Articles Posted in Contracts

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In this dispute involving mineral interests pooled for natural gas production, lessors and other stakeholders alleged that the lessee underpaid royalties owed to them under their mineral leases and pooling agreements. The issues presented in this appeal centered on the lessee’s efforts to avoid a contractual obligation to pay royalties to the overlapping unit stakeholders for production from a zone shared by the two pooled units. The lower courts held that the agreement to pay royalties was enforceable. The Supreme Court affirmed, holding (1) ineffective conveyance of title does not preclude the lessee’s liability under a contract theory; (2) the lessee’s quasi-estoppel and scrivener’s error defenses to contract enforcement failed as a matter of law; and (3) the lessee was not entitled to recoup royalty payments from stakeholders in another pooled unit; (4) this court’s decision in Hooks v. Samson Lone Star, Ltd. Partnership, 457 S.W. 3d 52 (Tex. 2015) precluded the unpooling stakeholders’ claims; and (5) the court of appeals properly construed a proportionate-reduction clause to award royalties owed to the overlapping unit stakeholders in accordance with their fifty percent mineral-interest ownership. View "Samson Exploration, LLC v. T.S. Reed Properties, Inc." on Justia Law

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In construing an unambiguous deed, the parties’ intent is paramount, and that intent is determined by conducting a careful and detailed examination of a deed in its entirety rather than applying some default rule that appears nowhere in the deed’s text. In this case, the Supreme Court construed a deed that conveyed a mineral estate and the surface above it. At issue was whether the language of the deed passed the entire burden of an outstanding non-participating royalty interest (NPRI) to the grantees or whether the NPRI proportionately burdened the grantor’s reserved interest. The trial court ruled that the deed burdened both parties with an outstanding NPRI and that the parties must share the burden of the NPRI in proportion to their respective fractional mineral interests. The court of appeals affirmed. The Supreme Court affirmed, holding that the only reasonable reading of the deed in this case resulted in the parties bearing the NPRI burden in shares proportionate to their fractional interests in the minerals. View "Wenske v. Ealy" on Justia Law

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ConocoPhillips Co. and Alma Energy Corp. exchanged oil and gas interests under an exchange agreement in which each indemnified the other for any environmental claims related to the properties received. Alma later filed for protection under Chapter 11 of the Bankruptcy Code. Thereafter, Noble Energy Inc. agreed to by the properties Alma had received from Conoco under the exchange agreement. After the bankruptcy proceeding concluded, an environmental contamination suit was filed against Conoco, and Noble refused to indemnify Conoco under the exchange agreement. Conoco filed suit against Noble alleging breach of the exchange agreement and seeking to recover the $63 million it paid to settle the suit. The trial court granted summary judgment for Noble. The court of appeals reversed and entered summary judgment for Conoco, concluding that the exchange agreement was an executory contract that was assumed by Alma and assigned to Noble in the bankruptcy proceeding. The Supreme Court affirmed, holding that under the terms of the bankruptcy court order confirming the plan of reorganization and the agreement for sale of Alma’s assets, Noble was assigned an undisclosed contractual indemnity obligation of Alma. View "Noble Energy, Inc. v. Conocophillips Co." on Justia Law

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This case arose from an allegedly forged home-equity loan. Plaintiff sued the lenders, bringing several claims, including statutory fraud and violations of the Texas Finance Code and Texas Deceptive Trade Practices Act. The trial court granted summary judgment for the lenders without stating its reasons. The court of appeals affirmed. The Supreme Court affirmed in part and reversed and remanded in part, holding that the court of appeals (1) properly affirmed summary judgment on Plaintiff’s constitutional forfeiture claim; and (2) erred in holding that Plaintiff’s remaining claims were barred on statute of limitations and waiver grounds. View "Kyle v. Strasburger" on Justia Law

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The dispute arose from a contingency fee agreement (agreement) for legal services. Attorneys filed suit against Client seeking a judgment that would include an ownership interest in a business partially formed by Client as compensation for unpaid attorney fees. A jury found that Attorneys were not entitled to an ownership interest under the terms of the agreement. The trial court granted Attorneys’ motion for a new trial, concluding that the agreement unambiguously provided for the recovery of an ownership interest as attorney fees. The Supreme Court conditionally granted Client’s petition for writ of mandamus, directing the trial court to vacate its new trial orders and render a final judgment consistent with this opinion, holding that the agreement unambiguously did not permit Attorneys to recovery from the ownership interest in the business. View "In re Dean Davenport" on Justia Law

Posted in: Contracts

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This action stemmed from a “without cause” termination of Plaintiff’s five-year employment contract at the end of his third contract year. Plaintiff brought claims against his former employer, its chief executive officer, and its professional services company for, inter alia, breach of contract and tortious interference with contract. The trial court granted summary judgment for Defendants. The court of appeals reversed the trial court’s dismissal of the claims for breach of contract and tortious interference. The Supreme Court reversed the judgment of the court of appeals and reinstated the trial court’s judgment in favor of Defendants, holding (1) the employer was entitled to summary judgment on the breach of contract claim where the employer was not required to prove the reasons it terminated Plaintiff’s employment contract “without cause” an the relevant provisions of the contract were not ambiguous; (2) Defendants were entitled to summary judgment on the tortious interference claim where Plaintiff presented no evidence of willful or intentional interference; and (3) the employer’s professional services company was entitled to Plaintiff’s tortious interference claim where it conclusively established its justification defense to the claim. View "Community Health Systems Professional Services Corp. v. Hansen" on Justia Law

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Homeowners sued Builder for failing to construct their home in a good and workmanlike manner. Builder’s commercial general liability insurer (Insurer) refused to defend Builder in the suit. Judgment was granted in favor of Homeowners after a trial, and Builder assigned the majority of its claims against Insurer to Homeowners. Homeowners subsequently sought to recover the judgment from Insurer under the applicable policy. The trial court entered judgment in favor of Homeowners. The court of appeals affirmed. The Supreme Court reversed and, in the interests of justice, remanded the case to the trial court for a new trial, holding (1) the judgment against Builder was not binding on Insurer in this suit because it was not the product of a fully adversarial proceeding; but (2) this insurance litigation may serve to determine Insurer’s liability, although the parties in the case focused on other issues during the trial. View "Great American Insurance Co. v. Hamel" on Justia Law

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The trial court did not abuse its discretion by denying Defendant’s motion to dismiss based on the sufficiency of a certificate of merit supplied by Plaintiff. Plaintiff, a water supply corporation, contracted with Defendant to provide engineering design and project supervision services for a new water treatment plant. After the project was substantially completed, Plaintiff sued Defendant and others involved in the contract, attributing poor water quality issues to the plant’s design and construction. To comply with the certificate-of-merit statute, Plaintiff filed the affidavit of a licensed professional with its original petition. In this interlocutory appeal, Defendant argued that the trial court erred in not dismissing Plaintiff’s complaint because the certificate of merit’s author was unqualified and the affidavit failed to provide the factual basis required by Tex. Civ. Prac. & Rem. Code 150.002. The Supreme Court affirmed. View "Melden & Hunt, Inc. v. East Rio Hondo Water Supply Corp." on Justia Law

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A jury awarded Plaintiff future lost profits based on Defendants’ failure to comply with their covenants not to compete and covenants not to solicit. The jury also awarded Plaintiff exemplary damages and attorney fees. The trial court awarded Plaintiff the full amount of damages. The court of appeals reversed and rendered a take-nothing judgment in part and remanded in part, concluding, inter alia, that the evidence was legally insufficient to support the jury’s award of future lost profits and that the exemplary damages award was unconstitutionally excessive. The Supreme Court affirmed in part and reversed in part, holding (1) the court of appeals did not err in concluding that the evidence of future lost profits was legally insufficient; (2) the court of appeals’ remitted exemplary damages award was unconstitutionally excessive; and (3) the court of appeals properly found that remand of the issue of attorney’s fees was proper. The court remanded the case to the court of appeals so that it may reconsider its suggested remittitur of exemplary damages. View "Horizon Health Corp. v. Acadia Healthcare Co." on Justia Law

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Certain minority shareholders filed suit in a Texas court alleging dilution of equity interests. Defendants responded by invoking a forum-selection clause designating Delaware as the proper forum for disputes arising out of a shareholders agreement. The court of appeals reversed the trial court’s grant of Defendants’ motion to dismiss, concluding that the forum-selection clause did not control because the shareholders’ extracontractual claims did not allege noncompliance or interference with any rights or obligations derived from the shareholders agreement. The Supreme Court reversed and dismissed the shareholders’ claims in part, holding (1) the shareholders’ statutory and common-law tort claims evidence a “dispute arising out of” the shareholders agreement; and (2) the shareholders’ noncontractual claims fell within the forum-selection clause’s scope. View "Pinto Technology Ventures, LP v. Sheldon" on Justia Law