Joseph W. Hamm, Jessica C. Hamm and Jennifer H. Hamm v. John M. Robinson and Hall Royalty Company ( 2010 )

COURT OF APPEALS
EIGHTH DISTRICT OF TEXAS
EL PASO, TEXAS
JOSEPH HAMM, JESSICA C. HAMM, §
AND JENNIFER H. HAMM, No. 08-08-00243-CV
§
Appellants, Appeal from the
§
v. 143rd District Court
§
JOHN M. ROBINSON, HALL of Reeves County, Texas
ROYALTY COMPANY, AND §
CIMAREX ENERGY COMPANY, (TC# 07-10-18954-CVR)
§
Appellees.
OPINION
Appellants, Joseph, Jessica, and Jennifer Hamm, appeal the trial court’s summary judgment
in favor of Appellees, John M. Robinson, Hall Royalty Company, and Cimarex Energy Company
following the former’s filing of a bill of review, challenging a termination judgment for lack of
service. We reverse.
BACKGROUND
The heart of this case concerns who retains an interest in the land located in Reeves County,
Texas, which was purchased by John C. Kinsley in 1923, based on the rules of descent and
distribution. Therefore, we begin with a recitation of the applicable family trees.
In the mid-1800s, John H. Kinsley married Rebecca L. Kinsley, and the couple begot three
children, Jennie Blanche Kinsley, John C. Kinsley, and Anna S. Kinsley. Although Anna died at age
one, Blanche and John C. Kinsley survived. Presumably, John H. Kinsley predeceased Rebecca, and
Rebecca died in 1932.
John C. Kinsley married Eva in 1915. Although John and Eva had no children together, Eva
had two from a previous marriage, Wilbur Robinson and Edwina Sutherland. In 1942, John C.
Kinsley died intestate in Los Angeles, California, and in 1970, Eva died intestate in Indio, California.
Edwina died without children in 1996, and Wilbur died intestate in 1963, survived by his only child,
John M. Robinson (Appellee).
Although a marriage is not specifically found in the record, Blanche Kinsley’s last name is
referred to as Hamm in a trust document executed by Rebecca in 1930. She had three children,
Howard K. Hamm, Rosalind Hamm, and Warren W. Hamm. Blanche died in 1955, leaving her
assets by will in equal portions to Howard, Rosalind, and Warren Hamm. Howard Hamm later begot
three sons, Warren H., Robert L., and Howard K. Hamm, Jr. Rosalind Hamm begot one son, John
R. Harman, Jr., and Warren W. Hamm begot one son, Thomas Hamm. Of that generation, Warren
H. Hamm had three children, Matthew, Eleanor, and Russell Hamm, and Thomas Hamm had three
children, Joseph, Jessica, and Jennifer Hamm (Appellants).
The Purchase of the Land, the Receivership, and the Termination
As noted previously, John C. Kinsley married Eva in 1915. Eight years later, while residing
in Illinois, John purchased a tract of land in Reeves County, Texas, from W. W. Dean. The deed
named John C. Kinsley as the grantee and recited a consideration of $200 as the purchase price for
the land. The deed was recorded with the Reeves County Clerk.
Several decades later, on May 4, 1999, Frontier Land Corporation, unable to locate John C.
Kinsley or his heirs, filed a petition for appointment of a receiver for missing and unknown mineral
owners, including John and Eva Kinsley, and their heirs. After serving the potential owners by
publication in the Pecos Enterprise newspaper, which circulated in Reeves, Ward, and Loving
counties, the district court, on July 28, 1999, appointed Randall Reynolds to represent the unknown
owners as attorney ad litem. Reynolds filed an answer on behalf of all the owners, including any and
all heirs of John and Eva Kinsley.
On August 6, 1999, the court heard Frontier’s application for the appointment of a receiver
for undivided mineral interests. The court found that all owners, including John and Eva Kinsley,
and their heirs, appeared through their attorney, Reynolds. The court further found that after due
diligence, those owners were unable to be located and were served by citation by publication, and
that citation was duly returned. The court then appointed Tom Nance as receiver, and Nance, in turn,
executed an oil and gas lease on the property on August 18, 1999, with Helmerich & Payne, Inc.
(now Cimarex Energy Company). Cimarex subsequently drilled a well on the tract and paid royalties
in separate accounts established for John and Eva Kinsley with the Reeves County District Clerk.
On March 24, 2006, John M. Robinson and Hall Royalty Company filed a motion to
terminate the receivership and requested distribution of the assets in the receiver’s possession. John
Robinson claimed he was the rightful heir to the land, and Hall claimed an interest pursuant to a
wellbore royalty conveyance executed by John Robinson, granting Hall 50 percent of his royalty
interest until December 1, 2005, and 25 percent thereafter.1
The motion was served on Reynolds as attorney ad litem, and on June 8, 2006, Reynolds
participated in the hearing on the same as counsel for all unknown heirs of John and Eva Kinsley.
On July 27, 2006, the court entered an order declaring John Robinson owned the land and distributed
$225,184.25 to Robinson, and $210,892.15 to Hall.
1
Under Texas law, John Robinson would retain some ownership in the property regardless as to whether
John C. Kinsley adopted W ilbur Robinson as his son or whether the property is characterized as community or
separate property. According to the rules of intestate succession for community property, if a person dies without
children, survived only by a spouse, the real property passes to the spouse. T EX . P RO B . C O D E A N N . § 45(a) (Vernon
2003). Upon that spouse’s death, the property passes to her children. Id. at § 38(a)(1) (Vernon 2003). If any of
those children die without issue or surviving spouses, the property passes to the other child and then to that child’s
descendants. Id. at § 38(a)(3). For non-community property, when a person dies leaving a spouse and no children,
the spouse is entitled to one-half of the real property and the other half passes to the deceased’s parents. Id. at §
38(b)(2). If the deceased’s parents are no longer living, that half of the property passes to the deceased’s siblings,
and then to their children. Id. Because adopted children are considered lineal heirs in Texas, the rules of intestate
succession do not change. See T EX . P RO B . C O D E A N N . § 40 (Vernon 2003).
The Bill of Review
Later, on October 22, 2007, Appellants filed a petition for bill of review, asserting an interest
in the land and that they were entitled to notice of the termination hearing.2 The affidavits from
Joseph, Jessica, and Jennifer Hamm, each averred that in 2004, Hall informed them that as heirs of
John C. Kinsley, they were potentially entitled to funds owed to him, and that Hall would not
disclose the whereabouts of those assets unless they first signed a contract, conveying to Hall 50
percent of the funds plus 50 percent of the underlying mineral interest. The affidavits further stated
that when Appellants refused Hall’s offer, Hall ceased communication with them, leaving them to
locate the property on their own, which they did not find until December 2006.
Appellants moved for summary judgment claiming, as interested owners in the land, they
were entitled to be served with notice of the termination hearing since Hall knew their location in
2004, rather than such notice simply being served on the attorney ad litem. Appellees moved for
summary judgment on no-evidence and traditional grounds, asserting first that Appellants had no
interest in the land in that they failed to overcome the presumption of community property and there
was no evidence the property was purchased with separate funds, and second that Appellants’
interests were duly represented by the attorney ad litem making their claims of ownership in the land
barred by res judicata. After a hearing, the court, without specifying what grounds summary
judgment would be granted on, granted summary judgment in favor of Appellees.
DISCUSSION
On appeal, Appellants bring three issues. The first alleges that the trial court erred by
denying their motion for summary judgment when they were never served with the motion to
2
Appellants’ potential ownership in the land is based on their claim that the land was John C. Kinsley’s
separate property. T EX . P RO B . C O DE A N N . § 38(b)(2).
terminate the receivership, the second contends that the trial court erred in granting Appellees’ no-
evidence motion for summary judgment when Appellants presented prima facie proof that the
property was John C. Kinsley’s separate property, and the third asserts that the trial court erred by
granting Appellees’ traditional motion for summary judgment on grounds that their claims were
barred on principles of res judicata. Finding the trial court erred by denying Appellants’ motion for
summary judgment, we determine Appellants’ first issue is dispositive and need not address
Appellants’ remaining issues.
Standard of Review
“A bill of review is an equitable proceeding brought by a party seeking to set aside a prior
judgment that is no longer subject to challenge by a motion for new trial or appeal.” Caldwell v.
Barnes, 154 S.W.3d 93, 96 (Tex. 2004) (citing Baker v. Goldsmith, 582 S.W.2d 404, 406 (Tex.
1979)). The party seeking a bill of review must ordinarily plead and prove (1) a meritorious defense
to the underlying cause of action, (2) which he was prevented from making by the fraud, accident,
or wrongful act of the opposing party or official mistake, (3) unmixed with any fault or negligence
on their own part. Baker, 582 S.W.2d at 406-07.
However, when a party claims non-service, he need not prove a meritorious defense or that
fraud, accident, wrongful act, or official mistake prevented him from presenting such a defense.
Caldwell, 154 S.W.3d at 96-97; see also Peralta v. Heights Med. Ctr., Inc., 485 U.S. 80, 86-87, 108
S. Ct. 896, 99 L. Ed. 2d 75 (1988) (holding that the meritorious defense requirement in a bill of review
proceeding violates due process where the bill of review plaintiff has no notice of the proceeding in
which the default judgment was rendered); Texas Industries, Inc. v. Sanchez, 525 S.W.2d 870, 871
(Tex. 1975) (holding that proof of not having been served with citation obviates the necessity of
pleading and proving that party was prevented from making his meritorious defense by fraud,
accident, or wrongful act of the opposite party). Rather, he simply must prove that the judgment was
rendered unmixed with any fault or negligence of his own, which is conclusively established by
proving he was never served with process. Caldwell, 154 S.W.3d at 97.
When a trial court grants summary judgment on a bill of review, we apply the general
standard of review of a summary judgment. See Boaz v. Boaz, 221 S.W.3d 126, 131 (Tex.
App.–Houston [1st Dist.] 2006, no pet.); Brown v. Vann, No. 05-06-01424-CV, 2008 WL 484125,
at *4 (Tex. App.–Dallas Feb.25, 2008, no pet.) (mem. op.) (cases reviewing summary judgment on
bill of review). To prevail on a traditional summary-judgment motion, the movant bears the burden
of proving that he is entitled to judgment as a matter of law and that there is no genuine issue of
material fact. TEX . R. CIV . P. 166a(c); Cathey v. Booth, 900 S.W.2d 339, 341 (Tex. 1995). When
deciding whether a disputed, material fact issue precludes summary judgment, we take as true
evidence favorable to the nonmovant, indulge every reasonable inference in favor of the nonmovant,
and resolve any doubts in the nonmovant’s favor. Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546,
548-49 (Tex. 1985).
Application
Appellants’ first issue contends that the trial court erred by denying their motion for summary
judgment on grounds that they were never served. Appellants’ sole basis in filing the bill of review
was that they, believing they owned an interest in the land based on representations made by Hall
in 2004, should have been served with notice of the termination and distribution of the assets.
Although Appellants recognize that an attorney ad litem represented John C. Kinsley’s unknown
heirs’ potential interests in the receivership and termination hearings, they, citing Mullane v. Central
Hanover Bank & Trust Co., 339 U.S. 306, 314, 70 S. Ct. 652, 94 L. Ed. 865 (1950), argue that such
representative notice for them was incompatible with the requirements of due process when Hall
previously contacted them and knew their location.3 In other words, Appellants contend they were
entitled to individual notice when Appellees filed their motion to terminate so that they could obtain
their own counsel and represent themselves at the termination hearing.
Initially, we address whether the non-service issue should have gone to the jury. As noted
before, to be entitled to a traditional summary judgment, there must be no genuine issues of material
fact. TEX . R. CIV . P. 166a(c); M.D. Anderson Hosp. & Tumor Institute v. Willrich, 28 S.W.3d 22,
23 (Tex. 2000). In Caldwell, the parties, at the bill-of-review hearing, contested whether the named
defendant in the original law suit was actually served. Caldwell, 154 S.W.3d at 96. The defendant
claimed that he was not, attaching various affidavits to his bill of review that showed he was not at
the location the process server claimed on the day he was allegedly served. Id. Finding a material
question of fact as to whether the defendant was actually served, the Supreme Court determined that
the contested issue of service should have been submitted to a jury, rather than decided by the trial
court in a pretrial proceeding. Id. at 97-98.
However, we are not presented with a case concerning whether Appellants were ever
personally served with notice of the termination proceedings. Indeed, it is undisputed that they were
not. Instead, we are asked to determine whether Appellants were entitled to individual notice once
Hall knew their location, despite the attorney ad litem’s appointment. This is not a question of
material fact, but of law, and therefore, the issue was properly submitted on summary judgment. See
Doe v. Boys Clubs of Greater Dallas, Inc., 907 S.W.2d 472, 477 (Tex. 1995); Koelsch v. Indus. Gas
Supply Corp., 132 S.W.3d 494, 497 (Tex. App.–Houston [1st Dist.] 2004, pet. denied) (when a
question of law, rather than a question of fact, is presented, the trial court may properly render
3
W e note that at the termination hearing, Hall acknowledged that it previously contacted Appellants but
later determined they did not own an interest in the land.
summary judgment).
We now turn to whether Appellants were entitled to notice. As an elementary and
fundamental requirement, our system of justice comprehends due process to include notice and an
opportunity to be heard by interested parties to the action. See Peralta, 485 U.S. at 84; Mullane, 339
U.S. at 313-14; Ex parte Peterson, 444 S.W.2d 286, 288-89 (Tex. 1969). Indeed, in any proceeding
that is to be accorded finality, due process requires that interested parties receive notice reasonably
calculated, under the circumstances, to apprise them of the pendency of the action and afford them
the opportunity to present their objections. Peralta, 485 U.S. at 84; Mullane, 339 U.S. at 314-15;
Dispensa v. Univ. State Bank, 987 S.W.2d 923, 926 (Tex. App.–Houston [14th Dist.] 1999, no pet.).
Failure to give adequate notice violates “the most rudimentary demands of due process of law.”
Armstrong v. Manzo, 380 U.S. 545, 550, 85 S. Ct. 1187, 14 L. Ed. 2d 62 (1965); Jimenez v.
Transwestern Prop. Co., 999 S.W.2d 125, 128 (Tex. App.–Houston [14th Dist.] 1999, no pet.).
Under the circumstances presented in this case, we find that Appellants were entitled to
notice. They, as John C. Kinsley’s heirs, may have a potential interest in the property, and therefore,
any proceedings or judgments concerning that property necessarily affect that potential interest.
Accordingly, Appellants were entitled to an opportunity to present their objections. See Peralta, 485
U.S. at 84 (interested parties are entitled to notice for purposes of presenting their objections when
those interests are affected by a proceeding that is to be accorded finality). As their whereabouts
were known by the opposing party seeking to terminate the receivership, we conclude that
Appellants were entitled to notice of the termination. See Mullane, 339 U.S. at 318 (“[w]here the
names and post office addresses of those affected by a proceeding are at hand, the reasons disappear
for resort to means less likely than the mails to apprise them of its pendency.”).
Nevertheless, Appellees argue that Appellants’ interests were represented by an attorney ad
litem at the termination hearing and thus service on him was sufficient. However, according to the
court order appointing the receiver and attorney ad litem, the latter was only appointed to represent
any unknown heirs of John C. Kinsley. Hall then chose to locate various heirs and found them.
Because Hall, an opposing party who filed the motion to terminate the receivership, knew Appellants
were heirs of John C. Kinsley and their whereabouts, he cannot claim that service on the attorney
ad litem, who was solely appointed to represent unknown heirs, was reasonably calculated notice.
See Peralta, 485 U.S. at 84 (due process requires an interested party to be served with reasonably
calculated notice).
Appellees also argue that since they determined Appellants lacked an interest in the land,
Appellants were not entitled to notice. Whether Appellants owned an interest in the land was an
issue to be determined by the fact finder after notice was had on all potential and known interested
parties, not for Hall to preliminarily determine on its own. As Hall knew Appellants’ whereabouts
at the time it filed the motion to terminate the receivership, we believe Hall was required to give
notice to Appellants. See In the Matter of Marriage of Peace, 631 S.W.2d 790, 794 (Tex.
App.–Amarillo 1982, no writ) (holding individual entitled to notice when his name and address are
known, and his legal interests are directly affected by the proceedings in question).
Accordingly, we conclude that Appellants, as a matter of law, were entitled to notice. As
Appellants were never served, we need not determine whether they had a meritorious defense or that
fraud, accident, wrongful act, or official mistake prevented them from presenting such a defense.
Peralta, 485 U.S. at 86-87; Caldwell, 154 S.W.3d at 96-97; Sanchez, 525 S.W.2d at 871. Further,
having established that they were never served with process, we conclude that the judgment was
rendered unmixed with any fault or negligence of Appellants. Caldwell, 154 S.W.3d at 97.
Therefore, Appellants were entitled to summary judgment on their petition for bill of review as a
matter of law, and the trial court erred by failing to grant the same. Issue One is sustained.
CONCLUSION
Having sustained Appellants’ first issue, we reverse the judgment of the trial court and
remand for further proceedings.
GUADALUPE RIVERA, Justice
April 30, 2010
Before Chew, C.J., McClure, and Rivera, JJ.