Transtexas Gas Corporation v. Forcenergy Onshore, Inc.

    NUMBER 13-02-387-CV

COURT OF APPEALS

THIRTEENTH DISTRICT OF TEXAS

CORPUS CHRISTI - EDINBURG

---

  TRANSTEXAS GAS CORPORATION,                                         Appellant,

v.

FORCENERGY ONSHORE, INC.,                                                 Appellee.  

---

  On appeal from the 329th District Court

of Wharton County, Texas.

---

  MEMORANDUM OPINION

Before Justices Rodriguez, Castillo, and Wittig   

Memorandum Opinion by Justice Castillo

         This is an action to quiet title between two successors in interest to an oil and gas interest. Appellee Forcenergy Onshore, Inc. ("Forcenergy") brought suit against appellant TransTexas Gas Corporation ("TransTexas") to remove a cloud on Forcenergy's title. By five issues, TransTexas contends the trial court committed error: (1) in granting Forcenergy's motion for summary judgment that Forcenergy holds title to the disputed mineral interest; (2) in refusing to grant TransTexas's motion for summary judgment that TransTexas holds title to the disputed mineral interest; (3) by declaring that Forcenergy is the operator of the mineral interests at issue; (4) in refusing to grant TransTexas's motion for summary judgment on the operatorship issue; and (5) by awarding Forcenergy attorney fees under the Uniform Declaratory Judgments Act (the "UDJA"). We reverse and render in part and remand in part.

I. RELEVANT FACTS

         This is a memorandum opinion. The parties are familiar with the facts. We will not recite them here except as necessary to advise the parties of our decision and the basic reasons for it. See Tex. R. App. P. 47.4.

         At the heart of the parties' dispute are three related documents: (1) a "Letter Exchange Agreement" dated September 18, 1984; (2) a "Farmout Agreement" dated September 14, 1984; and (3) an "Assignment of Oil, Gas, and Mineral Lease" dated

October 10, 1984. The three documents memorialized an earlier agreement between TransTexas and Forcenergy's predecessors in interest to exchange assignments of equivalent mineral rights and for Forcenergy to farm out other lease interests to TransTexas. In the Letter Exchange Agreement, Forcenergy agreed to trade its deep rights (those minerals at a depth of more than 8,500 feet) in one leasehold for TransTexas's shallow rights in another leasehold. At issue is title to the deep mineral rights subject to the Letter Exchange Agreement.

A. The Parties' Agreements

1. The Letter Exchange Agreement

         The Letter Exchange Agreement stated that it "shall evidence the agreement made as of September 7, 1984 between [Forcenergy] and [TransTexas] relative to lands in Wharton County, Texas." It was not filed of record. It provided in relevant part:

[Forcenergy] and [TransTexas] agree to exchange assignments covering certain interests over certain lands on the following terms and conditions.

I. [Forcenergy] Assignments:

A.[Forcenergy] agrees to assign or cause to be assigned to [TransTexas] the following interests in the following leases insofar and only insofar as said leases cover depths below 8500':

1)An 83.75% Working Interest in and to those leases colored red on the attached plat.

2)83.75% of 75% Working Interest in and to those leases colored blue on the attached plat.

3)100% Working Interest in and to those leases colored green on the attached plat.

* * *

C.  It is hereby understood and agreed that [TransTexas] must reassign to [Forcenergy] any and all acreage which has not been allocated to a producing or proration unit, as prescribed or permitted by the State of Texas, or included within a pooled unit, whichever is larger, within 3 years from the date of the assignment. However, should [TransTexas] establish production below 8500 feet within the area outlined in red on the attached plat within 3 years from the date of the assignment, then this 3 year period shall be automatically extended for an additional 2 years.

* * *

II.[TransTexas] Assignments:

A. [TransTexas] agrees to assign to [Forcenergy] all of its right, title and interest in and to those lands colored yellow on the attached plat insofar and only insofar as said leases cover depths from the surface of the earth to 8500 feet. . . .

B.It is agreed to by the parties hereto that [Forcenergy] will reassign to [TransTexas] any and all acreage assigned to [Forcenergy] which has not been allocated to a pooled or proration unit, whichever is larger within 3 years from the date of the assignment or on or before 60 days prior to the expiration of the assigned lease(s), whichever occurs first.

         2. The Farmout Agreement

         Like the Letter Exchange Agreement, the Farmout Agreement also stated that it "shall evidence the general terms of the agreement made September 7, 1984 between [Forcenergy] and [TransTexas] relative to lands in Wharton County, Texas." Like the Letter Exchange Agreement, the Farmout Agreement was not recorded of record. It provided in relevant part:

[TransTexas] agrees to farmout to [Forcenergy] all of its right, title and interest in and to the leases within the Areas designated as Areas I, II and III on the attached plat under the following general terms:

6)[Forcenergy] shall have the right and option to earn either one or both of the remaining undrilled Areas by timely commencing a Test Well (Option Well), and completing the same as a well capable of commercial production, on each of the then undrilled Areas in the same manner and to the same objective depth as the Initial Test Well. [Forcenergy's] option to earn shall terminate unless the first well drilled on each Area is spudded within 180 days from completion, either as a dry hole or as a producer, of the first Test Well (or Successive Well) on the previously drilled block. [Forcenergy] shall earn and Conoco shall retain the same rights as set out under the Initial Test Well above with respect to each additional Area.

* * *

This letter shall in no way be construed as the final agreement between the parties and neither party shall have any obligations until the execution of the formal farmout agreement.

3. The Assignment of Oil, Gas and Mineral Lease

         The Assignment of Oil, Gas and Mineral Lease from Forcenergy to TransTexas covering the deep rights was dated October 10, 1984 and filed of record in the Wharton County deed records. It read as follows:

[Forcenergy], for and in consideration of the sum of TEN AND NO/100 DOLLARS ($10.00), and other good and valuable consideration, the receipt of which is hereby acknowledged, and, in further consideration of the reservations, terms and conditions hereof, do hereby SELL, TRANSFER, ASSIGN and CONVEY unto [TRANSTEXAS]. . . , the following interests of the below named parties representing the entire interest owned by each party, . . . INSOFAR AND ONLY INSOFAR as such lease covers rights below 8,500 feet below the surface of the earth. . . .

This Assignment is further made subject to the terms and conditions of that certain Letter Agreement dated September 18, 1984, between [Forcenergy] and [TransTexas], of which reference is made for all purposes and which is incorporated herein by reference to the same extent as if a copy was attached herein in its entirety. . . .   

B. The Parties' Performance

         Forcenergy successfully produced in the shallow zone. TransTexas farmed out drilling operations in the deep zone. Those efforts did not lead to successful production. Years passed without any reassignment of the deep rights from TransTexas to Forcenergy. On March 23, 2000, Forcenergy demanded that TransTexas reassign the deep rights to Forcenergy pursuant to the Letter Exchange Agreement. This litigation resulted.

C. The Claims and Cross-Claims

         Forcenergy brought suit to remove the cloud on its title to the deep mineral rights and to quiet title, alleging disparagement of title and causes of action under the Texas Natural Resources Code. Forcenergy later asserted in an amended petition the right to participate in a pooled unit formed by TransTexas. Forcenergy also sought to recover its attorney fees. TransTexas counterclaimed for slander of title against Forcenergy. It sought a declaratory judgment that TransTexas held title to the deep rights and that Forcenergy was not the operator of the deep rights. The trial court severed Forcenergy's claims under the Texas Natural Resources Code. TransTexas non-suited its slander-of-title claim. On the filing of motions for summary judgment by both sides, the trial court denied TransTexas's claim that Forcenergy was not the operator of the deep rights. It declared that Forcenergy held good, superior, and equitable title to the deep rights. The trial court awarded attorney fees to Forcenergy on the operatorship issue in the amount of $350,000.00. This appeal ensued.

                               II. SUMMARY-JUDGMENT ANALYSIS

A. Summary-Judgment Grounds

         Both parties brought multiple traditional motions for summary judgment. TransTexas asserted that: (1) TransTexas was not required to reassign the deep rights to Forcenergy; (2) Forcenergy's claims are barred by limitations; and (3) Forcenergy is not the operator with respect to the deep rights. Forcenergy asserted that: (1) Forcenergy's title in and to the deep rights is superior to TransTexas's title; (2) Forcenergy holds title to the deep rights free and clear from any and all claims, liens, or encumbrances arising by, through, or under TransTexas or as a result of TransTexas's actions; (3) TransTexas's claim of title to the deep rights is wrongful and without justification; (4) Forcenergy is entitled to removal of TransTexas's claims as clouds or encumbrances on Forcenergy's title to the deep rights; (5) Forcenergy is entitled to quiet title to its interest in the deep rights as against TransTexas and any party claiming by, through, or under TransTexas; (6) Forcenergy is entitled to a declaration that the statute of limitation does not apply to its title claims or, alternatively, that it timely brought suit within four years of the date on which TransTexas assumed, agreed, and bound itself to perform the reassignment obligations under the Letter Exchange Agreement.

B. Traditional Summary-Judgment Standard of Review

          The function of summary judgment is to eliminate patently unmeritorious claims and defenses, not to deprive litigants of the right to a jury trial. Alaniz v. Hoyt, 105 S.W.3d 330, 344 (Tex. App.–Corpus Christi 2003, no pet.). We review the evidence "in the light most favorable to the nonmovant, disregarding all contrary evidence and inferences." See KPMG Peat Marwick v. Harrison County Housing Fin. Corp., 988 S.W.2d 746, 748 (Tex. 1995); Branton v. Wood, 100 S.W.3d 645, 646 (Tex. App.–Corpus Christi 2003, no pet.). We affirm a trial court's ruling on a summary-judgment motion if any of the theories advanced in the motion are meritorious. State Farm Fire & Cas. Co. v. S.S., 858 S.W.2d 374, 380 (Tex. 1993). We review a summary judgment de novo to determine whether a party established its right to prevail as a matter of law. Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548-49 (Tex. 1985); Ortega, 97 S.W.3d at 771. In a traditional summary-judgment motion, the movant bears the burden of showing both no genuine issue of material fact and entitlement to judgment as a matter of law. See Tex. R. Civ. P. 166a(c); see also Ortega, 97 S.W.3d at 771-72.  In deciding whether there is a genuine issue of material fact, we take evidence favorable to the non-movant as true. Ortega, 97 S.W.3d at 772.

         When both sides move for summary judgment and the trial court grants one motion but denies the other, we review both sides' summary-judgment evidence and determine all questions presented. FM Props. Operating Co. v. City of Austin, 22 S.W.3d 868, 872 (Tex. 2000); Frost Nat'l Bank v. L & F Distribs., 122 S.W.3d 922, 929 (Tex. App.–Corpus Christi 2003, pet. filed). Where the only issue both movants presented to the trial court was a question of law, we either affirm or render the judgment the trial court should have rendered. Tex. R. App. P. 43.2(a),(c); Jones v. Strauss, 745 S.W.2d 898, 900 (Tex. 1988).

C. Disposition

1. The Title Issue

         At the heart of the parties' dispute is the meaning of the following language in the Letter Exchange Agreement:

It is hereby understood and agreed that [TransTexas] must reassign to [Forcenergy] any and all acreage which has not been allocated to a producing or proration unit, as prescribed or permitted by the State of Texas, or included within a pooled unit, whichever is larger, within 3 years from the date of the assignment. However, should [TransTexas] establish production below 8500 feet within the area outlined in red on the attached plat within 3 years from the date of the assignment, then this 3 year period shall be automatically extended for an additional 2 years.

         TransTexas does not dispute that it did not perform as contemplated by the Letter Exchange Agreement by producing or pooling "within 3 years from the date of the assignment." TransTexas also does not dispute that it did not reassign the deep rights to Forcenergy after the expiration of 3 years. However, TransTexas urges, the quoted language is a covenant. Forcenergy's remedy for TransTexas's failure to perform or reassign the interest was to sue TransTexas for specific performance or breach of contract. By the time Forcenergy filed suit, TransTexas argues, laches barred any suit for specific performance, and the statute of limitation for breach of contract had long run. On the other hand, if the quoted language is a condition precedent, as Forcenergy contends, the condition precedent to title vesting in TransTexas never occurred. Therefore, Forcenergy argues, Forcenergy still holds title to the deep rights, and its equitable action to quiet title is not time barred.

         To determine whether the language at issue is a covenant or a condition precedent, we must ascertain the intent of the parties. Hudson v. Wakefield, 645 S.W.2d 427, 430 (Tex. 1983). We consider the parties' agreement as a whole in determining their intent. Id. The first paragraph of both the Letter Exchange Agreement and the Farmout Agreement reference the parties' agreement of September 7, 1984 "relative to lands in Wharton County, Texas." Further, the parties expressly agreed that the Assignment of Oil, Gas and Mineral Lease was "subject to terms and conditions of that certain Letter Exchange Agreement dated September 18, 1984 between [Forcenergy] and [TransTexas]."

         It is well settled we construe together as one contract writings simultaneously executed by the same parties with respect to the same subject matter. Board of Ins. Comm'rs v. Great S. Life Ins. Co., 239 S.W.2d 803, 809 (Tex. 1951); Hydro-Line Mfg. Co. v. Pulido, 674 S.W.2d 382, 386 (Tex. App.–Corpus Christi 1984, writ ref'd n.r.e.). Similarly, we construe together as one contract writings connected by reference to one another. In re C & H News Co., 133 S.W.3d 642, 645-46 (Tex. App.–Corpus Christi 2003, orig. proceeding). Accordingly, we find that all three writings here memorialized the same agreement and formed part of the same transaction between the same parties. We therefore construe the three writings together. See Great S. Life Ins. Co., 239 S.W.2d at 809; see also Pulido, 674 S.W.2d at 386; In re C & H News Co., 133 S.W.3d at 645-46.  

         The fact that both parties rely on the same authority as support for their respective positions underscores the difficulty in deciding this case. See Rogers v. Ricane, 772 S.W.2d. 76, 78 (Tex. 1989). The following language was at issue in Rogers:

THIS ASSIGNMENT IS MADE SUBJECT TO THE FOLLOWING CONDITION AND PROVISION:

1.All of the right, title, interest and privileges herein conveyed to and conferred upon Western will cease and terminate and shall revert to and revest in Superior, unless within thirty (30) days after the date hereof, Western shall commence the actual drilling of oil and gas upon the above described land and at a location thereon which shall satisfy any then existing offset obligation. . . .

2.Western shall and hereby does assume and agree to perform and discharge all of the [base] lease obligations, express or implied. . . . To this end, it is recognized by the parties hereto... that there now are a number of . . . off-set wells which Western shall protect against by the drilling of properly located wells on the above described land, in due and proper time, and subject to all of the applicable provisions of this agreement.

Id. The Rogers court found, and in fact the parties agreed, that the first paragraph was a condition because the drilling provision had to be satisfied before title would vest. Id. at 79. The assignee satisfied the condition by drilling a well immediately. Id. When the well ceased production, the assignee made no other attempt to drill on the property. Id. Following later transactions and assignments, a dispute arose between the parties as to the meaning of the language in the second paragraph. Id. The assignor contended the paragraph created a condition, arguing that the assignee had forfeited its right to the property. Id. The assignee asserted that the paragraph created a covenant, urging that forfeiture was not a proper remedy. Id. The court of appeals agreed with the assignee. Id. The court pointed to the language used by the parties in the first paragraph, which unequivocally created a condition. Id. By contrast, the language in the second paragraph did not. Id.

         The Rogers court also concluded that "doubts should be resolved in favor of a covenant rather than a condition." Id. (citing Henshaw v. Tex. Nat'l Res. Found., 216 S.W.2d 566, 570-71 (Tex. 1949)). The court further noted that "[t]he language used by the parties to an oil and gas lease will not be held to impose a special limitation on the grant unless it is clear and precise and so unequivocal that it can reasonably be given no other meaning." Rogers, 772 S.W.2d at 79 (citing Fox v. Thoreson, 398 S.W.2d 88, 92 (Tex. 1966)). The Rogers court echoed the general rule that we avoid the forfeiture that results from finding a condition precedent if another reasonable reading of the contract is possible. See Schwartz-Jordan, Inc. v. Delisle Const. Co., 569 S.W.2d 878, 881 (Tex. 1976).

         Forcenergy maintains that the language at issue in this case is closer to the language of the first paragraph in Rogers, a condition, than it is to the second, a covenant. Forcenergy contends that production or pooling within three years is an "earning event" that must occur for title to be transferred permanently to TransTexas, thereby creating a conditional conveyance. Forcenergy also points out that no particular words are required to create a condition so long as the condition is fairly expressed. See Hudson v. Caffey, 179 S.W.2d 1017, 1019 (Tex. Civ. App.– Texarkana 1944, writ ref'd w.o.j.). The assignment did not result in either production or a pooling agreement within three years, Forcenergy emphasizes. Thus, TransTexas did not satisfy the condition. As a consequence, Forcenergy reacquired equitable title when the period for performance expired even in the absence of any reassignment by TransTexas.

         TransTexas asserts that the language at issue here is closer to the second paragraph in Rogers and creates a covenant, not a condition. TransTexas analogizes the language "understood and agreed" in the Letter Exchange Agreement to the covenanting language "assume and agree" in the second paragraph of the Rogers conveyance. See Rogers, 772 S.W.2d at 79. Under this interpretation, the proper remedy for Forcenergy would be to sue either for specific performance or for breach of contract, both of which TransTexas argues were time-barred when Forcenergy filed suit. See Tex. Civ. Prac. & Rem. Code Ann. § 16.004(a)(1) (Vernon 2002) (providing for four-year statute of limitation on suit for specific performance of contract for sale of real property); see also Saunders v. Alamo Soil Conservation Dist., 545 S.W.2d 249, 253 (Tex. Civ. App.–San Antonio 1976, writ ref'd n.r.e.) ("Insofar as a possible suit for damages resulting from breach of contract is concerned, the breach, if any, occurred more than eight years prior to the time the suit was filed and the cause of action is clearly barred.").

         Generally speaking, contracting parties use terms such as "provided that," "if," "on condition that," to make performance specifically conditional. Landscape Design v. Harold Thomas Excavating, 604 S.W.2d 374, 377 (Tex. Civ. App.–Dallas 1980, writ ref'd n.r.e.). However, as Forcenergy maintains, no particular words of condition are required so long as the condition is fairly expressed. See Hudson, 179 S.W.2d at 1019. Nonetheless, the absence of conditional language is probative of the parties' intent to make a promise rather than impose a condition. Hohenberg Bros. Co. v. George E. Gibbons & Co., 537 S.W.2d 1, 3 (Tex. 1976).

         Forcenergy counters by pointing to the "subject to" language in the Assignment of Oil, Gas and Mineral Lease from Forcenergy to TransTexas. The assignment states:

This assignment is further made subject to the terms and conditions of that certain Letter Exchange Agreement dated September 18, 1984, between Forcenergy and TransTexas, of which reference is made for all purposes and which is incorporated herein by reference to the same extent as if a copy was attached herein in its entirety.

 Forcenergy contends that this language is analogous to the language in Rogers that "[t]his assignment is made subject to the following conditions and provision." Thus, Forcenergy argues, the conditional "subject to" language in the Assignment of Oil, Gas and Mineral Lease, when read in conjunction with the "drill or pool" provisions of the Letter Exchange Agreement, unequivocally imposes conditions to title. See Rogers, 772 S.W.2d at 78.

         Forcenergy analogizes to the conditional conveyance created by a farmout agreement, citing Eland v. Rowden Oil & Gas Inc., 914 S.W.2d 179, 182 (Tex. App.–San Antonio 1995, writ denied). As the Eland court noted, "[t]he primary characteristic of a farmout is the obligation of the assignee to drill one or more wells on the assigned acreage as a prerequisite to the completion of the transfer. . . ." Id. at 182, n.1 (quoting Mengden v. Peninsula Prod. Co., 544 S.W.2d 643, 645 n.1 (Tex. 1976)). We note that farmout and related agreements, as executory instruments, normally are not recorded at the time of execution, since title is yet to be earned. See Westland Oil Dev. Corp. v. Gulf Oil Corp., 637 S.W.2d 903, 911 (Tex. 1982) (Wallace, J., dissenting) ("The letter agreement [assigning interest in farmout agreement] before us was not recorded, therefore, we are not dealing with constructive notice."). The parties here entered into the Farmout Agreement, dated September 14, 1984. Both the Letter Exchange Agreement and the Farmout Agreement stated that they "shall evidence the general terms of the agreement made September 7, 1984 between [Forcenergy] and [TransTexas] relative to lands in Wharton County, Texas," although they related to different leases. The language of the Farmout Agreement closely tracks what Forcenergy urges we read into the Letter Exchange Agreement. Neither document was recorded in the deed records, but the resemblance between the two documents ends there. The Farmout Agreement set out with specificity what Forcenergy was required to do to "earn" the right, title, and interest contemplated by the agreement. Its closing paragraph unequivocally describes its executory nature: "This letter shall in no way be construed as the final agreement between the parties and neither party shall have any obligations until the execution of the formal farmout agreement." Under the Farmout Agreement, Forcenergy was not required to assign the interest subject to the farmout until TransTexas drilled and developed the mineral rights, at which time Forcenergy would retain an overriding interest.

         By contrast, the language used by the parties in the Letter Exchange Agreement did not expressly delay transfer of title. Rather, the Letter Exchange Agreement provided that TransTexas "must reassign" the interest at issue to Forcenergy if TransTexas did not drill or pool within three years. The Letter Exchange Agreement did not provide that Forcenergy would transfer title only after TransTexas "earned" it by drilling or pooling within three years. Moreover, unlike the Farmout Agreement, the Letter Exchange Agreement does not contain any language expressing its executory nature.

         Finally, Forcenergy contends it has the right to have title quieted in its favor after all these years, pointing out that equitable title is the enforceable right to have legal title transferred to the holder of the equitable title. See Neely v. Intercity Mgmt. Corp., 623 S.W.2d 942, 950-51 (Tex. App.–Houston [1st Dist.] 1981, no writ). However, Forcenergy's authorities in support of a characterization of its surviving interest under the Letter Exchange Agreement as equitable title address the equitable rights associated with real estate conveyances. See Johnson v. Wood, 157 S.W.2d 146, 148 (Tex. 1941) (holding that on performance of payment obligations on real estate note, equitable right ripened into superior equitable title); see also Hall v. Rawls, 188 S.W.2d 807, 815 (Tex. Civ. App.–Texarkana 1944, writ ref'd) (holding that interest ripened into equitable title on payment of obligation to purchase real property conveyed in trust). For that reason, we do not find Johnson and Hall applicable here.

         TransTexas persuasively points out that a party cannot "reassign" an interest it did not acquire in the first place. Forcenergy has no satisfactory rejoinder to this interpretation of the term "reassign" as the parties used it in the Letter Exchange Agreement. Further, reading the Letter Exchange Agreement in conjunction with the Farmout Agreement, as we must, we conclude that the parties knew how to draft a condition precedent when they intended to do so. We do not find the language of the Letter Exchange Agreement to be "clear and precise and so unequivocal that it can reasonably be given no other meaning" than that it imposed a condition. See Rogers, 772 S.W.2d at 79. To the contrary, we find that another "reasonable reading" of the Letter Exchange Agreement is that the parties intended a covenant, not a condition. See Schwarz-Jordan, Inc., of Houston v. Delisle Const. Co., 569 S.W.2d 878, 881 (Tex. 1978). Forcenergy's only remedy was for specific performance or breach of contract, which are time-barred. Accordingly, we hold that summary judgment in Forcenergy's favor was error. We sustain TransTexas's first issue. Similarly, we hold that denial of TransTexas's summary judgment also was error. We sustain TransTexas's second issue.

         2. The Operatorship Issue

         The trial court granted Forcenergy's third motion for partial summary judgment and declared certain operating agreements to be in full force and effect. Forcenergy did in fact move for summary judgment on the operatorship issue. However, it did not plead for any relief relating to the operatorship of the interests at issue in this appeal. Unpleaded causes of action cannot support a summary judgment. DeBord v. Muller, 446 S.W.2d 299, 301 (Tex. 1969) (holding that summary judgment could not be granted on unpleaded affirmative defense); Collard v. Interstate Northborough Partners, 961 S.W.2d 701, 704 (Tex. App.–Tyler 1998, no pet.) (holding that plaintiff was not entitled to summary judgment on unpleaded negligence claim). Forcenergy argues, since TransTexas sought a declaratory judgment that Forcenergy is not the operator, that Forcenergy is entitled, pursuant to its own motion, to a declaration that Forcenergy is the operator without affirmatively pleading for a declaratory judgment or other relief on the operatorship issue. We disagree. Procedurally, denying TransTexas's motion for summary judgment that Forcenergy is not the operator is not the same as granting Forcenergy's motion for summary judgment that Forcenergy is the operator. Without an affirmative pleading to support summary judgment for Forcenergy on the operatorship issue, the trial court could only deny TransTexas's motion. It had no authority to grant Forcenergy's motion without a pleading to support an affirmative declaration that Forcenergy is the operator. See DeBord, 446 S.W.2d at 301. We sustain TransTexas's third issue.

         Further, the operating agreement at issue provided that if Forcenergy "no longer owns an interest" in the deep mineral rights, "it shall cease to be Operator without any action by Non Operator." We conclude that our holding that Forcenergy conveyed its interest in the deep mineral rights to TransTexas in the Letter Exchange Agreement is dispositive of TransTexas's fourth issue. We hold that the trial court's denial of TransTexas's motion for summary judgment that Forcenergy is not the operator of the deep mineral rights at issue was error. We sustain TransTexas's fourth issue.

3. The Attorney-Fee Issue

         In a declaratory judgment action, the trial court "may award costs and reasonable and necessary attorney's fees as are equitable and just." Tex. Civ. Prac. & Rem. Code § 37.009 (Vernon 1997). Whether to award attorney fees under the UDJA is within a trial court's sound discretion. Bocquet v. Herring, 972 S.W.2d 19, 21 (Tex. 1998). Prevailing-party status is not required. State Farm Lloyds v. C.M.W., 53 S.W.3d 877, 894 (Tex. App.–Dallas 2001, pet. denied) (citing Barshop v. Medina County Underground Water Conservation Dist., 925 S.W.2d 618, 637-38 (Tex. 1996)). We remand this case to the trial court to determine an equitable and just apportionment of attorney fees in view of the present reversal. See Tex. Civ. Prac. & Rem. Code § 37.009 (Vernon 1997); see also Barshop, 925 S.W.2d at 637-38.

III. CONCLUSION

         We sustain each of TransTexas's issues on appeal. We reverse the trial court's declaration that Forcenergy holds title to the deep mineral rights that were the subject of the parties' "Letter Exchange Agreement" dated September 18, 1984. We render the judgment the trial court should have rendered, that is, a declaratory judgment that TransTexas holds the title to the deep mineral rights. See FM Props. Operating Co., 22 S.W.3d at 872; see also L & F Distribs., 122 S.W.3d at 929. Similarly, we reverse the trial court's declaration that Forcenergy is the operator of the deep mineral rights that were the subject of the parties' "Letter Exchange Agreement" dated September 18, 1984. We render the judgment the trial court should have rendered, that is, a declaratory judgment that Forcenergy is not the operator of the deep mineral rights. See FM Props. Operating Co., 22 S.W.3d at 872; see also L & F Distribs., 122 S.W.3d at 929. We reverse the trial court's judgment awarding attorney fees to Forcenergy in the amount of $350,000.00. We remand for a redetermination of an equitable and just apportionment of attorney fees. See Tex. Civ. Prac. & Rem. Code § 37.009 (Vernon 1997); see also Barshop, 925 S.W.2d at 637-38.   

                                                               ERRLINDA CASTILLO

                                                                Justice

Opinion delivered and filed

this 26th day of August, 2004.