Eastin v. Dial

• Decision Date: 28 January 2009
• Docket Number: No. 04-06-00377-CV.,04-06-00377-CV.
• Citation: 288 S.W.3d 491
• Parties: Chester D. EASTIN Jr., Appellant, v. Preston H. DIAL Jr., Debra Lynn Dial, Robert Scott Dial, and Ralph Lopez, Sheriff of Bexar County, Texas, Appellees.
• Court: Texas Court of Appeals

288 S.W.3d 491

Chester D. EASTIN Jr., Appellant, v.Preston H. DIAL Jr., Debra Lynn Dial, Robert Scott Dial, and Ralph Lopez, Sheriff of Bexar County, Texas, Appellees.

No. 04-06-00377-CV.

Court of Appeals of Texas, San Antonio.

January 28, 2009.

Rehearing Overruled March 19, 2009.

Leonard J. Gittinger, Jr., Leonard J. Gittinger, Jr., P.C., San Antonio, TX, for Appellant.

Grace G. Kunde, Seguin, TX, Thomas H. Crofts, Jr., Crofts & Callaway, P.C., San Antonio, TX, for Appellee.

Sitting: CATHERINE STONE, Chief Justice, KAREN ANGELINI, Justice, STEVEN C. HILBIG, Justice.

OPINION

Opinion by: STEVEN C. HILBIG, Justice.

Chester D. Eastin Jr. appeals the trial court's order granting summary judgment in favor of appelleesPreston H. Dial Jr., Debra Lynn Dial, Robert Scott Dial, and Ralph Lopez, Sheriff of Bexar County, Texas.Eastin contends the trial court erred in granting Dial's motion for summary judgment, denying Eastin's motions for summary judgment, and denying Eastin's bill of review.He also claims the bill of review procedure, which required Eastin to establish a meritorious ground of appeal, violates his due process rights.We affirm the trial court's judgment.

BACKGROUND

In 1966, Eastin purchased approximately 969 acres in Zavala County("the Ranch") from G.C. Jackson and others.Jackson reserved a one-half interest in the property's minerals.The remaining one-half interest went to Eastin.In 1981, Eastin sold the Ranch to John R. Blanton.As part of the purchase, Blanton assumed a $251,000.00 note payable to the Federal Land Bank and executed another note in favor of Eastin, secured by a second lien deed of trust.The next year, a dispute arose over late note payments and Eastin instigated foreclosure proceedings based on his lien.Blanton filed suit against Eastin to stop the foreclosure.When Blanton's request for an injunction failed, Eastin foreclosed and repurchased the Ranch at the foreclosure sale.Blanton thereafter amended his suit, seeking to set aside the foreclosure and recover damages.

In October or November of 1983, Preston H. Dial Jr. entered into a series of contracts for a tax-free exchange of properties in Comal, Bexar, and Zavala counties.One of these contracts was with Eastin and was entitled Contract for Tax Free Exchange ("CTFE").Under the CTFE, Eastin agreed to convey the Ranch to Dial and Dial agreed to convey property he owned in Comal and Bexar counties to Eastin.Eastin was required, before closing, to deliver a title insurance policy to Dial that would guarantee clear title to the Ranch.Because of the disparity in the value of the properties, Dial agreed to assume the balance of the Federal Land Bank note and to pay sufficient cash to make up the difference in value.The obligations set forth in the CTFE were "expressly conditioned or subject to"(1) approval of Dial for assumption of the Federal Land Bank note, (2) a mineral lease from 1981 between Eastin and Zeitgeist Exploration Company, and (3) a mineral reservation in favor of Eastin of one-half (½) of his "right, title and interest in and to the royalty, excess royalties and overriding royalties, of all the oil, gas and/or minerals in, to and under or that may be produced" from the Ranch, pro rata participation in any bonuses, and participation in delay rentals.

The closing date for the transactions was December 19, 1983.According to Dial, when the time came to close, Eastin could not convey clear title to the Ranch because of Blanton's claim, as well as another alleged encumbrance.Eastin and Dial entered into another contract, which was entitled Contract to Clear Title ("CCT").The parties agreed the CCT would "relate[] back to, survive[], and incorporate[] by reference the Contract for Tax Free Exchange" and was entered into to "carry out the intent and terms of the" CTFE.After acknowledging in the CCT that there were clouds on the Ranch that prevented Eastin from delivering a clear title policy, the parties agreed Eastin would have twelve months to obtain clear title, but still required Eastin to deliver immediately to Dial a warranty deed as contemplated in the CTFE.Eastin agreed to provide Dial with a $100,000.00 letter of credit upon which Dial could draw if Eastin failed to clear the title, and to continue making payments on the Federal Land Bank note, which Dial would reimburse if clear title were delivered.The CCT also included a paragraph stating that all other requirements imposed upon Eastin would be performed at the time he removed the clouds on the title, "including a replacement Warranty Deed under the Contract for Tax Free Exchange."

On December 29, 1983, in accordance with the CCT, Eastin delivered a "Warranty Deed," to Dial, which Dial recorded on January 4, 1984.The 1983 deed conveyed the Ranch to Dial without the mineral reservation contemplated in the CTFE and did not refer to Dial's assumption of the Federal Land Bank note or the Zeitgeist Exploration Company lease.Eastin claimed he did not object to the absence of the mineral reservation or the other conditions required under the CTFE because the 1983 deed was merely a "temporary deed" executed with the "express understanding" that when he removed the clouds on the Ranch title, a "replacement deed" would be issued to Dial, which would contain all of the conditions set forth in the CTFE, including the reservation of the mineral interest.Dial, on the other hand, asserted the 1983 deed was executed, along with the letter of credit, in exchange for permitting Eastin additional time to clear title to the Ranch.Dial claimed he never represented to Eastin or anyone else that the 1983 deed was a temporary deed.Indeed, Dial took possession of the Ranch pursuant to the 1983 deed, performed his obligation to convey his property to Eastin, and paid Eastin including the payment of $11,000.00 in earnest money.

After Eastin foreclosed and delivered the 1983 deed to Dial, Blanton amended his petition, naming Dial as a defendant.Dial answered.The matter proceeded to trial and on August 8, 1984, a judgment was entered in Blanton's favor based on the jury's verdict.The judgment cancelled the foreclosure and awarded Blanton title to the Ranch plus damages for wrongful foreclosure.The judgment "cancelled and annulled" the December 1983 deed from Eastin to Dial, and stated that Dial "at all times, had knowledge of the controversy between EASTIN and BLANTON."Eastin alone appealed, but the parties ultimately settled and Eastin moved to dismiss the appeal.On January 31, 1985, this court granted the motion to dismiss, dismissed the appeal, and vacated the trial court's judgment.

According to Dial, his attorney advised him after the settlement that to "assure the tax free exchange," Blanton should execute a deed transferring the Ranch back to Eastin and Eastin should execute another deed to Dial.Blanton transferred the Ranch and, at the end of 1984, Eastin executed another deed to Dial entitled "Exchange Warranty Deed"("1984 deed").This deed again transferred the Ranch to Dial but unlike the 1983 deed, the Exchange Warranty Deed included most of the conditions stated in the CTFE.Notably however, the 1984 deed, which was prepared by Dial's attorney, did not include the mineral reservation in favor of Eastin.According to Eastin, he and his attorney noticed the missing mineral reservation when they went to review the documents at the closing.Eastin claimed that there was no one at the title company available to prepare an addition to the deed so they took the 1984 deed to another office, typed an allonge reserving the royalties in favor of Eastin, and attached it to the 1984 deed.Dial asserted he executed the deed, in accordance with his attorney's advice regarding assuring the tax-free exchange, before Eastin signed the deed.He further claimed that at the time he signed the deed no allonge was attached.However, he noticed when it was returned to him after recording it had a "scotch-taped allonge containing a one-half mineral reservation in favor of Eastin."Dial claimed the allonge was added without his knowledge or agreement.

In 1990, Eastin learned from his predecessor in interest that a $24,000.00 bonus was paid to Dial pursuant to a mineral lease with Joe R. Peacock.Eastin also learned about a payment of $8,000.00 in delay rentals.Eastin asked his attorney to contact Dial regarding payment to Eastin of his share of the bonus and delay rentals, which he claimed pursuant to the reservation in the 1984 deed.Eastin's attorney contacted Dial and demanded that Dial acknowledge the reservation attached to the 1984 deed and pay Eastin his share of monies due based thereon.Dial's attorney responded by letter stating in part:

Please remind Dr. Easton [sic] that in December of 1983he executed a warranty deed for the same real property without any reservation of mineral interest.The subsequent exchange deed was for the purpose of clearing title in the grantee of any cloud by the Blanton claim and to insure [sic] a land exchange free of income tax consequences.

The letter concluded by stating that under well-settled law the 1983 general warranty deed conveyed fee simple to Dial and estopped Eastin from asserting any interest in the Ranch.Apparently Eastin took no further action until 1992 when he sent a copy of the 1984 deed to Dial and again demanded his share of any monies due him based on the reservation in the deed.

In September 1994, Dial executed a mineral lease with Columbia Gas Development Corporation("Columbia").Having apparently discovered the existence of the 1984 deed, Columbia contacted Eastin and requested that he ratify the lease.Eastin claimed Columbia representatives told him that unless he ratified the lease and approved a pooling agreement, Columbia would not drill on the Ranch.Eastin thereafter executed an agreement with Columbia acknowledging the dispute between Eastin and Dial and agreeing to place the...