Green Meadow Oil & Gas Corp. v. EOG Resources, Inc. , 390 S.W.3d 625 ( 2012 )

AFFJR:%i; Opinion issued i’oveinlwr 27, 2012.
In ilie
(!Lutrl nf iaIs
1itrIct nf at t1Lai
No. 05-11-
1 0029l-C
GREEN MEADOW OIL & GAS CORPORATION, Appellant
V.
EOG RESOURCES, INC., Appdllee
On Appeal from the 116th Judicial District Court
Dallas County, Texas
Trial Court Cause No. 08-15688-F
OPINION
l3elhre Justices o’Neill, FitzGerald, and Lang-Miers
Opinion By Justice O’Neill
Green Meadow Oil & Gas Corporation appeals the trial court’s judgment granting EOG
Resources. Inc.’s motion for summary judgment. In three issues, Green Meadow contends generally
that the trial court erred in granting LOG’s motion for summary judgment and in denying its own
motion tbr summary judgment. We overrule Green Meadow’s issues and affirm the trial court’s
judgment.
Background
in 2008, EOG was contracting with R.S. Peveto, Jr. Properties, Inc. (RSP) to obtain oil and
gas leases in Montague County, Texas. LOG set the terms and prices for the leases. RSP contracted
with RAS interest, Inc. RAS specializes in negotiating and facilitating the purchase of oil and gas
leases throughout Texas. Roger Steward owned RAS. RSP paid for land man services provided by
RAS through Steward. Steward worked with Green Meadow and its principal, Stephen W. Knight,
with regard to four oil and gas leases at issue in this case.
In March 2008, Green Meadow, as lessee, acquired the four oil and gas leases. Green
Meadow then tried to “flip” each of the leases to LOG at a higher price than Green Meadow had
paid. This was to be accomplished through four assignments ofthe leases. Green Meadow prepared
the assignments. Neither the leases nor the assignments were on forms used by LOG. Each tease
was accompanied by a draft which provided that if the draft was not paid within twenty banking
days, the collecting bank was to return it to the payee and all further obligations ofthe parties would
terminate.
After the drafts were signed, Steward submitted the leases and assignments, along with the
lease acquisition reports to Wendy Dalton at LOG for approval. While reviewing the title
documents, EOG learned for the first time that the assignments created an additional overriding
royalty that reduced the amount of its mineral estate. BOG did not approve title to the leases. Prior
to the twentieth banking day, BOG declined payment of each of the drafts. Green Meadow filed a
lawsuit to enforce payment for the purchase of the leases. Both parties moved for summary
judgment The trial court granted LOG’s motion for summary judgment and denied Green
Meadow’s motion. This appeal timely followed.
Standard of Review
The standard for reviewing a traditional summaryjudgment is well established. See Nixon
v. Mr. Prop. MgmL Co., 690 S.W.2d 546,54849 (rex. 1985); McAfee. Inc. v. Agilysys, Inc., 316
S.W.3d 820, 825 (rex. App.—Dallas 2010, no pet.). The movant has the burden of showing that
no genuine issue of material &ct exists and that it is entitled to judgment as a matter of law. TEx.
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R. ( ‘iv. P. 1 (6a(c) In (Icciding \vhether a disputed material thct issue cx isis precluding summary
udgrnent, evidence favorable to the nonmovant will be taken as true, iVixon, 690 S.W.2d at 549;
In re Estate ol Berry, 280 S.W.3d 478, 480 (Tex, App.—Dallas 2009, no pet.). Every reasonable
inibrence must be indulged in favor of the nonniovant and any doubts resolved in its lavor. (‘itv of
Keller v. Wi/von, 168 S.W.3d 802. 824 (Tex. 2005). We review a summary judgment de novo to
determine whether a partys right to prevail is established as a matter of law. Dickey v. Club c’orp.
of .1 inerica, 12 S.W.3d 172, 175 (Tex. Apr- -l)allas 2000. pet. denied). When both sides move for
summar judgment and the trial court grants one motion and denies the other, we review the
summary judgment evidence presented by both sides and determine all questions presented. Mann
frra,ikfort,Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009). We render the
judgment the trial court should have rendered. 1(1.
EOC’s Motion for Summary Judgment
In its first issue, Green Meadow contends the trial court erred in granting summary judgment
for hOG. Specifically, Green Meadow contends that it performed all of its contractual obligations
and was entitled to payment of the drafts as a matter of law. In its third issue, Green Meadow
contends summary judgment was improper because genuine issues of material fact exist as to
whether the titles on the leases were good.
The construction ofan unambiguous written contract is a question of law for the court. See
Matagorda Cnty. Hosp. Dist. v. Burwell, 189 S.W.3d 738, 740 (Tex.2006). When construing a
contract, we must ascertain the true intentions of the parties as expressed in the writing itself. See
Ito/iou Cowboy Partners, Ltd. v. Prudential ins’. Co. o/A,n.. 341 S.W.3d 323, 333—34 (Tex.201 I).
In identifying the intention of the parties, we examine and consider the entire writing in an effort to
harmonize and give effect to all the provisions of the contract so that none will be rendered
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meaningless. See Valence Operating Co. v. Dorseit, 164 S.W.3d 656,662 (Tex.2005). if, after the
rules of construction arc applied, the contract can be given a definite or certain legal meaning, it is
unambiguous and we construe it as a matter of law. Cotter v. Cotter, 650 S.W.2d 391, 393
(Tex.1983).
Green Meadow contends, pursuant to the tenns ofthe drafts, the only reason they would not
be paid is ifthe leases did not have good title. It argues that BOG breached the agreement by failing
to pay the drafts because title for each ofthe leases was good. Moreover, Green Meadow points out
that BOG never indicated that title was not good.
Each of the drafts state:
NOT LATER THAN 20 BANIUNG DAYS AFTER SIGHT AND SUBJECT TO
APPROVAL OF TiTLE
S..
In consideration of Grantee’s/Lessee’s agreement to examine title to the
interest conveyed by the OGML, the payees hereby appoint the collecting bank their
escrow agent to hold this draft and any attachments for the time herein specified and
no party hereto shall have the right to demand return ofthis draft or the OGML prior
to the expiration of such period. All parties hereto and to the OGML agree that the
collecting bank shall not incur any liability whatsoever to any party by its refusal to
return this draft and any attachments during said period of time. Upon timely
acceptance and payment hereof, the collecting bank shall deliver this draft and any
attachments to Grantee/Lessee, but ifdraft is not paid within said time the collecting
bank shall return this draft and any attachments to the payee or forwarding bank and
all further obligations of the parties hereto shall terminate.
LOG contends this language permits it to not pay the drafts without any penalty. As support, BOG
relies upon similar language that was construed in Spelbnan v. Lyons Petroleum, Inc., 709 S.W.2d
295 (rex. Civ. App.—Houston [14th Dist.] 1986, writ refd n.r.c.). In Speilman, the language in the
draft submitted with an oil and gas lease stated:
In the event this draft is not paid within said time, the collecting bank shall
return the same to forwarding bank and no liability for payment or otherwise
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shall be attached to any of the parties hereto.
Id. at 297, The Spel/man court relerred to the above language as the “no liability” clause. In finding
the prior cancellation ol the draft efftctive. the court held that the “no liability clause caused the
contract to fail for want of mutuality, hi. at 298.
Green Meadow tries to distinguish Spelhnan by arguing that the no liability clause is
preprmted and inconsistent with the typed pmvislon that the draft be paid within twenty banking
days and subject to approval of title, Green Meadow argues the typed provision supercedes an
inconsistent preprinted provision. See Harry F Frey & Cornpani’ i WL).Laey Feed Co.. 272
S.W.2d 765, 767 (Tex. Civ. App.—AVaco 1 954, writ dism ‘d); Gonstitution Indemnity Co. of
Philadelphia v ,4mbrusi, 25 S.W .2d 176 (1 cx. Civ. App.—San Antonio I 930, writ ref’d). However,
as EOG points out in its brief, Green Meadow di(l not present any evidence that the language with
the no liability clause is preprinted and the language about approval of title is typed. We find Green
Meadow’s contention without merit.
EOG contends that, under the contract, it had an absolute right not to pay the drafts and that
it exercised that right. In her affidavit, Wendy Dalton, an employee of hOG, stated that on or before
the twentieth banking day, EOG refused payment of each draft,
Green Meadow also contends that the drafts expressly provided that the only condition to
payment was good title. It argues that the language “And Subject to Approval of Title” on top of
each draft means that bad title is the only reason EOG could refuse payment of the drafts. Green
Meadow argues the trial court erred in granting summary judgment because EOG failed to show a
defect in title that would excuse its nonperiormance. First, we note the drafts do not use the terms
“good title” or “defect in title.” Rather, the drafts state they are subject to EOG’s “approval of title.”
Green Meadow argues that it submitted summary judgment evidence that Steward, as EC)G ‘s
acnt, confirmed that the titles were unod, Confirmation 1w Steward that the titles were uood had
no bearing on LOG’s alleged obligation to approve title, If Stewards word that the titles were good
was all that was necessary, there would have been no reason for him to submit them to Dalton for
LOG’s approval
Green Meadow also contends that Steward’s determination of good title should be sufficient
because it was acting as an agent br LOG. It points to the ltct that each dralt was signed “Roger
Steward, Agent for EOG Resources, inc.” However, Dalton stated in her affidavit that Steward “did
not have the authority to bind LOG to the terms of the deal.” Steward behaved in accordance with
Dalton’s assessment ol’ his authority by submitting the leases and assignments for her approval.
Steward’s determination of good title was not the final word. Pursuant to the drafts, the final word
belonged to LOG.
Steward prepared the lease acquisition reports and sent them, along with the leases and
assignments, to Dalton for EOG’s approval. Steward testified that it was Dalton who would approve
the leases lbr LOG. Under the contract, LOG had the right not to pay the drafts if it did not approve
title. Dalton stated that LOG did not approve title to each of the leases and specifically, did not
approve the form of each of the leases. Neither the leases nor the assignments were on fonus used
by EOG in the area. Moreover, when EOG reviewed the titles, it learned for the first time that an
additional overriding royalty, a separate interest that reduced the mineral estate of EOG, had been
created in the assignments. Steward testified at his deposition that all leases that he had acquired for
EOG with the exception of the four leases at issue here, were leases direct from the mineral owner.
in addition, the subject four leases were the only ones that included an overriding royalty in addition
to the lease royalty.
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We conclude that the drafts provided that they would not be paid unless BOG approved title.
The summary judgment evidence established that the documentation was submitted by Steward to
I )alton at BOG br BOG’s approval. For numerous reasons. BOG (lid not approve title. Moreover,
under the terms of the drafts, BOG had the absolute right not the pay the drafts. For these reasons,
we hold that BOG did not breach the contract when it elected not to pay the drafts and the trial court
did not err in gi’antinn BOG’s motion [‘or summary judgment. We overrule Green Meadow’s Iirst
and third issues.
Green Meadow’s Motion for Summary Judgment
In its second issue. Green Meadow contends the trial court erred in denying its motion for
summary judgment. in light of our disposition of Green Meadow’s first and third issues, we
conclude the trial court did not err in denying Green Meadow’s motion for summary judgment. We
oven’ule Green Meadow’s second issue.
We affirm the trial court’s judgment.
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JUSTICE /
11029 IF.P05
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1niirL ti \ppcth
fiftIi DistrirL vf rxa i1 Dallas
JUDGMENT
1<1 I N \I I. \ )( )W ( ) II & ( AS Appeal from the 116th Judicial District Court
‘( )R P( )R \i l( )S. \ppell;mt of i)allas County, Texas. (Tr.CLNo. 0$-
I 56$X-F).
N. flS- II I -(‘V Opinion delivered by Justice O’Neill, Justices
FitzGerald and Lang—Miers, participating.
I ( )( RI S( )1 R( ‘I S IN( •\ppellee
lii ac’’oidance ith this (‘uurls upinim of this date. the judinent ol’ the trial cowl is
AH’IItII1). It N ()kIWRIi) that appellec I O( RISOL JRCI:S IN(. recover its costs otihis
appeal from appellant ( RI-I-N \1H\I)( )W ( )H & ( AS ( ‘ORP( )R,\Tl( )N.
Judgment entered November 27. 2() 12.
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