This morning, the Supreme Court of Texas issued opinions in three cases and denied a petition for review with opinion. The Court also granted seven petitions for review and set two mandamus petitions for argument. Read the complete order list here.
This post will summarize the four opinions. Scott has summarized the issues in the granted petitions for review and the mandamus petitions here.
The three opinions in cases decided are:
No. 12-0920, Hooks v. Samson Lone Star L.P. - This appeal arises from an oil and gas dispute and raises a multitude of issues. Plaintiff Hooks signed three leases with Samson Lone Star and alleged claims for breach of contract, failure to pay royalties, fraud, fraudulent inducement, and statutory fraud. The fraud claim arose from an alleged misrepresentation about where a well had "bottomed out." Samson Lone Star argued that the claim was barred by the statute of limitations because Hooks could have found the true location by searching Railroad Commission records. The Supreme Court rejected that argument because the Railroad Commission records were "tainted" by the alleged fraud. The most recent records showed the same incorrect hole location that was communicated to Hooks, but earlier records showed the correct location. The Court held that reasonable diligence did not require Hooks to search out the prior correct filings.
Hooks also claimed breach of a "most favored nations" clause that required Samson Lone Star to pay royalties to Hooks at the same rate it paid royalties on nearby leases. Hooks contended that Samson Lone Star breached this provision by effectively paying royalties to the State at a higher rate than to Hooks. Samson Lone Star argued that the higher effective rate was not the result of a higher royalty, but was instead the result of increasing the State's "unit royalty interest" in order to induce the State to agree to a pooling agreement. The Supreme Court rejected this argument, holding that because the effect of pooling is that production anywhere in the pooled unit is treated as production on the lessor's tract, increasing the royalty payable from the unit is the same as increasing the royalty paid on the lessor's tract.
The Court also addressed the proper construction of clause that required royalties to be paid based on all production from the formation, not just on gas sold. The parties' dispute centered on how to handle gas condensate. Hooks argued that the formation-production clause required Samson Lone Star to convert the volume of condensate to gas to determine the amount of gas subject to the formation-production royalty. But Hooks also argued that an additional 25% royalty was still due on the condensate in addition to the formation-production volumes. In other words, Hooks sought to have two royalties paid on the condensate. The Court rejected this argument and held that Samson Lone Star was required to pay the royalty only once.
The Court also addressed issues related to (1) ratification of a new pooling unit; (2) the proper way to determine the applicable limitations period when there are two possible breaches of contract, one recurring and one non-recurring; and (3) the proper rate of post-judgment interest under the parties' agreement.
You can read the entire opinion by Justice Devine here.
No. 14-0038, In re The Office of the Attorney General of Texas - This mandamus petition arose from a suit by the Attorney General to establish paternity and obtain a child-support order. In its temporary order establishing paternity and ordering child-support payments, the trial court also ordered the Attorney General to remove a "family violence indicator" that had been administratively attached to the file. In a per curiam opinion, the Supreme Court found that the trial court did not have the power to order removal of the family violence indicator. Click here for the opinion.
No. 14-0279, Farm Bureau County Mutual Ins. Co. v. Rogers - In this per curiam opinion, the Court considered whether a summary-judgment order containing a "Mother Hubbard" clause was a final judgment for purposes of appeal. The petitioner insurance company filed suit against Rogers (its insured) seeking a declaratory judgment that it had no duty to defend her or indemnify her in a tort suit. The insurance company sued for costs and for attorneys' fees under Texas Civil Practice and Remedies Code section 37.009. The insured answered and prayed for recovery of her attorneys' fees under section 37.009 and under the DTPA (although she had not pleaded a DTPA claim). The insurance company moved for summary judgment, and the insured answered but did not file her own motion. The trial court denied the motion, but also affirmatively declared that the insurance company had a duty to defend and indemnify, taxed court costs, and stated that "any and all relief sought in this cause which is not expressly granted herein is DENIED." The court of appeals dismissed the appeal for want of jurisdiction, holding that the summary-judgment order could not have been final because the insured did not file her own motion. The Supreme Court affirmed, but on a different ground. The Court reiterated that a summary-judgment order that grants more relief than requested can still be final if it actually disposes of all claims and all parties. Therefore, it was of no import that the insured had not sought summary judgment. The trial court granted more relief than was requested, but that only makes the judgment erroneous. It does not prevent the order from being final. Instead, the Supreme Court held that the order was not final because it did not expressly address the parties' competing claims for attorneys' fees. The Court reiterated that a Mother Hubbard clause will not, by itself, indicate an intent to enter a final judgment without a conventional trial on the merits. Because there was no indication that the trial court considered or disposed of the attorneys' fees claims, the Supreme Court held that the judgment was not final and remanded to the trial court. Read the opinion here.
The Court also denied the petition for review in No. 13-0355, Gulf Chemical & Metallurgical Corp. v. Miner Dederick Construction LLP, but issued a short per curiam opinion. This petition for review raises issues about the trial court's discretion related to spoliation. The court of appeals found that the trial court abused its discretion and remanded the case. The Supreme Court denied the petition for review, but specifically instructed the trial court to "reconsider all spoliation issues in light of our recently issued opinion in Brookshire Brothers, Ltd. v. Aldridge, 438 S.W.3d 9 (Tex. 2014)."
- Rich Phillips, Thompson & Knight LLP