stephens-johnson-operating-co-henry-w-breyer-iii-trust-cah-ltd-mopi ( 2015 )

Fourth Court of Appeals
San Antonio, Texas
MEMORANDUM OPINION
No. 04-14-00167-CV
STEPHENS & JOHNSON OPERTING CO.; Henry W. Breyer, III, Trust; CAH, Ltd.-MOPI
for Capital Account; CAH, Ltd.-Stivers Capital Account; CAH, Ltd.-Wiegand Resources Capital
Account Wiegand Resources; C.T. Carden; Myrl W. Deitch Trust; E.R. Godbout Family Trust,
Appellants
v.
Charles W. Schroeder, Elsie A. Schroeder Schneider, Hollis London, Terry Mengers Reel, Ted
Charles W. SCHROEDER; Elsie A. Schroeder Schneider; Hollis London; Terry Mengers Reel;
Ted Mengers; Debbie Mengers Quates; August H. Setinmeyer; Carole Schroeder Miller; James
M. Schroeder; Sally Schroeder Tinanus; James E. Schroeder; Sue Schroeder Stanford,
Appellees
From the 229th Judicial District Court, Jim Hogg County, Texas
Trial Court No. CC-04-143
Honorable Ana Lisa Garza, Judge Presiding
Opinion by: Jason Pulliam, Justice
Sitting: Marialyn Barnard, Justice
Patricia O. Alvarez, Justice
Jason Pulliam, Justice
Delivered and Filed: August 12, 2015
AFFIRM IN PART; REVERSE AND REMAND IN PART
This is an appeal from a declaratory judgment and award of attorneys’ fees rendered upon
the Plaintiffs’/Appellees’ motion for partial summary judgment. We affirm in part and reverse
and remand in part.
04-14-00167-CV
PROCEDURAL HISTORY
The litigation underlying this appeal arose in November 2004 and is based upon an oil and
gas lease entered in 1972 between Charles Schroeder and Elsie and C.R. Schneider, as lessors, and
Lawrence Hoover, as lessee. In this action, the underlying Plaintiffs/Lessors (the Schroeder
parties) sought declaratory judgment pronouncing the lease had terminated due to cessation of
production. In addition, the Schroeder parties asserted causes of action for failure to file release,
trespass and bad faith pooling. In 2013, the Schroeder parties sought partial summary judgment
on only the declaratory-judgment action. The trial court granted the Schroeder parties’ motion for
partial summary judgment, entered declaratory relief stating the subject lease terminated as of July
1, 2003, and awarded attorney fees in the amount of $63,797.95 to be paid by defendant, Stephens
& Johnson Operating Co. The trial court severed the remaining causes of action. The collective
Defendants/Appellants (“Stephens and Johnson parties”) now appeal the trial court’s summary
judgment in the declaratory-judgment action. In addition, Genessee Country Museum (Genessee)
files its own, separate appeal from the trial court’s summary judgment.
I. Stephens and Johnson Parties’ Arguments
A. Subject Matter Jurisdiction to Enter Declaratory Relief
The Stephens and Johnson parties argue the trial court lacked subject matter jurisdiction to
enter declaratory relief based upon the Schroeder parties’ failure to adequately allege, plead or
prove a justiciable controversy existed. Because the existence of a justiciable controversy is
necessary to confer subject matter jurisdiction, and the Schroeder parties failed to allege, plead or
prove a justiciable controversy existed, the Stephens and Johnson parties contend the Schroeder
parties failed to satisfy their burden to establish jurisdiction for declaratory relief. The Stephens
and Johnson parties go on to argue that because the Schroeder parties failed to prove the Stephens
and Johnson parties “ever actually denied that production had ceased or that the subject lease had
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terminated” they failed to adequately plead or prove an actual controversy existed to confer subject
matter jurisdiction.
The Stephens and Johnson parties’ argument on appeal appears to pertain to two different
jurisdictional challenges: (1) a challenge to the sufficiency of the pleading to confer subject matter
jurisdiction; and (2) sufficiency of the summary judgment proof to establish the necessary
jurisdictional element of justiciable controversy. The Stephens and Johnson parties raise these
jurisdictional challenges for the first time on appeal. 1 Because these two challenges are reviewed
under different standards, this court will address each individually.
Under the Texas Declaratory Judgments Act, a court may declare the rights, status, and
other legal relations of parties to an action. TEX. CIV. PRAC. & REM. CODE ANN. § 37.003(a) (West
2015). Thus, a declaratory judgment is appropriate when a justiciable controversy exists as to the
rights and status of the parties, and the controversy will be resolved by the declaration sought. Tex.
Health Care Info. Council v. Seton Health Plan, Inc., 94 S.W.3d 841, 846 (Tex. App.—Austin
2002, pet. denied). However, a declaratory-judgment action is not appropriate if it would result in
determination of a hypothetical or contingent situation or determination of questions not essential
to the resolution of an actual controversy. Empire Life Ins. Co. of Amer. v. Moody, 584 S.W.2d
855, 858 (Tex. 1979). “A controversy is considered justiciable … if there exists a real and
substantial controversy involving a genuine conflict of tangible interests and not merely a
theoretical dispute. Otherwise, the judgment amounts to no more than an advisory opinion, which
the district court does not have power to render.” Tex. Health Care Info. Council, 94 S.W.3d at
846.
1
Because the issue whether a trial court has subject matter jurisdiction is a question of law for the court to determine,
a challenge to the trial court’s jurisdiction may be raised for the first time on appeal. Rusk State Hosp. v. Black, 392
S.W.3d 88, 94-97 (Tex. 2012); Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 445 (Tex. 1993)
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Thus, to avoid rendition of an advisory opinion, a court’s subject matter jurisdiction in a
declaratory-judgment action is dependent upon the existence of a justiciable controversy. Id. In a
declaratory-judgment action, the plaintiff bears the burden to establish the existence of a justiciable
controversy by showing the presence of contested issues which conclusively affect any adversary
parties in interest. Hodges v. Brazos County Water Control and Improvement Dist. #1, Big Creek,
Brazos County, 449 S.W.2d 861, 862 (Tex. Civ. App.—Houston [1st Dist.] 1970, writ ref’d n.r.e.).
1. Sufficiency of the Pleading to Establish Justiciable Controversy
Specific to this challenge, the Stephens and Johnson parties contend “unless a party’s
pleadings and evidence demonstrate an actual controversy between the parties, for example,
whether production has actually ceased …, then a declaration under the Declaratory Judgment Act
as to the status of the lease appears unnecessary and improper under Texas law.” Specifically, the
Stephens and Johnson parties contend the Schroeder parties’ request for declaratory judgment that
“the Lease has terminated”, alone, does not show there was a justiciable controversy between the
parties to justify declaratory relief.
A plaintiff is obligated to plead facts affirmatively demonstrating the subject matter
jurisdiction of the trial court. Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226
(Tex. 2004). Courts must liberally construe the plaintiff’s petition, looking to the pleader’s intent
and good faith allegations to determine whether the trial court holds jurisdiction. State v. Holland,
221 S.W.3d 639, 642–43 (Tex. 2007). While a plaintiff should plead facts supporting jurisdiction,
specific allegations about subject matter jurisdiction are not required, and a plaintiff need not “put
on [its] case simply to establish jurisdiction.” Unifund CCR Partners v. Watson, 337 S.W.3d 922,
925 (Tex. App.—Amarillo 2011, no pet.). Whether a plaintiff’s pleadings affirmatively
demonstrate subject matter jurisdiction is a question of law reviewed de novo. Tex. Dep’t of Parks
& Wildlife, 133 S.W.3d at 226.
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The face of the Fourth Amended Petition dispels the Stephens and Johnson parties’
challenge to the sufficiency of the pleading to confer subject matter jurisdiction. In the “Factual
Background” of their Fourth Amended Petition, the Schroeder parties request declaratory relief
that “the Court determine that the Lease has terminated.” Within their petition, the Schroeder
parties state the relevant parties entered an oil and gas lease with a primary term, and subsequently,
production began. The Schroeder parties allege production ceased and began again at a certain
time, but “[a]ccording to the records of the Railroad Commission of Texas, there was no
production … for a seven (7) month period, beginning July 1, 2003 and ending on January 31,
2004…. Moreover, there has been no production … since April 2005 to the present.” The
Schroeder parties allege the cessation of production terminated the subject lease according to its
terms. The Stephens and Johnson parties filed a general-denial answer, stating, they “den[y] each
and every … allegation in said petition contained and says that the same are not true….”
The factual recitation in the Fourth Amended Petition dispels the Stephens and Johnson
parties’ contention that the pleadings fail to allege “an actual controversy between the parties, for
example, whether production has actually ceased” to confer subject matter jurisdiction. Although
the Stephens and Johnson parties contend the Schroeder parties’ “request for declaratory judgment,
alone, does not show there was a justiciable controversy between the parties to justify declaratory
relief”, the Schroeder parties are not tied to their request for declaratory relief, alone, to establish
the existence of a justiciable controversy. The facts, as alleged, do demonstrate a concrete
contested issue whether the lease terminated based upon cessation of production. This contested
issue conclusively affects any adverse parties in interest, and therefore, demonstrates an actual,
justiciable controversy to confer subject matter jurisdiction for declaratory relief. Although the
Schroeder parties did not state specifically that a justiciable controversy exists, the facts alleged
are sufficient to show the existence of a justiciable controversy. Thus, the facts alleged are
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sufficient to affirmatively demonstrate the trial court’s jurisdiction to hear the cause. Finally, the
Stephens and Johnson parties’ general-denial answer further established a justiciable controversy
on the issue whether production had terminated and placed the requested declaratory relief in
dispute.
For these reasons, the Schroeder parties’ Fourth Amended Petition alleges facts sufficient
to demonstrate the existence of a justiciable controversy regarding whether the subject lease
terminated under its terms. Thus, the Fourth Amended Petition demonstrates the trial court’s
subject matter jurisdiction to confer the requested declaratory relief.
2. Sufficiency of Summary Judgment Proof to Establish Justiciable Controversy
Subsumed in the same argument, the Stephens and Johnson parties contend the summary
judgment proof offered to support the requested declaratory relief was insufficient to confer
summary judgment jurisdiction. The Stephens and Johnson parties contend the summary judgment
evidence failed to demonstrate an actual controversy exists, that is, that production had ceased and
was “absolutely devoid of any allegation or suggestion that a true controversy existed between the
parties with respect to the question of whether the subject lease had terminated due to non-
production.” Curiously, the Stephens and Johnson parties state “there is no evidence that [the
Stephens and Johnson parties] ever actually denied that production had ceased or that the subject
lease had terminated by operation of law.”
In support of their motion for declaratory-relief summary judgment, the Schroeder parties
attached an affidavit and supplemental affidavit of Rex Howell. In these affidavits, Mr. Howell
stated his opinion based upon review of the records of the Texas Railroad Commission. Mr.
Howell attested his opinion consistent with the facts as alleged by the Schroeder parties: The
named parties entered the subject oil and gas lease with a primary term of five years. Production
began and ceased and began again at a certain time, until finally, according to the records of the
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Texas Railroad Commission, “no gas production was recorded … for a seven month period from
July, 2003 through January, 2004 and thereafter no production has been reported … since April
2005 to the present.” Attached to Rex Howell’s affidavit are the records of the Texas Railroad
Commission upon which his opinion is based. The Stephens and Johnson parties challenged the
sufficiency of the pleading of the motion for summary judgment and challenged the sufficiency of
the evidence through special exceptions for the same reasons presented on appeal; however, the
Stephens and Johnson parties did not offer any controverting evidence.
This summary judgment evidence presented by the Schroeder parties dispels the Stephens
and Johnson parties’ contention that the Schroeder parties failed to provide sufficient proof of an
actual controversy between the parties to confer subject matter jurisdiction, that is, whether
production had actually ceased. Mr. Howell’s affidavit and supplemental affidavit provide
uncontested proof that production on the subject lease had ceased. Thus, the affidavits provide
sufficient proof and a sufficient showing that an actual and justiciable controversy existed whether
production on the subject well ceased and provided sufficient summary judgment evidence in
support of the trial court’s ultimate finding.
With regard to the Stephens and Johnson parties’ contention that there is “no evidence that
[they] ever actually denied that production had ceased”, this statement comes dangerously close
to an admission that, in itself, would support the trial court’s summary judgment. However, in the
context of the brief, as a whole, it appears the Stephens and Johnson parties intend to only advance
an argument relative to the sufficiency of the pleadings and summary judgment proof. In any
event, the Schroeder parties need not provide proof of the Stephens and Johnson parties’ actual
denial, but need only provide proof of a justiciable controversy. In addition, the Stephens and
Johnson parties’ general denial contained within their First Amended Answer is sufficient to
establish these parties denied that production on the subject oil and gas lease had ceased.
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For these reasons, the affidavit of Rex Howell is sufficient proof to demonstrate the trial
court’s subject matter jurisdiction to confer the requested declaratory relief. The Stephens and
Johnson parties provided no controverting evidence. Therefore, the summary judgment evidence
offered is sufficient to affirmatively demonstrate the trial court’s subject matter jurisdiction to hear
the cause.
We overrule the Stephens and Johnson parties’ first issue.
B. Special Exception
In their second issue, the Stephens and Johnson parties contend the trial court erred by
overruling their special exceptions to the Schroeder parties’ motion for partial summary judgment.
The Stephens and Johnson parties contend the Schroeder parties’ request for summary judgment
“to declare and determine the status of the Lease” was vague and ambiguous and did not provide
sufficient notice of what the Schroeder parties were requesting.
Trial courts have broad discretion to sustain or deny special exceptions. Thus, we review
the trial court’s actions under the abuse of discretion standard of review. Kutch v. Del Mar College,
831 S.W.2d 506, 508 (Tex. App.—Corpus Christi 1992, no writ). The test for determination
whether a trial court abused its discretion is whether the trial court acted without reference to any
guiding rules or principles or otherwise acted in an arbitrary or unreasonable manner. Downer v.
Aquamarine Operators, Inc., 701 S.W.2d 238, 241–42 (Tex. 1985). While uncommon, special
exceptions are available in the context of a motion for summary judgment. The purpose of special
exceptions focused upon a summary judgment motion is to ensure the parties and the trial court
are focused on the same grounds. See McConnell v. Southside Indep. Sch. Dist., 858 S.W.2d 337,
342–43 (Tex. 1993).
We have reviewed the pleadings, the motion for summary judgment and responses, and the
Stephens and Johnson parties’ special exception. While the request for declaratory relief in the
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Schroeder parties’ motion for summary judgment, i.e. that the trial court “declare the status of the
Lease”, does appear non-specific and open-ended, the motion for summary judgment, as a whole,
does provide reasonable notice of the basis of the requested relief. The body of the motion for
summary judgment states the same facts and representations as the Fourth Amended Petition. The
alleged facts and argument within the Schroeder parties’ petition and motion for summary
judgment provided sufficient notice to the Stephens and Johnson parties of the declaratory relief
requested and sufficiently guided the trial court in its determination.
Furthermore, the Stephens and Johnson parties’ special exception to the motion for
summary judgment was based upon the same argument presented on appeal, i.e. that the Schroeder
parties failed to provide sufficient pleading of a justiciable controversy. For the same reasons as
recited above, the Schroeder parties did provide sufficient pleading of a justiciable controversy.
For these reasons, the trial court did not abuse its discretion in denying the Stephens and
Johnson parties’ special exception. The Stephens and Johnson parties’ second issue is overruled.
II. Genessee Country Museum
A. Pleading Sufficiency
In its’ first issue, Genessee contends the trial court erred by granting the declaratory relief
against it because the Schroeder parties’ Fourth Amended Petition never established that Genessee
was a party or signatory to the subject Lease. Because the petition states only that Genessee owns
an interest in the lease, Genessee contends this pleading is insufficient to assert causes of action
against it and insufficient to award declaratory relief against it. Genessee asserts this matter of
avoidance for the first time on appeal.
To properly preserve error for appellate review, a party must make a timely, specific
objection to the trial court. See TEX. R. APP. P. 33.1(a). The party who fails to make a timely
objection or fails to raise a pleading deficiency before submission of the case cannot later raise the
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pleading deficiency for the first time on appeal. Roark v. Stallworth Oil and Gas, Inc., 813 S.W.2d
492, 495 (Tex. 1991).
In Genessee’s original answer and subsequent amended answers, it entered a general denial
and at no time in the 11-year litigation of this matter did Genessee assert a challenge to the
sufficiency of the pleadings or otherwise challenge the Schroeder parties’ ability to assert a cause
of action against it. Genessee never challenged the trial court’s authority to award the requested
declaratory relief against it. Genessee failed to raise this challenge in its response to summary
judgement or at any time before the trial court rendered declaratory judgment.
Because Genessee failed to raise this challenge, the Schroeder parties’ action against
Genessee was effectively tried by consent. Accordingly, Genessee failed to preserve any alleged
error regarding a challenge to the sufficiency of the pleading or the Schroeder parties’ ability to
assert a cause of action against it, and thus, has waived this complaint for appeal. See id.
Notwithstanding lack of preservation of error, however, Genessee’s contention is without
merit. In a declaratory judgment action, all parties who have or who claim any interest that would
be affected by the requested declaration must be made parties. TEX. CIV. PRAC. & REM. CODE
ANN. § 37.006(a) (West 2015). Genessee does not deny that it holds a claim or interest in the
subject lease that would be affected by the requested declaratory relief. Therefore, Genessee is a
proper party.
For these reasons, Genessee’s first issue is overruled.
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B. Other Controversies
In its second point of issue, Genessee asserts the trial court erred by awarding declaratory
relief when other controversies existed and survived. Genessee’s argument with regard to this
issue on appeal consists entirely of the following:
Finally, the trial court should not render a declaratory judgment when other
controversies exist between the parties. Willacy Cty. Appr. Dist. v. No. Alamo
Waters., 676 S.W.2d 632, 642 (Tex. App.—Corpus Christi 1984, ref. n.r.e.) In this
instance, the Plaintiffs still have a bad faith pooling claim, a failure to file release
claim, and a trespass claim before the court.
Genessee’s second issue on appeal provides no argument stating specific reasons the trial
court’s severance was erroneous. Because Genessee provides no argument or extrapolation on the
ground or basis of error, this argument is not sufficiently developed. See TEX. R. APP. P. 38.1.
This court cannot decide an issue on appeal without proper argument and authority showing why
the actions of the trial court were in error. Foster v. State, 101 S.W.3d 490, 499 (Tex. App.—
Houston [1st Dist.] 2002, no pet.). To present appellate argument, an appellant must go further
than just merely stating an issue, but must present argument and cite supporting authority. Bechtel
Corp. v. City of San Antonio, No. 04-04-00910-CV, 2006 WL 228689, at *2 (Tex. App.—San
Antonio 2006, no pet.); Wilson & Wilson Tax Servs., Inc. v. Mohammed, 131 S.W.3d 231, 242
(Tex. App.—Houston [14th Dist.] 2004, no pet.).
By failing to properly brief the issue presented, Genessee presents nothing for review on
appeal because an appellate court cannot speculate as to the arguments that could have been
brought or attempt to formulate arguments for a party. See Wilson & Wilson Tax Servs., Inc., 131
S.W.3d at 242.
We do note that Genessee did cite a case to support this point, however, this cited case only
provides the general rule regarding a trial court’s broad authority and discretion to grant or deny a
severance. Without presentation of a ground or challenge to a trial court’s ruling, Genessee’s
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argument is not sufficiently developed or presented for appellate review. See Foster, 101 S.W.3d
at 499.
Therefore, we hold this issue on appeal is inadequately briefed, and, as such, is waived.
III. Attorneys’ Fees
In the Stephens and Johnson parties’ and Genessee’s final issue on appeal, the parties
contend the trial court erred by awarding attorneys’ fees to the Schroeder parties. The Stephens
and Johnson parties argue, among other things, that the Schroeder parties are not entitled to an
award of attorneys’ fees on summary judgment because they did not move for attorneys’ fees in
their motion for summary judgment or supplemental motion for summary judgment.
Genessee argues the trial court erred by awarding attorney fees because the Schroeder
parties failed to segregate the attorney fees relative to the declaratory-judgment action from the
remaining causes of action and because the Schroeder parties failed to prove the awarded
attorneys’ fees were reasonable. In addition, Genessee argues a fact issue existed regarding
reasonable attorney fees.
Summary judgment cannot be granted except on the grounds expressly presented in the
motion. TEX. R. CIV. P. 166a(c) (“The motion for summary judgment shall state the specific
grounds therefor.”); Sci. Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 912 (Tex. 1997); McConnell,
858 S.W.2d at 341 (Tex. 1993). In determining whether grounds are expressly presented, reliance
may not be placed on the briefs or summary judgment evidence. See McConnell, 858 S.W.2d at
341; Torres v. Garcia, No. 04-11-00822-CV, 2012 WL 3808593, at *5 (Tex. App.—San Antonio
2012, no pet.) (mem. op.). Accordingly, “[s]pecific grounds for summary judgment must be
expressly stated in the motion for summary judgment itself and not ... in the summary judgment
evidence....” McConnell, 858 S.W.2d at 344; Torres, 2012 WL 3808593, at *5. Therefore, a
party’s request for attorney fees and the grounds supporting this request must be expressly stated
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in the motion before a court may award summary judgment on the stated grounds. McConnell,
858 S.W.2d at 341; Torres, 2012 WL 3808593, at *5.
Review of the Schroeder parties’ motion for summary judgment and supplemental motion
for summary judgment reveal there is no request for, or statement of any ground for, the recovery
of attorneys’ fees. The motions are completely silent on the issue and address only the request for
declaratory relief. The Schroeder parties plead for attorneys’ fees in their Fourth Amended Petition
and did attach an affidavit pertinent to recovery of attorneys’ fees, with attached invoice, to their
supplemental motion for summary judgment. The affidavit was an attestation of one of the
Schroeder parties’ attorneys and pertained to the amount of reasonable and necessary attorneys’
fees the attorney believed were due.
While the Schroeder parties did provide an affidavit pertinent to an award of attorneys’
fees and did plead for an award of attorneys’ fees, they failed to request or state any ground for the
recovery of attorneys’ fees within their motion for summary judgment. Because the trial court
may not rely upon the pleadings or summary judgment evidence as support for a summary
judgment award, the trial court erred by awarding attorneys’ fees through a summary judgment
award. See McConnell, 858 S.W.2d at 344; Torres, 2012 WL 3808593, at *5.
Accordingly, because we cannot affirm a summary judgment on grounds not stated in the
motion, we sustain the Stephens and Johnson’s parties’ second issue on appeal. Because this
disposition requires reversal of the trial court’s award of attorneys’ fees, we do not address
Genessee’s independent challenge to the award.
Based upon the foregoing, we affirm the portion of the trial court’s summary judgment
with regard to the declaratory relief granted. We reverse the trial court’s summary judgment with
regard to the award of attorneys’ fees to be paid by the Stephens and Johnson parties and remand
for further discretionary proceedings on that issue.
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Accordingly, we affirm in part and reverse and remand in part.
Jason Pulliam, Justice
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