Cole v. Anadarko Petroleum Corp. And
| Decision Date | 14 October 2010 |
| Docket Number | No. B-117,955,No. 11-09-00056-CV,11-09-00056-CV,B-117,955 |
| Parties | THOMAS ED COLE AND ROY FRANKLIN COLE, Appellants and Cross-Appellees. v. ANADARKO PETROLEUM CORPORATION AND PERMIAN BASIN JOINT VENTURE, LLC, Appellees and Cross-Appellants. |
| Court | Texas Court of Appeals |
On Appeal from the 161st District Court Ector County.
Thomas Ed Cole and Roy Franklin Cole filed a motion for rehearing which is granted in part. We withdraw our opinion and judgment dated July 22, 2010, and substitute our opinion and judgment dated October 14, 2010.
This suit arises out of a surface use dispute between the owners of the JY Ranch, Thomas Ed Cole and Roy Franklin Cole (the Coles), and the operators of a waterflood partially situatedon that ranch. The trial court granted multiple motions for partial summary judgment and certified an interlocutory appeal. We affirm in part and reverse and remand in part.
H.E. and Rosa Lee Cummins executed an oil and gas lease in 1925 that covered 15 sections in Ector County. William Horace "Buster" Cole acquired the Cummins' interest in 1940. Atlantic Richfield Company (ARCO) became the operator for the 1925 Lease. In 1966, it created the Goldsmith Cummins (Deep) Unit (GCDU) to conduct a waterflood in the Clearfork Formation. Some of the tracts covered by the 1925 Lease were included within the GCDU. Buster and his wife Mary Cole ratified the GCDU Unit Agreement in 1967.
ARCO constructed a central battery facility to service the unit on 2.25 acres of land that is covered by the 1925 Lease and is within the GCDU's boundaries. Well fluid from GCDU wells is pumped to this facility where oil is separated and sold and water is reinjected. In 1984, ARCO entered into a surface lease agreement with Buster that added 1.18 acres to the central battery site for pipe storage and an emergency storage tank. In 1992, ARCO transferred its interest to Anadarko Petroleum Corporation.
The 1925 Lease gave Anadarko the right to construct and operate associated equipment such as pipelines and power lines and included a damage schedule. In 1995, Anadarko leased a.2778-acre tract of land in Section 33 that is within the 1925 Lease but is outside the GCDU's boundary for the construction of a water injection plant to service a second waterflood project. The 1995 lease was for a one-year term, and each succeeding year was automatically renewed for an additional year until terminated in writing by Anadarko. Buster was given the right to cancel the lease for nonpayment of the annual $500 rental after thirty days written notice of the default.
Buster passed away on October 1, 2000. He was survived by his wife and five children. Roy and Thomas are two of Buster's sons. Buster's will bequeathed his property to the Cole Family Master Trust. In 2001 and 2002, Roy and Thomas acquired the surface estate of the JY Ranch from William C. Cole, the Cole Family Master Trust, the Roy F. Cole 1995 Trust, and the Thomas Ed Cole 1995 Trust. The JY Ranch consists of approximately 18% sections in Ector County. Most of the ranch is covered by the 1925 Lease, but only the southeastern portion is within the GCDU.
Anadarko made the 2002 and 2003 payments required by the 1995 Lease to Buster. On August 7, 2003, the Coles' attorney notified Anadarko that they were Buster's successors and that they intended to cancel the lease in thirty days for nonpayment of the 2002 and 2003 rentals. On August 18, Anadarko responded with copies of documents evidencing that it had mailed the 2002 and 2003 payments by certified mail and that the receipts had been signed by Mary Cole and William C. Cole but acknowledged that the checks had not been cashed. It asked the Coles to return the 2002 and 2003 checks and to provide evidence of the change of ownership. Anadarko also asked for a certified copy of Buster's death certificate, his will, and certain probate documents. The Coles' attorney replied on August 27 and indicated that he would request "any correspondence from the Coles to Anadarko pertinent to these issues." On September 12, the Coles notified Anadarko that the 1995 Lease had been cancelled for nonpayment.
On October 3, the Coles provided Anadarko with three special warranty deeds from the Cole Family Master Trust and William C. Cole to themselves and requested Anadarko to cease operations on the.2778-acre tract covered by the 1995 Lease. On November 6, Anadarko replied that the deeds were insufficient to document the ownership transfer because there was no documentation from Buster to the grantors, but it still forwarded two checks for $250 payable to Roy and Thomas and requested documentation of the transfer from Buster to the coexecutors of his estate. The checks reflect that they were intended as the 2003 rental payment. The Coles returned the checks to Anadarko, complaining that payment had been improperly conditioned upon a requirement that they procure Buster's probate documents.
The Coles filed suit against Anadarko in December 2003, alleging breach of contract causes of action. In 2007, Anadarko assigned its interest to Permian Basin Joint Venture, LLC. The Coles amended their petition and added Permian Basin as a defendant and also added causes of action based upon allegations of excessive and unauthorized surface use. The parties filed multiple motions for summary judgment. The trial court granted a motion for partial summary judgment filed by the Coles concerning the 1995 Lease, finding that Anadarko breached this agreement by failing to make annual rental payments of $500 and that the agreement terminated in 2003. The trial court also granted a motion for partial summary judgment filed by the Coles concerning Anadarko's surface use but denied the remaining motions. Prior to trial, however, the trial court reconsidered its surface use ruling and, instead, granted three partial summaryjudgment motions filed by Permian Basin and Anadarko. The trial court also announced legal findings concerning the 1925 Lease, the 1966 Unit Agreement, limitations, the Coles' standing to bring property damage claims, and Anadarko's breach of the 1995 Lease. Finally, the trial court certified an interlocutory appeal pursuant to Tex. Civ. Prac. & Rem. Code Ann. § 51.014(d)
(Vernon 2008).
The Coles challenge the trial court's order with four issues. They contend in Issues One and Two that the trial court erred when it construed Anadarko and Permian Basin's rights under the 1925 Lease and 1966 Unit Agreement and in Issues Three and Four that the trial court erred in its construction or application of the 1967 Agreement. Anadarko and Permian Basin filed a cross-appeal. They contend that the trial court erred by granting the Coles' motion for summary judgment on the 1995 Lease.
We apply the well-recognized standard of review for traditional summary judgments. Questions of law are reviewed de novo. St. Paul Ins. Co. v. Tex. Dep't of Transp., 999 S.W.2d 881 (Tex. App.—Austin 1999, pet. denied). When cross-motions are filed and the trial court grants one and denies the other, we review all issues presented and enter the judgment that the trial court should have entered. Bradley v. State ex rel. White, 990 S.W.2d 245, 247 (Tex. 1999). To determine if a fact question exists, we must consider whether reasonable and fair-minded jurors could differ in their conclusions in light of all the evidence presented. Goodyear Tire & Rubber Co. v. Mayes, 236 S.W.3d 754 (Tex. 2007). We must consider all the evidence in the light most favorable to the nonmovant, indulging all reasonable inferences in favor of the nonmovant, and determine whether the movant proved that there were no genuine issues of material fact and that it was entitled to judgment as a matter of law. Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546 (Tex. 1985).
The Coles' surface use claims are predicated upon allegations that Anadarko and Permian Basin exceeded their rights under the 1925 Lease and the 1966 Unit Agreement. The trial court found that the Coles lacked standing to bring any claim for property damage or unauthorized use that existed when they acquired the JY Ranch. Because standing is a prerequisite to the trial court's subject-matter jurisdiction, Bland Independent School District v. Blue, 34 S.W.3d 547, 553-54 (Tex. 2000), we must review this finding before considering whether the 1925 Lease or 1966 Unit Agreement was violated.
Whether a court has subject-matter jurisdiction is a question of law and, therefore, is reviewed de novo. Tex. Natural Res. Conservation Comm'n v. IT-Davy, 74 S.W.3d 849, 855 (Tex. 2002). Texas law is clear that a cause of action for injury to real property is a personal right that belongs to the person who owns the property at the time of the injury. Senn v. Texaco, Inc., 55 S.W.3d 222, 225 (Tex. App.—Eastland 2001, pet. denied). A subsequent purchaser can acquire a property damage claim, but it must be specifically assigned. See Vann v. Bowie Sewerage Co., 90 S.W.2d 561, 563 (Tex. 1936) (). The Coles make no claim that their deeds conveyed their father's causes of action for property damages. Instead, they argue that they acquired his claims as his heirs and successors. The record does not corroborate this contention.
Buster's will devised his property to the Cole Family Master Trust. The Coles then acquired their interest from William C. Cole and three family trusts, including the Master Trust. The Coles testified that, in 1995, Buster created the Roy F. Cole 1995 Trust and the Thomas Ed Cole 1995 Trust and then conveyed a percentage ownership in the JY Ranch to them. The Coles also testified that Buster and the 1995 Trusts later conveyed the ranch to a limited partnership. The trust instruments and conveyance documents from these transactions are not in the record. How the family trusts reacquired...
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