Charles L. B. Aycock, Edward S. Aycock, and Charlotte Cherry Aycock McHale v. Vantage Fort Worth Energy, LLC

Opinion filed March 20, 2015
In The
Eleventh Court of Appeals
__________
No. 11-13-00338-CV
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CHARLES L. B. AYCOCK, EDWARD S. AYCOCK,
AND CHARLOTTE CHERRY AYCOCK MCHALE, Appellants
V.
VANTAGE FORT WORTH ENERGY, LLC, Appellee
On Appeal from the 266th District Court
Erath County, Texas
Trial Court Cause No. CV31725
MEMORANDUM OPINION
Charles L. B. Aycock, Edward S. Aycock, and Charlotte Cherry Aycock
McHale, who called themselves the “unpaid mineral cotenants,” sued Vantage Fort
Worth Energy, LLC for unpaid bonus money in connection with an oil and gas
lease. The trial court granted Vantage’s traditional motion for summary judgment
and entered final judgment against the unpaid mineral cotenants. The unpaid
mineral cotenants appeal. We affirm.
I. Background Facts
Fitzhugh H. Pannill Jr. and his company, Desdemona Cattle Company, along
with others, owned undivided mineral interests in a 1,409-acre tract in Erath
County. Pannill and Desdemona entered into an oil and gas lease with Vantage in
March 2008, and the lease contained a three-year primary term. Vantage paid
$750 per net mineral acre as a bonus to Pannill and Desdemona for their undivided
mineral interest of 526.0994667 net mineral acres for a total bonus of $394,574.60.
Vantage filed a memorandum of oil and gas lease in May 2010. The unpaid
mineral cotenants mailed a letter to Vantage in September 2010, in which they
asked to meet with Vantage about the lease. Vantage never responded. No drilling
or production occurred, and the lease terminated in March 2011. The unpaid
mineral cotenants filed their suit against Vantage in May 2012.
II. Issues Presented
The unpaid mineral cotenants assert that the trial court erred by granting
Vantage’s traditional motion for summary judgment and by denying their motion
for new trial.
III. Standard of Review
We review a trial court’s ruling on a traditional motion for summary
judgment de novo. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex.
2005). We must determine whether the movant established that no genuine issues
of material fact existed and that the movant was entitled to judgment as a matter of
law. TEX. R. CIV. P. 166a(c); Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546,
548–49 (Tex. 1985). Where the trial court’s order granting summary judgment
does not specify the ground or grounds relied upon for its ruling, we will affirm
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summary judgment if any of the grounds advanced by the movant are meritorious.
Dow Chem. Co. v. Francis, 46 S.W.3d 237, 242 (Tex. 2001).
We review a trial court’s denial of a motion for new trial under an abuse of
discretion standard. Waffle House, Inc. v. Williams, 313 S.W.3d 796, 813 (Tex.
2010). A trial court abuses its discretion if it acts in an arbitrary or unreasonable
manner without reference to any guiding rules or principles. Downer v.
Aquamarine Operators, Inc., 701 S.W.2d 238, 241–42 (Tex. 1985).
IV. Analysis
A. Issue One: Summary Judgment
Owners of undivided mineral interests are tenants in common. Willson v.
Superior Oil Co., 274 S.W.2d 947, 950 (Tex. Civ. App.—Texarkana 1954, writ
ref’d n.r.e.). A cotenant may lease its undivided interest without joinder of another
cotenant. Glover v. Union Pac. R.R. Co., 187 S.W.3d 201, 213 (Tex. App.—
Texarkana 2006, pet. denied) (citing Burnham v. Hardy Oil Co., 147 S.W. 330,
334 (Tex. Civ. App.—San Antonio 1912), aff’d, 195 S.W. 1139, 1146 (Tex.
1917)). The lease does not bind a nonconsenting cotenant. Willson, 274 S.W.2d at
950. The lessor cotenant, however, must account to its nonconsenting cotenant for
any minerals produced where the lessor cotenant has leased both its and the
nonconsenting cotenant’s interest or has received production payments on the
nonconsenting cotenant’s interest. Burnham, 147 S.W. at 334.
If the lessor cotenant purports to convey the entire common property, a
nonconsenting cotenant may rightfully ratify the lease and collect its share of
proceeds from the lease. Van Deventer v. Gulf Prod. Co., 41 S.W.2d 1029, 1038
(Tex. Civ. App.—Beaumont 1931, writ ref’d); see also Gill v. Bennett, 59 S.W.2d
473, 475 (Tex. Civ. App.—El Paso 1933, writ ref’d) (holding that if nonconsenting
cotenant ratified lease, he became “a participating royalty owner and entitled to
1/128 of the oil and gas royalty agreed to be paid by the lessee”). The
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nonconsenting cotenant may also choose to not ratify the lease and collect its share
of the value of the minerals taken less the reasonable cost of production. Cox v.
Davison, 397 S.W.2d 200, 201 (Tex. 1965). If a nonjoined cotenant ratifies a
lease, the ratifying cotenant may sue the lessor cotenant for an accounting of all
money received by the lessor cotenant, in the form of bonus, royalty, rentals, and
otherwise, relative to the ratifying cotenant’s interest. Tex. & Pac. Coal & Oil
Co. v. Kirtley, 288 S.W. 619, 624 (Tex. Civ. App.—Eastland 1926, writ ref’d).
Ratification can occur in several ways. See, e.g., Montgomery v.
Rittersbacher, 424 S.W.2d 210, 214 (Tex. 1968) (holding that filing suit ratifies a
lease as a matter of law); Loeffler v. King, 236 S.W.2d 772, 774 (Tex. 1951)
(holding that execution and acceptance of royalty deed ratifies a lease); Grissom v.
Anderson, 79 S.W.2d 619, 622–23 (Tex. 1935) (holding that a conveyance that
recognizes a lease ratifies the lease); Barker v. Roelke, 105 S.W.3d 75, 84 (Tex.
App.—Eastland 2003, pet. denied) (explaining that “[r]atification occurs when a
party recognizes the validity of a contract by . . . affirmatively acknowledging it”);
Van Deventer, 41 S.W.2d at 1037 (holding that recital of recognition of the lease in
a contract ratifies the lease); cf., e.g., Kirtley, 288 S.W. at 623 (explaining that
accepting proportionate part of royalties binds nonconsenting cotenant to lease).
A reviewing court, when construing the lease, is bound by the language of
the lease when the lease is plain and unambiguous. Van Deventer, 41 S.W.2d at
1035. A proportionate reduction clause acts to protect the lessee from paying the
lessor more than what the lessor is due, but it does not act to reduce what the lessor
conveys to the lessee. McMahon v. Christmann, 303 S.W.2d 341, 346 (Tex.
1957); Klein v. Humble Oil & Ref. Co., 86 S.W.2d 1077, 1080 (Tex. 1935).
Charles Aycock, Edward Aycock, and Charlotte McHale, who identified
themselves as the “unpaid mineral cotenants,” along with Pannill and Desdemona,
all owned undivided mineral interests in the 1,409 acres; as such, they were tenants
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in common. See Willson, 274 S.W.2d at 950. The unpaid mineral cotenants
complain that Vantage leased the entire 1,409 acres from Pannill and Desdemona.
See Glover, 187 S.W.3d at 213. The unpaid mineral cotenants also assert that they
ratified the lease with their September 2010 letter to Vantage.
Vantage claims that the proportionate reduction clause in the lease, along
with other documents, shows that Vantage only intended to lease Pannill’s and
Desdemona’s undivided interests. But see McMahon, 303 S.W.2d at 346 (holding
that a proportionate reduction clause does not decrease the amount of land
conveyed to lessee); Van Deventer, 41 S.W.2d at 1035 (explaining that reviewing
court is bound by the language of the lease if the lease is unambiguous).
Even if we assume, 1 without deciding, that (1) Vantage leased all of the
cotenants’ mineral interests for the entire 1,409 acres, instead of just Pannill’s and
Desdemona’s interests, and (2) the unpaid mineral cotenants ratified the lease with
their September 2010 letter, the unpaid mineral cotenants do not claim that genuine
issues of material fact exist. Therefore, their position only requires this court to
determine whether Vantage was entitled to judgment as a matter of law. See
TEX. R. CIV. P. 166a(c); Nixon, 690 S.W.2d at 548–49.
In its motion for summary judgment, Vantage asserted that any recovery by
the unpaid mineral cotenants had to come from their cotenants, Pannill and
Desdemona. Vantage rightfully leased the land from Pannill and Desdemona. See
Willson, 274 S.W.2d at 950 (explaining that lessor cotenant may lease
nonconsenting cotenant’s interest, but lessor cotenant must account for value of
minerals produced). The cases that the unpaid mineral cotenants rely on support
the proposition that a nonconsenting cotenant, after ratifying a lease, may recover
any profits already paid to a lessor cotenant. See, e.g., Van Deventer, 41 S.W.2d at
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We do not express an opinion as to the validity of these contentions asserted by the unpaid
mineral cotenants.
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1038 (holding that ratifying cotenant could claim his share of profits paid to lessor
cotenant); Kirtley, 288 S.W. at 624 (explaining that “the accounting should include
all money received by the lessor, cotenant . . . accruing under such lease” (quoting
Sommers v. Bennett, 69 S.E. 690, 690 (W. Va. 1910)). Here, Vantage is not the
lessor cotenant and received no money accruing under the lease. See Kirtley, 288
S.W. at 624. Therefore, the unpaid mineral cotenants cannot recover bonus money
from Vantage. See Cox, 397 S.W.2d at 201; Van Deventer, 41 S.W.2d at 1038;
Kirtley, 288 S.W. at 624.
The unpaid mineral cotenants claimed in their response to Vantage’s motion
for summary judgment that unjust enrichment precludes Vantage’s entitlement to
summary judgment. Unjust enrichment did not occur here because Vantage did
not profit at the expense of the unpaid mineral cotenants. See HECI Exploration
Co. v. Neel, 982 S.W.2d 881, 891 (Tex. 1998); see also Cox, 397 S.W.2d at 201
(explaining that a lessor cotenant may lease a nonconsenting cotenant’s interest if
lessor cotenant accounts for value of minerals produced).
Vantage established that the unpaid mineral cotenants can only recover
bonus money paid to Pannill and Desdemona for the nonjoined interests, if any,
from Pannill and Desdemona and cannot recover any such payments, if any, from
Vantage. Therefore, Vantage is entitled to judgment as a matter of law. See
TEX. R. CIV. P. 166a(c); Nixon, 690 S.W.2d at 548–49; see also Dow Chem. Co.,
46 S.W.3d at 242 (meritorious motion for summary judgment is granted). The trial
court did not err by granting Vantage’s motion for summary judgment. See
Valence Operating Co., 164 S.W.3d at 661. We overrule the unpaid mineral
cotenants’ first issue.
B. Issue Two: New Trial
The unpaid mineral cotenants assert no new arguments in their second issue
on the denial of their motion for new trial, and their grounds in that motion mirror
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their summary judgment arguments and responses. Because the trial court did not
err by granting Vantage’s motion for summary judgment, there can be no error by
failing to grant the unpaid mineral cotenants’ motion for new trial on the same
grounds. See, e.g., Spring Valley Acres v. LLN Assocs., No. 11-96-061-CV, 1997
WL 33797945, at *1 (Tex. App.—Eastland Feb. 27, 1997, no writ) (not designated
for publication) (holding that, because trial court did not err by denying motion for
continuance on one ground, trial court could not have erred by denying motion for
new trial on same ground). A new trial could not result in the unpaid mineral
cotenants recovering any bonus money against Vantage because, as a matter of
law, the unpaid mineral cotenants cannot recover from Vantage under the facts in
the case. See Cox, 397 S.W.2d at 201; Van Deventer, 41 S.W.2d at 1038; Kirtley,
288 S.W. at 624. The trial court did not abuse its discretion by denying the unpaid
mineral cotenants’ motion for new trial. Waffle House, 313 S.W.3d at 813. We
overrule the unpaid mineral cotenants’ second issue.
V. This Court’s Ruling
We affirm the judgment of the trial court.
MIKE WILLSON
JUSTICE
March 20, 2015
Panel consists of: Wright, C.J.,
Willson, J., and Bailey, J.
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