Gloria Garcia v. Genesis Crude Oil L.P. ( 2015 )

ACCEPTED
13-14-00727-CV
THIRTEENTH COURT OF APPEALS
CORPUS CHRISTI, TEXAS
2/27/2015 4:29:57 PM
DORIAN RAMIREZ
CLERK
NO. 13-14-00727-CV
In The Court of Appeals FILED IN
13th COURT OF APPEALS
CORPUS CHRISTI/EDINBURG, TEXAS
Thirteenth Judicial District of Texas
2/27/2015 4:29:57 PM
DORIAN E. RAMIREZ
Corpus Christi, Texas Clerk
GLORIA GARCIA,
Appellant,
vs.
GENESIS CRUDE OIL, L.P.,
Appellee.
From the 229th Judicial District Court,
Duval County, Texas, The Honorable Martin J. Chiuminatto, Jr., Presiding Judge
Cause No. DC-12-200
APPELLANT’S BRIEF
James R. Harris Andrew M. Greenwell
Harris & Greenwell – Of Counsel HARRIS & GREENWELL
The Six Hundred Building One Shoreline Plaza
600 Leopard Street, Suite 924 800 N. Shoreline Blvd., Suite 2800-S
Corpus Christi, Texas 78401 Corpus Christi, Texas 78401
Tel: (361) 929-5362 Telephone: (361) 883-1946
Fax: (361) 462-4580 Facsimile: (361) 882-2900
Email: jharris@harris-greenwell.com agreenwell@harris-greenwell.com
ORAL ARGUMENT REQUESTED
IDENTITY OF PARTIES AND COUNSEL
The following is a list of names of parties and counsel pursuant to TEX. R.
APP. P. 38.1(a):
APPELLANT: GLORIA GARCIA
Trial and Appellate Counsel:
Andrew M. Greenwell
HARRIS & GREENWELL
One Shoreline Plaza
800 N. Shoreline Blvd., Suite 2800-S
Corpus Christi, Texas 78401
Tel: (361) 883-1946
Fax: (361) 882-2900
James R. Harris
HARRIS & GREENWELL – OF COUNSEL
The Six Hundred Building
600 Leopard Street, Suite 924
Corpus Christi, Texas 78401
Tel: (361) 929-5362
Fax: (361) 462-4580
APPELLEES: GENESIS CRUDE OIL, L.P.
Trial and Appellate Counsel
James T. Kittrell
Everard A. Marseglia, Jr.
LISKOW & LEWIS
First City Tower
1001 Fannin Street, Suite 1800
Houston, TX 77002
Tel: (713) 651-2900
Fax: (713) 651-2908
i
TABLE OF CONTENTS
IDENTITY OF PARTIES AND COUNSEL .......................................................................... i
TABLE OF CONTENTS ................................................................................................. ii
TABLE OF AUTHORITIES ............................................................................................ iv
STATEMENT OF THE CASE ......................................................................................... ix
STATEMENT ON ORAL ARGUMENT ........................................................................... xii
ISSUES ON APPEAL .................................................................................................. xiii
STATEMENT OF FACTS.................................................................................................1
I. THE MINERAL OWNERSHIP ......................................................................................1
A. 1994 - OIL & GAS LEASE WITH UVALDE ENERGY CORPORATION. ................ 1
Barb. 1998 - CHANGE IN LESSOR AND PAYOR ......................................................... 2
C. THE UNDERLYING TEXAS NATURAL RESOURCES CODE LITIGATION. ............ 4
D. PARTIAL PAYMENTS BY GENESIS .................................................................7
SUMMARY OF THE ARGUMENT ..................................................................................12
ARGUMENT ...............................................................................................................13
I. THE TRIAL COURT ERRED IN FINDING THE CAUSE OF ACTION FOR NONPAYMENT
OF OIL AND GAS PROCEEDS OR INTEREST UNDER SECTION 91.404 OF THE
RESOURCES CODE WAS EXTINGUISHED BY LATE PAYMENT. ..............................13
II. THE TRIAL COURT ERRED IN DETERMINING LEGISLATIVE INTENT AND
INTERPRETATION OF SECTION 91.406 OF THE TEXAS NATURAL RESOURCES
CODE. .................................................................................................................16
ii
III. THE TRIAL COURT ERRED IN FINDING SECTION 91.403 OF THE RESOURCES CODE
PROVIDES THE ONLY MANDATORY PENALTY FOR LATE PAYMENTS. ................24
IV. THE TRIAL COURT ERRED IN FINDING “ACTUAL” MONETARY DAMAGES ARE
NECESSARY TO RECOVER A MINIMUM AWARD AND RECEIVE A FAVORABLE
FINAL JUDGMENT. ..............................................................................................24
A. THE LEGISLATURE IS NOT PRESUMED TO DO A USELESS ACT ..................... 27
B. GENESIS CANNOT RE-WRITE THE STATUTE TO SAY "IF ACTUAL DAMAGES
ARE GREATER THAN ZERO." ........................................................................28
C. ONE SATISFACTION RULE DOES NOT APPLY ..............................................30
V. THE TRIAL COURT ERRED IN FINDING THAT GARCIA WAS NOT ENTITLED
PROCEED TO TRIAL. ............................................................................................31
A. THERE WAS A JUSTICIABLE CONTROVERSY .............................................31
B. GARCIA WAS ENTITLED TO KEEP A BINDING DIVISION ORDER IN PLACE .34
CONCLUSION & PRAYER ...........................................................................................35
CERTIFICATE OF COMPLIANCE ..................................................................................39
CERTIFICATE OF SERVICE ..........................................................................................39
APPENDICES ............................................................................................................. 40
iii
TABLE OF AUTHORITIES
U.S. Court of Appeals
In re CPDC, Inc.,
337 F.3d 436 (5th Cir. 2003) .............................................................................18
GE Capital Commercial, Inc. v. Worthington Nat. Bank,
754 F.3d 297 (5th Cir. 2014) (applying Texas law) ........................................... 31
Hall v. GE Plastic Pac. PTE Ltd.,
327 F.3d 391, 396 (5th Cir. 2003) ...................................................................... 29
McNeil v. Time Ins. Co.,
205 F.3d 179 (5th Cir. 2000) .............................................................................. 18
Phillips Petroleum Co. v. Williams,
158 F.2d 723, 727 (5th Cir. 1946) ...................................................................... 35
Tenneco Chems., Inc. v. William T. Burnett & Co.,
691 F.2d 658, 665 (4th Cir.1982) ....................................................................... 29
In re Trautman,
496 F.3d 366 (5th Cir. 2007) .............................................................................. 18
Texas Supreme Court
American Surety Co. v. Axtell Co.,
120 Tex. 166, 36 S.W.2d 715, 718 (Tex.1931) .................................................. 15
Bradshaw v. Baylor University,
126 Tex. 99, 84 S.W.2d 703, 705 (Tex. 1935) ................................................... 30
Brown v. Owens,
674 S.W.2d 748, 19 Ed. Law Rep. 1222 (Tex. 1984) ........................................ 18
In re Canales,
52 S.W.3d 698 (Tex. 2001)................................................................................. 17
City of Marshall v. City of Uncertain,
206 S.W.3d 97, 105 (Tex. 2006); ....................................................................... 26
City of Mason v. West Tex. Utilities Co.,
150 Tex. 18, 237 S.W.2d 273 (1951) ................................................................. 17
City of Waco v. Kelley,
309 S.W.3d 536 (Tex. 2010) .........................................................................17,33
Crimmins v. Lowry,
691 S.W.2d 582, 40 U.C.C. Rep. Serv. (West) 1779 (Tex. 1985) ................................. 18
Crown Life Ins. Co. v. Casteel,
22 S.W.3d 378, 390 (Tex. 2000) ...................................................................30,31
Dolan v. Walker,
121 Tex. 361, 49 S.W.2d 695 (1932) ............................................................17,18
iv
Ezell v. Knapp & Elliott,
120 Tex. 503, 39 S.W.2d 829 (1931) ................................................................. 18
Fresh Coat, Inc. v. K-2, Inc.,
318 S.W.3d 893 (Tex. 2010) .............................................................................. 18
Gilmore v. Waples,
108 Tex. 167, 188 S.W. 1037 (Tex. 1916) ......................................................... 18
Hernandez v. Ebrom,
289 S.W.3d 316 (Tex. 2009) .............................................................................. 17
International Security Life Insurance Co. v. Finck,
496 S.W.2d 544, 546-547 (Tex. 1973) ............................................................... 11
Koy v. Schneider,
110 Tex. 369, 218 S.W. 479 (1920) ................................................................... 19
Long v. Knox,
155 Tex. 581, 291 S.W.2d 292, 295 (1956).......................................................29
Mills County v. Lampasas County,
90 Tex. 603, 40 S.W. 403 (1897) ...................................................................... 18
In re Nalle Plastics,
406 S.W.3d 168 (Tex. 2013) .............................................................................. 26
Owens & Minor, Inc. v. Ansell Healthcare Products, Inc.,
251 S.W.3d 481 (Tex. 2008) .............................................................................. 17
Patterson v. Planned Parenthood of Houston,
971 S.W.2d 439, 442 (Tex.1998) ....................................................................... 32
Phillips v. Beaber,
995 S.W.2d 655, 658 (Tex.1999) ....................................................................... 19
Pleasant Glade Assembly of God v. Schubert,
264 S.W.3d 1, 6 (Tex. 2008) .............................................................................. 29
Rocor Intern., Inc. v. National Union Fire Ins. Co. of Pittsburgh, PA,
77 S.W.3d 253 (Tex. 2002)................................................................................. 17
St. Luke's Episcopal Hosp. v. Agbor,
952 S.W.2d 503, 505 (Tex.1997) ....................................................................... 16
State v. Delesdenier,
7 Tex. 76, 1851 WL 4041 (1851) ....................................................................... 18
Seay v. Hall,
677 S.W.2d 19 (Tex. 1984)................................................................................. 17
State Highway Dept. v. Gorham,
139 Tex. 361, 162 S.W.2d 934 (Tex. 1942) ....................................................... 17
Stewart Title Co. v. Sterling,
822 S.W.2d 1, 10 (Tex. 1991) ......................................................................... 9,30
v
Texas Ass'n of Bus. v. Texas Air Control Bd.,
852 S.W.2d 440, 444 (Tex.1993) ....................................................................... 32
Tex. Lottery Comm'n v. First State Bank of DeQueen,
325 S.W.3d 628, 637 (Tex. 2010) ...................................................................... 25
Texas-Louisiana Power Co. v. City of Farmersville,
67 S.W.2d 235 (1933) ...................................................................................17,18
Tx Municipal League Intergovernmental Risk Pool v. Tx Workers' Comp. Com'n,
74 S.W.3d 377 (Tex. 2002)................................................................................. 17
Waco Indep. Sch. Dist. v. Gibson,
22 S.W.3d 849, 851 (Tex.2000) ......................................................................... 32
Texas Court of Civil Appeals
Aland v. Martin,
271 S.W.3d 424, 430 (Tex.App.―Dallas 2008, no pet.) ................................... 28
Andrews v. Diamond, Rash, Leslie & Smith,
959 S.W.2d 646, 650 (Tex. App.—El Paso 1997, writ denied) ......................... 29
Baylor University Medical Center v. Borders,
581 S.W.2d 731 (Tex. Civ. App.―Dallas 1979, writ ref’d n.r.e.) ................17,18
Capley v. Hudson,
286 S.W. 531 (Tex. Civ. App.―Amarillo 1926, no writ) .................................. 18
Centurion Planning Corp. v. Seabrook Venture II,
176 S.W.3d 498, 504 (Tex. App.―Houston [1st Dist.] 2004, no pet.) .........18,25
Denver-Albuquerque Motor Transport, Inc. v. State,
584 S.W.2d 738 (Tex. Civ. App.―Amarillo 1979, no writ) .............................. 18
Dunnagan v. Watson,
204 S.W.3d 30, 43 (Tex.App.―Fort Worth 2006, pet. denied) ......................... 26
Frasier v. Yanes,
9 S.W.3d 422, 427 (Tex.App.―Austin 1999, no pet.) ....................................... 34
Frass v. Darrouzett Independent School Dist.,
277 S.W. 751 (Tex. Civ. App.―Amarillo 1925, writ dism’d w.o.j.) ................ 18
GXG, Inc. v. Texacal Oil & Gas,
977 S.W.2d 403, 140 O.G.R. 278 (Tex.App.―Corpus Christi 1998, pet.
denied)................................................................................................................. 11
Gonzalez v. Gonzalez,
672 S.W.2d 887 (Tex. App.―Corpus Christi 1984, no writ) ............................ 17
Green v. County Attorney of Anderson County,
592 S.W.2d 69 (Tex. Civ. App.―Tyler 1979, no writ) ..................................... 18
Holcombe v. Levy,
301 S.W.2d 507 (Tex. Civ. App.―Galveston 1957, writ refused n.r.e.) ........... 19
vi
Houston Chronicle Pub. Co. v. City of Houston,
531 S.W.2d 177, 82 A.L.R. 3d 1 (Tex. Civ. App.―Houston [14th Dist.] 1975),
writ refused n.r.e., 536 S.W.2d 559 (Tex. 1976) ................................................ 18
Jones v. Clem,
2012 WL 1069168, ___ S.W.3d ___, (Tex.App.―Eastland, 2012
(unpublished opinion) ........................................................................................... 4
Koch Oil Co. vs. Wilber,
895 S.W.2d 854, 867 (Tex.App.―Beaumont 1995, writ denied) .................10,20
In re K.L.V.,
109 S.W.3d 61, 65 (Tex.App.―Fort Worth 2003, pet. denied) ......................... 16
Lawson v. Baker,
220 S.W. 260 (Tex. Civ. App.―Austin 1920, writ ref’d) .................................. 18
Metroflight, Inc. v. Shaffer,
581 S.W.2d 704, 709 (Tex. Civ. App.—Dallas 1979, writ ref’d n.r.e) .............. 30
Metropolitan Transit Authority v. Plessner,
682 S.W.2d 650 (Tex. App.―Houston [1st Dist.]1984 no writ) ....................... 17
Morton Salt Co. v. Wells,
35 S.W.2d 454 (Tex.Civ.App.―Dallas 1930), aff’d, 70 S.W2d 409 (Tex. 1934)
............................................................................................................................. 19
Peterson v. Calvert,
473 S.W.2d 314 (Tex. Civ. App.―Austin 1971, writ ref’d.) ............................. 17
Prize Energy Res., L.P. v. Cliff Hoskins, Inc.,
345 S.W.3d 537, 560 (Tex.App.―San Antonio 2011, no pet.) ......................... 35
Railroad Commission of Texas v. Texas & N.O.R. Co.,
42 S.W.2d 1091 (Tex. Civ. App.―Austin 1931, writ ref’d);............................. 18
Railroad Com'n of Texas v. Olin Corp.,
690 S.W.2d 628 (Tex. App.―Austin 1985, writ ref’d n.r.e.) ............................ 17
Richards v. Mena,
907 S.W.2d 566 (Tex. App.―Corpus Christi 1995, writ dism’d by agr.) ......... 17
Sanchez v. Brandt,
567 S.W.2d 254 (Tex. Civ. App.―Corpus Christi 1978, writ refused n.r.e.) .... 18
Sparks v. Kaufman County,
194 S.W. 605 (Tex. Civ. App.―Dallas 1917, writ ref’d) .................................. 18
State v. Estate of Loomis,
553 S.W.2d 166 (Tex. Civ. App.―Tyler 1977, writ ref’d.) ............................... 17
Taylor Elec. Services, Inc. v. Armstrong Elec. Supply Co.,
167 S.W.3d 522, 530-31 (Tex. App.―Ft. Worth 2005, no pet.)........................ 28
vii
Texas Dep't of Pub. Safety v. Moore,
985 S.W.2d 149, 153 (Tex.App.―Austin 1998, no pet.) ..............................31,32
The Pea Picker, Inc. v. Reagan,
632 S.W.2d 674, 677 (Tex.App.―Tyler 1982, writ ref'd n.r.e.) .......................34
Thrush v. Lingo Lumber Co.,
262 S.W. 551 (Tex. Civ. App.―Dallas 1924, writ ref’d) .................................. 17
Texas Court of Criminal Appeals
Ivey v. State,
277 S.W.3d 43 (Tex. Crim. App. 2009) ............................................................. 18
Kutzner v. State,
75 S.W.3d 427 (Tex. Crim. App. 2002) ............................................................. 17
Mahaffey v. State,
316 S.W.3d 633 (Tex. Crim. App. 2010) ........................................................... 17
Slack v. State,
61 Tex. Crim. 372, 136 S.W. 1073 (Tex. Crim. App. 1911) .............................. 18
Statutes & Rules
TEX. CIV. PRAC. & REM. CODE SEC. 12.002(a) - 12.002(3)(b) ...........................27,28
TEX. CIV. PRAC. & REM.CODE ANN. § 37.002 ....................................................13,32
TEX. CIV. PRAC. & REM.CODE ANN. § 37.004 ....................................................31,33
TEX. GOV'T CODE ANN. § 311.021(2) ...................................................................... 25
TEX. GOV'T CODE ANN. § 311.023 (West 2005) ................................................19,25
Tex. Gov't Code Ann. § 312.005 ............................................................................. 17
TEXAS NATURAL RESOURCES CODE. ACTS 1983, 68TH LEG. P. 966, CH. 228, § 1 ........
........................................................................................................................14,19,20
TEXAS NATURAL RESOURCES CODE § 91.401 ............................................................ 5
TEXAS NATURAL RESOURCES CODE § 91.402 .............................................5,28,34,35
TEXAS NATURAL RESOURCES CODE § 91.403 .................. 6,7,9,12,20,22,24,26,36,37
TEXAS NATURAL RESOURCES CODE § 91.404 ........ 4,6,8,11,12,13,23,25,33,35,36,37
TEXAS NATURAL RESOURCES CODE § 91.406 ..............................................................
....................................................... 6,7,8,11,12,13,14,15,16,22,23,25,26,27,36,37
Other Authorities
TEX. JUR. STATUTES § 107 ........................................................................................ 18
Bill Analysis available at http:// www.legis.state.tx.us/BillLookup
/BillNumber.aspx. “In 1983 ................................................................................ 14
Tex. H.B. 1775, 68th Leg., R.S. (1983) ..........................................................14,19,20
Tex. H.B. 2363,70th Leg., R.S. – Bill Analysis: Purpose; Synopsis ...................14,21
viii
ATTORNEY-GENERAL'S OFFICE AND GERALD C. MANN,
TEXAS ATTORNEY GENERAL OPINION: O-3811, TEXT, 1941; DIGITAL IMAGES,
(HTTP://TEXASHISTORY.UNT.EDU/ARK:/67531/METAPTH261050 ......................... 18
The Portal to Texas History, http://texashistory.unt.edu ......................................... 18
ix
STATEMENT OF THE CASE
This case involves the statutory interpretation of Texas Natural Resources
Code § 91.406, and the purpose and intent of the Legislature in adding a new law
with additional penalties of a “Minimum Award” and mandatory reasonable
attorney’s fees to be awarded to the royalty owner, if suit had to be filed to collect
oil and gas proceeds and interest. The new penalties imposed by the Legislature
were to be an additional incentive to force the Payor to make timely payment of
royalties, as the statutory interest penalty imposed in 1983 on late payments
established under Texas Natural Resources Code § 91.403 was not getting the job
done. The parties dispute whether the cause of action established under Texas
Natural Resources Code § 91.404 to collect unpaid proceeds and interest can be
extinguished ― and the additional penalties to be imposed under Section 91.406
nullified and voided, if late payment of oil and gas proceeds and interest is finally
tendered – albeit after suit had to be filed.
On motion for summary judgment filed by the Defendant Genesis Crude Oil,
L.P.,1 the trial court found as a matter of law that the additional late payment
penalties enacted under Section 91.406 were not mandatory and were extinguished
1
CR. 158
x
if late payment was tendered at any point prior to trial.2 As a result, the trial court
found the royalty owner was not entitled to collect either the Minimum Award or
reasonable attorney’s fees for being forced to bring a lawsuit.3 In so doing, the
trial court rejected both the law’s requirements and the legislative intent to add
additional mandatory penalties over and above statutory interest, if a lawsuit had to
be filed because of non-payment of oil and gas proceeds or interest on late
payments.4
By its ruling, the trial court also rejected the correct standard in making a
determination that since late payments and interest had been finally paid, without
further monetary damages Gloria Garcia was not entitled to a favorable judgment,
the Minimum Award of $200 and recovery of reasonable attorney’s fees, or a
declaration of the rights of the parties in an ongoing and continuing relationship.5
2
CR. 296. For the Court’s convenience, a copy of the Order granting summary judgment is
attached as Appendix A.
3
CR. 296.
4
CR. 209, 238.
5
CR. 214.
xi
STATEMENT ON ORAL ARGUMENT
The Appellant believes that oral argument would be valuable and is
warranted in this case. This case involves important issues involving the rights of
royalty owners, statutory interpretation, and legislative history, and the Court
would be aided by oral argument. Moreover, any ruling in this case, which would
involve issues of first impression, would have significant effect on the relationship
between royalty interest owners and operators, especially on the rights of royalty
interest owners to their royalties and the remedies they have in the event operators
fail to pay those timely. For these reasons, the Appellant believes that oral
argument should be granted.
xii
ISSUES ON APPEAL
ISSUE NO. 1
Whether the trial court erred in determining as a matter of law, that a cause of
action under Texas Natural Resources Code § 91.404(a)-(b) can be extinguished,
and the additional penalties to be imposed under Texas Natural Resources Code §
91.406 nullified and voided even if a suit is filed, as long as the Payor tendered late
payment of oil and gas proceeds and interest before a trial commences.
ISSUE NO. 2
Whether the trial court erred in determining as a matter of law, that statutory
interest imposed under Texas Natural Resources Code § 91.403 provides the only
mandatory penalty for late payments, even if the Payee has been forced to file suit
to collect unpaid oil and gas proceeds and interest.
ISSUE NO. 3
Whether the trial court erred in determining as a matter of law, that in order to be
entitled to recover the statutory Minimum Award of $200.00 and reasonable
attorney’s fees under Texas Natural Resources Code § 91.406 if suit is filed, the
Payee must still recover “actual” monetary damages in order to be entitled to
favorable final judgment.
ISSUE NO. 4
Whether the trial court erred in determining as a matter of law that the statutory
language of Texas Natural Resources Code § 91.406 was plain and unambiguous,
which precluded an inquiry into the legislative intent of enacting additional
mandatory penalties if suit had to be filed, as an incentive to force the Payor to
timely pay proceeds from the sale of oil and gas.
xiii
ISSUE NO. 5
Whether the trial court erred in denying Garcia’s right to proceed to trial to
establish the essential elements of her claim:
a. After notice was given, Genesis breached its duty to timely pay
proceeds from the sale of oil and gas to Gloria Garcia, pursuant to
Texas Natural Resources Code § 91.402(a)(1);
b. Genesis was not excused from making a timely payment of oil and gas
proceeds, as there was no legitimate title dispute;
c. Reasonable attorney’s fees incurred by Gloria Garcia were established
as a matter of law;
and
d. A declaration of rights under the Texas Natural Resources Code, that
Genesis “is or was a ‘payor’ vis-à-vis Ms. Garcia” and “has or had” a
duty to keep in place a binding division order in connection with the
subject lease under § 91.402(c)(1).
xiv
STATEMENT OF FACTS
I. THE MINERAL OWNERSHIP
A. 1994 - OIL & GAS LEASE WITH UVALDE ENERGY CORPORATION.
On August 3, 1994, Gloria Garcia and her father, Willie De La Fuente (now
deceased) as Lessors, executed and delivered an Oil, Gas and Liquid Hydrocarbons
Lease to Uvalde Energy Corporation, Lessee, for the purpose of drilling and
producing oil, gas, and all other liquid and hydrocarbons.6 The lease was for a
term of two (2) years from the date of its execution and as long thereafter as oil or
gas was produced from the land by the Lessee in paying quantities, and was filed
for record.7
Gloria Garcia’s ownership interest in the 164.16 acre ranch was memorialized
by Gift Deed from her father, Willie De La Fuente, filed for record in Duval
County, Texas on November 7, 1994.8 This conveyance to Mrs. Garcia of the
entire fee simple surface and an undivided one-half of the mineral estate was
subsequently corrected to reflect the reservation of a life estate in the right to
receive rents and royalties by Willie De La Fuente until his death, which
6
CR. 30-40.
7
Id..
8
Supp.CR. 11-12, 61-62.
1
instrument was filed for record on December 29, 1994.9 A final Correction Deed
was executed by Willie De La Fuente to reflect gifts to Mrs. Garcia of mineral
interests in additional property also located in Duval County, still subject to the
life estate being reserved by Willie De La Fuente, which was dated March 5, 1995,
but filed for record on October 19, 1995.10
B. 1998 - CHANGE IN LESSOR AND PAYOR.
In 1998, LTD Explorations, Inc. (“LTD”) took an assignment of the Willie
De La Fuente lease from Uvalde Energy Corporation, and assumed the contractual
lease obligations as the new owner/operator.11 LTD then contracted with Genesis
Crude Oil, LP (“Genesis”) to be the first purchaser of the oil produced from the
subject lease.12 As a result, on August 14, 1998, Genesis acquired an interest in the
oil production and lease and assumed the obligations of a Payor under the Texas
Natural Resources Code, issuing two Division Orders in favor of Willie De La
Fuente under Lease No. 54546000, both made effective retroactively to July 1,
1998.13
9
Supp.CR. 12, 64-65.
10
Supp.CR. 12, 67-68.
11
CR. 67-68.
12
Id.
13
Supp.CR. 12, 103-104.
2
Willie De La Fuente passed away on December 12, 2008.14 On April 26,
2011, Mrs. Garcia wrote a letter to LTD Exploration (the lessor and operator) and
provided copies of the Death Certificate and Gift Deed to establish that her royalty
ownership had fully vested.15 Receiving no response, on July 12, 2011, Mrs.
Garcia’s attorney, Mark R. Paisley, wrote directly to Genesis concerning Mr. De
La Fuente’s death back in 2008, which triggered their duty to issue Mrs. Garcia
new Division Orders in place of Willie De La Fuente, and begin payment of oil
and gas proceeds under the lease.16 Although Paisley wrote and later called
Genesis relating to royalty payments, Genesis never responded.17 Mrs. Garcia
finally hired attorney James Harris, who again gave written notice to Genesis on
January 24, 2013, of their continued failure to pay royalties and accrued interest to
which she was entitled, and provided Genesis with another copy of the 2008 Death
Certificate of Mr. De La Fuente.18
Genesis failed to pay the oil and gas proceeds due within 30 days after receipt
of the required notice and demand for payment of past due royalties in January of
14
Supp.CR. 12, 70.
15
Supp.CR. 12, 70, 72-77.
16
Supp.CR. 12, 79.
17
Supp.CR. 12, 106.
18
Supp.CR. 12, 83-99.
3
2013,19 and Genesis had no reasonable cause to dispute Mrs. Garcia’s entitlement
to payment, as it was on constructive and actual notice of her right to be paid
royalties upon proof of death of her father, and Mrs. Garcia’s title was a matter of
public record.20 Her recorded title in 1994 long-preceded the transfer of lease to
LTD in 1998, and Genesis Crude Oil, L.P. did not begin purchasing production
from the lease until July 1, 1998.21 Genesis willfully refused to respond to Mr.
Harris’ attempts to collect the unpaid royalties in Mrs. Garcia’s behalf.
C. THE UNDERLYING TEXAS NATURAL RESOURCES CODE LITIGATION.
Since receiving notice in 2011, both Genesis and LTD disputed liability for
tendering timely royalty payments to Mrs. Garcia from the sale of oil and gas, and
refused to issue division orders. As a result, six months after sending the January
24, 2013 demand letter to Genesis, Mrs. Garcia amended an environmental
property damage lawsuit already pending against the lease owner/operator (LTD)
on July 19, 2013, to include both contractual and statutory claims under Texas
Natural Resources Code for non-payment of royalties and interest accruing since
19
CR. 187, Supp.CR. 12, 83; TEX. NATURAL RESOURCES CODE § 91.404(a)-(b). For the Court’s
convenience, a copy of TEX. NATURAL RESOURCES CODE § 91.401-91.406 is attached to this
Appellant’s Brief as Appendix B.
20
CR. 14-16, Jones v. Clem, 2012 WL 1069168, ___ S.W.3d ___, (Tex.App.―Eastland, 2012
(unpublished opinion).
21
Supp.CR. 12, 103-104.
4
December 2010.22 Mrs. Garcia also sought declaratory relief from the Court to
determine the identity of the statutory “payor” and obtain the division orders
required to be issued under Texas Natural Resources Code § 91.402(c)(1), as a
prerequisite to receiving payments.23 At the time of filing the July 19, 2013
petition, royalty payments due Mrs. Garcia had been suspended since December
2010, and both the well operator (LTD) and Genesis (the purchaser of oil
production) denied liability for payment of royalties or accrued interest.24
As a result of the July 2013 pleading amendment, the trial date was delayed
from November 12, 2013 to July 28, 2014. Mrs. Garcia issued a subpoena for
records from Genesis on September 18, 2013, seeking information regarding the
amount of oil and gas being produced and purchased from the lease, and to
determine the relationship between Genesis and the Lessee/Operator pertaining to
the responsibility to issue division orders and pay proceeds to royalty owners.25 On
January 23, 2014, LTD joined Genesis in the pending lawsuit and Mrs. Garcia
became aware that LTD had entered into an agreement with Genesis, whereby the
22
CR. 21-40.
23
Id.
24
CR. 21-40, and 80-81, 101.
25
TEXAS NATURAL RESOURCES CODE § 91.401(2) [“"Payor" means the party who undertakes to
distribute oil and gas proceeds to the payee, whether as the purchaser of the production of oil or
gas generating such proceeds or as operator of the well from which such production was
obtained or as lessee under the lease on which royalty is due.”]. See, Appendix B.
5
purchaser (Genesis) was to be responsible for payment of the proceeds from the
sale of oil or gas to the royalty owner. 26 Mrs. Garcia also learned at that time that
LTD had made demand upon Genesis to perform its statutory obligations to issue a
division order and pay over the royalty proceeds due to Mrs. Garcia, which LTD
alleged Genesis had collected and was holding in suspense.27 LTD’s efforts to
obtain cooperation from Genesis to make full payment of Garcia’s royalties and
accrued interest were unsuccessful.28
In April 2014, Genesis requested a continuance and the July 28, 2014 trial
date was postponed again to November 17, 2014.29 On June 4, 2014, Mrs. Garcia
filed her third amended petition joining Genesis as a direct defendant, seeking a
declaration of her statutory rights and all damages to which she was entitled under
the statute, including accrued interest, and the reasonable attorney’s fees mandated
under Texas Natural Resources Code § 91.406.30 Mrs. Garcia asserted that as a
result of having to file suit under Section 91.404, she was not only entitled to
statutory interest on late payments due under § 91.403(a), but also the statutory
Minimum Award of monetary damages and attorney’s fees imposed under §
26
CR. 43 at ¶ 3.2.
27
Id.
28
CR. 41-48.
29
CR. 49.
30
CR. 51-60, at 57. See, Appendix B.
6
91.406(1)-(2) of the Texas Natural Resources Code.31 Mrs. Garcia filed her Fourth
Amended Original Petition against Genesis on September 22, 2014, after the
contractual and environmental claims against LTD were severed from the
lawsuit.32
D. PARTIAL PAYMENTS BY GENESIS
After Mrs. Garcia was forced to file suit on July 19, 2013 for “Nonpayment
of Oil and Gas Proceeds or Interest” under the Texas Natural Resources Code and
subpoenaed records from Genesis, two division orders were finally prepared and
submitted by Genesis to Mrs. Garcia to be effective retroactively to December 1,
2010 and January 1, 2011 (respectively) and Genesis made a partial tender of
accrued royalties on November 1, 2013.33 However, Genesis refused to pay Mrs.
Garcia the statutory accrued interest due under Section 91.403(a) of the Texas
Natural Resources Code. As a result, Genesis was joined as a party to the lawsuit
on January 23, 2014,34 and named a direct defendant on June 5, 2014.35 Genesis
continued to deny liability, asserting (among other defenses) that Mrs. Garcia had
31
Id. See, Appendix B.
32
CR. 66-85.
33
CR. 174-175, 180-182.
34
CR. 41-48.
35
CR. 51-60.
7
no cause of action, no right to recover statutory interest, and Genesis had fulfilled
all obligations under the Texas Natural Resources Code.36
Seventeen (17) months had elapsed since Genesis received the January 24,
2013 statutory notice from Mrs. Garcia regarding its failure to make timely
payments of oil and gas proceeds and interest;37 and eleven (11) months had
elapsed since the Section 91.404 Texas Natural Resources Code lawsuit was filed,
before Genesis made a conditional tender of statutory accrued interest on June 25,
2014, asserting “this tender does not amount to a waiver or acknowledgement that
Genesis is or was a ‘payor’ vis-à-vis Ms. Garcia under the Texas Natural
Resources Code at any time, or that Genesis has or had any liability to Ms. Garcia
for the payment of royalties in connection with this property.”38
Genesis then moved for partial summary judgment under the framework of
the Section 91.404 Resources Code cause of action, asserting Mrs. Garcia was not
entitled to collect statutory attorney’s fees or further relief under Section 91.406,
despite having been forced to file suit to collect unpaid royalties and interest,
because the attorney’s fees being sought against Genesis were not reasonable and
36
CR. 61-65.
37
TEXAS NATURAL RESOURCES CODE § 91.404(a)-(c). See, Appendix B.
38
CR. 187-191.
8
necessary.39 Genesis argued that no claim for Garcia’s attorney’s fees could be
attributable to her efforts to recover royalties and interest from Genesis.40 Genesis
further argued that since the total accrued interest (calculated on the tens of
thousands of dollars withheld from Mrs. Garcia in unpaid royalties from December
2010 to November 2013) was only $585.47,41 that “any attorney fee award against
Genesis must reflect that reality.”
In response, Mrs. Garcia established as a matter of law that there was never
a legitimate title dispute and Genesis had no reasonable excuse to withhold
payments or refuse to issue a division order, because her title was a matter of
public record in 1994, long prior to the time Genesis acquired its interest in the
Willie De La Fuente lease in 1998.42 There had been no change in ownership
when Genesis acquired the right to purchase lease production. Mrs. Garcia also
established that the attorney’s fees being sought were both reasonable, necessary,
and incurred against the defendant sought to be charged with said fees.43 The
attorney’s fee claim against Genesis related to far more than three weeks of
39
CR. 94-102, at 98 ¶ B [“...plaintiff is required to show that the fees were incurred while suing
the defendant sought to be charged with the fees on a claim which allows recovery of such fees.”
(citing) Stewart Title Co. v. Sterling, 822 S.W.2d 1, 10 (Tex. 1991)].
40
CR. 101.
41
Calculation based on the statutory penalty formula established by Sec. 91.403(a). See,
Appendix B.
42
Supp. CR. 14-16; and CR. 155.
43
Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1, 10 (Tex. 1991); CR. 155.
9
litigation against Genesis, and included 132.6 hours of attorney time and 139.9
hours of paralegal time to investigate why Genesis refused to accept Mrs. Garcia’s
reasonable notice of the death of Mr. De La Fuente in 2011; sending statutory
demand under the Resources Code in January of 2013 for non-payment of oil and
gas proceeds; conducting discovery; preparing and responding to pleadings;
attending hearings; consulting with the client, opposing counsel and expert
witnesses; and demonstrated the hourly rates of $300 and $85 respectively were
both fair and reasonable for the work involved.44 Mrs. Garcia also demonstrated
that the claim was over two years old and suit had been filed to obtain release of
suspended royalties totaling $57,913.42 in the aggregate as well as accrued
interest, and the total attorney’s fees being sought from Genesis totaled $51,786.50
through July 23, 2014.45 Because Mrs. Garcia had been required to employ legal
counsel to retrieve the suspended funds, and those fees were itemized and
segregated in a realistic fashion to place responsibility where it belonged, Mrs.
Garcia was entitled to recover reasonable attorney’s fees for those services.46
Genesis continued to argue that the framework for an award of statutory
attorney’s fees must be limited to fees incurred between June 4, 2014 and the date
44
Supp. CR. 16-17 @ ¶ IX; Supp. CR. 27-31; Supp. CR. 32-46.
45
Supp. CR. 17; Supp. CR. 27-31 and 32-46.
46
Supp. CR. 16-17; Koch Oil Co. vs. Wilber, 895 S.W.2d 854, 867 (Tex.App.―Beaumont 1995,
writ denied); CR. 155.
10
statutory interest was tendered on June 25, 2014.47 In response, Mrs. Garcia
demonstrated that the statutory language awarding reasonable attorney’s fees under
Sec. 91.406 of the Resources Code did not limit an award to fees incurred after
suit is filed.48 In addition, as long as the fees sought to be recovered were
proximately and necessarily caused by the act complained of,49 rendered in
connection with the claims for which recovery is authorized,50 and segregated from
services rendered in connection with other claims, then the fees were reasonable
and necessary.51
The trial court correctly ruled that an award of reasonable attorney’s fees
under Resources Code Section 91.406 was not limited to those fees incurred after
suit was filed, but erred in granting final summary judgment that the entire cause of
action under Section 91.404 was extinguished upon payment of proceeds and
accrued interest, and, as a result, the additional penalties to be awarded if suit must
be filed were nullified or extinguished and further relief unavailable to Mrs. Garcia
under the Resources Code.
47
CR. 147.
48
CR. 150-152; CR. 155. See, Appendix B.
49
CR. 152-153; citing GXG, Inc. v. Texacal Oil & Gas, 977 S.W.2d 403, 140 O.G.R. 278
(Tex.App.―Corpus Christi 1998, pet. denied).
50
International Security Life Insurance Co. v. Finck, 496 S.W.2d 544, 546-547 (Tex. 1973).
51
Id.; CR. 155.
11
SUMMARY OF THE ARGUMENT
Genesis moved for final summary judgment on the theory that once late
payment had been made for oil and gas proceeds, and once even later payment had
been made for accrued interest, the cause of action established under Section
91.404 of the Texas Natural Resources Code was completely extinguished. Thus,
Genesis argued that allowing Mrs. Garcia to recover her attorney’s fees and a
Minimum Award of $200 established under Section 91.406, would be “redundant
to the remedy of statutory interest provided in Section 91.403 of the Resources
Code” an[d] “creates a double penalty where it does not exist.”52 Genesis argued
that “Section 91.403 provides the mandatory remedy for any late payments,
statutory interest.”53 As a result, Genesis argued the court should not look to the
statute’s legislature history, because the plain meaning of Section 91.406 was
unambiguous54 and required a judgment for proceeds or interest as “actual
damages” at the time of trial, in order for the judgment to be “favorable” to the
plaintiff.55
Genesis’ Amended Motion for “Final” Summary Judgment stated the only
three issues in the case were (1) whether the Sec. 91.404 cause of action for
52
CR. 284. See, Appendix B.
53
CR. 286 @ ¶ 2.
54
CR. 286 @ ¶ 1.
55
CR. 285.
12
“Nonpayment of Oil and Gas Proceeds or Interest” remained following payment;
(2) if no Section 91.404 cause of action still exists, whether an independent cause
of action existed allowing recovery of attorney’s fees; and (3) whether a party
could replead the Sec. 91.404 cause of action for non-payment as a Chapter 37
declaratory judgment action and recover attorney’s fees.
The trial court erred by granting a final “take nothing” judgment that the
additional remedies to be afforded under Texas Natural Resources Code Section
91.406, if suit had to be filed were not available, because the Section 91.404(c)
cause of action established under the Texas Natural Resources Code had been
extinguished following Genesis’ late payment of oil and gas proceeds and statutory
accrued interest.56
ARGUMENT
I. THE TRIAL COURT ERRED IN FINDING THE CAUSE OF ACTION FOR
NONPAYMENT OF OIL AND GAS PROCEEDS OR INTEREST UNDER SECTION
91.404 OF THE RESOURCES CODE WAS EXTINGUISHED BY LATE PAYMENT.
Genesis contends that Section 91.404 created only one cause of action, and
the affirmative defense of payment (albeit late) for proceeds on November 1, 2013
and late payment of statutory interest on June 25, 2014, extinguished the Resources
56
See, Appendix A.
13
Code cause of action for Nonpayment of Oil and Gas Proceeds Or Interest.57 Prior
to the 1987 enactment of Section 91.406, Genesis’ interpretation of the law would
have been correct. However, following the addition of Section 91.406, statutory
interest for late payments was no longer the only mandatory penalty to be imposed,
if suit was filed to collect proceeds and interest.
The sole purpose and legislative intent for adding Section 91.406 to the
Texas Natural Resources Code was to provide “that if a suit is filed to collect
proceeds and interest from the sale of oil and gas proceeds, the court shall include
reasonable attorney’s fees and a minimum award of $200” as an additional
incentive for the Payor to timely make payments.58 Despite the 68th Texas
Legislature enacting strict time deadlines for payment in 1983, the 70 th Legislature
recognized that it was still very difficult for an individual with a claim for unpaid
royalty to obtain relief in a court of law under the Resources Code.59 Thus,
recovery of a minimum award and mandatory attorney’s fees were added as
additional remedies to persons forced to file suit under the Sec. 91.404 cause of
action established in 1983 by the 68th Legislature, for nonpayment of proceeds and
57
CR. 162-163. See, Appendix B.
58
CR. 238 and Appendix D (Tex. H.B. 2363,70th Leg., R.S. – Bill Analysis: Purpose; Synopsis).
59
See, CR. 238 and Appendix D (Tex. H.B. 2363,70th Leg., R.S. – Bill Analysis: Background).
14
interest.60
In American Surety Co. v. Axtell Co., the Texas Supreme Court established
the steps in interpreting a statute:
To arrive at the intention of the Legislature ... it is the duty ... to look
primarily to the act itself as an entirety; and to understand the legal effect of
the amendment enacted by the Legislature, it must be considered in
connection with the original act, and that which has been done thereunder. A
particular section of an act of the Legislature, when enacted, must be
construed in view of the existence of the original statute as it stands after the
amendment is introduced; it and all sections of the old law must be regarded
as a harmonious whole, as connected with and naturally acting upon each
other.... It will be presumed that the Legislature, in adopting the amendment,
intended to make some change in the existing law, and therefore the courts
will endeavor to give some effect to the amendment.61
This Court is thus bound to conclude that, in amending the statute to add Section
91.406, the Legislature intended to change existing law and implement additional
mandatory penalties over and above the statutory interest penalty on late payments
―if the incentives were ignored and the royalty owner was forced to file suit. As a
result, once suit has been filed to collect proceeds or interest under the Resources
Code, then even a late tender of proceeds or interest cannot completely extinguish
the Resources Code cause of action. A plaintiff is entitled to proceed to trial and
prove the essential elements of this cause of action (i.e., breach by non-payment;
60
CR. 238 and Appendix D (Background).
61
American Surety Co. v. Axtell Co., 120 Tex. 166, 36 S.W.2d 715, 718 (Tex.1931) (internal
citations and quotations omitted).
15
written notice of failure to pay timely; and no reasonable excuse for non-payment).
If all elements are proven, the plaintiff is entitled to a favorable judgment with a
Minimum Award of $200 and reasonable attorney’s fees for the collection process.
II. THE TRIAL COURT ERRED IN DETERMINING LEGISLATIVE INTENT AND
INTERPRETATION OF SECTION 91.406 OF THE TEXAS NATURAL RESOURCES
CODE.
Section 91.406 of the Texas Natural Resources Code states:
“Sec. 91.406. ATTORNEY'S FEES AND MINIMUM AWARD. If a
suit is filed to collect proceeds and interest under this subchapter, the court
shall include in any final judgment in favor of the plaintiff an award of:
(1) Reasonable attorney's fees; and
(2) If the actual damages to the plaintiff are less than $200, an additional
amount so that the total amount of damages equals $200.
(Emphasis added)
Genesis argued and the trial court apparently found that Section 91.406 was
unambiguous, but ignored legislative intent and failed to construe the amended
statute as a whole. When language in a statute is unambiguous, we will seek the
intent of the legislature as found in the plain and common meaning of the words
and terms used.62
In interpreting a statute, a court must diligently attempt to ascertain
62
St. Luke's Episcopal Hosp. v. Agbor, 952 S.W.2d 503, 505 (Tex.1997); In re K.L.V., 109
S.W.3d 61, 65 (Tex.App.―Fort Worth 2003, pet. denied).
16
legislative intent and must consider at all times the old law, the evil, and the
remedy.63 It is the duty of the courts to give full recognition to the legislative
intent;64 therefore, when construing a statute, the primary goal is to ascertain and
give effect to the legislature's intent in enacting it65 and not to defeat,66 nullify,67 or
thwart it.68 Once the intent has been ascertained, statutes must be interpreted so as
to give effect to the legislative intent69 as to the whole and each material part of the
law70 even though this may involve a departure from the strict letter of the law as
63
TEX. GOV'T CODE ANN. § 312.005.
64
Kutzner v. State, 75 S.W.3d 427 (Tex. Crim. App. 2002); Texas Municipal League
Intergovernmental Risk Pool v. Texas Workers' Compensation Com'n, 74 S.W.3d 377 (Tex.
2002); Seay v. Hall, 677 S.W.2d 19 (Tex. 1984); Railroad Com'n of Texas v. Olin Corp., 690
S.W.2d 628 (Tex. App.―Austin 1985, writ ref’d n.r.e.); Metropolitan Transit Authority v.
Plessner, 682 S.W.2d 650 (Tex. App.―Houston [1st Dist.]1984 no writ); Gonzalez v. Gonzalez,
672 S.W.2d 887 (Tex. App.―Corpus Christi 1984, no writ).
65
Mahaffey v. State, 316 S.W.3d 633 (Tex. Crim. App. 2010); City of Waco v. Kelley, 309
S.W.3d 536 (Tex. 2010); Hernandez v. Ebrom, 289 S.W.3d 316 (Tex. 2009); Owens & Minor,
Inc. v. Ansell Healthcare Products, Inc., 251 S.W.3d 481 (Tex. 2008); Rocor Intern., Inc. v.
National Union Fire Ins. Co. of Pittsburgh, PA, 77 S.W.3d 253 (Tex. 2002); In re Canales, 52
S.W.3d 698 (Tex. 2001).
66
Dolan v. Walker, 121 Tex. 361, 49 S.W.2d 695 (1932); Baylor University Medical Center v.
Borders, 581 S.W.2d 731 (Tex. Civ. App.―Dallas 1979, writ ref’d n.r.e.); State v. Estate of
Loomis, 553 S.W.2d 166 (Tex. Civ. App.―Tyler 1977, writ ref’d.).
67
Baylor University Medical Center, 581 S.W.2d 731 (Tex. Civ. App.―Dallas 1979); Estate of
Loomis, 553 S.W.2d 166 (Tex. Civ. App. 1977); Peterson v. Calvert, 473 S.W.2d 314 (Tex. Civ.
App.―Austin 1971, writ ref’d.).
68
City of Mason v. West Tex. Utilities Co., 150 Tex. 18, 237 S.W.2d 273 (1951); Baylor
University Medical Center, 581 S.W.2d 731; Estate of Loomis, 553 S.W.2d 166.
69
Richards v. Mena, 907 S.W.2d 566 (Tex. App.―Corpus Christi 1995, writ dism’d by agr.).
70
Texas-Louisiana Power Co. v. City of Farmersville, 67 S.W.2d 235 (Tex. Comm'n App. 1933,
writ dismissed); State Highway Dept. v. Gorham, 139 Tex. 361, 162 S.W.2d 934 (Tex. 1942);
Thrush v. Lingo Lumber Co., 262 S.W. 551 (Tex. Civ. App.―Dallas 1924, writ ref’d).
17
written by the legislature.71 Under Texas law, giving effect to legislature's intent is
the fundamental canon72 and the cardinal,73 primary,74 and paramount rule of
construction,75 which should always be closely observed and to which all other
rules must yield.76 The intention of the legislature in enacting a law is the law
itself,77 the essence of the law,78 and the spirit that gives life to the enactment.79
71
TEX. JUR. STATUTES § 107; see also, Attorney-General's Office and Gerald C. Mann, Texas
Attorney General Opinion: O-3811, Text, 1941; digital images,
(http://texashistory.unt.edu/ark:/67531/metapth261050; The Portal to Texas History,
http://texashistory.unt.edu.
72
Brown v. Owens, 674 S.W.2d 748, 19 Ed. Law Rep. 1222 (Tex. 1984); Green v. County
Attorney of Anderson County, 592 S.W.2d 69 (Tex. Civ. App.―Tyler 1979, no writ); Sanchez v.
Brandt, 567 S.W.2d 254 (Tex. Civ. App.―Corpus Christi 1978, writ refused n.r.e.); Capley v.
Hudson, 286 S.W. 531 (Tex. Civ. App.―Amarillo 1926, no writ).
73
In re Trautman, 496 F.3d 366 (5th Cir. 2007); In re CPDC, Inc., 337 F.3d 436 (5th Cir. 2003);
McNeil v. Time Ins. Co., 205 F.3d 179 (5th Cir. 2000); Fresh Coat, Inc. v. K-2, Inc., 318 S.W.3d
893 (Tex. 2010); Ivey v. State, 277 S.W.3d 43 (Tex. Crim. App. 2009).
74
Texas-Louisiana Power Co. v. City of Farmersville, 67 S.W.2d 235 (Tex. Comm'n App. 1933,
writ dismissed); Ezell v. Knapp & Elliott, 120 Tex. 503, 39 S.W.2d 829 (Comm'n App. 1931);
Gilmore v. Waples, 108 Tex. 167, 188 S.W. 1037 (Tex. 1916).
75
Dolan v. Walker, 121 Tex. 361, 49 S.W.2d 695 (1932); Railroad Commission of Texas v.
Texas & N.O.R. Co., 42 S.W.2d 1091 (Tex. Civ. App.―Austin 1931, writ ref’d); Lawson v.
Baker, 220 S.W. 260 (Tex. Civ. App.―Austin 1920, writ ref’d); Sparks v. Kaufman County, 194
S.W. 605 (Tex. Civ. App.―Dallas 1917, writ ref’d).
76
Slack v. State, 61 Tex. Crim. 372, 136 S.W. 1073 (Tex. Crim. App. 1911); Mills County v.
Lampasas County, 90 Tex. 603, 40 S.W. 403 (1897); State v. Delesdenier, 7 Tex. 76, 1851 WL
4041 (1851); Frass v. Darrouzett Independent School Dist., 277 S.W. 751 (Tex. Civ.
App.―Amarillo 1925, writ dism’d w.o.j.).
77
Crimmins v. Lowry, 691 S.W.2d 582, 40 U.C.C. Rep. Serv. (West) 1779 (Tex. 1985); Baylor
University Medical Center, 581 S.W.2d 731.
78
Gilmore v. Waples, 108 Tex. 167, 188 S.W. 1037 (1916); Denver-Albuquerque Motor
Transport, Inc. v. State, 584 S.W.2d 738 (Tex. Civ. App.―Amarillo 1979, no writ); Houston
Chronicle Pub. Co. v. City of Houston, 531 S.W.2d 177, 82 A.L.R. 3d 1 (Tex. Civ.
App.―Houston [14th Dist.] 1975), writ refused n.r.e., 536 S.W.2d 559 (Tex. 1976).
18
The Court's objective in construing a statute should be to determine and give
effect to the Legislature's intent.80 To determine intent, the Court must first look to
the plain language of the statute.81 The statute's terms should be viewed in the
context of the surrounding words and provisions.82 Regardless of whether or not
the statute is ambiguous, the Court may additionally look to the object sought to be
obtained by the enactment of the statute; the circumstances under which the
statute was enacted; the legislative history of the statute; common law provisions,
former statutory provisions, or laws on the same or similar subjects; the
consequences of interpreting the statute in a particular way; the administrative
construction of the statute; and the title, preamble, and emergency provision.83
In 1983, when H.B. 1775 was initially introduced to add a requirement for
timely payment of proceeds from the sale of oil and gas, there were no deadlines
for royalty payments.84
79
Koy v. Schneider, 110 Tex. 369, 218 S.W. 479 (1920); Holcombe v. Levy, 301 S.W.2d 507
(Tex. Civ. App.―Galveston 1957, writ refused n.r.e.); Morton Salt Co. v. Wells, 35 S.W.2d 454
(Tex. Civ. App.―Dallas 1930, writ granted), and aff'd, 123 Tex. 151, 70 S.W.2d 409 (1934).
80
Phillips v. Beaber, 995 S.W.2d 655, 658 (Tex.1999).
81
Id.
82
Id.
83
TEX. GOV'T CODE ANN. § 311.023 (West 2005) (emphasis added).
84
See, Appendix C. Tex. H.B. 1775, 68th Leg., R.S. (1983); Bill Analysis available at http://
www.legis.state.tx.us/BillLookup /BillNumber.aspx. “In 1983, our Texas Legislature enacted
Sections 91.401 through 91.405 of the Texas Natural Resources Code. Acts 1983, 68th Leg. p.
966, ch. 228, § 1. Four bills concerning this topic were introduced: HB 1775, SB 146, and
identical bills HB 1266 and SB 731. On April 12, 1983, the House Energy Committee considered
Footnote continued on the next page.
19
85
As a result, a new law was enacted in 1983 to allow the payee to “sue for failure
to make timely payments after giving the payor 30 days’ written notice.” Id. In
addition, to setting deadlines for timely payment, it required late payments to be
subject to an interest penalty, unless there was a reasonable title dispute.86 As the
bill was being debated in 1983, prime rate was 10.5% and to prevent market rates
from exceeding a proposed fixed 9-percent interest rate, creating an incentive to
keep royalty owners’ money, a floating rate of interest on late payments was tied to
market conditions.87 In April 1987, even though market interest rates had fallen
HB 1775 and HB 1226 together at public hearing. The House Study Group reported on the bill
on April 21, 1983. The House Study Group reported arguments for and against the bill,
summarizing each of the bills that had been introduced on the subject. When HB 1775 reached
the House floor on April 21, 1983, same was amended to include new language for § 91.403(a)
and to add § 91.405 (House Journal Report dated April 21, 1983). House Bill 1775, as amended,
became effective September 1, 1983. Prior to the 1983 enactment, no specific laws protected
royalty owners from intentional practices to delay their royalty checks. While it was
generally accepted that a great deal of these delays stem from legitimate title problems, it was
also recognized that some delays were intentional and should be addressed by the Legislature. It
was the admirable intent of our Legislature to compel timely payment of proceeds to
royalty interest owners by those persons or entities occupying the status of a ‘payor.’“ See
also, Koch v. Wilber, 895 S.W.2d 854 (Tex.App.―Beaumont, 1995, writ denied). C.R. 229-232.
85
CR. 229; Appendix C.
86
CR. 229; Appendix C.
87
See, Appendix B and C. TEX. NAT. RES. CODE § 91.403. PAYMENT OF INTEREST ON
LATE PAYMENTS. (a) If payment has not been made for any reason in the time limits
Footnote continued on the next page.
20
from historical highs of 21.50% in December 1980 to 7.75%,88 there was still no
incentive for a payor to tender proceeds to all persons entitled to share in the
proceeds. Therefore, the clearly stated intent and purpose of H.B. 2363 and
enactment of a new law by the 70th Legislature in 1987,89 was to add the incentive
of a mandatory MINIMUM AWARD of monetary damages and reasonable
attorney’s fees in a final judgment “if a suit is filed to collect proceeds and interest
from the sale of oil and gas production.”90
91
specified in Section 91.402 of this code, the payor must pay interest to a payee beginning at the
expiration of those time limits at two percentage points above the percentage rate charged on
loans to depository institutions by the New York Federal Reserve Bank, unless a different rate of
interest is specified in a written agreement between payor and payee.”
88
The Court is asked to take judicial notice of the historical U.S. prime interest rate history from
1980 through 1987.
89
See, Appendix D. TEX. H.B. 2363, 70th Leg., R.S. (ch. 1011) (1987).
90
CR.233-255; See, Appendix D (ch. 1011, § 3) “H.B. No. 2363, AN ACT relating to attorney’s
fees and damages in a suit for failure to timely pay proceeds derived from the sale of oil or gas
production.”
91
CR. 238; See, Appendix D. (Tex. H.B. 2363, 70th Leg. R.S.—Bill Analysis)
21
The plain language of the stated purpose indicates the legislative intent was
to provide a minimum award of $200 and reasonable attorney’s fees if the payee
was forced to file to collect unpaid royalties or unpaid interest. Under the
Resources Code penalty enacted in 1983 under Sec. 91.403(c), the obligation to
pay interest as well as the right to receive interest terminated on delivery of the
proceeds. Thus, even though Genesis did not tender the statutory interest penalty
until June 25, 2014, the amount of the penalty was fixed on the date the proceeds
were finally paid, and the statutory interest penalty would never increase from that
fixed amount – no matter how long or how much effort it took for Mrs. Garcia to
collect the interest due.
As a result, following the 1987 enactment of Resources Code Section
91.406, unless the payor was able to establish a reasonable excuse for withholding
timely payment, the royalty owner was no longer limited to collection of interest,
and was instead entitled to reasonable attorney’s fees and a minimum damage
award as additional mandatory remedies if the essential elements of the Resources
Code cause of action was proven in a court of law. There is no evidence elsewhere
in the legislative history to support the theory that the incentive of being forced to
pay for the services of an attorney hired to collect unpaid royalty or interest and
22
file suit could be circumvented, defeated, nullified, thwarted -- and the penalties
avoided -- by merely waiting until the eve of trial to tender the final payment due.
The statute’s title is “ATTORNEY’S FEES and MINIMUM AWARD.”92 In
adopting the amendment the Legislature intended to change the existing law, and
therefore the courts must give some effect to the amendment as a whole and
understand the legal effect of the amendment enacted by the Legislature. By its
plain terms and reading the statutory cause of action established under Sec.
91.404(a)-(b) only requires the Payor to have failed to timely pay; and continue
that failure after receiving 30 days written notice without having a reasonable
cause for non-payment,93 before suit can be filed to collect unpaid oil and gas
proceeds or interest. If payment is not made within thirty days of receiving written
notice, and if there is no reasonable cause for nonpayment, judicial action can
commence and the statutory penalties of Section 91.406 are to be imposed, in
92
See, Appendix B. TEXAS NATURAL RESOURCES CODE § 91.406 (emphasis added).
93
See, Appendix B. TEXAS NATURAL RESOURCES CODE § 91.404. “NONPAYMENT OF OIL
AND GAS PROCEEDS OR INTEREST. (a) If a payee seeks relief for the failure of a payor to
make timely payment of proceeds from the sale of oil or gas or an interest in oil or gas as
required under Section 91.402 or 91.403 of this code, the payee must give the payor written
notice by mail of that failure as a prerequisite to beginning judicial action against the payor for
nonpayment.
(b) The payor has 30 days after receipt of the required notice from the payee in which to pay the
proceeds due, or to respond by stating in writing a reasonable cause for nonpayment.
(c) A payee has a cause of action for nonpayment of oil or gas proceeds or interest on those
proceeds as required in Section 91.402 or 91.403 of this code in any court of competent
jurisdiction in the county in which the oil or gas well is located.”
23
addition to statutory accrued interest. A defendant found to have violated the
statute was to be held liable for a minimum statutory award of $200 in actual
damages, plus reasonable attorney’s fees.
Genesis’ position would allow a payor to withhold payment for up to four
years (the limitations period) with “no incentive” to make timely payment—
because they could entirely avoid payment of the $200 Minimum Award and
the attorney’s fee penalty—as long as payment was eventually made at any time
prior to trial. Interest rates charged by the New York Federal Reserve since 2011
have been - for the most part – at or below 1/10th of 1%, and only being required to
pay $585.47 in statutory interest94 as the sole penalty for holding tens of thousands
of dollars in unpaid royalties for almost three years and forcing a royalty owner to
hire an attorney to collect the monies due, is a license to steal that was rejected and
prevented by the 70th Legislature through the enactment of the new law in 1987.
III. THE TRIAL COURT ERRED IN FINDING SECTION 91.403 OF THE
RESOURCES CODE PROVIDES THE ONLY MANDATORY PENALTY FOR LATE
PAYMENTS;
and
IV. THE TRIAL COURT ERRED IN FINDING “ACTUAL” MONETARY DAMAGES
ARE NECESSARY TO RECOVER A MINIMUM AWARD AND RECEIVE A
FAVORABLE FINAL JUDGMENT.
94
CR. 257-271.
24
A. THE LEGISLATURE IS NOT PRESUMED TO DO A USELESS ACT.
Texas courts should not adopt a construction that would render a law or
provision meaningless.95 In addition, the Legislature is not presumed to do a
useless act, and the law does not permit a wrong without a remedy.96
In 1987, the Legislature passed a new law adopting a Minimum Award of
$200.00 and requiring mandatory reasonable attorney’s fees to be paid as
additional penalties, “if suit is filed to collect proceeds and interest under this
subchapter.”97 Genesis argues that under their construction and “plain meaning”
of the statute, a royalty owner suing to collect unpaid proceeds and interest can
never file a lawsuit and receive a final judgment in their favor as long as the
“actual damages” (of proceeds and interest) are paid before the case reaches trial.
Genesis ignores the statute’s provision that “if actual damages ... are less than
$200, an additional amount” is to be included, “so that the total amount of
damages equals $200.” It is mathematically axiomatic that ZERO (0) dollars (if
proceeds and interest are paid on the eve of trial) are less than $200, and therefore
95
Centurion Planning Corp. v. Seabrook Venture II, 176 S.W.3d 498, 504 (Tex. App.―Houston
[1st Dist.] 2004, no pet.).
96
Tex. Lottery Comm'n v. First State Bank of DeQueen, 325 S.W.3d 628, 637 (Tex. 2010)
("Courts 'do not lightly presume that the Legislature may have done a useless act.'"); see also
TEX. GOV'T CODE ANN. § 311.021(2) (stating the presumption that the Legislature intends an
entire statute to be effective); id. § 311.023(5) (West 2005) (providing that in construing statutes,
courts may consider the consequences of a particular construction).
97
See, Appendix B. TEX. NATURAL RESOURCES CODE § 91.406.
25
an additional amount is to be included in the Minimum Award to ensure that actual
damages are at least $200.00. The “plain meaning” of less than $200.00, is Zero
Dollars (0) to Two Hundred Dollars ($200.00).
The Legislature’s addition of Section 91.406 to the Resources Code
fundamentally altered the statute’s remedial scheme, by adding additional penalties
as an incentive to make timely payments of proceeds and interest to royalty
owners. Adopting the construction imposed by Genesis relegates statutory interest
calculated under Sec. 91.403 to be the only penalty – even if suit must be filed to
collect proceeds or interest – and renders the incentive penalties enacted under Sec.
91.406 completely inoperative, superfluous, or useless.98
B. GENESIS CANNOT RE-WRITE THE STATUTE TO SAY “IF ACTUAL
DAMAGES ARE GREATER THAN ZERO.”
Genesis argued that because all proceeds and accrued interest had been paid
after suit was filed, Mrs. Garcia would not be entitled to a favorable judgment.
Citing In re Nalle Plastics Family, L.P.,99 and other breach of contract cases,
Genesis argued that there is no basis to award Mrs. Garcia a favorable judgment
under a Sec. 91.404 cause of action, because attorney’s fees are not “damages.”
98
City of Marshall v. City of Uncertain, 206 S.W.3d 97, 105 (Tex. 2006); see also, Dunnagan v.
Watson, 204 S.W.3d 30, 43 (Tex.App.―Fort Worth 2006, pet. denied).
99
In re Nalle Plastics, 406 S.W.3d 168 (Tex. 2013).
26
While it is true that under a breach of contract, there must be a recovery of
some measure of economic damages before a plaintiff is entitled to recover
attorney’s fees, the statutory scheme of a Resources Code recovery under Section
91.406 is not so limiting. Genesis argues that Section 91.406 must be read as only
entitling a plaintiff to an additional amount if damages are greater than zero. But
the Legislature did not write: “if the actual damages to the plaintiff are greater
than zero ...”. Instead the Legislature created a MINIMUM AWARD of $200.00
in actual damages, and if actual damages are less than $200.00, then an award of
an additional amount - so that the total amount of damages equals $200.00. The
mathematical formula [0 + $200 = $200] is a fairly easy concept.
In addition, this is not the only statute that the Legislature has written which
allows for an award of a minimum amount of damages and reasonable attorney’s
fees, without proof of any actual damages. Texas Civil Practice & Remedies Code
Sec. 12.002, awards the greater of $10,000.00 - or actual damages as a result of
someone filing a fraudulent lien or claim against real property.100 Thus even if a
plaintiff is found to have suffered no actual economic damages as a result of
someone violating the fraudulent lien statute, there is still a $10,000 minimum
statutory recovery in actual damages [0 + $10,000 = $10,000]. In addition to the
100
TEX. CIV. PRAC. & REM. CODE SEC. 12.002(3)(b).
27
minimum award of damages, the fraudulent lien statute also includes a mandatory
recovery of reasonable attorney’s fees (even if there are no actual damages), as
long as the three essential elements of a fraudulent lien or claim filed against real
property are established by the fact finder.101
C. ONE SATISFACTION RULE DOES NOT APPLY.
After Mrs. Garcia’s contractual claim against the Oil Company Defendant
(LTD) was severed and the Fourth Amended Petition was filed against Genesis,
Genesis argued that it would be entitled to a settlement credit against the $200
“mandatory Minimum Award” guaranteed by Section 91.406 of the Resources
Code; and as a result, contended that Garcia would still be barred from recovering
statutory attorney’s fees for this tort. However, Gloria Garcia’s claim against LTD
concerned their contractual failure to pay royalties under the terms of the oil and
gas lease with Garcia, which was a breach of contract claim.102 Section 91.402(h)
of the Resources Code expressly states that this statute “shall not change or relieve
the lessee's specific, expressed or implied obligations under an oil and gas
lease.”103
101
TEX. CIV. PRAC. & REM. CODE § 12.002(a) - 12.002(3)(b); Taylor Elec. Services, Inc. v.
Armstrong Elec. Supply Co., 167 S.W.3d 522, 530-31 (Tex. App.―Ft. Worth 2005, no pet.); see
also, Aland v. Martin, 271 S.W.3d 424, 430 (Tex.App.―Dallas 2008, no pet.).
102
CR. 24.
103
See, Appendix B. TEXAS NATURAL RESOURCES CODE § 91.402(h).
28
In contrast, Mrs. Garcia had no contract with Genesis. In addition to the
absence of joint liability under the Resources Code violation, Genesis is barred by
judicial estoppel from now claiming joint liability or joint tortfeasor status with
LTD.104 Genesis successfully obtained a partial summary judgment against LTD,
taking the position that “Garcia’s other claim under the Texas Natural Resources
Code does not sound in tort, as that claim is expressly statutory.”105 In obtaining
partial summary judgment, Genesis contended LTD had no exposure to any tort
claims and was not a joint tortfeasor. The doctrine of judicial estoppel “precludes
a party from adopting a position inconsistent with one that it maintained
successfully in an earlier proceeding.”106 The doctrine is not strictly speaking
estoppel, but rather is a rule of procedure based on justice and sound public
policy.107 Its essential function “is to prevent the use of intentional self-
contradiction as a means of obtaining unfair advantage.”108 The species of judicial
estoppel alleged in this case is “based on the principle that a party should not be
104
CR.217-225.
105
CR. 223-2224.
106
Pleasant Glade Assembly of God v. Schubert, 264 S.W.3d 1, 6 (Tex. 2008).
107
Pleasant Glade Assembly of God, 264 S.W.3d at 6; Long v. Knox, 155 Tex. 581, 291 S.W.2d
292, 295 (1956).
108
Pleasant Glade Assembly of God, 264 S.W.3d at 6; Andrews v. Diamond, Rash, Leslie &
Smith, 959 S.W.2d 646, 650 (Tex. App.—El Paso 1997, writ denied); Hall v. GE Plastic Pac.
PTE Ltd., 327 F.3d 391, 396 (5th Cir. 2003) (noting basis for estoppel is the assertion of a
position clearly inconsistent with a previous position accepted by the court); Tenneco Chems.,
Inc. v. William T. Burnett & Co., 691 F.2d 658, 665 (4th Cir.1982) (finding “the determinative
factor is whether the appellant intentionally misled the court to gain an unfair advantage”).
29
permitted to abuse the judicial process by obtaining one recovery based first on
affirming a certain state of facts, and then another recovery based on denying the
same set of facts.”109 Genesis was the first purchaser of oil produced and the only
entity that suspended and maintained possession of Garcia’s funds.110 As a result
Genesis was the only entity against which Gloria Garcia had a statutory Resources
Code claim.
In Bradshaw v. Baylor University, the one-satisfaction rule was first
articulated as being derived from tort law principles of contribution.111 Just as in
Bradshaw, in Stewart Title112 the Texas Supreme Court emphasized that the
damages all arose from the “alleged misrepresentations of all the defendants,”113
and in Crown Life,114 the Court again explained that under the one-satisfaction rule,
“the non-settling defendant may only claim a credit based on the damages for
which all tortfeasors are jointly liable.”115 The Crown Life Court went on to say
that “[s]eparate or punitive damages paid by the settling defendant” on his own
behalf cannot offset a judgment against a non-settling defendant, since such
109
Metroflight, Inc. v. Shaffer, 581 S.W.2d 704, 709 (Tex. Civ. App.—Dallas 1979, writ ref’d
n.r.e).
110
CR. 180-182 (Genesis Crude Oil, L.P.’s oil run suspense accounting).
111
Bradshaw v. Baylor University, 126 Tex. 99, 84 S.W.2d 703, 705 (Tex. 1935).
112
Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1, 7 (Tex. 1991).
113
Stewart Title, 822 S.W.2d at 8.
114
Crown Life Ins. Co. v. Casteel, 22 S.W.3d 378, 390 (Tex. 2000).
115
Crown Life Ins., 22 S.W.3d at 391.
30
amounts would not constitute “common damages.”116 By the same logic, in GE
Capital Commercial, Inc. v. Worthington Nat’l Bank,117 the Fifth Circuit held that
where one claim sounds in contract and the other in tort, and the settling party and
non-settling party did not share a common theory of legal liability, then factual
commonality did not render Citibank a joint tortfeasor with Worthington for one-
satisfaction rule purposes.118
V. THE TRIAL COURT ERRED IN FINDING THAT GARCIA WAS NOT ENTITLED
PROCEED TO TRIAL.
A. THERE WAS A JUSTICIABLE CONTROVERSY.
Genesis argued that Mrs. Garcia was not entitled to proceed to trial, because
her request for declaratory relief improperly duplicated the elements of her claim
under the Resources Code. However, the Uniform Declaratory Judgment Act
(UDJA) provides a basis by which a claimant can obtain a declaration of rights,
status, or other legal relations under a writing or a statute.119 A suit under the
UDJA is not confined to cases in which the parties have a cause of action apart
from the Act itself.120 The Legislature intended the UDJA to be remedial, to settle
116
Id. at 391–92.
117
GE Capital Commercial, Inc. v. Worthington Nat. Bank, 754 F.3d 297 (5th Cir. 2014)
(applying Texas law).
118
GE Capital, 754 F.3d at 309.
119
TEX. CIV. PRAC. & REM.CODE ANN. § 37.004.
120
Texas Dep't of Pub. Safety v. Moore, 985 S.W.2d 149, 153 (Tex.App.―Austin 1998, no pet.).
31
and afford relief from uncertainty and insecurity with respect to rights, and to be
liberally construed.121
Under the Declaratory Judgment Act, a claimant must show that (1) a
justiciable controversy exists as to the rights and status of the parties; and (2) the
controversy will be resolved by the declaration sought.122 Ripeness implicates
subject-matter jurisdiction and emphasizes the requirement of a concrete injury in
order to present a justiciable claim.123 Ripeness is concerned with when an action
can be brought and seeks to conserve judicial time and resources for real and
current controversies rather than hypothetical or remote disputes.124 Courts of this
state may not issue advisory opinions.125 An opinion issued in a case that is not ripe
would address only a hypothetical injury rather than remedying actual or imminent
harm.126
Mrs. Garcia was involved in an actual ongoing controversy to determine
whether or not she was able to prove the essential elements of the statutory
Resources Code cause of action, and if so, was she entitled to the Minimum Award
121
TEX. CIV. PRAC. & REM.CODE ANN. § 37.002; Moore, 985 S.W.2d at 153.
122
Moore, 985 S.W.2d at 153.
123
Waco Indep. Sch. Dist. v. Gibson, 22 S.W.3d 849, 851 (Tex.2000); Patterson v. Planned
Parenthood of Houston, 971 S.W.2d 439, 442 (Tex.1998).
124
Gibson, 22 S.W.3d at 851; Patterson, 971 S.W.2d at 442–43.
125
Patterson, 971 S.W.2d at 443; Texas Ass'n of Bus. v. Texas Air Control Bd., 852 S.W.2d 440,
444 (Tex.1993).
126
See Texas Ass'n of Bus., 852 S.W.2d at 444.
32
and recovery of her reasonable attorney’s fees that had been incurred in trying to
collect her oil and gas proceeds and interest since 2011. This was not a
hypothetical issue. Because Genesis had suspended funds since December 2010,
and refused to timely pay proceeds and interest due to her, Mrs. Garcia had been
forced to file suit for Nonpayment under the Texas Natural Resources Code.
Unless Genesis had a reasonable cause for nonpayment,127 Mrs. Garcia was
entitled to a declaration of her statutory right to proceed to trial, and obtain
findings by the trier of fact whether Genesis breached its duty to timely pay
proceeds under the Resources Code; whether Mrs. Garcia had given the requisite
30 day notice prior to filing suit under the provisions of the Resources Code; and
whether Genesis had a legitimate excuse for refusing to tender a division order
and/or making timely payment.
Mrs. Garcia was relying on the UDJA to provide a basis to obtain a
declaration of her rights, status, and remedies under statute.128 And while the
Court might have found Mrs. Garcia was entitled to reasonable and necessary fees
127
See, Appendix B. TEXAS NATURAL RESOURCES CODE § 91.404(b): “The payor has 30 days
after receipt of the required notice from the payee in which to pay the proceeds due, or to
respond by stating in writing a reasonable cause for nonpayment.”
128
See TEX. CIV. PRAC. & REM.CODE ANN. § 37.004 (West 1997); City of Waco, 83 S.W.3d at
177.
33
under the UDJA, she was relying on the Texas Natural Resources Code to establish
her statutory right to recover reasonable attorney’s fees.
B. GARCIA WAS ENTITLED TO KEEP A BINDING DIVISION ORDER IN PLACE.
The UDJA may be used to clarify the meaning of statutes.129 Courts have
also issued declaratory judgments construing a statute before the statute is
violated.130 Genesis threw down the gauntlet in making what was actually a
“conditional” tender of accrued interest on the late payments, by continuing to
challenge both past or future liability to Mrs. Garcia, and disputing whether it was
ever “at any time” the statutory “Payor” under the lease—with a continuing duty to
keep in place a binding division order.131
132
. According to Sec. 91.402(e) of the Resources Code, division orders are
binding only for the time and to the extent that they have been acted on and made
the basis of settlements and payments – and from the time that notice is given
129
Frasier v. Yanes, 9 S.W.3d 422, 427 (Tex.App.―Austin 1999, no pet.).
130
The Pea Picker, Inc. v. Reagan, 632 S.W.2d 674, 677 (Tex.App.―Tyler 1982, writ ref'd
n.r.e.) (trial court had power to construe Open Meetings Act and determine whether notice must
be given and when meeting is required to be open).
131
CR. 187.
132
Id.
34
that settlements will not be made on the basis provided in them, they cease to
be binding.133 Division orders may be terminated with thirty days notice by either
party.134 In addition, the statute places the burden on the Payor to submit a
division order to the payee for its signature; it is not the royalty owner or mineral
interest owner's burden to draft its own division order, sign it, and submit it to the
payor.135 In order to avoid the necessity for future litigation, Mrs. Garcia asked
the trial court to determine the status and continuing duties and obligations of the
parties and declare whether Genesis had a duty to maintain a binding division order
reflecting the ownership interests of Gloria Garcia in the Willie De La Fuente lease
as long as Genesis remained the Payor under the lease.136
CONCLUSION & PRAYER
The trial court erred in finding that the cause of action for non-payment of
oil or gas proceeds and interest under Section 91.404(c) of the Texas Natural
Resources Code was extinguished, and declaring that Gloria Garcia was entitled to
133
See, Appendix B. TEXAS NATURAL RESOURCES CODE § 91.402(e) (“Division orders are
binding for the time and to the extent that they have been acted on and made the basis of
settlements and payments, and, from the time that notice is given that settlements will not be
made on the basis provided in them, they cease to be binding.”) (emphasis added).
134
See, Appendix B. TEXAS NATURAL RESOURCES CODE § 91.402(e) (“Division orders are
terminable by either party on 30 days written notice.”), see also, Phillips Petroleum Co. v.
Williams, 158 F.2d 723, 727 (5th Cir. 1946).
135
Prize Energy Res., L.P. v. Cliff Hoskins, Inc., 345 S.W.3d 537, 560 (Tex.App.―San Antonio
2011, no pet.).
136
CR. 69-70, 72.
35
a “take nothing” judgment.137 The trial court erred in making a determination that
statutory interest under Section 91.403(a) of the Texas Natural Resources Code
was the only mandatory penalty – even if suit was filed to collect unpaid oil and
gas proceeds and interest. The trial court erred in determining that if suit was filed,
the Minimum Award of $200.00 under Section 91.406 of the Texas Natural
Resources Code meant a plaintiff must have actual damages “greater than zero” at
the time of trial, instead of “less than $200.00.” The trial court erred in refusing to
consider the Legislature’s intent in enacting a $200 Minimum Award and
attorney’s fees under Section 91.406, and declaring that Gloria Garcia was entitled
to a “take nothing” judgment on this claim. Finally, the trial court erred in
preventing Mrs. Garcia from proceeding to trial on the essential elements of the
Resources Code lawsuit, or obtaining a declaration of the continuing duties and
obligations of the parties under Section 91 of the Texas Natural Resources Code.
Accordingly, this Court should reverse the trial court’s order granting
Genesis’ Motion for Final Summary Judgment to the extent it ruled that Gloria
Garcia “take nothing” on the cause of action established under Texas Natural
Resources Code Section 91.404, as it was not extinguished by late payment of
proceeds and statutory interest. This Court should also reverse the order of the
137
See, Appendix A.
36
trial court that granted Genesis a favorable judgment on Gloria Garcia’s Texas
Natural Resources Section 91.406 claim of a Minimum Award of $200.00, and
reasonable attorney’s fees.
After reversing the trial court, this Court should render as follows:
1. That a suit filed to collect proceeds and interest under the Texas
Natural Resources Code Section 91.404 cause of action, is not extinguished by
payment of proceeds and statutory interest.
2. That the statutory interest penalty established under Texas Natural
Resources Code Section 91.403 is not the only mandatory penalty to be imposed, if
a plaintiff has filed suit to collect proceeds and interest.
3. That a plaintiff is entitled to a favorable final judgment if he or she
can establish the essential elements of a cause of action filed under Texas Natural
Resources Code Section 91.404.
4. That “if actual damages ... are less than $200.00” means that a
plaintiff who files suit to collect proceeds and interest under the Texas Natural
Resources Code and establishes the essential elements of the Section 91.404 cause
of action, is entitled to a Minimum Award of $200, and if actual damages at trial
are zero, “an additional amount so that the total amount of damages equals $200,”
plus reasonable attorney’s fees.
5. That Genesis failed to make timely payments of oil and gas proceeds
to Gloria Garcia after December 1, 2010; Gloria Garcia gave written notice of the
failure to pay as a prerequisite to beginning judicial action for nonpayment; more
than 30 days elapsed after notice was given before suit was filed; Genesis had no
reasonable cause for non-payment; and Gloria Garcia filed suit to collect proceeds
and interest under the Texas Natural Resources Code.
6. That Gloria Garcia is entitled to a Minimum Award of $200.00 in
actual damages and $51,786.50, as a fair and reasonable fee for the necessary legal
services rendered to Gloria Garcia through July 23, 2014.
37
With respect to reasonable attorney's fees incurred by Gloria Garcia since
July 23, 2014, this Court should remand the case for trial before a jury, for this
limited purpose. This Court should further grant all other relief, at law or in
equity, to which Gloria Garcia is entitled.
Respectfully submitted,
James R. Harris
State Bar No. 09066000
HARRIS & GREENWELL-OF COUNSEL
The Six Hundred Building
600 Leopard Street, Suite 924
Corpus Christi, Texas 78401
Telephone: (361) 929-5362
Facsimile: (361) 462-4580
Emai I: jharris@harris-greenwell.com
HARRIS & GREENWELL
One Shoreline Plaza
800 N. Shoreline Blvd., Suite 2800-S
Corpus Christi, Texas 78401
Telephone: (361) 883-1946
Facsimile: (361) 882-2900
Email: agreenwell@harris-greenwell.com
-·/"(..=-- . Greenwell
State Bar No. 00784170
ATTORNEYS FOR APPELLANT
38
CERTIFICATE OF COMPLIANCE
In compliance with Texas Rule of Appellate Procedure 9.4(i)(3), I certify
that the number of words in this brief, excl ing those matters listed in Rule
9.4(i)(l), is 9,497 words.
CERTIFICATE OF SERVICE
I hereby certify, by my signature above, that on the 2th day of February,
2015, the foregoing document has been served to the following viae-service.
Everard A. Marseglia, Jr. Hon. Martin J. Chiuminatto, Jr.
emarseglia@liskow.com mchium2@gmail.com
James T. Kittrell 229th District Court - Duval County
jkittrell@liskow.com P. 0. Box 1482
First City Tower Kingsville, Texas 78364-1482
1001 Fannin Street, Suite 1800
Houston, Texas 77002
39
APPENDICES
Order Granting Genesis Crude Oil, L.P.’s Motion for Final Summary Judgment
dated November 3, 2014.........................................................................................A
TEX. NATURAL RESOURCES CODE § 91.401-91.406............................................B
Tex. H.B. 1775, 68th Leg., R.S. 1983 (Bill Analysis)..............................................C
Tex. H.B. 2363, 70th Leg., R.S. 1987.......................................................................D
40
...
ORDER
(granting final summary judgment)
'
signed Nov. 3, 2014
.•·l
... •
I
·~ ~I I
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(
FILED AT } o~:v O'CLOCK fu
ORIGINAL NOV 12 2014
~ !R. BARJ,P~,. -Aw.$
CAUSE NO: DC-12-200 ``T-!/iliftlmt~
GLORIA GARCIA, § IN THE DISTRICT COURT OF
§
Plaintiff, §
§
v. §
§
L.T.D. EXPLORATIONS, INC., § DUVAL COUNTY, TEXAS
LARRY T. DONAHO, DEBRA A. §
DONAHO, TEXAS GREEN GOLD §
LLC, DAVID L. DONAHO, L YNNAE §
DONAHO, SUN EXPLORATION, §
INC., AND GENESIS CRUDE OIL, L.P. §
Defendants. § 229TH JUDICIAL DISTRICT
ORDER
0~ this day came on to be heard Defendant Genesis Crude Oil, L.P's Motion for Final
Summary Judgment. After considering the motion, the response, the pleadings on file, and the
arguments of counsel, if any, the Court is of the opinion that Genesis Crude Oil, L.P's Motion for
Final Summary Judgment should be GRANTED.
It is therefore ORDERED that Defendant Genesis Crude Oil, L.P's Motion for Final
Summary Judgment is GRANTED.
The Court ORDERS that Plaintiff Gloria Garcia take nothing on her cause of action
against Defendant Genesis Crude Oil, L.P. for non-payment of oil or gas proceeds and interest
pursuant to Tex. Nat. Res. Code§ 91.404(c) and that JUDGMENT be entered accordingly.
00296
Cause No.DC-12-200; Gloria Garcia vs. Genesis Crude Oil, L. P.
('
'ORIGINAL
Additionally, the Court ORDERS that Plaintiff Gloria Garcia take nothing on her claim
against Genesis Crude Oil, L.P. for attorney's fees and a mandatory minimum of $200.00
pursuant to Tex. Nat. Res. Code§ 91.406 and that JUDGMENT be entered accordingly.
This is a final summary judgment. All relief not expressly granted herein is DENIED.
This order is final and appealable.
-2-
00297
Cause No.DC-12-200; Gloria Garcia vs. Genesis Crude Oil, L. P.
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SUBCHAPTER J. PAYMENT FOR PROCEEDS OF SALE
Sec. 91.401. DEFINITIONS. In this subchapter:
(1) "Payee" means any person or persons legally entitled to
payment from the proceeds derived from the sale of oil or gas from an oil or
gas well located in this state.
(2) "Payor" means the party who undertakes to distribute oil
and gas proceeds to the payee, whether as the purchaser of the production of
oil or gas generating such proceeds or as operator of the well from which
such production was obtained or as lessee under the lease on which royalty is
due. The payor is the first purchaser of such production of oil or gas from
an oil or gas well, unless the owner of the right to produce under an oil or
gas lease or pooling order and the first purchaser have entered into
arrangements providing that the proceeds derived from the sale of oil or gas
are to be paid by the first purchaser to the owner of the right to produce
who is thereby deemed to be the payor having the responsibility of paying
those proceeds received from the first purchaser to the payee.
(3) "Division order" means an agreement signed by the payee
directing the distribution of proceeds from the sale of oil, gas, casinghead
gas, or other related hydrocarbons. The order directs and authorizes the
payor to make payment for the products taken in accordance with the division
order. When used herein "division order" shall also include "transfer
order".
(4) "Transfer order" means an agreement signed by a payee and
his transferee (new payee) directing the payor under the division order to
pay another person a share in the oil or gas produced.
Added by Acts 1983, 68th Leg., p. 966, ch. 228, Sec. 1, eff. Sept. 1, 1983.
Amended by Acts 1991, 72nd Leg., ch. 650, Sec. 1, eff. Aug. 26, 1991.
Sec. 91.402. TIME FOR PAYMENT OF PROCEEDS.
(a) The proceeds derived from the sale of oil or gas production from
an oil or gas well located in this state must be paid to each payee by payor
on or before 120 days after the end of the month of first sale of production
from the well. After that time, payments must be made to each payee on a
timely basis according to the frequency of payment specified in a lease or
other written agreement between payee and payor. If the lease or other
agreement does not specify the time for payment, subsequent proceeds must be
paid no later than:
(1) 60 days after the end of the calendar month in which
subsequent oil production is sold; or
(2) 90 days after the end of the calendar month in which
subsequent gas production is sold.
(b) Payments may be withheld without interest beyond the time limits
set out in Subsection (a) of this section when there is:
(1) a dispute concerning title that would affect distribution
of payments;
(2) a reasonable doubt that the payee:
(A) has sold or authorized the sale of its share of the
oil or gas to the purchaser of such production; or
(B) has clear title to the interest in the proceeds of
production;
(3) a requirement in a title opinion that places in issue the
title, identity, or whereabouts of the payee and that has not been satisfied
by the payee after a reasonable request for curative information has been
made by the payor.
(c)(1) As a condition for the payment of proceeds from the sale of
oil and gas production to payee, a payor shall be entitled to receive a
signed division order from payee containing only the following provisions:
(A) the effective date of the division order, transfer
order, or other instrument;
(B) a description of the property from which the oil or
gas is being produced and the type of production;
(C) the fractional and/or decimal interest in production
claimed by payee, the type of interest, the certification of title to the
share of production claimed, and, unless otherwise agreed to by the parties,
an agreement to notify payor at least one month in advance of the effective
date of any change in the interest in production owned by payee and an
agreement to indemnify the payor and reimburse the payor for payments made if
the payee does not have merchantable title to the production sold;
(D) the authorization to suspend payment to payee for
production until the resolution of any title dispute or adverse claim
asserted regarding the interest in production claimed by payee;
(E) the name, address, and taxpayer identification number
of payee;
(F) provisions for the valuation and timing of
settlements of oil and gas production to the payee; and
(G) a notification to the payee that other statutory
rights may be available to a payee with regard to payments.
(2) Such a division order does not amend any lease or operating
agreement between the interest owner and the lessee or operator or any other
contracts for the purchase of oil or gas.
(d) In the alternative, the provisions of Subsection (c) of this
section may be satisfied by a division order for oil payments in
substantially the following form and content:
DIVISION ORDER
TO: (Payor)Property No.
Effective
(Date)
The undersigned severally and not jointly certifies it is the legal
owner of the interest set out below of all the oil and related liquid
hydrocarbons produced from the property described below:
OPERATOR:
Property name:
County: State:
Legal Description:
OWNER NO. TAX I.D./SOC. SEC. NO. PAYEE
DIVISION OF INTEREST
THIS AGREEMENT DOES NOT AMEND ANY LEASE OR OPERATING AGREEMENT BETWEEN
THE INTEREST OWNERS AND THE LESSEE OR OPERATOR OR ANY OTHER CONTRACTS FOR THE
PURCHASE OF OIL OR GAS.
The following provisions apply to each interest owner ("owner") who
executes this agreement:
TERMS OF SALE: The undersigned will be paid in accordance with the
division of interests set out above. The payor shall pay all parties at the
price agreed to by the operator for oil to be sold pursuant to this division
order. Purchaser shall compute quantity and make corrections for gravity and
temperature and make deductions for impurities.
PAYMENT: From the effective date, payment is to be made monthly by
payor's check, based on this division of interest, for oil run during the
preceding calendar month from the property listed above, less taxes required
by law to be deducted and remitted by payor as purchaser. Payments of less
than $100 may be accrued before disbursement until the total amount equals
$100 or more, or until 12 months' proceeds accumulate, whichever occurs
first. However, the payor may hold accumulated proceeds of less than $10
until production ceases or the payor's responsibility for making payment for
production ceases, whichever occurs first. Payee agrees to refund to payor
any amounts attributable to an interest or part of an interest that payee
does not own.
INDEMNITY: The owner agrees to indemnify and hold payor harmless from
all liability resulting from payments made to the owner in accordance with
such division of interest, including but not limited to attorney fees or
judgments in connection with any suit that affects the owner's interest to
which payor is made a party.
DISPUTE; WITHHOLDING OF FUNDS: If a suit is filed that affects the
interest of the owner, written notice shall be given to payor by the owner
together with a copy of the complaint or petition filed.
In the event of a claim or dispute that affects title to the division
of interest credited herein, payor is authorized to withhold payments
accruing to such interest, without interest unless otherwise required by
applicable statute, until the claim or dispute is settled.
TERMINATION: Termination of this agreement is effective on the first
day of the month that begins after the 30th day after the date written notice
of termination is received by either party.
NOTICES: The owner agrees to notify payor in writing of any change in
the division of interest, including changes of interest contingent on payment
of money or expiration of time.
No change of interest is binding on payor until the recorded copy of
the instrument of change or documents satisfactorily evidencing such change
are furnished to payor at the time the change occurs.
Any change of interest shall be made effective on the first day of the
month following receipt of such notice by payor.
Any correspondence regarding this agreement shall be furnished to the
addresses listed unless otherwise advised by either party.
In addition to the legal rights provided by the terms and provisions
of this division order, an owner may have certain statutory rights under the
laws of this state.
Signature of Social Security/
Witness Interest Owner Tax I.D. No. Address
____________ _________________ _________________ ____________
____________ _________________ _________________ ____________
____________ _________________ _________________ ____________
Failure to furnish your Social Security/Tax I.D. number will result in
withholding tax in accordance with federal law, and any tax withheld will not
be refundable by payor.
(e) If an owner in a producing property will not sign a division
order because it contains provisions in addition to those provisions provided
for in this section, payor shall not withhold payment solely because of such
refusal. If an owner in a producing property refuses to sign a division
order which includes only the provisions specified in Subsection (c) of this
section, payor may withhold payment without interest until such division
order is signed.
(f) Payment may be remitted to a payee annually for the aggregate of
up to 12 months' accumulation of proceeds if the payor owes the payee a total
amount of $100 or less for production from all oil or gas wells for which the
payor must pay the payee. However, the payor may hold accumulated proceeds
of less than $10 until production ceases or the payor's responsibility for
making payment for production ceases, whichever occurs first. On the written
request of the payee, the payor shall remit payment of accumulated proceeds
to the payee annually if the payor owes the payee less than $10. On the
written request of the payee, the payor shall remit payment of proceeds to
the payee monthly if the payor owes the payee more than $25 but less than
$100.
(g) Division orders are binding for the time and to the extent that
they have been acted on and made the basis of settlements and payments, and,
from the time that notice is given that settlements will not be made on the
basis provided in them, they cease to be binding. Division orders are
terminable by either party on 30 days written notice.
(h) The execution of a division order between a royalty owner and
lessee or between a royalty owner and a party other than lessee shall not
change or relieve the lessee's specific, expressed or implied obligations
under an oil and gas lease, including any obligation to market production as
a reasonably prudent lessee. Any provision of a division order between payee
and its lessee which is in contradiction with any provision of an oil and gas
lease is invalid to the extent of the contradiction.
(i) A division order may be used to clarify royalty settlement terms
in the oil and gas lease. With respect to oil and/or gas sold in the field
where produced or at a gathering point in the immediate vicinity, the terms
"market value," "market price," "prevailing price in the field," or other
such language, when used as a basis of valuation in the oil and gas lease,
shall be defined as the amount realized at the mouth of the well by the
seller of such production in an arm's-length transaction.
Added by Acts 1983, 68th Leg., p. 966, ch. 228, Sec. 1, eff. Sept. 1, 1983.
Amended by Acts 1991, 72nd Leg., ch. 650, Sec. 2, eff. Aug. 26, 1991; Acts
1995, 74th Leg., ch. 681, Sec. 1, eff. June 15, 1995.
Sec. 91.403. PAYMENT OF INTEREST ON LATE PAYMENTS. (a) If payment
has not been made for any reason in the time limits specified in Section
91.402 of this code, the payor must pay interest to a payee beginning at the
expiration of those time limits at two percentage points above the percentage
rate charged on loans to depository institutions by the New York Federal
Reserve Bank, unless a different rate of interest is specified in a written
agreement between payor and payee.
(b) Subsection (a) of this section does not apply where payments are
withheld or suspended by a payor beyond the time limits specified in Section
91.402 of this code because of the conditions enumerated in Section 91.402 of
this code.
(c) The payor's obligation to pay interest and the payee's right to
receive interest under Subsection (a) of this section terminate on delivery
of the proceeds and accumulated interest to the comptroller as provided by
Title 6, Property Code.
Added by Acts 1983, 68th Leg., p. 966, ch. 228, Sec. 1, eff. Sept. 1, 1983.
Amended by Acts 1985, 69th Leg., ch. 230, Sec. 18, eff. Sept. 1, 1985; Acts
1991, 72nd Leg., ch. 650, Sec. 3, eff. Aug. 26, 1991; Acts 1991, 72nd Leg.,
ch. 676, Sec. 1, eff. Sept. 1, 1991; Acts 1997, 75th Leg., ch. 1037, Sec.
39, eff. Sept. 1, 1997; Acts 1997, 75th Leg., ch. 1423, Sec. 14.15, eff.
Sept. 1, 1997.
Sec. 91.404. NONPAYMENT OF OIL AND GAS PROCEEDS OR INTEREST. (a) If
a payee seeks relief for the failure of a payor to make timely payment of
proceeds from the sale of oil or gas or an interest in oil or gas as required
under Section 91.402 or 91.403 of this code, the payee must give the payor
written notice by mail of that failure as a prerequisite to beginning
judicial action against the payor for nonpayment.
(b) The payor has 30 days after receipt of the required notice from
the payee in which to pay the proceeds due, or to respond by stating in
writing a reasonable cause for nonpayment.
(c) A payee has a cause of action for nonpayment of oil or gas
proceeds or interest on those proceeds as required in Section 91.402 or
91.403 of this code in any court of competent jurisdiction in the county in
which the oil or gas well is located.
Added by Acts 1983, 68th Leg., p. 966, ch. 228, Sec. 1, eff. Sept. 1, 1983.
Sec. 91.405. EXEMPTIONS. This subchapter does not apply to any
royalties that are payable to:
(1) the board of regents of The University of Texas System
under a lease of land dedicated to the permanent university fund; or
(2) the General Land Office as provided by Subchapter D,
Chapter 52, of this code.
Added by Acts 1983, 68th Leg., p. 966, ch. 228, Sec. 1, eff. Sept. 1, 1983.
Sec. 91.406. ATTORNEY'S FEES AND MINIMUM AWARD. If a suit is filed
to collect proceeds and interest under this subchapter, the court shall
include in any final judgment in favor of the plaintiff an award of:
(1) reasonable attorney's fees; and
(2) if the actual damages to the plaintiff are less than $200,
an additional amount so that the total amount of damages equals $200.
Added by Acts 1987, 70th Leg., ch. 1011, Sec. 1, eff. Aug. 31, 1987.
TEX. H.B. 1773,
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(Bill Analysis)
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HOUSE
STUDY HB 1775
GROUP bill analysis 4/21/83 Hanna
SUBJECT: Deadlines for paying oil and gas royalties
COMMITTEE: Energy: favorable, without amendment
VOTE: 5 ayes--Hanna, Agnich, Coody, Craddick, B. Hall
0 nays
4 absent--Cary, Clark, Bomer, Ha``ney
WITNESSES: None
DIGEST: This bill sets requirements for timely payment
of proceeds from the sale of oil and gas and speci-
fies procedures for cases of late payment or nonpay-
ment. The bill would require that payments to
each person entitled to a share of the proceeds
from the production be made within 120 days after
the end of the month of the first sale of the
output of an oil or gas well. The bill also sets
deadlines for payments from subsequent sales.
Late payments would be subject to an interest
penalty, unless payment was withheld because of
a title dispute affecting allocation of the proceeds or
because of a reasonable question concerning either
the payee's entitlement to share in the proceeds
or the payee's whereabouts. A payee could sue
for failure to make timely payments after giving
the payor 30 days' written notice.
Current law is totally vague as to deadlines for
royalty payments. Most l~ases don't specify deadlines
either, and there is no law specifically protecting
Texas royalty owners from deliberate delay of
their royalty checks. Many delays stem from legiti-
mate questions about the validity of titles or
the whereabouts of royalty owners. But some oil
operators have raised title questions just to
put off payments.
The drilling boom a few years ago brought a lot
of new investors into the Texas oil and gas business,
including some fly-by-night operators, high interest
rates gave marginal operators an incentive to
hold onto other people's money as long as possible.
Increased bankruptcies caused by the recent decline
in the industry have aggravated problems of late
payment and nonpayment. HB 646, by Craddick,
already passed by the House, addresses the problem
of bankruptcies more directly. But HB 1775 is
also needed, to establish some guidelines in cases
EXHIBIT
of late payment and nonpayment. All the associations
of producers and royalty owners support this bill.
5 ")")
00229
Cause No.DC-12-200; Gloria Garcia vs. Genesis Crude Oil, L. P.
(
HB 1775
page two
SUPPORTERS The 120~day deadline for payment after first purchase
SAY: is reasonable. A moderately long grace period
(ccmtinued) is needed at the beginning of a drilling and produc-
tion operation. Sometimes a well is drilled and
starts producing before all title questions are
reJolved. It.may take 30 to 45 days to get an
abstract, and another 30 ·to 45 days to get a title
opinion. Sometimes royalty owners delay in respon-
ding to division orders. When drilling starts
may also be influenced by the expiration date
of a lease or the availability of drilling rigs.
Title questions may be very cqmplex-~East Texas,
for example, is full of title problems, with missing
people, split interests, and improperly-worded
deeds.
Specifying a fixed 9-percent interest rate to
be added to late payments will simplify accounting
procedures.
~he oil industry would not support a proposal
to require that royalty payments be put in escrow
until title questions are resolved. This would
~equire having to set up too many accounts. Wyoming
has an escrow requirement, and oil operators have
had a lot of problems with it. An esc~ow requirement
would be unfair to legitim~te oil companies, which
mijy already be burdened with extra expenses when
title questions are involved.
There is no need for an additional provision cequicing
pijyment deadlines in future leases, as some have
proposed. Royalty owners would be sufficiently
protected under this bill. Leases may include
payment-deadline agreements under existing law.
OPPONENTS ~his bill would allow routine delays of 120 to
SAY: lSO days in making royalty payments, depending
on which day of the month the oil or gas was sold,
even in cases when there are no title problems.
This is too long. The bill should be amended
to set a 60- or 90-day deadline, except when title
problems give reasonable cause for delay.
The bill should be amended to specify a floating
interest rate on late payments, tied to market
conditions. Otherwise, when market interestrates
exceed the statutory rate, payors would have an
incentive to keep royalty own~rs' mpney longer
than they should.
23
00230
Cause No.DC-12-200; Gloria Garcia vs. Genesis Cru.de Oil, L. p_:
HB 1775
page three
OPPONENTS The bill should be amended to require that, when
SAY: payment is delayed because of a title question,
(continued) the royalty money must be put in an escrow account.
If the money is not placed in escrow, royalty
owners run a greater risk when a producer goes
bankrupt or an unscrupulous operator absconds.
The bill should require that all future leases
contain payment deadlines at least as stringent
as those specified in the bill. This would give
more notice to royalty owners of their protection
against late payments.
NOTES: SB 731, by Traeger, and its companion HB 1266,
by Coody, would require payment within 60 days
of the date of first sale, and within 45 days
after the end of the calendar month of subsequent
sales. SB 731 and HB 1266 specify a 12-percent
interest rate on late payments, require that payments
delayed due to title questions be put in a separate
account, allow payees to recover court costs and
attorney's fees when they win a judgment involving
a late payment, and specify that, if payment is
delayed to any person pending determination of
valid title or location of the payee, the delay
would not affect the timeliness of payment owed
to other royalty owners. SB 731 has been referred to
the Senate Natural Resources Committee. HB 1266
was heard in the House Energy Committee on April 12,
with no action taken.
SB 146, by Blake, would require that royalty payments
be made within 90 days of first sale, with an
annual interest rate of 18 percent on the unpaid
balance of late payments. SB 146 would require
oil and gas exploration and production leases
to state payment deadlines and would allow royalty
owners who win court judgments in cases of late
payment to recover court costs and dttorney's
fees. SB 146 has been referred to the Senate
Natural Resources Committee.
HB 846, by Craddick, has been passed by the House
and was scheduled for a hearing in the Senate
Natural Resources Committee on April 20. HB 846
would provide an automatic security interest (secured
claim) f~r owners and royalty-holders that would
allow them a priority claim against a purchase~
who failed to pay.
24
00231.
Cause No.DC-12-200; Gloria Garcia vs. Genesis Crude Oil, L. P.
------~------------------------``
\
··'"' ~
FILED MAR 23 9Jr
By
.ILl,0 /:
1Ls. No. o23fs, 3
A BILL TO BE ENTITLED
1 AN ACT
2 relatinq to attorney's feea and damaqea in a suit for failure to
3 timely pay proceeds derived from the sale of oil or qas production.
4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
5 SECTION 1. Subchapter K, Chapter 91, Natural Resources Code,
6 as added by Chapter 228, Acts of the 68th Leqislature, Regular
7 Session, 1983, is amended by addinq Section 91.406 to read as
8 follows:
9 Sec. 91.406. ATTORNEY'S FEES AND MINIMUM AWARD. If a suit
lO is filed to collect proceeds and interest under this subchapter,
ll the court shall include in any final judqment in favor of the
12 plaintiff an award of:
13 (l) reasonable attorney's fees; and
14 (2) if the actual damaqea to the plaintiff are less
15 than $200, an additional amount so that the total amount of damaqes
16 equals $200.
17 SECTION 2. This Act applies only to a suit filed on or after
18 the effective date of this Act.
19 SECTION 3. The iaportance of this leqislation and the
20 crowded condition of the calendars in both houses create an
21 emergency and an imperative public necesSity that the
22 constitutional rule requirinq billa to be read on three several
23 days in each house be suspended, and this rule is hereby suspended,
24 and that this Act take effect and be in force from and after ita
~ EXHIBIT
!_{g_
70R4490 DAK·D l
00233
Cause No.DC-12-200; Gloria Garcia vs. Genesis Crude Oil, L. P.
.• -
l paasaqe, and it is so enacted.
70R4490 DAK-D 2
00234
Cause No.DC-12-200; Gloria Garcia vs. Genesis Crude Oil, L. P.
(
1st PriD1
.BY Hackney H.B. No. 2363
A BILL TO BE ENTITLED
1 AN ACT
2 relating to attorney's fees and damages in a suit for failure to
3 timely pay proceeds derived from the sale of oil or gas p~oduction.
4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
5 SECTION 1. Subchapter K, Chapter 91, Natural Resources Code,
6 as added by Chapter 228, Acts of the 68th Legislature, Regular
7 Session, 1983, is amended by adding Section 91.406 to read as
8 follows:
9 Sec. 91.~06. ATTORNEY'S FEES AND MINIMUM AWARD. If a suit
10 is filed to collect proceeds and interest under this subchapter,
11 the court shall include in any final judqment in favor of the
12 plaintiff an award of:
13 (1) reasonable attorney's fees; and
a (2) if the actual damages to the plaintiff are less
15 than $200, an additional amount so that the total amount of damages
16 equals $200.
17 SECTION 2. This Act applies only to a suit filed on or after
18 the effective date of this Act.
19 SECTION 3. The importance of this legislation and the
20 crowded condition of the calendars in both houses create an
21 emerqency and an imperative public necessity that the
22 constitutional rule requiring bills to be read on three several
23 days in each house be suspended, and this rule is hereby suspended,
24 and that this Act take effect and be in force from and after its
70R4490 DAK-D 1
00235
Cause No.DC-12-200; Gloria Garcia vs. Genesis Crude Oil, L. P:
H.B. No. 2363
l passage, and it is so enacted.
2
00236
Cause No.DC-12-200; Gloria Garcia vs. Genesis Crude Oil, L. P.
(
COMMmEE REPORT
4 -J.'f-8'1
(dew)
Sir:
We, your COMMITTEE ON ENERGY,
to whom wa1 reterr.d .:l .3 ~ "
t1 B (measure) have had the same under ~ and beg to ·report
back with the recommendation 1hat It
M"c10 paSI, without amendment.
( ) do pa11, with amendment(&).
( I do paaa and be not prim.d; a ~e CommlttM Subetltute Is recommended In lieu of the original ~e.
A fiiCII note was requested. (~ ( ) no
An authOr's fiscal statement was requelted. ( ) yea M1io
The Committee recommends that this measure be placed on tt. fl
Tnis measure ( ) propoHa new law. (ot(amenda exlaUng taw.
House Sponsor or S.nata MNIUrt - - - - - - - - - - - - - - - - -
The mnsure was reported from Conwnlttet by the folowlng vote:
AYE NAY ABSENT
Hackney, Ch. ../
Clark, V.C. v
McW~Mama C.B.O. v
..,/".
AoniCh
Craddlck ./
Penn!naton v
Smith, A. ./
Smithee v'
Yost \/
Total
'7
Q
aye
nay c~
I
-~
Q preaent, not voting
.:l. abaent
00237
Cause No.DC-12-200; Gloria Garcia vs. Genesis Crude Oil, L. P.
BILL ANALYSIS
H. B. 2363 Committee on Energy
By: Hackney
Background
Chapter 91 of the Natural Resources Code deals with regulation of
oil and gas production by the Railroad Commission of Texas, In
1983, the 68th Legislature amended Chapter 91 by adding
Subchapter K, which provides that a person or persons entitled to
payment from the proceeds derived from the sale of oil or gas has
a cause of action for nonpayment in a court of competent
jurisdiction. Since many of these claims involve relatively
small amounts of money, it is sometimes difficult for an
individual to have a cause resolved in court.
Purpose
H.B. 2363 would add an incentive of reasonable attorney's fees
and a minimum award in any final judgement in favor of the
plaintiff in cases involving nonpayment of oil and gas proceeds
and interest on late payments.
Synopais
H.B. 2363 amends Subchapter K, Chapter 91 of the Natural
Resources Code by adding Section 91.406, providing that if a suit
is filed to collect proceeds and interest from the sale of oil
and gas production, the court shall include reasonable attorney's
fees and a minimum award of $200 in any final judgement in favor
of the plaintiff.
Rulemaking Authority
It is the opinion of the committee that this bill does not
delegate any rulemalting authority to a state agency, officer,
department, or institution.
summary of Committee Action
H.B. 2363 was considered in a public hearing on April 27, 1987.
Testifying for the bill was Seldon B. Graham, Jr., attorney,
representing himself. Nat testifying, but appearing to register
~upport for the bill were; Warren R. Anderson, representing the
National Association of Royalty OWners; Morris Burns,
representing the West Central Texas Oil and Gas Association; Joe
c. Hanna, representing TIPRO, North Texas Oil and Gas, and a
number of other oil and gas associations, Dan Jones, representing
the East Texas Producers and Royalty OWners Association; and
Scott Anderson, representing TIPRO. There were no other
witnesses, At the April 27, 1987 meeting a motion was made to
report H.B. 2363 favorably, with the recommendation that it be
placed on the consent calendar. The motion carried by a vote of 7
ayes, 0 nays, 0 PNV, and 2 absent.
00238
Cause No.DC-12-200; Gloria Garcia vs. Genesis Crude Oil, L. P.
(
• . q_
'
·. . '
LEGISLATIVE BUDGET BOARD
Aulfin, TelUI
FISCAL NOTE
April Z7, 1987
TO: Honorable Clint Hackney, Chair In Re: House Bill No. 2363
C~ittee on Energy By: Hackney
House of Representatives
Austin, Texas
FROM! Jim 011ver, 01rector
[n response to your request for a Fiscal Note on House Bill No. 2363 (relating
to attorney's fees and da.ages in a su1t for failure to ti~ely pay proceeds
derived fra. the sale of oil or gas production) this off1ce has deten~ined the
following:
No fiscal 1•plication to the State or units of local government is
anticipated.
Source: LBB Staff: JO, HES, JWH, Al, LV
70fHB2363 Rl
00239
Cause No.DC-12-200; Gloria Garcia vs. Genesis Crude Oil, L. P.
(i
~@l\1)`` 1987 HAY -8 PH II: 30
~[M@j00@````[M~
By Hackney H.B. No. 2363
A BILL TO BE ENTITLED
1 AN ACT
2 relating to attorney's fees and damaqes in a suit for failure to
3 timely pay proceeds derived from the sale of oil or qas production.
4 BE IT ENACTED BY TBE LEGISLAl'URE OF THE STATE OF TEXAS:
5 SECTION 1. Subchapter K, Chapter 91, Natural Reaourcea Code,
6 as added by Chapter 228, Acts of the 68th Legislature, Regular
7 Session, 1983, ia amended by addinq Section 91.406 to read aa
8 follows:
9 Sec. 91.406. ATTORNEY'S FEES AND MINIMUM AWARD. If a suit
10 is filed to collect proceeds and interest under this subchapter,
11 the court shall include in any final judgment in favor of the
12 plaintiff an award qf:
13 (1) reasonable attorney's fees; and
14 {2) if the actual damages to the plaintiff are leas
15 than $200, an additional amount so that the total amount of damaqes
16 equals $200.
17 SECTION 2. This Act applies only to a suit filed on or after
18 the effective date of this Act.
19 SECTION 3. The importance of this 1eqislat1on and the
20 crowded condition of the calendars in both houses create an
21 emerqency and an imperative public necessity that the
22 constitutional rule requiring billa to be read on three several
23 days in each house be suspended, and this rule is hereby suspended,
24 and that this Act take effect and be in force from and after ita
70R4490 DAK-D 1
00240
Cause No.DC-12-200; Gloria Garcia vs. Genesis Crude Oil, L. P.
{!
H.B. No. 2363
l paaaaqe, and it ia ao enacted.
2
00241
Cause No.DC-12-200; Gloria Garcia vs. Genesis Crude Oil, L. P.
(
.- ., .~ . LEGISLATIVE BUDGET BOARD
Austin, Texaa
FISCAL NOTE
April 27, 1987
TO: Honorable Clint Hackney, Chair In Re: House 8i11 No. Z363
C~ittee on Energy By: Hackney
House of Representatives
Austin, Texas
fROM: Ji• Oliver, Director
In response to your request for a fiscal Note on House 8i11 No. 2363 (relating
to attorney's fees and d..ages in a suit for failure to ti~ly pay proceeds
derived fro. the sale of oil or g1s production) th1s office has deten~ined the
following:
No fisc•l 1ap11catfon to the State or units of local gover~nt fs
antfc1pated.
Source: L88 Staff: JO, HES, JWH, AL, LV
70FHBZ363 j_ Rl
00242
Cause No.DC-12-200; Gloria Garcia vs. Gen sis Crude Oil, L. P.
( \
[
.. \
1 By: Hackney (Senate Sponsor - Santiesteban) H.B. No. 2363
2 (In the Senate - Received from the House May 11, 1987;
• 3 May 12, 1987, read first time and referred to Committee on Natural
4 Resources; May 21, 1987, reported favorably by the followinq vote:
5 Yeas 6, Nays 0; May 21, 1987, sent to printer.)
6 COMMITTEE VOTE
7 Yea Nay PNV Absent
8 Santiesteban X
9 Montford X
10 Armbrister X
11 Brown X
12 L on X
13 Sarpalius X
14 Sima X
15 Tejeda X
16 Uribe X
17 Whitmire
18 Za!!irini X
19 A BILL TO BE ENTITLED
20 AN ACT
• 21
22
23
24
25
26
relatinq to attorney's fees and damaqes in a suit for failure to
timely pay proceeds derived from the sale of oil or gas production.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter K, Chapter 91, Natural Resources Code,
as added by Chapter 228, Acts of the 68th Legislature, Regular
Session, 1983, is amended by adding Section 91.406 to read as
27 follows:
28 Sec. 91.406. ATTORNEY'S FEES AND MINIMUM AWARD. I f a suit
29 is filed to collect proceeds and interest under this subchapter,
30 the court shall include in any final judgment in favor of the
31 plaintiff an award of:
32 {l) reasonable attorney's fees; and
33 (2) if the actual damages to the plaintiff are less
34 200 an additional amount so that the total amount of dama es
35 als 200.
36 SECTION 2. This Act applies only to a suit filed on or after
37 the effective date of thia Act.
38 SECTION 3. The importance of this leqislation and the
39 crowded condition of the calendars in both houses create an
40 emarqency and an imperative public necessity that the
•
41 constitutional rule requirinq billa to be read on three several
42 days in each house be suspended, and this rule is hereby suspended,
43 and that this Act take effect and be in force from and after ita
44 passaqe, and it is so enacted.
45 ** • * *
46 Austin, Texas
47 May 21, 1987
48 Hon. William P. Hobby
49 President of the Senate
50 Sir:
51 We, your Committee on Natural Resource& to which was referred H.B.
52 No. 2363, have had the same under consideration, and I am
53 1natructed to report it back to the Senate with the recommendation
54 that 1t do pass and be printed.
55 Santiesteban, Chairman
•
l
00243
cause No.DC-12-200; Gloria Garcia vs. Genesis Crude Oil, L. P.
tt
'
LEGISLATIVE BUDGET BOARD
Austin. Te:us
TO:
FISCAL NOTE
Hay 19, 1987
Honorable H. Tat1 Sant1esteban, Cha1rman In Re: House 8111 No. 2363,
•
Committee on Natural Resources as engrossed
Senate Chlllber By: Hackney
Aust1n, Texas
FROM: J1~ 011ver, Director
In response to your request for a Fiscal Note on House 8ill Ho. 2363, as
engrossed (relating to attorney's fees and d&mages 1n a suit for failure to
timely pay proceeds derived fro. the sale of o11 or gas production) th1s office
has determined the following:
No fiscal implication to the State or units of local govern~ent is
anticipated.
Source: l88 Staff: JO, HES, JWH, AL, AF
•
•
70FHSZ363ae
•
00244
Cause No.DC-12-200; Gloria Garcia vs. Genesis Crude Oil, L. P.
(
'• :·.-. LEGISLATIVE BUDGET BOARD
Auatin, Texu
•
FISCAL NOTE
Apr1l 27, 1987
TO: Honorable Clint Hackney, Chair In Re: House Bill Ho. 2363
Comaittee on Energy By: .Hackney
House of Representatives
Austin, Texas
FROM: Jim Oliver, Director
In response to your request for a Fiscal Note on House Bill No. 2363 (relating
to attorney's fees and damages in a suit for failure to t1•ely pay proceeds
derived fra. the sale of ofl or gas production) thfs office has determined the
following:
Ho fiscal i~plfcatfon to the State or units of local government is
anticipated.
• Source: LBB Staff: JO, HES, JWH, AL, LV
•
• 70FHB2363 Rl
00245:
Cause No.DC-12-200; Gloria Garcia vs. Genesis Crude Oil, L. P.
If·-
\;
, ' SENATE FAVORABLE COMMITTEE REPORT
Lt. Governor William P. Hobby
President of the Senate 1
(date)/(time)
Sir:
We, your Committee on __N_A_TU_RA_L_R;_E_s_o_u_R_C_E_s_ _ _ _ _ _ _ _ _ _ _ _ _ to which was referred
~ 23~3 by_``~.....a````"41.4----haveon .\'{'14) , 19_!:l:had the same
(measure) (spon5t\r) (hetJing date)
under consideration and I am instructed to report it back with the recommendation (s) that it
~ pass and be printed
() ~ass and be ordered not printed
~nd is recommended for placement on the Local and Uncontested Bills Calendar .
A fiscal note was requested. ..-n-Yes () no
A revised fiscal note was requested. ( ) yes ~
An actuarial analysis was requested. ( ) yes <1"il'O'
Considered by subcommittee. ( ) yes ~
Senate Sponsor of House Measure
The measure was reported from Committee by the following vote: ··) .
:~
. '•
NAY PNV ABSENT
s,·
nueste ban, Ch'
auman
~
Montford, Vice Chairman
Armbrister v
.__........
Brown
Lyon ~
Sarpaliu~ a.--
~
Sims
Tejeda
.....,.....
Uribe ~
Whitmire ~ &./"'
Zafflrini
TOTAL VOTES
.......
I~ 0 0 ~
-
COMMIITEE~
Paper clip the orialnal and one c:opy of this form to the oriainal bil and retain one copy for your ftle.
00246
Cause No.DC-12-200; Gloria Garcia vs. Genesis Crude Oil, L. P.
-.; ~
"'... . 1' ..
REQUEST FOR LOCAL & UNCONTESTED CALENDAR
PLACEMENT
....1Jon. Roy Blake, Chainnan
~.
"'Administration Committee
Sir:
Notice is hereby given that
r\.o.
txn // JW
"''2..' '3 , by: I
`` c.k:.w....1?7!1,"-"-t...'-U.\.fe.,
{.r.---~--t-r-- \\
was heard by the Committee on on \ 1v , 19 -``
~
t'\,P...-\ tR-4 l . ~
and reported out with the recommendation that it be placed on the Local and Uncontested
Calendar.
Clerk of,
0
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IMPORTANT: A COPY OF 1HIS FORM MUST BE AITACHED 10 A PRINTED COPY OF
z THE BILL OR RESOLUTION, WHICH AWNG WITH 14 ADDmONAL CoPIES OF 1HE
0
0 BILL OR RESOLUTION SHOULD BE DELIVERED TO 111E OFFlCE OF 1HE ~
0 COMMITTEE ON ADMINISTRATION, ROOM 419. PLEASE CALL 3.0350 IF YOU HAVE
~
1\)
r\) ANY QUESTIONS. DEADLINE FOR SUBMITTING BILLS FOR 1HE WCAL CALENDAR
0
_q JS4:00 P.M. THURSDAYS.
Gl
~
o;·
Paper clip tbe odalnal to tbe btu; retain one c:opy for reportlnf committee filet; ~lfver one c:opy to the blllapotUOr.
Gl
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(
ENROLLED
r
H.B. No. 2363
l AN ACT
2 relating to attorney's fees and damages in a suit for failure to
3 timely pay proceeds derived from the sale of oil or gas production.
4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
5 SECTION 1. Subchapter K, Chapter 91, Natural Resources Code,
6 as added by Chapter 228, Acts of the 68th Legislature, Regular
7 Session, 1983, is amended by adding Section 91.406 to read as
B follows:
9 Sec. 91.406. ATTORNEY'S FEES AND MINIMUM AWARD. If a suit
10 is filed to collect proceeds and interest under this subchapter,
11 the court shall include in any final judgment in favor of the
12 plaintiff an award of:
13 {l) reasonable attorney's fees; and
14 {2) if the actual damages to the plaintiff are less
15 than $200, an additional amount so that the total amount of damages
16 equals $200.
17 SECTION 2. This Act applies only to a suit filed on or after
18 the effective date of this Act.
19 SECTION 3. The importance of this legislation and the
20 crowded condition of the calendars in both houses create an
21 emergency and an imperative public necessity that the
22 constitutional rule requiring bills to be read on three several
23 days in each house be suspended, and this rule is hereby suspended,
24 and that this Act take effect and be in force from and after ita
l
00248
Cause No.DC-12-200; Gloria Garcia vs. Genesis Crude Oil, L. p;
H.B. No. 2363
1 paaeaqe, and it is eo enacted.
2
00249
Cause No.DC-12-200; Gloria Garcia vs. Genesis Crude Oil, L. P:
(I
H. B. No. 2363
President of the Senate Speaker of the House
I certify that H.B. No. 2363 was passed by the Houae on May
8, 1987, by a non-record vote.
Chief Clerk of the House
I certify that H.B. No. 2363 was passed by the Senate on May
25, 1987, by the followinq vote: Yeas 30, Nays 0.
Secretary of the Senate
APPROVED:
Date
Governor
3
00250
Cause No.DC-12-200; Gloria Garcia vs. Genesis Crude Oil, L. P.
H.B.No. ~%r "~=-
:~ . A BILL TO BE ENTITLED
MAY 8 1987
. _. •· ANACT
cela``ig to attorney's fees and damages in a suit for failure
L
10. Ception onlorocl -nded to oonfa-m to body of bill.
to t~ely pay proceeds derived from the sale of oil or gas
?roduc:tion.
11. Motion to rocontidor end t8lllo tho • - by which H. B. _ _ _ - fiNly p-.1
pro..Ued (fo~odl by o (Non-Roc:ord Votll (R--.1 Votl of _ _ _ voa. _ __
novo. ond _ . _ not wotint).
~
MAR 13
MAR 30 1987
. APR 2'l \981
fJf/
1. Filed wict. tht Chief Clerk.
Committee on
IIAY 8 11119
MAY
lAY B 1981
8 1987
" .,._ ,......., •
13. Engrostld.
14. Returnlrd to Chief Clerk It
/'
I{~ 38 p¥t: •
r
.
ond lint to Printor It I t:?Je ~ MAY 11 1997
APR 28 1987 15. Sent to Son-.
·,
:APR 28 1987 4. Pri ..... Mid dlnrlbu-lt B:£8 pvtV
APR
•
29 1981 6. Sent "'Comml.- on Gl.f.cion
L 4/Y
It
q :~tl.tU-'
MAY 11 1987
Ill
i
18. Rearind foom tht Hou11
MAY 8 6. Reid oocond t i - ~I; _...t to third rolding.......,-=1-by``=~o:::•:R:ecor:``---,.
1ftcwsd r • ' s ~- ~·M!KII!QM
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17. Rold, rwforred toComm~ on-------------------
C1l
z 1. Motion to _ . . . , . lnd tllble tht ~ by w!tidl H.B. wa orderlrd lAY 21 1987 18. R-rtld foworobly
0 ....,_.t ,...._.led
(failed) by • INon-R..:ord VOC.I (Reconl Voto of yo•.
~.
0
0
.• .f".
_ _ _ _ noya.lnd _ _ _ - n t . not wotintl. ---
18. Roportld itdforolly, with foworoblo Conmtlttlo Subltitlltl; CommittH Subotitutl rood
1\) ,
. first timo .
r\, ~. ~
8. Constitutionol Rule .....,iring bills to be rold on th- _ ... deyt suspmcllrd (fiHird
0
0
G)
~
... ,.
to .,_.,., by • four·flfctlt woto of _ _ _ v••. _ _ _ ....,,, end-----
prw``nt, not woting. 20. 0....,_ not printod.
o;·
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.- 21. R.., .., ordoo of butiMa ._.w by
(I wi.,. YGa YOIIIJ
n
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---- ......
22. To pennit consiclemlon, rudint end - . . S.nHo Mil c-tltu1ionll R~les ... . 4
.. lpOftllod by "''" of v••· ......,_ . ..
.,..~
MAY:.~ 8Jl ;R~ 6````.. /`` .... ~
23. Roed 11-.d tl!N ~ .,...C to third nedi,. by:
tl!"'·-·ill>Y.... _,
~.
24. Captiool ordorwd oiNnded to conform to body of bil.
MAY 25 1~7 25. Se"j and Conttltutional 3-Dav RuMI .._"-1 by woto of .:l q v-.
- - - - - - n-v• to p i - bill on third readi,. and finol . . _ . T
~r.y 25 1S97
28. Reed tllhd t i - and pasood by
(aw· ``aN?,
I Y-. 0 nays.)
``··~·
OTHER ACTION: OTHER ACTION: IJbl
s;cr;;;y;ho SoMta ~
W2"5'_, 27. Ro1urnod to ttto H - .
0
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MM' 111981 21. RecMvect trom tt. s.n... '=:~;::``':.':S.J
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0 29. HOVtO (C-..md) IRofu10d to Concur) in Slonato ~":.:=:::," 1 by a (Non-Aoont A .
0 Voto) (R-.1 Vote of - · - - - navt. pnsent,.
,··•
1\) not •otingl.
r\)
0
.0
30. Confaronc» CormninH Ordorwd.
-·
Gl .-I.!E . . ·.'~·· •. 3S~OH
Q .!~:-.>~ . .Jsx; ··~ .
Oi 31. Confarenca C-'ttee R - ' Adopted (Rejectlod) by o (N-.R-d Votol (Roord
Gl Vo11 « yon, novo. ond p-nt. not woti,.l.
0~ :Uifci t:· lfill861 r:; ~ l(ci 8~ &: LE:I
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___, -- -~--------- ·-- ........ - .-. ...-~- . ----~---- ,_._,._ ................ _...,_ ·- _.,, ---~ ., . _________ __...._
(
i ..
President of the Senate Speaker of the House
.........
I certify that H.B. No. ~ wae paned by the Houee
( 1)
'--
on 1987, by a non-record vote.
Chief o! the House
-
Cler~
I certify that H.B. No. ``~wae paseed by the Senate
on 1h ~ 2 / ' -
--------````````````~---------• 1987, by the followinq vote:
(_. 1\3>-
Yea111
~.
(4) Naya ~-'----------------------``--------------------------
(S)
Secretary o! the Senate
APPROVED:
Date
Governor
**** Preparation: 'A;CT27;
00253
Cause No.DC-12-200; Gloria Garcia vs. Genesis Crude Oil, L. P.
£'\
') !
\:
!
May 8, 1987 HOUSE JOURNAL 19~3
SECflON 2. This Act takes el'ect September I, 1987.
SECTION 3. Tbc imponance of' lhis l~slltion and the crowded condition
of the calendars in both houses cn:aae an em~ and an imperative public
nco:uity that the coastitutional rule requirin& bilb to be read on thlft ICVerBl daY'
in each boule be suspended, and this rule is hmby wspcnded, and that tbis Act take
effect and br. in force from and after its pasqe, aod it is 10 enacted.
HI :ZJ71, A bill to be entiUed An Act relatina to the compensation of the
judJes or the county civil courts It law in certain counties.
Representative Palumbo offered the foUowina committee amendment to the
bill:
COMMITIEE AMENDMENT NO. I
Amend HI 2171as follows:
In Section I, strike all Janauqc bqionina with the words "In addition
to . . . ... on pqc I, line 24, throuah the rema.ioder of Section I.
Comminee Amendment No. I was adopted without objection.
HB 1236 WIS withdrawn by the author.
HB 2278, A bill to be entitled An Act relltin& to the ofl'cnse of receiving
deposits in certain financial institutions.
HB 2345, A bill to be entitled An Act relatina to duties and compensation of
the district auorney for the I lOth Judicial District.
HB l36J, A bill to be entitled An Act refatilll to anomcy's fees and damages
in a suit for failure to timely pay proceeds derived from the sale of oil or ps
production.
HB 1369, A bill to be entitled An Act relatlna to the identification of poll
watchers.
HB 2371, A bill to he entitled An Act rclatins to the disposition or a pollli~t.
HB 23!t2. A bin to be entitled An Act relatina to the development of research
facilities at The University ofTe~tas at Austin.
HB 2408, A bill to be entitled An Act relatina to the hearina and dclermination
of juror ellcii5CS and the postponement of jury servke.
HB 2411!t, A bill to be entitled An Act providina for cenilicates of title
evidencina Ownership of a motorboat or an outboard motor to be iDued on an
accelerated basis for a pnscribed fee.
HI 1466, A bill to be entitled An Act relatina to the regulation of musaac
therapists and massqe establishments.
HB J.486, A bill to be entitled An Act relating to receivership for local religious
conareptions.
CSHB 2!17, A bill to be entitled An Act relatina to the powers and bondins
authority of \he Jollnaon County fresh Water Suppl)' District No. I, and the
validation of ocnain actions of the district.
BE IT ENACfED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SEcrJON I. DEFJNITION. In this Act, "district" means the Johl1SOn
County Fresh Waler Supply District No. 1.
SECTION 2. POWERS. (a) In addition to the powen aranted under Chapter
33, Water Code, and subject to approval at an election held as provided by Section
00254
Cause No.DC-12-200; Gloria Garcia vs. Genesis Crude Oil, L P.
,.
'
70th LEGI8LATURE-REGUL.Ul 818810N Ch. 1011, 13
CHAPJ'BR 1011
H.B. No. 2868
ANACr
~ ID lttarneY'I .... lnd . . . . . In I IIIII lor ....,,. ID tlllllly pay prooeedl dellved fWom the 1111
of ol Of 1111 production.
s, it lfUJI:t«l 6r 1M u,;.tac.n~ of u... SttJU of Jaa&·
SECTION 1. Subchapter IC, O.pter 81, Natural Reloure.. Code, u added by Chapter
228, Ac&l of tbe 88th IAPiatun, Reaular Setaloa, 1888, It amanded bJ addiDc Sectiou
8U06 to read u follow.:
&c. 11.401. ArtORNBY'S 1'BBS AND MINlMUM AWARD. ll o ~Kit u ftW to
oollm Jlf'OCIIdl o'IUI iratnut "lltkr tAil ll&bcltopt.r, 1M c:o~&rl 1/uUl irad1uU ira •raw
/fJIGl `` it& /OWW of tM ploWf8' Gil GII.'4N of.
(1) ``~ 114`` JM,· gftd
(J) if UlfJ ``ettuJI doJMg~t to tM plait&t(ff ,,., , , ,..,. 1100. " IJdditiof&ol
IJWIOI&fll MJ tUt tM totoliJtJIC,."It of domag. .,....Z, II«J,
SECTION 2. Thla Aet appllel only to a IUit filed on or after the effective date of thfl
Act.
SEC'nON 8. The importance of Ulla Jetitlation ud tbe crowded condition of the
ralendara In both houMI create 1111 emerpney and an lmperatlYe publie neeeultf that the
c:o``~titutional rule requJriDI bilJI to be read on three aeveral daJ• iD each boule be
auapended, and thla rule Ia herebJ auapended, and that thia Aet take effect and be ill force
from ud after Ita pauage, ud It Ia 10 eaaeted.
a.
P....s the ~ on May 8, 1887, by a non-reoord vote. Pitied lhe Senate on a.
Mey 25, 1887, by the following vote: Yeu 30, Naya o.
Approved June 18, 1887.
Effactlv8 Aug. 31, 1887, 90 day& after cs.te of lldjoumrnent.
8418
00255
Cause NoDC-12-200; Gloria Garcia vs. Genesis Crude Oil, L P.