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Samson Exploration, LLC v. Moak

Court of Appeals of Texas, Ninth District, Beaumont

January 16, 2020

SAMSON EXPLORATION, LLC, Appellant/Cross-Appellee
v.
T.W. MOAK AND MOAK MORTGAGE AND INVESTMENT CO., Appellees/Cross-Appellants

          Submitted on October 2, 2019

          On Appeal from the 136th District Court Jefferson County, Texas Trial Cause No. D-195, 106

          Before McKeithen, C.J., Kreger and Johnson, JJ.

          MEMORANDUM OPINION

          STEVE MCKEITHEN CHIEF JUSTICE

         This is an oil and gas case involving a dispute over whether land associated with mineral interests that were leased and included in a pooled unit remained in the unit after the leases were terminated via foreclosure. The appellant/cross-appellee, Samson Exploration, LLC ("Samson") appeals the trial court's final judgment awarding equitable damages to the appellees/cross-appellants, T.W. Moak and Moak Mortgage and Investment Co. ("Moak"). Samson asserts that the trial court misapplied oil and gas law and ruled in favor of Moak, although Moak held neither a leasehold interest nor a reversionary interest that warranted a share of production in the pooled unit. Samson further argues that it did not have a duty to afford Moak, an unleased co-tenant, the opportunity to ratify prior leases that were terminated via foreclosure. Samson asks this Court to reverse the trial court's judgment and render a judgment that Moak take nothing against Samson.

         According to Moak, the trial court correctly determined that it has an interest in the pooled unit but misconstrued the nature of its interest as a royalty interest rather than a working interest. Moak argues that because it has a working interest in the Amelia Gas Unit ("the Unit"), the trial court erred in granting summary judgment in favor of Samson, Bold Minerals II, LLC ("Bold Minerals"), and Etoco, L.P., [1] on its claim for an accounting, and erred in assessing equitable damages based on a calculation of accrued royalties. Moak asks this Court to reverse the trial court's summary judgment in favor of Samson and Bold on its accounting claim, reverse the trial court's final judgment that Moak take nothing as to Bold and reverse the trial court's award of equitable damages against Samson, and render a judgment for damages in the amount of $171, 658.39 against Samson and Bold. In the alternative, Moak asks this Court to affirm the trial court's award of equitable damages. Bold filed a brief arguing that Moak does not own a working interest in the Unit and that Moak has no evidence of damages caused by Bold. Bold asks this Court to affirm that portion of the trial court's judgment that Moak take nothing against Bold.

         We affirm the trial court's summary judgment in favor of Samson and Bold on Moak's accounting claim. We reverse the trial court's final judgment awarding equitable damages against Samson and render judgment that Moak take nothing as to Samson. We affirm the trial court's final judgment that Moak take nothing against Bold.

         PROCEDURAL BACKGROUND

         Moak filed suit against Samson, Lucas Petroleum Group, Inc. ("Lucas"), and Bold[2], alleging to be record owners of undivided mineral and leasehold interests in real property that entitled Moak "to participate in production of oil, gas, and other minerals therefrom or from lands pooled therewith, or proceeds from the sale thereof." Moak alleged that Defendants purport to own undivided mineral interests with Moak in the real property at issue, together with additional property pooled therewith, and that Defendants operated a pooled unit that includes the real property in which Moak is a record owner, but have failed to account to Moak for production attributable to its share of the undivided mineral interests. Moak asserted claims for an accounting, conversion, unjust enrichment, negligence, and to quiet title.

         The parties in the case agreed to the stipulations that are summarized below:

• In February 2012, Samson, Bold Minerals, and Lucas created the Unit by executing and recording a Unit Designation that pooled and combined certain leases and certain lands for the production, storage, processing, and marketing of gas and all hydrocarbons and gaseous substances.
• Bold Minerals assigned ETOCO an interest in the leases subject to the Unit Designation.
• Moak is not a party to any Operating Agreements which govern oil and gas operations within the Unit and which designate Samson as the operator of the Unit.
• Samson drilled and completed two wells in the Unit.
• Moak filed suit against the Defendants alleging causes of action arising out of Samson's failure, as operator, to share with Moak any revenue, royalties, and production from the Unit's oil and gas production with respect to six tracts of land, Property A, Property B, Property C, Property D, Property E, and Property F, which are collectively referred to as the Subject Properties.
• At the time the Unit was created, Moak did not own any property interest in the Subject Properties or within the boundaries of the Unit.
• In 2010, the property owner of Property A ("Porter"), leased all of her fifty percent mineral interest in the property (the "Porter Interest") to Bold Minerals pursuant to a certain Oil, Gas, and Mineral Lease (the "Porter Lease") and at the time the lease was executed, the Porter Interest was subject to a deed of trust that was never subordinated to the Porter Lease which did not allow Porter to in any way commit or bind the mortgagee. The Porter Lease and land were included in the Unit. The Porter Interest was foreclosed on pursuant to the deed of trust, thereby terminating the Porter Lease, and was eventually acquired by Moak pursuant to a Substitute Trustee's Deed in 2012.
• In 2010, the property owner of Property B ("Keys"), leased all of her fifty percent mineral interest in the property (the "Keys Interest") to Bold Minerals pursuant to a certain Oil, Gas, and Mineral Lease (the "Keys Lease") and at the time the lease was executed, the Keys Interest was subject to a deed of trust that was never subordinated to the Keys Lease which did not allow Keys to in any way commit or bind the mortgagee. The Keys Lease and land were included in the Unit. The Keys Interest was foreclosed on pursuant to the deed of trust, ...

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