Glenn A. Wade and Karen Wade v. XTO Energy Inc. ( 2013 )

COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 02-12-00007-CV
Glenn A. Wade and Karen Wade § From County Court at Law No. 3
§ of Tarrant County (2009-071744-3)
v.
§ January 24, 2013
XTO Energy Inc. § Opinion by Justice Walker
JUDGMENT
This court has considered the record on appeal in this case and holds that
there was no error in the trial court‘s judgment. It is ordered that the judgment of
the trial court is affirmed.
It is further ordered that appellants Glenn A. Wade and Karen Wade shall
pay all costs of this appeal, for which let execution issue.
SECOND DISTRICT COURT OF APPEALS
By_________________________________
Justice Sue Walker
COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 02-12-00007-CV
GLENN A. WADE AND KAREN APPELLANTS
WADE
V.
XTO ENERGY INC. APPELLEE
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FROM COUNTY COURT AT LAW NO. 3 OF TARRANT COUNTY
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MEMORANDUM OPINION1
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I. INTRODUCTION
In this breach of contract case, appellants Glenn A. Wade and Karen
Wade argue that the trial court erred by granting judgment notwithstanding the
verdict (JNOV) after the jury returned a verdict for the Wades, finding that they
1
See Tex. R. App. P. 47.4.
2
had entered into a mineral lease with appellee XTO Energy Inc. and that XTO
had breached the lease. We will affirm.
II. FACTUAL AND PROCEDURAL BACKGROUND
XTO retained Holland Acquisitions to assist XTO in leasing the mineral
interests from homeowners in the Overton Woods neighborhood of Fort Worth.
Holland was responsible for conducting title searches, hosting lease-signing
parties, and preparing the lease paperwork.
The Wades own Block 1, Lot 16 in the Overton Woods subdivision,
including the mineral interests in the property. Holland, as XTO‘s agent, sent the
Wades a letter in November 2007, proposing to lease the Wades‘ mineral
interests for a $10,000 per net acre bonus payment and a 25% royalty. The
Wades thought the offer was too low and did nothing to accept it.
In July 2008, Holland sent the Wades another offer letter, proposing a
$21,000 per net acre bonus and a 26% royalty. The letter also included a lease
form, which had a signature block for the Wades to sign as lessors and a notary
block on the last page of the lease. The lease form also included as a separate
page an Exhibit ―A‖ describing the leased premises as Block 1, Lot 16 of the
Overton Woods Addition to Fort Worth. The Wades took the lease form to a
bank and signed it in front of a notary, who filled out the notary block. However,
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Glenn decided to ―sit on it for a while,‖ thinking XTO might make a better offer,
and he put the signed lease on his desk.2
On September 4, 2008, Holland sent the Wades a new offer letter,
proposing a $25,000 per net acre bonus and a 25% royalty. The letter included a
lease form, which, like the previous lease, included signature and notary blocks
on the last page of the lease and an Exhibit ―A‖ describing the leased premises
as the Wades‘ property. The letter instructed the Wades to mail the executed
lease to Holland, at which time XTO would mail them a bonus check. Glenn did
not trust that he would receive a check, so he contacted Pam Dietrich with
Holland and informed her that he and his wife wanted to accept that offer. Glenn
told Dietrich that he did not want to mail the signed lease back to Holland but
wanted instead to exchange it for a bonus check. Dietrich informed Glenn of an
upcoming signing party where he could exchange the executed lease for a bonus
check.
The Wades never executed the September 4, 2008 lease. Glenn went to
the signing party on September 18, 2008, and took with him all of the documents
that he had received from Holland and XTO, including the executed July 2008
lease and the unexecuted September 4, 2008 lease. Karen did not go with him.
A Holland employee at the registration table looked at the documents and told
Glenn that they were out of date and that he needed to sign a new lease. The
2
He also made a copy of the last page of the lease for his records.
3
Holland employee took a new lease form off a stack of leases on the table and
handed it to Glenn; Glenn confirmed that it contained the same bonus and royalty
terms as the lease he received in the mail earlier that month. Glenn asked if his
wife needed to come to the signing party to sign the new lease, and the Holland
employee told him that they could use the signature page from the July 2008
lease that had already been signed by the Wades and notarized. The Holland
employee wrote Glenn‘s and Karen‘s names and address in the blanks for the
lessors‘ on the first page of the lease form and attached the last page of the July
2008 lease (executed by the Wades and the notary) to the new lease. The
Holland employee kept the lease and told Glenn to go to the back table to get a
bonus check. At the check table, Glenn filled out a check receipt form and
received a bonus check in the amount of $12,430.3 The check stub attached to
the check included a description of the Wades‘ property, including the lot and
block numbers and acreage.
As Glenn left the signing party, two Holland representatives stopped him
and told him that they could not find his signed lease in their paperwork; they
asked to look through his documents to see if it was mistakenly included in them.
When they did not find it in Glenn‘s papers, he offered to sign another lease and
have Karen come to the party and sign as well. The Holland employees told him
not to ―worry about it,‖ and Glenn left. The Holland employees returned to the
3
The check was pre-printed and dated September 16, 2008, two days prior
to the signing party.
4
signing party and resumed looking for the signed lease or anything with the
Wades‘ signatures on it. They only found the check receipt form in their
paperwork, so a Holland leasing agent drove to the Wades‘ residence to have
them sign a new lease. No one answered the door.
The following day, the Wades used the bonus check to purchase a
certificate of deposit in the same amount as the bonus payment. However, on
that same day, XTO stopped payment on the bonus check because it did not
have a signed lease from the Wades; XTO did not notify the Wades that it
stopped payment on the check. The Wades‘ bank sent them a letter the
following week notifying them of the stopped payment. Glenn did not read the
letter until several weeks later, and upon reading it, he contacted Dietrich to
inquire about getting a new bonus check. She told Glenn that XTO was no
longer leasing. Glenn also spoke with XTO‘s general counsel, who said that
XTO had stopped payment on the check because it did not have a signed lease
and that it was making no further leasing offers. Shortly thereafter, XTO sent the
Wades a letter stating that it was rescinding all offers to lease their mineral
interests.
The Wades brought this suit against XTO for breach of contract,
promissory estoppel, declaratory judgment, and specific performance. The case
proceeded to a jury trial. After the Wades rested, the trial court granted XTO‘s
motion for directed verdict on the issue of actual authority and on the Wades‘
promissory estoppel claim. The jury returned a verdict in favor of the Wades,
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finding that the Wades ―agree[d] to lease their minerals to XTO,‖ and awarding
the Wades damages of $12,430.00 and attorney‘s fees.4
The Wades filed a motion to enter judgment, and XTO filed a motion for
JNOV. The trial court denied the Wades‘ motion, granted XTO‘s motion for
JNOV, and entered judgment that the Wades take nothing on their claims.
III. STANDARDS OF REVIEW
A trial court may disregard a jury verdict and render JNOV if no evidence
supports the jury findings on issues necessary to liability or if a directed verdict
would have been proper. See Tex. R. Civ. P. 301; Tiller v. McLure, 121 S.W.3d
709, 713 (Tex. 2003); Fort Bend Cnty. Drainage Dist. v. Sbrusch, 818 S.W.2d
392, 394 (Tex. 1991). A directed verdict is proper only under limited
circumstances: (1) when the evidence conclusively establishes the right of the
movant to judgment or negates the right of the opponent; or (2) when the
evidence is insufficient to raise a material fact issue. Prudential Ins. Co. of Am.
v. Fin. Review Servs., Inc., 29 S.W.3d 74, 77 (Tex. 2000); Playoff Corp. v.
Blackwell, 300 S.W.3d 451, 454 (Tex. App.—Fort Worth 2009, pet. denied) (op.
on reh‘g).
To determine whether the trial court erred by rendering a directed verdict
or JNOV, we view the evidence in the light most favorable to the verdict under
4
Specifically, the jury awarded attorney‘s fees of $50,000.00 for
preparation and trial, $15,000.00 for an appeal to the court of appeals, and
$15,000.00 for an appeal to the Texas supreme court.
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the well-settled standards that govern legal sufficiency review. See Ingram v.
Deere, 288 S.W.3d 886, 893 (Tex. 2009); City of Keller v. Wilson, 168 S.W.3d
802, 823 (Tex. 2005); Wal-Mart Stores, Inc. v. Miller, 102 S.W.3d 706, 709 (Tex.
2003). We must credit evidence favoring the jury verdict if reasonable jurors
could and disregard contrary evidence unless reasonable jurors could not. See
Exxon Corp. v. Emerald Oil & Gas Co., 348 S.W.3d 194, 215 (Tex. 2011);
Tanner v. Nationwide Mut. Fire Ins. Co., 289 S.W.3d 828, 830 (Tex. 2009); Cent.
Ready Mix Concrete Co. v. Islas, 228 S.W.3d 649, 651 (Tex. 2007).
IV. BREACH OF CONTRACT
In their first issue, the Wades argue, in four subparts, that the trial court
erred by granting JNOV for XTO because sufficient evidence exists in the record
to support the jury‘s findings that the parties entered into an oil and gas lease for
XTO to lease the Wades‘ mineral interests, because the statute of frauds does
not preclude enforcement of the lease, and because evidence supported the
jury‘s award of attorney‘s fees to the Wades.
Jury Question No. 1 asked, ―Did the Wades agree to lease their minerals
to XTO?‖ Question No. 2 asked, ―Did the Wades and XTO agree to an oil and
gas lease made up of pages 1 through 5 of the September 4, 2008 lease form
followed by the original, fully executed, notarized signature page from the July
11, 2008 lease form?‖ Question No. 5 asked, ―Did the Wades and XTO agree to
an oil and gas lease in which the Lessors are defined as ‗Glenn Alan and Karen
Carter Wade, whose address is 4850 Moss Hollow Ct., Fort Worth, Texas
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76109‘?‖ Question No. 6 asked, ―Did the Wades and XTO agree to an oil and
gas lease in which the Leased Premises is described, in part, by an attached
Exhibit ‗A‘ that reads ‗Block 1, Lot 16, Overton Woods Addition, City of Fort
Worth, Tarrant County, Texas, 0.4972 acres, more or less‘?‖ The jury answered,
―Yes‖ to these questions. The jury also found that XTO‘s failure to comply with
the agreement resulted in damages of $12,430 to the Wades.
XTO moved for JNOV arguing in part that no evidence existed that the
Wades‘ names and addresses were correctly filled in on the lease form (Jury
Question No. 5) or that an Exhibit ―A‖ defining the leased property as the Wades‘
property was ever filled in and attached to the lease (Jury Question No. 6). In a
letter to the parties‘ attorneys, the trial court wrote that it did not find any
evidence to support the jury‘s answer to Jury Question No. 6. The trial court
subsequently entered a written judgment granting XTO‘s motion for JNOV and
ordering that the Wades take nothing.
A. Statute of Frauds
Oil and gas leases are conveyances of interests in real property and, as
such, must comply with the statute of frauds to be valid. See Tex. Bus. & Com.
Code Ann. § 26.01(b)(4) (West 2009); Long Trusts v. Griffin, 222 S.W.3d 412,
416 (Tex. 2006). The statute of frauds requires that all contracts for the sale of
real estate be in writing and signed by the person to be charged. Tex. Bus. &
Com. Code Ann. § 26.01(a); see also Tex. Prop. Code Ann. § 5.021 (West 2004)
(requiring that conveyance of land be in writing and ―subscribed and delivered by
8
the conveyor‖). To satisfy the statute of frauds, a writing conveying an interest in
property must furnish, either within itself or by reference to some other existing
document, the means or data by which the real estate at issue may be identified.
Texas Builders v. Keller, 928 S.W.2d 479, 481 (Tex. 1996). Parol evidence may
be used to explain or clarify the written agreement, but not to supply the essential
terms. Id.; see Long Trusts, 222 S.W.3d at 416. The validity of the legal
description of the property that is subject to the conveyance is not, under the
statute of frauds, affected by the knowledge or intent of the parties. Morrow v.
Shotwell, 477 S.W.2d 538, 540–41 (Tex. 1972); May v. Buck, 375 S.W.3d 568,
574 (Tex. App.—Dallas 2012, no pet.).
B. Insufficient Evidence to Support Jury’s Finding of a Valid Lease
Here, there is legally insufficient evidence of a fully executed lease that
complies with the statute of frauds to support the jury‘s verdict. The Wades did
not accept any of the lease offers from XTO that they received in the mail prior to
September 2008, including the July 2008 lease that they signed and had
notarized, nor do they base their claims on any of those leases. Instead, the
Wades are attempting to enforce the September 2008 lease that they never
signed. As XTO stated in its brief to this court, ―This case can be summed up as
follows: the Wades signed a lease that they did not accept and allegedly
accepted a lease, without a property description, that they did not sign.‖
The July 2008 lease that the Wades executed contains different material
terms than the September 2008 lease that they are attempting to enforce, and
9
even the July 2008 lease‘s signature page—where the Wades and the notary
signed—contains provisions that conflict with those of the September 2008
lease.5 But even assuming that attaching the signature page from a prior lease,
which contains different terms than the September 2008 lease, to the September
2008 lease sufficed to satisfy the requirement that the lease be signed by the
lessor, see Tex. Bus. & Com. Code Ann. § 26.01(a); Tex. Prop. Code Ann. §
5.021, there is legally insufficient evidence in the record that Exhibit ―A‖ was filled
out with a description of the leased premises and attached to the lease that the
Wades are attempting to enforce. The form lease that the Holland employees
used at the September signing party includes blanks for the lessors‘ names and
address and states that the lessors leases ―the land described on Exhibit ‗A‘
attached hereto (the ‗leased premises‘).‖ The Exhibit ―A‖ attached to the form
lease also includes blanks for the block and lot, and acreage of the leased
premises:
5
The last page of the July 2008 lease contains, in addition to the Wades‘
and the notary‘s signatures, paragraphs 14 through 20 of the lease; paragraph
19 is titled ―Option to Extend‖ and provides for additional consideration of
$15,000 per net mineral acre if XTO exercised its option to extend the lease
under that paragraph. The last page of the September 2008 lease contains, in
addition to blanks for the lessors‘ and notary‘s signatures, part of paragraph 21
and all of paragraph 22 of the lease. Unlike the July 2008 lease, the ―Option to
Extend‖ paragraph is on the previous page and provides for additional
consideration of $20,000 per net mineral acre if XTO exercised its option to
extend the lease under that paragraph. Thus, by attaching the last page of the
July 2008 lease to the end of the September 2008 lease, there were two
provisions governing the option to extend, each containing different terms.
10
Exhibit “A”
Block ___, Lot ___
Overton Woods Addition
City of Fort Worth, Tarrant County, Texas
_______ acres, more or less
Although Glenn testified that a Holland employee at the registration table filled in
the Wades‘ names and address on the first page of the lease and attached the
signature page of the July 2008 lease to it, Glenn never testified that the leasing
agent or anyone else ever filled out Exhibit ―A‖ to describe the leased premises,
and the record is devoid of any evidence raising a material fact issue that the
lease that the Wades are attempting to enforce—the September 2008 lease—
provided a property description for the leased premises. See Prudential Ins. Co.
of Am., 29 S.W.3d at 77; Playoff Corp., 300 S.W.3d at 454. While ―[t]he record
leaves little doubt that the parties knew and understood what property was
intended to be conveyed,‖ the lease had to furnish within itself or by reference to
another writing the means to identify the leased premises with reasonable
certainty. See Morrow, 477 S.W.2d at 540–41. Thus, contrary to the Wades‘
arguments on appeal, we cannot look to the bonus check stub, offer letters, or
other extrinsic documents not referenced in the lease to supply the necessary
legal description.6
6
And although the form lease included the Wades‘ street address in the
blank for the lessors‘ address, and this is the street address of the leased
premises, nothing in the lease defines the leased premises as the lessor‘s
mailing address or otherwise connects the defined term ―leased premises‖ with
the lessor‘s mailing address. Instead, it refers to an attached exhibit to supply
the description of the leased premises.
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The Wades further contend that the jury could have inferred that the
leasing agent completed Exhibit ―A‖ based on circumstantial evidence: Glenn
testified that the leasing agent filled in his and his wife‘s names and address on
the first page of the form lease; Glenn gave the leasing agent all the documents
XTO and Holland had sent the Wades, which stated the legal description of the
Wades‘ property, and therefore the leasing agent had the information necessary
to fill out Exhibit ―A‖; and Glenn‘s neighbor testified that he also executed a lease
at the signing party and that a leasing agent filled in the blanks on his lease form.
But this evidence does no more than create a mere surmise or suspicion that the
leasing agent filled out the Exhibit ―A‖ to the lease that the Wades are attempting
to enforce and does not amount to more than a scintilla of evidence to support
the jury‘s finding. See Blount v. Bordens, Inc., 910 S.W.2d 931, 933 (Tex. 1995);
Kindred v. Con/Chem, Inc., 650 S.W.2d 61, 63 (Tex. 1983).
Viewing the evidence in the light most favorable to the jury‘s verdict under
the well-settled standards that govern legal sufficiency review, crediting evidence
favoring the jury verdict if reasonable jurors could and disregarding contrary
evidence unless reasonable jurors could not, we find insufficient evidence to
support the jury‘s finding that the Wades entered into a September 2008 lease
that described the leased premises.
C. Counter-Defenses to Statute of Frauds Inapplicable
The Wades also argue that the doctrines of partial performance and
promissory estoppel apply here as counter-defenses to the statute of frauds.
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XTO responds that the Wades waived these counter-defenses by not pleading
them or requesting jury findings on them.7
Promissory estoppel and partial performance have been recognized as
equity-based exceptions to the traditional statute of frauds. Bank of Tex., N.A. v.
Gaubert, 286 S.W.3d 546, 553 (Tex. App.—Dallas 2009, pet. dism‘d w.o.j.); see
also Nagle v. Nagle, 633 S.W.2d 796, 800 (Tex. 1982) (explaining promissory
estoppel exception to statute of frauds); Exxon Corp. v. Breezevale Ltd., 82
S.W.3d 429, 439 (Tex. App.—Dallas 2002, pet. denied) (explaining partial
performance exception to statute of frauds). Generally, the party claiming an
exception to the statute of frauds must secure a finding to that effect unless the
exception is conclusively established by the evidence. Mann v. NCNB Tex. Nat’l
Bank, 854 S.W.2d 664, 668 (Tex. App.—Dallas 1992, no writ); see Tex. R. Civ.
P. 279; Choi v. McKenzie, 975 S.W.2d 740, 744 (Tex. App.—Corpus Christi
1998, pet. denied). Nevertheless, we need not decide whether these exceptions
were properly pleaded or conclusively established because, as we explain in part
V below in addressing the Wades‘ affirmative cause of action for promissory
estoppel, they sought, and presented evidence, on only benefit-of-the-bargain
damages. When promissory estoppel or partial performance applies to except
7
The Wades sought affirmative relief under the equitable doctrine of
promissory estoppel, but they did not plead promissory estoppel as an exception
to the statute of frauds. See Frost Crushed Stone Co., Inc. v. Odell Geer Const.
Co., Inc., 110 S.W.3d 41, 46 & n.1 (Tex. App.—Waco 2002, no pet.) (explaining
the difference between promissory estoppel as a counter-defense to statute of
frauds and as a cause of action for affirmative relief).
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an agreement from compliance with the statute of frauds, the party is entitled to
only reliance damages, not benefit-of-the-bargain damages. See Breezevale
Ltd., 82 S.W.3d at 441; see also Transcon. Realty Investors, Inc. v. John T.
Lupton Trust, 286 S.W.3d 635, 646 (Tex. App.—Dallas 2009, no pet.). Because
the Wades have not pleaded or presented any evidence that they incurred any
reliance damages, they are not entitled to recovery under these exceptions to the
statute of frauds.
D. JNOV was Proper
Having determined that insufficient evidence exists to support the jury‘s
finding that the Wades entered into a September 2008 lease that described the
leased premises and that no evidence exists that the Wades incurred any
reliance damages as required to support recovery under an exception to the
statute of frauds, we hold that the trial court correctly granted JNOV that the
Wades take nothing on their breach of contract claim. Furthermore, because the
trial court correctly granted JNOV on the Wades‘ breach of contract claim, they
were not entitled to attorney‘s fees on this claim. See Tex. Civ. Prac. & Rem.
Code Ann. § 38.001(8) (West 2008) (providing for recovery of attorney‘s fees for
claims for oral or written contracts); Green Int’l, Inc. v. Solis, 951 S.W.2d 384,
390 (Tex. 1997) (providing that attorney‘s fees are recoverable only if claimant
prevails on cause of action and recovers damages). Having addressed all of the
subparts of the Wades‘ first issue, we overrule it.
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V. PROMISSORY ESTOPPEL
In their second issue, the Wades argue that the trial court erred by entering
a directed verdict on their promissory estoppel claim.
The requisites of promissory estoppel in Texas are: (1) a promise; (2)
foreseeability of reliance thereon by the promisor; and (3) substantial reliance by
the promisees to their detriment. See English v. Fischer, 660 S.W.2d 521, 524
(Tex. 1983); Frost Crushed Stone Co., Inc., 110 S.W.3d at 44. Damages
recoverable in a case of promissory estoppel are not the profit that the promisees
expected, but only the amount necessary to restore them to the position they
would have been in had they not acted in reliance on the promise. Fretz Constr.
Co. v. S. Nat’l Bank of Houston, 626 S.W.2d 478, 483 (Tex. 1981); Frost
Crushed Stone Co., Inc., 110 S.W.3d at 47; see also Transcon. Realty Investors,
Inc., 286 S.W.3d at 646 (explaining that when the statute of frauds bars
enforcement of the representations, only out-of-pocket costs are recoverable).
Here, the Wades pleaded that they were ―entitled to recover damages in
the amount of the lease bonus and landowner‘s royalty,‖ and they sought
damages in the amount of $12,430—the amount of the bonus check that Wade
received at the September signing party. The Wades sought what they would
have gained had they entered into a valid lease with XTO. These are benefit-of-
the-bargain damages—not reliance damages recoverable on a claim for
promissory estoppel. Because the Wades presented no evidence of reliance
damages, that is, any amounts necessary to place them in the position they
15
would have been in had they not relied on XTO‘s promise, their promissory
estoppel claim fails. See Fretz Constr. Co., 626 S.W.2d at 483. Consequently,
we hold that the trial court correctly entered a directed verdict for XTO on this
cause of action, and we overrule the Wades‘ second issue.
VI. CONCLUSION
Having overruled the Wades‘ two issues, we affirm the trial court‘s
judgment.
SUE WALKER
JUSTICE
PANEL: WALKER, MCCOY, and GABRIEL, JJ.
DELIVERED: January 24, 2013
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