Luecke v. Wallace, 03-96-00436-CV

Citation951 S.W.2d 267
Decision Date28 August 1997
Docket NumberNo. 03-96-00436-CV,03-96-00436-CV
PartiesJimmie LUECKE and Tex-Lee Drilling & Development Company, Inc., Appellants, v. Carolyn Kay WALLACE, Appellee.
CourtTexas Court of Appeals

Charles E. Hampton, Charles B. Lord, Austin, for Appellants.

Harlan Hentges, McElroy & Sullivan, L.L.P., Austin, for Appellee.

Before POWERS, JONES and KIDD, JJ.

KIDD, Justice.

Appellants Jimmie Luecke and Tex-Lee Drilling & Development Company, Inc. challenge a trial-court judgment declaring that Carolyn Kay Wallace, appellee, has an interest in the oil and gas royalties and bonuses to a certain 303.055-acre tract of land (the "303-acre tract") owned by Luecke. We will affirm the trial court's judgment.

THE CONTROVERSY

In 1984, Carolyn Wallace (formerly Durrenberger) and John Durrenberger were divorced. As part of their property settlement agreement, Wallace executed a deed (the "1984 deed") conveying her interest in a 303-acre tract of land to Durrenberger. In this deed, however, Wallace reserved (1) an "undivided one-half ( 1/2) non-participating interest in any and all oil, gas and mineral royalties reserved by" Durrenberger, his heirs, and assigns; and (2) "an undivided one-half interest in any bonus money exceeding $50.00 per acre received by" Durrenberger, his heirs, and assigns. This reservation forms the basis of this dispute.

In 1988, Durrenberger conveyed his interest in the 303 acres to appellant Jimmie Luecke. The deed from Durrenberger to Luecke (the "1988 deed") was expressly made subject to Wallace's reservation.

Early in 1992, Luecke negotiated an agreement to lease the 303-acre tract to Union Pacific Resources Company (Union Pacific). Originally, Luecke proposed to lease the 303 acres directly to Union Pacific in exchange for a 1/5th royalty and a $150 per acre bonus. In performing a title search, however, Union Pacific discovered Wallace's interest and, in a letter dated April 28, 1992, informed Luecke that, with respect to Wallace's interest, he must provide Union Pacific with "evidence of payment of 1/2 of excess bonus money above $50.00 per acre and a Ratification and Rental Division Order setting forth the interest division."

Two days after receiving this letter, Luecke and Union Pacific closed the lease agreement; however, at Luecke's request, the structure of the transaction was changed. First, Luecke leased the 303-acre tract to appellant Tex-Lee Drilling & Development Company (Tex-Lee) for a 1/8th royalty and "less than $50.00 per acre" bonus. 1 Luecke was the president and sole owner of Tex-Lee. Tex-Lee then sold its lease to Union Pacific for the $150.00 per acre bonus and an overriding 1/5th royalty. 2 According to a representative of Union Pacific, at the closing of the lease agreement, Luecke orally represented that he had contacted Wallace and she was "on board" with the lease of the 303 acres.

Wallace was not, however, "on board" with Luecke's lease. Indeed, according to Wallace, at the time of the closing, she had not been contacted about the lease. Only after the closing did Luecke send representatives to contact Wallace. Initially, Luecke attempted to purchase Wallace's interest in the 303-acre tract; then, when Wallace refused to sell, he unsuccessfully tried to get Wallace to sign a stipulation of her interest in the 303 acres.

On the day after the closing, Union Pacific paid Tex-Lee a $150 per acre bonus for the 303-acre tract. 3 Five days later, Tex-Lee paid Luecke this same amount. Luecke did not, however, pay or attempt to pay Wallace anything.

Wallace brought this lawsuit for declaratory judgment of the parties' rights and duties and for Luecke's breach of duty to Wallace. Wallace alleged that, in the deed by which she transferred the 303 acres to Durrenberger, she reserved (1) a 1/2 nonparticipating royalty interest and (2) 1/2 of all bonuses in excess of $50. She contends Luecke knew of this reservation and intentionally structured the lease to avoid paying her the royalties and bonus payments she was due. Further, Wallace alleged that Luecke, as owner of the executive rights to the 303-acre tract, owed her a duty of "utmost good faith and fair dealing." 4 She argues that Luecke breached this duty when he leased the tract to Tex-Lee for a bonus and royalty that were below market value.

The trial court granted Wallace's two motions for partial summary judgment. In the first partial summary judgment, the trial court declared that "Wallace is a non-participating royalty interest owner in the [303-acre] tract...." In the second partial summary judgment, the court found as a matter The court then held a trial on the merits to determine Wallace's damages and whether Wallace was entitled to receive exemplary damages. After the trial, the court entered its final judgment, awarding Wallace $15,153 in actual damages, $6,647 in prejudgment interest, $25,000 in exemplary damages, and a total of $107,500 in attorney's fees. 5

of law that: (1) Luecke held Wallace's executive rights in the 303-acre tract when he executed the lease to Tex-Lee; (2) Luecke owed Wallace "a duty to obtain for her every benefit ... Luecke obtained for himself or his wholly owned and controlled Corporation, Tex-Lee"; (3) Wallace was entitled to "her share of the additional royalty ... over $50.00 per acre received by" Luecke and Tex-Lee; and (4) Wallace was entitled to reasonable attorney's fees.

Luecke and Tex-Lee appeal, complaining that: (1) the trial court misconstrued the reservation in the 1984 deed and, therefore, erred in granting Wallace's motions for partial summary judgment; (2) the trial court denied Luecke and Tex-Lee due process of law by filing findings of fact concerning issues of liability following the bench trial when the court had already determined liability as a matter of law by partial summary judgment; (3) the trial court erred by awarding exemplary damages when there was no evidence to support an award of exemplary damages. Luecke and Tex-Lee also challenge the factual and legal sufficiency of the evidence supporting the amount of punitive damages awarded Wallace. Finally they contend that the trial court's award of attorney's fees is excessive.

DISCUSSION
Summary Judgment

In their first two points of error, Luecke and Tex-Lee challenge the trial court's partial summary judgments. We review the trial court's summary judgment de novo. In performing our review we must determine whether Wallace met her burden of showing that no genuine issue of material fact exists and that she is entitled to judgment as a matter of law. We will accept as true all evidence favorable to Luecke and Tex-Lee, and indulge every reasonable inference and resolve every doubt in their favor. See Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548-49 (Tex.1985). The partial summary judgments construing Wallace's reservation in the 1984 deed are based on uncontroverted facts and present only questions of law. We must, therefore, determine whether the trial court correctly concluded that the reservation is unambiguous and reached a proper legal conclusion as to its content. See Myers v. Gulf Coast Minerals Management Corp., 361 S.W.2d 193, 196 (Tex.1962); Asset Restructuring Fund, L.P. v. Liberty Nat'l Bank, 886 S.W.2d 548, 550 (Tex.App.--Austin 1994, writ denied).

Reservation Unambiguous and Does Not Violate Rule Against Perpetuities.

Luecke and Tex-Lee contend the trial court erred in granting Wallace's partial summary judgments because her reservation in the 1984 deed is either ambiguous or, in the alternative, void because it violates the rule against perpetuities. In making their arguments, Luecke and Tex-Lee focus on what they call "awkward language" in the reservation.

The language of the reservation reads as follows:

There is hereby reserved unto Grantor [Wallace], her heirs and assigns, an undivided one-half ( 1/2) non-participating interest in any and all oil, gas and mineral royalties reserved by Grantee [Durrenberger], his heirs and assigns at any time in the future and which may be payable to Grantee, his heirs and assigns under any future lease of the property, and there is hereby reserved unto Grantor her heirs and assigns an undivided one-half interest in any bonus money exceeding $50.00 per (Emphasis added.)

acre received by Grantee, his heirs and assigns for the lease of the property.

Specifically, Luecke and Tex-Lee contend that the clause emphasized above renders the reservation ambiguous or void. First, they argue that this language makes Wallace's interest in the 303 acres contingent upon Durrenberger reserving some interest in the tract when he conveyed it to Luecke. Because Durrenberger made no such reservation when he sold the 303 acres to Luecke, they contend that Wallace has no further interest in the property. Wallace's interest is not, however, contingent upon a reservation by Durrenberger. The reservation in the 1984 deed states that Wallace has a royalty interest in any royalties reserved by Durrenberger, his heirs and assigns. The word "assigns" includes those individuals who take property "either immediately or remotely from or under the assignor, whether by conveyance, devise, descent, or act of law." Black's Law Dictionary 119 (6th ed.1990) (emphasis added). Because Durrenberger conveyed the 303-acre tract to Luecke, Luecke is an assign of Durrenberger. Id; see also Barstow v. State, 742 S.W.2d 495, 499-500 (Tex.App.--Austin 1987, writ denied) (construing the word "assigns" to include those who take real property by grant); Neeley v. Intercity Management Corp., 623 S.W.2d 942, 951 (Tex.App.--Houston [1st Dist.] 1981, no writ) ("The word 'assign' is tantamount to the word 'grant', which is an operative word of conveyance."). Although Tex-Lee did not acquire its interest in the 303-acre tract directly from Durrenberger, it did acquire it through Luecke and therefore it is also an assign of Durrenberger. Id...

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