ConocoPhillips Co. v. Koopmann
| Decision Date | 19 May 2016 |
| Docket Number | NUMBER 13–14–00402–CV |
| Citation | 542 S.W.3d 643 |
| Parties | CONOCOPHILLIPS COMPANY, Burlington Resources Oil & Gas Co., L.P., and Lois Strieber, Individually and as Executrix of the Estate of Jerry Strieber, Appellants, v. Ralph Wade KOOPMANN, Karen Marie Koenig, and Lorene H. Koopmann, Appellees |
| Court | Texas Court of Appeals |
William Scott Hastings, Elizabeth L. Tiblets, Fort Worth, TX, Kirsten M. Castaneda, Kevin D. Cullen, Victoria, TX, J. Clinton Schumacher, Michael V. Powell, Andrew M. Buttaro, Dallas, TX, for Appellants Burlington Resources Oil & Gas Co., L.P., ConocoPhillips.
Carrie Schadle, Errol John Dietze, Cuero, TX, D. Mitchell McFarland, Houston, TX, for Appellants Lois Strieber, Individually and as Executrix of the Estate of Jerry Strieber.
Christopher Michael Volf, Ronald B. Walker, Victoria, TX, Mike Johanson, Sugar Land, TX, Todd Taylor, Kevin Christopher Kyser, Sugar Land, TX, for Appellees Ralph Wade Koopmann, Lorene H. Koopmann, and Karen Marie Koenig.
Amicus Curiae Cory Pomeroy, Austin, TX, for Texas Oil and Gas Association.
Amicus Curiae George S. Christian, Austin, TX, for Texas Civil Justice League.
Before Chief Justice Valdez and Justices Rodriguez and Longoria
This case concerns ownership of a non-participating royalty interest1 (NPRI) in the gross production of oil and gas covering a tract of land located in Dewitt County, Texas. On competing motions for summary judgment, the trial court entered a declaratory judgment stating that the NPRI is owned by the appellees/cross-appellants Ralph Wade Koopmann, Karen Marie Koenig, and Lorene H. Koopmann (the Koopmanns) and not appellant Lois Strieber, individually and as executrix of the state of Jerry Strieber. Also on summary judgment, the trial court dismissed certain claims brought by the Koopmanns against appellants/cross-appellees Burlington Resources Oil & Gas Co., L.P. (Burlington) and ConocoPhillips Company (ConocoPhillips). We affirm in part and reverse and remand in part.
By warranty deed dated December 27, 1996, Strieber conveyed the surface and mineral estate of a 120–acre tract of land to the Koopmanns. As per the deed, Strieber reserved for herself the NPRI at issue for a period of fifteen years, or until December 27, 2011, and for "as long thereafter as there is production [of oil, gas, or minerals from the land] in paying or commercial quantities." The deed also contained a "savings clause," allowing for Strieber's NPRI to be preserved beyond December 27, 2011 without actually producing oil, gas, or minerals from the land.
Specifically, the deed's savings clause provided that:
[I]f any oil, gas, or mineral or mining lease covering [the Koopmanns' land] is maintained in force and effect by payment of shut-in royalties or any other similar payments made to [the Koopmanns] in lieu of actual production while there is located on [the Koopmanns' land] a well or mine capable of producing oil, gas, or other minerals in paying or commercial quantities but shut-in for lack of market or any other reason, then for purposes of determining [whether Strieber's NPRI continues beyond December 27, 2011,] it will be considered that production in paying or commercial quantities is being obtained from the [Koopmanns' land].
In 2007, the Koopmanns entered into a three-year lease with Burlington, an oil and gas company, for the purpose oil and gas exploration and development under their land. In 2010, with a few months remaining on the three-year lease, ConocoPhillips, Burlington's parent company, paid the Koopmanns $24,000 to extend Burlington's lease for an additional two years, or until October 2012.
By August 2011, Strieber's initial fifteen-year NPRI term under the deed was four months away from terminating in December 2011, and Burlington had not been able to produce oil and gas from the Koopmanns' land. As an incentive to accelerate the drilling process, Strieber offered Burlington a 60% interest in her NPRI, which Burlington accepted. As such, Strieber and Burlington then owed 40% and 60% of the NPRI, respectively.
Thereafter, Burlington identified a well site on the Koopmanns' land and began a process called "hydraulic fracturing" to complete the drilling of a well. On December 7, 2011, ConocoPhillips, on behalf of Burlington, sent a letter informing the Koopmanns that a well was anticipated to begin producing oil and gas in the first quarter of 2012. Noting the deed's savings clause, ConocoPhillips enclosed a shut-in royalty payment, which, according to the letter, was being tendered to the Koopmanns to "ensure that all parties' interest, if any, in the well [was] maintained." However, the Koopmanns promptly returned this shut-in royalty payment to ConocoPhillips.
The summary judgment evidence is undisputed that no well actually produced oil, gas, or minerals from the land until February 2012, which is some two months after Strieber's initial fifteen-year NPRI term ended on December 27, 2011. Although there was no production by December 27, 2011, Burlington and ConocoPhillips' expert, Joseph Rhodes, determined that the well was at least capable of producing as early as December 16, 2011—thus implicating the savings clause. The Koopmanns, on the other hand, sponsored their own expert, Peter Huddleston, who disagreed with Rhodes' conclusion that the well was capable of producing before December 27, 2011—thus negating the savings clause. All royalties attributable to the NPRI have been withheld from the Koopmanns since the well began producing.
The Koopmanns brought a declaratory action against Strieber, Burlington, and ConocoPhillips to be declared the owners of the NPRI. The Koopmanns also brought several non-declaratory claims against Burlington and ConocoPhillips for withholding royalties on the NPRI and for tendering a shut-in royalty payment on December 7, 2011.2 At an early juncture in the proceedings below, the litigation leading to this appeal fractured along two major fault lines; a first cluster of litigation related to the Koopmanns' request for a declaratory judgment concerning ownership of the NPRI, and a second involved litigation relating to the Koopmanns' non-declaratory claims against Burlington and ConocoPhillips.
Concerning the first cluster of litigation, the Koopmanns sought a declaration from the trial court that they owned the NPRI as of December 27, 2011. In response to the Koopmanns' declaratory action, Strieber, Burlington, and ConocoPhillips moved for summary judgment to have the trial court declare that the NPRI remained in Strieber. They contended, among other things, that Strieber's reservation of the NPRI for fifteen years, and for as long thereafter as there is production, created a future interest in the Koopmanns that violates the rule against perpetuities. They reasoned that because the Koopmanns' future interest is void under the rule against perpetuities, the NPRI stayed with Strieber. In the alternative, they asserted that the deed's saving clause applies to preserve Strieber's NPRI beyond December 27, 2011 even without actual production.
In a competing motion, the Koopmanns moved for summary judgment to have the trial court declare that they own the NPRI. The Koopmanns argued that the savings clause did not apply to preserve Strieber's interest in the NPRI beyond December 27, 2011, and the rule against perpetuities did not apply to void the NPRI. Agreeing with the Koopmanns, the trial court entered a summary judgment declaring that:
Although the trial court granted a declaratory judgment in favor of the Koopmanns, it did not award them interest on unpaid royalties attributable to the NPRI.
Concerning the second cluster of litigation, the Koopmanns brought claims against Burlington and ConocoPhillips under contract, quasi-contract, and tort theories. The relevant non-declaratory claims include: (1) breach of contract, (2) unjust enrichment/money had and received,3 (3) conversion, (4) negligence, and (5) negligence per se. Specifically, the Koopmanns alleged the following:
1. Burlington and ConocoPhillips Move to Dismiss the Koopmanns' Non-Declaratory Claims Under Texas Rule of Civil Procedure 91a.
Seeking early dismissal of the above-mentioned claims, Burlington and ConocoPhillips filed a motion to dismiss pursuant to Texas Rule of Civil Procedure 91a. See TEX. R. CIV. P. 91a.3. In support of their motion to dismiss, Burlington and ConocoPhillips asserted that all of the Koopmanns' claims were barred as a matter of law under section 91.402(b) of the Texas Natural Resources Code because ownership of the NPRI was in dispute. See TEX. NAT. RES.CODE ANN. § 91.402(b) (West, Westlaw through 2015 R.S.). Aside from the natural resources code,...
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