On
appeal from the 51st District Court of Irion County, Texas.
MEMORANDUM OPINION ON REMAND
NORA
L. LONGORIA JUSTICE
This
cause is before this Court on remand from the Texas Supreme
Court. The underlying suit concerns the boundary between two
mineral leases in Irion County.[1] This case is principally a
trespass-to-try-title suit between the lessees of adjacent
mineral estates. Appellant Marsha Ellison d/b/a Ellison Lease
Operating alleges that appellees Concho Resources, Inc., COG
Operating LLC, Three Rivers Acquisition LLC, and Three Rivers
Operating Company (collectively, "Concho"); Samson
Resources Co., Samson Exploration, LLC, Samson Lonestar, LLC
and Samson Lonestar Limited Partnership (collectively
"Samson"); Sunoco Logistics Partners Operations GP
LLC, and Sunoco Partners Marketing & Terminals L.P.
(collectively, "Sunoco")[2] drilled several wells either
on appellant's leasehold or closer to the lease line than
Railroad Commission rules allow. Appellees, relying on a
boundary stipulation between the fee owners of the two
mineral estates and appellant's written acceptance of the
stipulation, claimed that appellant ratified the agreed
boundary line, foreclosing the trespass claims.
On
original submission, this Court was asked by appellant to
determine whether the trial court erred in granting summary
judgment in favor of appellees. We determined
that the trial court erred in granting summary judgment in
appellees' favor and reversed the judgment. See
Ellison v. Three Rivers Acquisition LLC, 609 S.W.3d 549
565 (Tex. App.-Corpus Christi-Edinburg 2019) (Ellison
I), rev'd sub nom. Concho Res., Inc. v.
Ellison, 627 S.W.3d 226 (Tex. 2021) (Ellison
II). The Texas Supreme Court reversed our opinion,
holding "that the boundary stipulation is valid and that
[appellees] conclusively established their ratification
defense." Ellison II, 627 S.W.3d at 228.
In our
original opinion, because we reversed the trial court's
summary judgment in favor of appellees, we necessarily
overruled Concho's issues presented on cross-appeal.
See Ellison I, 609 S.W.3d at 565. The Texas Supreme
Court, having reversed our summary judgment ruling, remanded
the case to this Court "to consider the parties'
unaddressed issues regarding Concho's
counterclaims." Ellison II, 627 S.W.3d at 239.
On cross-appeal, Concho argues that the trial court erred by
not awarding: (1) lost profit damages; (2) prejudgment
interest; (3) attorneys' fees in connection with the
defense and prosecution of claims under the Declaratory
Judgment Act; and (4) appellate attorneys' fees. We
affirm as modified in part and reverse and remand in part.
We
previously described the background of the case as follows:
When J.D. Sugg died in 1925, his estate and family assumed
100% ownership of "Section 1," a 640-acre tract of
land. Sugg's estate is the source of title to the 154
acres of land that are in dispute. Some of Sugg's heirs
agreed to swap land with the Noelkes, nearby landowners. To
effectuate the swap, the Sugg family executed a deed on July
26, 1927 ("the 1927 Deed"). One of the tracts
conveyed in that deed is described as "Second Tract: All
of Survey 1, Block 6, H & T.C. Ry. Co. lands located
North and West of the public road which now runs across the
corner of said Survey, containing 147 acres, more or
less" (the "Northwest Tract"). In
1930, the executor of Sugg's estate conveyed to A.A. Sugg
by partition deed the remaining 493 acres (the
"Southeast Tract"). This deed did not describe the
boundaries or location of the Southeast Tract; the deed
simply referred to it as the "493 acre tract."
Below is a relative representation of the relevant area.
(Image Omitted)
In 1939, the Sugg family commissioned a survey. According to
the 1939 survey, the 1927 deed conveys all of the land north
and west of the public road, including the disputed 154
acres; the survey also stated that the Northwest Tract
contains 301 acres.
Between 1927 and 1987, the Northwest Tract was conveyed
multiple times; by 1987, the Pilon Family Trust and three
individuals owned the mineral estate of the Northwest Tract.
On July 8, 1987, the Pilon Family Trust and the three
individuals granted four identical oil and gas leases
("the Pilon Leases") to Questa Oil & Gas Co.
("Questa"). The description of the land leased in
each of these Pilon Leases is as follows:
147 acre tract of land out of Survey 1, Block 6, H & TC
Ry. Co. Survey, Abst. 312, lying N and W of the public road
which runs NE and SW across said Survey 1, and being the same
land conveyed to W.M. Hemphill, Trustee by E.S. Briant,
Indep. Exec. of the Estate of J.D. Sugg, dec'd by Deed
dated 7-26-27 & recorded in Bk. 17, Pg. 118.
Through a series of assignments, Questa's leasehold was
assigned to Jamie Ellison, d/b/a Ellison Lease Operating in
1996. At about the same time, William and Carol Richey
acquired the mineral fee interest in the Northwest Tract.
Jamie and Marsha Ellison became the designated operators of
Pilon Well #1, an oil and gas well drilled in the Northwest
Tract. Marsha Ellison has continued as the sole operator
since her husband's death in 2011. Through the duration
of the leases, the Ellisons posted Railroad Commission signs
at the gate entrance of the Northwest Tract on the public
road boundary, designating themselves as owners and operators
of the Pilon Leases and claiming 320 acres, consistent with
their Railroad Commission filings. Irion County property tax
public records and Ellison's income tax records also
indicate that the Ellisons have claimed title to the disputed
154-acre since they received title.
Between 1930 and 2006, the Southeast Tract passed through the
estate of A. A. Sugg to various family members. In 2005, the
Suggs claimed that the Southeast Tract only contained 339
acres for ad valorem tax purposes on the Irion County tax
rolls. In 2006, the mineral owners of the Southeast Tract
(various members of the Sugg and Farmar families) granted an
oil and gas lease to Samson.
In 2006, a Sugg family owner of the Southeast Tract executed
and recorded a gift mineral deed, conveying the Southeast
Tract to his four children. This deed is the only Sugg chain
of title document that describes the boundaries of the
Southeast Tract: "being a tract of land lying South and
East of the public road which runs NE and SW across Survey
[Section] 1, containing 493 acres, more or less." The
four children subsequently executed the Sugg Lease of the
Southeast Tract to a Samson affiliate and recorded a lease
memorandum.
In October of 2006, Samson received a title opinion addressed
to Tim Reece, Samson's landman; the title opinion covered
the Southeast Tract, for purposes of drilling Samson's
Sugg Well #1 on the tract. The title opinion acknowledges the
Sugg 2005 property tax document showing that the Suggs only
claimed 339 acres of land. The title opinion also advised
that the 1927 Deed tract is shaped approximately like a
triangle, which would be
true only if the disputed 154 acres were part of the
Northwest Tract. Furthermore, the attorney who wrote the
title opinion warned that the Southeast Tract description in
the original 1930 Sugg deed was defective and opined that he
saw "no evidence of where the 493 acres is located on
the ground. As a technical matter, this description is
incorrect." Samson's surveyor prepared a preliminary
survey plat (the Samson plat) for a W-1 well permit
application. In the plat, Samson instructed the surveyor to
credit 493 acres to the Southeast Tract.
In December of 2006, landman Reece sent a letter to the
Ellisons titled "Statewide Rule 37 Exception
Request" for Samson's Sugg Well #1 location. This
letter did not include the Samson Plat. Instead, it asked the
Ellisons to waive objections to Samson's application to
locate Sugg Well #1 "100 feet South of the public
road." The letter to the Ellisons shows an execution
date of January 1, 2007. A similar letter was addressed to
the Richey family as the owners of the mineral interest of
the Northwest Tract. Later in 2007, after drilling Sugg Well
#1, Samson received a division order title opinion for Sugg
Well #1 and the Southeast Tract, again addressed to Reece.
Comment No. 4 in the opinion repeated the concern from the
2006 title opinion that the Sugg Lease Southeast Tract
description was inadequate; it further counseled to confine
drilling to land not located within the boundary of the 1927
Deed tract. Over the next two years, Samson filed well
applications for Wells #2, #3, and #4. In all these
applications, Samson included the disputed 154 acres as part
of the Southeast Tract.
In 2007, the Sugg family surface owners of the Southeast
Tract executed a warranty deed that purported to convey to
the Richey family only the surface of a "certain tract
of land," located north and west of the public road,
which "would be considered 154 acres." This deed
vaguely asserted that the "South Boundary" of the
Northwest Tract was located somewhere north and west of the
public road and yet south of Richey's tract (see the
approximate location of this "new boundary" on the
map above). According to the record, Reece averred that he
spoke with Jamie Ellison at this time, and again in 2008, to
explain the legal effects of this deed.
In 2008, Samson proposed to drill Sugg Well #3, which is
...
