Kevin Martin v. Newfield Exploration Company and Dynamic Production, Inc. ( 2018 )

NUMBER 13-17-00104-CV
COURT OF APPEALS
THIRTEENTH DISTRICT OF TEXAS
CORPUS CHRISTI - EDINBURG
KEVIN MARTIN, JAMIE MARTIN,
AND ASHLEY LUSK, Appellants,
v.
NEWFIELD EXPLORATION COMPANY;
ROSETTA RESOURCES OPERATING, L.C.
AND DYNAMIC PRODUCTION, INC., Appellees.
On appeal from the 156th District Court
of Live Oak, Texas.
MEMORANDUM OPINION
Before Justices Benavides, Longoria, and Hinojosa
Memorandum Opinion by Justice Benavides
This is an appeal from orders granting appellees Newfield Exploration Company
and Dynamic Production Inc.’s (collectively Newfield, unless otherwise noted) no-evidence
and traditional motions for summary judgment in an oil and gas dispute with appellants
Kevin Martin, Jamie Martin, and Ashley Lusk (collectively the Martins). By two issues,
which we treat as one, Martin asserts that the trial court erred by granting summary
judgment in favor of Newfield. We affirm.
I. BACKGROUND
In 2001, the Martins entered into oil, gas, and mineral leases with Mesquite
Development (the Martin Leases) for a term of five years, concerning approximately 600
acres of land located on Block 84 of the Dr. Charles F. Simmons Nueces River Farm.1 In
2006, the Martins extended and amended those same lease agreements with Mesquite
Development. As provided by Newfield in its briefing, the Martin Leases are best illustrated
by the attached graphic to this opinion labeled “Appendix 1” and shaded in light gray.
In 2007, Mesquite Development assigned the Martin Leases to Rosetta Resources
Operating, L.P.2 In October 2007, Rosetta, Newfield, and Dynamic agreed to a
“Designation of Pooled Unit” created by Block 76 and Block 84 of the Dr. Charles F.
Simmons Nueces River Valley Subdivision to form a “675-acre pooled unit” with the
purpose to explore, develop and produce gas (the Martin Unit). The Martin Unit is
composed of four tracts of land, which includes 315 acres of the Martin Leases and other
non-Martin properties. Not all of the tracts composing the Martin Leases were
incorporated into the Martin Unit. As gathered from the record and provided by Newfield
in its brief, the Martin Unit is best illustrated by the attached graphic to this opinion labeled
“Appendix 2” and shaded in black. The non-unitized acreage from the Martin Leases
remains shaded in light gray.
1More specifically, the total acreage was composed of Farm Tracts 3567, 3568, 3569, 3570, 3571,
3572, 3573, 3574, 3575, 3576, 3577, 3578, 3579, 3580, 3581, and 3583, Block 84, Dr. Charles F. Simmons
Nueces River Farm Subdivision.
2 Although it was named as a party at the trial court, Rosetta Resources Operating, L.P. is not a
party to the present appeal.
2
In 2008, Rosetta assigned a partial interest of: (1) fifty-five percent of all rights, title,
and interest in and to the oil, gas, and mineral leases to Newfield Exploration Company of
the Martin Leases that were included in the Martin Unit; and (2) five percent of all rights,
title, and interest in and to the oil, gas, and mineral leases to Dynamic Production, Inc. of
the Martin Leases that were included in the Martin Unit.
In 2009, Newfield filed a designation of pooled unit on various other properties
totaling 570 acres located near the Martin Unit to establish Newfield Exploration Company-
Simmons Subdivision Unit No. 1 Well (the Simmons Unit). According to the record, the
Simmons Unit’s northwest corner was separated from the southwest corner of the Martin
Leases by one tract of land known as Farm Tract 3584. As provided by Newfield in its
briefing, the Simmons Unit’s location is best illustrated by the attached graphic to this
opinion labeled “Appendix 3.” The Simmons Unit is shaded in dark gray, the Martin Unit
remains shaded in black, and the non-unitized portion of the Martin Leases remains
shaded in light gray.
In 2014, Martin sued Newfield for failing to protect against drainage of the Martin
Unit as mandated by the 2006 lease agreements, and for failing to spud an offset well or
release Martin Unit within the time period required by the 2006 lease agreements. Martin
further alleged that in the event that Newfield was not liable under the 2006 lease
agreements, Newfield was liable under the 2001 lease agreements. In the alternative,
Martin pled that Newfield wrongfully pooled the Martin Unit, and that it “did not hold all of
the required acreage or have the authority to drill to the depth” of the Martin Well. In their
lawsuit for damages, Martin asserted causes of action for: (1) breach of contract, (2)
common-law fraud, (3) negligence, (4) negligent misrepresentation, (5) conversion, (6)
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wrongful pooling and mineral trespass, (7) violations of the Texas Theft Liability Act, (8)
breach of fiduciary duty, and (9) breach of implied covenants.
Subsequently, Newfield filed no-evidence and traditional motions for summary
judgment claiming that:
(1) no evidence showed that: (a) the 2006 lease agreements were in effect at the
time of the lawsuit; or (b) Newfield has any interest in the 2006 lease agreements; and
(2) Newfield established as a matter of law that: (a) it had no duty to fulfill the
drainage covenant relied upon by Martin because they were not assigned to them; and (b)
even if such a duty existed, because the Simmons Unit does not “adjoin” the Martin
Leases, Newfield’s duty to prevent drainage was never triggered.
After response and hearing, the trial court granted Newfield’s summary judgment.
Newfield later moved for another no-evidence and traditional motion for summary
judgment on Martin’s added claims of wrongful pooling and mineral trespass. Those
motions were also granted.
The orders granting summary judgment—neither of which specified the grounds on
which they were granted—were severed from the cause and were made into final
judgments. This appeal followed.
II. SUMMARY JUDGMENTS
By two issues, Martin asserts that the trial court erred by granting summary
judgment because: (1) the lease required Newfield to protect against drainage, and the
obligation to spud an offset well or release the Martin Lease was triggered; and (2) a fact
issue exists on whether Newfield has an obligation to spud an offset well or release the
Martin Lease because Newfield enjoyed the benefits of assignment of the Martin Lease.
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A. Standard of Review
1. No-Evidence Summary Judgment
A motion for summary judgment may be brought on no-evidence or traditional
grounds. See TEX. R. CIV. P. 166a(c), (i). A motion for no-evidence summary judgment is
equivalent to a motion for pretrial directed verdict, and we apply the same legal sufficiency
standard on review. Nalle Plastics Fam. Ltd. P’ship v. Porter, Rogers, Dahlman & Gordon,
P.C., 406 S.W.3d 186, 199 (Tex. App.—Corpus Christi 2013, pet. denied). Such a motion
should be granted if there is no evidence of at least one essential element of the claimant’s
cause of action. Hamilton v. Wilson, 249 S.W.3d 425, 426 (Tex. 2008). After adequate
time for discovery, a party without presenting summary judgment evidence may move for
summary judgment on the ground that there is no evidence of one or more essential
elements of a claim or defense on which an adverse party would have the burden of proof
at trial. TEX. R. CIV. P. 166a(i). All that is required of the non-movant is to produce a
scintilla of probative evidence to raise a genuine issue of material fact on the
challenged element. Forbes Inc. v. Granada Biosciences, Inc., 124 S.W.3d 167, 172
(Tex. 2003). Less than a scintilla of evidence exists when the evidence is so weak as
to do no more than create a mere surmise or suspicion of a fact. Id. More than a
scintilla of evidence exists if it would allow reasonable and fair-minded people to differ
in their conclusions. Id. In determining whether the non-movant has produced more
than a scintilla of evidence, we review the evidence in the light most favorable to the
non-movant, crediting such evidence if reasonable jurors could and disregarding
contrary evidence unless reasonable jurors could not. Nalle Plastics, 406 S.W.3d at
199.
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2. Traditional Summary Judgment
We review the trial court’s granting of a traditional motion for summary de novo.
Id. When reviewing a traditional summary judgment, we must determine whether the
movant met its burden to establish that no genuine issue of material fact exists and
that the movant is entitled to judgment as a matter of law. TEX. R. CIV. P. 166a(c). The
movant bears the burden of proof, and all doubts about the existence of a genuine
issue of material fact are resolved against the movant. See Nalle Plastics, 406 S.W.3d
at 200. We take as true all evidence favorable to the non-movant, and we indulge
every reasonable inference and resolve any doubts in the non-movant’s favor. Id.
B. Discussion
1. Waiver
As a preliminary matter, we must first set the parameters of what is presently before
us to review. Newfield argues in its briefing that Martin waived any arguments on appeal
that: (1) the duty to protect the non-unitized Martin Leases acres from drainage was
triggered when the Martin Unit well was drilled in 2008, or (2) the lease clause quoted
above is ambiguous, because neither argument was made to the trial court. We agree.
Issues a non-movant contends avoid the movant’s entitlement to summary
judgment must be expressly presented by written answer to the motion or by other written
response to the motion and are not expressly presented by mere reference to summary
judgment. McConnell v. Southside Ind. Sch. Dist., 858 S.W.2d 337, 341 (Tex. 1993); see
also TEX. R. CIV. P. 166a(c) (“Issues not expressly presented to the trial court by written
motion, answer or other response shall not be considered on appeal as grounds
for reversal.”). Our review of Martin’s response to Newfield’s motions for summary
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judgment show that Martin focused their arguments on whether Newfield’s duty to protect
against drainage was triggered when Newfield began drilling the Simmons Unit, not the
Martin Unit. Furthermore, nothing in Martin’s response asserts that the clauses at issue
were ambiguous. Accordingly, without regard to their merits, we conclude that those
arguments are waived, and we will not consider them on appeal. See id.
2. Summary Judgment Analysis
Turning to the merits of the summary judgment, the lease provision at issue
between the parties states the following identical language in the 2001 lease agreements
and 2006 lease agreements:
Notwithstanding anything contained herein to the contrary, it is further
agreed that in the event a well is drilled on or in a unit containing part of this
acreage or is drilled on acreage adjoining this Lease, the Lessor, or its
agent(s) shall protect the Lessee’s undrilled acreage from drainage and in
the opinions of reasonable and prudent operations, draining is occurring on
the un-drilled acreage, even though the draining well is located over three
hundred-thirty (330) feet from the un-drilled acreage, the Lessee shall spud
an offset well on said un-drilled acreage or on a unit containing said acreage
within twelve (12) months from the date the drainage began or release the
acreage which is un-drilled or is not part of a unit which is held by production.
Because it is dispositive, we will address Newfield’s alternative argument
supporting the trial court’s traditional summary judgment that: even assuming Newfield
owed Martin a duty to prevent drainage and spud an offset well, such a duty was not
triggered by Newfield’s drilling of the Simmons Unit.3 Stated another way, Newfield argues
that even if it had a duty to prevent drainage and spud an offset well under the lease-
agreements’ clauses, such a duty was not triggered because the Simmons Unit was not
3 See State Farm Fire & Cas. Co. v. S.S., 858 S.W.2d 374, 380 (Tex. 1993) (“When a trial court's
order granting summary judgment does not specify the ground or grounds relied on for the ruling, summary
judgment will be affirmed on appeal if any of the theories advanced are meritorious.”); see also TEX. R. APP.
P. 47.1 (“The court of appeals must hand down a written opinion that is as brief as practicable but that
addresses every issue raised and necessary to final disposition of the appeal.”).
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“adjoining” the Martin Leases as a matter of law, according to the lease agreements. We
agree.
An oil and gas lease is a contract, and its terms are interpreted as such. Exxon
Corp. v. Emerald Oil & Gas Co., L.C., 348 S.W.3d 194, 210–11 (Tex. 2011). In construing
an unambiguous oil and gas lease, we seek to enforce the intention of the parties as it is
expressed in the lease. Id. Contract terms are given their plain, ordinary, and generally
accepted meanings unless the contract itself shows them to be used in a technical or
different sense. Valence Op. Co. v. Dorsett, 164 S.W.3d 656, 662 (Tex. 2005); Kingsley
Props., LP v. San Jacinto Title Servs. of Corpus Christi, LLC, 501 S.W.3d 344, 348 (Tex.
App.—2016, no pet.).
The duty-triggering language in the relevant lease-agreement clauses at issue in
this case states that “in the event a well is drilled on or in a unit containing part of this
acreage or is drilled on acreage adjoining this Lease . . .” the party shall protect the
undrilled acreage from drainage and spud an offset well within twelve months from the
date the drainage began. (emphasis added). For reasons discussed above, we will focus
solely on whether the duty was triggered in this case because the Simmons Well was
“drilled on acreage adjoining” the Martin Leases. See TEX. R. CIV. P. 166a(c). To answer
this question, we look to the definition of “adjoining.”
Nearly one-hundred years ago, the Amarillo Court of Appeals defined “adjoining”
as “lying next to, adjoining to, uniting, being in contact.” Curlee v. Phelps, 242 S.W. 517,
520 (Tex. Civ. App.—Amarillo 1922, no writ). In 1934, the Beaumont Court of Appeals
upheld a no-evidence challenge to a jury verdict that two tracts of land separated by an
80-acre tract of land were not “adjoining lands.” More recently, the Fort Worth Court of
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Appeals utilized the Black’s Law Dictionary definition of adjoining as “‘touching’ or ‘sharing
a common boundary.’” Titan Op., LLC v. Marsden, No. 02-14-00303-CV, 2015 WL
5727573, at *8 n.19 (Tex. App.—Fort Worth Aug. 27, 2015, pet. denied) (quoting BLACK’S
LAW DICTIONARY 49 (10th ed.)). Because the lease agreements in this case do not provide
contrary definitions, we give “adjoining” its plain, ordinary, and general meaning, and
hereby adopt the definitions provided by our sister courts.
Utilizing the definition of “adjoining” and examining the record in this case, we
conclude as a matter of law that the Simmons Unit is not “acreage adjoining” the Martin
Leases because Tract 3584 separates the two pieces of acreage. Therefore, assuming
that a duty to prevent drainage and spud an offset well existed in this case, such a duty
was not triggered as a matter of law because the Simmons Unit does not adjoin the Martin
Leases as required by the lease agreements. We conclude that the trial court did not err
in granting Newfield’s traditional motion for summary judgment on this ground, which is
fatal to all of Martin’s causes of action against Newfield.
We overrule Martin’s issues.
III. CONCLUSION
We affirm the trial court’s judgment.
GINA M. BENAVIDES,
Justice
Delivered and filed the
5th day of April, 2018.
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Appendix 1
3569 3568
3570
3571
3572 Martin Family
3573 Leases
3574
3575
3576
3577 3567
3578
3579
3580
3581
3582
3583
3584
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Appendix 2
3461 3476 3487
3462 3475
3463 3474
3464 3473
3465 3472
3466 3471
3467 3470
3468 3469
3569 3568
3570
3571
3572 The Martin
3573 Unit
3574
3575
3576
3577 3567
3578
3579
3580
3581
3582
3583
3584
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Appendix 3
3461 3476 3487
3462 3475
3463 3474
3464 3473
3465 3472
3466 3471
3467 3470
3468 3469
3569 3568
3570
3571
3572 The Martin
3573 Unit
3574
3575
3576
3577 3567
3578
3579
3580
3581
3582
3583
3584
3813 3842
The Simmons 3814 3841
Unit 3815 3840
3816 3839
3817 3838
3818 3837
3819 3836
3820 3835
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