Gary and Theresa Poenisch Family Limited Partnership v. TMH Land Services, Inc. ( 2021 )

Fourth Court of Appeals
San Antonio, Texas
MEMORANDUM OPINION
No. 04-20-00300-CV
GARY AND THERESA POENISCH FAMILY LIMITED PARTNERSHIP,
Appellant
v.
TMH LAND SERVICES, INC.,
Appellee
From the 218th Judicial District Court, Karnes County, Texas
Trial Court No. 19-02-00030-CVK
Honorable Russell Wilson, Judge Presiding
Opinion by: Irene Rios, Justice
Sitting: Rebeca C. Martinez, Chief Justice
Irene Rios, Justice
Liza A. Rodriguez, Justice
Delivered and Filed: September 15, 2021
AFFIRMED
Appellant Gary and Theresa Poenisch Family Limited Partnership (“Poenisch”) appeals a
summary judgment rendered in favor of appellee TMH Land Services, Inc. (“TMH”). In this suit
to enforce a contract for the sale of an overriding royalty interest, the trial court determined the
contract did not contain a legal property description sufficient to satisfy the statute of frauds. On
appeal, Poenisch argues: (1) the email agreement between the parties was sufficient because it
described the real property with reasonable certainty; and (2) TMH failed to raise a material issue
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of fact on its affirmative defenses of anticipatory repudiation and failure to perform within a
reasonable time. We affirm the trial court’s judgment.
BACKGROUND
Poenisch and TMH, among others, jointly owned an overriding royalty interest in a mineral
lease (“the Wiatrek Lease”). At some point, the Wiatrek Lease became the subject of a lawsuit
(“the Wiatrek lawsuit”) that could have resulted in termination of the lease, thereby extinguishing
the overriding royalty interest partially owned by Poenisch and TMH. Another company, GulfTex
Energy IV, LP (“GulfTex”), was in a position to settle the Wiatrek lawsuit; however, GulfTex
would not settle the lawsuit unless it could buy down the overriding royalty interest in the Wiatrek
Lease.
Each of the overriding royalty interest owners, except Poenisch, agreed to GulfTex’s
proposal to reduce the overriding royalty interest. Poenisch informed Jonathan Floyd, the
spokesperson for the overriding royalty interest owners, it would agree to the GulfTex proposal if
it could acquire one of the other owner’s share of the overriding royalty interest. Because the
GulfTex proposal would reduce the overriding royalty interest, Poenisch sought to increase its
share of the interest by acquiring another owner’s share.
Trae Ellerbe, president of TMH, informed Floyd that TMH would be willing to sell its
share of the overriding royalty interest to Poenisch because TMH “want[ed] out of this deal all the
way around.” On December 21, 2017, Ellerbe sent an email to Floyd and Clinton Butler—the
attorney representing the overriding royalty interest owners in the GulfTex settlement—stating:
“Pursuant to my conversation with [Floyd], I will sell my retained ORR 1 in the Gulftex proposed
300+ acre unit for $20,000.”
1
Overriding royalty interest.
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Butler sent an email to Poenisch stating TMH would sell its share of the overriding royalty
interest for $20,000 and asked if Poenisch would agree to the deal. Poenisch’s counsel replied:
“We have a deal.” On February 5, 2018, Poenisch’s counsel sent an email to Butler stating he
“will draft up the Ellerbe assignment of ORRI and send your way for review.” Poenisch’s counsel
never sent the draft “Ellerbe assignment” and no further steps were taken to consummate the
transaction.
Nevertheless, Butler informed GulfTex that all the overriding royalty interest owners
agreed to GulfTex’s proposal to buy down the interest. GulfTex and the overriding royalty interest
owners, including Poenisch, executed an assignment memorializing the buydown and reduction of
the overriding royalty interest in the Wiatrek Lease (“the GulfTex Assignment”). TMH retained
its share of the overriding royalty interest in the GulfTex Assignment.
Sometime in 2018, the Wiatrek lawsuit settled and GulfTex began producing minerals
under the Wiatrek Lease. On December 4, 2018, Poenisch sent a letter to TMH seeking to enforce
the December 21, 2017 email chain as a binding contract and requesting TMH sell its share of the
overriding royalty interest for $20,000. When TMH refused to sell its share of the overriding
royalty interest for $20,000, Poenisch filed this lawsuit seeking specific performance.
In the trial court, Poenisch filed a motion for partial summary judgment 2 claiming the
parties had a valid and enforceable contract and sought specific performance of the December 21,
2017 email as well as additional damages from the breach. TMH filed a competing motion for
summary judgment claiming “there is no contract between [the parties]” and Poenisch’s claims are
barred by the statute of frauds. In the alternative, TMH argued summary judgment is inappropriate
because there are fact issues on whether Poenisch failed to perform within a reasonable time and
2
Poenisch did not seek a summary judgment on its claim for promissory estoppel.
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whether Poenisch’s failure to perform within a year implied an anticipatory repudiation of the
contract.
The trial court granted TMH’s motion for summary judgment because it determined the
December 21, 2017 email chain did not contain a legal property description sufficient to satisfy
the statute of frauds. This appeal followed. 3
STANDARD OF REVIEW
We review a trial court’s ruling on a summary judgment motion de novo. Tarr v.
Timberwood Park Owners Assoc., Inc., 556 S.W.3d 274, 278 (Tex. 2018). To prevail on a
traditional summary judgment motion, the movant must show that no genuine issue of material
fact exists and that it is entitled to judgment as a matter of law. TEX. R. CIV. P. 166a(c); Provident
Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215–16 (Tex. 2003). In reviewing a trial
court’s summary judgment ruling, we take as true all evidence favorable to the nonmovant,
indulging every reasonable inference and resolving any doubts in the nonmovant’s favor. Knott,
128 S.W.3d at 215.
STATUTE OF FRAUDS
The trial court granted summary judgment in favor of TMH because the parties’ contract
lacked a legal property description sufficient to satisfy the statute of frauds. The statute of frauds
requires contracts for the sale of real property to be in writing and signed by the person to be
charged. TEX. BUS. & COM. CODE ANN. § 26.01(a), (b)(4); see also TEX. PROP. CODE ANN.
§ 5.021. “An overriding royalty interest in an oil and gas lease is considered an interest in real
estate that falls within the statute of frauds.” Quigley v. Bennett, 227 S.W.3d 51, 54 (Tex. 2007).
To satisfy the statute of frauds, “a contract must furnish within itself, or by reference to some other
3
Poenisch non-suited its promissory estoppel claim without prejudice so the trial court’s order regarding the summary
judgments could become a final and appealable judgment.
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existing writing, the means or data by which the property to be conveyed may be identified with
reasonable certainty.” Long Trs. v. Griffin, 222 S.W.3d 412, 416 (Tex. 2006) (internal quotations
and alterations omitted). “No part of the agreement is more essential than the description of the
property to be conveyed.” Moudy v. Manning, 82 S.W.3d 726, 728 (Tex. App.—San
Antonio 2002, pet. denied). “[O]ne of the most essential elements of a contract for the conveyance
of . . . an overriding royalty interest is a description of the lease from which it comes; for it is the
lease which denotes the life and breadth of the estate to be assigned.” Piranha Partners v. Neuhoff,
596 S.W.3d 740, 742 n.2 (Tex. 2020). “Even if the record is clear that the parties to the contract
knew and understood what property was intended to be conveyed, the knowledge and intent of the
parties will not make the contract valid.” Anderson Energy Corp. v. Dominion Okla. Tex. Expl. &
Prod., Inc., 469 S.W.3d 280, 295 (Tex. App.—San Antonio 2015, no pet.). “If the contract does
not sufficiently describe the real property interest to be conveyed, the conveyance is void under
the [s]tatute of [f]rauds and will not support an action for specific performance or breach of
contract.” Id.“The sufficiency of a legal description in any instrument transferring a property interest is
a question of law . . . .” Id. “The Texas Supreme Court has acknowledged that Texas employs a
strict application of the statute of frauds for interests in land, but nonetheless allows for a liberal
construction of the words describing the land.” Carpenter v. Phelps, 391 S.W.3d 143, 148 (Tex.
App.—Houston [1st Dist.] 2011, no pet.) (citing Gates v. Asher, 280 S.W.2d 247, 248
(Tex. 1955)). “The property description must furnish enough information to locate the general
area as in identifying it by tract[,] survey[,] and county, as well as to determine the size, shape, and
boundaries of the property.” Anderson Energy Corp., 469 S.W.3d at 295 (internal quotations
omitted). Thus, a description of real property must be reasonably certain so that a party familiar
with the locality could identify the property to the exclusion of other property. Gaut v. Daniel,
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293 S.W.3d 764, 767 (Tex. App.—San Antonio 2009, pet. denied). “When the language in the
contract furnishes a ‘key or nucleus’ description of the property, extrinsic evidence may then be
used merely as an aid to identify the property with reasonable certainty from the data contained in
the contract, not to supply a missing description.” Anderson Energy Corp., 469 S.W.3d at 295–
96. Under this nucleus description theory, a property description may identify the property “with
reasonable certainty when: (1) the contract contains a ‘statement of ownership’ such as ‘my
property,’ ‘my land,’ or ‘owned by me’; and (2) it is shown by extrinsic evidence that the party to
be charged owns only one tract of land [, or only one interest in real property,] fitting the property
description in the contract.” Moudy, 82 S.W.3d at 728 (quoting Pickett v. Bishop, 223 S.W.2d
222, 223 (Tex. 1949)).
However, “[e]xtrinsic evidence may be used ‘only for the purpose of identifying the
property with reasonable certainty from the data’ contained in the contract, ‘not for the purpose of
supplying the location or description of the property.’” Gaut, 293 S.W.3d at 767 (alterations
omitted) (quoting Pick v. Bartel, 659 S.W.2d 636, 637 (Tex. 1983)). This court has previously
held:
The certainty of the contract may be aided by parol only with certain limitations.
The essential elements may never be supplied by parol. The details which
merely explain or clarify the essential terms appearing in the instrument may
ordinarily be shown by parol. But the parol must not constitute the framework or
skeleton of the agreement. That must be contained in the writing. Thus, resort to
extrinsic evidence, where proper at all, is not for the purpose of supplying the
location or description of the land, but only for the purpose of identifying it with
reasonable certainty from the data in the [contract].
Gaut, 293 S.W.3d at 767 (emphasis in original) (quoting Wilson v. Fisher, 188 S.W.2d 150, 152
(Tex. 1945)).
Here, the only description of the property in the proffered contract is the December 21,
2017 email stating: “I will sell my retained ORR in the Gulftex proposed 300+ acre unit for
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$20,000.” 4 Poenisch argues the property can be identified with reasonable certainty because the
description contains a statement of ownership, and statements in Ellerbe’s deposition show that
TMH owned only one overriding royalty interest. We disagree.
The December 21, 2017 email does not contain the means or data by which the property
can be identified nor does it contain a “key or nucleus” description of the property. Based on the
description, a person familiar with the locality would not be able to determine what percentage of
the overriding royalty interest is being conveyed; the general area of the property covered by the
mineral lease; or the size, shape, or boundary of the property covered by the mineral lease. The
descriptive language used in this email is vitally lacking in definiteness. See Matney v. Odom,
210 S.W.2d 980, 982 (Tex. 1948) (holding a description that contained survey, county, and size of
the property lacked in definiteness because it did not refer to the shape or boundaries of the
property). Poenisch argues all these descriptive terms can be determined with extrinsic evidence.
However, there must be a “key or nucleus” description of the property before extrinsic evidence
can be introduced to identify the property with reasonable certainty. See Anderson Energy Corp.,
469 S.W.3d at 295–96. Moreover, extrinsic evidence may be used only for the purpose of
identifying the property with reasonable certainty from the data contained in the contract, not for
the purpose of supplying the location or description of the property. Gaut, 293 S.W.3d at 767. As
such, Poenisch’s reliance on extrinsic evidence to supply the location or description of the property
burdened by the Wiatrek Lease is improper and does not satisfy the statute of frauds.
4
Poenisch also claims two other emails where Butler stated TMH was willing to sell its ORRI constitute statements
of ownership. However, those emails are less descriptive than the December 21, 2017 email and Butler cannot make
a statement of ownership for property owned by TMH. See Cavazos v. Cavazos, 246 S.W.3d 175, 179 (Tex. App.—
San Antonio 2007, pet. denied) (indicating a statement of ownership cannot be made by individual who does not have
authority to sell the property at issue).
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In the alternative, Poenisch argues the December 21, 2017 email refers to the GulfTex
Assignment—and the letter agreement preceding the GulfTex Assignment—which each contain a
sufficient description of the property. However, a close reading of the email shows that Poenisch’s
argument is without merit. The December 21, 2017 email refers to “the GulfTex proposed 300+
acre unit.” We cannot say the reference to a proposed GulfTex 300+ acre unit is a reference to the
GulfTex Assignment or letter agreement. In the email, TMH did not refer to the GulfTex
Assignment or letter agreement. Additionally, the GulfTex Assignment and letter agreement
expressly state they only “cover[] 177.98 acres of land.” While it is unclear what “300+ acre unit”
Ellerbe was referring to in the email, it is clear this is not a sufficient reference to the 177.98-acre
GulfTex Assignment or letter agreement. See Davis v. Mueller, 528 S.W.3d 97, 102 (Tex. 2017)
(“[A] reference to an unidentified portion of a larger, identifiable tract is not sufficient to satisfy
the [s]tatute of [f]rauds.”); see also Gates, 280 S.W.2d at 248 (holding Texas employs a strict
application of the statute of frauds for interests in real property).
We hold the contract here contains an inadequate property description and the statute of
frauds precludes Poenisch’s claims as a matter of law. Accordingly, Poenisch’s first issue is
overruled.
AFFIRMATIVE DEFENSES
In its second issue, Poenisch claims TMH failed to raise issues of material fact on its
affirmative defenses of anticipatory repudiation and failure to perform within a reasonable time.
Having determined the statute of frauds bars Poenisch’s claims, we need not address Poenisch’s
second issue.
CONCLUSION
The trial court’s judgment is affirmed.
Irene Rios, Justice
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