Sustainable Tex. Oyster Res. Mgmt., L.L.C. v. Hannah Reef, Inc.

• Decision Date: 22 December 2020
• Docket Number: NO. 01-18-00088-CV,01-18-00088-CV
• Citation: 623 S.W.3d 851
• Parties: SUSTAINABLE TEXAS OYSTER RESOURCE MANAGEMENT, L.L.C., Appellant v. HANNAH REEF, INC., Shrimps R Us, Inc., Ivo Slabic, and Michael Ivic, Appellees
• Court: Texas Court of Appeals

623 S.W.3d 851

SUSTAINABLE TEXAS OYSTER RESOURCE MANAGEMENT, L.L.C., Appellant

v.HANNAH REEF, INC., Shrimps R Us, Inc., Ivo Slabic, and Michael Ivic, Appellees

NO. 01-18-00088-CV

Court of Appeals of Texas, Houston (1st Dist.).

Opinion issued December 22, 2020

Rehearing Denied March 23, 2021

James B. GalBraith, Anthony P. Brown, McLeod, Alexander, Powel, & Apffel, P.C., 802 Rosenberg, P.O. Box 629, Galveston, Texas 77553, Richard G. Baker, Baker & Zbranek, P. C., P.O. Box 10066 / 1935 Trinity, Liberty, Texas 77575, for Appellant.

George W. Vie III, Feldman & Feldman, P.C., 3355 West Alabama St., Ste. 1220, Houston, Texas 77098, for Appellees.

Panel consists of Chief Justice Radack and Justices Hightower and Adams.

Richard Hightower, Justice

The dispute in this case arose after the Chambers–Liberty Counties Navigation District ("Navigation District") issued a Coastal Surface Lease to Sustainable Texas Oyster Resource Management, L.L.C. ("STORM") in 2014, authorizing STORM to cultivate and harvest oysters on 23,000 acres of submerged land in Galveston and Trinity Bays. The lease purported to give STORM the exclusive right to engage in oyster-production activities on the submerged land and authorized STORM to protect the submerged land from trespassers in the same manner as a freeholder of the land.

At the time the Navigation District issued the Coastal Surface Lease to STORM, parts of the 23,000 acres covered by the lease were already subject to six oyster-production permits, known as "certificates of location," and accompanying oyster leases issued by the Texas Parks and Wildlife Department ("TPWD") to oystermen (1) Hannah Reef, Inc., (2) Shrimps R Us, Inc. (3) Ivo Slabic, and (4) Michael Ivic ("the Oystermen"). The certificates of location and accompanying oyster leases authorized the Oystermen to plant and construct private oyster beds on the submerged land identified in each certificate of location. The Oystermen also possessed permits and licenses issued by the TPWD, authorizing the Oystermen to harvest oysters from naturally-occurring oyster reefs located within public fishing grounds, which also lie within the boundaries of STORM's lease.

After STORM began to treat the Oystermen as trespassers, litigation ensued between the parties regarding which had the right to cultivate and harvest oysters in the areas of Galveston and Trinity Bays covered by STORM's Coastal Surface Lease. At the heart of the dispute was whether the Navigation District had the legal authority to grant STORM the Coastal Surface Lease, purporting to give STORM the exclusive right to engage in oyster-production activities on the submerged land covered by the lease, or whether the TPWD had the exclusive authority to regulate oyster-production activities, including the exclusive authority to grant the right to cultivate and harvest oysters on land submerged beneath Texas waters. Stephen Hillman, who claimed to have a TPWD license to fish and harvest oysters in the public waters that lie within the boundaries of the Coastal Surface Lease, later joined the suit, aligning with the Oystermen.

In a pre-trial partial summary-judgment order, the trial court rendered declaratory relief requested by the Oystermen, declaring that (1) the TPWD had the exclusive authority to regulate the cultivation and harvesting of oysters; (2) the Navigation District did not have the legal authority to issue the Coastal Surface Lease to STORM; and (3) the Coastal Surface Lease was void and unenforceable against the Oystermen's rights. The trial court also declared that the Oystermen were not trespassers as a matter of law and ordered STORM to take nothing on its counterclaims.

The trial court determined that the Oystermen were entitled to recover attorney's fees from STORM under the Declaratory Judgments Act. See TEX. CIV. PRAC. & REM. CODE § 37.009 (providing that "court may award costs and reasonable and necessary attorney's fees as are equitable and just" in declaratory-judgment proceeding). The issue of reasonable and necessary attorney's fees was tried to a jury, and the trial court rendered judgment on the jury's verdict, awarding the Oystermen $417,000 in attorney's fees for the trial-court proceedings and additional sums totaling $75,000 for conditional appellate attorney's fees. The final judgment also ordered that the Oystermen take nothing on their claim for trespass to try title, and it incorporated a nonsuit without prejudice filed by Hillman.

Among its challenges on appeal, STORM contends that trial court erred in declaring that the Navigation District had no legal authority to issue the Coastal Surface Lease to STORM, and it asserts that the Oystermen improperly prosecuted their case under the Declaratory Judgments Act. STORM also challenges the trial court's take-nothing summary judgment on its trespass and related counterclaims and disputes the award of attorney's fees on several grounds, including failure to segregate the fees. STORM further contends that the trial court erred by permitting Hillman to nonsuit his claims after trial. Finally, STORM requests that we reconsider a venue ruling made in an earlier interlocutory appeal in this case.

We agree with STORM that, because the Oystermen did not segregate their attorney's fees between claims on which attorney's fees may be recovered and those for which they may not, the portion of the judgment awarding attorney's fees should be reversed, and the attorney's fees issue remanded to the trial court for a new trial. We reject STORM's other arguments and affirm the remainder of the trial court's judgment.

Background

A. Historical Facts

The Texas Legislature created the Chambers–Liberty Counties Navigation District in 1944. Chambers-Liberty Ctys. Navigation Dist. v. State , 575 S.W.3d 339, 342 (Tex. 2019). The Navigation District operated as a navigation district authorized by Article XVI, Section 59 of the Texas Constitution and Chapter 62 of the Texas Water Code. Id. In 1974, the Navigation District converted into a "self-liquidating district," operating under Chapter 63 of the Water Code. See TEX. WATER CODE §§ 63.021(a), 63.022.

In 1957 and 1967, the State of Texas conveyed land submerged by the waters in and around Galveston Bay to the Navigation District. The submerged land, located in Chambers and Galveston Counties, was conveyed by a series of land patents. The conveyances were authorized by Texas Revised Civil Statutes article 8225 (1925), which provided, in part, as follows:

Any Navigation District heretofore or hereafter organized under this title or any General Law under which said subdivision may be created shall have the right to purchase from the State of Texas any lands and flats belonging to said State, covered or partly covered by the waters of any of the bays or other arms of the sea to be used by said District for the purposes authorized by law with the right to dredge out or to fill in and reclaim said lands or otherwise improve the same....

Chambers-Liberty Ctys. Navigation Dist. , 575 S.W.3d at 342 (setting out text of article 8225).

From 1975 to 1989, the TPWD issued six certificates of location and accompanying oyster leases to private parties, permitting those parties to establish private oyster beds on the submerged land described in the certificates. These six tracts of submerged land lie within the land transferred to the Navigation District by the State of Texas in 1957 and 1967. Over time, the six certificates of location and oyster leases was transferred to different private parties. By 2014, the six certificates of location and oyster leases were held by the four Oystermen. Hannah Reef and Michael Ivic each held two certificates of location. The submerged land included in those four certificates of location was in Galveston County. Shrimps R Us and Ivo Slabic each held one certificate of location. The submerged land covered by those two certificates was in Chambers County.

On April 14, 2014, the Navigation District entered into a Coastal Surface Lease with STORM. The Coastal Surface Lease granted STORM the exclusive right, for a period of 30 years, to cultivate and harvest oysters on approximately 23,000 acres of submerged land in Galveston and Trinity Bays. The Coastal Surface Lease stated that ownership of the submerged land was conveyed to the Navigation District by the State of Texas by patents in 1957 and 1967. The tracts of submerged land subject to the six certificates of location and oyster leases held by the Oystermen was within the 23,000 acres covered by the Coastal Surface Lease.

On August 5, 2014, STORM sent a letter to the Oystermen entitled "No Trespass Notice" and "No Unauthorized Oyster Activities Notice." The letter notified the Oystermen as follows:

This letter is written notice to you that [STORM] is the Lessee of the land described in the referenced Coastal Surface Lease from [the Navigation District]. [The Navigation District] obtained fee simple title to the land from the State of Texas by ... Letters Patent. The land is located along the shore of Trinity-Galveston-West-East Bay and is generally submerged land.

....

[The Navigation District] acquired fee simple title to the land in 1957 & 1967. Pursuant to the Coastal Surface Lease, STORM has the superior right to use and possession of the land under [the Navigation District's] fee simple title for oyster purposes....

The right to plant, cultivate and grow oysters on this land is inherent in [the Navigation District's] fee title to the land; a right now leased to STORM. It has come to STORM's attention that you might be engaged in or about to engage in oyster activities on the land that conflict with STORM's property rights and the Coastal Surface Lease. Be advised that under the Coastal Surface Lease, you may not engage in oyster activities upon the land without STORM's consent. Likewise, under the Texas Parks & Wildlife Code, you may not catch by any means or method or possess an oyster on this land without

...