Walter Bounds and Wife, Carolyn B. Bounds, Appellants/Cross-Appellees v. John Thomas Prud'Homme, Appellees/Cross-Appellants ( 2015 )

ACCEPTED
12-15-00177-CV
TWELFTH COURT OF APPEALS
TYLER, TEXAS
9/22/2015 4:50:16 PM
Pam Estes
CLERK
CAUSE NO. 12-15-00177-CV
FILED IN
IN THE COURT OF APPEALS 12th COURT OF APPEALS
TYLER, TEXAS
FOR THE 9/22/2015 4:50:16 PM
PAM ESTES
TWELFTH COURT OF APPEALS DISTRICT Clerk
AT TYLER, TEXAS.
WALTER BOUNDS and wife, CAROLYN B. BOUNDS, Appellant,
VS.
JOHN THOMAS PRUD’HOMME, JOSEPH GILBERT PRUD’HOMME,
JOSEPH LYNN PRUD’HOMME, PETER A. BREEN, Individually and as
Successor Trustee of the BREEN FAMILY TRUST, JANET M. SUTRO, SUSAN
E. BREEN, and TERRANCE E. BREEN, individually and d/b/a E. G. AND M.
A. PRUD’HOMME BENEFICIARIES PARTNERSHIP, Appellee.
On Appeal from the 1st Judicial District Court
of San Augustine County, Texas.
BRIEF OF APPELLANT
Thomas R. McLeroy, Jr.
Bar No. 13766800
P. O. Box 668
Center, Texas 75935
(936) 598-2701
FAX (936) 598-6086
mcleroylaw@sbcglobal.net
ATTORNEY FOR APPELLANT
ORAL ARGUMENT REQUESTED
IDENTITY OF PARTIES AND COUNSEL
Pursuant to TEX. R. APP. P., 38.1(a), the following persons are parties to
the trial court’s judgment or other order appealed from and the names and
addresses of all trial and appellate counsel, to-wit:
PARTIES:
Appellant: WALTER BOUNDS
CAROLYN B. BOUNDS
Appellee: JOHN THOMAS PRUD’HOMME
JOSEPH GILBERT PRUD’HOMME
JOSEPH LYNN PRUD’HOMME
PETER A. BREEN,
The BREEN FAMILY TRUST
JANET M. SUTRO
SUSAN E. BREEN
TERRANCE E. BREEN
The E.G. AND M.A. PRUD’HOMME
BENEFICIARIES PARTNERSHIP
i
COUNSEL OF RECORD:
Attorney for Appellant:
Thomas R. McLeroy, Jr.
Bar No. 13766800
P. O. Box 668
Center, Texas 75935
(936) 598-2701
FAX (936) 598-6086
mcleroylaw@sbcglobal.net
Attorney for Appellee:
Robert G. Hargrove
Bar No. 24032391
Osborn, Griffith & Hargrove
515 Congress Avenue, Suite 2450
Austin, Texas 78701
(512) 476-3529
FAX (512) 476-8310
rob@texasenergylaw.com
ii
TABLE OF CONTENTS
IDENTITY OF PARTIES AND COUNSEL. . . . . . . . . . . . . . . . . . . . . . . . . . . . i
PARTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i
COUNSEL OF RECORD.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii
TABLE OF CONTENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii
INDEX OF AUTHORITIES.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v
STATEMENT OF THE CASE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 1
ISSUES PRESENTED. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 3
ISSUE NO. 1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 3
ISSUE NO. 2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 3
ISSUE NO. 3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 3
STATEMENT OF FACTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 3
ISSUE NO. 1
(Restated). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 9
SUMMARY OF THE ARGUMENT
(Under Issue No. 1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 9
ARGUMENT AND AUTHORITIES
(Under Issue No. 1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 10
ISSUE NO. 2
(Restated). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 20
SUMMARY OF THE ARGUMENT
(Under Issue No. 2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 21
ARGUMENT AND AUTHORITIES
(Under Issue No. 2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 22
ISSUE NO. 3
(Restated). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 31
SUMMARY OF THE ARGUMENT
(Under Issue No. 3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 31
iii
ARGUMENT AND AUTHORITIES
(Under Issue No. 3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 32
CONCLUSION AND PRAYER.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 40
CERTIFICATE OF COMPLIANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . page 42
CERTIFICATE OF SERVICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 43
TAB 1
(Trial Court’s Judgment). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -I-
TAB 2
(Trial Court’s Findings of Fact and Conclusions of Law). . . . . . . . . -IX-
TAB 3
(Farm and Ranch Contract).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -XXIV-
TAB 4
(Prud’homme Partnership Deed). . . . . . . . . . . . . . . . . . . . . . . . . . . . . -XL-
TAB 5
(Breen Deeds).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -XLVI-
TAB 6
(Title Insurance Commitment No. SA01-135 Schedules). . . . . . . . -LXII-
TAB 7
(Bounds’ Title Insurance Policy). . . . . . . . . . . . . . . . . . . . . . . . . . -LXXIII-
iv
INDEX OF AUTHORITIES
RULES:
TEX. R. APP. P., 38.1(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i
TEX. R. APP. P., 9.4(i)(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 42
TEX. R. APP. P., 9.5.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 43
STATUTES:
TEX. BUS. & COM. CODE, §26.01. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 30
TEX. CIV. PRAC. & REM. CODE, §16.051. . . . . . . . . . . . . . . . . . . . . . . . . . page 33
TEX. CIV. PRAC. & REM. CODE, §§37.001, et seq.. . . . . . . . . . . . . . . . . . . . page 2
TEX. PROP. CODE, § 5.01(a).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 15
CASES:
Alford v. Crum, 671 S.W.2d 870 (Tex. 1984). . . . . . . . . . . . . . . . . . . . . . . page 14
Anderson v. City of Seven Points, 806 S.W.2d 791 (Tex. 1991). . . . . . . . page 22
B.M.C. Software Belgium, N.V. v. Marchand, 83 S.W.3d 789
(Tex. 2002). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 23, page 24
Bagby v. Bredthauer, 627 S.W.2d 190 (Tex. App. –Austin,
1981, no writ). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 12
Bass v. Harper, 441 S.W.2d 825 (Tex. 1969). . . . . . . . . . . . . . . . . . . . . . . page 12
Brown v. Havard, 593 S.W.2d 939 (Tex. 1980). . . . . . . . . . . . . . . . . . . . . page 33
Cherokee Water Co. v. Forderhause, 741 S.W.2d 377 (Tex. 1987). . . . . page 24
City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005). . . . . . . . . . . . . . . . page 23
v
City of Stamford v. King, 144 S.W.2d 923 (Tex. Civ. App.
–Eastland, 1940, writ ref’d.).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 14
Coker v. Coker, 650 S.W.2d 391 (Tex. 1983). . . . . . . . . . . . . . . . . . . . . . page 10
Davis v. Grammar, 750 S.W.2d 766 (Tex. 1988). . . . . . . . . . . . . page 30, page 31
Dewitt County Electric Coop. v. Parks, 1 S.W.3d 96
(Tex. 1998). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 10, page 11, page 17
Farm & Ranch Investors, Ltd., v. Titan Operating, L.L.C.,
369 S.W.3d 679 (Tex. App. –Ft. Worth, 2012, pet. denied). . . . . . . . . . page 14
Garrett v. Dills, 157 Tex. 92, 299 S.W.2d 904 (1957). . . . . . . . . . . . . . . . page 14
Hardy v. Bennefield, 368 S.W.3d 643 (Tex. App. –Tyler,
2012, no pet.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 24, page 25
Houston Exploration Co. v. Wellington Underwriting
Agencies, Ltd., 352 S.W.3d 462 (Tex. 2011).. . . . . . . . . . . . . . . . page 16, page 17
Johnson v. Conner, 260 S.W.3d 575 (Tex. App. –Tyler,
2008, no pet.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 14, page 15
Lott v. Lott, 370 S.W.2d 463 (Tex. 1963). . . . . . . . . . . . . . . . . . . . . . . . . . page 14
Luckel v. White, 819 S.W.2d 459 (Tex. 1991). . . . . . . page 10, page 11, page 14
Ortiz v. Jones, 917 S.W.2d 770 (Tex. 1996). . . . . . . . . . . . . . . . . . . . . . . . page 23
Pich v. Langford, 157 Tex. 335, 302 S.W.2d 645 (1957). . . . . . . page 11, page 12
Sharp v. Fowler, 151 Tex. 490, 252 S.W.2d 153 (1952). . . . . . . . . . . . . . page 15
Simpson v. Curtis, 351 S.W.3d 374 (Tex. App. –Tyler, 2010,
no pet.).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 24, page 25, page 30
Smith v. Allison, 157 Tex. 220, 301 S.W.2d 608 (1956). . . . . . . . . . . . . . page 11
Sullivan v. Barnett, 471 S.W.2d 39 (Tex. 1971). . . . . . . . . . . . . . . . . . . . . page 33
Tex. Dep’t of Pub. Safety v. Stockton, 53 S.W.3d 421
(Tex. App. —San Antonio 2001, pet. denied). . . . . . . . . . . . . . . . . . . . . . page 24
vi
Walker v. Foss, 930 S.W.2d 701 (Tex. App. –San Antonio,
1998, no writ). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 15
Waters v. Ellis, 158 Tex. 342, 312 S.W.2d 231 (1958). . . . . . . . . . . . . . . . page 14
Will. v. Glash, 789 S.W.2d 261 (Tex. 1990).. . . . . . . . . . . . . . . . . . . . page 25
OTHER AUTHORITIES:
Blacks Law Dictionary (10th ed. 2014). . . . . . . . . . . . . . . . . . . . . . . . . . . . page 12
vii
CAUSE NO. 12-15-00177-CV
IN THE COURT OF APPEALS
FOR THE
TWELFTH COURT OF APPEALS DISTRICT
AT TYLER, TEXAS.
WALTER BOUNDS and wife, CAROLYN B. BOUNDS, Appellant,
VS.
JOHN THOMAS PRUD’HOMME, JOSEPH GILBERT PRUD’HOMME,
JOSEPH LYNN PRUD’HOMME, PETER A. BREEN, Individually and as
Successor Trustee of the BREEN FAMILY TRUST, JANET M. SUTRO, SUSAN
E. BREEN, and TERRANCE E. BREEN, individually and d/b/a E. G. AND M.
A. PRUD’HOMME BENEFICIARIES PARTNERSHIP, Appellee.
BRIEF OF APPELLANT
TO THE HONORABLE COURT OF APPEALS:
Now come WALTER BOUNDS and CAROLYN B. BOUNDS, the
Appellants in the above styled and numbered matter, and respectfully submit the
following brief of their arguments and authorities:
STATEMENT OF THE CASE
The Appellants, hereinafter referred to as the “Bounds,” filed this suit to
recover a mineral interest that the Appellees, hereinafter referred to as the
Prud’hommes,” agreed to convey to the Bounds but later claimed they reserved.
The conveyance was accomplished by six almost identical deeds from the
Prud’hommes to the Bounds. (Appendix, Tab 4, Tab 5). The Bounds sought
relief in the trial court under the statute and rules governing Trespass to Try
Title suits, for a construction of their instruments of conveyance under the
Uniform Declaratory Judgment Act, TEX. CIV. PRAC. & REM. CODE, §§ 37.001,
et seq., for reformation, if necessary, of their instruments of conveyance due to
fraud, accident, mistake or scriveners’s error and for cancellation of certain
mineral leases executed by the Prud’hommes as a cloud upon the Bounds’ title
to the minerals. The Prud’hommes answered with their plea of “not guilty,” a
general denial and a plea of limitations. After a bench trial, District Judge Craig
M. Mixon entered a judgment denying the Bounds recovery of an undivided
45% interest in the mineral estate from the Prud’hommes and awarding the title
to and possession of those minerals to the Prud’hommes. The judgment awarded
Bounds title to and possession of an undivided 5% interest in the mineral estate
claimed by Appellants, Peter A. Breen, individually and as Successor Trustee of
the Breen Family Trust, Janet M. Sutro, Susan E. Breen, and Terrance E. Breen.
(Appendix, Tab 1). The Bounds appeal from the judgment denying them relief
with respect to the 45% interest awarded to the Prud’hommes.
page 2
ISSUES PRESENTED
ISSUE NO. 1
(I CR, pg. 91, “Findings of Fact and Conclusions of Law,”
Conclusion of Law Nos. 1 - 2)
WHETHER THE TRIAL COURT INCORRECTLY CONSTRUED THE
DEEDS FROM THE PRUD’HOMME PARTNERSHIP TO THE BOUNDS TO
UNAMBIGUOUSLY RESERVE THE GRANTORS’ MINERALS.
ISSUE NO. 2
(I CR, pp. 86, 90, 92, “Findings of Fact and Conclusions of Law,”
Findings of Fact Nos. 19, 43 - 45, Conclusion of Law No. 6)
WHETHER THE TRIAL COURT INCORRECTLY RULED THAT THE
DEEDS FROM THE PRUD’HOMMES TO THE BOUNDS WERE NOT
SUBJECT TO REFORMATION DUE TO FRAUD, ACCIDENT, MISTAKE
OR SCRIVENER’S ERROR.
ISSUE NO. 3
(I CR, pp. 90 - 92, “Findings of Fact and Conclusions of Law,”
Findings of Fact Nos. 46 - 48, Conclusions of Law Nos. 3 - 5)
WHETHER THE TRIAL COURT INCORRECTLY RULED THAT THE
STATUTE OF LIMITATIONS BARRED THE BOUNDS FROM SEEKING
RELIEF BY WAY OF REFORMATION.
STATEMENT OF FACTS
In 2001, Walter Bounds and his wife, Carolyn Bounds, decided to
purchase a tract of rural property in order to fulfill Mrs. Bounds’ dream of land
ownership. (I RR, pg. 32, lines 1 - 15; pg. 71, line 20 - pg. 72, line 8). Because
they were inexperienced in the process of acquiring and managing land, they
page 3
enlisted the assistance of their son-in-law, Terry Scull, who was experienced in
the matters of real estate acquisitions and management. (I RR, pg. 32, line 6 -
18; pg. 70, lines 7 - 21). Through his contacts and connections, Mr. Scull was
aware that the Prud’hommes desired to sell the 126.632 acre tract involved in
this suit. (I RR, pg. 33, line 16 - pg. 34, line 3; pg. 71, lines 5 - 19). The parties
referred to the tract as the pine “plantation.” (I RR, pg. 32, line 21 - pg. 33, line
9; pg. 122, lines 15 - 25). From the beginning, the Prud’hommes’ offer included
the sale their mineral interest. (I RR, 38, line 3 - pg. 40, line 4; pg. 73, lines 9 -
21; pg. 121, lines 8 - 24; pg. 122, lines 15 - pg. 123, line 20; II RR, Plaintiff’s
Exhibit 28; Exhibit P-27, pg. 65, line 25 - pg. 66, line 12). The Bounds, along
with Mr. Scull, inspected the property, discussed its merits and advantages,
including benefits of owning the minerals, and, in due course, determined that
it would be a suitable acquisition. (I RR, pg. 33, lines 10 - 13; pg. 38, line 3 - pg.
40, line 4; pg. 71, lines 5 - pg. 72, line 8; pg. 74, line 9 - pg. 74, line 2). The
Bounds relied upon their son-in-law to negotiate the terms of the sales contract
and arrange for the closing. (I RR, pg. 34. lines 11 - 23; pg. 72, line 72 - pg. 73,
line 3; pg. 74, line 24 - pg. 75, line 2). Neither the Bounds nor Mr. Scull had any
direct dealings with the Prud’hommes during the negotiations or the closing of
the sale. (I RR, pg. 34. line 24 - pg. 35, line 7; pg. 74, lines 3 - 7). Both Mr. Scull
and the Prud’hommes communicated with each other through Mr. John
Gorham, a consulting forester, and John Crawford, a realtor and the
Prud’hommes’ consulting forester. (I RR., pg 71, lines 9 - 16;pg. 73, lines 9 -16;
page 4
pg. 74, lines 3 -10; pg. 122, lines 15 - 25; pg. 123, line 21 - pg. 124, line 8).
As a result of the negotiations, a written sales contract between the Bounds
and the E. G. and M. A. Prud’homme Beneficiaries Partnership was executed.
(I RR, pg. 35, line 20 - pg. 36, line 18; pg. 74, lines 11 - 23; pg. 76, line 16 - pg. 78,
line 6; pg. 112, line 25 - pg. 113, line 23; pg. 121, lines 8 - 17; pg. 125, lines 2 - 4;
II RR, Plaintiffs’ Exhibit 21). In compliance with the Prud’hommes’ offer, the
contract provided that “All minerals owned [by the Seller are] to be conveyed”
and did not provide for the retention of any interest by the Seller. (II RR,
Plaintiffs’ Exhibit 21, Paragraph 2(A), 2(A)(2)). The contract, also, provided
that closing of the sale would occur on or before September 2, 2001, or within 7
days after objections to matters disclosed in the title insurance commitment have
been cured, whichever date is later. (II RR, Plaintiffs’ Exhibit 21, Paragraph 9).
Upon failure to close, specific remedies were available to the non-defaulting
party. (II RR, Plaintiffs’ Exhibit 21, Paragraph 9). In the case of the Seller’s
failure to close for any reason other than Seller’s failure to make timely casualty
repairs or deliver the title insurance commitment, the Buyer’s remedy included
enforcement of specific performance, seeking any other relief provided by law,
or both. (II RR, Plaintiffs’ Exhibit 21, Paragraph 15).
The sale closing did not occur on September 2, 2001. (I RR, pg. 114, lines
6 - 10). When the title insurance commitment was issued, it showed title to the
property to be vested in certain individual members as well as the E.G. and M.
A. Prud’homme Beneficiaries Partnership, and required execution of the
page 5
proposed deed to the Bounds by the individual members of the partnership,
including Eleanor Prud’homme Breen. (II RR, Exhibit D-23). Eleanor
Prud’homme Breen had died testate two years earlier, survived by her husband,
Hal Joseph Breen, and four children, Appellees Terrance J. Breen, Susan E.
Breen, Peter A. Breen and Janet M. Breen Suttro. (II RR, Plaintiffs’ Exhibit 4).
Her will left her estate to a family trust of which her husband was the trustee.
(II RR., Plaintiffs’ Exhibit 4). The requirement that they execute the deeds
delayed the closing. (I RR, pg. 114, lines 6 - 25; pg. 116, line 19 - pg. 118, line 3;
pg. 147, line 7 - pg. 148, line 10; II RR, Exhibit P-27, pg 67, lines 6 - 17). The
Breens initially objected to signing the deeds, but eventually agreed to do so and
permit the partnership to receive the funds. (I RR., pg. 143, line 15 - pg. 145, line
11; pg. 150, lines 5 - 14). The closing was, therefore, delayed by the
Prud’hommes’ inability or unwillingness to execute the conveyances required by
the title insurance company as a prerequisite to insuring the Bounds’ title. By
the time the title insurance company’s requirements were addressed, closing had
been delayed until after the Breens last deed was executed on October 17, 2001.
(II RR, Plaintiffs’ Exhibits 7 - 9).
John Griffin, the Bounds’ lawyer, prepared the deeds that the
Prud’hommes’ signed. (II RR, Exhibit P-27, pg. 43, line 16 - pg. 44, line 14; pg.
53, line 17 - pg. 54, line 1; pg. 55, lines 2 - 9). Each of the deeds contained a
paragraph bearing the heading, “Reservations from and Exceptions to
Conveyance and Warranty:” (II RR, Plaintiffs’ Exhibit 5; Plaintiffs’ Exhibits
page 6
6 - 9). Beneath each of the headings, the deeds contained the following
statement:
“TITLE to any of the oil, gas and other minerals, in, under and that
may be produced from the above-described real property, together
with all rights, privileges and immunities relating thereto, including
the following:
“1. MINERAL RESERVATION as set forth in instrument
from Roy Atkinson to V. R. Marlow, dated November 7, 1934, and
recorded in Vol.74, Page 542, Deed Records of San Augustine
County, Texas, reserving one-half (½) of the minerals and/or royalty
interests, the royalties, bonuses and rentals in connection therewith.
“2. MINERAL RESERVATION as set forth in the
instrument from E. G. Prud’homme, et ux, to Eck G. Prud’homme,
et al, dated May 22, 1971, recorded in Vol. 166, Page 239, Deed
Records, San Augustine County, Texas, reserving one-half (½) of the
minerals and/or royalty interest, the royalties, bonuses and rentals
in connection therewith.” (II RR, Plaintiffs’ Exhibits 5 - 9).
The first two clauses of the paragraph quoted above are essentially
identical to the corresponding provisions of Schedule B “Exceptions from
Coverage” item 9(f) of the title insurance commitment and Schedule B
“Exceptions from Coverage” item 6(f) of the Owner Policy of Title Insurance
issued in connection with the Bounds’ purchase. (II RR, Exhibits D-23, D-24).
Other than the names of the grantors, each of the deeds was identical to the
others except that the Breen deeds contained an additional sentence preceding
the above quoted paragraphs that read, “This Deed is intended to convey all of
the Grantor’s interest in and to the above-described real property.” (II RR.,
Plaintiff’s Exhibits 6 - 9). Mr. Griffin intended the text following the heading in
question to be exceptions to the grantors’ warranties, and not reservations of
their mineral interest or exceptions from the conveyance, and was of the opinion
page 7
that the text was effective to do so. (II RR., Exhibit P-27, pg. 6, [pg. 21, lines 8 -
20]; pg. 7, [pg. 25, lines 6 - 23]; pp. 12 - 13, [pg. 47, lines 12 - 18; pp. 48, line 13 -
pg. 49, line 13; pp. 49, line 20 - pg. 50, line 16]; pg. 18, [pg. 71, line 21 - pg 72,
line 13]; pg. 19, [pg. 73, line 6 - pg. 74, line 20]). Mr. Scull and the Bounds were
of a like opinion. (I RR., pg. 83, line 3 - pg. 86, line 9; pg. 87, line 19 - pg. 88, line
9; pg. 96, line 2 - pg. 87, line 2). When the Prud’hommes received the deeds,
however, they claim that they construed the text as a mineral reservation,
assumed that the Bounds had unilaterally changed the parties’ agreement and
closed the transaction without revealing their assumptions to the Bounds or the
Bounds’ representatives. (I RR., pg. 116, line 19 - pg. 117, line 11; pg. 118, lines
8 - pg. 119, line 6; pg. 139, line 2 - pg. 140, line 11; pg. 143, line 23 - pg. 145, line
2; pg. 145, line 12 - pg. 146, line 24; pg. 147, line 7 - pg. 149, line 13).
The meaning and legal effect of the text in the quoted portion of the deeds
is the basis of this suit. The Bounds claimed that the text creates only an
exception to the Grantors warranties under the deeds and that, if it should be
construed otherwise, the deeds should be reformed to reflect that the Bounds
acquired whatever mineral interest the Grantors owned at the time of the
conveyance. (I CR, pp. 9 - 69). In order to circumvent their contractual
agreements, the Prud’hommes claimed that the deeds unambiguously reserved
their mineral interest and that evidence of contemporary transactions was
inadmissable to show that they did not. (1 RR, pg. 8, line 13 - pg. 9, line 6). The
trial court ruled that the deed from the E. G. and M. A. Prud’homme
page 8
Beneficiaries Partnership unambiguously reserved the minerals to the
partnership. (1 RR, pg. 26, line 24 - pg 27, line 23; 1 CR, pg. 9, “Findings of Fact
and Conclusions of Law,” Conclusions of Law Nos. 1, 2). By contrast, the trial
court found that Breen deeds were ambiguous and construed them to convey the
grantors’ minerals to the Bounds. (1 RR, pg. 26, line 24 - pg. 27, line 23; I Cr,
pg. 10, “Findings of Fact and Conclusions of Law,” Conclusions of Law Nos. 7 -
11).
ISSUE NO. 1
(Restated)
Whether the Trial Court Incorrectly Construed the Deeds from the
Prud’hommes to the Bounds to Unambiguously Reserve the Grantors’ Minerals.
SUMMARY OF THE ARGUMENT
(Under Issue No. 1)
The trial court construed the deed conveying the property in question from
the E.G. and M.A. Prud’homme Beneficiaries Partnership to the Bounds as
unambiguously reserving the partnership’s interest in the oil, gas and other
minerals. In doing so, the trial court erred. The deed clearly did not contain an
express reservation of minerals by the grantors. The trial court failed to
construe the deeds most strongly against the grantor to confer upon the grantee
the greatest estate permitted by the terms of the deed and to convey, in the
absence of language clearly showing an intention to convey a lesser interest, all
of the grantor’s interest. The trial court, also, ignored the policy which does not
favor reservations or exceptions by implication. The trial court’s construction
page 9
of the partnership deed is inconsistent with its construction of the other deeds
executed as part of the parties’ contract. If the deeds are construed in the light
of the facts and circumstances surrounding their execution, it becomes clear that
the text in question was intended as a limitation of the grantors’ warranty and
not intended as a mineral reservation or exception. A proper application of the
traditional rules of construction dictate that the text in question should have
been construed as unambiguously limiting the grantors’ warranties.
ARGUMENT AND AUTHORITIES
(Under Issue No. 1)
The trial court construed the deed conveying the property in question from
the E.G. and M.A. Prud’homme Beneficiaries Partnership to the Bounds as
unambiguously reserving the partnership’s interest in the oil, gas and other
minerals. (I RR., pg. 26, line 23 - pg. 27, line 4; pg. 27, lines 16 - 23; I CR, pg. 91,
“Findings of Fact and Conclusions of Law,” Conclusion of Law Nos. 1-2). The
trial court erred in its construction.
Construction of an unambiguous deed is a question of law for the court.
Luckel v. White, 819 S.W.2d 459, 461 (Tex. 1991). Contract language is not
ambiguous when it can be given a certain or definite meaning and the court is
obligated to interpret the language as a matter of law. Coker v. Coker, 650 S.W.
2d 391, 393 (Tex. 1983). A term is not ambiguous because of a simple lack of
clarity, nor does an ambiguity arise merely because parties to an agreement
proffer different interpretations of a term. Dewitt County Electric Coop. v. Parks,
1 S.W.3d 96, 100 (Tex. 1998). An ambiguity results if the application of
page 10
established rules of construction leaves the agreement susceptible to more than
one meaning. Id. Both potential meanings must be reasonable. Id. The ultimate
purpose in construing a deed is to ascertain the intention of the grantor. Luckel
v. White, 819 S.W.2d at 461; Smith v. Allison, 157 Tex. 220, 229, 301 S.W.2d 608,
614, (1956). When this intention is ascertained, that construction which carries
the intention into effect governs and controls. Smith v. Allison, 157 Tex. at 229,
301 S.W.2d at 614.
As a matter of law, the Prud’homme partnership deed did not
unambiguously reserve the grantors’ minerals. The deeds in question were
prepared from a State Bar of Texas form. (II RR, Exhibit P-27, pg. 11 [pg. 44,
lines 10 - 20]). The text that the trial court found to be an unambiguous began
with a heading supplied by the form that read, “Reservations from and
Exceptions to Conveyance and Warranty.” (II RR, Exhibit P-27, pg 12 [pg. 47,
lines 19 - 25]). The quoted text is a heading and, in the absence of any other
following text, would clearly not, of itself, create any legal rights or relationships
between the grantors and the grantee. The subject referenced in the heading
was not limited solely to “reservations.” The references are to four different and
distinct aspects of Deeds.
Although they are often used interchangeably, the words “exception” and
“reservation are not strictly synonymous. Pich. v. Langford, 157 Tex. 335, 342,
302 S.W.2d 645, 650. (1957). A “reservation” is a creation by and on behalf of
the grantor, of a new right issuing out of the thing granted that did not exist
page 11
before the grant. Pich v. Langford, 157 Tex. at 343, 302 S.W.2d at 650; Bagby v.
Bredthauer, 627 S.W.2d 190, 195, (Tex. App. –Austin, 1981, no writ). On the
other hand, an “exception” is an exclusion from the grant in favor of the grantor
only to the extent that such interest as is excepted may then be vested in the
grantor and not outstanding in another. Pich v. Langford, 157 Tex. at 343, 302
S.W.2d at 650; Bagby v. Bredthauer, 627 S.W.2d at 195.
Likewise, there is a distinction between a “conveyance” and a “warranty.”
A “conveyance” is a voluntary transfer of a right or of property. Blacks Law
Dictionary (10th ed. 2014). It is equivalent to the noun, “grant.” see Blacks Law
Dictionary, (10th ed. 2014). A “warranty,” on the other hand, is a separate
covenant from the grant and is not a part of the conveyance; It neither
strengthens, enlarges nor limits the title conveyed but is a contract on the part
of the grantor to pay damages in the event of failure of title. Bass v. Harper, 441
S.W.2d 825, 827, (Tex. 1969).
If the heading would have no legal significance without following text
expressing the parties’ intentions, what text did the deeds contain that
unambiguously expressed the parties intent for the Prud’hommes to reserve
their minerals? The text following the heading in the Prud’hommes’ deed read,
“TITLE to any of the oil, gas and other minerals, in, under and that may be
produced from the above-described real property, together with all rights,
privileges and immunities relating thereto . . .” followed by specific references
to reservations by the prior owners in two instruments appearing earlier in the
page 12
Prud’hommes’ chain of title. (II RR, Plaintiffs’ Exhibits 5 - 9). The text used
closely tracked the text that the Bounds’ title insurer used to exclude mineral
ownership from the title insurance coverage. (II RR., Exhibit D-23, page
PRU_0127, Schedule B, paragraph 9(f)). The deeds’ text is not a complete
sentence and contains no verb. The language in the title insurance commitment
was part of paragraph 9(f) of Schedule B, Exceptions from Coverage, that began,
“In addition to the Exclusions and Conditions and Stipulations, your Policy will
not cover loss, cost, attorney’s fees, and expenses resulting from:” followed by
a list of numerous matters, one of which was the disclaimer of coverage for the
title to the minerals. The text of paragraph 9(f) was part of a sentence that
expressly related the language to what the insurance would or would not cover.
Unlike the commitment, the text of Prud’hommes’ deeds was not part of a
clearly articulated statement identifying what was to be done about the title to
the minerals. There is no express declaration that the grantors “reserve” to
themselves the “title to” the mineral interests nor that they “excepted” the “title
to” the mineral interests from the conveyance. The text merely refers to the
“title to” the oil, gas and other minerals, without mentioning a “reservation” or
an “exception.” There is nothing in the paragraphs following the heading that
would clearly specify that a reservation or exception of the title to the minerals
was intended by the grantors rather than merely a limitation of the grantors’
warranty of title with respect to the minerals. In order to construe the text
otherwise than as only a limitation of the grantors’ warranty, the trial court had
page 13
to complete the sentence by supplying the missing subject and verb, “Grantors
reserve . . .” title to the oil, gas and other minerals. Such a construction in the
absence of express words or some other affirmative expression indicating that
the title to the minerals was to be reserved or excepted from the both the
conveyance and warranty, and not just the grantors’ warranty, is arbitrary. A
court must construe the instrument as it is written and has no right to alter it by
interpolation or substitution. Alford v. Crum, 671 S.W.2d 870, 872, (Tex. 1984).
If a deed is not ambiguous, it is to be construed under the “four corners”
rule. Luckel v. White, 819 S.W.2d at 461. The court, when seeking to ascertain
the intention of the parties, attempts to harmonize all parts of the deed. Id. If
a deed is worded in such a way that a court may properly give it a certain or
definite legal meaning or interpretation, it is not ambiguous. Johnson v. Conner,
260 S.W.3d 575, 579 (Tex. App. –Tyler, 2008, no pet.). There are a number of
applicable construction aids that courts have consistently employ to determine
the meaning of the language in a deed. Deeds are construed most strongly
against the grantor. Garrett v. Dills, 157 Tex. 92, 95, 299 S.W.2d 904, 906 (1957);
Farm & Ranch Investors, Ltd., v. Titan Operating, L.L.C., 369 S.W.3d 679, 681
(Tex. App. –Ft. Worth, 2012, pet. denied); City of Stamford v. King, 144 S.W.2d
923, 927 (Tex. Civ. App. –Eastland, 1940, writ ref’d.). A deed will be construed
to confer upon the grantee the greatest estate that the terms of the instrument
will permit. Lott v. Lott, 370 S.W.2d 463, 465 (Tex. 1963); Waters v. Ellis, 158
Tex. 342, 312 S.W.2d 231, 234 (1958). A general warranty deed conveys all of
page 14
the grantor’s interest unless there is language in the instrument that clearly
shows an intention to convey a lesser interest. Johnson v. Connor, 260 S.W.3d
at 579. The courts do not favor reservations by implication. Sharp v. Fowler,
151 Tex. 490, 494, 252 S.W.2d 153, 154 (1952); see TEX. PROP. CODE, § 5.01(a)
(mandating that, “An estate in land that is conveyed . . . is a fee simple unless the
estate is limited by express words. . . [emphasis added]).
The trial courts finding that the Prud’hommes’ deed contains an
unambiguous reservation of the minerals finds no support by an examination of
the deed’s “four corners.” The form’s granting clause states that the Grantor,
“. . . subject to the reservations from and exceptions to conveyance and
warranty, grants, sells and conveys to the Grantee, the property.” The principal
function of the “subject to” clause in the conveyance is to protect the grantor
against a claimed breach of warranty. Walker v. Foss, 930 S.W.2d 701, 706 (Tex.
App. –San Antonio, 1998, no writ). Subject to” in its ordinary sense means
“limited by” or “subordinate to” and does not have the effect of creating any
affirmative rights. Id. In conveyances, “subject to” is a term of qualification
and does not create new interests. Id. If use of the phrase, “subject to,” creates
no new interest, it cannot create any new right in favor of the grantor that is
consistent with the definition of a “reservation” where no such right was created
under the “Reservations and Exceptions from Conveyance and Warranty”
clause. Nor can it preserve for the grantor a right included within the
description of the “property” conveyed that is not expressly excluded from the
page 15
conveyance, either by the definition of the property conveyed or by the
provisions of the clause in question. The deed’s warranty clause contains none
of the ambiguities discussed above. It clearly binds the grantor to warrant the
title conveyed, “. . . except as to the reservations from and exceptions to
conveyance and warranty,” thereby excluding those matters from breach of
warranty claims. Looking at the whole instrument, what is apparent is that it
did not clearly and expressly reserve the minerals to the grantors or except the
minerals from the conveyance. Because it did not, the only method by which the
deed could be construed to contain a reservation in the grantors’ favor is to
imply that a reservation was intended. That implication violates the rules of
construction that require a reservation or exception to be made in clear and
express terms and that, in the absence of clear and express terms, the deed
should be construed to convey the greatest possible estate.
If the circumstances involving the negotiation for and preparation of the
deeds are considered, the proper construction of the deeds’ text becomes a
matter of certainty. A trial court is properly authorized to examine those
circumstances. A written contract must be construed to give effect to the
parties’ intent expressed in the text as understood in the light of the facts and
circumstances surrounding the contract’s execution. Houston Exploration Co.
v. Wellington Underwriting Agencies, Ltd., 352 S.W.3d 462, 469 (Tex. 2011). The
parole evidence rule applies when parties have a valid, integrated written
agreement and precludes enforcement of prior or contemporaneous agreements.
page 16
Id. The rule does not prohibit consideration of surrounding circumstances that
inform, rather than vary from or contradict, the contract text. Id. Under
generally accepted principles of contract interpretation, all writings that pertain
to the same transaction will be considered together, even if they were executed
at different times and do not expressly refer to one another. Dewitt County
Electric Coop. v. Parks, 1 S.W.3d at 102. The negotiations of the parties may
have some relevance in ascertaining the dominant purpose and intent of the
parties embodied in the contract interpreted as a whole. Houston Exploration
Co. v. Wellington Underwriting Agencies, Ltd., 352 at 469 - 470.
Both Bounds and the Prud’hommes’ agree that the Prud’hommes initial
offer to sell the property in question included the sale of the minerals and did not
provide that the Prud’hommes would reserve the minerals. (I RR, 38, line 3 - pg.
40, line 4; pg. 73, lines 9 - 21; pg. 121, lines 8 - 24; pg. 122, line 15 - pg. 123, line
20; II RR, Plaintiff’s Exhibit 28; Exhibit P-27, pg. 17 [pg. 65, line 25 - pg. 66, line
12]). When an agreement for the sale had been concluded, a written contract
was prepared which provided that the Prud’hommes would convey “. . . [a]ll
minerals owned . . .” (I RR, pg. 35, line 20 - pg. 36, line 18; pg. 74, lines 11 - 23;
pg. 76, line 16 - pg. 78, line 6; pg. 112, line 25 - pg. 113, line 23; pg. 121, lines 8 -
17; pg. 125, lines 2 - 4; II RR, Plaintiffs’ Exhibit 21). The deeds to be used to
close the transaction were prepared by John Griffin, an experienced attorney
whose practice included real estate transactions. (II RR, Exhibit P-27, pg. 3, [pg.
9, line 8 - pg. 10, line 3]; pg. 7, [pg. 25, lines 6 - 23]; pg. 11, [pg. 42, line 24 - pg.
page 17
44, line 20]; pp. 17 - 18, [pg. 68, line 24 - pg. 70, line 17]). The text following the
heading in question in all 6 deeds executed by the Prud’hommes or Breens was
identical, the only variance in the Breen deeds being the insertion of a sentence
between the property description and the heading that expressly stated that the
deed was intended to convey all of the grantor’s interest in the above-described
property. (II RR., Plaintiff’s Exhibits 5 - 9). Although the Breen deeds
contained a more specific declaration of the grantors’ intent, the trial court
found them to be ambiguous and construed them to convey the grantors’ mineral
interests. (I CR., pp. 92 - 93, “Findings of Fact and Conclusions of Law,”
Conclusion of Law No. 7 - 11). The trial court offered no explanation for the
inconsistent construction of same text in the Prud’homme partnership deed and
the Breen deeds, although both sets of instruments were executed pursuant to the
same agreement and the added statement of the general rule of construction in
the Breen deeds that would have been implied even if it had not been specifically
stated was the only difference in two the sets.
From the beginning, Mr. Griffin was aware that the contract provided that
the Prud’hommes were to convey their minerals. (II RR., Exhibit P-27, pp. 7 -
8, [pg. 27, line 14 - pg. 29, line 9]; pg. 17, [pg. 65, line 25 - pg. 67, line 2]). Mr.
Griffin explained that, in the area of his practice, none of the title insurance
companies offered title insurance coverage for minerals but commonly listed
prior transactions concerning the mineral estate. (II RR, Exhibit P-27, 9, [pg.
34, line 10 - pg. 35, line 23]; pg. 19, [pg. 75, line 23 - pg. 76, line 7). When
page 18
preparing real estate documents, he commonly relied on the title company for
information about the minerals and made the conveyance subject to them. (II
RR, Exhibit P-27, pp. 9 - 10, [pg. 35, line 24 - pg. 37, line 8]). If the grantor was
to reserve the minerals, he explained, he would include a separate, express
statement that the grantors reserve the minerals. (II RR., Exhibit P-27, pp. 12
-13, [pg. 48, line 2 - pg. 49, line 13], pg. 18, [pg. 70, line 18 - pg. 71, line 4]; pg. 18,
[pg. 70, line 18 - pg. 71, line 4; pg. 71, lines 6 - 21]).
In preparing the deeds, Mr. Griffin inserted the title insurance
commitment’s text following the heading dealing with reservations and
exceptions. (II RR., Exhibit P-27, pg. 12, [pg. 48, lines 13 - 19]; pg. 13, [pg. 49,
line 20 - pg. 50, line 16]). His intention in using the commitment’s text was to
limit the grantors’ warranties. (II RR., pg. 19, [pg. 73, lines 6 - 21]). Mr.
Griffin’s opinion was that the matters following the heading in question were
effective as exceptions to the grantors’ warranties, and not reservations of their
mineral interest or exceptions from the conveyance. (II RR., Exhibit P-27, pg.
6, [pg. 21, lines 8 - 20]; pg. 7, [pg. 25, lines 6 - 23]; pp. 12 - 13, [pg. 47, lines 12 -
18; pp. 48, line 13 - pg. 49, line 13; pp. 49, line 20 - pg. 50, line 16]; pg. 18, [pg.
71, line 21 - pg 72, line 13]; pg. 19, [pg. 73, line 6 - pg. 74, line 20]).
Because the text of the deed contains no clear and explicit reservation of
minerals, it plainly did not unambiguously reserve the grantors’ minerals.
Viewing the documents in question within their “four corners,” the text used
after the heading is reasonably capable of construction as a limitation of the
page 19
grantors’ warranty and the trial court erred as a matter of law in failing to
construe it that way. Application of the appropriate rules of construction
require this result because of the absence of any clearly expressed reservation
or exception and the disfavor of implied reservations or exceptions. The
construction of the text following the reservations and exceptions heading only
as a limitation of the grantors’ warranty gives effect to text consistently with the
requirements that deeds are construed most strongly against the grantor to
convey the greatest possible estate and avoids the necessity of having to imply the
existence words of reservation or exception that were not in fact used in
connection with the mineral estate. Construing the text as a limitation of the
grantors’ warranties, also, avoids inconsistencies in the construction of the other
deeds which were part of the same transaction. The correctness of this
construction is confirmed by examining the circumstances surrounding the sale
that show the intention of the parties, the scrivener’s reasons for using the text
and his opinion of the meaning of the text used. The trial court, therefore, erred
as a matter of law in its construction of the Prud’homme partnership deed.
ISSUE NO. 2
(Restated)
Whether the Trial Court Incorrectly Ruled That the Deeds from the
Prud’hommes to the Bounds Were Not Subject to Reformation Due to Fraud,
Accident, Mistake or Scrivener’s Error.
page 20
SUMMARY OF THE ARGUMENT
(Under Issue No. 2)
The trial court concluded as a matter of law that there was no mutual
mistake of the parties in regard to the execution of the deeds in question. The
conclusion was based on its findings that the Bounds and the Prud’hommes
understanding of the legal effect of the text used in the deeds in question was
different and that, as a result, the parties did not have a mutual intent and
understanding of the deeds in question. The trial court’s conclusion misapplies
the law to the facts found. If it was true that the Prud’homme partnership deed
unambiguously reserved the grantors’ minerals and that the Bounds and
Prud’hommes each thought the current agreement contained different terms, the
undisputed evidence shows that each of them labored under a common
misconception that the deeds complied with the contract that was current in
their understanding. That the parties had a different understanding of the terms
of the agreement or the meaning of the deeds is not determinative. The mistaken
fact was that the deeds complied with the contract and was, therefore, a mutual
mistake. The undisputed evidence, moreover, shows that, if the Bounds’ mistake
was not shared by the Prud’hommes, their mistake, when coupled with the
Prud’hommes’ silence, was legally equivalent to a mutual mistake. As a result,
the trial court’s conclusion of law that there was no mutual mistake was not
supported by legally sufficient evidence and the only evidence supporting such
a conclusion is so against the great weight and preponderance of the evidence as
to be clearly wrong and unjust.
page 21
ARGUMENT AND AUTHORITIES
(Under Issue No. 2)
The court concluded as a matter of law that the Bounds did not prove by
clear, exact and satisfactory evidence that a mineral reservation was included in
the Prud’homme partnership’s deed by a mutual mistake of the parties. (1 CR.,
pg. 92, “Findings of Fact and Conclusions of Law,” Conclusion of Law No. 6).
The court’s legal conclusion was based on its finding that, at the time Gilbert
Prud’homme executed the deed dated September 7, 2001, from the E. G. and M.
A. Prud’homme Beneficiaries Partnership to the Bounds, he understood that it
reserved the minerals in and under the 126 acres to its grantors. (I CR, pg 86,
“Findings of Fact and Conclusions of Law,” Finding of Fact No. 19). The court,
further, found that, although the Bounds believed they were acquiring whatever
mineral interest the Prud’hommes owned with respect to the property being
purchased, the Prud’hommes believed they were reserving the minerals. (I CR.,
pg. 90, “Findings of Fact and Conclusions of Law,” Findings of Facts Nos. 43 -
44). As a result, the trial court found that the Bounds’ and Prud’hommes’ did
not have an identical intent and understanding at the times the deeds in question
were executed. (I CR., pg. 90, “Findings of Fact and Conclusions of Law,”
Finding of Fact No. 45). The evidence adduced at trial was legally and factually
insufficient to support the trial court’s findings of fact and conclusions of law.
Findings of fact in a bench trial have the same force and dignity as a jury
verdict and are reviewable for legal and factual sufficiency of the evidence by the
same standards as applied in reviewing a jury’s findings. Anderson v. City of
page 22
Seven Points, 806 S.W.2d 791, 794, (Tex. 1991). To determine whether legally
sufficient evidence supports a challenged finding of fact, the reviewing court
must credit favorable evidence if reasonable jurors could, and disregard
contrary evidence unless reasonable jurors could not. See City of Keller v.
Wilson, 168 S.W.3d 802, 827, (Tex. 2005). The final test for legal sufficiency
must always be whether the evidence at trial would enable reasonable and
fair-minded people to reach the verdict under review. Id. A reviewing court
must sustain a legal sufficiency or no evidence challenge when the record
discloses one of the following situations: (1) there is a complete absence of
evidence of a vital fact; (2) the court is barred by rules of law or of evidence from
giving weight to the only evidence offered to prove a vital fact; (3) the evidence
offered to prove a vital fact is no more than a mere scintilla; or (4) the evidence
establishes conclusively the opposite of the vital fact. Id. at 810.
In reviewing a trial court's findings for factual sufficiency, the reviewing
court must weigh all of the evidence in the record and may overturn a finding
only if the finding is so against the great weight and preponderance of the
evidence as to be clearly wrong and unjust. Ortiz v. Jones, 917 S.W.2d 770, 772,
(Tex. 1996).
Appellate courts review a trial court’s conclusions of law de novo. B.M.C.
Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 794, (Tex. 2002). An
appellant may not challenge a trial court’s conclusions of law for factual
insufficiency; however the reviewing court may review the trial court’s legal
page 23
conclusions drawn from the facts to determine their correctness. Id.
Conclusions of law will not be reversed unless they are erroneous as a matter of
law. Tex. Dep’t of Pub. Safety v. Stockton, 53 S.W.3d 421, 423, (Tex. App. —San
Antonio 2001, pet. denied).
The underlying objective of reformation is to correct a mutual mistake
made in preparing a written instrument, so that the instrument truly reflects the
original agreement of the parties. Cherokee Water Co. v. Forderhause, 741
S.W.2d 377, 379, (Tex. 1987). Reformation requires two elements: (1) an original
agreement; and (2) a mutual mistake, made after the original agreement, in
reducing the original agreement to writing. Id. A party is, therefore, entitled to
reformation of a deed when it proves that it reached an agreement with the other
party but the deed does not reflect the true agreement due to a mutual mistake.
Hardy v. Bennefield, 368 S.W.3d 643, 650, (Tex. App. –Tyler, 2012, no pet.). A
mutual mistake is one common to both or all parties, wherein each labors under
the same misconception respecting a material fact, the terms of the agreement,
or the provision of a written agreement designed to embody such an agreement.
Hardy v. Bennefield, 368 S.W.3d at 650; Simpson v. Curtis, 351 S.W.3d 374, 378 -
379, (Tex. App. –Tyler, 2010, no pet.). If a mistake has been made by a scrivener
or typist, an instrument may be reformed and modified by a court to reflect the
true agreement of the parties, if the mistake was a mutual mistake. Simpson v.
Curtis, 351 S.W.3d at 379. A mutual mistake is generally established from all of
the facts and circumstances surrounding the parties and the execution of the
page 24
instrument. Id. The parole evidence rule does not bar extrinsic proof of a
mutual mistake. Williams v. Glash, 789 S.W.2d 261, 264 (Tex. 1990).
Reformation is unavailable, however, unless the party claiming mutual mistake
presents “clear, exact and satisfactory evidence.” Hardy v. Bennefield, 368
S.W.3d at 648.
If this court determines that the Prud’hommes’ deeds unambiguously
reserved the grantors’ minerals, the evidence that they did so as the result of a
mutual mistake or scrivener’s error is clear, exact and satisfactory. The
Prud’hommes’ own testimony establishes the mutual mistake. It is undisputed
that the parties entered into a sales contract that required the Prud’hommes to
convey their minerals to the Bounds. When Gilbert Prud’homme, the partner’s
general manager, signed the contract, he expressly agreed on behalf of the
partnership to convey whatever minerals the partnership owned. (I RR, pg. 113,
lines 7 - 23; pg. 121, line 8 - pg. 125, line 4). After the sales contract was signed,
the title insurance company raised an objection to the property’s title and
required a conveyance from all of the individual partners of the E. G. and M. A.
Prud’homme Beneficiaries Partnership, including Eleanor P. Breen, who was
then deceased. (I RR, pg. 114, lines 6 - 15; pg. 116, line 19 - pg. 117, line 11; pp.
122 - 131; II RR., Plaintiffs’ Exhibit 4; Exhibit D-23, pg. PRU_0122, Schedule A,
paragraph 3; pp. PRU_0128 - 0129, Schedule C, paragraph 4(g)). Deeds were
prepared by John Griffin and sent by him or by the title company to Gilbert
Prud’homme. (II RR., Exhibit P-27, pg. 11, [pg. 42, line 24 - pg. pg. 44, line 20]).
page 25
Mr. Prud’homme received the deeds on September 7, 2001. (I RR, pg. 139, lines
2 - 6). When he received the deeds, Mr. Prud’homme reviewed them and
assumed from their text that the grantors were reserving the minerals. (I RR.,
pg. 118, lines 8 - 17). Although he was aware that the original contract provided
that the Bounds were to get the minerals, he did not immediately call this matter
to the attention of Mr. Griffin, the Bounds or Mr. Crawford, but, rather,
assumed that the terms of the sale had changed and did nothing. (I RR., pg. 118,
18 - pg. 119, line 6; pg. 139, line 2 - pg. 140, line 11). Mr. Prud’homme was
aware that the sales contract pursuant to which deeds had been prepared
clearly stated that, “Closing of the sale will be on or before September 2, 2001,
or within 7 days after objections to matters disclosed in the Commitment . . .
have been cured, whichever date is later,” [emphasis added]. (I RR., pg. 147, line
7 - pg. 148, line 14; II RR, Plaintiffs’ Exhibit 21 [page 5]). He, also, understood
that the title insurance company had required the execution of deeds from the
Breen heirs. (I RR., pg. 114, lines 6 - 25; pg. 143, line 15 - pg. 145, line 2; pg. 148,
line 8 - pg. 149, line 3). Mr. Prud’homme, nevertheless, presumed incorrectly
that the contract had expired even though there had been no communication
between Mr. Prud’homme and Mr. Prud’homme’s agent, Mr. Crawford, Mr.
Griffin or the Bounds and even though the Breens delayed for over a month in
signing the deeds. (I RR., pg. 116, line 19 - pg. 117, line 11; pg. 139, line 2 - pg.
140, line 11; pg. 143, line 23 - pg. 145, line 2; pg. 145, line 12 - pg. 146, line 24; pg.
147, line 7 - pg. 149, line 13; II RR., Plaintiff’s Exhibits 7 - 9).
page 26
When Mr. Prud’homme received the deeds from Mr. Griffin, he
forwarded the Breen deeds to the others. (I RR, pp. 117, line 23 - 118, line 3).
The deed from the partnership and its living members was signed between
September 8, 2001, and September 12, 2001, about a month before Mr.
Prud’homme tried to confirm his assumption that the terms of the sale contract
had changed with any other person. (I CR, pg. 86, “Findings of Fact and
Conclusions of Law,” Finding of Fact No. 16). The Breen deeds were all signed
between October 5, 2001, and October 17, 2001. (II RR., Plaintiffs’ Exhibits 6,
7, 8, 8A and 9). At that time, Mr. Prud’homme had not confirmed with any of
the other parties his understanding that the original contract had expired and
that the deeds represented a new contract between the Prud’hommes and the
Bounds. He stated that his understanding that the expiration of the contract and
the change in the terms of the sales agreement was an “implicit” understanding
between him and Mr. Griffin, even though it was never articulated and “just
assumed” between Mr. Griffin and Mr. Prud’homme. (1 RR., pg. 139, lines 7 -
23). There was no discussion about Mr. Prud’homme’s assumptions with any
other party to the transaction until mid October, 2001, when he called Mr.
Griffin’s office to find out if the deeds affected only half of the minerals or all of
them. (I RR., pg. 140, line 12 - pg. 146, line 24). That discussion was not with
Mr. Griffin, nor the Bounds, nor his agent, Mr. Crawford, but with an
unidentified girl in Mr. Griffin’s office. (I RR., pg 139, line 24 - pg. 140, line 11;
pg. 145, line 12 - pg. 146, line 24). The only discussion Mr. Prud’homme had
page 27
directly with Mr. Griffin related to the Breens reluctance to comply with the title
insurance company’s requirement that they sign deeds conveying the property
to the Bounds. (I RR., pg. 143, line 15 - pg. 146, line 24).
The Bounds understood from the time of the Prud’hommes’ initial offer
that they were to receive the Prud’hommes’ minerals. (I RR., pg. 36, lines 1 - 18;
pg. 37, line 22 - pg. 40, line 24; pg. 45, line 7 - pg. 52, line 14; pg. 63, lines 1 - 6;
pg. 65, line 7 - pg. 66, line 25). Likewise, the Bounds’ son-in-law, Terry Scull,
who assisted them in concluding the sale, understood that the Prud’hommes’
minerals were to be conveyed. (I RR., pg. 73, lines 9 - 21; pg. 80, line 22 - pg. 81,
line 3). Mr. Griffin, who drafted the deeds, knew that the Bounds were to
receive the minerals from the time he received the sales contract and discussed
that specific fact with Mr. Prud’homme. (II RR., Exhibit P-27, pg. 17, [pg. 65,
line 25 - pg. 66, line6]). He did not believe or intend that the deeds would be
effective to reserve the Prud’hommes’ mineral interests to the grantors. (II RR.,
Exhibit P-27, pg. 6, [pg. 21, lines 8 - 20]; pg. 7, [pg. 25, lines 6 - 23]; pp. 12 - 13,
[pg. 47, lines 12 - 18; pp. 48, line 13 - pg. 49, line 13; pp. 49, line 20 - pg. 50, line
16]; pg. 18, [pg. 71, line 21 - pg 72, line 13]; pg. 19, [pg. 73, line 6 - pg. 74, line
20]). The first time that either he or the Bounds became aware of the
Prud’hommes’ claim of mineral ownership through a reservation was late in the
year, 2010, or early in the year, 2011. (I RR., pg. 47, line 10 - pg. 50, line 2; pg.
81, lines 4 - 16). Even then, upon examination of the documents as a result of the
Prud’hommes’ claim, Mr. Scull believed that the deeds properly conveyed the
page 28
Prud’hommes’ minerals to the Bounds. (I RR., pg. 83, line 3 - pg. 86, line 9; pg.
87, line 19 - pg. 88, line 9; pg. 96, line 2 - pg. 87, line 2).
That the text of the deeds that Mr. Griffin prepared in order to complete
the contract is subject to reasonable interpretation in different ways is shown in
the arguments contained herein under Issue No. 1. That the deeds’ text was in
fact interpreted in different ways by the Bounds and the Prud’hommes may be
inferred by the testimony outlined above. It is clear that, despite Mr.
Prud’homme’s assumptions about a new agreement, no such contract change
was ever discussed with, or agreed to by, the Bounds, or anyone else on their
behalf. The Prud’hommes, in this case, seek to avoid their contractual
obligations to Bounds by unilaterally choosing to ignore what would have been
an obvious mistake in drafting the deeds and then rationalizing that the Bounds
had agreed to a contract change that they had never agreed to. Thereafter, by
remaining silent about the imaginary contract until the oil companies required
curative work on their mineral titles, they insured that the Bounds would not
learn of their misappropriation for years. Should this court permit the
Prud’hommes assertion of a phantom contract entered into by only one party to
the agreement to prevent the assertion of a mutual mistake in drafting the deeds
by the other party who did not agree to the change and who had no knowledge
of its existence, it will have provided unscrupulous persons a new and convenient
vehicle for avoiding their disadvantageous but otherwise legally binding
contracts.
page 29
Mr. Prud’homme was a lawyer and should have been aware of the
requirement that real estate sales contracts must be in writing, yet there is no
evidence that he signed such a document containing a new agreement addressing
a mineral reservation or requested a copy of it for review. See, TEX. BUS. &
COM. CODE, §26.01(a), (b)(4). As a lawyer, he should have known that the sales
contract expressly provided that the date of closing depended on addressing the
title insurance company’s requirements, but chose to ignore those requirements
when he unilaterally decided that the contract under which the curative deeds
had been sent to him had expired. And, as a lawyer, he should have known that
his silence in the face of an apparent mistake in the drafting of the deeds would
be justification for reforming the deeds. See Davis v. Grammar, 750 S.W.2d 766,
768, (Tex. 1988) (holding that a unilateral mistake by one party, and knowledge
of that mistake by the other party, is equivalent to mutual mistake).
Nevertheless, without taking the precaution of verifying his assumptions, but
keeping them to himself, Mr. Prud’homme presumed that the deeds were sent
pursuant to a new agreement that he had not made with the Bounds.
The only mutual agreement between the parties to the deed was reflected
in the original sales contract. Both the Bounds and the Prud’hommes were,
however, under the impression that the deeds followed the terms of their sales
agreement. If both parties were wrong in their assumption, then both parties
labored under the same misconception that the deeds correctly reflected the
current agreement. See Simpson v. Curtis, 351 S.W.3d at 379. Mr. Prud’homme,
page 30
moreover, believed that the deeds failed to comply with the written sales
contract, but did not advise the Bounds of this circumstance. Even if the
Bounds’ understanding of the documents was a unilateral mistake, it amounts
to a mutual mistake when coupled with the Prud’homme’s silence with regard
to the failure of the documents to comply with the contract. See Davis v.
Grammar, 750 S.W.2d at 768. The trial court’s findings of fact that the parties
to the sale did not have the same understanding of the agreement do not,
therefore, address the issue of whether they labored under a mutual mistake.
There was no credible evidence that either of the parties did not think that the
deeds effectively complied with their existing real or imagined agreements. Mr.
Prud’homme’s testimony conclusively establishes that he believed the deeds were
drawn in conformity to a new contract that the Bounds had offered but that he
remained silent about his assumptions. Because it’s findings of fact were not
supported by legally and factually sufficient evidence, the trial court’s conclusion
that there was no mutual mistake was an error of law.
ISSUE NO. 3
(Restated)
Whether the Trial Court Incorrectly Ruled That the Statute of Limitations
Barred the Bounds from Seeking Relief by Way of Reformation.
SUMMARY OF THE ARGUMENT
(Under Issue No. 3)
The evidence was legally and factually insufficient to support the trial
court’s findings that the Bounds were on notice that the Prud’hommes’ deeds
page 31
contained a mineral reservation from at least the time they received their title
insurance policy. The unchallenged evidence establishes that the Bounds
reasonably construed the deeds to convey all of the Prud’hommes’ mineral
interests and had no actual notice of the Prud’hommes’ construed the deeds
otherwise until less than 3 years before this suit was filed. The Prud’hommes did
not inform the Bounds of their interpretation of the deeds or their imagined new
agreement concerning the minerals until December, 2010. The title insurance
policy issued to the Bounds does not provide any greater notice of the
Prud’hommes’ claim than a reading of the deeds would give and does not excuse
the Prud’hommes’ silence with regard to their assumptions about the changed
contract terms.
ARGUMENT AND AUTHORITIES
(Under Issue No. 3)
The trial court found that the Bounds failed to exercise reasonable
diligence to discover that the deeds in question did not convey the Prud’hommes’
minerals because they had constructive notice of the contents of the deeds from
the time they were delivered to the Bounds or from the time they received their
title insurance policy. (I CR., pp. 90 - 91, “Findings of Fact and Conclusions of
Law,” Findings of Fact Nos. 46 - 48). Based on those findings, the trial court
concluded as a matter of law that the statute of limitations bars Bounds’ action
for reformation of the deed. (I CR., pg. 92, “Findings of Fact and Conclusions of
Law,” Conclusions of Law Nos. 3 - 5). The trial court erred as a matter of law
in concluding that the statute of limitations had run because its findings of fact
page 32
are supported by legally and factually insufficient evidence.
The Prud’hommes claim that the Bounds suit is barred by the four year
statute of limitations. A suit for reformation of a deed is governed by the four
year statute of limitations. TEX. CIV. PRAC. & REM. CODE, §16.051; Brown v.
Havard, 593 S.W.2d 939, 943, (Tex. 1980). The frequently stated rule is that a
party is charged with knowledge of the contents of his deed from the date of its
execution, and that limitations begins to run on such date against any action to
correct it. See Sullivan v. Barnett, 471 S.W.2d 39, 45, (Tex. 1971). This rule has
not been strictly applied in the past and courts have noted numerous exceptions
over the years. Id. at 45 - 46. The presumption can be rebutted and there are
various circumstances which will excuse a delay in discovery of the mutual
mistake. Id. at 45. Once the presumption of immediate knowledge is rebutted,
however, the statute of limitation will begin to run when the mutual mistake was,
or in the exercise of reasonable diligence should have been, discovered. Brown
v. Havard, 593 S.W.2d at 944; Sullivan v. Barnett, 471 S.W.2d at 45). As between
the original parties to a transaction, the statute of limitation does not commence
to run against actions for cancellation and reformation of deeds on the basis of
mutual mistake and fraud until four years after the mistake was, or in the
exercise of reasonable diligence should have been, discovered. Sullivan v.
Barnett, 471 S.W.2d at 47). The question of when a mistake should have been
discovered is one of fact. Brown v. Havard, 593 S.W.2d at 944.
The Bounds’ action for reformation is not barred under the four year
page 33
statute of limitations. The trial court’s findings of fact assume that the Bounds
were “on notice” of the Prud’hommes’ claimed mineral reservation from the
date of the execution of the deeds or the receipt of their title insurance policy
from the title company. The trial court returned no other finding of fact with
respect to when the Bounds discovered, or could have, in the exercise of
reasonable diligence, discovered that the deeds failed to transfer the
Prud’homme’s minerals.
The facts are largely undisputed. The Bounds received copies of their
deeds and their title insurance policy at or before November, 2001. As explained
in the argument under Issue No. 1, the deeds in question did not clearly and
expressly reserve the minerals to the grantors. They were not so plainly worded
that resort to the rules of construction and the examination the contemporary
background of the transaction are not needed to explain their meaning.
Although Mr. Prud’homme was a lawyer, the Bounds were not and had no
experience in real estate matters. (I RR., pg. 31, lines 12 - 25; pg. 67, lines 1 - 7).
They did not possess the sophistication necessary to determine the meaning of
the text in the deeds or the title insurance policy and had to rely on the opinion
of others. (I RR., pg. 32, lines 6 - 15; pg. 64, line 3 - pg. 65, line 6; pg. 66, lines 5
-12). Their son-in-law, upon whom the Bounds relied and who was better
acquainted with the legal aspects of land ownership, and Mr. Griffin, the lawyer
who prepared the deeds, believed that the text amounted only to an exclusion of
minerals from the Prud’hommes’ warranties, and not a mineral reservation. (1
page 34
RR., pg. 95, line 15 - pg. 97, line 2; Exhibit 27, pg. 6 [pg. 21, lines 8 - 20]; pg. 7,
[pg. 25, lines 6 - 12]; pp. 12 - 13 [pg. 47, line 7 - pg. 49, line 13). Because they
both believed that the deeds were effective to convey the minerals, no inquiry of
them would have revealed any reason to believe the Prud’hommes possessed a
contrary claim. (I RR., pg. 45, lines 14 - 18). If professions dealing with such
matters on a regular basis would have formed an opinion that the deeds did not
reserve the minerals, it is unreasonable to expect that the Bounds, who had no
experience in or understanding of these matters, to be placed on notice that the
Prud’hommes might claim that the effect of the language in the deeds was to
reserve the grantors’ minerals.
The Prud’hommes admitted that they failed to talk to the Bounds, Mr.
Griffin or to Mr. Gorham about their changed understanding of the sale terms,
thus permitting them to believe that the original offer to convey their minerals
had not been withdrawn or superceded . (1 RR., pg. 139, line 7 - pg. 146, line
24). The Prud’hommes presented no evidence of any new contract to which the
Bounds had expressly agreed, either directly or through their representatives,
to complete the sale on the terms that Mr. Prud’homme imagined. The only
contact that Mr. Prud’homme had with anyone about the text relating to the
minerals was a conversation he alleges he had with an unidentified girl in Mr.
Griffin’s office, whose authority and competence was not shown, in which he
inquired, “Whats the deal. Do you understand? Whats the deal. Is it a half
interest or is it a full interest?” (I RR., pg. 140, lines 20 - 23). Although Mr.
page 35
Prud’homme documented many of his contacts with Mr. Griffin in his time
sheets, they did not show this discussion and Mr. Prud’homme depended on his
recollection to fix the time at which the discussion occurred. (I RR., pg. 141, line
10 - pg. 143, line 14).
There is nothing to impeach the Bounds evidence that they lacked actual
knowledge of the Prud’homme’s claim. The Bounds were unaware that the
Prud’homme defendants claimed to own the minerals under the property in
question until December, 2010. On that date, they received a telephone call from
Gilbert Prud’homme requesting the Bounds to execute a correction deed to the
property to correctly state the terms of the conveyance with respect to the
minerals. (I RR., pg. 47, line 10 - pg. 50, line 24; pg. 51, line 22 - pg. 52, line 14;
pg. 95, line 15 - 20; pg. 80, line 22 - pg. 83, line 2; pg. 87, line 19 - pg. 88, line 9;
pg. 92, line 8 - pg. 93, line 1; pg. 95, lines 15 - 20; II RR., pg. 5, [pg. 18, line 9 - pg.
20, line 12], pg. 6, [pg. 21, line 8 - pg. 22, line 17; pg. 23, line 4 - pg. 23, line 22]).
In that call and his subsequent dealings, Mr. Prud’homme suggested that the
minerals should be split, even though he believed the assumed new agreement
had permitted the grantors to keep all of their minerals. (I RR., pg. 49, line 15 -
pg. 50, line 2; pg. 80, line 22 - pg. 61, line 16; pg. 87, line 25 - pg. 88, line 9; II
RR., pp. 19 - 20, [pg. 76, lines 9 - 22; pp. 77, line 8 - pg. 78, line 8]). In January,
2011, the Bounds declined Mr. Prud’homme’s request. (I RR., pg. 47, line 25 -
pg. 49, line 20; pg. 87, line 25 - pg. 88, line 12).
Mr. Prud’homme’s communication prompted the Bounds to search the
page 36
real estate records, where it was discovered that the Prud’hommes had leased
the mineral interest under the property they had sold. (I RR., pg. 80, line 22 -
pg. 83, line 2; pg. 88, line 19 - pg. 90, line 12). This suit was filed October 28,
2013, less than four years after Mr. Prud’homme first made the Bounds aware
that the original deeds required revision because of the mistake in drafting the
provisions relating to the minerals.
The Prud’hommes assert that the Bounds were placed on notice of the
Prud’hommes’ mineral reservations because of the statements contained in the
title insurance policy they received by November of 2001. Schedule B of that
title insurance policy listed numerous exceptions from insurance coverage. That
schedule provided, as follows:
“This policy does not insure against loss of damage . . . which arise
by reason of . . . the following matters:
***
“6. The following matters and all terms of the documents creating
or offering evidence of the matters . . .:
“f. Title to any of the oil, gas and other minerals in, under
and that may be produced from the insured premises.
The following is provided for informational purposes
only:
***
“(iii) Mineral Reservation as set forth in multiple
Warranty Deeds from Eck G. Prud’homme, et al,
to Walter Bounds and wife, Carolyn B. Bounds,
all dated September 7, 2001, and recorded in the
Real Property Records of San Augustine County,
Texas, as follows: Vol. 24, Page 20; Vol. 24, Page
25; Vol. 24, Page 28; Vol. 24, Page 31; Vol. 24,
Page 34; and Vol 24, Page 37;
“Title to said interests has not been investigated subsequent to the
dates of the aforesaid instruments.”
It may be initially observed that the title insurance policy itself was a
page 37
contract between the Bounds and third parties, and not the Prud’hommes. A
fair summary of the meaning of the text is that the policy doesn’t insure the title
to the oil, gas and other minerals. The subject addressed by the language,
therefore, is the general exclusion of the liability of the title insurance company
for failure to the title to any of the minerals, and not specific title defects. The
language relied upon by the Prud’hommes as notice to the Bounds appears after
a statement that the following references are given for informational purposes
only. If the following references had been omitted, the title insurance coverage
would still not have included the specific matters referred to and, as far as the
policy was concerned, the additional text was surplusage.
The last reference in the title insurance policy was to the “mineral
reservation” contained in the Prud’hommes’ deeds to the Bounds. Those deeds
were not so plainly written that their meaning was obvious upon inspection. As
shown above in the Bounds’ argument under Issue No. 1, the text of those deeds
was not clearly a “reservation” and requires consideration of additional factors
to construe correctly. If the Bounds possessed the same legal understandings as
Mr. Scull and Mr. Griffin, an inspection of those deeds would have produced the
opinion that they were exceptions from the grantors’ warranties, and not
reservations. Neither the references in the title insurance policy or the text of the
deeds, even if they could be read to permit the Prud’hommes assert a claim to
the minerals, gave any notice that the Prud’hommes, in fact, were claiming them.
The fact that the third party instrument mischaracterized the effect of the deeds’
page 38
text might put the Bounds on notice that their title insurance would not pay for
their loss of the minerals, but would not give notice that the Prud’hommes
claimed to reserve the minerals. This is particularly true where the text of the
deeds is unclear. The Prud’hommes cannot, in this case, rely on a third party to
provide the disclosure to the Bounds that they were obligated to give but did not
give until December, 2010. The text, even if it could be read to permit the
Prud’hommes assert a claim to the minerals, gave no notice that they, in fact,
were claiming them.
The only evidence, therefore, in this case establishes that the Bounds, and
those who advised them, reasonably believed that the deeds from the
Prud’hommes were effective to comply with their sales contract’s requirement
for the Prud’hommes to convey all of their minerals, that the Prud’hommes
believed or came to believe that the deeds represented a new contract between
the parties that permitted them to keep their minerals, but that the
Prud’hommes remained silent about their assumptions and did not apprise the
Bounds of their claims until at least December of 2010. Consequently, the
evidence offered to show when the Bounds were on notice of the possible claim
that the deeds contained a mineral reservation conclusively establishes that the
text of the deeds was not so clear and express that it unambiguously gave notice
of a reservation, that, before December, 2010, the Bounds were not aware that
the Prud’hommes might have a possible claim that the text reserved their
mineral interest, that the Prud’hommes remained silent about their claim
page 39
throughout that time and that this suit was filed within four years of when the
Bounds first learned, or could have learned through the exercise of reasonable
diligence, of the Prud’hommes’ claim. There was no evidence that the Bounds
had actual notice of the claim prior to Mr. Prud’hommes contact in December
of 2010, and any contradictory evidence there may have been was no more than
a mere scintilla. The trial court’s findings that the Bounds had notice of the
reservation by at least November of 2001 is so against the great weight and
preponderance of the evidence as to be clearly wrong and unjust.
CONCLUSION AND PRAYER
The trial court erred as a matter of law in construing the deed in question
to unambiguously reserve the grantors’ minerals and in failing to construe the
deed as a limitation of the grantors’ warranty.
The evidence was legally and factually insufficient to support the trial
court’s findings of fact that the parties did not labor under a mutual mistake and
the trial court erred as a matter of law in concluding that an action for
reformation of the deeds based on a mutual mistake of the parties would not lie.
The evidence was legally and factually insufficient to support the trial
court’s findings of fact upon which it’s legal conclusion that the Bounds suit is
barred by the statute of limitations and the trial court erred as a matter of law
in so concluding.
For the reasons enumerated above, Appellant prays this court, alternately,
to enter its orders:
page 40
Modifying the trial court’s judgment to award Appellant recovery against
the Appellees, John Thomas Prud’homme, Joseph Gilbert Prud’homme, Joseph
Lynn Prud’homme, Peter A. Breen, Individually and as Successor Trustee of the
Breen Family Trust, Janet M. Sutro, Susan E. Breen, and Terrance E. Breen,
Individually and d/b/a E. G. and M. A. Prud’homme Beneficiaries Partnership,
of the title to and possession of an undivided fifty percent, (50%), of the oil, gas
and other minerals situated in, on or under the real property described in the
trial court’s judgment, or otherwise modifying said judgment, and affirming the
judgment as modified;
Reversing the judgment of the trial court, in whole or in part, and
rendering the judgment that the trial court should have rendered; or
Reversing the judgment of the trial court, in whole or in part, and
remanding this cause for further proceedings in the trial court consistent with
this court’s orders or the interests of justice;
Taxing costs herein against Appellee; and
page 41
Granting such other and further relief to Appellant as they may show
themselves entitled.
Respectfully Submitted:
Thomas R. McLeroy, Jr.
P. O. Box 668
Center, Texas 75935
(936) 598-2701
FAX (936) 598-6086
BY: /s/ Thomas R. McLeroy, Jr.
Attorney for Appellant.
CERTIFICATE OF COMPLIANCE
In compliance with TEX. R. APP. P., 9.4(i)(3) , I certify that the word-count
of the foregoing brief is 10,712 words.
/s/ Thomas R. McLeroy, Jr.
_______________________________
Attorney for Appellant
page 42
CERTIFICATE OF SERVICE
In compliance with TEX. R. APP. P., 9.5, I hereby certify that service of the
foregoing pleading was this date made upon counsel for all parties to this appeal
as follows:
Name and Address
Date Manner of Service of Persons Served
9/22/2015 eservice Mr. Robert G. Hargrove
Osborn, Griffith & Hargrove
515 Congress Avenue, Suite 2450
Austin, Texas 78701
(512) 476-3529
FAX (512) 476-8310
rob@texasenergylaw.com
Bar No. 24032391
/s/ Thomas R. McLeroy, Jr.
Attorney for Appellant
page 43
TAB 1
(Trial Court’s Judgment)
-I-
-II-
-III-
-IV-
-V-
-VI-
-VII-
-VIII-
TAB 2
(Trial Court’s Findings of Fact and Conclusions of Law)
-IX-
-X-
-XI-
-XII-
-XIII-
-XIV-
-XV-
-XVI-
-XVII-
-XVIII-
-XIX-
-XX-
-XXI-
-XXII-
-XXIII-
TAB 3
(Farm and Ranch Contract)
-XXIV-
-XXV-
-XXVI-
-XXVII-
-XXVIII-
-XXIX-
-XXX-
-XXXI-
-XXXII-
-XXXIII-
-XXXIV-
-XXXV-
-XXXVI-
-XXXVII-
-XXXVIII-
-XXXIX-
TAB 4
(Prud’homme Partnership Deed)
-XL-
-XLI-
-XLII-
-XLIII-
-XLIV-
-XLV-
TAB 5
(Breen Deeds)
-XLVI-
-XLVII-
-XLVIII-
-XLIX-
-L-
-LI-
-LII-
-LIII-
-LIV-
-LV-
-LVI-
-LVII-
-LVIII-
-LIX-
-LX-
-LXI-
TAB 6
(Title Insurance Commitment No. SA01-135 Schedules)
-LXII-
-LXIII-
-LXIV-
-LXV-
-LXVI-
-LXVII-
-LXVIII-
-LXIX-
-LXX-
-LXXI-
-LXXII-
TAB 7
(Bounds’ Title Insurance Policy)
-LXXIII-
-LXXIV-
-LXXV-
-LXXVI-
-LXXVII-
-LXXVIII-
-LXXIX-
-LXXX-
-LXXXI-
-LXXXII-