in Re: Devon Energy Production Company, L.P. ( 2010 )

NO. 12-10-00147-CV
IN THE COURT OF APPEALS
TWELFTH COURT OF APPEALS DISTRICT
TYLER, TEXAS
'
IN RE: DEVON ENERGY
PRODUCTION COMPANY, L.P., ' ORIGINAL PROCEEDING
RELATOR
'
OPINION
Devon Energy Production Company, L.P. filed a petition for writ of mandamus
challenging the trial court’s order denying its motion to strike the petition in intervention
filed by Nathan Wade Jones, T.D. Livingston, Charles Windham, Janice Windham, Paul
Ross, and Bobbie Ross (the “intervenors”).1 We conditionally grant the petition.
BACKGROUND
On May 27, 2008, W. Brady Clark, A. Blain Clark, and Angela McCaa (the
“plaintiffs”) brought suit against Devon, DJ Energycom, LLC, and Chant Clark for
rescission of three oil and gas leases:
PLAINTIFFS
Lessors Date of Lease Subject Lands
Willis Brady Clark 4-7-08 157.65 acres
Alan Blain Clark Lewis Watkins Survey
and Joel White Survey
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The respondent is the Honorable Charles R. Mitchell, Judge of the 273rd Judicial District Court,
Shelby County, Texas. The real parties in interest are W. Brady Clark, A. Blain Clark, Angela McCaa,
Nathan Wade Jones, Tenison Deloyd Livingston, Charles P. Windham, Janice W. Windham, Paul M. Ross,
and Bobbie L. Ross.
Alan Blain Clark 4-7-08 81.001 acres
Lewis Watkins Survey
Joel White Survey
W. Brady Clark 4-7-08 34.99 Acres
Angela K. McCaa Lewis Watkins Survey
Chant Clark, a landman acting as Devon’s agent, obtained these leases.
The plaintiffs sought rescission of the leases based upon claims of fraud, statutory
fraud, and breach of fiduciary duty. As an alternative to rescission of the leases, the
plaintiffs sought monetary damages. Along with filing their original petition, the
plaintiffs tendered into the registry of the court $136,820.00, the full amount of the
consideration Devon had paid for the leases.
On October 8, 2009, the plaintiffs’ attorney filed a “Plaintiff[s’] First Amended
Petition and Intervenors’ Petition In Intervention.” The amended petition named three
additional defendants, and included the following intervenors who sought to join the
plaintiffs’ suit:
INTERVENORS
Lessors Date of Lease Subject Lands
Wade Jones 4-9-08 80.8643 acres
G.W. Watson Survey
John Hall Survey
G.R. Hughes Survey
Tenison Deloyd Livingston 4-18-08 62.655 acres
Thomas Haley Survey
Charles P. Windham 4-3-08 52.81 Acres
Janice W. Windham S.S. Runnels Survey
Jonathan Anderson Survey
28.51 acres
Jonathan Anderson Survey
Paul M. Ross 3-3-09 93.5249 acres
Bobbie L. Ross Benjamin Odell Survey
Jonathan McFadden Survey
Kneel Black Survey
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The intervenors sought the same relief as the plaintiffs: rescission of their
respective leases along with an alternative remedy of monetary damages. Unlike the
plaintiffs, however, none of the intervenors tendered the consideration they had received
from Devon into the registry of the court. Devon moved to strike the petition in
intervention. Following a telephonic hearing, the trial court entered an order on March 5,
2010, denying Devon’s motion to strike the petition in intervention. On May 17, 2010,
Devon filed a petition for writ of mandamus with this court.
DUE DILIGENCE IN SEEKING MANDAMUS
Initially, the intervenors contend that Devon unreasonably delayed two and one-
half months before seeking mandamus relief and that its petition should be denied
because of laches. We disagree. When reviewing a mandamus petition, the term
“diligence” is relative and incapable of exact definition. Strickland v. Lake, 163 Tex.
445, 448, 357 S.W.2d 383, 384 (1962) (orig. proceeding). Its meaning must be
determined by the circumstances of each case. Id.
In Strickland, the Texas Supreme Court held that waiting two months to file a
mandamus petition was not failure to exercise due diligence. See id., 163 Tex. at 448,
357 S.W.2d at 384. Recently, our supreme court has held that a delay of slightly less
than six months before seeking mandamus relief was not unreasonable. See In re SCI
Tex. Funeral Services, Inc., 236 S.W.3d 759, 761 (Tex. 2007) (orig. proceeding). The
intervenors have cited us to no authority supporting a conclusion that waiting two and
one–half months from the time an order is signed to file for mandamus relief constitutes a
lack of due diligence and therefore laches. In the case before us, Devon’s appellate
counsel explained that it took time for Devon to retain him as appellate counsel, and then
for him to obtain a certified copy of the order, to familiarize himself with the case, and
prepare the mandamus petition. There has been no showing of a lack of due diligence on
Devon’s part in bringing this mandamus proceeding.
AVAILABILITY OF MANDAMUS
Mandamus will issue to correct a clear abuse of discretion when there is no
adequate remedy by appeal. Walker v. Packer, 827 S.W.2d 833, 839-40 (Tex. 1992). To
determine whether the trial court clearly abused its discretion, the reviewing court must
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consider whether the challenged ruling or order was one compelled by the facts and
circumstances or was arbitrarily unreasonable, or made without reference to any guiding
rules or principles. In re Allstate Ins. Co., 232 S.W.3d 340, 342 (Tex. App.–Tyler 2007,
orig. proceeding). A clear failure by the trial court to analyze or apply the law correctly
will constitute an abuse of discretion. Walker, 827 S.W.2d at 840. The trial court has no
discretion in determining what the law is or applying the law to the facts. In re
Prudential Ins. Co. of Am., 148 S.W.3d 124, 135 (Tex. 2004). An appellate remedy is
“adequate” when any benefits to mandamus review are outweighed by the detriments.
Id. at 136. This determination depends heavily on the circumstances presented and is
better guided by general principles than by simple rules. Id. at 137. The party seeking
the writ of mandamus has the burden of showing that the trial court abused its discretion
and that appeal is an inadequate remedy. In re E. Tex. Med. Ctr. Athens, 154 S.W.3d
933, 935 (Tex. App.–Tyler 2005, orig. proceeding).
INTERVENTION
Any party may intervene by filing a pleading, subject to being stricken out by the
court for sufficient cause on the motion of any party. TEX. R. CIV. P. 60. When an
intervention is challenged by a party’s motion to strike, the intervenor bears the burden to
demonstrate a “justiciable interest” in the pending suit. In re Union Carbide Corp., 273
S.W.3d 152, 155 (Tex. 2008) (orig. proceeding). To constitute a justiciable interest, the
intervenor’s interest must be such that if the original action had never been commenced,
and he had first brought it as the sole plaintiff, he would have been entitled to recover in
his own name to the extent of at least a part of the relief sought in the original suit. Id.
An intervenor must show some present legal or equitable interest in the subject matter
that makes it proper for him to participate in the proceeding. Jabri v. Alsayyed, 145
S.W.3d 660, 672 (Tex. App.–Houston [14th Dist.] 2004, no pet.).
ABUSE OF DISCRETION
An oil and gas lease creates an interest in real property. See Amoco Prod. Co. v.
Alexander, 622 S.W.2d 563, 572 (Tex. 1981). In a typical oil and gas lease, the lessor is
a grantor and grants a fee simple determinable interest to the lessee, who is actually a
grantee. Natural Gas Pipeline Co. of Am. v. Pool, 124 S.W.3d 188, 192 (Tex. 2003).
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When an oil and gas lease reserves only a royalty interest, the lessee acquires title to all
of the oil and gas in place; the lessor owns only a possibility of reverter and has a right to
receive royalties. Id. Under an oil and gas lease, the lessee is in effect a cotenant of the
lessor. Shell Oil Co. v. Howth, 138 Tex. 357, 367, 159 S.W.2d 483, 490 (1942).
A party who has an interest in real property that is the subject of the litigation may
intervene in a pending suit. See American Spiritualist Ass’n v. City of Dallas, 366
S.W.2d 97, 100 (Tex. Civ. App.–Dallas 1963, no writ). When a party owns no interest in
the real property that is the subject of a suit, it has no justiciable interest in the suit. See
Old Alamo Heights Neighborhood Ass’n v. City of Alamo Heights, 650 S.W.2d 216,
217 (Tex. App.–San Antonio 1983, no writ); see also Wilson v. County of Calhoun, 489
S.W.2d 393, 396-97 (Tex. Civ. App.–Corpus Christi 1972, no writ) (party not alleging
legal or equitable interest in land may not intervene in suit involving that land).
Here, the intervenors concede that they do not have an interest in the real property
described in the oil and gas leases between the plaintiffs and Devon. However, they
contend that because Devon used the same lease form for all of the leases, they should be
allowed to intervene. But they are not parties to the plaintiffs’ leases nor are they entitled
to any benefits from them. The fact that the form used for all the leases is the same does
not give the intervenors a justiciable interest in the plaintiffs’ suit. See Henderson
Edwards Wilson, L.L.P. v. Toledo, 244 S.W.3d 851, 854 (Tex. App.–Dallas 2008, no
pet.) (intervenor had no justiciable interest in suit to rescind contract where intervenor
was not party to contract and could not have sued to enforce it). The oil and gas leases in
this case are only the vehicles used to create the interest in land that is the subject matter
of the plaintiffs’ suit. The intervenors have shown no direct interest in the subject matter
of the suit between the plaintiffs and Devon. Because there was no showing that the
intervenors had an interest in the subject matter of the suit between the plaintiffs and
Devon, the trial court had no basis upon which to deny Devon’s motion to strike the
petition in intervention. Therefore, it abused its discretion when it entered that order.
ADEQUATE REMEDY BY APPEAL
Having determined that the denial of Devon’s motion to strike the petition in
intervention was an abuse of discretion, we next consider whether Devon has an adequate
remedy by appeal. Mandamus is not to be used as a substitute for an ordinary appeal. In
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re Barrett, 149 S.W.3d 275, 280 (Tex. App.–Tyler 2004, orig. proceeding). But the word
“adequate” has no comprehensive definition; it is simply a reference to the careful
balancing of jurisprudential considerations that determine when appellate courts will use
original mandamus proceedings to review the actions of lower courts. In re Prudential,
148 S.W.3d at 136. These considerations implicate both public and private interests. Id.
An appellate remedy is “adequate” when any benefits to mandamus review are
outweighed by the detriments. Id. Conversely, when the benefits outweigh the
detriments, appellate courts must consider whether the appellate remedy is adequate. Id.
Among other factors, we consider the procedural dynamics of the case in determining
whether the appellate remedy is adequate. Id.
The intervenors contend that it would be in the interest of judicial economy for
their cases to be tried with the plaintiffs’ case, thus having one trial instead of five.
However, it is a fundamental rule of law that only the person whose primary legal right
has been breached may seek redress for that injury. Nobles v. Marcus, 533 S.W.2d 923,
927 (Tex. 1976). For example, a suit to set aside a deed obtained by fraud can only be
maintained by the defrauded party. Id. A party who was not defrauded by the
conveyance has not suffered an invasion of a legal right and therefore does not have
standing to bring suit based on that fraud. Id. In this case, the plaintiffs are seeking
rescission of the leases based upon fraudulent representations allegedly made to them by
Devon and its agents.
Rescission is an “undoing” of an instrument, in this case the oil and gas lease
between Devon and the plaintiffs. See American Apparel Prods. v. Brabs, Inc., 880
S.W.2d 267, 270 (Tex. App.–Houston [14th Dist.] 1994, no writ). To be entitled to
rescission, a party must show that (1) it and the defrauding party are in the status quo (i.e.
there are no retained benefits received under the instrument and not restored to the other
party) or 2) there are equitable considerations that obviate the need for the status quo
relationship. Isaacs v. Bishop, 249 S.W.3d 100, 110 (Tex. App.–Texarkana 2008, pet.
denied). An inability or unwillingness to return the parties to their former position should
be considered in determining whether rescission would be equitable. See id. In the case
before us, the primary relief sought by the plaintiffs and intervenors is rescission. The
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plaintiffs have properly followed the procedure required to seek rescission, while the
intervenors have not.
Moreover, Devon used five different agents in its dealings with the intervenors
while using only two to deal with the plaintiffs. Each agent’s negotiation on each tract of
land involved different dynamics and therefore almost certainly different representations.
Five different sets of facts have been created. The evidence of fraud would be unique to
each lease. Further, the plaintiffs may be entitled to rescission while the intervenors may
be entitled only to monetary damages because of a failure to satisfy a prerequisite to
rescission. And finally, in an appeal of an adverse judgment, it would be difficult, if not
impossible, for Devon to untangle how confusion over these important differences
contaminated the jury’s deliberations. See In re Hochheim Prairie Farm Mut. Ins.
Ass’n, 296 S.W.3d 907, 911 (Tex. App.–Corpus Christi 2009, orig. proceeding).
While we are not unmindful of the importance of judicial economy, it is more
important that each party have its interest in each lease of real property decided
specifically upon the evidence unique to that tract, separate from consideration of
evidence applicable only to an adjoining lease. Under the facts of this case, we conclude
that the benefits of mandamus outweigh the detriments. Accordingly, we hold that
Devon does not have an adequate remedy by appeal.
DISPOSITION
Having concluded that the trial court abused its discretion by denying Devon’s
motion to strike the petition in intervention and that it does not have an adequate remedy
at law, we conditionally grant mandamus relief. We trust that the trial court will
promptly vacate its order of March 5, 2010 denying defendant Devon Energy Production
Company, L.P.’s motion to strike the petition in intervention and enter an order granting
the motion. The writ will issue only if the trial court fails to comply with this court’s
opinion and order within ten days after the date of the opinion and order. The trial court
shall furnish this court, within the time for compliance with this court’s opinion and
order, a certified copy of its order evidencing such compliance. All pending motions are
overruled as moot.
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JAMES T. WORTHEN
Chief Justice
Opinion delivered August 17, 2010.
Panel consisted of Worthen, C.J., Griffith, J., and Hoyle, J.
(PUBLISH)
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