Veterans Land Bd. v. Lesley

• Decision Date: 22 January 2009
• Docket Number: No. 11-07-00034-CV.,11-07-00034-CV.
• Citation: Veterans Land Bd. v. Lesley, 281 S.W.3d 602 (Tex. App. 2009)
• Parties: VETERANS LAND BOARD of the State of Texas et al, Appellants, v. Betty Yvon LESLEY et al, Appellees.
• Court: Texas Court of Appeals

281 S.W.3d 602

VETERANS LAND BOARD of the State of Texas et al, Appellants, v. Betty Yvon LESLEY et al, Appellees.

No. 11-07-00034-CV.

Court of Appeals of Texas, Eastland.

January 22, 2009.

Rehearing Overruled March 19, 2009.

Priscilla M. Hubenak, Asst. Office of Atty. Gen., Austin, for Appellants Veterans Land Board.

Michael J. Murray, Sharon Callaway, Crofts & Callaway, Brian C. Hamilton, Matthew D. Bradley, Pipkin, Oliver & Bradley, L.L.P., San Antonio, for Appellants Bluegreen Southwest One.

Darrell Haynes, Stephen E. Haynes, Haynes Law Firm, P.C., Brownwood, Byron L. Woolley, Simpson, Woolley & McConachie, L.L.P., D. Prichard Bevis, James P. McGowen, McGowen & Shaw, P.L.L.C., Steven R. Shaver, Friedman & Feiger, L.L.P., David C. McCue, Mary T. Sullivan, McCue-Pauley & Associates, P.C., Christopher A. Payne, Karen Keltz, Riddle & Williams, P.C., Dallas, Robert J. Glasgow, Glasgow, Isham & Glasgow, P.C., Stephenville, Lawrence L. Fleishman, Browning & Fleishman, P.C., Ennis, Katherine Woodruff, Law Office of Katherine Woodruff, Houston, Amy M. McLin, Law Office of Amy M. McLin, P.C., San Antonio, for Appellants Landowner.

Harold L. Hensley, Jr., Hinkle, Hensley, Shanor, Marton, L.L.P., Chris Aycock, Charles L. Tighe, Susan R. Richardson, David W. Lauritzen, Robert C. Bledsoe, Cotton, Bledsoe, Tighe & Dawson, Midland, for appellees.

Panel consists of WRIGHT, C.J.,

McCALL, J., and BOYD, S.J.^*

OPINION

TERRY McCALL, Justice.

Appellees own non-executive mineral interests in lands underlying the Mountain Lakes Development, a residential subdivision in Erath County, Texas. They brought this suit against the developer of the subdivision, the property owners' association for the development, and the lot owners in the subdivision. Appellees sought declaratory judgment on a number of issues, and they also alleged various claims for affirmative relief against appellants. This case involves two primary issues: (1) who owned the executive rights and (2) did the owner or owners of the executive rights breach a duty to the non-executives. On these issues, the trial court granted summary judgment in favor of appellees on their claims that the developer owned the executive rights, that it owed appellees a duty to lease the minerals, and that it breached its duty to lease. In this appeal, appellants challenge the trial court's order granting and denying summary judgment and order denying plea to the jurisdiction. We reverse the judgment of the trial court.

The Parties

Appellants are (1) Bluegreen Southwest One, L.P. (Bluegreen), the developer of the Mountain Lakes Development; (2) approximately 460 lot owners in the Mountain Lakes Development (Landowner Appellants); and (3) the Veterans Land Board of the State of Texas (VLB). The VLB purchased lots in the development and then sold them to veterans as part of a program that was designed to assist veterans in obtaining property with low interest loans. Appellees sued the VLB as a lot owner defendant.

Appellees are (1) Betty Yvon Lesley and her husband, Kenneth Lesley; (2) Kenneth Lesley and Perry Elliott, Independent Executors of the Estate of Bobby John Foster, Deceased;¹ (3) Richard H. Coffey, Sr.; (4) Singin' Hills Minerals, Ltd.; and (5) JPMorgan Chase Bank, N.A., as trustee of eighteen trusts. Some of the claims in this case are common to all appellees. In addition to these common claims, the Lesley Appellees (groups (1) and (2) above) brought claims for reformation of deeds and for breach of contract. We will refer to "appellees" when addressing the common claims. We will refer to the "Lesley Appellees" when addressing claims that are unique to them.

Introduction

The Mountain Lakes Development contains about 4,100 acres of land. The development is located on land that was, at one time, owned by Wyatt C. Hedrick and his wife, Mildred Sterling Hedrick. The Hedricks owned the surface estate and the mineral estate in the subject property. On November 6, 1952, the Hedricks executed a deed to H.S. Foster. Under the deed, "[the Hedricks] granted, sold and conveyed to [H.S. Foster] a full interest in the surface estate and an undivided one-half (½) interest in the oil, gas and other minerals, except that [H.S. Foster] shall have full, complete and sole right to execute oil, gas and mineral leases covering all the oil, gas and other minerals in the following described land."

H.S. Foster had two children, Betty Yvon Lesley and Bobby John Foster. In 1966, Betty Yvon Lesley and her husband, Kenneth Lesley, acquired from H.S. Foster the surface estate and one-half of the mineral estate in 174.35 acres of the subject property. When H.S. Foster died, Betty Yvon Lesley and Bobby John Foster inherited the entire surface estate and one-half mineral interest in 3,923.58 acres of the subject property.

In 1998, Bobby John Foster, Betty Yvon Lesley, and Kenneth Lesley sold the surface estate of the subject property to Bluff Dale Development Corporation for about $2,000,000. Bluff Dale intended to develop the property as a residential subdivision or to sell it to another residential developer. On February 17, 1998, Bobby John Foster and Betty Yvon Lesley, joined by her husband Kenneth Lesley, executed a deed to Bluff Dale covering 3,923.58 acres of the subject property. On September 30, 1998, Betty Yvon Lesley and Kenneth Lesley executed a deed to Bluff Dale covering an additional 174.35 acres of the subject property. Both deeds provided:

Grantors will be reserving unto themselves, their heirs, and assigns, one-fourth (1/4) of the oil, gas, sulphur and other minerals to which Grantors are now entitled to in all of the lands covered by this conveyance. It is understood and agreed, however, that Grantee, his heirs, successors and assigns, shall have full rights to execute all future oil, gas, sulphur and other mineral leases for such bonuses, such delay rentals and for such terms as Buyers may think proper, but Grantors shall not be required to execute any such leases, but shall be entitled to receive one-fourth (1/4) of all bonuses and delay rentals, whether the same be paid in cash, by overriding royalties, production payments or in any other manner.

By deeds dated September 25, 1998, and December 30, 1998, Bluff Dale conveyed its interests in the subject property to Properties of the Southwest, L.P., subject to "[a]ny prior reservations or conveyance[s] of oil, gas and other minerals, restrictions, covenants, conditions, rights-of-way and easements of record." On March 15, 1999, Properties of the Southwest changed its name to Bluegreen.

Bluegreen developed the property as the Mountain Lakes Development in a series of five sections. In connection with developing each section, Bluegreen filed and recorded declarations of covenants, conditions, and restrictions. The declarations contained the following use restriction, among others:

Section 3.12 Mineral Development. No commercial oil drilling, oil development operations, oil refining, quarrying or mining operation of any kind shall be permitted. No derrick or other structures designed for the use of boring for oil or natural gas shall be erected, maintained or permitted upon any Tract.

Section 9.02 of the declarations provided that "[t]his Declaration may be amended or changed, in whole or in part, at any time by the written agreement or signed ballot of two-thirds (2/3rds) of the Owners (including the Developer) entitled to vote."

Bluegreen sold home sites to about 1,700 purchasers. Although Bluegreen did not use identical deeds in connection with all the sales, one type of deed that Bluegreen commonly used provided as follows:

Reservation from conveyance: None.

Exceptions to Conveyance and Warranty:

1. Any and all restrictions, covenants, and easements, if any, relating to the hereinabove described property, but only to the extent they are still in effect, shown of record in Erath County, Texas, and to all zoning laws, regulations or ordinances of municipal and other governmental authorities, if any, but only to the extent they are still in effect, relating to the hereinabove described property.

2. Undivided one-half of all oil, gas and other minerals of every character in and under the herein described property reserved by Wyatt Hedrick, et ux, in instrument recorded in Volume 339, Page 172, Deed Records, Erath County, Texas.

3. Undivided one-fourth of all oil, gas and other minerals of every character in and under the herein described property reserved by Bobby John Foster, et al in instrument recorded in Volume 948, Page 639, Deed Records, Erath County, Texas.

Proceedings in Trial Court

On October 12, 2005, appellees sued Bluff Dale, Bluegreen, the Property Owners' Association of Mountain Lakes Ranch (POA), and about 1,700 individual lot owners. In their petition, appellees alleged, among other things, (1) that they owned undivided mineral interests in the subject property; (2) that, as a result of the transactions described above, Bluegreen had acquired the executive rights and had later transferred "all the executive rights to the lot owners of all minerals underlying each of said lots"; (3) that the defendants as their mineral co-tenants and as owners of the executive rights owed a duty of utmost good faith to them as non-executive mineral interest owners; and (4) that "[s]uch duty [was] fiduciary in nature and include[d] the duty to lease all of the minerals for exploration and development of oil and gas." Appellees alleged that all defendants had breached this fiduciary duty and, specifically, that Bluegreen and the POA had breached this duty by creating the restriction that prohibited mineral development. Appellees also alleged claims for breach of contract and sought a declaratory judgment on a number of issues, including declarations as to their rights as non-executive mineral interest owners and as to the defendants' duties as owners of the surface, the executive rights, and the remaining minerals.

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