Justia Texas Supreme Court Opinion Summaries

This case involved two related oil and gas mineral lease disputes that were jointly tried. One of the disputes was between petitioners, BP American Production Co., Atlantic Richfield Co., and Vastar Resources, Inc. (collectively, "BP"), the lessee and operator, and respondents, the Marshall family, the lessors. The other dispute was between BP's successors-in-interest, Wagner Oil Co. (collectively, "Wagner"), and another lessor, respondents Vaquillas Ranch Co. Ltd. ("Vaquillas"). At issue was whether limitations barred the Marshall family's fraud claim against BP and whether Vaquillas lost title by adverse possession after Wagner succeeded to BP's interests, took over the operations, and produced and paid Vaquillas royalties for nearly twenty years. The court held that, because the Marshall family injury was not inherently undiscoverable and BP's fraudulent representations about its good faith efforts to develop the well could have been discovered with reasonable diligence before limitations expired, neither the discovery rule nor fraudulent concealment extended limitations and therefore, the Marshall family's fraud claims against BP were time barred. The court also held that by paying a clearly labeled royalty to Vaquillas, Wagner sufficiently asserted its intent to oust Vaquillas to acquire the lease by adverse possession.

This case returns from the Fifth Circuit to answer one of three certified questions. Appellee Barnes sought to enforce a Working Interest Unit Agreement (WIUA) and Joint Operating Agreement (JOA) for unpaid royalties as a third-party beneficiary or through privity of estate. Doris Barnes sued individually and as the executrix of the estate of her husband, who was an original signatory to a lease that was later assigned to an oil exploration company. The company created a joint venture to begin drilling on lands covered by Barnes’ lease; partner to this joint venture included Appellant Tawes. When the joint venture went bankrupt, Barnes settled her unpaid royalties with the venture. Tawes did not join in the settlement, which gives rise to Barnes’ current claim for the balance of the unpaid royalties. Arguing that because the Bankruptcy Court and Federal District Court concluded that Barnes was a third-party beneficiary to the JOA’s Royalty Provision, Barnes brought suit to enforce, and Tawes appealed. On certification from the Fifth Circuit, the Supreme Court concluded that Barnes had no right to enforce agreements that gave rise to this suit, finding that the original lease assignment to the exploration company did not extend to Tawes. Finding no theory of recovery, the Court did not address the remaining certified questions. View "Tawes v. Barnes" on Justia Law