Devon Energy Production Company, L.P. v. KCS Resources, LLC

Affirmed in Part and Reversed and Remanded in Part and Majority and
Concurring and Dissenting Opinions filed October 30, 2014.
In The
Fourteenth Court of Appeals
NO. 14-13-00348-CV
DEVON ENERGY PRODUCTION COMPANY, L.P., Appellant
V.
KCS RESOURCES, LLC, Appellee
On Appeal from the 129th District Court
Harris County, Texas
Trial Court Cause No. 2010-15225
MAJORITY OPINION
In this dispute over ownership of property in Louisiana, appellant Devon
Energy Production Company, L.P., contends that the trial court erred in granting
summary judgment in favor of appellee KCS Resources, LLC, on the ground that
the trial court lacked subject matter jurisdiction over Devon’s action for relief
under the Uniform Declaratory Judgments Act. In a cross-issue, KCS contends the
trial court erred in concluding that it also lacked jurisdiction to decide KCS’s
counterclaim for attorney’s fees under the Act. We affirm in part and reverse and
remand in part.
BACKGROUND
Devon and KCS are parties to a Purchase and Sale Agreement, effective
February 22, 2005, in which Devon agreed to sell to KCS certain oil and gas assets
in Texas, Louisiana, and Mississippi (the PSA). The assets to be sold were listed in
Exhibit A to the PSA, which was further divided into three sub-parts. Exhibit A-3
of the PSA identified “Leases and Lands” to be conveyed, including oil and gas
leases, wells, mineral interests, and associated assets located in DeSoto Parish,
Louisiana. Under the PSA, the assets included all of Devon’s right, title, and
interest in and to the oil and gas leases, lands, and wells described in Exhibit A as
follows:
2.1 Purchase and Sale. Subject to the terms and conditions of this
Agreement, [Devon] agrees to sell, and [KCS] agrees to purchase and
pay for, all of [Devon]’s right, title and interest in and to the
following (less and except for the Excluded Assets, collectively, the
“Assets”):
(a) the oil and gas leases more particularly described in Exhibit
A, subject to any depth restrictions described in Exhibit A
(collectively, the “Leases”), together with any and all other rights,
titles, and interests of [Devon] in and to (i) the leasehold estates
created thereby, subject to any depth restrictions described in Exhibit
A and to the terms, conditions, covenants, and obligations set forth in
the Leases and/or Exhibit A and (ii) the lands covered by the Leases
or included in Units with which the Leases may have been pooled or
unitized, subject to any depth restrictions described in Exhibit A (the
“Lands”), including in each case, without limitation, fee interests,
royalty interests, overriding royalty interests, production payments,
net profits interests, carried interests, reversionary interests, and all
other interests of any kind or character;
(b) all oil and gas wells located on the Leases and the Lands
or on other leases or lands with which the Leases and/or the Lands
2
may have been pooled or unitized (collectively and including the
wells set forth on Exhibit A, the “Wells”), and all Hydrocarbons
produced therefrom or allocated thereto.
(Emphasis added). The PSA also included a forum selection clause specifying that
Texas law applied and that all actions arising out of or related to the PSA would be
exclusively litigated in Harris County.
After about six weeks of due diligence, the parties closed the deal on April
13, 2005. At the closing, Devon executed various deeds conveying the assets to
KCS, including a “Deed, Assignment and Bill of Sale” conveying the DeSoto
Parish properties (the DeSoto Deed). Although the parties had negotiated revisions
to some of the deeds during the due diligence period, Exhibit A to the DeSoto
Deed contained the same properties that were previously listed on Exhibit A-3 of
the PSA, with no revisions other than the addition of recording information. On
April 18, 2005, the DeSoto Deed was recorded in the public records of DeSoto
Parish.
About five years later, a dispute arose between KCS and Devon concerning
the scope of the mineral interests Devon conveyed to KCS in DeSoto Parish. That
dispute is the subject of this lawsuit. KCS contends that Devon intended to convey
all of its right, title, and interest in two mineral servitudes1 known as the “Olin
Mathieson Servitude” and the “Riverwood Servitude” burdening ten sections of
land. Conversely, Devon maintains that its conveyance was restricted to specific
wells or wellbores located within the two mineral servitudes. For convenience, we
will refer to the properties at issue as the “Disputed Properties.”
In 2010, after Devon learned that KCS had mortgaged some of the Disputed
1
A mineral servitude is “the right of enjoyment belonging to another for the purpose of
exploring for and producing minerals and reducing them to possession and ownership.” La. Rev.
Stat. § 31:21.
3
Properties, Devon filed a “Petition to Quiet Disturbance” in Louisiana seeking to
cancel KCS’s mortgage on those mineral interests. Devon contends that, after it
filed that petition, EXCO Resources, Inc., another oil and gas company, informed
Devon that KCS was claiming an interest in wells in which Devon had retained an
interest under the PSA. Recognizing that Devon and KCS “had different views
regarding what interests were intended to be conveyed by the PSA,” Devon argues
that it filed this declaratory action in Texas in accordance with the PSA’s forum-
selection clause.
KCS disputes Devon’s account. According to KCS, EXCO contacted both
Devon and KCS in the fall of 2009 to confirm who owned the Disputed Properties
in connection with EXCO’s plans to drill new wells in the area and, rather than
acknowledge KCS’s ownership, Devon seized an opportunity “to re-gain the now
highly valuable” mineral interests. According to KCS, Devon sought to maintain
its suit in both Louisiana and Texas by challenging the conveyance of different
sections of the Disputed Properties in each action. KCS also argues that Devon’s
original pleadings in the Texas action sought a declaration as to the parties’ rights
under the DeSoto Deed and an adjudication of title to Louisiana real property, not
declaratory relief under the PSA.
Litigation over the Disputed Properties proceeded in both Texas and
Louisiana. In response to Devon’s Louisiana petition, KCS answered and filed a
counterclaim to have its rights under both the PSA and the DeSoto Deed declared
in its favor, as well as alternative claims for fraud, misrepresentation, and
violations of Louisiana law. KCS later amended its request for declaratory relief to
seek a declaration as to the DeSoto Deed only. The Louisiana case has since been
stayed pending the completion of the present case.
In the Texas action, KCS filed a motion to dismiss Devon’s request for
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declaratory relief. Because Devon originally sought a declaration as to the parties’
rights under the PSA and the DeSoto Deed in the Texas action, KCS argued that
the Texas court lacked subject matter jurisdiction to interpret the DeSoto Deed and
declare title to the Disputed Properties in Louisiana. The trial court treated KCS’s
motion as a plea to the jurisdiction and conditionally granted it, but allowed Devon
the opportunity to amend its original petition.
Devon then amended its pleading to seek a declaration of the parties’ intent
regarding the conveyance of the Disputed Properties under the PSA alone. In
response, KCS again challenged the court’s jurisdiction over Devon’s amended
claims, arguing that the court must look first to the DeSoto Deed, not the PSA,
because the conveyance provisions of the PSA had been merged into and were
superseded by the conveyance provisions of the later-executed DeSoto Deed. The
trial court denied KCS’s motion, but stated that it would be willing to revisit the
issue of subject matter jurisdiction later in the proceedings.
KCS later challenged the trial court’s subject matter jurisdiction for a third
time in a motion for summary judgment, arguing that a declaration of the PSA
would not resolve the parties’ dispute and would be an advisory opinion on a
question of title to land in Louisiana. Although the trial court held a hearing on the
motion, it made no ruling for several months. As the trial date approached, KCS
amended its pleadings to file counterclaims for declaratory relief and alternatively,
claims for fraud and negligent misrepresentation, subject to its jurisdictional
challenge. Devon also filed a second amended petition.
The trial court granted KCS’s motion for summary judgment on March 27,
2012, and ordered that Devon “take nothing” on its claims. Devon filed a motion to
modify the trial court’s summary judgment order, arguing that the trial court’s
ruling on the merits was improper and that the proper relief was to dismiss
5
Devon’s claims for lack of subject matter jurisdiction. Shortly after that, KCS non-
suited all of its counterclaims except for its counterclaim for attorney’s fees and
costs as provided in the declaratory judgments act.
Almost a year later, on March 25, 2013, the trial court granted Devon’s
motion to modify and entered a final judgment dismissing Devon’s declaratory
judgment claims and KCS’s attorney’s fees claim for lack of subject matter
jurisdiction. Both parties have appealed the final judgment.
ANALYSIS OF DEVON’S ISSUE
I. Summary of the Parties’ Arguments
In its motion for summary judgment, KCS argued that the trial court lacked
jurisdiction to interpret the conveyance terms of the PSA because any decision on
that issue would be an impermissible advisory opinion that would not resolve the
parties’ dispute concerning the ownership of the Disputed Properties. KCS
contended that the declaratory relief Devon seeks would be advisory for three
reasons: (1) the PSA merged into the DeSoto Deed, so only the deed controls the
respective rights of the parties; (2) the parties’ intent under the PSA was
superseded and mooted by the execution of the DeSoto Deed; and (3) the statute of
frauds bars enforcement of any declaration since the PSA lacks the requisite
recording information contained only in the DeSoto Deed. According to KCS, the
final DeSoto Deed establishes the interests that were actually conveyed, and
therefore any disagreement between the parties concerning ownership of the
Disputed Properties must be resolved by a Louisiana court because the law is well-
settled that Texas courts lack subject matter jurisdiction to determine title to real
property located in another state.
On appeal, Devon argues that the declaratory relief it seeks does not amount
6
to an advisory opinion concerning a question of title to land in Louisiana because
the PSA was not merged into or superseded by the DeSoto Deed, the dispute
regarding the meaning of the PSA is not moot, and the statute of frauds does not
apply. Devon also contends that its claims arise directly out of the PSA and so are
governed by the PSA’s forum selection and choice of law clause providing for
litigation of the action in Harris County and the application of Texas law. Further,
Devon asserts that Texas courts have jurisdiction to interpret contracts involving
land in another state so long as the case does not involve a “naked question of
title,” and that this is such a case.
II. Standard of Review and Applicable Law
We review a trial court’s grant of summary judgment de novo. Masterson v.
Diocese of Nw. Tex., 422 S.W.3d 594, 607 (Tex. 2013). To prevail on its motion,
KCS was required to prove that no genuine issue of material fact exists and that it
is entitled to judgment as a matter of law. See Tex. R. Civ. P. 166a(c); Joe v. Two
Thirty Nine Joint Venture, 145 S.W.3d 150, 157 (Tex. 2004). We take as true all
evidence favorable to Devon, the non-movant, and we indulge every reasonable
inference and resolve any doubts in Devon’s favor. See Joe, 145 S.W.3d at 157.
We affirm the summary judgment if any of the theories presented to the trial court
and preserved for appellate review are meritorious. Id.
Subject matter jurisdiction is essential to the authority of a court to decide a
case and is never presumed. Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d
440, 443–44 (Tex. 1993). The absence of subject matter jurisdiction may be raised
by a motion for summary judgment. Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d
547, 554 (Tex. 2000). In reviewing a challenge to the court’s subject matter
jurisdiction, the trial court may review the pleadings and any other evidence
relevant to the subject matter jurisdiction issue. Id. at 554–55. Whether a trial court
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has subject matter jurisdiction is a question of law. Tex. Dep’t of Parks & Wildlife
v. Miranda, 133 S.W.3d 217, 226 (Tex. 2004).
Under Article II, section 1 of the Texas Constitution, courts have no
jurisdiction to issue advisory opinions. Valley Baptist Med. Ctr. v. Gonzalez, 33
S.W.3d 821, 822 (Tex. 2000) (per curiam); see Heckman v. Williamson Cnty., 369
S.W.3d 137, 147 (Tex. 2012) (“The Texas Constitution—the source of the
requirements of justiciability in Texas—bars our courts from rendering advisory
opinions and limits access to the courts to those individuals who have suffered an
actual, concrete injury.”). An advisory opinion decides an abstract question of law
without binding the parties, and a judgment based on an advisory opinion
addresses only a hypothetical injury rather than remedying an actual or imminent
harm. Tex. Ass’n of Bus., 852 S.W.2d at 444. The prohibition on advisory opinions
likewise precludes the courts from deciding moot controversies. Klein v.
Hernandez, 315 S.W.3d 1, 3 (Tex. 2010).
The Uniform Declaratory Judgments Act (UDJA) allows a person interested
under a written contract to have determined any question of construction or
validity arising under the contract and to “obtain a declaration of rights, status, or
other legal relations thereunder.” Tex. Civ. Prac. & Rem Code § 37.004(a). But the
Act does not create or enlarge a trial court’s subject matter jurisdiction; it is
“merely a procedural device for deciding cases already within a court’s
jurisdiction.” Tex. Ass’n of Bus., 852 S.W.2d at 444. Thus, a declaratory judgment
is appropriate only if a justiciable controversy exists as to the rights and status of
the parties and the declaration will resolve the controversy. Bonham State Bank v.
Beadle, 907 S.W.2d 465, 467 (Tex. 1995); see also Tex Civ. Prac. & Rem. Code §
37.008 (“The court may refuse to render or enter a declaratory judgment or decree
if the judgment or decree would not terminate the uncertainty or controversy
8
giving rise to the proceeding.”).
II. Analysis of the Parties’ Arguments
A. Merger of the PSA into the DeSoto Deed and Mootness
1. The PSA is Merged Into, Superseded By, and Mooted by
the DeSoto Deed.
In its summary-judgment motion, KCS first argued that any decision
construing the PSA would be an advisory opinion because the DeSoto Deed is the
controlling instrument under the merger doctrine. The Supreme Court of Texas has
long recognized that the conveyance provisions in a contract for the sale of real
property merge into the deed executed in accordance with the contract. Alvarado v.
Bolton, 749 S.W.2d 47, 48 (Tex. 1988).
The merger doctrine requires courts to look to the deed alone in evaluating
the parties’ respective rights even if the terms of the deed vary from the contract.
Id. (“Though the terms of the deed may vary from those contained in the contract,
still the deed must be looked to alone to determine the rights of the parties.”); see
also Turberville v. Upper Valley Farms, Inc., 616 S.W.2d 676, 678 (Tex. Civ.
App.—Corpus Christi 1981, no writ) (“Where a deed has been executed and
accepted as performance of an executory contract to convey real estate, the
contract is functus officio, and the rights of the parties rest thereafter solely in the
deed.”). “The merger doctrine is an analogue of the parol evidence rule and
functions to prevent enforcement of prior or contemporaneous transactions on the
assumption that all agreements merged into the final executed contract.” See GXG,
Inc. v. Texacal Oil & Gas, 977 S.W.2d 403, 415 (Tex. App.—Corpus Christi 1998,
pet. denied).
For example, in Commercial Bank, Unincorporated, of Mason, Tex. v.
Satterwhite, the plaintiff sought to cancel a general warranty deed conveying to the
9
defendant the plaintiff’s mother’s and her late husband’s community interests in
the family ranch. See 413 S.W.2d 905, 906 (Tex. 1967). The mother had entered
into a contract for sale with the defendant to sell “all of her right title and interest
in and to” the ranch. Id. at 909 (emphasis added). The deed that she executed
individually and in her capacity as executrix of her husband’s estate, however,
conveyed specifically described tracts encompassing the ranch. Id. The court held
that pursuant to the merger doctrine, in the absence of fraud, accident, or mistake,
“all prior agreements entered into between the parties [were] considered merged in
the deed” and it refused to reform the deed to reflect that only the mother’s
community interest in the ranch had been conveyed. Id.
Similarly, in Carter v. Barclay, 476 S.W.2d 909, 915 (Tex. Civ. App.—
Amarillo 1972, no writ), an action to quiet title to real property, the plaintiff argued
that certain language in a contract to purchase land prevented the rights of the
parties from merging into the deed, and that the contract and deed were cumulative
of the parties’ rights. The court held that the deed alone controlled the terms on
which the property was conveyed and superseded any other agreement between the
parties regarding the conveyance terms, the consideration, and the method of
payment:
[I]n the absence of fraud, accident or mistake in the execution, the
deed, an absolute conveyance on its face, must be considered the final
expression and the sole repository of the terms upon which [the
parties] have agreed with respect to the property conveyed, the
consideration and the method of payment. Although . . . certain rights
of appellee are still governed under the contract, such as the
furnishing of water, restrictions and easements, . . . the matter of
consideration and method of payment were finalized in the deed
which was an absolute conveyance of the property in question. . . . .
[T]he general warranty deed by its very nature has finalized and
supersedes any other agreement between the parties regarding
consideration and method of payment . . . .
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Id. at 914-15 (emphasis added) (internal citation omitted).
KCS argues that, as in these cases, the conveyance terms of the PSA merged
into and were superseded by the DeSoto Deed when it was executed at closing.
Consequently, a determination of the parties’ intent under the PSA would be no
more than parol evidence, admissible only in the event a Louisiana court finds that
the conveyance terms of the DeSoto Deed were ambiguous or were procured by
fraud. See GXG, Inc., 977 S.W.2d at 416 (“principles of law permit referral to
agreement upon which deed is founded to explain an ambiguity in deed”). Because
the Louisiana court has made no such determination, and may never do so, the
declaration Devon seeks would be premised on the happening of a future,
hypothetical event. Thus, KCS argues, any such declaration would be advisory
because it would not resolve the ownership of the Disputed Properties conveyed by
the DeSoto Deed. See Stop ‘N Go Mkts. of Tex., Inc. v. Exec. Sec. Sys., Inc. of Am.,
556 S.W.2d 836, 837 (Tex. Civ. App.—Houston [14th Dist.] 1977, no writ)
(recognizing “[a] justiciable controversy does not exist and an advisory opinion is
being sought if a party requests a court to render a declaratory judgment premised
upon the happening of a future, hypothetical event”).
KCS also argues that the declaration Devon seeks would be advisory
because the issue of what interests the parties intended to convey under the PSA is
mooted by the execution of the DeSoto Deed. Mootness is a component of subject
matter jurisdiction. See Valley Baptist Med. Ctr., 33 S.W.3d at 822. The mootness
doctrine prevents courts from rendering advisory opinions, which they have no
jurisdiction to issue. Id. A case becomes moot if there ceases to be a justiciable
controversy between the parties, such as when “the issues presented are no longer
‘live.’” Heckman, 369 S.W.3d at 162; see also In re H&R Block Fin. Advisors,
Inc., 262 S.W.3d 896, 900 (Tex. App.—Houston [14th Dist.] 2008, orig.
11
proceeding) (“An issue may become moot when a party seeks a ruling on some
matter which, when rendered, would not have any practical legal effect on a then-
existing controversy.”).
We agree with KCS that any issue regarding what the parties intended to
convey under the PSA is no longer live because the DeSoto Deed is the final
expression and sole repository of the parties’ agreement with respect to the
properties conveyed. See Satterwhite, 413 S.W.2d at 909; Carter, 476 S.W.2d at
915. This conclusion is consistent not only with the case law but also with the
practical application of the doctrine. Devon’s own land manager testified that
anyone seeking to determine what properties were actually conveyed to KCS
would need to review the exhibits attached to the deeds executed at the closing of
the transaction—not the exhibits attached to the PSA that was executed six weeks
earlier—because the exhibits to the PSA were not revised to reflect any changes
made when properties were removed or added to the deal as a result of the due-
diligence process. The parties’ agreement to apply Texas law to the construction of
the PSA further compels the application of this settled Texas doctrine.
Applying the doctrine of merger, any interpretation of the PSA would not
resolve the issue as to who owns the Disputed Properties because the final DeSoto
Deed establishes the interests that were actually conveyed.2 The declaration Devon
seeks will have no determinative legal effect on the parties’ controversy over
ownership of the Disputed Properties conveyed by the DeSoto Deed, as only the
Louisiana court has the ability to adjudicate title to realty. Because any declaration
of the parties’ intent under the PSA would not resolve the parties’ dispute, the
declaration Devon seeks would be advisory only and therefore the trial court lacks
2
Because of our disposition of this issue, it is unnecessary to reach the parties’ arguments
concerning the applicability of the statute of frauds.
12
subject matter jurisdiction to consider it. See, e.g., Patterson v. Planned
Parenthood of Houston and Se. Tex., Inc., 971 S.W.2d 439, 443 (Tex. 1998); Tex.
Ass’n of Bus., 852 S.W.2d at 444.
2. Devon’s Contrary Arguments Concerning Merger and
Mootness are Unpersuasive.
Devon contends that the trial court erred in concluding that it lacked subject
matter jurisdiction over the parties’ dispute because the PSA was not merged into,
superseded by, or mooted by the DeSoto Deed. Discussing the merger and
superseded contract doctrines together with mootness, Devon argues these
doctrines do not apply because (1) the PSA survived the closing and did not
address the same subject matter as the DeSoto Deed; and (2) KCS made allegations
of fraud and misrepresentation regarding the PSA and also sought reformation of
the PSA. Because the PSA was neither merged into nor superseded by the DeSoto
Deed, Devon asserts, the controversy regarding its meaning is not moot.
(a) The Existence of Surviving Collateral Terms Does Not
Preclude the Application of the Merger Doctrine to
the Conveyance Terms.
First, Devon contends that the merger doctrine does not apply because the
PSA created continuing rights and obligations that were independent of the
conveyances within it. See Harris v. Rowe, 593 S.W.2d 303, 306–07 (Tex. 1979);
Stanford Dev. Corp. v. Stanford Condo. Owners Ass’n, 285 S.W.3d 45, 52 (Tex.
App.—Houston [1st Dist.] 2009, no pet.). Devon argues that the PSA contains a
number of independent rights and obligations that survived closing, such as an
agreement to cooperate in effectuating the intent of the PSA and detailed
indemnification provisions. Devon also points to language in the DeSoto Deed that
“the execution and delivery of this Assignment . . . shall not operate to release or
impair any surviving rights and obligations of Assignor or Assignee under the
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[PSA].” Further, Devon argues that as a practical matter, the parties continued to
revise leases and assignments under the PSA even beyond the closing date,
something they would not have done if the DeSoto Deed rendered the PSA moot.
In response, KCS does not dispute that certain provisions of the PSA
survived beyond the execution of the deeds at the closing, but argues that Devon’s
argument ignores the actual dispute between them, which concerns the scope of the
conveyance as it relates to the Disputed Properties rather than any of the PSA’s
surviving terms. We agree. Devon’s cited authorities concern disputes over
collateral terms, not disputes over terms of the conveyance that were merged into
the subsequently executed agreement. For example, in Harris v. Rowe, the Texas
Supreme Court held that an escrow agreement pertaining to funds for post-
conveyance construction work was collateral to and independent of the conveyance
terms in the purchase contract. 593 S.W.2d at 306–07. Likewise, in Stanford Dev.
Corp., the court of appeals held that arbitration provisions in homeowners’ earnest
money contracts created rights collateral to and independent of the deeds to their
condominiums that were not merged into and extinguished by the subsequent
deeds. 285 S.W.3d at 52.
Here, the dispute between Devon and KCS does not involve the PSA’s
surviving collateral terms, such as the right to transfer properties after closing. It
involves the scope of the conveyance itself and whether Devon conveyed the
Disputed Properties to KCS based on the descriptions provided in the DeSoto
Deed. Under the PSA, Devon agreed to convey all of its “right, title and interest”
in and to the described assets, and Devon points to nothing in the PSA indicating
that the parties intended to retain some legal or equitable interest in those assets,
and it is undisputed that the descriptions of the properties conveyed in the exhibits
to both the PSA and the DeSoto Deed are the same. Devon’s reliance on the
14
collateral-rights exception is misplaced and does not defeat the application of the
merger doctrine.
In a related argument, Devon contends that the merger doctrine does not
apply because the DeSoto Deed addressed only a small portion of the multistate
assets identified in the PSA. See, e.g., Superior Laminate & Supply, Inc. v.
Formica Corp., 93 S.W.3d 445, 448–49 (Tex. App.—Houston [14th Dist.] 2002,
pet. denied) (“A merger occurs when the same parties to an earlier agreement later
enter into a written integrated agreement covering the same subject matter.”).
Devon contends that it was clearly not the intent of the parties that the PSA be
merged into, superseded by, or mooted by the DeSoto Deed because the parties
included in the DeSoto Deed the statement that the Deed was “expressly made
subject to” the PSA.
These arguments also fail because the parties’ actual dispute is confined to
the ownership of the Disputed Properties, which are addressed by both the PSA
and the DeSoto Deed. None of Devon’s authorities support its argument that
because the PSA involves properties in addition to those conveyed in the DeSoto
Deed, the merger doctrine does not apply to a property addressed by both
instruments. That the deal included other assets in other states has no bearing on
the parties’ dispute over the assets conveyed in Louisiana. For the same reason, we
reject Devon’s argument that the DeSoto Deed’s language that it is made “subject
to” the PSA indicates the parties’ intent that the PSA would not be merged into,
superseded by, or mooted by the DeSoto Deed. The evidence shows that although
revisions were made to the exhibits attached to the deeds during the due-diligence
process, the exhibits to the PSA describing the properties to be conveyed were not
correspondingly revised. Thus, the deeds, rather than the PSA, reflect the parties’
final agreement as to which properties were conveyed to KCS. Moreover, as KCS
15
argues, if the conveyance terms of the DeSoto Deed were “subject to” the PSA,
then the revisions the parties made to deeds during the due-diligence period would
be irrelevant. Such a construction of the DeSoto Deed would also undermine the
purpose of the merger doctrine. Therefore, both the evidence and the case law are
consistent with the application of the merger doctrine in this case. See Alvarado v.
Bolton, 749 S.W.2d at 48 (stating that when a deed is delivered and accepted as
performance of a contract to convey, the contract is merged into the deed).
(b) KCS’s Dismissed Counterclaims Do Not Preclude
Application of the Merger Doctrine.
Second, Devon argues that the merger doctrine does not apply because KCS
made allegations of fraud and misrepresentation regarding the PSA, and also
sought reformation of the PSA. See, e.g., GXG Inc., 977 S.W.2d at 416 (“The
doctrine of merger is inapplicable when there is an allegation of fraud, mistake, or
accident, or an ambiguity in the contract.”); see also Givens v. Ward, 272 S.W.3d
63, 68–69 (Tex. App.—Waco 2008, no pet.) (declining to apply merger doctrine
when claim for reformation of deed required determination of parties’ original
agreement). But Devon’s arguments against application of the merger doctrine
based on KCS’s counterclaims fail for two reasons.
First, KCS’s fraud, misrepresentation, and reformation counterclaims, which
were expressly made subject to KCS’s jurisdictional challenge, were nonsuited and
dismissed in May 2012. Thus, the counterclaims were not live pleadings when the
final order on KCS’s summary-judgment motion was modified and signed on
March 25, 2013.3 Second, all of KCS’s counterclaims were in opposition to
3
In its reply brief, Devon argues that KCS’s counterclaims were live pleadings when the
trial court initially granted KCS’s summary-judgment motion on March 27, 2012, and that the
trial court’s final judgment on March 25, 2013 “did nothing to alter its earlier March 27, 2012
order.” We note that the 2012 order denied Devon’s request for declaratory relief and granted a
take-nothing judgment against Devon, while the 2013 order dismissed Devon’s declaratory
16
Devon’s requested declarations as to the PSA and called into question Devon’s
conduct leading up to the execution of the PSA, not the DeSoto Deed. The cases
Devon cites are distinguishable because they each address allegations of fraud or
reformation relating to execution of the subsequent deed, not the preliminary
contracts for sale like the PSA. As KCS acknowledges, it could not have sought an
interpretation of the DeSoto Deed because the trial court lacks jurisdiction over
such a claim.
We conclude that Devon has failed to demonstrate that the merger doctrine
is inapplicable to this case.
B. The PSA’s Forum Selection Clause
Devon’s lead appellate argument is that the trial court’s ruling was erroneous
because the PSA’s forum selection clause requires that the parties’ dispute be
litigated in Harris County. This clause provides that the PSA and the parties’ legal
relations shall be governed by Texas law, that all parties to the PSA consent to the
exercise of personal jurisdiction by Texas courts for any action arising out of the
PSA or other transaction documents, and that “[a]ll actions or proceedings with
respect to, arising directly or indirectly in connection with, out of, related to or
from” the PSA “shall be exclusively litigated in courts having sites in Houston,
Harris County Texas.”
Devon argues that its declaratory judgment action must be litigated in Harris
County because the relief Devon sought in its amended petition required a judicial
determination of the intent of the parties to the PSA. Devon notes that Texas’
public policy strongly favors the freedom of parties to contract, so long as their
judgment action for lack of subject matter jurisdiction and also dismissed KCS’s counterclaim
for attorney’s fees. Although the court ruled in KCS’s favor in both orders, the basis for the
rulings and relief granted are distinctly different. Therefore, on these facts, we look to the state of
the pleadings at the time the trial court signed its final judgment.
17
agreement does not violate the law or public policy. See BMG Direct Mktg, Inc. v.
Peake, 178 S.W.3d 763, 767 (Tex. 2005); In re Prudential Ins. Co. of Am., 148
S.W.3d 124, 129–30 & n.11 (Tex. 2004). Therefore, Devon contends, its forum
selection clause “should be given full effect.” See In re Lisa Laser USA, Inc., 310
S.W.3d 880, 883 (Tex. 2010).
But the trial court did not rule that the PSA’s forum selection clause was
unenforceable; it ruled that the trial court lacked subject matter jurisdiction over
Devon’s declaratory judgment. Devon does not argue that the forum selection
clause somehow confers subject matter jurisdiction on the court, nor do Devon’s
cited cases so hold. The law is well settled that parties may by agreement consent
to personal jurisdiction and venue in a given court, but subject matter jurisdiction
cannot be conferred merely by agreement of the parties. See, e.g., Burke v.
Satterfield, 525 S.W.2d 950, 953 (Tex. 1975) (“It is also fundamental . . . that the
subject matter jurisdiction of a court cannot be enlarged by an agreement between
the parties or a request that the court exceed its powers.”); Taub v. Aquila Sw.
Pipeline Corp., 93 S.W.3d 451, 461 (Tex. App.—Houston [14th Dist.] 2002, no
pet.) (“Subject matter jurisdiction cannot be conferred by consent, waiver, or
estoppel at any stage of a proceeding.”). Therefore, Devon’s reliance on this clause
is misplaced because the presence of the forum selection clause in the PSA cannot
confer subject matter jurisdiction where it does not otherwise exist.
C. Adjudication of Title to Land in Another State
Devon next argues that Texas courts have subject matter jurisdiction to
determine obligations under a contract that may involve land located in another
state, and that this action is such a case. According to Devon, the trial court has
jurisdiction over this declaratory judgment action because it does not involve a
“naked question of title.”
18
As Devon acknowledges, Texas courts have no subject matter jurisdiction to
adjudicate title to realty, including interests in oil and gas leases, in another state or
country. See, e.g., Trutec Oil & Gas, Inc. v. Western Atlas Int’l, Inc., 194 S.W.3d
580, 583 (Tex. App.—Houston [14th Dist.] 2006, no pet.) (citing Holt v. Guerguin,
163 S.W. 10, 12 (Tex. 1914)); Kelly Oil Co, Inc. v. Svetlik, 975 S.W.2d 762, 764
(Tex. App.—Corpus Christi 1998, pet. denied); Miller v. Miller, 715 S.W.2d 786,
788 (Tex. App.—Austin 1986, writ ref’d n.r.e.). But a Texas court with jurisdiction
over the parties may enforce a party’s personal or contractual obligation that
indirectly involves property in another state. See Tex. & Pac. Ry. Co. v. Gay, 26
S.W. 599, 605–06 (Tex. 1894); Hartman v. Sirgo Operating, Inc., 863 S.W.2d 764,
766 (Tex. App.—El Paso 1993, pet. denied). For example, a Texas court may
compel a party over whom it has jurisdiction to execute a conveyance of a real
property interest situated in another state. See McElreath v. McElreath, 345
S.W.2d 722, 727–28 (Tex. 1961). Some courts have described the distinction as
whether the case involves a “naked question of title.” See, e.g., Hartman, 863
S.W.2d at 766.
To determine the nature of Devon’s action, we look to Devon’s pleadings
and the relevant evidence. See Trutec Oil & Gas, Inc., 194 S.W.3d at 583–88
(rejecting appellant’s contention that its action was only “tangentially” related to
real property and affirming trial court’s dismissal of appellant’s claims for lack of
subject matter jurisdiction when a review of the pleadings and evidence
demonstrated that appellant’s core complaint was that that it had been wrongfully
deprived of the functional equivalent of oil and gas leases in Nigeria). In Devon’s
second amended petition, Devon sets out in detail the dispute between it and KCS
over the extent of the mineral interests conveyed.4 Devon describes the nature of
4
KCS argues that the operative pleading is Devon’s first amended petition, and not the
19
the present action as seeking “a determination of the parties’ intent with respect to
certain Louisiana mineral interests described in Exhibit A-3 of the PSA.” In its
request for relief, Devon further states:
By the present action, Devon does not seek a construction of the
[DeSoto Deed], or a determination or adjudication of title to the
Louisiana properties listed in the PSA. Rather, Devon seeks a
construction of the PSA and the determination of the parties’ intent
under the PSA regarding the mineral interests the PSA was intended
to encompass. Such an action must necessarily precede any action to
adjudicate title. . . .
Devon then requests specific declarations that (1) the parties intended to include in
“the PSA transaction” only Devon’s interest in specifically named wells located on
specific sections of the lands described on Exhibit A-3 to the PSA pertaining to
DeSoto Parish, Louisiana, and not all of Devon’s right, title and interest in the
mineral servitudes; and (2) the parties intended to exclude from “the PSA
transaction” three additional sections of land in DeSoto Parish, Louisiana.
Throughout its pleading, Devon insists that the controlling document is the
PSA and not the DeSoto Deed, and restricts its requested relief to an interpretation
of the parties’ intent under the PSA. It is evident, however, that the relief Devon
ultimately seeks is the resolution of the disagreement between it and KCS as to
which of them owns the Disputed Properties in Louisiana. Notably, Devon first
filed suit in Louisiana, claiming that it owned the mineral interests KCS had
mortgaged. And when Devon originally filed this lawsuit in Texas, it requested
declarations regarding ownership of the Disputed Properties under both the DeSoto
second amended petition, which Devon filed after KCS moved for summary judgment but before
the trial court’s judgment was signed. Devon’s first amended petition did not request specific
declarations, but set out each party’s contentions concerning the Disputed Properties and merely
requests that the court declare the parties’ intent under the PSA. For purposes of our analysis,
however, the same dispute is reflected in both petitions.
20
Deed and the PSA. Only after the trial court granted KCS’s plea to the jurisdiction
did Devon amend its pleadings to argue that the dispute could be resolved by
interpreting the PSA alone. Moreover, although Devon relies on cases like
McElreath for the proposition that a Texas court has subject matter jurisdiction to
order a conveyance of out-of-state property, neither party has requested such relief.
Instead, Devon requests a declaration of the Louisiana mineral interests it intended
to convey.
The other authorities on which Devon relies are also distinguishable. See
Hartman, 863 S.W.2d at 766 (affirming trial court’s jurisdiction to determine the
validity of a contract for the sale and exchange of certain oil and gas properties in
New Mexico because the “trial court was not required to determine ownership of
land in New Mexico nor was any relief sought requiring the transfer of title to land
in New Mexico”); Protech of Tex., Inc. v. BP Oil Pipeline Co., No. 01-95-00270-
CV, 1995 WL 737442, at *3 (Tex. App.—Houston [1st Dist.] Dec. 14, 1995, pet.
denied) (mem. op., not designated for publication) (holding case did not simply
involve “a naked question of title” and trial court had subject matter jurisdiction
when plaintiff’s claims sounded in tort, contract, and quasi-contract); Askanase v.
Maddox, No. 05-91-01595-CV, 1992 WL 224588, *5 (Tex. App.—Dallas Sept. 10,
1992, writ denied) (mem. op., not designated for publication) (reversing plea to the
jurisdiction because the “substance and purpose” of the claim was the recovery of
money damages for breach of contract, tortious interference, and the declaration of
contractual rights, not a transfer of property or adjudication of title).5
In contrast, the pleadings, factual allegations, and relief sought in this case
5
We also note that Protech and Askanase are pre-2003 memorandum opinions
designated “do not publish” and thus have no precedential value. See Tex. R. App. P. 47.2 cmt.
(opinions issued in civil cases before 2003 and affirmatively designated “do not publish” lack
precedential value).
21
demonstrate that the gravamen of Devon’s action is the determination of the
parties’ existing property interests located in another state. Despite being couched
as a request for declaratory relief under the UDJA, the relief Devon seeks is in
essence a determination of title to land in Louisiana—a matter over which the trial
court lacks jurisdiction. See Trutec Oil & Gas, Inc., 194 S.W.3d at 588; Miller, 715
S.W.2d at 789; see also Renwar Oil Corp. v. Lancaster, 276 S.W.2d 774, 776
(Tex. 1955) (in context of venue dispute, suit was in essence one for recovery of
interest in land despite being cast as one for declaratory judgment).
IV. Disposition of Devon’s Appeal
We conclude that the trial court did not err in dismissing Devon’s claims for
lack of subject matter jurisdiction on the basis that Devon’s requested declaratory
relief sought an impermissible advisory opinion concerning Devon’s conveyance
of mineral interests located in Louisiana. We overrule Devon’s issues and affirm
that portion of the trial court’s judgment granting summary judgment in favor of
KCS.
KCS’S CROSS-ISSUE
In one cross-issue, KCS contends the trial court erred in dismissing its
counterclaim for attorney’s fees under the UDJA for lack of subject matter
jurisdiction. According to KCS, a trial court has jurisdiction to adjudicate a
defendant’s claim for costs and attorney’s fees when the defendant succeeds on its
claim that the trial court lacks subject matter jurisdiction over the plaintiff’s claim
for declaratory relief.
In response, Devon argues that when a trial court lacks subject matter
jurisdiction over a case from the time of filing, the only action the court may take
is to dismiss the case. To hold otherwise would be contrary to controlling case law,
22
the plain language of the UDJA, and those courts which have distinguished
between cases in which the court had subject matter jurisdiction and lost it and
those in which the court never properly acquired subject matter jurisdiction. As
above, when reviewing whether subject matter jurisdiction exists, we review the
trial court’s ruling de novo. Miranda, 133 S.W.3d at 228.
A. Attorney’s Fees Under the UDJA
In any proceeding under the UDJA, the court “may award costs and
reasonable and necessary attorneys’ fees as are equitable and just.” Tex. Civ. Prac.
& Rem. Code § 37.009. The UDJA “entrusts attorney fee awards to the trial court’s
sound discretion, subject to the requirements that any fees awarded be reasonable
and necessary, which are matters of fact, and to the additional requirements that
fees be equitable and just, which are matters of law.” Bocquet v. Herring, 972
S.W.2d 19, 21 (Tex. 1998). Under the UDJA, a party defending a suit brought
under the UDJA may be awarded its reasonable and necessary attorney’s fees.
Bradt v. State Bar of Tex., 905 S.W.2d 756, 760 (Tex. App.—Houston [14th Dist.]
1995, no pet.).
Devon argues broadly that if KCS is correct that the trial court lacked
subject matter jurisdiction over Devon’s claims, then the trial court likewise lacked
subject matter jurisdiction to award KCS its costs and attorney’s fees. See Goss v.
City of Houston, 391 S.W.3d 168, 176 (Tex. App.—Houston [1st Dist.] 2012, no
pet.) (“Subject matter jurisdiction is essential to the authority of the courts to
decide a case.”); Little v. Tex Bd. of Law Examiners, 334 S.W.3d 860, 862 (Tex.
App.—Austin 2011, no pet.) (“Failure to comply with a jurisdictional requirement
deprives the trial court of the power to act, other than to determine that it lacks
jurisdiction.”); see also Mapco, Inc. v. Forrest, 795 S.W.2d 700, 703 (Tex. 1990)
(per curiam) (stating that a judgment is void if it is apparent that the court
23
rendering the judgment lacks subject matter jurisdiction). But the trial court’s
determination that it lacked subject matter jurisdiction over Devon’s claims does
not necessarily mean that it had no authority to consider KCS’s counterclaim for
fees and costs in defending the lawsuit.
1. KCS’s authorities are on point and persuasive.
KCS points to two cases expressly holding that a trial court maintains
jurisdiction over a counterclaim for attorney’s fees under the UDJA despite the
dismissal of the plaintiff’s declaratory judgment action for lack of subject matter
jurisdiction. See Castro v. McNabb, 319 S.W.3d 721, 735–36 (Tex. App.—El Paso
2009, no pet.); Zurita v. SVH-1 Partners, Ltd., No. 03-10-00650-CV, 2011 WL
6118573, at *8 (Tex. App.—Austin Dec. 8, 2011, pet. denied) (mem. op.). In
Castro, the court examined the plain language of section 37.009 and determined
that the UDJA “does not require a judgment on the merits of the dispute as a
prerequisite to a fee award.” 319 S.W.3d at 735. Accordingly, the court concluded
that
Castro invoked the entire [UDJA] when she filed suit. Her failure to
make the City a party to the suit meant that any declaration sought
does not change the nature of the proceedings below. Because this
was a proceeding under the [UDJA], the trial court properly exercised
jurisdiction under Section 37.009 to award attorney’s fees to McNabb.
Id. at 735–36. The Zurita court reached the same conclusion, holding that the
dismissal of a clam under the UDJA for lack of subject matter jurisdiction does not
preclude the trial court from awarding attorney’s fees under the statute to the party
who succeeded in having the claims dismissed. See Zurita, 2011 WL 6118573,
at *8.
Devon asserts, however, that these cases are “non-controlling” and adverse
to decisions of the Houston appellate courts. As support for its contention, Devon
24
relies on Graves v. Diehl, No. 01-00-00412-CV, 2006 WL 1699527 (Tex. App.—
Houston [1st Dist.] June 22, 2006, pet. denied) (mem. op.), and Kenneth Leventhal
& Co. v. Reeves, 978 S.W.2d 253 (Tex. App.—Houston [14th Dist.] 1998, no pet.).
But these cases are distinguishable and do not control the disposition of KCS’s
issue.
In Reeves, the plaintiff sought attorney’s fees in connection with a breach of
contract claim and an identical claim for declaratory relief. 978 S.W.2d at 256.
This Court reversed the trial court’s award of attorney’s fees because the plaintiff
recovered no damages and so could not recover attorney’s fees under Chapter 38 of
the Texas Civil Practice and Remedies Code. Id. at 257–58. Further, the court held
that the plaintiff could not use a request for declaratory relief identical to his
breach of contract claim “simply to pave the way to recover attorney’s fees not
otherwise available.” Id. at 258–59. The Reeves court went on to note that the
plaintiff’s claim for declaratory relief “should have been dismissed by the trial
court because it was moot” and therefore the plaintiff was not entitled to recover
fees on the basis of either breach of contract or declaratory judgment. Id. at 259–
60. In a single paragraph, the court addressed the defendant’s second issue as
follows:
In its second point of error, [the defendant] argues that even if
there was a legal basis for an award of attorney’s fees to [the
plaintiff], the court abused its discretion and, if anything, should have
awarded fees to [the defendant]. Having found no legal basis for
awarding attorney’s fees to [the plaintiff] we likewise find no legal
basis for awarding such fees to [the defendant]. Therefore, [the
defendant’s] second point of error is overruled.
Id. at 260. In other words, having concluded that the plaintiff improperly invoked
the UDJA to request the same relief already sought under his breach of contract
claim, the court held that the UDJA was not a proper procedural vehicle to award
25
either party attorney’s fees. In contrast, Devon’s UDJA claim was not duplicative
of any other claim or urged solely for the purpose of obtaining attorney’s fees;
Devon properly invoked the UDJA when it filed its original petition seeking a
declaration of the rights, obligations, and legal status of the parties under the PSA
and the DeSoto Deed.
Graves is factually distinguishable because in that case only the defendants
sought affirmative declaratory relief and attorney’s fees. The defendants’ requested
relief was denied for lack of subject matter jurisdiction, so fees were not warranted.
See 2006 WL 1699527, at *9. The Graves court’s decision was also based on its
determination that the declaratory judgment and fee award were an abuse of
discretion because the lawsuit did not involve the construction of a deed to the
defendants’ property as recited in the trial court’s judgment; it involved the manner
in which the defendants made use of their property, and no deed was even offered
into evidence. Id. at *10. Thus, the court concluded there was no basis in the record
for the trial court to award either a declaratory judgment or attorney’s fees under
the UDJA. Id. This was not a case in which the fees were incurred solely in
defense of a plaintiff’s UDJA claim.
We also note that more recently, the same court has held, consistent with
Castro and Zurita, that the trial court had the power to award attorney’s fees under
the UDJA even though it had dismissed the plaintiff’s declaratory judgment claim
for lack of jurisdiction. See Feldman v. KPMG LLP, 438 S.W.3d 678, 685–86
(Tex. App.—Houston [1st Dist.] 2014, no pet.). Thus, the decisions in Graves and
Reeves do not preclude this Court from holding that the trial court maintained
jurisdiction to resolve the issue of attorney’s fees. We find Feldman, Castro, and
Zurita persuasive authority and agree that attorney’s fees may be awarded to a
party defending against a declaratory judgment action over which the trial court
26
has determined that it lacks subject matter jurisdiction over the plaintiff’s claim.
2. Devon’s argument that the plain language of the UDJA
precludes an award of attorney’s fees is unpersuasive.
Devon argues that section 37.009’s provision allowing for attorney’s fees in
any proceeding “under” the UDJA requires the trial court to first have subject
matter jurisdiction over the underlying controversy to have the authority to award
fees. To support this interpretation of the statute, Devon points to federal case law
interpreting substantive federal statutes. See Cliburn v. Police Jury Ass’n of La.,
Inc., 165 F.3d 315, 316 (5th Cir. 1999) (per curiam) (holding that trial court’s
award of attorney’s fees under ERISA6 was inconsistent with dismissal for lack of
subject matter jurisdiction because there was no ERISA “action” under the statute
and neither the plaintiff nor the defendant were a “participant, beneficiary, or
fiduciary” eligible to invoke the substantive statute’s attorney’s fees provision); In
re Knight, 207 F.3d 1115, 1117–18 (9th Cir. 2000) (relying in part on Cliburn to
hold that when district court dismissed ERISA action for lack of subject matter
jurisdiction, “there was no ERISA action” and therefore no jurisdiction to award
attorney’s fees and costs); W.G. v. Senatore, 18 F.3d 60, 64–65 (2d Cir. 1994)
(holding that when trial court lacked subject matter jurisdiction over plaintiff’s
substantive claims under IDEA,7 the court lacked jurisdiction to consider plaintiff’s
request for fees allowed in “any action or proceeding brought under this
subsection”).
Devon further argues that Texas courts have held that a trial court has
jurisdiction to award attorney’s fees only when a party has “properly invoked” the
UDJA. See Knighton v. Int’l. Bus. Machines Corp., 856 S.W.2d 206, 210 (Tex.
6
The Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001–1461.
7
The Individuals with Disabilities Education Act, 20 U.S.C. §§ 1400–1485.
27
App.—Houston [1st Dist.] 1993, writ denied) (“When a claimant . . . has properly
invoked the declaratory judgment statute, either party may plead for and obtain
attorney’s fees.”) (emphasis added); Hartford Cas. Ins. Co. v. Budget Rent-A-Car
Sys., Inc., 796 S.W.2d 763, 771 (Tex. App.—Dallas 1990, writ denied) (“[W]here
a claimant or a counter-claimant has properly invoked the declaratory judgment
statute, either party may plead for and obtain attorney’s fees.”) (emphasis added).
Devon also cites City of Houston v. Chenam, 01-08-01005-CV, 2010 WL 143476,
at *8 (Tex. App.–Houston [1st Dist.] Jan. 14, 2010, no pet.) (mem. op.), in which
the court held that the trial court lacked subject matter jurisdiction over the
underlying declaratory judgment action and thus “any claim for attorney’s fees
arising under it.” (emphasis added). According to Devon, the section of the UDJA
allowing an award of attorney’s fees is a subset of the larger Act, and a trial court
without jurisdiction under the Act cannot selectively assert subject matter
jurisdiction over the remedies section of the Act to award fees.
Initially, we note that decisions of the federal courts, other than the Supreme
Court, may be persuasive in a state court or a federal matter, but in this appeal they
are not binding. See J.M. Huber Corp. v. Santa Fe Energy Res., Inc., 871 S.W.2d
842, 846 (Tex. App.—Houston [14th Dist.] 1994, writ denied). Further, all of the
federal cases Devon cites involved the interpretation of federal substantive statutes.
In contrast, the UDJA is a procedural device that does not establish jurisdiction.
Chenault v Phillips, 914 S.W.2d 140, 141 (Tex. 1996) (per curiam) (“[T]he
[UDJA] is not a grant of jurisdiction, but ‘merely a procedural device for deciding
cases already within a court’s jurisdiction.’”) (quoting State v. Morales, 869
S.W.2d 941, 947 (Tex. 1994)). The court in In re Knight, on which Devon relies,
expressly acknowledged that courts can award fees even in the absence of subject
matter jurisdiction when those fees are authorized by statutes and rules that are
28
non-substantive. See 207 F.3d at 1117.
Under the UDJA, the trial court has authority to award attorneys’ fees and
costs “[i]n any proceeding under this chapter.” See Tex. Civ. Prac. & Rem.
Code § 37.009. By seeking declaratory relief, Devon initiated a “proceeding under
this chapter” that falls squarely within the plain language of Section 37.009. In
response, KCS properly pleaded an ancillary claim for relief under the statute
through its counterclaim for attorneys’ fees. See id. § 37.004. KCS’s fee claim was
likewise a “proceeding under this chapter” and thus remained viable even though
Devon’s action was properly dismissed.
Also unpersuasive is Devon’s claim that the trial court lacked jurisdiction to
award fees because the UDJA was not “properly invoked” from the outset. None of
the cases Devon relies on involve the absence of subject matter jurisdiction over
the primary claim. The references to properly invoking the statute in these cases
relate only to proper pleading and improper attempts to use the UDJA to recover
fees when they are not available under the substantive law that serves as the basis
for the plaintiff’s claims. See Knighton, 856 S.W.2d at 210–11 (holding that trial
court did not abuse its discretion to deny request for attorney’s fees when the
record reflected that the trial court recognized that both parties pursued legitimate
rights and therefore each should bear its own attorney’s fees); Hartford Cas. Ins.
Co., 796 S.W.2d at 772 (reversing judgment for plaintiff on contract claim and
declining to remand for consideration of equitable and just attorney’s fees under
UDJA when plaintiff’s additional request for declaratory relief was unnecessary
and improper). Similarly, City of Houston v. Chemam is not on point, because in
that case the court reversed a trial court’s denial of the City’s plea to the
jurisdiction when a plaintiff attempted to avoid governmental immunity by filing a
redundant declaratory judgment action and demand for attorney’s fees. See 2010
29
WL 143476, at *8.
Devon “invoked” the UDJA through its pleadings. KCS, therefore, was
eligible to recover its attorneys’ fees as a party defending a claim for declaratory
relief. See Allstate Ins. Co. v. Hallman, 159 S.W.3d 640, 641–43 (Tex. 2005);
Bradt, 905 S.W.2d at 759–60; see also Corcoran v. Atascocita Cmty. Improvement
Ass’n, Inc., No. 14-12-00982-CV, 2013 WL 5888127, at *9–12 (Tex. App.—
Houston [14th Dist.] Oct. 31, 2013, pet. denied) (mem. op.) (affirming award of
attorney’s fees to third-party defendant against whom appellants filed suit).
Therefore, regardless of whether Devon prevailed on its own claims, the trial court
had jurisdiction over KCS’s attorneys’ fee claim for the defense of that litigation.
3. Texas law does not recognize Devon’s distinction between
intervening mootness and mootness ab initio.
The Texas Supreme Court has recognized that a trial court retains
jurisdiction to award attorneys’ fees even if the merits of the dispute become moot.
See Hallman, 159 S.W.3d at 643; Camarena v. Tex. Emp’t Comm’n, 754 S.W.2d
149, 151 (Tex. 1988). Devon argues that these cases are distinguishable, however,
because they involve situations in which a trial court properly had subject matter
jurisdiction over a declaratory judgment action at the outset of the case but then
later, because of subsequent actions, lost jurisdiction. As support for its contention,
Devon cites to Samsung Electronics Co., Ltd. v. Rambus, Inc., 398 F. Supp. 2d
470, 481 (E.D. Va. 2005). In that case, the court stated that “[w]here a court is
divested of its subject matter jurisdiction over the substantive claim by virtue of
intervening mootness, it nonetheless retains jurisdiction to ‘consider collateral
issues after an action is no longer pending.’” Id. at 482. But the court went on to
state that, in contrast, “lack of subject matter jurisdiction over a substantive claim
30
serves ‘to bar an award of attorney’s fees where an action was moot at the time of
filing.’” Id. at 481.
We conclude that, under Texas law, the point in time when the court lacked
subject matter jurisdiction over Devon’s predicate claims is irrelevant to KCS’s fee
claim. Although Hallman and Camarena involved situations in which the court
lost subject matter jurisdiction during the pendency of the litigation because the
plaintiff’s claims became moot, the same analysis applies to a situation in which
the court lacks subject matter jurisdiction over the plaintiff’s claims from the
inception of the case. See Hallman, 159 S.W.3d at 642 (“[A] dispute over attorneys
fees is a live controversy.”) (citing Camarena, 754 S.W.2d at 151).
For example, this Court has recognized that attorneys’ fees may be awarded
to a defendant under the UDJA when the plaintiff who sought declaratory relief
lacked standing to assert its claims. See Galveston Cnty. Commissioner’s Court v.
Lohec, 814 S.W.2d 751, 754–55 (Tex. App.—Houston [14th Dist.] 1991), rev’d on
other grounds, 841 S.W.2d 361 (Tex. 1992) (remanding for determination of
attorneys’ fees under the UDJA to party defending claims brought by county
commissioner who lacked standing to sue in individual or official capacity); see
also Save Our Springs Alliance, Inc. v. City of Dripping Springs, 304 S.W.3d 871,
891 (Tex. App.—Austin 2010, pet. denied) (district court had jurisdiction to award
attorneys’ fees incurred in connection with defense of plaintiff’s claims over which
the court determined plaintiff lacked standing).
Standing, like mootness, is a component of subject matter jurisdiction. Tex.
Ass’n of Bus., 852 S.W.2d at 445. When a plaintiff lacks standing, the court lacks
subject matter jurisdiction. Id. at 444-45 (“[A] lack of standing deprives a court of
subject matter jurisdiction because standing is an element of such jurisdiction.”). In
Lohec, when this Court found that the intervening plaintiff lacked standing to
31
assert his declaratory judgment claims, this Court necessarily determined that it
lacked subject matter jurisdiction over his claims from their inception. 814 S.W.2d
at 754–55. Nevertheless, this Court held that the trial court had jurisdiction to
decide whether it would be equitable and just to award fees to the defendant. Id. at
755. Similarly, in City of Dripping Springs, in which the plaintiff argued, as Devon
does here, that the trial court lacked jurisdiction to award fees under the UDJA
because it lacked jurisdiction over the plaintiff’s claims, the Austin Court of
Appeals held that the court had authority to award fees. 304 S.W.3d at 891–92.
Devon’s argument and reliance on Samsung Electronics for the proposition
that a court has jurisdiction to award fees when a case becomes moot while the
action is pending, but not when the action is moot from its inception, is misplaced
because it is contrary to Texas law. According to the Texas cases interpreting the
UDJA on which KCS relies, the absence of subject matter jurisdiction over
Devon’s claims at the inception of the litigation has no effect on whether KCS
could recover its fees under the UDJA for defending against them when Devon’s
pleadings invoked the statute. We therefore sustain KCS’s cross-issue.
CONCLUSION
We hold that the trial court did not err in dismissing Devon’s claims for lack
of subject matter jurisdiction because Devon’s requested declaratory relief sought
an impermissible advisory opinion concerning title to Louisiana mineral interests.
We therefore affirm that part of the trial court’s judgment. We further hold that the
trial court did not lose subject matter jurisdiction over KCS’s counterclaim for
attorney’s fees when it determined that it lacked subject matter jurisdiction over
Devon’s request for declaratory relief, and therefore the trial court erred when it
dismissed KCS’ claim for attorney’s fees and costs under the UDJA. Accordingly,
we reverse and remand for the trial court to determine whether, in its discretion,
32
KCS is entitled to attorney’s fees and costs arising from its defense against
Devon’s declaratory judgment action.
/s/ Ken Wise
Justice
Panel consists of Chief Justice Frost and Justices Jamison and Wise (C.J. Frost,
concurring and dissenting).
33