in Re DSTJ, L.L.P., Successor to DSTJ Corporation and Milestone Operating, Inc. ( 2016 )

Petition for Writ of Mandamus Conditionally Granted, in Part, and Denied,
in Part, and Memorandum Opinion filed November 8, 2016.
In The
Fourteenth Court of Appeals
NO. 14-16-00645-CV
IN RE DSTJ, L.L.P., SUCCESSOR TO DSTJ CORPORATION, AND
MILESTONE OPERATING, INC., Relators
ORIGINAL PROCEEDING
WRIT OF MANDAMUS
60th District Court
Jefferson County, Texas
Trial Court Cause No. A-172,979
MEMORANDUM OPINION
Relators, DSTJ, L.L.P., successor to DSTJ Corporation, and Milestone
Operating, Inc., seek mandamus relief in this court. See Tex. Gov’t Code Ann.
§ 22.221 (West 2004); see also Tex. R. App. P. 52. Relators ask this court to
compel the Honorable Gary Sanderson, presiding judge of the 60th District Court
of Jefferson County, to set aside his (1) May 20, 2014 order limiting trial on
remand to the issue of ratification; and (2) July 19, 2016 order denying relators’
motion to quash the deposition of the corporate representative for third-party
ExxonMobil Corporation.1 We conditionally grant the petition, in part, and deny
it, in part.
BACKGROUND
The underlying dispute involves the determination of ownership of certain
mineral leases located in Jefferson County, Texas. DSTJ engages in oil and gas
exploration and production. Real parties in interest M & M Resources, Inc.,
Energy Land Resources a/k/a Energy Land Resources Land Services (“ELR”),
A.M. Phelan III, the president of M & M, and Daniel Phelan are landmen.
M & M claimed that it obtained oil, gas, and mineral leases from a number
of mineral owners in various tracts of land in Jefferson County, and that it assigned
twenty-one leases to DSTJ. According to M & M, it was to receive an override
royalty from DSTJ for any oil and gas production from the leased tracts, but DSTJ
failed to make royalty payments, constituting a default under the assignment.
M & M asserted that DSTJ’s default allowed it to terminate the assignment.
1
Relators originally filed their petition for writ of mandamus in the Beaumont Court of
Appeals on August 15, 2016. The case was transferred to this court pursuant to order of the
Texas Supreme Court. We conclude that the disposition of the petition would be the same under
precedent of the Beaumont Court of Appeals and precedent of this court. See Tex. R. App. P.
41.3.
2
DSTJ contended that it engaged the services of M & M, ELR, and the
Phelans on its behalf to lease certain mineral properties located in Jefferson
County. DSTJ alleged that, although it was not necessary to take the leases in any
name other than DSTJ, the leases were taken in M & M’s name. M & M, ELR,
and the Phelans forwarded the assignment, which had been recorded previously, to
DSTJ. DSTJ rejected the assignments based on the form and provisions of the
assignment.
On July 28, 2004, M & M filed a petition for declaratory judgment against
DSTJ, seeking a judgment that (1) the assignment was terminated in its entirety;
(2) any title, right, or interest DSTJ held in the leases was terminated; and (3)
M & M owned all title, rights, and interests in all equipment, personal property,
and fixtures located on, held, or used in connection with the leases.
DSTJ filed an original answer and asserted a number of affirmative
defenses, including the statute of frauds. DSTJ also alleged counterclaims against
M & M and third-party claims against ELR and the Phelans. M & M pleaded a
number of affirmative defenses to DSTJ’s counterclaims, including ratification.
ELR alleged that it owned an undivided interest in the minerals that were subject to
a lease. ELR asserted that the lease obligated DSTJ and/or Milestone to
commence drilling operations by May 2003, or pay delay rentals, but relators
failed to do either.
Milestone, the operator that drilled one of the wells on the disputed leases,
filed a petition in intervention and a petition in interpleader. Milestone alleged that
it held funds to which M & M and DSTJ had competing claims, and deposited the
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funds into the registry of the court. M & M opposed Milestone’s intervention into
the case because Milestone was not an innocent stakeholder, but was DSTJ’s alter
ego.
M & M, as plaintiff, filed a traditional motion for partial summary judgment,
in which it argued that DSTJ had breached the terms of the assignment by failing
to make royalty payments. M & M, ELR, and the Phelans also filed a traditional
motion for partial summary judgment in their capacity as counter-defendant and
third-party defendants. The trial court did not rule on the summary judgment
motions at that time. The case went to trial in May 2009, but ended in a mistrial.
On October 9, 2009, the trial court signed an order granting plaintiff
M & M’s first amended motion for partial summary judgment. The trial court
ordered and declared that (1) the assignment had terminated; (2) any right, title, or
interest held by DSTJ in the leases had terminated; (3) DSTJ’s right, title, or
interest in all equipment, personal property, and fixtures located on or held or used
in connection with the leases had terminated; and (4) M & M had right, title, and
interest in all such equipment, personal property, and fixtures. The trial court
further directed the clerk to pay M & M $1,041.37, plus interest, which represent
the overriding royalties that Milestone had interpleaded into the registry of the
court. The order did not explain the basis on which the trial court was granting
partial summary judgment.
The trial court also signed an order granting counter-defendant M & M’s
first amended motion for partial summary judgment. The trial court ordered that
DSTJ take-nothing by way of its counterclaims asserted against M & M, but did
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not explain the basis on which it granted partial summary judgment. The trial
court did not enter summary judgment in favor of ELR.
In February 2011, the case proceeded to trial for a second time on the
remaining claims. The jury found that (1) ELR had breached its fiduciary duties to
relators, but awarded no damages to DSTJ; and (2) M & M had incurred
reasonable attorney’s fees in the amount of $386,700 from July 28, 2004, to
November 9, 2009, and $59,880 from November 10, 2009, to entry of judgment,
and costs in the amount of $53,700. The trial court signed a final judgment on
March 9, 2011, which incorporated the summary judgment orders and the jury’s
verdict. Under the final judgment, the trial court order that DSTJ take nothing on
its claims against M & M, ELR, and the Phelans, and that M & M recover
$386,000 in attorney’s fees and $53,700 in costs.
All parties appealed the final judgment to the Beaumont Court of Appeals.
See DSTJ, L.L.P. v. M & M Res., Inc., No. 09-11-00292-CV, 2012 WL 2450820
(Tex. App.—Beaumont June 28, 2012, pet. denied) (mem. op.). On appeal,
relators argued that the trial court erred by granting M & M’s partial motion for
summary judgment because the statute of frauds precluded enforcement of the
overriding royalty provision in the assignment. Id. at *5. The court of appeals
found this issue dispositive and reversed the order granting summary judgment in
favor of M & M because there was a genuine issue of material fact on whether
DTSJ had ratified or accepted the assignment, thereby removing it from the
purview of the statute of frauds. Id. at *7. It was not necessary for the court to
reach the parties’ other issues. Id. The trial court “reverse[d] the trial court’s final
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judgment, which was entered after the remaining issues were tried on the merits,
and . . . remand[ed] for further proceedings consistent with this opinion.” Id. at *8.
The court of appeals issued its mandate on February 28, 2013. On January
22, 2014, relators filed a motion to enforce the mandate and the general remand.
Relators argued that the remand was a general remand, which reopened the entire
case. M & M argued that ratification was the only issue before the trial court on
remand. On May 20, 2014, the trial court signed the order denying relators’
motion to enforce mandate and general remand, and granting M & M’s request to
limit the issues at trial on remand to ratification.
M & M sought additional discovery on the issue of ratification. On
September 17, 2014, M & M filed a motion to compel four depositions, including
the deposition of a designated representative of ExxonMobil Corporation. The
trial court held a hearing on the motion to compel on October 16, 2014, and signed
an order granting the motion to compel the four depositions on October 21, 2014.
M & M noticed the depositions for summer 2016, with the deposition of
ExxonMobil’s corporate representative noticed for July 14, 2016. Relators filed a
motion to quash the ExxonMobil deposition. The trial court held a hearing on
relators’ motion to quash the ExxonMobil deposition on July 19, 2016, and signed
the order denying relators’ motion that day.
Relators seek mandamus relief from the May 20, 2014 order denying their
motion to enforce the mandate, and the July 19, 2016 order denying their motion to
quash the deposition of ExxonMobil’s representative.
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STANDARD OF REVIEW
To be entitled to mandamus relief, a relator must demonstrate (1) the trial
court clearly abused its discretion; and (2) the relator has no adequate remedy by
appeal. In re Reece, 341 S.W.3d 360, 364 (Tex. 2011) (orig. proceeding). A trial
court abuses its discretion if it reaches a decision so arbitrary and unreasonable as
to amount to a clear and prejudicial error of law or if it clearly fails to analyze the
law correctly or apply the law correctly to the facts. In re Cerberus Capital Mgmt.
L.P., 164 S.W.3d 379, 382 (Tex. 2005) (orig. proceeding) (per curiam).
The adequacy of an appellate remedy must be determined by balancing the
benefits of mandamus review against the detriments. In re Team Rocket, L.P., 256
S.W.3d 257, 262 (Tex. 2008) (orig. proceeding). Because this balance depends
heavily on circumstances, it must be guided by analysis of principles rather than
simple rules that treat cases as categories. In re McAllen Med. Ctr., Inc., 275
S.W.3d 458, 464 (Tex. 2008) (orig. proceeding). In evaluating benefits and
detriments, we consider whether mandamus will preserve important substantive
and procedural rights from impairment or loss. In re Prudential Ins. Co. of Am.,
148 S.W.3d 124, 136 (Tex. 2004) (orig. proceeding). We also consider whether
mandamus will “allow the appellate courts to give needed and helpful direction to
the law that would otherwise prove elusive in appeals from final judgments.” Id.
Finally, we consider whether mandamus will spare the litigants and the public “the
time and money utterly wasted enduring eventual reversal of improperly conducted
proceedings.” Id.
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ANALYSIS
Relators contend that the trial court abused its discretion by limiting the
issue for trial on remand to ratification, contrary to the court of appeals’ mandate
for a general remand. “Generally, when an appellate court reverses and remands a
case for further proceedings, and the mandate is not limited by special instructions,
the effect is to remand the case to the lower court on all issues of fact, and the case
is opened in its entirety.” Simulis, L.L.C. v. Gen. Elec. Capital Corp., 392 S.W.3d
729, 734 (Tex. App.—Houston [14th Dist.] 2011, pet. denied); see also Univ. of
Tex. Sys. v. Harry, 948 S.W.2d 481, 483 (Tex. App.—El Paso, 1997, no writ)
“When we remand a cause to the trial court for a new trial, the remand generally is
unlimited in scope and the cause is reopened in its entirety.”). When the appellate
court remands a case and limits a subsequent trial to a particular issue, the trial
court is restricted to a determination of that issue. Hudson v. Wakefield, 711
S.W.2d 628, 630 (Tex. 1986); Celtic Props., L.C. v. Cleveland Reg’l Med. Ctr.,
L.P., No. 09-13-00464-CV, 2105 WL 4600661, at *3 (Tex. App.—Beaumont July
31, 2015, no pet.) (mem. op.). For a reversal to be limited to particular fact issues,
it must be clearly apparent from the decision that the appellate court intended to do
so. Hudson, 711 S.W.2d at 630. The scope of the mandate is determine by
looking to both the mandate and the opinion. Id; Celtic Props., L.C., 2015 WL
4600661, at *3.
The Beaumont Court of Appeals’ mandate states, in relevant part:
This Court has concluded there was error in the judgment. It is
therefore ordered that the judgment of the Court below is reversed and
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the cause remanded to the trial court. The trial court’s judgment is
REVERSED AND REMANDED. All costs of the appeal are
assessed against the appellees. A copy of this judgment shall be
certified below for observance.
Here, the mandate does not contain any language limiting the scope of the
remand to ratification or any other specific issue. In the absence of any limitation
of the remand to the issue of ratification, the remand was a general remand.2
In the trial court, M & M argued that the scope of remand was limited to
ratification because that was the only issue that the court of appeals addressed.
M & M, however, does not address that argument in its response to the petition.
Instead, M & M raises two new arguments in response to relators’ petition.
2
See Mattox v. Cty. Comm’rs’ Ct., 389 S.W.3d 464, 474 (Tex. App.—Houston [14th
Dist.] 2012, pet. denied) (holding that, because the mandate, judgment, and opinion did not limit
the scope of remand with special instructions, the court’s reversal and remand for further
proceedings was a general remand, and the parties were free to raise new issues and arguments
on remand); Maswoswe v. Nelson, No. 09-11-00639-CV, 2012 WL 1448575, at *2 (Tex. App.—
Beaumont Apr. 26, 2012, no pet.) (mem. op.) (“Nothing in our opinion or judgment limited the
scope of remand. . . Consequently, [appellees] were free to amend their pleadings and add new
claims[.]”); Manon v. Solis, 142 S.W.3d 380, 386 (Tex. App.—Houston [14th Dist.] 2004, pet.
denied) (holding that, because the opinion and mandate did not provide any special instruction to
the trial court on remand, the case was remanded for a new trial on all issues of fact, and the case
was reopened in its entirety); Graham Sav. & Loan Ass’n, F.A. v. Blair, 986 S.W.2d 727, 729
(Tex. App—Eastland 1999, no pet.) (“This entire case was expressly remanded with no
instruction to modify or affirm the judgment in part. The trial court should have set the cause for
a new trial on all of the issues of fact.”); Jones v. McDonald, 880 S.W.2d 260, 263 (Tex. App.—
Waco 1994, orig. proceeding) (holding that remand was a general remand because the appellate
court’s judgment and mandate “neither expressly prohibited the trial court from litigating any
particular issues nor expressly directed that only certain severed issues or causes could still be
litigated on remand”); Price v. Gulf Atl. Life Ins. Co., 621 S.W.2d 185, 186–87 (Tex. Civ.
App.—Texarkana 1981, writ ref’d n.r.e.) (holding that remand was not a partial remand because
“[n]owhere was it directed or suggested that the remand was to be anything but a general one”).
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First, M & M asserts that, because relators waited more than two years from
the trial court’s May 20, 2014 order denying the motion to enforce the mandate,
relators’ request for relief is barred by laches. Mandamus is not issued as a matter
of right, but at the discretion of the court. Rivercenter Assocs. v. Rivera, 858
S.W.2d 366, 367 (Tex. 1993) (orig. proceeding). Although mandamus is not an
equitable remedy, its issuance is largely controlled by equitable principles. Id.
One such principle is that equity aids the diligent and not those who slumber on
their rights. Id. Whether a party’s delay in asserting its rights precludes
mandamus relief depends on the circumstances. In re Oceanografia, S.A. de C.V.,
494 S.W.3d 728, 730 (Tex. 2016) (orig. proceeding) (per curiam).
According to the mandamus record, the next order the trial court entered was
the October 21, 2014 order, granting M & M’s motion to compel depositions
related to the issue of ratification. M & M waited until the summer of 2016 to set
the deposition of ExxonMobil’s representative for July 14, 2016—two months
prior to the September 12, 2016 trial date. Under these circumstances, laches is not
a bar to challenging the May 20, 2014 order denying relators’ motion to enforce
the mandate.
M & M contends, in the alternative, that even if laches does not apply, the
trial court had discretion to order a separate trial on any claim under Rule 174(b) of
the Texas Rules of Civil Procedure. See Tex. R. Civ. P. 174(b). Rule 174(b)
provides the following:
Separate Trials. The court in furtherance of convenience or to avoid
prejudice may order a separate trial of any claim, cross-claim,
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counterclaim, or third-party claim, or of any separate issue or of any
number of claims, cross-claims, counterclaims, third-party claims, or
issues.
Tex. R. Civ. P. 174(b).
M & M argues that relators cannot show that the trial court abused its
discretion in light of the broad discretion the court has under Rule 174(b). M & M
does not explain how Rule 174(b) is relevant to the underlying case. Here, the trial
court disposed of all claims in the March 2011 final judgment, which included the
jury verdict and in the partial summary judgment orders. The court of appeals’
mandate remanded every claim to be retried, and the trial court’s order did not
indicate that the court intended to try all issues other than ratification at another
time. Therefore, M & M’s argument is without merit. We conclude that the trial
court abused its discretion by limiting the trial to the issue of ratification because
the mandate imposed no such limitation on remand.
We must also determine whether relators have an adequate remedy by
appeal. Among the factors we consider in determining whether an adequate
remedy by appeal exists is whether mandamus will preserve important substantive
and procedural rights from impairment or loss. See Prudential Ins. Co. of Am., 148
S.W.3d at 136. Mandamus is necessary in this case to preserve relators’ important
substantive right to have the entire case retried on remand as the Beaumont Court
of Appeals directed in its mandate. We also consider whether mandamus will
spare the litigants and the public “the time and money utterly wasted enduring
eventual reversal of improperly conducted proceedings.” Id. Entry of a judgment
based only on ratification after the third trial in this case, which has been pending
11
since 2004, would be contrary to the court of appeals’ mandate. Such error would
result in the eventual reversal of that judgment and necessitate a fourth trial. See In
re Richardson, 327 S.W.3d 848, 851 (Tex. App.—Fort Worth 2010, orig.
proceeding) (relator was not required to perfect a second interlocutory appeal to
require the trial court to give effect to the appellate court’s judgment and mandate).
We conclude that relators do not have an adequate remedy by appeal.
CONCLUSION
In summary, we hold that the Beaumont Court of Appeals’ mandate is a
general remand. Therefore, (1) the trial court abused its discretion by denying
relators’ motion to enforce the court of appeals’ mandate and limiting trial on
remand to the issue of ratification; and (2) relators do not have an adequate remedy
by appeal. See Lee v. Downey, 842 S.W.2d 646, 648 (Tex. 1992) (orig.
proceeding) (holding that mandamus is available when the trial court does not
comply with the higher court’s mandate; In re Elite Door & Trim, Inc., 362 S.W.3d
199, 201 (Tex. App.—Dallas 2012, orig. proceeding) (same).
Accordingly, we conditionally grant the petition for writ of mandamus, in
part, and direct the trial court to (1) vacate its May 20, 2014 order, which denies
relators’ motion to enforce the mandate and limits trial on remand to the issue
ratification; and (2) enter an order granting relator’s motion to enforce mandate as
a general remand. The writ will issue only if the trial court fails to comply with
this opinion.
We deny relators’ petition regarding the trial court’s July 19, 2016 order
compelling the deposition of ExxonMobil’s corporate representative without
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regard to the merits and without prejudice to refiling, if necessary. We further lift
our stay entered on August 18, 2016.
/s/ Ken Wise
Justice
Panel consists of Justices Boyce, McCally, and Wise.
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