Conglomerate Gas II, L.P. and Vancouver Sky Management, L.L.C. v. Gregg Gibb

COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 02-14-00119-CV
CONGLOMERATE GAS II, L.P. AND APPELLANTS AND APPELLEES
VANCOUVER SKY MANAGEMENT,
L.L.C.
V.
GREGG GIBB APPELLEE AND APPELLANT
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FROM THE 236TH DISTRICT COURT OF TARRANT COUNTY
TRIAL COURT NO. 236-237790-09
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MEMORANDUM OPINION1
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I. INTRODUCTION
Appellee and Cross-Appellant Gregg Gibb sued Appellants and Cross-
Appellees Conglomerate Gas II, L.P. and Vancouver Sky Management, L.L.C. to
1
See Tex. R. App. P. 47.4.
recover damages for Appellants’ failure to comply with an alleged agreement to
assign Gibb a back-in working interest in minerals under a tract of land that Gibb
helped Conglomerate CEO D. Alan Meeker sell. A jury ultimately sided with
Gibb, awarding him damages and attorneys’ fees. Appellants raise five issues
on appeal, but we address only their first because it is both meritorious and
dispositive. Gibb raises four conditional cross-points, but they are unpersuasive.
Therefore, as to Gibb’s cross-appeal, we will affirm, but as to Appellants’ appeal,
we will reverse and render a judgment that Gibb take nothing on his contract
claim.
II. BACKGROUND
Meeker is an oil and gas and real estate businessman based in Fort
Worth. At the times relevant to this case, he managed and conducted the
business operations of several Texas limited liability companies, including
Crestview Farm, L.L.C. and Crestview Resources, L.L.C. Meeker also served as
the CEO of Conglomerate, a Texas limited partnership formed to perform oil and
gas development and production in the Barnett Shale, and as the manager of
Vancouver Sky Management, L.L.C., Conglomerate’s general partner.2
2
Our reference to Appellant Conglomerate Gas II, L.P. as Conglomerate
should not be confused with Conglomerate Gas I, another entity that Meeker
formed.
2
Gibb is a licensed real estate broker with over forty years’ experience. He
focuses his business on large tracts of real estate located in and around the
Dallas/Fort Worth area.
Rock Creek Ranch is a 2,233-acre tract of undeveloped land located
approximately half an hour south of Fort Worth. As of the late 1980s, MTV Real
Estate Limited Partnership owned 100% of the surface estate and 50% of the
mineral estate. Rock Creek Ranch’s previous owners retained the other 50% of
the mineral estate and leased it to Carrizo Oil & Gas.
A. Rock Creek Ranch Transactions and Gibb’s Brokerage
Commission
Operating through Crestview Farm, Meeker contacted MTV in June 2004
and offered to purchase Rock Creek Ranch. Several months later, in October
2004, Crestview Farm and MTV entered into a Purchase and Sale Agreement
whereby MTV agreed to sell the entire surface estate of Rock Creek Ranch to
Crestview Farm for $20,097,000, or $9,000 per acre. MTV also agreed to deliver
an oil and gas mineral lease to Crestview Farm’s choice of either Crestview
Resources or Antero Resources.
Crestview Farm did not have the money to cover the $20 million purchase
price, but according to Meeker, he planned to collaborate with a partner to
develop the land. A development deal never came to be, so with the help of
retained Washington, D.C. attorney Ross Eichberg, Meeker searched for a buyer
3
to flip 1,983 acres of Rock Creek Ranch’s surface.3 MTV agreed to extend the
Purchase and Sale Agreement several times, and Crestview Farm paid MTV
$10,000 per month for the option to keep the Purchase and Sale Agreement
open.
In late April 2005, Eichberg contacted Gibb about finding a buyer for Rock
Creek Ranch. Gibb met Meeker sometime soon thereafter and toured the
property. In a May 1, 2005 letter that Meeker addressed to Gibb, Meeker set out
detailed information about Rock Creek Ranch, including the status of the mineral
interests.4 By the next day, May 2, 2005, Gibb had started working to sell the
tract even though he did not have a brokerage agreement in place. Gibb did so
because “[t]ime was of the essence. This property was ready to sell.”
One of the potential buyers for Rock Creek Ranch was the Texas General
Land Office (GLO), which at the time was seeking to purchase real estate for
investment. Jim Rose at the GLO had contacted Matthew Hurlbut at
Transwestern, a real estate brokerage firm, and Henry Knapek at Transwestern
contacted Gibb, whom Knapek knew from a previous transaction. On May 3,
2005, Gibb gave Knapek and Hurlbut a list of tracts that Gibb thought might be of
3
Meeker planned to keep the remaining 250 acres for his personal use.
4
Meeker stated that he and his brother “own an oil & gas company, which
has the lease commitment on the 1116 net acres that the Seller now owns. Our
lease has been committed to our exploration and development agreement with
our development partner.”
4
interest to the GLO. One of the tracts was Rock Creek Ranch. Gibb, Rose, and
the Transwestern brokers met and toured the property, and Gibb reached a
handshake deal with Transwestern that if Gibb sold Rock Creek Ranch to the
GLO, he would split the commission 50/50 with Transwestern.
On May 3, 2005, Eichberg emailed Gibb a brokerage agreement dated the
same day and between Crestview Farm, Gibb, and Roca Beda Properties, LLC,
a brokerage company used by Eichberg. The agreement stated that Crestview
Farm hires Roca Beda and Gibb to find a buyer; that Crestview Farm intended to
offer to sell Rock Creek Ranch’s surface estate, less 250 acres, for $21,213,500;
and that approximately $20,097,000 of the purchase price would be paid to the
owner of the property (MTV) pursuant to Crestview Farm’s option agreement.
Regarding a brokerage fee to be paid by Crestview Farm, the agreement
provided that the fee would equal the difference between the amount that
Crestview Farm paid MTV for the property ($20,097,000) and the amount that
Crestview Farm received for the resale of the property, with 80% of that figure
paid to Gibb and 20% paid to Roca Beda.5 However, if the fee was $500,000 or
less, then Gibb would “retain the entire Fee and Roca Beda [would] be ‘made
whole’ pursuant to a separate agreement with Crestview.” Gibb did not like the
offer—obviously, because depending on the resale price, which was unknown at
5
The agreement gave an illustration: “[I]f the actual purchase price paid by
Buyer is $21,213,500, then the Fee will be $1,116,500 (shared by Roca Beda
and [Gibb] per section 3 below)[.]”
5
that point, the potential existed that he could be paid a brokerage fee as little as
$1, and Gibb did not “work for $1 or $10 for something like this”—so he struck
through the portion of the “$500,000 or less” language and wrote in the margin,
“No expenses” and “The minimum fee will be 500,000.” Gibb returned the
document to Eichberg.
Meeker considered Gibb’s request for a minimum $500,000 commission
unacceptable. He claimed, “From the very beginning I had told [Gibb] . . . that all
expenses of the sale, including the brokerage commission, had to be borne by
the sale of the Rock Creek bed.” [Emphasis added.] Meeker reiterated this in an
email that he sent Gibb on May 16, 2005, regarding a brokerage commission
owed Gibb if Hillwood (another potential buyer) purchased Rock Creek Ranch.
Gibb understood Meeker’s email to mean that to make a commission, he would
“have to add it on . . . the base price [of] $20,097,000.”
By mid to late May 2005, Hillwood was still in the running to purchase
Rock Creek Ranch, but the GLO was the most promising prospect in Crestview
Farm’s opinion because it could pay cash, close quickly, and was not concerned
about obtaining zoning. Although Meeker opposed paying Gibb a minimum
commission, Gibb continued to ask for one after the May 16, 2005 email.
Meeker therefore decided that he “would try to come back to [Gibb] with an offer
that would . . . probably bridge a gap.”
6
On May 23, 2005, Meeker sent Gibb the following email:
This email is to notify you that I have agreed that you would be due
a commission under the terms of our commission agreement should
you be successful in closing a sale of the Rock Creek Ranch,
through Crestview Farm LLC (Crestview), to the [GLO]. Crestview
will not accept any offer lower than $20,097,000.00, nor will
Crestview bring any money to a closing table to pay brokerage fees.
All costs of the sale must be borne by the transaction and payable
out of funds at the closing brought by a buyer.
Additionally, in the event you are successful in selling the
surface of the Rock Creek Ranch to the [GLO], and [Conglomerate]
leases the Minerals under the Rock Creek Ranch, Conglomerate will
assign to you a 3% back in working interest on a well-by-well basis
on the acreage Conglomerate leases under the aforementioned
ranch.
Agreed and Accepted this 23[rd] day of May, 2005
/s/ D. Alan Meeker
CEO Conglomerate Gas II LP. [Emphasis added.]
Gibb understood the first paragraph to mean that Crestview Farm would not
guarantee a minimum commission. As for the second paragraph, Gibb called
Meeker and asked him what he meant by a 3% back-in working interest on a
well-by-well basis. According to Gibb, Meeker said, “[T]hat’s a lot more than your
cash commission on the surface.” Gibb responded, “Thank you very much.”
Gibb did not respond to the May 23, 2005 email in writing, but he continued
working towards closing a deal with the GLO.
On June 15, 2005, the GLO, on behalf of the Texas Permanent School
Fund, sent Gibb a nonbinding letter of intent to purchase 1,983 acres of Rock
7
Creek Ranch for $9,500 per acre. Crestview Farm counteroffered to sell the land
for $10,600 per acre, or $21,019,800, which the GLO accepted by July 9, 2005.6
By August 24, 2005, Crestview Farm and the GLO had signed a final
contract, and as of late August 2005, the contract was in the title company. One
provision stated, “Seller [Crestview Farm] has informed Buyer that, by separate
agreement, Seller is liable for a commission in respect of this transaction to [Gibb
and Roca Beda].” Another provision prohibited the GLO from paying more for
the land than its fair market value as determined by an appraisal. Thus, if the
property failed to appraise, the GLO could terminate the contract or the parties
could agree to lower the price.
By August 29, 2005, “a lot of agreements . . . [had] floated across [Gibb’s]
desk,” so he sent Eichberg a fax that asked him to “review our current
[brokerage] agreement,” to clean it up, to date and sign it, and to add a 3% back-
in working interest. The attachment contained a version of the May 3, 2005
brokerage agreement that Gibb had altered by requesting a $500,000 minimum
commission. Gibb did not hear back from Meeker or Eichberg, so on
September 15, 2005, Gibb emailed Meeker and again asked him to “restate our
6
Therefore, excluding costs, the difference between the price that
Crestview Farm agreed to pay MTV to purchase Rock Creek Ranch’s surface
($20,097,000) and the price that the GLO agreed to pay Crestview Farm for
1,983 acres of Rock Creek Ranch’s surface ($21,019,800) was $922,800, more
than the $500,000 minimum commission that Gibb had requested.
8
brokerage agreement to incorporate all of our agreements regarding commission
into one document.” Gibb again mentioned the 3% back-in working interest.
Meeker responded to Gibb’s request a week later, on September 22, 2005,
by emailing him a brokerage agreement that set Gibb’s commission at 80% of
the difference between Rock Creek Ranch’s purchase price and its sales price.
The agreement did not contain a provision for a 3% back-in working interest, but
it stated, “There is a separate agreement between Crestview and Gibb . . .
regarding the mineral rights of the Property.” Gibb did not sign the agreement
because according to him, “[i]t didn’t follow the first agreements or any of the
things we talked about.”
On October 3, 2015, Gibb sent Meeker a fax once again asking him to
“restate current in place commission agreements” and to “submit a[n] oil & gas
commission agreement as per your email.” Meeker called Gibb and told him that
“there was not a three percent back-in available and it looked like . . . the cash
commission would be enough to satisfy [Gibb’s] minimum desires, the 500,000.”
Meanwhile, Gibb and Transwestern executed a written memorandum of
understanding that Gibb would pay Transwestern 50% of the commission he
received for brokering the sale of Rock Creek Ranch to the GLO.
By October 20, 2005, the property had appraised for more than the sales
price, but the parties still did not have a final written brokerage agreement in
place. On October 28, 2005, Gibb emailed Eichberg a signed copy of the May 3,
9
2005 brokerage agreement that did not contain the interlineations that Gibb had
made when the agreement was originally circulated back in May, nor did it
contain a provision for a 3% back-in working interest. On November 7, 2005,
Gibb’s attorney sent Meeker a letter stating that it was Gibb’s understanding that
upon the closing of the sale of Rock Creek Ranch, he would receive a
commission equal to (1) 80% of the difference between the price that the GLO
paid Crestview Farm and the price that Crestview Farm paid MTV and (2) a 3%
back-in working interest on a well-by-well basis on the acreage that
Conglomerate leased under Rock Creek Ranch. Meeker asked his attorney to
try to work out a compromise with Gibb.
On November 17, 2005, Crestview Farm, Gibb, and Roca Beda signed an
agreement that Gibb and Roca Beda would be paid a commission in the amount
of $862,900, with 80% paid to Gibb and 20% paid to Roca Beda. However, the
agreement expressly reserved the issue of the 3% back-in working interest. That
same day, MTV closed on its sale of Rock Creek Ranch’s surface to Crestview
Farm, and the next day, Crestview Farm closed on its sale of 1,983 acres of
Rock Creek Ranch to the GLO. Gibb received a cash commission in the amount
of $690,305.74, which he split 50/50 with Transwestern.
B. Oil & Gas Activity
In March 2005, while Meeker was looking for a buyer for Rock Creek
Ranch, Conglomerate and Chesapeake Exploration Limited Partnership entered
10
into an Exploration and Development Agreement (EDA) whereby Conglomerate
agreed to offer Chesapeake the exclusive option to purchase all oil and gas
interests that Conglomerate, or one of its affiliates, acquired in the Barnett Shale.
Chesapeake’s election under the EDA was triggered only if Conglomerate
acquired at least 75% of a particular interest. In addition to paying Conglomerate
the acquisition costs plus $100/acre, if Chesapeake elected to acquire an
interest, it agreed to convey Conglomerate a 15% carried working interest and
the right to purchase a 15% look-back interest in each well drilled, that is, a total
30% mineral leasehold interest.
As contemplated by Crestview Farm’s Purchase and Sale Agreement with
MTV, on March 28, 2006, Crestview Resources leased MTV’s 50% mineral
interest under Rock Creek Ranch. Shortly thereafter, Crestview Resources
purchased Carrizo’s leases of the remaining 50% of the minerals under Rock
Creek Ranch. Crestview Resources subsequently assigned all of the leases to
Chesapeake, and on March 1, 2007, Chesapeake assigned Conglomerate a
15% carried working interest in minerals under Rock Creek Ranch.
Conglomerate also exercised its right under the EDA to acquire an additional
15% look-back interest in a number of wells. In July 2008, Conglomerate sold its
mineral interests under the EDA, including those under Rock Creek Ranch, to
Chesapeake.
11
C. Litigation
Gibb sued Appellants in May 2009 for breach of contract. He alleged in his
fifth amended original petition that as part of his commission for brokering the
sale of Rock Creek Ranch to the GLO, a valid and enforceable contract existed
whereby Conglomerate agreed to assign him a 3% back-in working interest on a
well-by-well basis if (i) he sold Rock Creek Ranch to the GLO and
(ii) Conglomerate leased the minerals under the tract, as set out in the May 23,
2005 email from Meeker to Gibb. Gibb averred that Conglomerate had breached
the agreement because although both conditions had been met, Conglomerate
had failed to assign him a 3% back-in working interest (or to remit the value of
the interest to him). Gibb also alleged claims for fraud, statutory fraud,
intentional interference with contract, and commingling, among others.
At trial, the parties disputed not only whether there was an agreement to
assign Gibb a 3% back-in working interest, but also the meaning of a 3% back-in
working interest on a well-by-well basis, the percentage of minerals under Rock
Creek Ranch that were subject to a 3% back-in working interest, the type of
working interest that Gibb was seeking, and the amount of damages resulting
from Appellants’ alleged breach.7 The trial court granted Appellants a directed
verdict on Gibb’s tort claims but let the jury resolve the contract dispute. The jury
7
The parties’ damages figures ranged from as low as $8,025 to as high as
$2.9 million, depending on the model used.
12
found that Gibb and Conglomerate had reached an agreement on a back-in
working interest, that Conglomerate had failed to comply with the agreement, and
that the breach had occurred on March 1, 2007. The jury awarded Gibb
damages in the amount of $1,833,599.38 and attorneys’ fees in the amount of
$1,743,363.26 for representation in the trial court and on appeal.
III. AGREEMENT FOR 3% BACK-IN WORKING INTEREST
Appellants argue in their first issue that the evidence is legally insufficient
to support the jury’s answer to question number one that an agreement existed
between Gibb and Conglomerate to assign Gibb a 3% back-in working interest
on a well-by-well basis on the acreage that Conglomerate leased under Rock
Creek Ranch. Relying on well-established contract-formation law that a
counteroffer operates as a rejection of the original offer, Appellants contend that
instead of accepting the May 23, 2005 offer for a back-in working interest, Gibb
rejected it by repeatedly insisting on a $500,000 guaranteed minimum
commission—the very same thing that Meeker had repeatedly refused to accept.
According to Appellants,
Simply put, Gibb would not agree to a brokerage agreement
that did not have a $500,000 guaranteed minimum commission
because of his fear that the sale would fall through or that the sale
price would be reduced. On the other hand, for the same reason,
Crestview Farm would not agree to any guaranteed commission.
There was simply no meeting of the minds [regarding the 3% back-in
working interest] because all offers and counter offers had been
rejected.
13
Gibb responds that legally sufficient evidence supports the jury’s answer to
question number one because Gibb accepted the May 23, 2005 email both
verbally and by performance and because Meeker admitted that an agreement
existed.
We may sustain a legal sufficiency challenge only when (1) the record
discloses a complete absence of evidence of a vital fact; (2) the court is barred
by rules of law or of evidence from giving weight to the only evidence offered to
prove a vital fact; (3) the evidence offered to prove a vital fact is no more than a
mere scintilla; or (4) the evidence establishes conclusively the opposite of a vital
fact. Uniroyal Goodrich Tire Co. v. Martinez, 977 S.W.2d 328, 334 (Tex. 1998),
cert. denied, 526 U.S. 1040 (1999); Robert W. Calvert, “No Evidence” and
“Insufficient Evidence” Points of Error, 38 Tex. L. Rev. 361, 362–63 (1960). In
determining whether there is legally sufficient evidence to support the finding
under review, we must consider evidence favorable to the finding if a reasonable
factfinder could and disregard evidence contrary to the finding unless a
reasonable factfinder could not. Cent. Ready Mix Concrete Co. v. Islas, 228
S.W.3d 649, 651 (Tex. 2007); City of Keller v. Wilson, 168 S.W.3d 802, 807, 827
(Tex. 2005).
A valid contract is one of the essential elements of a breach-of-contract
claim. See Rice v. Metro. Life Ins. Co., 324 S.W.3d 660, 666 (Tex. App.—Fort
Worth 2010, no pet.). Parties form a binding contract when the following
14
elements are present: (1) an offer, (2) an acceptance in strict compliance with
the terms of the offer, (3) a meeting of the minds, (4) each party’s consent to the
terms, and (5) execution and delivery of the contract with the intent that it be
mutual and binding. Id. at 670. An acceptance must be clear and definite and
may not change or qualify the material terms of the offer. Amedisys, Inc. v.
Kingwood Home Health Care, LLC, 437 S.W.3d 507, 513‒14 (Tex. 2014);
Coleman v. Reich, 417 S.W.3d 488, 491 (Tex. App.—Houston [14th Dist.] 2013,
no pet.). Stated otherwise, an acceptance must be identical with the offer to
make a binding contract. Schriver v. Tex. Dep’t of Transp., 293 S.W.3d 846, 851
(Tex. App.—Fort Worth 2009, no pet.). A purported acceptance that changes or
qualifies an offer’s material terms constitutes a rejection and counteroffer rather
than an acceptance. Parker Drilling Co. v. Romfor Supply Co., 316 S.W.3d 68,
74 (Tex. App.—Houston [14th Dist.] 2010, pet. denied). Whether the parties
intended to enter into a binding agreement is often a question of fact. Foreca,
S.A. v. GRD Dev. Co., 758 S.W.2d 744, 746 (Tex. 1988).
The May 23, 2005 email constituted one offer with two material terms—a
cash commission in the first full paragraph and a back-in working-interest
commission in the second full paragraph. Meeker acknowledged at trial that in
the first full paragraph, he was “reasserting” his offer of a cash commission for
80% of the difference between the purchase price and sale price of Rock Creek
Ranch. And regarding the language that Crestview Farm would not “bring any
15
money to a closing table to pay brokerage fees” and that “[a]ll costs of the sale
must be borne by the transaction and payable out of funds at the closing brought
by a buyer,” Gibb acknowledged at trial that he understood this to mean that
Meeker would not guarantee a minimum commission, something that Gibb had
expressly sought several weeks earlier when he made the interlineations to the
May 3, 2005 proposed brokerage agreement. The second full paragraph set out
the term for a 3% back-in working interest on a well-by-well basis on the acreage
that Conglomerate leased under Rock Creek Ranch. Therefore, for a valid and
binding agreement to exist between Gibb and Conglomerate for a 3% back-in
working interest, Gibb must have accepted the May 23, 2005 email offer without
changing or qualifying either of its material terms. See Amedisys, 437 S.W.3d at
513‒14. He did not do so.
Meeker testified that there was no agreement reached with Gibb on a
back-in working interest because Gibb “would always counter saying he wanted
and needed a $500,000 minimum on his commission.” Specifically, Meeker
testified that after sending Gibb the May 23, 2005 email, Gibb “came right back”
and said that he wanted a minimum commission. Meeker thought that the issue
had been resolved once Crestview Farm and the GLO reached an agreement for
the sale of Rock Creek Ranch on July 9, 2005—because 80% of the difference
between the price to purchase the land and the price to sell it was more than the
$500,000 that Gibb had demanded—but after the final contract arrived in late
16
August—and contained several contingencies to closing, including that the
property appraise for at least the sale price—Gibb called Meeker the very next
day and “started demanding a half million dollar minimum again,” as reflected in
Gibb’s August 29, 2005 fax to Eichberg. After Meeker sent Gibb the
September 22, 2005 email offer, Gibb “countered it by requesting a minimum
commission again.” Even as late as early October, Gibb was still requesting a
minimum commission, which apparently led to a heated telephone discussion
between Gibb and Meeker. According to Meeker,
I told Mr. Gibb emphatically that I will not nor will I ever agree to a
minimum commission, that I’m happy to pay him 80 percent of the
difference, that the three percent back-in was offered up as a
compromise and a bridge that he was trying to do the $500,000
minimum.
Thus, according to Meeker, Gibb “continued time and again every month all the
way through the end of October asking for a $500,000 minimum.”
Gibb’s relevant testimony was mostly no different. He admitted that he
had asked for a minimum commission in the days after receiving the May 23,
2005 email offer, and even after then. Gibb testified,
A. I was going to ask for it for quite a while, yes.
Q. You continued to ask for it in the days following
May 23rd, 2005, through at least the time of the State’s letter of
intent in June, correct?
A. I think even later than that.
Q. So continually you refused to agree to the first part of
Mr. Meeker’s offer?
17
A. That was Mr. Meeker’s terms.
Q. It was. True. And you continually refused to agree to
the first one?
A. I’m still looking for a brokerage fee. I need a base of
500,000.
....
Q. You still needed your base on May 23rd, 2005?
A. Yes, sir.
Q. You still needed your base in June of 2005?
A. Yes, sir.
Q. You still needed your base in July of 2005?
A. Yes, sir.
Q. You still needed your base in August of 2005?
A. Yes, sir.
Q. You still needed your base in September of 2005?
A. Yes, sir.
Q. And you continued to request it, correct?
A. Yes, sir.
Gibb confirmed that he continued working on the deal even though he did not
“want to accede to a contract that didn’t have a minimum and [Conglomerate
was] unwilling to accede to a contract that did.”
18
Gibb argues that the evidence does not conclusively establish that he
rejected the May 23, 2005 email offer by counteroffering for a minimum
commission because the “later requests” that he made pertained to buyers other
than the GLO. Gibb directs us to his testimony that after receiving the May 23,
2005 email, he “was working on the GLO deal knowing that there was no
minimum commission being paid on that.” He testified,
. . . In my mind, I was moving a little further ahead in trying to
see, in my mind, if the State was going to close this or not. I still was
trying to get a minimum commission to cover me in case Hillwood
would be coming in right behind this and pick it up. I would like to
have a base on that is what I was meaning. [Emphasis added.]
We italicized parts of Gibb’s testimony for a reason. It is well established
that in determining whether parties reached a meeting of the minds, objective
manifestations of intent to be bound are relevant but unexpressed subjective
intentions are not. Harrison v. Williams Dental Grp., P.C., 140 S.W.3d 912, 916
(Tex. App.—Dallas 2004, no pet.). Indeed, contract-formation cases commonly
recite that the determination of a meeting of the minds, and thus offer and
acceptance, is based on the objective standard of what the parties said and did
and not on their subjective state of mind. See, e.g., Baroid Equip., Inc. v. Odeco
Drilling, Inc., 184 S.W.3d 1, 17 (Tex. App.—Houston [1st Dist.] 2005, pets.
denied). Gibb’s testimony about what he was thinking when he made later
requests for a minimum $500,000 commission is therefore irrelevant; Meeker
could not have known what was going on in Gibb’s head when he requested a
19
minimum commission. Gibb contends that the letter from his attorney on
November 7, 2005, and the final agreement for a cash commission on
November 17, 2005, are “[c]onsistent with [his] position that he only continued to
request a minimum commission for buyers other than the GLO” because neither
document mentioned a minimum commission. However, the November 2005
letter and agreement are no objective bases upon which Meeker could have
concluded that Gibb sought a minimum commission for buyers other than the
GLO because, simply enough, they were not part of the circumstances
constituting what Gibb said and did when he requested the minimum
commission. See id. Moreover, there was no reason to mention a minimum
commission in either document because by November 7, 2005, the property had
appraised for more than the sales price, and the final agreement reflected exactly
that—the parties’ final agreement, not some term that may or may not have been
involved in the negotiations leading up to the agreement.
Gibb argues alternatively that the evidence does not conclusively establish
that he rejected the May 23, 2005 email offer because he specifically testified
that he neither countered nor rejected Meeker’s May 23, 2005 email. The
testimony went like this:
Q. Okay. Did you . . . counter any of this?
A. No, sir.
....
20
Q. Okay. Did you reject it?
A. No, sir.
We absolutely agree with Appellants that this testimony is conclusory. See
Coastal Transp. Co. v. Crown Cent. Petroleum Corp., 136 S.W.3d 227, 233 (Tex.
2004) (reasoning that bare conclusions, even if unobjected to, cannot constitute
probative evidence); see also Natural Gas Pipeline Co. of Am. v. Justiss, 397
S.W.3d 150, 156 (Tex. 2012) (stating that Coastal’s holding is not limited to
expert testimony). Therefore, it is no evidence.
Gibb argues that there is legally sufficient evidence of an agreement for a
3% back-in working interest based on certain objective actions and
communications of the parties, including (i) that Gibb accepted the May 23, 2005
email offer when he called Meeker on the telephone, questioned him about a 3%
back-in working interest, and told him, “Thank you very much”; (ii) that Gibb
accepted the May 23, 2005 email offer by performance, i.e., by securing the sale
of Rock Creek Ranch to the GLO; and (iii) that Gibb admitted the existence of an
agreement in his September 22, 2005 brokerage-agreement offer. Two contract-
formation rules foreclose all three of Gibb’s arguments.
As we have already explained, an acceptance must be identical with the
offer to make a binding contract. Schriver, 293 S.W.3d at 851. In other words,
[F]or an offer and an acceptance to constitute a contract, the
acceptance must meet and correspond with the offer in every
respect, neither falling within nor going beyond the terms proposed,
21
but exactly meeting (those terms) at all points and closing with them
just as they stand.
Uniroyal, Inc. v. Chambers Gasket & Mfg. Co., 380 N.E.2d 571, 575 (Ind. Ct.
App. 1978). Therefore, to the extent that Gibb purported to accept the 3% back-
in working interest during his phone call with Meeker, the partial acceptance was
legally ineffective because the evidence conclusively demonstrates that Gibb
rejected Meeker’s offer for a cash commission, the other material term contained
in the May 23, 2005 email offer.8
8
Gibb testified,
Q. . . . But we established this morning that both terms
were not agreed to back in May at a minimum, correct?
A. Yes, sir.
Q. Because you would not agree to Mr. Meeker’s first term,
right?
A. Yes, sir.
Meeker testified,
Q. Now, after you sent Exhibit 60 [the May 23, 2005 email
offer], did the matter of a minimum commission drop?
A. No.
Q. Why do you say that?
A. Because he came right back and said, Well, I’ll take
both. I want everything. I want a minimum commission and I want a
mineral interest.
22
As for Gibb’s acceptance-by-performance and admission arguments, a
party cannot accept an offer that has been withdrawn or that has already been
rejected.9 See, e.g., Legal Sec. Life Ins. Co. v. Ward, 373 S.W.2d 693, 698 (Tex.
Civ. App.—Austin 1963, no writ); see also Crews v. Sullivan, 113 S.E. 865, 867
(Va. 1922) (“The other party, having once rejected the offer, cannot afterwards
revive it by tendering an acceptance of it.”). Thus, Gibb could not accept by
performance an offer that he had previously rejected by making a counteroffer for
a minimum cash commission, nor could Meeker’s purported “admission” in the
September 22, 2005 email that a separate agreement existed for a mineral
interest have any legal relevance in light of Gibb’s prior rejection of the May 23,
2005 email offer.10
The evidence is legally insufficient to support the jury’s answer to question
number one that an agreement existed between Gibb and Conglomerate to
assign Gibb a 3% back-in working interest on a well-by-well basis on the acreage
that Conglomerate leased under Rock Creek Ranch. See Cent. Ready Mix
Concrete Co., 228 S.W.3d at 651; City of Keller, 168 S.W.3d at 807; Uniroyal
9
The charge instructed the jury that “[o]nce an offer has been rejected, the
offeree no longer has the power to accept it and cannot revive the offer by
tendering acceptance by performance.”
10
Gibb agreed at trial—and the other evidence showed—that the May 23,
2005 email was the only offer for a 3% back-in working interest.
23
Goodrich Tire Co., 977 S.W.2d at 334. Accordingly, we sustain Appellants’ first
issue and do not reach their remaining issues. See Tex. R. App. P. 47.1.
IV. GIBB’S CONDITIONAL CROSS-POINTS
In four conditional cross-points, Gibb argues that the trial court erred by
directing a verdict against him on his fraud, intentional interference, and
commingling claims and by submitting jury question number four, which asked
the jury to determine the date that Appellants breached the contract.
A. Directed Verdict
A directed verdict is proper only under limited circumstances: (1) when the
evidence is insufficient to raise a material fact issue, or (2) when the evidence
conclusively establishes the right of the movant to judgment or negates the right
of the opponent. See Prudential Ins. Co. of Am. v. Fin. Review Servs., Inc., 29
S.W.3d 74, 77 (Tex. 2000); Farlow v. Harris Methodist Fort Worth Hosp., 284
S.W.3d 903, 919 (Tex. App.—Fort Worth 2009, pet. denied). In reviewing a
directed verdict, we follow the standards for assessing legal sufficiency of the
evidence. See City of Keller, 168 S.W.3d at 823. We review the evidence in the
light most favorable to the person suffering the adverse judgment, and we must
credit favorable evidence if reasonable jurors could and disregard contrary
evidence unless reasonable jurors could not. Id. at 827; see also Exxon Corp. v.
Emerald Oil & Gas Co., 348 S.W.3d 194, 215 (Tex. 2011).
24
1. Common-Law Fraud and Statutory Fraud
Reliance is a necessary element of common-law fraud. Grant Thornton
LLP v. Prospect High Income Fund, 314 S.W.3d 913, 923 (Tex. 2010). To
prevail, a plaintiff must demonstrate that he justifiably relied upon a false and
material misrepresentation to his detriment. Johnson & Higgins of Tex., Inc. v.
Kenneco Energy, Inc., 962 S.W.2d 507, 524 (Tex. 1998). The elements of
statutory fraud under the business and commerce code are essentially identical
to the elements of common-law fraud except that the statute does not require
proof of knowledge or recklessness as a prerequisite to recovering damages.
See Tex. Bus. & Com. Code Ann. § 27.01(a) (West 2015); Brush v. Reata Oil &
Gas Corp., 984 S.W.2d 720, 726 (Tex. App.—Waco 1998, pet. denied).
Gibb argues that Meeker made a false representation (1) in his May 1,
2005 letter when he stated that he and his brother owned an oil and gas
company that had the lease commitment on the minerals owned by MTV and
(2) in his May 23, 2005 email, in which Meeker promised Gibb a 3% back-in
working interest. Gibb states that in those documents, Meeker and
Conglomerate represented that Conglomerate had the right to lease the minerals
and would be the leasing entity, but because the Purchase and Sale Agreement
between Crestview Farm and MTV only allowed Crestview Resources or Antero
Resources to lease the minerals, “Meeker could not utilize Conglomerate as the
lessee, and what he promised Gibb in the May 23 email was impossible.”
25
We disagree with Gibb that Meeker’s promise for a 3% back-in working
interest in the May 23, 2005 email was “impossible” because Conglomerate
acquired a 30% lease interest in the Rock Creek Ranch minerals. But even more
than that, there is no evidence of detrimental reliance by Gibb. Gibb argues that
he detrimentally relied on the May 23, 2005 representation because he “gave up
half of his cash commission and believed that he would receive a working
interest instead.” However, Gibb confirmed at trial that in deciding to represent
the property as a broker, he did not rely on Meeker’s representation in the May 1,
2005 letter about leasing MTV’s minerals. Indeed, at that point, Meeker had not
yet made the May 23, 2005 offer for a working interest. As for the May 23, 2005
representation for a 3% back-in working interest, Gibb may very well have
“believed that he would receive a working interest,” but when he did not, it was
not because Meeker could not utilize Conglomerate as the lessee of MTV’s
minerals—the primary fact underlying Gibb’s fraud claim, which Appellants also
contest—but because Meeker disagreed that the parties had reached an
agreement for a 3% back-in working interest. See, e.g., Gray v. Waste Res.,
Inc., 222 S.W.3d 522, 525 (Tex. App.—Houston [14th Dist.] 2007, no pet.)
(reasoning that “Gray, as a plaintiff, needed to show he failed to purchase his pro
rata shares of WRI under the equity recapitalization plan because of his reliance
on a misrepresentation by WRI” but that the evidence showed that “Gray
attempted to borrow money in order to purchase the shares, but was unable to
26
secure financing”). Along those same causal-connection lines, Gibb did not lose
half of his commission because he relied on Meeker’s alleged “impossible”
promise for a 3% back-in working interest; he “gave up half of his cash
commission” because he agreed to split it with Transwestern, who brought the
GLO to the table. In fact, Gibb testified that splitting his commission was
something that he welcomed,
Q. Now, the only potential purchaser . . . that you had
brought [of] the three who could close within a year was the State?
A. Was the State, correct.
Q. And you testified yesterday, I believe, that somehow, as
I recall, it harmed you to have to sell the property to the State rather
than another potential purchaser because you had to split your
commission with the folks at Transwestern, right?
A. I didn’t use the word “harm.”
Q. Well, . . . was it a negative fact for you? Was it
somehow a problem for you, that selling to the State would require
you to split your commission with the folks at Transwestern?
A. It did not upset me or anything like that. I was happy to
see the State have the cash to do it. I did not mind at all splitting, as
I do most of the time, with a co-broker.
Q. And that’s my question. Selling to the State and having
to split your commission was not at all unusual, was it?
A. Not really.
Q. In fact, at least 80 percent of the time you have to . . .
split your commission with another broker?
A. Yes. And I welcome that.
27
Gibb also alleged a claim for fraud by nondisclosure based on the same
allegations that Meeker failed to disclose to Gibb that only Crestview Resources
or Antero Resources could lease MTV’s minerals. Fraud by nondisclosure is
simply a subcategory of fraud, because when a party has a duty to disclose, the
nondisclosure may be as misleading as a positive misrepresentation of facts.
Schlumberger Tech. Corp. v. Swanson, 959 S.W.2d 171, 181 (Tex. 1997).
Gibb’s nondisclosure claim therefore fails for the same reason that his common
law and statutory fraud claims failed—there is no evidence raising a material fact
issue that Gibb relied to his detriment on Meeker’s purported misrepresentations
about Conglomerate’s right to lease MTV’s minerals. The trial court did not err
by directing a verdict in favor of Appellants on Gibb’s fraud claims, and we
overrule his first conditional cross-point.
2. Intentional Interference with an Existing Contract
Gibb’s interference claim relied upon the same facts as his fraud claims.
He contends that Meeker intentionally interfered with the May 23, 2005 email
because when he drafted it—and identified Conglomerate as the leasing entity in
the second paragraph—he had full knowledge that only Crestview Resources or
Antero Resources could lease MTV’s minerals under Rock Creek Ranch
pursuant to the Purchase and Sale Agreement between Crestview Farm and
MTV.
28
Gibb’s interference action required proof of the following: (1) the existence
of a contract subject to interference; (2) willful and intentional interference;
(3) interference that proximately caused damage; and (4) actual damage or loss.
See Powell Indus., Inc. v. Allen, 985 S.W.2d 455, 456 (Tex. 1998). Regarding
causation, Gibb argues that “Meeker’s interference was the proximate cause of
damages to Gibb because it allowed Meeker to take the position that the
conditions of the May 23 email did not occur, which was his justification for not
conveying Gibb his mineral interest.” [Emphasis added.] This reasoning is
inconsistent with the trial record, which even Gibb acknowledges on a different
page of his brief. In a footnote, Gibb states,
During the course of the litigation, Meeker argued multiple
times that Conglomerate could not have breached the May 23 email
because one of its conditions did not occur: Conglomerate did not
lease the minerals. However, Meeker ultimately changed his
position for trial and admitted that if the parties agreed to the May 23
email, then its conditions were met, and Gibb should have been
assigned a mineral interest. [Emphasis added.] [record citations
omitted]
Our assessment of the evidence is exactly the same. Meeker justified not
assigning Gibb a back-in working interest because, in his opinion, no agreement
existed for a mineral interest, not because one of the conditions in the second full
paragraph of the May 23, 2005 email did not occur. In fact, Meeker even
conceded that had there been a valid agreement to assign Gibb a 3% back-in
working interest, the assignment would have been due on March 1, 2007, when
Chesapeake assigned Conglomerate a 15% carried working interest in minerals
29
under Rock Creek Ranch. There is no evidence that Gibb’s alleged damages
were proximately caused by Meeker’s identifying Conglomerate as the leasing
entity in the May 23, 2005 email. Therefore, the trial court did not err by directing
a verdict in favor of Appellants on Gibb’s claim for intentional interference with an
existing contract.11
3. Commingling
The doctrine of commingling of goods attaches when the commingled
goods of different parties are so confused that the property of each cannot be
distinguished. Humble Oil & Refining Co. v. West, 508 S.W.2d 812, 818 (Tex.
1974). Gibb pleaded a commingling claim “because Conglomerate sold virtually
all of its interests in the oil and gas wells to Chesapeake in a cash sale. [] The
sale included Conglomerate’s (and Gibb’s) interest under the EDA in the Rock
Creek Ranch minerals.” [Emphasis added.] However, Gibb had no interest in
any part of the mineral interests that Conglomerate ultimately sold to
Chesapeake in 2008 because no enforceable agreement for a 3% back-in
11
Gibb states in his brief that “Meeker orchestrated Crestview Resources
becoming the lessee instead of Conglomerate in an attempt to deny Gibb the
mineral interest he was promised under the May 23 email.” [Emphasis added.] If
this is an alternative theory of interference, then it is unpersuasive, and a directed
verdict was proper, because the evidence showed that Conglomerate had not
been formed at the time that Crestview Farm entered into the Purchase and Sale
Agreement with MTV and identified Crestview Resources as one of two potential
lessees of MTV’s minerals.
30
interest existed. The trial court therefore properly directed a verdict on Gibb’s
commingling claim. We overrule his third conditional cross-point.12
B. Jury Question Number Four
Gibb argues that the trial court erred by submitting jury question number
four, the date that Appellants breached the contract. Gibb conditions this
argument on a determination by this court that there was no or insufficient
evidence of damages as of March 1, 2007, the date the jury found that
Appellants had breached the May 23, 2005 email. We did not reach that issue
because we sustained Appellants’ first issue. Moreover, for that same reason,
any error in submitting the question was harmless. We overrule Gibb’s fourth
conditional cross-point.
V. CONCLUSION
Having overruled Gibb’s conditional cross-points, we affirm the trial court’s
judgment as to Gibb’s tort claims. Having sustained Appellants’ first issue, we
reverse the trial court’s judgment and render judgment that Gibb take nothing on
his breach-of-contract claim. See Tex. R. App. P. 43.2(c).
/s/ Bill Meier
BILL MEIER
JUSTICE
12
Gibb also argues that the trial court abused its discretion by admitting
Plaintiff’s Exhibit 243, which “was probative of [his] commingling theory,” but any
error was harmless because the trial court properly granted a directed verdict on
Gibb’s commingling claim.
31
PANEL: WALKER and MEIER, JJ.; and CHARLES BLEIL (Senior Justice,
Retired, Sitting by Assignment).
DELIVERED: August 6, 2015
32