Brammer Petroleum, Inc. v. Bagley Minerals, L.P., Billy McFadden, and Arthur McFadden ( 2016 )

In The
Court of Appeals
Sixth Appellate District of Texas at Texarkana
No. 06-15-00091-CV
BRAMMER PETROLEUM, INC., Appellant
V.
BAGLEY MINERALS, L.P., BILLY MCFADDEN,
AND ARTHUR MCFADDEN, Appellees
On Appeal from the County Court at Law
Panola County, Texas
Trial Court No. 2013-457
Before Morriss, C.J., Moseley and Burgess, JJ.
Memorandum Opinion by Chief Justice Morriss
MEMORANDUM OPINION
Summary judgment was awarded to Bagley Minerals, L.P., Billy McFadden, and Arthur
McFadden (collectively Bagley) against Brammer Petroleum, Inc., based on a finding that three
relevant oil and gas leases terminated because Brammer failed to commence operations for more
than ninety days after a cessation of production, as provided by the leases.
On appeal, Brammer contends that the summary judgment was granted in error because:
the trial court improperly struck a portion of Larry Brammer’s affidavit, there was a disputed issue
of fact as to whether Bagley had denied Brammer access to the well, there was a disputed issue of
fact as to whether there was a cessation of production for more than ninety days, and Bagley failed
to plead and prove the elements of their trespass-to-try-title claim.
We reverse and remand the case for further proceedings, because whether production
ceased for more than ninety days remains a disputed issue of fact.
In the early 1980s, Billy McFadden and his wife Janie McFadden, Arthur McFadden and
his wife Janis McFadden, and Una Hunt Bagley and J.F. Bagley executed three oil and gas leases
to Marshall Exploration, Inc. The pertinent terms and conditions of the three leases are the same.
The parties stipulated in this suit that Bagley Minerals, LP, is the successor to Una Hunt Bagley
and J.F. Bagley and assignee of the Bagley lease.
The leases provided that the lessee shall have the right to use of the land for purposes of
drilling and operations. The term specified in the leases stated:
Unless sooner terminated or longer kept in force under other provisions hereof, this
lease shall remain in force for a term of three years from the date hereof, hereinafter
called “primary term,” and as long thereafter as operations, as hereinafter defined,
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are conducted on said land with no cessation for more than ninety (90) consecutive
days.
Operations, as the term is defined in the leases, includes the production of oil, gas, or other
minerals. In the event production ceases for more than ninety days, the leases may be extended
by the payment of shut-in royalties.1 The leases also expressly allow both the right of assignment
and for the lessee to pool the leases with other leases.
The three leases were pooled into the Una Bagley Gas Unit, and a prior operator drilled the
Una Bagley Gas Unit #1 Well (the Bagley Well) on the unit. Through later assignments, Brammer
became the operator of the Bagley Well in 1996. The Bagley Well continuously produced gas in
paying quantities from 1996 well into the year 2013, except for brief temporary periods when the
well was shut in for repairs.
On December 2, 2013, Bagley filed suit against Brammer, with their third amended petition
alleging causes of action for trespass to try title and breach of oil and gas lease, as well as
requesting a declaratory judgment that the leases had terminated under their own terms due to
Brammer’s failure to conduct operations for more than ninety days.2 Brammer entered a general
denial. The parties later agreed to transfer the case to the County Court at Law in Panola County.3
Bagley filed a traditional motion for summary judgment, relying on the leases, affidavits from
Bagley and the McFaddens, business documents from SEI Energy, LLC, and excerpts from the
1
It is undisputed that Brammer failed to timely pay shut-in royalties.
2
Bagley’s lawsuit also asserted a claim for Brammer’s alleged failure to plug and remediate a second well on the
property. However, the trial court later granted Bagley’s motion to nonsuit the claims.
3
The Honorable Michael J. O’Neill was later appointed as the presiding judge in this matter by the administrative
judge for the First Administrative Judicial Region.
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deposition of Brammer’s President, Larry Brammer. Bagley also sought a no evidence summary
judgment, arguing that Brammer had no proof of having paid shut-in royalties and had no proof
that it had conducted operations during the ninety days in question. Brammer responded to the
motion, attaching affidavits, documentary evidence, and deposition testimony to its response,
arguing in pertinent part that Bagley had failed to allege and prove its claim for trespass to try title
and that there were disputed issues of fact regarding whether production had ceased for more than
ninety days and whether the McFaddens denied Brammer access to the well, thus forgiving any
lack of performance.
The trial court heard Bagley’s motions for summary judgment and denied the no-evidence
motion for summary judgment but granted Bagley’s traditional motion for summary judgment on
the trespass-to-try-title claim. The trial court found that there was no genuine issue of material
fact that production ceased, that Brammer failed to conduct operations on the well for a period in
excess of ninety consecutive days, and that, because Brammer failed to timely pay shut-in
royalties, the leases terminated “no later than August 28, 2013.” The judgment awarded Bagley
fee simple mineral ownership of the tracts described in the leases.
Because they are dispositive, we address Brammer’s third and fourth points of error first.
In granting summary judgment in favor of Bagley, the trial court held that, no later than August 28,
2013, the leases terminated and ownership of the minerals reverted to Bagley because there was
no production on the well for more than ninety consecutive days and Brammer failed to conduct
operations on the well or timely pay shut-in royalties. Brammer contends that the trial court erred
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because there is a fact issue regarding whether there was a cessation of production for more than
ninety days. We agree.
We conduct a de novo review of a summary judgment. Valence Operating Co. v. Dorsett,
164 S.W.3d 656, 661 (Tex. 2005). In order to prevail on a traditional summary judgment motion,
the movant must demonstrate that there are no genuine issues of material fact and that it is entitled
to judgment as a matter of law. Diversicare Gen. Partner, Inc. v. Rubio, 185 S.W.3d 842, 846
(Tex. 2005). In our review, all competent evidence favorable to the nonmovant is accepted as true,
and “we indulge every reasonable inference and resolve any doubts in the nonmovant’s favor.” Id.
Bagley bore the burden of proving that no production or other well-related operations
occurred in the ninety days before August 28, 2013. The records of the well’s contract pumper,
Michael Gary, show that there was no production from the well in May, June, and July 2013.
However, during his deposition testimony, the following colloquy occurred:
Q. So then when you continue on down that report, that page of the
report we were looking at in the June, July, August and September of 2013 time
frame . . .
A. Uh-huh.
Q. Like, for instance, in July of 2013 you see 69 Mcf of gas produced
and 69 Mcf disposition. Does that sound like a reduced amount of production for
this well to you or can you remember?
....
A. Well, it seems like it is definitely a reduced amount looking at your
other production numbers.
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If conflicting inferences may be drawn from summary judgment evidence produced by the
same party, a fact issue is presented which defeats summary judgment.4 Tenowich v. Sterling
Plumbing Co., 712 S.W.2d 188, 189 (Tex. App.—Houston [14th Dist.] 1986, no writ) (same
party’s affidavit and deposition gave rise to conflicting material inferences). Indulging every
reasonable inference in Brammer’s favor, as we must, we find that a reasonable fact-finder could
infer from the deposition testimony that there was production from the well in July 2013. 5 See
Rubio, 185 S.W.3d at 846.
Because there is evidence giving rise to whether production had ceased for more than
ninety days, we sustain this point of error, reverse the trial court’s summary judgment, and remand
4
There is no evidence that the deposition or pumping records were produced after the motion for summary judgment
to create a sham fact issue in an effort to defeat summary judgment. See Burkett v. Welborn, 42 S.W.3d 282, 286
(Tex. App.—Texarkana 2001, no pet.); Eslon Thermoplastics v. Dynamic Sys., Inc., 49 S.W.3d 891, 901 (Tex. App.—
Austin 2001, no pet.).
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Bagley argues that the deposition testimony is not admissible, competent summary judgment evidence because it
references an unidentified document that was not attached to the deposition. Bagley admits that there was no objection
to the evidence at trial, but, citing several cases, argues that it may be raised for the first time on appeal. The cases
cited by Bagley all involve affidavits held to be substantively defective as summary judgment evidence because they
failed to attach documents referenced therein, but the facts of the present case are distinguishable because the
challenged evidence is deposition testimony, where Bagley was present to cross-examine Gary, lodge objections,
and/or seek clarification of his testimony. See Galindo v. Dean, 69 S.W.3d 623, 627 (Tex. App.—Eastland 2002, no
pet.); Sunsinger v. Perez, 16 S.W.3d 496, 500–01 (Tex. App.—Beaumont 2000, pet. denied); Natural Gas
Clearinghouse v. Midgard Energy Co., 23 S.W.3d 372, 378–79 (Tex. App.—Amarillo 1999, pet. denied); Mincron
SBC Corp. v. Worldcom, Inc., 994 S.W.2d 785, 795–96 (Tex. App.—Houston [1st Dist.] 1999, no pet.). Therefore,
we find the cases inapplicable, and Bagley, having failed to object at trial, failed to preserve any challenge to the
deposition testimony. See TEX. R. CIV. P. 166a(f).
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the case for further proceedings. As our resolution of this point of error is dispositive, we need
not address the remaining points of error.
Josh R. Morriss, III
Chief Justice
Date Submitted: April 1, 2016
Date Decided: June 8, 2016
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