Orca Assets, G.P., L.L.C. v. JP Morgan Chase Bank, N.A., JP Morgan Chase Bank, N.A., as Trustee of the Red Crest Trust, Philip Mettham, Andy J. McMullen, John H. McMullen, Jr. ( 2024 )

Affirm and Opinion Filed March 19, 2024
In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-22-00292-CV
ORCA ASSETS, G.P., L.L.C., Appellant
V.
JP MORGAN CHASE BANK, N.A., JP MORGAN CHASE BANK, N.A., AS
TRUSTEE OF THE RED CREST TRUST, Appellee
On Appeal from the 44th Judicial District Court
Dallas County, Texas
Trial Court Cause No. DC-13-13886
MEMORANDUM OPINION
Before Justices Molberg, Carlyle, and Smith
Opinion by Justice Molberg
Appellant Orca Assets, G.P., L.L.C. appeals from the trial court’s summary
judgment for appellee JPMorgan Chase Bank, N.A., as trustee for Red Crest Trust,
and in JPMorgan’s individual capacity. Orca argues the trial court erred in granting
summary judgment because the trial court lost its plenary power when JPMorgan
nonsuited its claims prior to the case being severed, and Orca nevertheless should
have been permitted to counter and defend when JPMorgan was permitted to pursue
its claim for attorney’s fees. Orca also contends the trial court erred in awarding
JPMorgan attorney’s fees because Texas Property Code § 114.064 is inapplicable in
this case, Texas Civil Practice & Remedies Code § 37.009 is inapplicable in this
case, and it was neither equitable nor just to make such an award. We affirm in this
memorandum opinion.
Background
This dispute arises from a mineral lease. Red Crest Trust owned certain
mineral interests in the Eagle Ford Shale, which JPMorgan, as trustee of Red Crest
Trust, leased to Orca under an agreement that included a provision shifting the risk
of title failure to Orca. After Orca and JPMorgan finalized their agreement,
JPMorgan discovered it had leased the minerals six months earlier to another entity,
GeoSouthern, which had not recorded its lease in the county records until after Orca
and JPMorgan had signed a letter of intent acknowledging the trust’s agreement to
lease the tracts to Orca. As a result, JPMorgan sent a $3.2 million refund to Orca
for its bonus payments under the lease. Orca rejected the refund and initiated
litigation.
Orca sued, among others, JPMorgan as trustee of the Red Crest Trust and in
its individual capacity in Dallas County on May 12, 2011,1 alleging Orca was
fraudulently induced to purchase an option to lease part of a mineral estate that
JPMorgan had already leased to a third party without Orca’s knowledge. Orca
alleged a JPMorgan employee, Philip Mettham, misrepresented to Orca that the
1
We note that Orca first sued JPMorgan in DeWitt County for the claims at issue here but ultimately
nonsuited that suit and refiled in Dallas.
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acreage in question was open and available to be leased. Orca asserted causes of
action for common law fraud, fraud under § 27.01 of the business and commerce
code, negligent misrepresentation, and tortious interference.
Orca relied on the Texas Trust Code2 in asserting venue was proper in Dallas
County, stating its suit was against a corporate trustee whose principal office is
located in the county, and, additionally, “the situs of the [trust’s] administration is
maintained or has been maintained at sometime during the last four-year period” in
the county.3
JPMorgan counterclaimed on August 2, 2013, seeking declaratory relief and
attorney’s fees under § 114.064 of the trust code and § 37.009 of the civil practice
and remedies code. On August 16, 2013, JPMorgan filed its second amended answer
in which it, among other things, sought recovery of its reasonable and necessary
attorney’s fees under § 114.064 of the trust code and § 38.001 of the civil practice
and remedies code. JPMorgan subsequently filed a notice of nonsuit without
prejudice of its original counterclaim seeking declaratory relief and attorney’s fees,
and the trial court dismissed the original counterclaim on October 11, 2013.
On November 6, 2013, Orca filed a seventh amended petition seeking, in
addition to the previously described causes, declaratory relief—in the event Orca
2
The Texas Trust Code is the short title for Subtitle B (chapters 111 through 117) of the Texas Property
Code. See TEX. PROP. CODE § 111.001.
3
TEX. PROP. CODE § 115.002(c).
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recovered the property at issue—stating JPMorgan wrongfully repudiated its
agreement with Orca, JPMorgan could not enter any transaction affecting the lease
rights with any party other than Orca, and JPMorgan must honor its mineral lease
with Orca for the remainder of the lease term.
On November 25, 2013, the trial court entered an agreed order of severance
and abatement under which Orca’s claim for declaratory relief and JPMorgan’s
claims for attorney’s fees4 were severed into cause number DC-13-13886—this
cause. The order stated it was rendered “pursuant to the parties’ agreement regarding
severance and abatement” and specified it did not waive Orca’s objections to the
rule 166 order we discuss next.
The trial court then determined, in a rule 166(g) order, that Orca’s remaining,
unsevered breach of contract and tort claims were without merit. The court entered
a final and appealable take nothing judgment against Orca on those claims, which
Orca appealed. Meanwhile, JPMorgan’s severed attorney’s fee claim was abated
until a final ruling from the court of appeals on Orca’s non-severed contract and tort
claims.
On appeal, a different panel of this Court “conclude[d] that questions of fact
remain regarding Orca’s claim that it was fraudulently induced into a contractual
relationship with JPMorgan” and reversed the trial court’s rulings on fraud and
4
Although JPMorgan had nonsuited its counterclaim, as noted above, JPMorgan also asserted in its
second amended answer that it sought recovery of its attorney’s fees under § 114.064 of the trust code.
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negligent misrepresentation. See Orca Assets, G.P., L.L.C. v. JPMorgan Chase
Bank, N.A., 542 S.W.3d 591, 606 (Tex. App.—Dallas 2015). However, the Supreme
Court of Texas reversed our decision because it “determined, as a matter of law, that
[Orca] cannot show justifiable reliance” and reinstated the trial court’s judgment for
JPMorgan. See JPMorgan Chase Bank, N.A. v. Orca Assets G.P., L.L.C., 546
S.W.3d 648, 660 (Tex. 2018).
Following this, on April 3, 2020, JPMorgan moved to lift the abatement of its
severed attorney’s fees claim. The trial court lifted the abatement two weeks later.
JPMorgan filed an amended counterclaim on October 6, 2020, stating it was entitled
to recover reasonable and necessary attorney’s fees under § 114.064 of the property
code and § 37.009 of the civil practice and remedies code.
Orca filed a supplement to its claims and an answer to JPMorgan’s amended
counterclaim. In response to JPMorgan’s claim for attorney’s fees, Orca argued it
“would be neither equitable nor just to award attorney’s fees to [JPMorgan] in this
case.” Orca asserted supplemental claims for unjust enrichment, conversion, money
had and received, and attorney’s fees, arguing the bank obtained $3.2 million by
fraud. In a second supplement, Orca added claims for fraud, statutory fraud,
negligent misrepresentation, and breach of contract. Orca also cast all of its
affirmative claims as defenses to JPMorgan’s claim for attorney’s fees, stating the
fees were barred by JPMorgan’s fraud, statutory fraud, fraud by nondisclosure,
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breach of contract, and negligent misrepresentations. JPMorgan answered, raising
affirmative defenses including res judicata and collateral estoppel.
Orca moved for summary judgment on JPMorgan’s attorney’s fees claims,
arguing that property code § 114.064 is inapplicable because it only allows fees for
proceedings brought under the trust code and that this cause is not such a proceeding.
Orca alternatively argued fees under that section would be neither equitable nor just
because JPMorgan “received $3.2 million from Orca for leases that [JPMorgan] had
misrepresented as being available for lease, when [JPMorgan] had already sold the
leases to another party” and thus had “unclean hands.” The trial court denied Orca’s
motion for summary judgment.
On August 25, 2021, JPMorgan moved for a summary judgment on Orca’s
claims, arguing they were barred by res judicata and collateral estoppel because they
were the same claims Orca previously litigated unsuccessfully and there was no basis
for awarding it attorney’s fees. In response to JPMorgan’s motion for summary
judgment, Orca seemingly supplemented its own summary judgment motion in
arguing the bank had nonsuited its attorney’s fees claim prior to severance and the
trial court therefore lost plenary power over the claim. Orca also argued the
attorney’s fees claim could not be severed from the underlying cause.
The trial court denied Orca’s traditional and no evidence motion for summary
judgment, granted JPMorgan’s motion for summary judgment on Orca’s affirmative
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claims and “the associated defenses based on those claims,” and ordered that Orca
take nothing on its claims.
The remaining matter of JPMorgan’s attorney’s fees was tried to the court.
The parties stipulated to the facts as outlined in the supreme court’s opinion which
we will discuss below in addressing Orca’s argument that the trial court erred in
awarding attorney’s fees to JPMorgan. JPMorgan admitted evidence on the
reasonableness and necessity of the fees it sought—about $2.4 million in total—
through the testimony and declaration of its counsel, David Jed Williams. 5 The
parties then presented evidence relating to the equities of awarding JPMorgan
attorney’s fees that we will discuss below.
The trial court rendered a final judgment for JPMorgan, awarding it attorney’s
fees pursuant to § 114.064 of the property code in an amount of $2,310,000 and costs
of $102,186.69, plus conditional appellate fees. This appeal followed.
Discussion
At the outset, we note that while JPMorgan briefed § 37.009 of the civil
practice and remedies code as an alternative basis for the award of attorney’s fees,
JPMorgan indicated during oral argument that it was only arguing the award of fees
was supported by § 114.064 of the property code. Furthermore, because we
5
Because Orca does not challenge the reasonableness or amount of the fees awarded but only their
equity, we refrain from discussing in detail JPMorgan’s evidence supporting the reasonableness of the fees.
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conclude the award was supported by the trust code, we pretermit discussion of all
of Orca’s arguments relating to § 37.009.6 See TEX. R. APP. P. 47.1.
Validity of severance
We first consider Orca’s contention that the severance of JPMorgan’s claim
for attorney’s fees was erroneous, thus precluding relief on the claim in the severed
proceeding. “Any claim against a party may be severed and proceeded with
separately.” TEX. R. CIV. P. 41. This rule grants the trial court broad discretion in
the matter of severance, and accordingly, we will not disturb the trial court’s ruling
severing a claim unless it has abused its discretion. Weilbacher v. Craft, No. 05-13-
01252-CV, 2014 WL 6466856, at *6 (Tex. App.—Dallas Nov. 19, 2014, pet. denied)
(mem. op.). A claim is properly severable if (1) the controversy involves more than
one cause of action, (2) the severed claim is one that would be the proper subject of
a lawsuit if independently asserted, and (3) the severed claim is not so interwoven
with the remaining action that they involve the same facts and issues. Id.Orca relies on two cases in arguing the trial court erred in severing
JPMorgan’s claim for attorney’s fees. In Dalisa, Inc. v. Bradford, 81 S.W.3d 876,
879–80 (Tex. App.—Austin 2002, no pet.), the trial court granted Bradford’s motion
for summary judgment on his claim for declaratory relief and immediately
afterwards “severed from the cause Bradford’s claim for declaratory relief under the
6
Accordingly, we do not address Orca’s arguments that JPMorgan’s claim for fees under § 37.009 of
the civil practice and remedies code did not survive JPMorgan’s nonsuit of its counterclaim and that
§ 37.009 was an improper basis for fees.
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Act, leaving for an independent adjudication Bradford’s claim for attorney’s fees
under section 37.009 of the Act and Dalisa’s counterclaims.” The court of appeals
concluded a claim for attorney’s fees under § 37.009 could not be severed from its
associated claim for declaratory relief because the two claims are “merely different
phases of a single cause of action.” Id. at 880. The court of appeals dismissed the
appeal for want of jurisdiction, reasoning that the severance order’s invalidity
rendered the judgment interlocutory, not final. Id. at 882.7
Following Dalisa, in Barclay v. Richey, No. 09-17-00026-CV, 2019 WL
302661, at *9 (Tex. App.—Beaumont Jan. 24, 2019, pet. denied) (mem. op.), the
trial court granted Richey’s motion to sever Barclay’s declaratory judgment claim
into a separate cause, and the severance order specifically stated it did not “dispose
of” Barclay’s attorney’s fees request on her declaratory judgment claim. The trial
court later rejected Barclay’s claim for fees because, it stated, it lacked jurisdiction
to award such fees, having previously severed the declaratory judgment action. Id.The court of appeals concluded the trial court erred in severing the declaratory relief
claim from the associated claim for attorney’s fees. Id. at 10. The court stated:
As Barclay neither appealed from the severed cause, nor objected to the
trial court’s ruling severing her claim for attorney’s fees from the final
judgment in the severed cause, she waived her right to complain in the
cause associated with this appeal about the trial court’s decision that
7
The en banc Austin Court of Appeals recently overruled Dalisa in Bertucci v. Watkins, No. 03-20-
00058-CV, 2022 WL 3328986, at *3 (Tex. App.—Austin Aug. 12, 2022) (op. on en banc reconsideration),
where the court concluded Dalisa erred “insofar as it holds that a finding of an improper severance divests
this Court of jurisdiction over the appeal such that the proper procedure is to vacate the severance and
dismiss the appeal for want of jurisdiction.”
–9–
effectively severed her claim for attorney’s fees into the cause in which
she did not appeal. Thus, the trial court correctly ruled that it no longer
retained jurisdiction of the severed cause because its plenary power
expired thirty days after it rendered judgment in the severed cause.
Id.We cannot conclude Dalisa and Barclay control the outcome of this case. To
begin with, JPMorgan’s claim for fees under the trust code is its own affirmative
claim for relief in response to Orca’s suit, see Lyco Acquisition 1984 Ltd. P’ship v.
First Nat. Bank of Amarillo, 860 S.W.2d 117, 121 (Tex. App.—Amarillo 1993, writ
denied)—not a claim for fees associated with its own declaratory judgment action,
as in Dalisa and Barclay. But the chief difference between Orca’s authorities and
this case for purposes of resolving this appeal is the parties’ explicit agreement here
to sever the attorney’s fees claim. As this Court has previously stated, “A severance,
even though erroneous, is effective and, in the absence of objection, permits valid,
final judgments to be rendered in both proceedings.” Inman v. O’Donnell, 722
S.W.2d 16, 18 (Tex. App.—Dallas 1986, no writ).
Even short of explicit agreement, other courts have concluded failure to object
waives a complaint regarding a severed attorney’s fees claim. In Hyde v. Hawk, No.
07-14-00059-CV, 2017 WL 5763069, at *1 (Tex. App.—Amarillo Nov. 27, 2017,
no pet.) (mem. op.), the appellee sought declaratory relief and attorney’s fees and
moved for a summary judgment on the relief, which the trial court granted. The trial
court then granted the appellee’s motion to sever the summary judgment ruling and
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signed a final judgment, from which the appellant appealed, arguing, among other
things, that the severance was erroneous because it split the attorney’s fee claim from
the claim for declaratory relief. Id. The appellant relied on Dalisa. Id. at *3. The
Amarillo Court of Appeals concluded the issue was not preserved for appellate
review because, although the appellant objected to the motion to sever, he did not
discuss the claim for attorney’s fees, contend the appellee sought to sever a single
cause of action for declaratory relief, or cite Dalisa. Id. at *3 (citing TEX. R. APP. P.
33.1).
Here, Orca not only failed to object to the severance but agreed to it.
Accordingly, we conclude Orca waived any complaint of error resulting from the
severance order. See In re C.S.B., No. 05-19-00627-CV, 2020 WL 2715188, at *5
(Tex. App.—Dallas May 26, 2020, no pet.) (mem. op.) (concluding party waived
objection to order by agreeing to order).
Relatedly, we conclude the invited error doctrine bars Orca’s argument on
appeal. A party to a lawsuit cannot ask something of a trial court and then complain
on appeal the trial court committed error in granting the party’s request. Naguib v.
Naguib, 137 S.W.3d 367, 375 (Tex. App.—Dallas 2004, pet. denied); see also
Tittizer v. Union Gas Corp., 171 S.W.3d 857, 861 (Tex. 2005) (describing this
doctrine as both “estoppel” and “invited error”). This rule is grounded in justice and
dictated by common sense. Tittizer, 171 S.W.3d at 861.
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Here, both parties asked the trial court to sever JPMorgan’s attorney’s fees
claim, and the trial court entered the order of severance pursuant to their agreement.
Given this, we conclude the invited error doctrine bars Orca from complaining on
appeal of any error in the severance. See In re B.Y.B., No. 09-22-00402-CV, 2023
WL 3114664, at *4 (Tex. App.—Beaumont Apr. 27, 2023, pet. denied) (mem. op.)
(concluding estoppel prevented party from arguing on appeal that severance
deprived trial court of subject matter jurisdiction after party requested severance in
trial court and trial court entered agreed order of severance). We overrule Orca’s
first issue.
Orca’s defenses
In a second issue, Orca argues the trial court erred in granting JPMorgan’s
motion for summary judgment because Orca should have been permitted to “counter
and defend” against JPMorgan’s claim for attorney’s fees. It argues “Orca should
have been allowed to present its defenses to the extent that the specific claim had not
been foreclosed by the Texas Supreme Court” and that “the initial action did not
adjudicate the claims of unjust enrichment, conversion, money had and received.”
As noted above, the trial court granted JPMorgan’s motion for summary
judgment and dismissed Orca’s affirmative claims and associated defenses. We
summarized the summary judgment standard recently as follows:
“We review summary judgments de novo, taking as true all evidence
favorable to the nonmovant, and indulging every reasonable inference
and resolving any doubts in the nonmovant’s favor.” Energen Res.
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Corp. v. Wallace, 642 S.W.3d 502, 509 (Tex. 2022). . . . A traditional
motion for summary judgment requires the moving party to show that
no genuine issue of material fact exists and that it is entitled to judgment
as a matter of law. TEX. R. CIV. P. 166a(c); Ortiz v. State Farm Lloyds,
589 S.W.3d 127, 131 (Tex. 2019); Lujan v. Navistar, Inc., 555 S.W.3d
79, 84 (Tex. 2018). If the movant does so, the burden then shifts to the
nonmovant to come forward with competent controverting evidence
sufficient to raise a genuine issue of material fact. Lujan, 555 S.W.3d
at 84. “A genuine issue of material fact exists if the evidence ‘rises to
a level that would enable reasonable and fair-minded people to differ in
their conclusions.’” First United Pentecostal Church of Beaumont v.
Parker, 514 S.W.3d 214, 220 (Tex. 2017) (quoting Merrell Dow
Pharms., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex. 1997)).
Eldorado Homeowners’ Ass’n, Inc. v. Clough, No. 05-22-00198-CV, 2024 WL
20170, at *8 (Tex. App.—Dallas Jan. 2, 2024, no pet. h.) (mem. op.).
JPMorgan’s motion for summary judgment argued, among other things, res
judicata barred Orca’s claims in its second supplement because they had been
adjudicated by the trial court and ultimately rejected by the supreme court. Under
the doctrine of res judicata, if the defendant wins a suit, “the plaintiff is barred from
bringing another action on claims actually litigated and also on claims that could
have been litigated in the original cause of action.” Jeanes v. Henderson, 688
S.W.2d 100, 103 (Tex. 1985). Res judicata applies when there is (1) a prior final
judgment on the merits by a court of competent jurisdiction; (2) identity of parties
or those in privity with them; and (3) a second action based on the same claims that
were raised or could have been raised in the first action. Citizens Ins. Co. of Am. v.
Daccach, 217 S.W.3d 430, 449 (Tex. 2007). It is based on policies reflecting the
need to “bring all litigation to an end, prevent vexatious litigation, maintain stability
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of court decisions, promote judicial economy, and prevent double recovery.” Barr
v. Resol. Tr. Corp. ex rel. Sunbelt Fed. Sav., 837 S.W.2d 627, 629 (Tex. 1992).
Texas follows a transactional approach to determine whether res judicata applies.
TRO-X, L.P. v. Eagle Oil & Gas Co., 608 S.W.3d 1, 11 (Tex. App.—Dallas 2018),
aff’d, 619 S.W.3d 699 (Tex. 2021). Under this approach, a subsequent suit is barred
if it arises out of the same subject matter as the prior suit, and that subject matter
could have been litigated in the prior suit. Daccach, 217 S.W.3d at 449. In
determining what constitutes the same subject matter, we examine “the factual basis
of the claim or claims in the prior litigation[,]” analyzing “the factual matters that
make up the gist of the complaint, without regard to the form of action.” Barr, 837
S.W.2d at 630.
Included with JPMorgan’s motion for summary judgment were Orca’s
original petition, seventh amended petition, and the trial court’s final judgment for
JPMorgan from the un-severed portion of this case. After reviewing the summary
judgment record, we conclude Orca’s second supplement to its claims reiterated the
same factual allegations and theories of recovery rejected in the un-severed portion
of the case. In sum, the second supplement alleged that JPMorgan, through Philip
Mettham, tortiously leased mineral interests to Orca, having already leased them to
GeoSouthern, thus depriving Orca of $3.2 million in bonus payments it made under
its agreement with JPMogran. It asserted claims for unjust enrichment, conversion,
money had and received, fraud, statutory fraud, negligent misrepresentation, and
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breach of contract based upon these allegations. These factual allegations are the
same as alleged in the un-severed portion of the case. See generally JPMorgan
Chase Bank, N.A. v. Orca Assets G.P., L.L.C., 546 S.W.3d 648 (Tex. 2018).
Although Orca presents three new causes of action—unjust enrichment, conversion,
and money had and received—they are based upon the same factual allegations and
could have been asserted in the un-severed action. See Barr, 837 S.W.2d at 630 (in
applying res judicata, we disregard the form of the action). Thus, we conclude the
trial court did not err in granting JPMorgan summary judgment on this basis. See
Daccach, 217 S.W.3d 430, 449.
To the extent that Orca argues these affirmative claims should have been
permitted to move forward as defenses to JPMorgan’s claim for attorney’s fees, we
conclude this argument is inadequately briefed as it is unsupported by any citations
to pertinent authorities. See TEX. R. APP. P. 33.1 (“The brief must contain a clear
and concise argument for the contentions made, with appropriate citations to
authorities and to the record.”).8 We overrule Orca’s second issue.
Attorney’s fees
In its third issue, Orca generally contends the trial court erred in awarding
JPMorgan attorney’s fees, arguing both that § 114.064 is inapplicable as a matter of
law because its suit is not a proceeding under the trust code and that the award was
8
We also observe that, as discussed below in our review of whether the trial court abused its discretion
in awarding fees under § 114.064, Orca was permitted to present evidence and make arguments as to why
any attorney’s fee award for JPMorgan was inequitable and unjust based on its view of the facts.
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not equitable and just, as required by the statute. We will first consider Orca’s
argument that § 114.064 cannot support the award of attorney’s fees. Section
114.064 provides: “In any proceeding under this code the court may make such
award of costs and reasonable and necessary attorney’s fees as may seem equitable
and just.” TEX. PROP. CODE § 114.064. This statute “authorizes the recovery of
attorney’s fees in an action involving a trust.” Schauble v. Schauble as Tr. of Edward
R. Schauble Tr., No. 11-20-00181-CV, 2022 WL 2839224, at *12 (Tex. App.—
Eastland July 21, 2022, no pet.) (mem. op.); see also In re Estate of Johnson, 340
S.W.3d 769, 788 (Tex. App.—San Antonio 2011, pet. denied) (stating the statute
“authorizes the recovery of attorney’s fees in a trust action”).
In determining whether this action is a proceeding under the trust code, we
begin with the sweeping language of the trust code’s jurisdiction provision: “a
district court has original and exclusive jurisdiction over all proceedings by or
against a trustee and all proceedings concerning trusts . . . .” TEX. PROP. CODE
§ 115.001(a) (emphasis added). The statute then enumerates ten separate types of
proceedings over which a district court has original and exclusive jurisdiction,
including, for example, proceedings to construe a trust instrument, ascertain
beneficiaries, or determine a question arising in the administration or distribution of
a trust. See id. The statute clarifies that this list of proceedings “is not exhaustive”:
“A district court has exclusive and original jurisdiction over a proceeding by or
against a trustee or a proceeding concerning a trust under Subsection (a) whether or
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not the proceeding is listed in Subsection (a).” Id. § 115.001(a-1). Further, the
venue of actions under § 115.001 is determined according to the trust code’s venue
provision. See id. § 115.002(a). Thus, the venue of a proceeding against a trustee
“is determined according to” § 115.002. Under § 115.002(c),
If there are one or more corporate trustees, an action shall be brought
in the county in which:
(1) the situs of administration of the trust is maintained or has been
maintained at any time during the four-year period preceding the
date the action is filed; or
(2) any corporate trustee maintains its principal office in this state.
TEX. PROP. CODE § 115.002(c).
Appropriately then, Orca cited § 115.002 in its original petition in asserting
venue was proper in Dallas County, stating its suit was against a corporate trustee
whose principal office is located in the county, and, additionally, “the situs of the
[trust’s] administration is maintained or has been maintained at sometime during the
last four-year period” in the county.
Section 115.002 is a mandatory venue provision. In re Wheeler, 441 S.W.3d
430, 434 (Tex. App.—Waco 2014, orig. proceeding). Therefore, it is of no
significance for our analysis that Orca eventually dropped § 115.002 as a basis for
venue in its seventh amended petition. See Perryman v. Spartan Tex. Six Cap.
Partners, Ltd., 546 S.W.3d 110, 130 (Tex. 2018) (courts honor plaintiff’s choice of
venue if the choice is “proper” when case is filed). In that amended petition, Orca
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instead invoked §§ 15.002 (Venue: General Rule) and 15.005 (Multiple Defendants)
of the civil practice and remedies code. However, § 15.016 (“action governed by any
other statute prescribing mandatory venue shall be brought in the county required by
that statute”) makes clear that mandatory venue provisions outside Chapter 15
prevail over those contained in the chapter. See In re J.P. Morgan Chase Bank, N.A.,
373 S.W.3d 615, 619 (Tex. App.—San Antonio 2012, orig. proceeding) (“Therefore,
section 15.016 requires that the mandatory venue provisions in section 115.002 of
the Property Code prevail over section 15.011 of the Texas Civil Practice and
Remedies Code.”). Similarly, the fact that venue may have been proper in Dallas
County under both the trust code and under the general provisions of the civil
practice and remedies code makes no difference here. In determining whether this
suit is a proceeding under the trust code, the pertinent question is which provision
ultimately determined proper venue in this case.
Orca relies on Conte v. Conte, 56 S.W.3d 830, 831 (Tex. App.—Houston [1st
Dist.] 2001, no pet.), where a co-trustee sister sued co-trustee brother seeking a
declaratory judgment that an action brought by her to remove the brother as co-
trustee would not violate the terms of the trust. The sister prevailed and the brother
appealed, arguing the trial court erred in failing to award him attorney’s fees under
§ 114.064. Id. at 834. The court of appeals rejected the brother’s contention, stating
that the “suit was not brought under the Property Code, but under the Declaratory
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Judgment Act. Therefore, Joseph, Jr. is not entitled to attorney’s fees under the trust
provisions of the Texas Property Code.” Id.
To the extent Conte could be considered analogous here, we decline to follow
it. After that case was decided, § 115.001 was “amended in 2007 to provide that a
district court has original and exclusive jurisdiction over not only all proceedings
concerning a trust, but also ‘all proceedings by or against a trustee.’” In re Equinor
Tex. Onshore Props., No. 05-20-00578-CV, 2020 WL 5939034, at *7 (Tex. App.—
Dallas Oct. 7, 2020, no pet.) (mem. op.) (quoting Wheeler, 441 S.W.3d at 434–35);
see also Act of May 16, 2007, 80th Leg., R.S., ch. 451, § 11, 2007 Tex. Gen. Laws
801, 804. Thus, Conte did not address the expansive jurisdiction provision before
us today.
Here, Orca sued trustee JPMorgan regarding a lease of trust property and
specifically invoked the trust code’s venue statute in its original petition. Given this,
and our above discussion of §§ 115.001–.002, we conclude Orca’s suit against
JPMorgan was a proceeding under the Texas Trust Code and § 114.064 thus
permitted an award of attorney’s fees. See Moody v. Herz, Tr. of Three R Trusts,
672 S.W.3d 842, 847 (Tex. App.—Houston [14th Dist.] 2023, no pet.) (disapproving
Conte and concluding beneficiary’s declaratory judgment action against trustee
seeking to invalidate supplement to trust was proceeding under trust code when
§ 115.001 applied and plaintiff invoked § 115.002 in original petition).
–19–
In reaching this conclusion, we necessarily reject Orca’s “law of the case”
argument that we must follow the Thirteenth Court of Appeals’ mandamus decision
in Orca’s DeWitt County lawsuit. See In re J.P. Morgan Chase Bank, N.A., 361
S.W.3d 703, 704 (Tex. App.—Corpus Christi–Edinburg 2011, orig. proceeding)
(denying JPMorgan’s petition for writ of mandamus seeking to transfer suit pursuant
to trust code venue provision). The law of the case doctrine is that principle under
which questions of law decided on appeal to a court of last resort will govern the
case throughout its subsequent stages. Cricket Commc’ns, Inc. v. Trillium Indus.,
Inc., 235 S.W.3d 298, 306 (Tex. App.—Dallas 2007, no pet.). This lawsuit is not a
subsequent stage of the DeWitt County lawsuit, which was dismissed by Orca, so
the “law of the case simply is not relevant.” See id.; see also NRG Expl., Inc. v.
Rauch, 905 S.W.2d 405, 409 (Tex. App.—Austin 1995, writ denied) (“Because the
instant case involves a different lawsuit from the one on appeal in Rauch I, the law
of the case doctrine does not apply.”). Orca directs us to no authorities applying the
law of the case under such circumstances. It cites Gonzalez v. San Jacinto Methodist
Hosp., 905 S.W.2d 416, 420 (Tex. App.—El Paso 1995), rev’d on other grounds,
922 S.W.2d 928 (Tex. 1996), but in that case, the trial court severed a lawsuit after
one defendant obtained a summary judgment; the appellate decision on the severed
portion of the case became the law of the case; and the court of appeals in the second
appeal applied certain legal conclusions reached in the first appellate decision. We
conclude Gonzalez is inapposite.
–20–
We also find Corpus Christi’s J.P. Morgan Chase Bank case unpersuasive on
the merits and decline to follow its reasoning. There, Orca filed suit in DeWitt
County against JPMorgan on the same facts alleged here but, instead of the trust
code venue provision, relied on civil practice and remedies code § 15.011 (generally
providing that a suit involving a land dispute must be filed in the county where all
or part of the land is located) for venue. See 361 S.W.3d at 705. JPMorgan sought
to transfer venue pursuant to § 115.002, and the trial court denied its motion to
transfer venue. Id. The court of appeals agreed with the trial court because, it stated,
Orca’s causes of action “are not enumerated in section 115.001(a), and they do not
fall within its scope.” Id. at 706. The court stated, “All of the actions enumerated
in section 115.001(a) involve actions relating to the trust itself or the operation
thereof, and none involves anything resembling a tort action.” Id. The court of
appeals relied on cases applying the former version of § 115.001. See In re
Guardianship of Gibbs, 253 S.W.3d 866, 871 (Tex. App.—Fort Worth 2008, pet.
dism’d) (op. on reh’g) (applying former version of § 115.001(a), which included an
exclusive list of actions “concerning trusts” over which district court had jurisdiction
under the trust code); Mobil Oil Corp. v. Shores, 128 S.W.3d 718, 724 (Tex. App.—
Fort Worth 2004, no pet.) (same). And the court rejected JPMorgan’s argument that
the 2007 amendments described above changed the outcome of the case and
concluded that § 115.001 was inapplicable because the suit did not involve an action
relating to the trust itself or the operation of a trust. Id. at 706–07.
–21–
We cannot agree with that conclusion. The legislature amended § 115.001
not only to add subsection (a-1) clarifying that subsection (a)’s list of applicable
proceedings is not exhaustive, but it amended subsection (a) to state that “a district
court has original and exclusive jurisdiction over all proceedings by or against a
trustee and all proceedings concerning trusts . . . .” TEX. PROP. CODE § 115.001(a)
(emphasis added). Thus, a suit need not “concern a trust” for § 115.001 to apply if
it is a proceeding against a trustee as trustee, as here. See In re J.P. Morgan Chase
Bank, N.A., 373 S.W.3d at 614 (declining to follow the Corpus Christi court because
it failed to “acknowledge that subsection (a) was also amended to include suits by
or against a trustee”).
Finally, Orca contends the attorney’s fees awarded by the trial court were
inequitable. See TEX. PROP. CODE § 114.064 (“the court may make such award of
costs and reasonable and necessary attorney’s fees as may seem equitable and just”).
Whether fees are equitable and just is a question of law to be decided by the trial
court and its “determination is not susceptible to direct proof but is rather a matter
of fairness in light of all the circumstances.” Ridge Oil Co., Inc. v. Guinn Invs., Inc.,
148 S.W.3d 143, 162 (Tex. 2004). Matters of equity are addressed to the trial court’s
discretion, so “we review the trial court’s decision to award these fees—in terms of
the equities involved—for an abuse of discretion.” Canadian Real Est. Holdings,
LP v. Karen F. Newton Revocable Tr., No. 05-20-00747-CV, 2022 WL 4545572, at
*6 (Tex. App.—Dallas Sept. 29, 2022) (mem. op.); see also Hachar v. Hachar, 153
–22–
S.W.3d 138, 142 (Tex. App.—San Antonio 2004, no pet.) (stating granting fees to
trustee under § 114.064 is within the sound discretion of the trial court and abuse of
discretion standard of review applies).
As noted above, the parties stipulated to the facts as discussed in the supreme
court’s opinion in the un-severed portion of the case. The supreme court stated:
Phillip Mettham, an employee of JPMorgan, was responsible for
leasing the trust’s Eagle Ford interests.
In 2010, Mettham leased fifteen of the trust’s Eagle Ford tracts in
DeWitt and Gonzales counties to GeoSouthern Energy Corporation.
Comprising more than 1,800 acres, the GeoSouthern deal was one of
the largest Mettham negotiated for the trust. Notably, GeoSouthern did
not record its leases in the counties’ property records until six months
after closing the deal.
Also in 2010, Lawrence Berry, an experienced oil-and-gas
businessman, formed Orca Assets, G.P., L.L.C. The specific purpose of
establishing Orca was to acquire promising unleased acreage in the
Eagle Ford Shale. And it quickly set its sights on the trust’s holdings in
Karnes and DeWitt counties. Orca’s team included Berry; its vice
president, John Ellis; landmen Tony Villalon and Joan Stewart, and a
collection of additional landmen. All were experienced in leasing oil-
and-gas properties.
On November 11, 2010, Mettham met with Ellis and Stewart to discuss
Orca leasing some of the trust’s tracts. Berry also attended part but not
all of the meeting. Orca’s team brought maps showing the tracts it
desired to lease. Ellis asked Mettham whether the indicated acreage
“was open and not leased.” Each of Orca’s representatives at the
meeting remembered Mettham’s reply somewhat differently. Ellis
believes Mettham answered, “[Y]es, but I’ll have to—I’ll have to
check.” Stewart remembers him saying, “I’m not sure of that. I’ll have
to check.” Berry recalls Mettham unequivocally representing that the
acreage was “open,” meaning unleased. However, Berry also concedes
that he was in the meeting for only a brief time.
–23–
The trust requires that all leases of its tracts contain a clause negating
any warranty of title. The standard lease form that JPMorgan usually
uses when dealing with the trust’s properties includes such a clause:
“This Lease is made without warranties of any kind, either express or
implied.” Orca was familiar with that language as it had twice before
leased acreage from the trust using the standard lease form.
But shortly after the parties’ initial meeting, Mettham notified Orca that
any lease deal it made with the trust would not employ the standard
negation-of-warranty provision. Instead, JPMorgan would require new
language expressly shifting the risk of title failure to the lessee.
Mettham explained that the high volume of leasing activity in the region
necessitated the change because lessees were quickly pursuing
opportunities without thoroughly examining title.
The new clause would read:
“Negation of Warranty. This lease is made without warranties of any
kind, either express or implied, and without recourse against Lessor in
the event of a failure of title, not even for the return of the bonus
consideration paid for the granting of the lease or for any rental, royalty,
shut-in payment, or any other payment now or hereafter made by
Lessee to Lessor under the terms of this lease.”
Mettham’s request to include this new lengthier clause incited concerns
among Orca’s team. To Ellis, the provision “raised a red flag.” It was a
“curveball”—something he had never “seen before in any lease.”
Because the new warranty provision gave the lessee the responsibility
“to make absolutely sure that [the t]rust owned the minerals,” Ellis
believed Orca should obtain “a solid outside legal opinion” as to title.
And when asked if Orca would rely on JPMorgan “to confirm whether
or not it had title to these mineral interests,” Ellis responded: “We
would never—that I would never look to JPMorgan to tell me whether
or not [the t]rust owned the minerals that were in question.”
Similarly, Villalon, Orca’s landman and a former practicing attorney,
conceded that without a warranty, Orca could purchase only “whatever
it was that the Red Crest Trust had to sell,” which “might be nothing at
all.” He also acknowledged that if the trust’s properties had already
been leased, it could not convey those minerals to Orca. In general, he
did not find a disclaimer of warranty out of the ordinary. But he
–24–
regarded the wording of this particular provision as unusually explicit.
So he advised Ellis: “I think we need to accept the language, but we
also need to give the title another review before we close.”
On December 6, the parties signed a letter of intent acknowledging the
trust’s agreement to lease the tracts to Orca. In the letter, neither the
trust nor JPMorgan made any representation about the trust’s title or
whether the acreage was available to lease. Instead, the letter provided
that Orca had “caused a search to be made of the records of Karnes and
DeWitt [c]ounties and has preliminarily determined that Red Crest
Trust is the owner and holder of the mineral estate underlying” the
tracts at issue.
The letter also quoted the new negation-of-warranty clause on which
the parties had agreed. And the letter noted that Orca had requested and
received a thirty-day option period in exchange for accepting the new
language:
“ORCA has accepted the counteroffer of RED CREST TRUST
proposing to modify paragraph 18[,] ... but, in light of such requested
modification to the lease form[, Orca] has requested, and RED CREST
TRUST has agreed to, a delay of up to 30 calendar days in the closing
of the proposed transaction to allow ORCA the opportunity to re-
examine its title work upon which its determination of ownership is
based ....”
The letter further provided that the parties could close the transaction
“on a piecemeal basis” over the thirty-day option period. As “the title
to the individual tracts is examined and approved,” the trust would
execute a lease to that tract upon Orca tendering consideration of
$3,500 per acre. And if Orca’s “re-examination of title should reveal
[previously unknown] information ... that brings into question the
ownership” of one or more of the tracts, then Orca “may, in its sole and
absolute discretion, elect to not take a lease on such tract or tracts.”
Finally, the letter precluded the trust or JPMorgan from leasing the
tracts or granting an option to acquire a lease to any third parties.
Before signing the letter of intent, Orca had been checking the property
records on an almost daily basis. But it did not continue to do so during
the thirty-day option period. And it was just three days into the option
period, on December 9, that GeoSouthern finally recorded the leases it
–25–
had obtained from the trust six months earlier. The tracts the letter of
intent covered included much of the acreage GeoSouthern had already
leased. Any title search Orca had commissioned after December 9—a
search that one of Orca’s landmen estimated would have cost between
$600 and $800—would have revealed GeoSouthern’s leases.
Orca contends it conducted no searches after signing the letter of intent
because (1) its earlier searches had revealed no title issues, (2) Mettham
had represented that the acreage was unleased, and (3) the letter
precluded JPMorgan from leasing any of the tracts during the option
period. The purpose of the thirty days, Orca argues, was to re-evaluate
the title review it had already performed. Orca feared defects in title
going backward in time, not forward.
Ultimately, Orca decided to move forward on just the tracts in DeWitt
County—919 of the 1,680 acres covered in the letter of intent. On
January 5, 2011, Orca sent Mettham six leases covering those tracts.
Each lease contained the new negation-of-warranty language providing
that it was “without warranties” and “without recourse” for failure of
title. Six days later, Orca sent Stewart to close the deal. As Stewart
handed Mettham bonus checks amounting to $3,217,585, she asked him
again if he was “sure these are all open.” A colleague attending the
closing with Stewart interjected: “Well, they better be for that kind of
money.”
Mettham allegedly responded to Stewart by saying, “[L]et me check.”
Then, after he “looked at something below his desk,” as well as “at his
computer” and the maps Orca had provided, he said, “We’re good to
go. They’re open.” Orca recorded the leases in the DeWitt County
property records the next day.
Two weeks later, GeoSouthern contacted Mettham. It had discovered
Orca’s leases in the property records—leases of acreage GeoSouthern
had already leased. Mettham immediately informed Orca of the title
defect. And on February 18, JPMorgan sent Orca a check refunding the
$3.2 million in bonus payments, though it maintained it was not
obligated to do so under the leases’ negation-of-warranty provisions.
But Orca rejected the tender. And on February 24, it sued JPMorgan
and Mettham for $400,000,000 in lost profits.
–26–
JPMorgan Chase Bank, N.A. v. Orca Assets G.P., L.L.C., 546 S.W.3d 648, 650–52
(Tex. 2018).
The parties also stipulated that after the supreme court rendered judgment for
JPMorgan, the bank distributed—except for a $195,000 lease commission for
JPMorgan—the $3.2 million in bonus payments to the trust beneficiaries as income
under the trust agreement. The parties presented additional evidence, some of which
was duplicative of the above recitation from the supreme court and we will therefore
not reproduce it here. A portion of the deposition testimony of Orca vice president
John Ellis was admitted into evidence. Ellis testified Orca acquired the services of
outside counsel to make sure the trust owned the minerals Orca was leasing, and he
said they depended on their landman who came highly recommended. Ellis said the
landman had done title work prior to the November 2010 meeting. He said he
understood the negation-of-warranty provision in the lease to mean that if Orca paid
the bonus money and there was a failure of title, JPMorgan would not have to return
the bonus money. Ellis said he had seen such provisions before in other leases. He
said it was important for Orca to verify the trust owned the minerals before they
finalized the lease and paid the bonus money and that Orca had the responsibility to
do so—he “would never look to JPMorgan to tell me whether or not Red Crest Trust
owned the minerals” in question.
Portions of the testimony of Orca’s landman, Jose Villalon, were also
admitted. Villolon testified he previously worked as a title attorney. He said he did
–27–
not rely on information obtained from the owner of mineral interests but relied on
“what was in the records.” He said it would not be prudent to only rely on
information obtained from the owner, including information as to whether mineral
interests were subject to another lease, and he did not rely on any representations
from JPMorgan in this case. Villalon said the responsibility to ensure the mineral
interests were open and available for lease rested with himself and the landmen, and
Orca relied upon them to do so.
Orca read portions of Mettham’s deposition for the trial court. He testified he
made a presentation for the Red Crest Trust beneficiaries on November 11, 2010,
and his presentation included a reference to a lease to GeoSouthern covering mineral
interests in DeWitt and Gonzales counties, amongst about a dozen pages listing other
leases. He said he met with Orca the next day. When questioned how he could
forget about the GeoSouthern lease a day later, Mettham responded, “I did forget.
This was not on my radar.” Mettham stated he was instructed to confirm the Orca
lease mineral interests were not subject to any other agreements that would prohibit
the deal with Orca; he said he checked “the last time we leased in DeWitt County”
but he denied he discovered he had previously leased the acres in question to
GeoSouthern. While he said he found the GeoSouthern lease, he did not look at the
legal description of the property nor compare it to the acres Orca was interested in.
Mettham stated he assumed the GeoSouthern lease “had been of record” and thus
the Orca lease did not cover the same acres. Mettham first became aware the Orca
–28–
lease covered the same property as the GeoSouthern lease when GeoSouthern
brought it to his attention less than a month after making the Orca lease.
Sherri Anderson stated during her deposition she worked in oil and gas
mineral management for JPMorgan. She said it would be unacceptable for her to
execute a lease knowing the acreage had already been leased to another entity.
Anderson stated she would compare the legal descriptions in leases in her files to the
legal description of properties a potential lessee was interested in to ensure the
properties were not already subject to a lease.
Joe Velasquez stated in his deposition he was a trust officer with JPMorgan
and he had attended Mettham’s November 2010 presentation to the Red Crest Trust
beneficiaries. Velasquez stated he did not recall there being a great deal of
conversation regarding any specific lease, but Orca admitted beneficiaries’ handouts
from the meeting with notations suggesting individual leases were discussed.
In sum, Orca argues the fees awarded to JPMorgan are inequitable because
Mettham either knew the acres in question had already been leased or was grossly
negligent in failing to check they were not, and as a result of his misrepresentations,
JPMorgan received $3.2 million from Orca for the leases. Given that, asking to be
reimbursed for $2.4 million in attorney’s fees is inequitable “when it made
$3,200,000 million in exchange for leases” JPMorgan could not lease “despite
JPMorgan’s misrepresentations to the contrary.”
–29–
We conclude Orca has not demonstrated the trial court abused its discretion
in awarding JPMorgan attorney’s fees under § 114.064. First, we observe that the
supreme court concluded the facts here precluded as a matter of law Orca’s claim of
justifiable reliance on JPMorgan’s representations. Orca Assets, 546 S.W.3d at 660.
Throughout the transaction, “Orca encountered ‘red flags’ that should have alerted
it to the danger of blindly relying on JPMorgan’s representations regarding title to
the tracts.” Id. at 658. These red flags included Mettham’s equivocal statements at
the November 2010 meeting; Stewart’s own apparent doubts at closing, causing her
to question again whether the properties were open; the absence of any assurance of
clear title in the letter of intent; and the non-standard negation-of-warranty clause.
Id. at 656–57. Further, Orca stopped checking the county property records once the
letter of intent was signed. Id. at 658. The supreme court also stated that “another
alarm Orca disregarded was the negation-of-warranty provision’s direct
contradiction of the representation upon which Orca claims to have relied.” Id.
There was a direct contradiction between the two because Mettham’s statement that
the acreage was open essentially meant the trust had not leased the property and had
good title, and the negation-of-warranty clause “spoke to Orca’s lack of recourse
‘for failure of title.’” Id. at 659. Thus, “[v]iewed in context with the numerous ‘red
flags,’ Orca’s sophistication in the oil-and-gas industry, and the direct contradiction
between the representation and the letter of intent, Orca cannot maintain its claim of
justifiable reliance.” Id. at 660 (footnote omitted).
–30–
Second, it is undisputed that, after discovering the acreage in question had
already been leased to GeoSouthern, JPMorgan sent Orca a refund check for the
entire bonus payment amount of $3.2 million. Only after Orca rejected the refund
and after the supreme court reinstated the trial court’s judgment, did JPMorgan
distribute the full amount, less a lease commission, to the trust beneficiaries. Given
this, we reject Orca’s contention that JPMorgan has “unclean hands” and thus cannot
receive an equitable award of attorney’s fees.
We also find distinguishable the authorities relied on by Orca. For instance,
in Goughnour v. Patterson, Tr. of Deborah Patterson Howard Tr., No. 12-17-00234-
CV, 2019 WL 1031575, at *16–17 (Tex. App.—Tyler Mar. 5, 2019, pet. denied)
(mem. op.), the court of appeals found inequitable the trial court’s ordering a trust
beneficiary to pay the trustee’s attorney’s fees when evidence showed the trustee
repeatedly engaged in self-dealing, “engaged in very risky activities and lost a
substantial amount of Trust money,” and “was not cleared of any wrongdoing by a
review of the merits.” We do not have anything like those facts here. At best for
Orca, it could be said reasonable minds could differ as to the equities involved here,
which is not enough for an abuse of discretion. See Austin Jockey Club, Ltd. v.
Dallas City Limits Prop. Co., L.P., No. 05-14-00114-CV, 2015 WL 3549645, at *8
(Tex. App.—Dallas June 5, 2015, pet. denied) (mem. op.). We overrule Orca’s final
issue.
–31–
Conclusion
Having overruled Orca’s issues, we affirm the judgment of the trial court.
220292f.p05 /Ken Molberg/
KEN MOLBERG
JUSTICE
–32–
Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
ORCA ASSETS, G.P., L.L.C., On Appeal from the 44th Judicial
Appellant District Court, Dallas County, Texas
Trial Court Cause No. DC-13-13886.
No. 05-22-00292-CV V. Opinion delivered by Justice
Molberg. Justices Carlyle and Smith
JP MORGAN CHASE BANK, N.A., participating.
JP MORGAN CHASE BANK, N.A.,
AS TRUSTEE OF THE RED
CREST TRUST, Appellee
In accordance with this Court’s opinion of this date, the judgment of the trial
court is AFFIRMED.
It is ORDERED that appellee JP MORGAN CHASE BANK, N.A., JP
MORGAN CHASE BANK, N.A., AS TRUSTEE OF THE RED CREST TRUST,
recover its costs of this appeal from appellant ORCA ASSETS, G.P., L.L.C.
Judgment entered this 19th day of March, 2024.
–33–