Aston Meadows, Ltd. v. Devon Energy Prod. Co.

• Decision Date: 26 January 2012
• Docket Number: No. 02–10–00370–CV.,02–10–00370–CV.
• Citation: 359 S.W.3d 856
• Parties: ASTON MEADOWS, LTD., Montclaire Custom Homes, L.P., Peter Paulsen, Steve Paulsen, Mike Wells, Kathryn LeBlanc, Donald LeBlanc, Natalie J. Warnick, James S. Warnick, and Kathy Ivey, Appellants, v. DEVON ENERGY PRODUCTION COMPANY, L.P. and Devon Energy Corporation, Appellees.
• Court: Texas Court of Appeals

359 S.W.3d 856

ASTON MEADOWS, LTD., Montclaire Custom Homes, L.P., Peter Paulsen, Steve Paulsen, Mike Wells, Kathryn LeBlanc, Donald LeBlanc, Natalie J. Warnick, James S. Warnick, and Kathy Ivey, Appellants,

v.DEVON ENERGY PRODUCTION COMPANY, L.P. and Devon Energy Corporation, Appellees.

No. 02–10–00370–CV.

Court of Appeals of Texas, Fort Worth.

Jan. 26, 2012.

Hunter T. McLean, William Brent Shellhorse, Whitaker, Chalk, Swindle & Sawyer, LLP, Fort Worth, TX, for Appellants.

David E. Keltner, John R. Thompson III, John T. Wilson, IV, Kelly, Hart & Hallman, LLP, Fort Worth, TX, for Appellees.

PANEL: LIVINGSTON, C.J.; DAUPHINOT, J.; and WILLIAM BRIGHAM (Senior Justice, Retired, Sitting by Assignment).

OPINION

TERRIE LIVINGSTON, Chief Justice.

Aston Meadows, Ltd., Montclaire Custom Homes, L.P., Peter Paulsen, Steve Paulsen, Mike Wells, Kathryn LeBlanc, Donald LeBlanc, Natalie J. Warnick, James S. Warnick, and Kathy Ivey (collectively, appellants) appeal from a summary judgment in favor of appellees Devon Energy Production Company, L.P. and Devon Energy Corporation. Appellants bring seven issues challenging the propriety of the summary judgment for appellees and the trial court's denial of Aston Meadows's and Ivey's cross-motions for summary judgment. Appellants also bring two issues challenging the trial court's evidentiary rulings as to Ivey's summary judgment evidence. Appellees bring a conditional cross-issue challenging the trial court's refusal to award them attorney's fees. We affirm.

Background

Aston Meadows purchased 182.024 acres (the Property) in northern Tarrant County in March 2001 to be used as a residential development; it subdivided the property and recorded a plat.¹ Aston Meadows also obtained a title policy in connection with the purchase. Unbeknownst to all of the appellants, the entire Property, which had been part of a larger tract located in both Tarrant and Wise Counties, was subject to a 1977 oil, gas, and mineral lease (the Lease) that encumbered several hundred acres of the larger tract in both Tarrant and Wise Counties. The Lease was recorded in Wise County only in 1977. The Lease was not shown as an encumbrance on Aston Meadows's title policy, and it was not recorded in Tarrant County until April 2002, after Aston Meadows purchased the Property.

Devon Energy Production Company, L.P. is the successor to the original lessee under the Lease. When Aston Meadows purchased the Property, there were no signs of any oil or gas production. However, in June 2007, appellants sued Devon and its parent company, Devon Energy Corporation, alleging that appellees had impermissibly drilled horizontally under the Property. Appellants sought a declaration that the Lease was invalid because it was not recorded in Tarrant County when Aston Meadows purchased the Property and, therefore, appellants were bona fide purchasers for value. They also sought damages for conversion and trespass, as well as injunctive relief. In the alternative, they brought a claim for breach of contract under the Lease, claiming as damages royalties under the Lease that they had not yet been paid.²

Appellees filed a motion for summary judgment contending that appellants had constructive notice of the Lease because it was properly recorded in Wise County under section 11.001(a) of the property code. Aston Meadows and Ivey filed cross-motions for summary judgment contending, among other things, that they are bona fide purchasers for value because section 11.001(a) does not control here; thus, they did not have constructive notice of the Lease. They also claimed in the alternative that they did not have inquiry notice of the Lease. In several orders, the trial court granted appellees' motion for summary judgment, denied Aston Meadows's and Ivey's, and rendered a final judgment dismissing all of appellants' claims against appellees.

Analysis

In their first seven issues, appellants challenge the trial court's rulings on the competing summary judgment motions; their issues all relate to the trial court's resolution of the question of law regarding whether appellants had notice of the Lease.

Applicable Law

Notice sufficient to defeat bona fide purchaser status may be actual or constructive. Noble Mortg. & Invs., LLC v. D & M Invs., LLC, 340 S.W.3d 65, 76 (Tex.App.-Houston [1st Dist.] 2011, no pet.). Actual notice rests on personal information or knowledge. Madison v. Gordon, 39 S.W.3d 604, 606 (Tex.2001); Noble Mortg., 340 S.W.3d at 76. Constructive notice is notice the law imputes to a person not having personal information or knowledge. Madison, 39 S.W.3d at 606; Noble Mortg., 340 S.W.3d at 76. Constructive notice creates an irrebuttable presumption of actual notice in some circumstances. See HECI Exploration Co. v. Neel, 982 S.W.2d 881, 887 (Tex.1998); Noble Mortg., 340 S.W.3d at 76.

The Texas Property Code provides that an “instrument that is properly recorded in the proper county is ... notice to all persons of the existence of the instrument.” Tex. Prop.Code Ann. § 13.002 (West 2004). Recorded instruments in a grantee's chain of title generally establish an irrebuttable presumption of notice. Ford v. Exxon Mobil Chem. Co., 235 S.W.3d 615, 617 (Tex.2007); Noble Mortg., 340 S.W.3d at 76; see also HECI Exploration Co., 982 S.W.2d at 887 (“The need for stability and certainty regarding titles to real property has led courts to hold that real property records can constitute constructive notice.”); Westland Oil Dev. Corp. v. Gulf Oil Corp., 637 S.W.2d 903, 908 (Tex.1982) (“It is well settled that ‘a purchaser is bound by every recital, reference and reservation contained in or fairly disclosed by any instrument which forms an essential link in the chain of title under which he claims.’ ”). A person may also be charged with constructive notice for a deed outside his chain of title if facts appearing in the chain of title through which he claims would place a reasonably prudent person on inquiry as to the rights of other parties in the property conveyed. Noble Mortg., 340 S.W.3d at 76; Nguyen v. Chapa, 305 S.W.3d 316, 324–25 (Tex.App.-Houston [14th Dist.] 2009, pet. denied).

Property code section 11.001(a) provides that “[t]o be effectively recorded, an instrument relating to real property must be eligible for recording and must be recorded in the county in which a part of the property is located.” Tex. Prop.Code Ann. § 11.001(a) (West Supp. 2011). Section 11.001 was enacted in 1983 as a nonsubstantive recodification of the property-related revised civil statutes. See Act of May 26, 1983, 68th Leg., R.S., ch. 576, § 1, sec. 1.001(a), 1983 Tex. Gen. Laws 3475, 3478. The substance of the predecessor to section 11.001 was initially enacted in 1887,³ has not significantly changed since then, and has been consistently construed by appellate courts to provide that if a single tract of land spans multiple counties, recording in either of the counties in which part of the tract is located is sufficient to provide constructive notice. See, e.g., Brown v. Lazarus, 5 Tex.Civ.App. 81, 25 S.W. 71, 73 (1893) ⁴ (“Article 4333, Rev. St., provides that ‘all deeds, conveyances, mortgages, deeds of trust, or other written contracts relating to real estate, which are authorized to be recorded, shall be recorded in the county where such real estate, or a part thereof, is situated.’ ”).⁵

In Brown v. Lazarus, the Court of Civil Appeals held,

From so much of the judgment as denied appellees Lazarus and the Western Mortgage & Investment Company, Limited, a recovery against the other appellees of that part of the tract of 3,111 acres which is situated in Wichita [C]ounty, they have prosecuted a cross appeal. They claim as purchasers under a deed of trust which was duly recorded in Archer [C]ounty, where about one-half of said tract of land is situated. The other appellees claim as purchasers at execution sale made in Wichita [C]ounty by virtue of a levy subsequent to the registration of the deed of trust in Archer [C]ounty, of which deed of trust the plaintiff in execution had no actual notice at the date of the levy. The entire tract of land was described in the patent, and in the subsequent conveyances, including the deed of trust, as situated in Archer [C]ounty, but with the field notes therein set out. Article 4333, Rev. St., provides that ‘all deeds, conveyances, mortgages, deeds of trust, or other written contracts relating to real estate, which are authorized to be recorded, shall be recorded in the county where such real estate, or a part thereof, is situated.’ The succeeding article provides that ‘every conveyance, covenant, agreement, deed of trust, or mortgage in this chapter mentioned, which shall be acknowledged, proved or certified according to law, and delivered to the clerk of the proper court to be recorded, shall take effect and be valid as to all subsequent purchasers for a valuable consideration, without notice, and as to all creditors, from the time when such instrument shall be so acknowledged, proved, or certified and delivered to such clerk to be recorded, and from that time only.’ The language of these articles indicates very clearly, we think, that when the holder of the deed of trust had it recorded in Archer [C]ounty, where all the land purported to be situated, and where ‘a part’ (one-half) of the entire tract was situated, the statute was fully complied with, and the lien thereby secured must be protected against ‘all creditors,’ as therein provided. The tract being a unit, record in either county would be sufficient constructive notice. The language employed by the present chief justice of our supreme court in Hancock v. Lumber Co., 65 Tex. 232, in construing this statute, while not necessary to a decision of that case, seems to us to state the rule correctly. It follows, therefore, that as to so much of this tract as lies in Wichita [C]ounty[,] the judgment must be reversed, and here rendered in accordance with...