Brad and Randi Aery, and the House Intervenors Lloyd House, Robert Eugene House, Magdalen House, Judith Ann House, Wayne House, Jimmy R. House, Edna Pawelek Ulbrich, Peter Pawelek, Jesse Pawelek, Ruby Pawelek Schumacher, Elizabeth Pawalek Reigh, Roy Mitch v. Hoskins, Inc. ( 2015 )

ACCEPTED
04-14-00807-CV
FOURTH COURT OF APPEALS
SAN ANTONIO, TEXAS
5/20/2015 4:00:54 PM
KEITH HOTTLE
CLERK
No. 04-14-00807-CV
__________________________________________________________________
FILED IN
4th COURT OF APPEALS
IN THE COURT OF APPEALS SAN ANTONIO, TEXAS
FOURTH COURT OF APPEALS DISTRICT OF05/20/2015
TEXAS 4:00:54 PM
SAN ANTONIO, TEXAS KEITH E. HOTTLE
Clerk
__________________________________________________________________
BRAD AERY, ET AL.,
Appellants FILED IN
4th COURT OF APPEALS
v. SAN ANTONIO, TEXAS
05/20/2015 4:00:54 PM
HOSKINS, INC., ET AL., KEITH E. HOTTLE
Clerk
Appellees.
__________________________________________________________________
On Appeal from 36th District Court of McMullen County, Texas
Trial Court Cause No. M-12-0045-CV-A
Honorable Starr Boldrick Bauer, Presiding
__________________________________________________________________
BRIEF OF APPELLEE AURORA RESOURCES CORPORATION
__________________________________________________________________
Roberta S. Dohse
State Bar No. 05955400
rdohse@hfdlaw.com
Conner R. Jackson
State Bar No. 24087786
cjackson@hfdlaw.com
HOBLIT DARLING RALLS HERNANDEZ
& HUDLOW, LLP
2000 Frost Bank Plaza
802 N. Carancahua
Corpus Christi, TX 78401
(361) 888-9392
(361) 888-9187 (facsimile)
Counsel for Appellee
Aurora Resources Corporation
Identities of Parties and Counsel
Pursuant to TEX. R. APP. P. 38.1(a), Appellee Aurora Resources Corporation
submits the following list of the names and last known addresses of all parties and
their counsel at trial and on appeal:
Appellants/Plaintiffs Brad Aery
Randi Aery
Counsel for the
Aery Appellants Dan Pozza
State Bar No. 16224800
Dan.pozza@yahoo.com
Law Offices of Dan Pozza
239 E. Commerce Street
San Antonio, TX 78205-2923
(210) 226-8888
(210) 224-6373 (facsimile)
Trial Counsel for the
Aery Appellants Marc K. Whyte
State Bar No. 24056526
whytemarc@gmail.com
Whyte, PLLC
209 Tuttle
San Antonio, TX 78209
(210) 340-9877
(210) 344-9899 (facsimile)
Melanie Hessler Phipps
State Bar No. 24032416
mphipps@kplegal.com
Kustoff & Phipps, LLP
4103 Parkdale Street
San Antonio, TX 78229-2520
(210) 614-9444
(210) 614-9464 (facsimile)
ii
John George, Jr.
State Bar No. 24051944
jgeorgejr@bmpllp.com
Matthew F. Wymer
State Bar No. 24005234
mwymer@bmpllp.com
Bierne Maynard & Parson, LLP
112 East Pecan Street, Suite 2750
San Antonio, TX 78205
(210) 582-0220
(210) 582-0231 (facsimile)
Appellants/Intervenors: The J.L. House Trust
Lloyd House
Robert Eugene House
Magdalen House
Judith Ann House
Wayne House
Jimmy R. House
Edna Pawelek Ulbrich
Peter James Pawelek
Jesse Pawelek
Ruby Pawelek Schumacher
Elizabeth Pawelek Reich
Roy Mitchell Pawelek
Darlene Robinson Williams
Diane Fischer Casey
Mary Kay Fischer Adams
Arley House
Counsel for
the House Appellants: Rosemarie Kanusky
State Bar No. 00790999
Rosemary.kanusky@nortonrosefulgright.com
John W. Weber, Jr.
State Bar No. 21046500
John.weber@nortonrosefulbright.com
Jeffrey A. Webb
State Bar No. 24053544
Jeff.webb@nortonrosefulbright.com
iii
300 Convent, Suite 2100
San Antonio, TX 78205
(210) 224-5575
(210) 270-7205 (facsimile)
Trial Counsel for
the House Appellants: John W. Weber, Jr.
State Bar No. 21046500
John.weber@nortonrosefulbright.com
Jeffrey A. Webb
State Bar No. 24053544
Jeff.webb@nortonrosefulbright.com
300 Convent, Suite 2100
San Antonio, TX 78205
(210) 224-5575
(210) 270-7205 (facsimile)
Appellees/Defendants: C. Clifton Hoskins
Hoskins, Inc.
Trudy Day
Counsel for
these Hoskins Appellees: C. David Kinder
State Bar No. 11432550
dkinder@dykema.com
Corey F. Wehmeyer
State Bar No. 24051903
cwehmeyer@dykema.com
Amy Davis
State Bar No. 24074114
adavis@dykema.com
Benjamin Robertson
State Bar No. 24083748
brobertson@dykema.com
Lindsay Scaief Riley
State Bar No. 24083799
lriley@dykema.com
Ellen B. Mitchell
State Bar No. 14208875
emitchell@dykema.com
iv
Dykema Cox Smith
112 East Pecan, Suite 1800
San Antonio, TX 78205
(210) 554-5500
(210) 226-8395 (facsimile)
and Michael C. Sartori
State Bar No. 17655500
michael@msartori.com
Law Office of Michael C. Sartori
P.O. Box 1222
502A Houston Street
George West, TX 78022
(361) 449-2691
(361) 449-2380 (facsimile)
Appellees/Defendants: Leonard Hoskins
Counsel for
Leonard Hoskins David L. Ylitalo
State Bar No. 22155500
dylitalo@coatsrose.com
Coats Rose PC
1020 Northeast Loop 410, Suite 800
San Antonio, TX 78209
(210) 224-7098
(210) 212-5698 (facsimile)
Appellees/Defendants: Lee Ann Kulka
Lee Roy Hoskins, III
Andrea Jurica
Counsel for
Kulka, Hoskins and Jurica
Appellees: Peter E. Hosey
State Bar No. 10027500
phosey@jw.com
Julia W. Mann
State Bar No. 00791171
v
jmann@jw.com
Jackson Walker, L.L.P.
112 E. Pecan Street, Suite 2400
San Antonio, TX 78205
(210) 978-7700
(210) 978-7790 (facsimile)
Appellee/Defendant: Blake C. Hoskins
Counsel for Blake C. Hoskins: Ezra A. Johnson
State Bar No. 24065499
ejohnson@ufjblaw.com
Joseph B.C. Fitzsimons
State Bar No. 07099100
jfitzsimons@ufjblaw.com
J. Byron “Trace” Burton, III
State Bar No. 24031776
tburton@ufjblaw.com
Uhl, Fitzsimons, Jewett & Burton, PLLC
4040 Broadway, Suite 430
San Antonio, TX 78209
(210) 829-1660
(210) 829-1641 (facsimile)
Appellee/Defendant: Brent C. Hoskins
Counsel for Brent C. Hoskins: David W. Navarro
State Bar No. 24027683
dnavarro@hsfblaw.com
Brendon C. Holm
State Bar No. 24087737
bholm@hsfblaw.com
Hornberger Sheehan Fuller Bieter
Wittenberg & Garza Incorporated
The Quarry Heights Building
7373 Broadway, Suite 300
San Antonio, TX 78209
(210) 271-1700
(210) 271-1740 (facsimile)
vi
Appellee/Defendant: Hazel Q. Hoskins
(in her individual and representative
capacities)
Counsel for Hazel Q. Hoskins: Michael C. Sartori
State Bar No. 17655500
michael@msartori.com
Law Office of Michael C. Sartori
P.O. Box 1222
502A Houston Street
George West, TX 78022
(361) 449-2691
(361) 449-2380 (facsimile)
Appellee/Defendant: Jane Hoskins
Counsel for Jane W. Hoskins: Benjamin F. Youngblood, III
State Bar No. 22213700
bfy@prodigy.net
Benjamin F. Youngblood III, P.L.L.C.
8207 Callaghan Road, Suite 100
San Antonio, TX 78230
(210) 308-9829
(210) 308-9854 (facsimile)
Appellee/Third Party Defendant: Aurora Resources Corporation
Counsel for Aurora
Resources Corporation: Roberta S. Dohse
State Bar No. 05955400
rdohse@hfdlaw.com
Conner R. Jackson
State Bar No. 24087786
cjackson@hfdlaw.com
HOBLIT DARLING RALLS HERNANDEZ
& HUDLOW, LLP
2000 Frost Bank Plaza
802 N. Carancahua
Corpus Christi, TX 78401
(361) 888-9392
(361) 888-9187 (facsimile)
vii
Appellees/Third Party
Defendants: Armadillo E&P,Inc.
(f/k/a Texoz E&P II, Inc.)
Sea Eagle Ford, LLC
Sundance Energy, Inc.
Counsel for Armadillo E&P, Inc.,
Sea Eagle Ford & LLC
Sundance Energy, Inc.: Bruce D. Oakley
State Bar No. 15156900
Bruce.oakley@hoganlovells.com
Robert L. Pillow
State Bar N. 24080315
Robert.pillow@hoganlovells.com
Hogan Lovells US LLP
700 Louisiana Street, Suite 4300
Houston, TX 77002
(713) 632-1420
(713) 632-1401 (facsimile)
Appellee/Third Party Defendant: Texoz E&P I, Inc.
Counsel for Texoz E&P I, Inc.: Jason A. Newman
State Bar No. 24048689
Jason.newman@bakerbotts.com
Baker Botts L.L.P.
One Shell Plaza
910 Louisiana Street
Houston, TX 77002-4995
(713) 229-1720
(713) 229-2720 (facsimile)
viii
Table of Contents
Identities of Parties & Counsel ...................................................................... ii
Table of Contents .......................................................................................... ix
Index of Authorities ...................................................................................... xi
Cases .............................................................................................. xi, xii
Statutes ................................................................................................ xii
Rules ................................................................................................... xii
Statement of the Case .................................................................................. xiii
Statement Regarding Oral Argument .......................................................... xv
Issues Presented ........................................................................................... xv
Adoption and Incorporation of Brief of Appellees C. Clifton Hoskins
and Hoskins, Inc. ............................................................................................. 1
Statement of Facts .......................................................................................... 2
A. Aurora Serves as Operator for Wells Located on the
Hoskins and Ray Tracts.............................................................. 2
B. Appellants Sued Aurora for, among other things, the
Nonpayment of Royalties ........................................................... 3
C. As Noted in the Hoskins Appellees’ Statement of Facts,
the Trial Court Granted Summary Judgment in Favor of
Hoskins, and Declared Appellants Did Not Have the
NPIRs in Production from the Hoskins and Ray Tracts ............ 4
D. Aurora’s Traditional Motion for Partial Summary
Judgment was Granted on a Derivative Basis ............................ 5
Summary of the Argument ............................................................................. 5
Argument and Authorities............................................................................... 6
A. The Trial Court Properly Granted Derivative Summary
Judgment in Favor of Aurora, as the Granting of
Summary Judgment in Favor of the Hoskins Appellees
Disposed of any Basis for Recovery Against Aurora ................ 7
ix
1. Appellants are Not “Payees” as Defined in the Statute
Authorizing Non-Payment of Oil and Gas Royalties
as a Cause of Action .............................................................. 7
2. Any Benefit or Money Retained by Aurora Would
Not Belong to Appellants ...................................................... 8
3. Any Alleged Tortious Interference Could Not Have
Damaged Appellants ........................................................... 10
4. Appellants Had No Possession of or Interest in the
Property Claimed to Have Been Converted ........................ 12
Conclusion ................................................................................................... 13
Prayer ........................................................................................................... 14
Certificate of Compliance ............................................................................ 15
Certificate of Service .............................................................................. 15-16
Appendix ....................................................................................................... 17
x
Index of Authorities
Cases
Baty v. Protech Ins. Agency,
63 S.W.3d 841 (Tex. App.—Houston [14th Dist.] 2001, pet. denied) ......... 11
Best Buy v. Barrera,
248 S.W.3d 160 (Tex. 2007) (per curiam) ...................................................... 9
Cristobal v. Allen,
2010 Tex. App. LEXIS 5829 (Tex. App.—Houston [1st Dist.] 2010) ........ 10
Delz v. Winfrey,
16 S.W. 111 (Tex. 1891) ......................................................................... 11, 13
Heldenfels Bros., Inc. v. City of Corpus Christi,
832 S.W.2d 39 (Tex. 1992) ....................................................................... 9, 10
J.P. Morgan Chase Bank, N.A. v. Texas Contract Carpet, Inc.,
302 S.W.3d 515 (Tex. App.—Austin 2009, no pet.) .................................. 12
Long Island Owner’s Ass’n, Inc. v. Davidson,
965 S.W.2d 674, 684 (Tex. App.—Corpus Christi 1998, pet. denied) .......... 6
Massey v. Armco Steel Co.,
652 S.W.2d 932 (Tex. 1983)......................................................................... 11
MGA Ins. Co. v. Charles R. Chesnutt, P.C.,
358 S.W.3d 808, (Tex. App.—Dallas 2012, no pet.) ..................................... 9
Staats v. Miller,
240 S.W.2d 342 (Tex. Civ. App.—Amarillo 1951), rev’d on other
grounds, 150 Tex. 581, 243 S.W.2d 686 (Tex. 1951) .................................. 12
Staats v. Miller,
243 S.W.2d 686 (Tex. 1951)..................................................................... 9, 10
Stonebridge Life Ins. Co. v. Pitts,
236 S.W.3d 201 (Tex. 2007) (per curiam) ...................................................... 9
xi
Tri-State Chems., Inc. v. Western Organics, Inc.,
83 S.W.3d 189 (Tex. App.—Amarillo 2002, pet. denied)........................ 9, 10
Victoria Bank & Trust Co. v. Brady,
811 S.W.2d 931 (Tex. 1991)......................................................................... 10
Wal-Mart Stores, Inc. v. Sturges,
52 S.W.3d 711 (Tex. 2001) ........................................................................... 11
Statutes
TEX. NAT. RES CODE ANN. §91.401 (West 2005) ........................................... 8
TEX. NAT. RES CODE ANN. §91.401(1) (West 2005) ...................................... 8
TEX. NAT. RES CODE ANN. §91.402 (West 2005) ........................................... 8
TEX. NAT. RES CODE ANN. §91.403 (West 2005) ........................................... 8
TEX. NAT. RES CODE ANN. §91.404 (West 2005) ........................................... 8
TEX. NAT. RES CODE ANN. §91.404(c) (West 2005) ...................................... 8
Rules
TEX. R. APP. P. 9.4 ........................................................................................ 15
TEX. R. APP. P. 9.4(i) .................................................................................... 15
TEX. R. APP. P. 38.1(a) ........................................................................................ ii
TEX. R. APP. P. 38.2 ............................................................................................ 1
xii
STATEMENT OF THE CASE
Appellee Aurora Resources Corporation (“Aurora”) (Third Party Defendant
below) adopts by reference and incorporates as though fully set forth herein the
Statement of the Case provided in the Brief of Appellees C. Clifton Hoskins and
Hoskins, Inc.
The position of Aurora in this appeal is directly dependent upon this Court’s
decision as to the merits of the Motion for Summary Judgment (CR 1 at 11-64) by
C. Clifton Hoskins and Hoskins, Inc. (“Hoskins”) and the subsequent amended
motion (CR 1 at 194-381). The trial court entered an Order granting Hoskins’
Amended Motion for Summary Judgment on August 4, 2014. CR 4 at 1077-81;
Appendix at A.
Aurora filed its Motion for Summary Judgment on August 25, 2014,
following the trial court’s Order on Hoskins’ Motion for Summary Judgment. CR
4 at 1155-1256.
On September 18, 2014, the trial court entered a series of orders, effectively
resolving nearly all outstanding issues and facilitating Final Judgment in the case.
The rulings included an Order denying the Joint Motion for Summary Judgment
filed by Aery and House (CR 5 at 1656), an Order denying Aery’s and House’s
Joint No Evidence Motion for Summary Judgment as to C. Clifton Hoskins’ and
Blake Hoskins’ Counterclaims (CR 5 at 1654), an Order sustaining objections to
xiii
certain of Hoskins’ summary judgment evidence (CR 5 at 1658), and an Order
granting Hoskins’s Objection and Motion to Strike certain of Aery and House’s
summary judgment evidence (CR 5 at 1651-52).
Also among the numerous Orders entered on September 18, 2014, was the
trial court’s Order on Derivative Summary Judgment Motions Based on the August
4, 2014 Order. CR 5 at 1631-33; Appendix at B. This Order granted summary
judgment in favor of numerous parties, including Aurora. Id.
The parties subsequently dismissed cross-claims. See, e.g., Texoz E&P I,
Inc. and Aurora’s Joint Motion for Entry of Proposed Order Dismissing
Crossclaims dated September 24, 2014 (CR 5 at 1669-72). An Order dismissing
those cross-claims was entered October 21, 2014. CR 5 at 1685-86; Appendix at
C. Aurora also nonsuited its counterclaim for declaratory relief on September 26,
2014. SR at 4-7. The trial court granted this request for nonsuit in the Final
Judgment entered on October 21, 2014. CR 5 at 1707; Appendix at D.
Ultimately, all pending cross-claims and counterclaims were dismissed,
nonsuited or otherwise resolved, enabling the Court to enter a Final Judgment as to
all claims on October 21, 2014. CR 5 at 1705-1716; Appendix at D. That Final
Judgment sets out in detail the rationale for its finality, and resolves any remaining
issues associated with any summary judgment filed by Hoskins. CR 5 at 1705-07;
Appendix at D. That Final Judgment also clarifies that the Order granting
xiv
summary judgment in favor of Aurora, and others, is derivative of the ruling in
favor of Hoskins. CR 5 at 1706; Appendix at D. Appellants’ Notice of Appeal
was timely filed. CR 5 at 1718-22.
In accord with the foregoing, Aurora is aligned with the position of Hoskins
in this appeal.
STATEMENT REGARDING ORAL ARGUMENT
Appellee Aurora Resources Corporation does not believe that oral argument
would be of assistance to the Court, as the facts are undisputed and the issues
presented are wholly a matter of construction of deeds and conveyances.
However, in the event that the Court elects to grant Appellants’ request for oral
argument, Appellee Aurora Resources Corporation requests the opportunity to
participate therein and present argument as well.
ISSUES PRESENTED
Appellants identify two issues on appeal. Aurora adopts the position of
Hoskins, that there is really only one issue to be resolved:
The ultimate issue presented is whether the 1966 deed from Sam
Quinn to James House, which described only the 623.93-acre Quinn
Tract, also conveyed Quinn’s one-quarter (1/4) non-participating
interests in royalties (“NPIRs”) in the separate Ray Tract and Hoskins
Tract.
xv
No. 04-14-00807-CV
__________________________________________________________________
IN THE COURT OF APPEALS
FOURTH COURT OF APPEALS DISTRICT OF TEXAS
SAN ANTONIO, TEXAS
__________________________________________________________________
BRAD AERY, ET AL.,
Appellants
v.
HOSKINS, INC., ET AL.,
Appellees.
__________________________________________________________________
On Appeal from 36th District Court of McMullen County, Texas
Trial Court Cause No. M-12-0045-CV-A
Honorable Starr Boldrick Bauer, Presiding
__________________________________________________________________
BRIEF OF APPELLEE AURORA RESOURCES CORPORATION
__________________________________________________________________
TO THE HONORABLE COURT OF APPEALS:
COMES NOW Appellee, Aurora Resources Corporation (“Aurora”), and
respectfully submits this its Brief of Appellee pursuant to Rule 38.2 of the Texas
Rules of Appellate Procedure, and would respectfully show the Court as follows:
I. ADOPTION AND INCORPORATION OF
BRIEF OF APPELLEES C. CLIFTON HOSKINS AND HOSKINS, INC.
Because Aurora’s position in the underlying litigation and in this appeal is
clearly derivative of the position of Hoskins, Appellee Aurora hereby adopts and
incorporates by reference the Brief of Appellees C. Clifton Hoskins and Hoskins,
Inc., including the Statement of Facts, Standard of Review, Argument and
Authorities. To the extent additional specific reference is required as to Aurora,
that is included below, as an addition to the facts and argument set forth by
Hoskins.
II. STATEMENT OF FACTS
Appellee has adopted and incorporated by reference the undisputed facts
contained in the Brief of Appellees C. Clifton Hoskins and Hoskins, Inc. This
includes those facts pertaining to the conveyance of the various deeds and
instruments relating to ownership of and royalty interests in the estates of the
various tracts comprising 2.471.8-acre ranch ( “The Ranch”), as well as any others
set out in Hoskins’ Statement of Facts. Aurora would add the following facts
which are specific to Aurora.
A. Aurora Serves as Operator for Wells Located on the Hoskins and
Ray Tracts.
Aurora became involved in this case as result of serving as operator for
various producing wells on the Hoskins and Ray Tracts. CR 1 at 77-78. Part of
Aurora’s obligations as operator include the proper and timely payment of royalties
on the production from these wells.
2
B. Appellants Sued Aurora for, among other things, the Nonpayment
of Royalties.
On January 10, 2014, The James House Family filed its Original Petition in
Intervention, Third-Party Petition, and Application for Injunctive Relief, naming
Aurora and others as Third-Party Defendants. CR 1 at 66. The James House
Family identifies causes of action for trespass to try title to the mineral estate,
conversion, declaratory relief, a request for injunctive relief, and a claim for the
nonpayment of oil and gas proceeds or interest. All causes of action allege the
same fundamental complaint: non-payment of oil and gas royalties. CR 1 at 78-83
et seq.
Shortly thereafter, the Aery Appellants amended their Petition to add several
Defendants, including Aurora. Aery similarly raised claims for conversion and
accounting, unjust enrichment and money had and received, and violation of
Chapter 91 of the Texas Natural Resources Code. CR 1 at 155-166. The Aery
Appellants also requested declaratory judgment, claiming they were entitled to
royalties related to oil and gas production from the Hoskins and Ray Tracts in the
past, present, and future, and that the NPIR was a valid and existing contractual
right, passed to the Aery Appellants upon their purchase of the Quinn Tract. CR 1
at 161, et seq.
Appellants’ live pleadings, which mirror one another, allege the following
causes of action against Aurora: conversion and conspiracy to commit the same;
3
unjust enrichment and money had & received; tortious interference with existing
and prospective contracts, and conspiracy to commit the same; and, pursuant to
Chapter 91 of the Texas Natural Resources Code, non-payment of oil and gas
proceeds. CR 3 at 1016-1031 et seq. (Aery live Petition); CR 3 at 1033-1059 et
seq. (House live Plea in Intervention and Third Party Petition). Appellants’ live
pleadings also seek declaratory and injunctive relief. CR 3 at 1022, 1024-25; CR 3
at 1047-48, 1052-54.
C. As Noted in the Hoskins Appellees’ Statement of Fact, the Trial
Court Granted Summary Judgment in Favor of Hoskins, and
Declared Appellants Did Not Have the NPIRs in Production from
the Hoskins and Ray Tracts.
On August 4, 2014, Judge Starr Boldrick Bauer signed and entered an order
granting the declaratory relief sought in Defendant C. Clifton Hoskins’s First
Amended Motion for Partial Summary Judgment. CR 4 at 1077-1078; Appendix at
A. The Court ordered and declared that:
The February 9, 1966 Deed from Sam E. Quinn to James L. House
conveying the lands of the 623.93-acre Quinn Tract (Vol. 95, pg. 451)
did not convey Sam E. Quinn’s non-participating royalty interests in
the Ray Tract and Hoskins Tract, originally established and described
in that certain November 7, 1963 Partition and Royalty Deed (Vol. 95,
pg. 357) and subsequently conveyed to Hazel Hoskins and L.R.
Hoskins by that certain February 11, 1966 Deed from Sam E. Quinn
to L. R. Hoskins and Hazel Hoskins conveying his non-participating
royalty interests in Ray Tract and Hoskins Tract.
Id.
4
In conjunction with this declaration, the Court further ordered that the House
and Aery Appellants take nothing on their declaratory judgment claims. CR 4 at
1078; Appendix at A.
D. Aurora’s Traditional Motion for Partial Summary Judgment was
Granted on a Derivative Basis.
As further noted above, based upon the trial court’s ruling as to Hoskins,
Aurora moved for summary judgment, arguing that claims raised against Aurora
all derived from the claims against Hoskins and therefore held no merit. CR 4 at
1155-1255 et seq. The trial court granted Aurora’s Traditional Motion for Partial
Summary Judgment and several other summary judgment motions on this same
derivative basis. CR 5 at 1631-33; Appendix at B.
III. SUMMARY OF ARGUMENT
Aurora has adopted in its entirety the argument and authorities set forth by
the Hoskins Appellees in their Brief. The trial court did not err when it granted
summary judgment and derivative summary judgment in favor of Appellees,
including Aurora.
The trial court correctly determined that the Aery and House Appellants did
not acquire non-participating interests in royalties (“NPIRs”) in the Hoskins and
Ray tracts. The agreement upon which Appellants base their claim is contractual
in nature. Texas recognizes that cross-conveyances of royalty interests in a
pooling situation can be valid, but they do not create appurtenant interests in land
5
not directly owned. Instead, they create a pooled royalty interest in gross.1 Under
the circumstances of this case, three individual tracts continued to exist, not just
one.
Therefore, the Aery and House Appellants are not entitled to royalty on
production from the Hoskins and Ray Tracts. All claims against Aurora are
without merit, as the trial court properly found. As a matter of law, derivative
summary judgment was properly granted in favor of Aurora. The trial court’s
judgment should in all things be affirmed.
IV. ARGUMENT AND AUTHORITIES
Aurora Resources Corporation herein incorporates by reference the
“Argument and Authorities” contained in Appellee C. Clifton Hoskins’ Brief. For
the reasons set forth therein, the transfer of property to Appellants through the
Quinn Deed did not expressly convey Quinn’s NPIRs in the Ray Tract or the
Hoskins Tract. Further, it did not impliedly convey Quinn’s NPIRs in the Ray
Tract or the Hoskins Tract as appurtenances.
Appellee Aurora Resources also adds the following argument appropriate to
the derivative claims asserted by Appellants against Aurora.
1An appurtenant interest attaches to the land; an interest in gross is personal and does not pass
with the land. See Long Island Owner’s Ass’n, Inc. v. Davidson, 965 S.W.2d 674, 684 (Tex.
App.—Corpus Christi 1998, pet. denied).
6
A. The Trial Court Properly Granted Derivative Summary
Judgment in Favor of Aurora, as the Granting of Summary
Judgment in Favor of the Hoskins Appellees Disposed of any
Basis for Recovery Against Aurora.
In their Opening Brief, Appellants do not address the appropriateness of the
derivative summary judgment granted by the trial court in favor of Aurora.
Nevertheless, in the event that Appellants challenge this grant of summary
judgment in favor of Aurora or any other Appellee, Appellee Aurora would refer
this Court to its underlying Motion for Partial Traditional Summary Judgment (CR
4 at 1155-1255), which sets out in detail the basis on which the trial court could
properly rule that all causes of action and relief sought from Aurora are premised
upon Appellants’ entitlement to royalties. The trial court properly declared
Appellants had no interest in the Hoskins or Ray Tracts. Appellants therefore have
no basis for claiming that they have not properly been paid for royalty interests
they do not possess.
1. Appellants are Not “Payees” as Defined in the Statute
Authorizing Non-Payment of Oil and Gas Royalties as a Cause
of Action.
Aurora was properly granted summary judgment regarding Appellants’
claims of non-payment of oil and gas royalties on the basis that Appellants are not
entitled to payments of oil and gas royalties in dispute, and thus are not “payees” as
defined by the statute establishing a cause of action for non-payment of oil and gas
royalties.
7
Nonpayment of oil and gas proceeds or interest is a statutory cause of action
provided in Section 91.404 of the Texas Natural Resources Code whereby a
statutorily-defined “payee” “has a cause of action for nonpayment of oil or gas
proceeds or interest on those proceeds as required Section 91.402 or 91.403 of [the
Texas Natural Resource Code]….” TEX. NAT. RES. CODE ANN. §91.404(c) (West
2005). The trial court correctly determined that Appellants are not “payees.”
Texas Natural Resources Code Chapter 91, Subchapter J, Payment For
Proceeds Of Sale, defines “payee” as “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.” TEX. NAT. RES CODE ANN. §91.401(1) (West 2005).
Appellants are not legally entitled to payment of proceeds derived from the sale of
oil or gas from wells located on either the Ray or Hoskins Tracts of the Ranch, as
they have no NPIRs or other royalty interests therein. CR 4 at 1077-78; Appendix
at A. Appellants are therefore not “payees” as defined by §91.401, and summary
judgment in favor of Aurora was properly granted as to Appellants’ claims for non-
payment of oil and gas royalties. TEX. NAT. RES CODE ANN. §91.401(1) (West
2005).
2. Any Benefit or Money Retained by Aurora Would Not Belong
to Appellants.
Appellants further asserted a claim against Aurora for unjust enrichment and
money had and received. CR 3 at 1023; CR 3 at 1049. Even if Aurora has
8
retained any benefit from this dispute, which it denies, it would not be to the
detriment of Appellants, who have no interest in the disputed royalties.
Unjust enrichment is a theory of recovery that applies when a defendant has
obtained a benefit from the plaintiff by fraud, duress, or the taking of an undue
advantage. See Heldenfels Bros., Inc. v. City of Corpus Christi, 832 S.W.2d 39, 41
(Tex. 1992). Unjust enrichment may take the form of the unjust retention of a
benefit to the detriment of another person or the unlawful retention of money or of
other personal property belonging to another person. Tri-State Chems., Inc. v.
Western Organics, Inc., 83 S.W.3d 189, 199 (Tex. App.—Amarillo 2002, pet.
denied).
Similarly, a claim for money had and received requires proof that a
defendant holds money which belongs to the plaintiff in equity and good
conscience. MGA Ins. Co. v. Charles R. Chesnutt, P.C., 358 S.W.3d 808, 813
(Tex. App.—Dallas 2012, no pet.). It is an equitable doctrine applied to prevent
unjust enrichment. Id.; see Stonebridge Life Ins. Co. v. Pitts, 236 S.W.3d 201, 203
at n.1 (Tex. 2007) (per curiam). A plaintiff must show that the defendant holds
money or its equivalent that in equity and good conscience belongs to the
plaintiff. Best Buy v. Barrera, 248 S.W.3d 160, 162–163 (Tex. 2007) (per
curiam); Staats v. Miller, 243 S.W.2d 686, 687 (Tex. 1951); see Tri-State Chems.,
83 S.W.3d at 194-95 (equivalent of money may be recovered).
9
Appellants have no royalty interest in production from the Hoskins or Ray
Tracts. As such, any money or other benefit Aurora may hold from production of
oil and gas on the Ray Tract or the Hoskins Tract, which Aurora denies, does not
belong to Appellants either legally or in equity. See Staats, 243 S.W.2d at 687;
Tri-State Chems., 83 S.W.3d at 199. As the oil and gas, or any monetary
equivalent such as royalties, do not belong to Appellants, any withholding or
benefit received by Aurora has not been obtained from Appellants. See Cristobal
v. Allen, 2010 Tex. App. LEXIS 5829, *16-17 (Tex. App.—Houston [1st Dist.]
2010) (citing Heldenfels Bros., Inc., 832 S.W.2d at 41). As Appellants are not an
aggrieved party, summary judgment was properly granted in favor of Aurora with
respect to Appellants’ causes of action of unjust enrichment and money had and
received.
3. Any Alleged Tortious Interference Could Not Have Damaged
Appellants.
The elements of a cause of action for tortious interference with an existing
contract are: (1) the existence of a contract subject to interference; (2) a willful and
intentional act of interference; (3) such act was a proximate cause of damage; and
(4) actual damage or loss occurred. Victoria Bank & Trust Co. v. Brady, 811
S.W.2d 931, 939 (Tex. 1991).
The elements of a cause of action for tortious interference with a prospective
contract are: (1) a reasonable probability that the parties would have entered into a
10
contractual relationship; (2) an “independently tortious or unlawful” act by the
defendant that prevented the relationship from occurring; (3) the defendant did
such act with a conscious desire to prevent the relationship from occurring or knew
that the interference was certain, or substantially certain, to occur as a result of his
conduct; and (4) the plaintiff suffered actual harm or damage as a result of the
defendant's interference. Wal-Mart Stores, Inc. v. Sturges, 52 S.W.3d 711, 726
(Tex. 2001); Baty v. Protech Ins. Agency, 63 S.W.3d 841, 860 (Tex. App.—
Houston [14th Dist.] 2001, pet. denied).
Finally, a conspiracy is a combination by two or more persons to accomplish
an unlawful purpose or to accomplish a lawful purpose by unlawful means.
Massey v. Armco Steel Co., 652 S.W.2d 932, 934 (Tex. 1983). The essential
elements of a conspiracy include one or more unlawful, overt act and damages as
the proximate result. Id. If a plaintiff is incapable of sustaining a separate action
against a defendant on account of the matter complained of, then a charge of
conspiracy will not sustain it alone. Delz v. Winfrey, 16 S.W. 111, 112 (Tex.
1891). In other words, the act complained of as accomplished or attempted to be
accomplished through the conspiracy must be actionable itself. Id.
Aurora has done no tortious act, much less an intentional act of interference,
and has not caused damages to Appellants. Appellants have no royalty interests in
production from the Hoskins or Ray Tracts. CR 4 at 1077-78; Appendix at A.
11
Because Appellants had no such interests, they cannot as a matter of law have
suffered any damages from the nonpayment of monies to which they are not
entitled.
Because an element of Appellants’ tortious interference claim fails as a
matter of law, and the alleged tortious conduct underlying Appellants’ claim for
conspiracy is not actionable, summary judgment in favor of Aurora disposing of
Appellants’ claims of tortious interference and conspiracy to commit the same was
properly granted.
4. Appellants Had No Possession of or Interest in the Property
Claimed to Have Been Converted.
Conversion is an offense against the possession of property. Staats v. Miller,
240 S.W.2d 342, 345 (Tex. Civ. App.—Amarillo 1951), rev’d on other grounds,
150 Tex. 581, 243 S.W.2d 686 (Tex. 1951). If the plaintiff did not or does not
own, possess, or have the right to possession of property, the plaintiff has no
property interest and cannot sue for conversion. J.P. Morgan Chase Bank, N.A. v.
Texas Contract Carpet, Inc., 302 S.W.3d 515, 536-39 (Tex. App.—Austin 2009,
no pet.). This is self-evident. Here, the property in question, oil and gas produced
from the Ray and Hoskins Tracts, is not the property of Appellants. CR 4 at 1077-
78; Appendix at A. As such, a claim that Aurora converted property in which
Appellants have no possessory rights or entitlement of any other nature necessarily
12
fails. Moreover, as Appellants’ conversion claims cannot be sustained, neither can
Appellants’ claims of conspiracy to commit conversion. See Delz, 16 S.W. at 112.
Based on the foregoing, summary judgment was properly entered in favor of
Aurora and against Appellants’ claims for conversion and conspiracy to commit
conversion.
V. CONCLUSION
The trial court’s Order granting summary judgment in favor of C. Clifton
Hoskins and Hoskins, Inc. reflects the proper construction and interpretation of the
relevant deeds and conveyances as it relates to the royalty interests at issue.
Because the issue centers on the interpretation and construction of written deed and
agreements, the question presented is inherently one of law, and the trial court was
within its rights and discretion to make such a ruling.
Appellants raise no argument in their Opening Brief regarding the fitness of
the trial court in granting derivative summary judgment. Appellants’ claims,
including those against Aurora, are entirely conditioned upon ownership of
relevant royalty interests. The trial court determined those interests do not belong
to Appellants. The trial court further acted properly, and in accordance with
controlling legal principles, by granting derivative summary judgment in favor of
Aurora and all other appellees. Accordingly, as to Aurora and all other appellees,
the Final Judgment entered by the trial court should be upheld in all respects.
13
VI. PRAYER
WHEREFORE, Appellee Aurora Resources Corporation respectfully
requests that the trial court’s judgment in all things be affirmed, including the
granting of summary judgment in favor of Appellee Aurora. Appellee further
prays for such other and further relief to which it may be justly entitled.
Respectfully submitted,
HOBLIT DARLING RALLS HERNANDEZ
& HUDLOW, LLP
2000 Frost Bank Plaza
802 N. Carancahua
Corpus Christi, TX 78401
(361) 888-9392
(361) 888-9187 (facsimile)
/s/ Roberta S. Dohse
Roberta S. Dohse
State Bar No. 05955400
rdohse@hfdlaw.com
Conner R. Jackson
State Bar No. 24087786
cjackson@hfdlaw.com
Counsel for Appellee
Aurora Resources Corporation
14
CERTIFICATE OF COMPLIANCE
I hereby certify that this Appellees’ Brief has been computer-generated,
using Word by Microsoft, in 14-point font, Times New Roman, in accord with
TEX. R. APP. P. 9.4, and that the number of words in this document totals
approximately 2,920, excluding the caption, identity of parties and counsel,
statement regarding oral argument, table of contents, index of authorities,
statement of the case, statement of issues presented, statement of jurisdiction,
statement of procedural history, signatures, proof of service, this certificate of
compliance, and any appendix (as is permitted by and in compliance with Tex. R.
App. P. 9.4(i)).
/s/ Roberta S. Dohse
Roberta S. Dohse
Counsel for Appellees
CERTIFICATE OF SERVICE
I hereby certify that a true and correct copy of Appellees’ Brief has been
forwarded to all counsel of record, via U.S. Postal Services, Certified Mail, return
receipt requested, and/or via electronic filing, on this the 20th day of May, 2015.
Dan Pozza John George, Jr.
Law Offices of Dan Pozza Matthew F. Wymer
239 E. Commerce Street Bierne Maynard & Parson, LLP
San Antonio, TX 78205-2923 112 East Pecan Street, Suite 2750
San Antonio, TX 78205
Marc K. Whyte
Whyte, PLLC Rosemarie Kanusky
209 Tuttle John W. Weber, Jr.
San Antonio, TX 78209 Jeffrey A. Webb
Norton Rose Fulbright
Melanie Hessler Phipps 300 Convent St., Suite 2100
Kustoff & Phipps, LLP San Antonio, TX 78205
4103 Parkdale Street
San Antonio, TX 78229-2520
15
C. David Kinder Peter E. Hosey
Corey F. Wehmeyer Julia W. Mann
Amy Davis Jackson Walker, L.L.P.
Benjamin Robertson 112 E. Pecan Street, Suite 2400
Lindsay Scaief Riley San Antonio, TX 78205
Ellen B. Mitchell
Dykema Cox Smith Ezra A. Johnson
112 East Pecan, Suite 1800 Joseph B.C. Fitzsimons
San Antonio, TX 78205 J. Byron “Trace” Burton, III
Uhl, Fitzsimons, Jewett
Michael C. Sartori & Burton, PLLC
Law Office of Michael C. Sartori 4040 Broadway, Suite 430
P.O. Box 1222 San Antonio, TX 78209
502A Houston Street
George West, TX 78022
David L. Ylitalo
Coats Rose PC
1020 Northeast Loop 410, Suite 800
San Antonio, TX 78209
/s/ Roberta S. Dohse
Roberta S. Dohse
16
APPENDIX
Exhibit A Order Granting Defendant C. Clifton Hoskin’s First Amended Motion
for Partial Summary Judgment (August 4, 2014) (CR 4 at 1077-81)
Exhibit B Order on Derivative Summary Judgment Motions Based on August 4,
2014 Order (September 18, 2014) (CR 5 at 1631-33)
Exhibit C Agreed Order Dismissing Texoz E&P I, Inc.’s and Aurora Resources
Corporation’s Cross-Claims for Contribution Without Prejudice
(October 21, 2014) (CR 5 at 1685-86)
Exhibit D Final Judgment (entered October 21, 2014) (CR 5 at 1705-1716)
17