Henry v. Smith
| Decision Date | 24 November 2021 |
| Docket Number | 02-20-00169-CV |
| Parties | ROBERT H. HENRY; MARGARET GREEN HENRY, INDIVIDUALLY AND AS TRUSTEE OF MARGARET GREEN HENRY TRUST U/W/O WILLIAM H. GREEN, JR., AND AS TRUSTEE OF MARGARET GREEN HENRY TRUST U/W/O ELIZABETH MORE GREEN; CLAYTON MOORE HENRY; AND HELEN HENRY WRIGHT, Appellants v. GEORGE RAY SMITH, SUSAN A. TULL, AND SHANNON L. RILEY, IN THE CAPACITIES AS CO-EXECUTORS OF THE ESTATE OF C.B. CHRISTIE, JR., DECEASED, Appellees |
| Court | Texas Court of Appeals |
On Appeal from the 97th District Court Archer County, Texas Trial Court No. 2017-0100A-CV.
Before Birdwell, Wallach, and Walker, JJ.
Appellants (Surface Owners), the surface estate owners of the Camp Creek Ranch in Archer County, sued Appellees (Lessees), lessees of three oil and gas leases on the ranch, seeking damages to the surface estate. Surface Owners asserted causes of action for breach of contract, negligence, trespass, and nuisance. They also sought declaratory relief and permanent injunctive relief to prevent surface damage in the future. The trial court granted Lessees' motion for partial summary judgment against Surface Owners on their contract claim seeking to enforce surface covenants in the mineral leases which effectively dismissed Surface Owners' breach of contract claim. The remainder of Surface Owners' claims were tried to a jury, which found in Surface Owners' favor on their negligence, nuisance, and trespass claims. The trial court entered judgment on the jury's verdict awarded Surface Owners nominal damages for trespass and minimal actual damages for negligence, incorporated the prior summary judgment ruling on the contract claim, and denied permanent injunctive relief regarding trespass and alleged violations of the Natural Resources Code stemming from National Electric Code (NEC) violations. Surface Owners bring this appeal complaining of (1) the trial court's summary judgment on their breach of contract claim and (2) the trial court's refusal to grant permanent injunctive relief arising from statutory violations and trespass. We sustain Surface Owners' first issue and part of their second issue.
First we hold that the trial court erred in granting Lessees' summary judgment on the breach of contract claim. Therefore we reverse the trial court's judgment on Surface Owners' contract claim and remand the case to the trial court for further proceedings on that claim. Second, we hold that the trial court did not abuse its discretion in denying permanent injunctive relief to Surface Owners regarding violations of the Natural Resources Code arising from violations of the NEC. We therefore affirm that portion of the trial court's judgment denying permanent injunctive relief on that claim. Finally, we hold that the trial court abused its discretion by denying Surface Owners' request for injunctive relief arising from Lessees' trespass on Surface Owners' surface estate. We therefore reverse that portion of the trial court's judgment denying permanent injunctive relief to Surface Owners for trespass and remand the case to the trial court with instructions to enter judgment against Lessees enjoining them from trespassing on Surface Owners' property in the future.
Surface Owners (Robert H. Henry; Margaret Green Henry, Individually and as Trustee of Margaret Green Henry Trust u/w/o William H. Green, Jr. and as Trustee of Margaret Green Henry Trust u/w/o Elizabeth Moore Green; Clayton Moore Henry; and Helen Henry Wright) own the surface estate of the Camp Creek Ranch, a 15, 000-acre tract of agricultural land in Archer County. Lessees (George Ray Smith, Susan A. Tull, and Shannon L. Riley, in the capacities as Co-Executors of the Estate of C.B. Christie, Jr., Deceased) are the lessees of three oil and gas leases on the ranch, the two "Mangold" leases and the "Ferguson" lease (collectively, the leases). The late C.B. Christie, Jr., whose estate is being administered by Lessees Smith, Tull, and Riley, obtained the Mangold leases and the Ferguson lease in 1961, 1962, and 1974, respectively, from Surface Owners' predecessors in title. Each lease contains special surface covenants, including one that requires the lessee to bury oil and gas pipelines to a certain depth at the request of the lessor.[1]
When the leases were originally executed, the respective landowners-Claude Miller (Mangold lands) and W.B. Ferguson (Ferguson lands)-owned both the surface and mineral estates. Many years later, Miller and Ferguson conveyed the surface estates to Surface Owners' predecessors in interest, while reserving the mineral estates (which were leased to Lessees). Specifically, in 1984, Miller conveyed the surface of the Mangold lands by deed to Surface Owners' predecessor "together with all and singular the rights and appurtenances thereto . . . ." In 1994, Ferguson conveyed the surface of the Ferguson lands by deed (the "Ferguson deed") to Surface Owners' predecessor "together with all improvements, structures and fixtures located thereon and all rights and appurtenances pertaining thereto . . . ."
Whether the covenants were conveyed with the surface estates or reserved to the mineral estates is at issue; the reservation language in the deeds is therefore key. Miller's reservation language provided:
Grantors [i.e. Miller] retain and reserve to themselves, as their respective interests now exist, all ownership, right, title and interest, in and to . . . [a]ny and all valid, recorded oil, gas and mineral lease or leases now existent and in full force and effect, which reservation and retention by the Grantors includes all royalties, and all delay rentals and royalties, and any and all payments due, or that may become due in the future, or which may become payable under the terms of any existent or future lease or leases to the Grantors, their heirs, successors or assigns.
Ferguson's reservation language provided:
Grantors [i.e., Ferguson] have RESERVED and RETAINED, and by these presents do hereby RESERVE and RETAIN, unto themselves, their heirs, successors and assigns, all of Grantors' rights, titles, interests and estates in and to the oil, gas and other minerals in and under, and that may be produced from, the real property described in the attached Exhibit "A" and all rights and appurtenances pertaining thereto, including, without limitation, all of Grantors' rights, titles, interests and estates in all executive rights; all royalty; and all bonus, delay rentals, royalty and other amounts and benefits accruing or to accrue under existing or future oil and gas leases covering all or part of such real property.
In 2002, Surface Owners purchased the surface of the Camp Creek Ranch, which includes the lands encumbered by the leases. Surface Owners requested that Lessees bury all flow lines on the leases pursuant to the covenants. Lessees refused, taking the position that Surface Owners could not enforce the covenants because the covenants had been detached from the surface estate through the mineral reservations when Surface Owners' predecessors in interest acquired the surface rights to the Mangold and Ferguson lands. In other words, Lessees argued then (and now argue) that the covenants do not belong to Surface Owners.
Surface Owners, as alleged successors to the covenants, sought in the trial court to enforce the covenants or, alternatively, to recover damages for their breach. Surface Owners alleged that the leases provided:
Surface Owners alleged that Lessees "breached the terms of their oil and gas leases in the following" ways:
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