In re Swepi, L.P.

• Decision Date: 29 August 2002
• Docket Number: No. 01-0353.,01-0353.
• Citation: 85 S.W.3d 800
• Parties: In re SWEPI, L.P., Kinder Morgan CO2 Company, L.P., Shell Western E & P, Inc., and Shell CO2 Company, Ltd., Relators.
• Court: Texas Supreme Court

Page 800

85 S.W.3d 800

In re SWEPI, L.P., Kinder Morgan CO2 Company, L.P., Shell Western E & P, Inc., and Shell CO2 Company, Ltd., Relators.

No. 01-0353.

Supreme Court of Texas.

Argued February 6, 2002.

Decided August 29, 2002.

Rehearing Denied October 24, 2002.

Donovan Campbell, Jr., Rader Campbell Fisher & Pyke, Dallas, Shannon H. Ratliff, Akin Gump Strauss Hauer & Feld, Austin, Gary J. Cruciani, McKool Smith, Dallas, Michael J. Whitten, Griffin Whitten Jones & Reib, Denton, Richard Kelley, McGinnis, Lochridge & Kilgore, Austin, Robert Bryan Perry, J. David Hartnett, Will Ford Hartnett, James J. Hartnett, Jr., The Hartnett Law Firm, Dallas, Marc O. Knisely, McGinnis Lochridge & Kilgore, Frank N. Ikard, Ikard & Golden, Austin, for Respondent.

Justice RODRIGUEZ delivered the opinion of the Court, in which Chief Justice PHILLIPS, Justice HECHT, Justice ENOCH, Justice OWEN, Justice BAKER, Justice HANKINSON, and Justice JEFFERSON join.

Section 5B of the Probate Code authorizes a statutory probate court to transfer to itself from a district court a cause of action "appertaining to or incident to an estate pending in the statutory probate court." TEX. PROB.CODE § 5B. The issue in this mandamus proceeding is whether a suit concerning royalty payments on an overriding royalty interest owned by a partnership in which a decedent and, subsequently, her estate were former partners is appertaining to or incident to the estate such that a statutory probate court may exercise its section 5B transfer jurisdiction. In this case, the statutory probate court did just that, and the plaintiffs in the transferred case sought mandamus relief. After granting a stay and hearing oral argument, the court of appeals denied mandamus relief in an unpublished memorandum opinion. We conclude that the transferred suit is not appertaining to or incident to the pending estate and that Relators do not have an adequate appellate remedy. Accordingly, we conditionally grant the writ and direct the statutory probate court to vacate its order transferring the suit under section 5B.

I.

Margaret Bridwell Bowdle died in Wichita County, Texas, in 1976, and her will was probated there in 1977. At her death, she was a general partner in and owned an undivided one-fourth interest in Bridwell Oil Company, a partnership between her and J.S. Bridwell, her father, who owned a three-fourths partnership interest. Bridwell Oil had at one time owned certain mineral leases in the McElmo Dome area of Colorado; the leases had been assigned from Gerald Bailey. In 1975, before Margaret Bowdle's death, Bridwell Oil assigned these leasehold interests to Shell Oil, reserving a 6.25% overriding royalty interest. Since then, Bridwell Oil has owned those overriding royalty interests, which will he referred to as the Shell royalty interests.

In her will, Margaret Bowdle directed the executors and trustees of her estate to establish three trusts, one for each of her children, Bonnie Lynne Bowdle Whiteis, Alison Gale Bowdle, and Brian Lee Bowdle (now deceased). Each trust was to receive an undivided one-third share of all that remained of Margaret Bowdle's property, including her partnership interest in Bridwell Oil, after expenses and specific bequests. All three trusts have now terminated under their own terms, with the trust created for Margaret Bowdle's deceased son Brian having been distributed to his daughter Alicia L. Bowdle under the terms of the will. Thus, Margaret Bowdie's partnership interest in Bridwell Oil has passed to her descendants. After Margaret Bowdle's death, her estate ("the Estate") was a general partner in Bridwell Oil for a period of time.¹ The current partners of Bridwell Oil include seven trusts created under the will of J.S. Bridwell, Margaret Bowdle's daughters Bonnie Lynn Whiteis and Allison Gale Bowdle, and the Alicia L. Bowdle Trust.

When she died, Margaret Bowdle also separately owned in her own name certain other mineral interests in the McElmo Dome area of Colorado. After her death, the executors and trustees of her estate assigned these separate mineral interests to Mobil, reserving a 6.25% overriding royalty interest. These overriding royalty interests, which will be referred to as the Mobil royalty interests, passed through her estate and into the three trusts established for her children in her will. When the trusts later terminated under the terms of the will, the Mobil royalty interests were distributed to the beneficiaries, Bonnie Lynne Whiteis, Alison Gale Bowdle, and Alicia Bowdle. Alicia Bowdle transferred her interests into the Alicia L. Bowdle Trust.

In 1982, the Colorado Oil and Gas Conservation Commission approved Shell and Mobil's proposal to unitize various tracts in and around the McElmo Dome area, subject to approval by eighty percent of the interest owners. The McElmo Dome Unit Agreement was ratified by the required percentage of interest owners, including Bridwell Oil, and production of carbon dioxide began in 1983. The project included constructing a 500-mile pipeline from Colorado to west Texas, so that carbon dioxide produced in Colorado could be transported to Texas and used in oil recovery operations there. Shell Oil Company was designated as the operator of the McElmo Dome Unit, and was subsequently succeeded by SWEPT (doing business as Shell Western E & P and formerly known as Shell Western E & P, Inc.) and Shell CO2 Company, Limited (now Kinder Morgan CO2 Company, L.P.). For ease of reference, we refer to these various entities as "Shell."

In the late 1990s, several overriding royalty interest owners, including Bailey and Bridwell Oil, began questioning whether Shell and Mobil were properly calculating royalties on carbon dioxide produced from the McElmo Dome unit. They believed that Shell's and Mobil's calculations were inconsistent with a 1983 brochure proposing the unitization, and they contended that they relied on the brochure in voting to ratify the project. Because of the dispute over royalty calculations, Bailey and Bridwell Oil sued Shell in federal court in the Northern District of Texas on March 11, 1997. They claimed that Shell had underpaid them on their royalties and had filed false federal tax-related documents (Form 1099s) reflecting their royalty income. The federal court granted Shell's motion for partial summary judgment on the federal tax claim and dismissed it with prejudice. The court then declined to exercise supplemental jurisdiction over the remaining state law claims and dismissed them without prejudice. Bailey v. Shell W. E & P, Inc., No. CA-3-97-CV-0518-R, 1998 WL 185520 (N.D.Tex. April.14, 1998), aff'd, 170 F.3d 184 (5th Cir.1999).

On June 17, 1998, Shell filed a declaratory judgment action in Harris County district court against Bailey and Bridwell Oil ("the Bailey suit"). Shell sought a declaration that it had at all times properly paid royalties to Bailey and Bridwell Oil for carbon dioxide produced from the McElmo Dome Unit. Bailey and Bridwell Oil asserted numerous counterclaims against Shell for the underpayment of royalties. The parties to the Bailey suit include Bailey, Bridwell Oil, and Shell. The Bailey suit concerns only the Shell royalty interests held by Bridwell Oil, not the Mobil royalty interests.

On December 22, 1999, Gary Shores, Frank Gibson, and John Barfield, co-trustees of the Alicia L. Bowdle Trust, Bonnie Lynn Whiteis, and others filed a class-action lawsuit in Denton County statutory probate court. That suit, which will be referred to as the Shores class action, is a nationwide class action filed on behalf of all nongovernmental owners of overriding royalty interests from August 24, 1982 to the present in any mineral lease that became unitized in the McElmo Dome Unit, and concerns the alleged underpayment of royalties for carbon dioxide produced from the McElmo Dome Unit. The defendants in the Shores class action include various Shell defendants, Mobil defendants, and Cortez Pipeline, the owner of the gas pipeline. The Denton County probate court has certified the class. The plaintiffs' petition in the Shores class action alleges that venue is mandatory in Denton County because the action concerns trusts, including a charitable trust (the Alicia L. Bowdle Trust) and the situs of administration of the Bowdle Trust is maintained in Denton County. See TEX. TRUST CODE § 115.002(a), (c). Shell filed a motion to transfer venue and a plea to the jurisdiction, which the probate court overruled. These issues, as well as the probate court's class certification order, are not before us in this proceeding.

After the Shores class action was filed, Bonnie Lynn Whiteis and Alicia Bowdle filed an application with the Wichita County Court at Law Number 2 seeking an appointment of an administrator for Margaret Bowdle's estate. The application sought to appoint Gary Shores, a named plaintiff in the Shores class action and the general manager of Bridwell Oil, as administrator of the Estate. The application further asserted that there was a "continued necessity for the administration of the Estate" because the Estate "owned" an unspecified cause of action and there were "lawsuits pending [the Bailey and Shores actions] that are appertaining to and incident to the Estate." The Wichita County court at law appointed Gary Shores as administrator on November 16, 2000. That same day, Shores filed a section 8(c)(2) motion under the Texas Probate Code, which permits probate proceedings to be transferred if it is in the best interests of the estate. Shores's motion explained to the Wichita County court at law that he "desire[d] to transfer the administration of the Estate to the nearest statutory probate court (which happens to be that in Denton County)" so that the Denton County probate court could exercise its jurisdiction under section 5B of the Probate Code. According to Shores's motion, the transfer would allow the Denton County probate court to transfer to itself...