Articles Posted in Texas Supreme Court

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A school district (District) obtained an in rem delinquent property tax judgment against an oil and gas lease that Respondent owned and operated. Respondent did not appeal, and the District foreclosed its judgment lien on the leasehold, taking ownership. The Railroad Commission ordered Respondent to plug a well on the lease. Respondent did not comply, and the Commission plugged the well and brought an enforcement action in court to recover the costs of the operation and the penalty. Respondent and the Commission settled. Respondent then sued the District, alleging in part that the District's actions had resulted in a taking of his property requiring compensation. The trial court dismissed Respondent's action for want of jurisdiction, but the court of appeals reversed and remanded with respect to the takings claim. The Supreme Court reversed and dismissed the case, holding that the trial court correctly dismissed Respondent's case, as Respondent did not assert on appeal that the District took his property without compensation. View "W. Hardin County Consol. Indep. Sch. Dist. v. Poole" on Justia Law

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This case involved the duties and standard of care of an oil and gas operator under an exculpatory clause in a joint operating agreement (JOA). Based on language in the exculpatory clause in the JOA, the trial court instructed the jury to find that to find a breach of the JOA the operator's conduct must have risen to the level of gross negligence or willful misconduct. The jury found the operator, Petitioner, breached his duties under the JOA to the working interest owners. The court of appeals affirmed, holding (1) the gross negligence and willful misconduct instruction should not have been included in the charge because the case centered around a breach of contract; but (2) there was legally sufficient evidence to support the jury's findings that Petitioner breached his duty as operator when measured against the elements of breach of contract. The Supreme Court reversed, holding (1) the exculpatory clause in the JOA established the standard for the claims against Petitioner; and (2) there was legally insufficient evidence that Petitioner was grossly negligent or acted with willful misconduct. View "Reeder v. Wood County Energy, LLC" on Justia Law

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This case arose when the owner of a gas-fired electric power generating plant sued the owner of the pipeline that supplied fuel to the plant for negligence in allowing interruptions in service and in delivering gas below contractual quality standards. The court held that Wolf Hollow could not assert its delivery and quality claims against Enterprise in an action for negligence, and though it could assert its quality claim against Enterprise through an assignment from El Paso, the damages it sought would be barred by the consequential damages waivers. Those waivers also precluded Wolf Hollow's recovery of plant damages from El Paso, but El Paso had not established that they precluded recovery of replacement-power damages. Because Wolf Hollow's replacement-power claim survived, the trial court's declaratory judgment was not moot. Accordingly, the judgment of the court of appeals was reversed, and the case was remanded to the court of appeals for further proceedings. View "El Paso Marketing L.P., et al. v. Wolf Hollow I, L.P." on Justia Law

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Plaintiff sued Shell for breach of contract, unjust enrichment, and fraud, based on claims that Shell underpaid royalty due under a mineral lease to plaintiff's grandmother. At issue was whether limitations barred a royalty owner's claims against the operator of the field. The court held that the fraudulent concealment doctrine did not apply to extend limitations as a matter of law when the royalty underpayments could have been discovered from readily accessible and publicly available information before the limitations period expired. When, as in this case, the information was publicly available and readily accessible to the royalty owner during the applicable time period, a royalty owner who failed to take action did not use reasonable diligence as a matter of law. Accordingly, because the parties did not dispute that the pertinent information was readily accessible and publicly available, plaintiff's claims were time-barred as a matter of law. View "Shell Oil Co., et al. v. Ross" on Justia Law

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This case involved two related oil and gas mineral lease disputes that were jointly tried. At issue was whether limitations barred the Marshalls' (respondents and lessors) fraud claim against BP America Production Co., et al. (the lessee and operator), and whether Vaquillas Ranch Co., Ltd., et al. (lessors) lost title by adverse possession after Wagner Oil Co. (successors-in-interest) succeeded to BP's interests, took over the operations, and produced and paid Vaquillas royalties for nearly twenty years. The court held that because the Marshalls' injury was not inherently undiscoverable and BP's fraudulent representations about its good faith efforts to develop the well could have been discovered with reasonable diligence before limitations expired, neither the discovery rule nor fraudulent concealment extended limitations. Accordingly, the Marshalls' fraud claims against BP were time-barred. The court further held that by paying a clearly labeled royalty to Vaquillas, Wagner sufficiently asserted its intent to oust Vaquillas to acquire the lease by adverse possession. View "BP America Prod. Co., et al. v. Marshall, et al." on Justia Law

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This appeal challenged a final order of the Public Utility Commission (PUC) in a true-up proceeding under Chapter 39 of the Utilities Code. AEP Texas Central Co. (AEP), a transmission and distribution utility, and CPL Retail Energy, L.P., its affiliated retail electric provider, initiated a proceeding under section 39.262 to finalize stranded costs and other true-up amounts and the state, several municipalities, and several other parties who were consumers of electricity or represent consumer interests (collectively, consumers), intervened in the proceeding. The issues before the court concern market value, net book value (NBV), and the capacity auction true-up. The court held that where, as here, the utility managed to sell its stake in a nuclear plant, the court saw no error in using the sale of assets method, which was, if anything, the preferred method for valuing generation assets. The court also held that it saw no error in PUC's approach where the interest rate AEP received on its stranded costs was grossed up. The court further held that section 39.262 unambiguously specified that the statutory capacity auction price, not some other blended price the PUC found more appropriate, must be used in calculating the capacity auction true-up amount. On remand, the PUC must recalculate the capacity auction true-up in a manner consistent with the court's opinion in State v. PUC, rather than relying on the proxy price it selected in the true-up proceeding. Accordingly, the court granted the petition for review, affirming in part and reversing in part.

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This case involved two related oil and gas mineral lease disputes that were jointly tried. One of the disputes was between petitioners, BP American Production Co., Atlantic Richfield Co., and Vastar Resources, Inc. (collectively, "BP"), the lessee and operator, and respondents, the Marshall family, the lessors. The other dispute was between BP's successors-in-interest, Wagner Oil Co. (collectively, "Wagner"), and another lessor, respondents Vaquillas Ranch Co. Ltd. ("Vaquillas"). At issue was whether limitations barred the Marshall family's fraud claim against BP and whether Vaquillas lost title by adverse possession after Wagner succeeded to BP's interests, took over the operations, and produced and paid Vaquillas royalties for nearly twenty years. The court held that, because the Marshall family injury was not inherently undiscoverable and BP's fraudulent representations about its good faith efforts to develop the well could have been discovered with reasonable diligence before limitations expired, neither the discovery rule nor fraudulent concealment extended limitations and therefore, the Marshall family's fraud claims against BP were time barred. The court also held that by paying a clearly labeled royalty to Vaquillas, Wagner sufficiently asserted its intent to oust Vaquillas to acquire the lease by adverse possession.

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This case returns from the Fifth Circuit to answer one of three certified questions. Appellee Barnes sought to enforce a Working Interest Unit Agreement (WIUA) and Joint Operating Agreement (JOA) for unpaid royalties as a third-party beneficiary or through privity of estate. Doris Barnes sued individually and as the executrix of the estate of her husband, who was an original signatory to a lease that was later assigned to an oil exploration company. The company created a joint venture to begin drilling on lands covered by Barnes’ lease; partner to this joint venture included Appellant Tawes. When the joint venture went bankrupt, Barnes settled her unpaid royalties with the venture. Tawes did not join in the settlement, which gives rise to Barnes’ current claim for the balance of the unpaid royalties. Arguing that because the Bankruptcy Court and Federal District Court concluded that Barnes was a third-party beneficiary to the JOA’s Royalty Provision, Barnes brought suit to enforce, and Tawes appealed. On certification from the Fifth Circuit, the Supreme Court concluded that Barnes had no right to enforce agreements that gave rise to this suit, finding that the original lease assignment to the exploration company did not extend to Tawes. Finding no theory of recovery, the Court did not address the remaining certified questions.