" at a large plant in Wise
County-the Bridgeport Plant.Iona's "offices" and
principal place of business are in Tarrant County; the Devon
Parties' principal places of business are in Oklahoma.
8, 2018, twenty-seven plaintiffs, all of whom had signed
leases with DEPCO regarding their mineral interests located
in Wise, Denton, and Tarrant Counties, sued the Devon Parties
for alleged royalty underpayments. Almost a year later on April
22, 2019, Iona and other mineral owners joined the suit as
plaintiffs.The plaintiffs raised claims for (1) breach
of the leases' royalty clauses against DEPCO, (2) breach
of the implied contractual duty to deduct only reasonable
expenses for processing against DEPCO, (3) fraud by
affirmative misrepresentations against DEPCO, (4) fraud by
nondisclosure against DEPCO, (5) statutory fraudulent
transfer against the Devon Parties, (6) "Corporate
Entities Used to Perpetrate Fraud" against the Devon
Parties, and (7) conspiracy against the Devon Parties. Iona
and the other plaintiffs pleaded for the recovery of their
damages (including exemplary damages), attorney's fees, a
constructive trust on the money that the Devon Parties
retained as a result of their royalty calculations, and the
disgorgement of the Devon Parties' profits. To support
their chosen venue of Wise County, the plaintiffs alleged
general, permissive venue under Section 15.002(a)(1)-all or a
substantial part of the acts or omissions giving rise to
their claims occurred in Wise County. Tex. Civ. Prac. & Rem.
Code Ann. § 15.002(a)(1); see also Tex. Specialty
Trailers, Inc. v. Jackson & Simmen Drilling Co., No.
2-07-228-CV, 2009 WL 2462530, at *5 (Tex. App.-Fort Worth
Aug. 13, 2009, pet. denied) (mem. op.) (referring to Section
15.002 as permissive venue).
Devon Parties quickly filed a motion to transfer venue of
Iona's claims to Tarrant County and denied Iona's
pleaded venue facts. The Devon Parties asserted mandatory venue
based on the contractual venue provision in DEPCO's lease
with Iona, arguing that the lease was a major transaction;
permissive, general venue based on their payment of royalties
to Iona in Tarrant County-the site of the execution of the
lease and the location of some of Iona's wells; and
permissive venue based on its contractual obligation to remit
payment to Iona in Tarrant County. See Tex. Civ.
Prac. & Rem. Code Ann. §§ 15.002(a)(1), 15.004,
15.020, 15.035; Tex.R.Civ.P. 86.3, 87.3(a). Iona responded
that the contractual venue provision did not relate to a
major transaction, that the events occurred in Wise County
because the gas produced from Iona's wells in Tarrant and
Parker Counties was processed in Wise County, that Iona met
the joinder elements to permit venue in Wise County, and that
DEPCO's contractual payment obligation in the transfer
order was irrelevant because Iona did not allege wrongdoing
under the transfer order. See Tex. Civ. Prac. &
Rem. Code Ann. §§ 15.002(a)(1), 15.003(a);
Tex.R.Civ.P. 87.2(b). The Devon Parties filed a reply,
attaching affidavits and documents in support of their venue
trial court held a nonevidentiary hearing and denied the
Devon Parties' motion to transfer venue on September 2,
2019. See Tex. R. Civ. P. 87.3(b). The Devon Parties
filed a notice of accelerated, interlocutory appeal and now
argue that Iona did not independently establish venue in Wise
County, that Iona failed to meet the joinder requirements
that would allow venue in Wise County even though Iona failed
to independently establish venue there, and that the Devon
Parties established proper venue in Tarrant County.
See Tex. Civ. Prac. & Rem. Code Ann. §
15.003(b)(1), (c); Tex.R.App.P. 26.1(b), 28.1.
reviewing a trial court's venue ruling, we must make
"an independent determination from the record" that
is not governed by "either an abuse of discretion or
substantial evidence standard." Tex. Civ. Prac. &
Rem. Code Ann. § 15.003(c)(1). In other words, we review
the ruling de novo, considering the entire record. See
id. § 15.064(b); Surgitek, Bristol-Myers Corp.
v. Abel, 997 S.W.2d 598, 603 (Tex. 1999);
Sustainable Tex. Oyster Res. Mgmt. LLC v. Hannah Reef,
Inc., 491 SW.3d 96, 107 (Tex. App.-Houston [1st Dist]
2016, pet. denied). If we conclude that the trial court erred
by denying the Devon Parties' motion to transfer venue,
we must reverse the order without conducting a harm analysis.
See Tex. Civ. Prac. & Rem. Code Ann. §
the Devon Parties moved to transfer venue, specifically
denying Iona's pleaded venue facts and proffering
affidavits and attachments, Iona was required to prove that
venue was proper in the county of suit. See Tex. R
Civ. P. 87.2(a)-(b), 87.3(a); Surgitek, 997 S.W.2d
at 602; In re Masonite Corp., 997 S.W.2d 194, 197
(Tex. 1999) (orig. proceeding); Lynn Smith Chevrolet-GEO,
Inc. v. Tidwell, 161 S.W.3d 738, 742 (Tex. App.-Fort
Worth 2005, no pet). Because there was more than one
plaintiff in the suit against the Devon Parties, Iona must
have independently established proper venue through prima
facie proof. See Tex. Civ. Prac. & Rem. Code
Ann. § 15.003(a); Tex.R.Civ.P. 87.2(a), 87.3(a);
Surgitek, 997 S.W.2d at 602-03.
Iona relied on the general venue statute and argued that all
or a substantial part of the events or omissions giving rise
to its claims occurred in Wise County. See Tex. Civ.
Prac. & Rem. Code Ann. § 15.002(a)(1). Section
15.002 is a permissive-venue statute such that Iona's
choice of venue controls if Iona independently established
this ground of permissive venue and if the Devon Parties did
not establish a ground of mandatory venue. See Tex.
R Civ. P. 87.3(b); Perryman v. Spartan Tex. Six Capital
Partners, Ltd., 546 S.W.3d 110, 130 (Tex. 2018);
Kerri D. Condie, PC. v. McLaughlin, No.
05-18-00085-CV, 2019 WL 2353443, at *3 (Tex. App.-Dallas June
4, 2019, no pet.) (mem. op.). If Iona did not independently
establish proper venue under the general venue statute, its
claims were required to be transferred to a county of proper
venue unless Iona independently established by prima facie
proof that it, as one of multiple plaintiffs, met four
statutory joinder factors. See Tex. Civ. Prac. &
Rem. Code Ann. § 15.003(a); Surgitek, 997
S.W.2d at 602-03; Sustainable Tex. Oyster, 491
S.W.3d at 106-07. See generally 72 Tex. Jur. 3d
Venue § 14 (2013) (recognizing joinder factors
considered only if plaintiff failed to independently
establish proper venue).
event, if the Devon Parties established mandatory venue by
prima facie proof, the trial court was required to transfer
Iona's claims to the county of mandatory venue.
See Tex. R. Civ. P. 87.3(c); Sustainable Tex.
Oyster, 491 S.W.3d at 106; In re City of Dall.,
977 S.W.2d 798, 803 (Tex. App.-Fort Worth 1998, orig.
proceeding). Thus, mandatory venue trumps permissive venue.
See Perryman, 546 S.W.3d at 130; see also
Tex. Civ. Prac. & Rem. Code Ann. § 15.001(b)
(defining proper venue as a county of mandatory venue or if
no mandatory-venue provision applies, a county of permissive
mandatory venue controls even if Iona independently
established permissive venue in Wise County under Section
15.002(a)(1) or established the joinder factors under Section
15.003(a), we first address whether the Devon Parties
established that a mandatory-venue provision applied to
Iona's claims. As we recounted, the Devon Parties raised
mandatory venue based on the fact that they and Iona had
contractually agreed that jurisdiction and venue for any
dispute involving the lease "shall lie" in Tarrant
County. See Tex. Civ. Prac. & Rem.
Code Ann. § 15.020.
15.020 provides that in suits arising from a "major
transaction," the parties' written agreement that a
suit arising from the transaction may be brought in a
particular county controls to set mandatory venue.
Id. § 15.020(b); see also In re
Fisher, 433 S.W.3d 523, 534 (Tex. 2014) (orig.
proceeding) (op. as corrected on reh'g) (concluding
Section 15.020 controls even over other mandatory-venue
provisions). A major transaction is
a transaction evidenced by a written agreement under which a
person pays or receives, or is obligated to pay or entitled
to receive, consideration with an aggregate stated value
equal to or greater than $1 million. The term does not
include a transaction entered into primarily for personal,
family, or household purposes, or to settle a personal injury
or wrongful death claim, without regard to the aggregate
Tex. Civ. Prac. & Rem. Code Ann. § 15.020(a). Iona
asserted that the lease was not a major transaction as that
term is defined for venue purposes because the lease did not
state on its face that it involved an aggregate value of $1
million or more.
aggregate stated value is the value of the consideration a
person paid or was obligated to pay under the lease. See
In re Tex. Ass'n of School Bds., Inc., 169 S.W.3d
653, 657-58 (Tex. 2005) (orig. proceeding); Shamoun &
Norman, LLP v. Yarto Intl Grp., LP, 398 S.W.3d
272, 294 (Tex. App.-Corpus Christi-Edinburg 2012, pet.
dism'd & orig. proceeding) (op. on reh'g). The
Devon Parties asserted that because DEPCO has paid $52
million in royalties on the production from Iona's wells
"pursuant to its written agreements with Iona,
" the aggregate-value requirement is met.
But the lease itself stated that it was entered into
"[f]or and in consideration of Ten ($10.00) Dollars and
other cash paid to [Iona's predecessor-in-interest]
concurrently with the execution and delivery of the
lease" and that DEPCO was obligated to pay "an
annual minimum royalty of $6, 000." There is no evidence
of the amount of any additional consideration Iona's
predecessor received over the stated $10 at the time the
lease was executed.
15.020 requires that the aggregate value be
"stated" and, thus, "requires the terms of the
contract to include provisions stating the contract's
value." Tex. Civ. Prac. & Rem. Code Ann. §
15.020(a); Blacklands R.R. v. Ne. Tex. Rural Transp.
Dist, No. 1:19-CV-250, 2019 WL 3613071, at *4 (E.D. Tex.
Aug. 5, 2019) (mem. & order); see also Tex. Ass'n
of School Bds., 169 S.W.3d at 659-60; In re Togs
Energy, Inc., No. 05-09-01018-CV, 2009 WL 3260910, at *1
(Tex. App.-Dallas Oct. 13, 2009, orig. proceeding) (mem.
op.). The only value reflected in the lease is the $10
consideration and the minimum $6, 000 royalty per year. We
decline the Devon Parties' invitation to look
prospectively at the aggregate value of the lease instead of
focusing on the aggregate value reflected on the face of the
lease. The lease's stated value falls short of the
statutory threshold amount; thus, Section 15.020 does not
apply to set mandatory venue in Tarrant County.
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