Yates Energy Corporation, EOG Resources, Inc., Jalapeno Corporation, ACG3 Mineral Interests, Ltd., Glassell Non-Operated Interests, Ltd., and Curry Glassell v. Broadway National Bank, Trustee of the Mary Frances Evers Trust ( 2022 )

Fourth Court of Appeals
San Antonio, Texas
MEMORANDUM OPINION
No. 04-17-00310-CV
YATES ENERGY CORPORATION, EOG Resources, Inc., Jalapeno Corporation, ACG3
Mineral Interests, Ltd., Glassell Non-Operated Interests, Ltd., and Curry Glassell,
Appellants
v.
BROADWAY NATIONAL BANK, TRUSTEE OF THE MARY FRANCES EVERS
TRUST,
Appellee
From the Probate Court No. 2, Bexar County, Texas
Trial Court No. 2015PC2618
Honorable Tom Rickhoff, Judge Presiding
Opinion by: Beth Watkins, Justice
Sitting: Patricia O. Alvarez, Justice
Irene Rios, Justice
Beth Watkins, Justice
Delivered and Filed: August 3, 2022
AFFIRMED IN PART; REVERSED AND REMANDED IN PART
Appellants Yates Energy Corporation, EOG Resources, Inc., Jalapeno Corporation, ACG3
Mineral Interests, Ltd., Glassell Non-Operated Interests, Ltd., and Curry Glassell appeal the
probate court’s summary judgment in favor of appellant Broadway National Bank, Trustee of the
Mary Frances Evers Trust. We affirm the judgment in part and reverse and remand in part.
04-17-00310-CV
BACKGROUND
This appeal, which is before us on remand from the Texas Supreme Court, involves a
dispute over ownership of mineral interests in Gonzales and DeWitt counties that were once held
by the Mary Frances Evers Trust. Broadway Bank served as trustee of the trust, which was
established by Mary Frances Evers during her lifetime. Yates acquired its claimed interest in the
subject minerals from Mary’s son, Eben John Evers (“John”). EOG, Jalapeno, ACG3, Glassell
Non-Operated Interests, and Curry Glassell all acquired their claimed interests from Yates.
Mary amended the trust several times before she died on September 3, 2003. The final
version of the trust (“the Trust Amendment”) specified that upon Mary’s death, Broadway Bank,
as trustee, was responsible for allocating the trust’s assets to Mary’s descendants. Mary’s surviving
descendants included her four children: Mariellen Evers Dyal, Sandra Evers Pierce, Jamie Evers
Drago, and John. The Trust Amendment provided that John’s share should be distributed to a
special-needs trust to be used for John’s benefit. The Trust Amendment further provided that if the
special-needs trust did not terminate in John’s lifetime, the corpus remaining at his death, if any,
would be distributed to: (1) Jamie or her surviving descendants; and (2) Mike E. Dyal or his
surviving descendants.
The record does not show whether Broadway Bank ever established the special-needs trust.
However, in 2005, Broadway Bank, in its capacity as trustee, conveyed interests in the subject
minerals to several of Mary’s descendants, including John. The 2005 Mineral Deed conveyed an
undivided 25% interest in the subject minerals to John in fee simple. In 2006, Broadway Bank
executed a Correction Mineral Deed, which stated that the Trust Amendment “provided that the
distribution to [John] would not be an outright distribution but, rather, a beneficial life interest
only” and that the 2005 Mineral Deed had conveyed the subject minerals to John in fee simple
“[b]y oversight.” The 2006 Correction Mineral Deed purported to: (1) change John’s interest in
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the subject minerals from a fee simple interest to a life estate; and (2) convey the remainder interest
in John’s life estate to Jamie’s descendants 1 and Mike E. Dyal. Broadway Bank signed the 2006
Correction Mineral Deed, but neither John nor any other parties to the 2005 Mineral Deed did so.
Broadway Bank filed copies of the 2006 Correction Mineral Deed in the Gonzales and
DeWitt county land records. Because some of the mineral interests at issue in the 2006 Correction
Mineral Deed had been leased to Yates, Broadway Bank sent copies of that instrument to Yates in
November of 2006.
In 2012, John executed a royalty deed and an assignment of overriding royalty interest
conveying his interest in the subject minerals to Yates. Yates then assigned some of the interests
it acquired from John to EOG, Jalapeno, ACG3, Glassell Non-Operated Interests, and Curry
Glassell.
In August of 2013, after the conveyances described above, a title attorney for EOG raised
concerns about the validity of the 2006 Correction Mineral Deed. In response to these concerns,
Broadway Bank executed and recorded an Amended Correction Deed. Unlike the 2006 Correction
Mineral Deed, the 2013 Amended Correction Deed was signed by all the parties to the 2005
Mineral Deed, including John. Like the 2006 Correction Mineral Deed, the 2013 Amended
Correction Deed conveyed only a life estate to John, identified specific remaindermen to take upon
the termination of John’s life estate, and stated that the 2005 Mineral Deed’s fee simple
conveyance to John was an “oversight” that was inconsistent with the Trust Amendment.
After John died on February 10, 2014, a dispute arose about who owned the subject
minerals. On July 31, 2015, Broadway Bank filed suit in probate court against Yates, EOG,
1
Jamie died on October 13, 2004.
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Jalapeno, ACG3, Glassell Non-Operated Interests, Curry Glassell, and others, 2 seeking
declarations that: (1) Yates had acquired only a life estate from John; and (2) when John died, his
life estate terminated and the interests claimed by appellants passed to the remaindermen identified
in the 2006 Correction Mineral Deed. In response, appellants asserted several affirmative defenses,
including claims that they were bona fide purchasers. They also filed counterclaims seeking
declarations that: (1) the 2005 Mineral Deed was binding and enforceable; and (2) the 2006
Correction Mineral Deed and the 2013 Amended Correction Deed were ineffective.
The parties sought summary judgment on their competing claims for declaratory relief. The
motions filed by Broadway Bank, the remaindermen, 3 EOG, ACG3, and Glassell Non-Operating
Interests specifically sought summary judgment on the appellants’ bona fide purchaser defense.
The probate court ultimately granted summary judgment in favor of Broadway Bank and the
remaindermen, declaring: (1) the 2013 Amended Correction Deed was a valid instrument that
granted John only a life estate in the subject minerals; (2) Yates received only a life estate in the
interests it acquired from John; (3) Yates could not have conveyed any interest greater than a life
estate to EOG, Jalapeno, ACG3, Glassell Non-Operated Interests, or Curry Glassell; (4) none of
the appellants were entitled to protection as bona fide purchasers; and (5) the remaindermen owned
the subject minerals after John’s death. Yates, EOG, Jalapeno, ACG3, Glassell Non-Operated
Interests, and Curry Glassell timely appealed.
In our original review, we reversed the probate court’s summary judgment. See Yates
Energy Corp. v. Broadway Nat’l Bank, Tr. of Mary Frances Evers Tr., 609 S.W.3d 140, 149–50
(Tex. App.—San Antonio 2018), rev’d, 631 S.W.3d 16 (Tex. 2021). We concluded that because
2
In its final judgment, the probate court dismissed all claims asserted by and against several defendants who are not
appellants here.
3
The remaindermen’s motion for summary judgment essentially tracked Broadway Bank’s motion. Our discussion of
Broadway Bank’s motion therefore applies equally to the remaindermen’s motion.
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John conveyed his interest in the subject minerals to Yates and Yates subsequently conveyed those
interests to others, section 5.029 of the Texas Property Code required the 2013 Amended
Correction Deed “to be signed by the successors in interest to Broadway Bank, who were John and
his siblings, as well as the successors and assigns to John, which was anyone who currently held
an interest in the royalty at the time the 2013 Amended Correction Deed was signed.” Id. at 148;
see also TEX. PROP. CODE ANN. § 5.029. The Texas Supreme Court disagreed, holding that “section
5.029 is satisfied when all the original parties agree to sign the correction instrument” and the
signatures of an original parties’ heirs, successors, or assigns are not required if the original parties
are available and agree to sign the correction instrument. Broadway Nat’l Bank, Tr. of Mary
Frances Evers Tr. v. Yates Energy Corp., 631 S.W.3d 16, 25–26 (Tex. 2021). The supreme court
reversed our judgment and remanded this case for us “to consider the parties’ arguments in light
of the summary judgment ruling that neither Yates nor its assigns are bona fide purchasers.” Id. at
29–30. On remand, we ordered the parties to submit supplemental briefing on, inter alia, the scope
of the supreme court’s remand.
ANALYSIS
Scope of the Supreme Court’s Remand
The parties agree that the supreme court’s remand requires us to consider whether some of
the appellants are bona fide purchasers who are not bound by the 2013 Amended Correction Deed.
See id.; see also TEX. PROP. CODE ANN. § 5.030(c) (“A correction instrument is subject to the
property interest of . . . a subsequent purchaser for valuable consideration without notice acquired
on or after the date the original instrument was acknowledged, sworn to, or proved and filed for
record as required by law and before the correction instrument has been acknowledged, sworn to,
or proved and filed for record as required by law.”). Broadway Bank argues, however, that the
supreme court intended to exclude Yates and EOG from that review. The parties also disagree
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about whether the supreme court’s remand permits us to review a question the parties refer to as
“the life estate issue.”
Did the Supreme Court Remand Yates’s and EOG’s Bona Fide Purchaser Defense?
Broadway Bank contends that the validity of Yates’s and EOG’s bona fide purchaser
defenses is outside the scope of the supreme court’s remand because those appellants did not
request a remand to this court on that issue. However, EOG’s supreme court briefing explicitly
argued that if the supreme court did not affirm this court’s judgment, it should “remand to the
Fourth Court or to the trial court, as appropriate, for consideration of additional issues not
presented for review.” Additionally, both Yates’s and EOG’s supreme court briefs expressly
adopted and incorporated the arguments made in the other appellants’ briefs. See TEX. R. APP. P.
9.7 (“Any party may join in or adopt by reference all or any part of a brief, petition, response,
motion, or other document filed in an appellate court by another party in the same case.”). ACG3’s
supreme court briefing requested a remand on the bona fide purchaser issue and presented
argument in support of that result. Accordingly, we disagree with Broadway Bank’s assertion that
Yates and EOG waived our review of this issue on remand. See id.
Broadway Bank also contends Yates and EOG waived this issue by representing in the
probate court and the supreme court that their bona fide purchaser defense was “irrelevant.” The
record shows, however, that Yates and EOG stated only that their bona fide purchaser defense was
immaterial to the question of whether the 2013 Amended Correction Deed complied with section
5.029’s signature requirements. Compare TEX. PROP. CODE § 5.029(b), with id. § 5.030(c). Both
Yates’s and EOG’s live answers asserted a bona fide purchaser defense, and their summary
judgment filings argued they acquired the subject minerals for value without notice of any
potentially adverse claims. This record does not support a conclusion that either Yates or EOG
waived their bona fide purchaser defenses.
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For these reasons, we hold that Yates’s and EOG’s bona fide purchaser defenses are within
the scope of the supreme court’s remand.
Did the Supreme Court Remand the Life Estate Issue?
The question the parties refer to as “the life estate issue” revolves around whether the Trust
Amendment permitted Broadway Bank to convey an interest greater than a life estate to John.
Appellants contend that the resolution of the life estate issue is necessary to dispose of this
appeal—and therefore falls within the scope of the supreme court’s remand—because “if the 2003
Trust Amendment did not actually limit John’s interest to a life estate, then there is nothing to
Broadway Bank’s argument that John could not sell to Yates in fee simple.” Stated differently,
appellants argue that if the Trust Amendment did not prohibit the 2005 Mineral Deed’s fee simple
conveyance to John, then: (1) there was no error to be corrected by the 2013 Amended Correction
Deed; (2) the 2013 Amended Correction Deed is therefore not a valid correction instrument; and
(3) the 2005 fee simple conveyance to John, John’s 2012 conveyance to Yates, and Yates’s later
conveyances to the other appellants are binding and effective.
As the supreme court recognized, the record shows the parties to the 2005 Mineral Deed
executed the 2013 Amended Correction Deed because they concluded the 2005 deed contained an
error:
In the 2005 Mineral Deed, John received an undivided 25 percent interest in fee
simple, which the Bank asserts was a mistake. To correct the error, the Bank, as
Trustee, filed a Corrected Mineral Deed in 2006, explaining that John was only
entitled to the distribution of a life estate in the minerals conveyed in the 2005
deed. . . . In November 2013, the Bank, as Trustee, executed and recorded an
Amended Correction Deed, which was signed by all of the parties to the original
2005 Mineral Deed. Like the 2006 Correction, the 2013 Amended Correction Deed
advised that the 2005 Mineral Deed made an incorrect conveyance of a fee estate
to John, who instead was entitled to only a life estate, with remainder interest
identified as in the 2006 Correction.
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Broadway Nat’l Bank, 631 S.W.3d at 19–20 (emphasis added). The supreme court appeared to
accept that the 2005 Mineral Deed contained an error. See id. at 22 (“The error here is material,
and thus the correction instrument must comply with 5.029.”). Nevertheless, appellants argue that
we must look beyond the 2013 Amended Correction Deed’s recitation that the original fee simple
conveyance to John was made in error and consider whether that recitation arose from an incorrect
interpretation of the Trust Amendment.
We agree with appellants that the supreme court did not explicitly decide whether the Trust
Amendment permitted Broadway Bank to convey more than a life estate to John. Nevertheless, we
conclude this issue falls outside the scope of the remand to this court for several reasons. First, as
Broadway Bank notes, appellants sought rehearing on this issue in the supreme court and asked
that court to either resolve the life estate issue or to clearly instruct this court to do so on remand.
The supreme court denied that request. We agree with Broadway Bank that we may not “proceed
exactly as if [appellants’] request for a broader remand had been granted.”
Second, the supreme court framed the primary issue presented to it as: “Whether the
execution of the 2013 Amended Correction Deed complies with Property Code section 5.029 and
thus validly corrects a material error in the original 2005 Mineral Deed.” Id. at 22 (emphasis
added). In answering this question, the court held that “section 5.029 is satisfied when all the
original parties agree to sign the correction instrument” and that the statute “provides for
unanimous agreement among the parties to an original conveyance as a means to correct a material
error and does not otherwise provide that the existence of an assign must supersede or replace that
method[.]” Id. at 26. The court further held that the Amended Correction Deed satisfied section
5.029’s requirements and is therefore a valid correction instrument. Id. at 27. Nevertheless,
appellants argue on remand that the life estate issue renders the 2013 Amended Correction Deed
ineffective because that issue shows the 2013 Amended Correction Deed did not “correct[] a
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material error in the original 2005 Mineral Deed.” We cannot resolve that question in appellants’
favor without running afoul of the supreme court’s plain holding. See id. at 26–27; see also, e.g.,
Rice v. Rice, 533 S.W.3d 58, 62 (Tex. App.—Houston [14th Dist.] 2017, no pet.) (“Under
principles of vertical stare decisis, Texas intermediate appellate courts and trial courts are bound
by the decisions of the Texas Supreme Court.”).
Third, appellants’ argument asks us to treat the Trust Amendment, rather than the 2013
Amended Correction Deed, as the controlling document in this dispute. Appellants contend that if
the Trust Amendment gave Broadway Bank authority to convey the subject minerals to John in
fee simple, then any contrary factual recitations in the 2013 Amended Correction Deed render the
correction instrument ineffective. While we note that a correction instrument is “subject to
rebuttal,” TEX. PROP. CODE § 5.030(a)(4), we conclude the Trust Amendment does not rebut the
2013 Amended Correction Deed for two reasons. First, as noted above, we are bound by the
supreme court’s holding that the 2013 Amended Correction Deed is valid. See Broadway Nat’l
Bank, 631 S.W.3d at 26–27; Rice, 533 S.W.3d at 62. Second, even if we assume the Trust
Amendment gave Broadway Bank authority to make a fee simple conveyance to John, the 2013
Amended Correction Deed shows that Broadway Bank, John, and the other parties to the 2005
Mineral Deed intended to limit John’s interest to a life estate. See TEX. PROP. CODE ANN. § 5.027(a)
(valid correction instrument “may correct an ambiguity or error in a recorded original instrument
of conveyance . . . including an ambiguity or error that relates to the description of or extent of the
interest conveyed”). We see nothing in the Property Code or the supreme court’s opinion that
allows us to either override the original parties’ determination that Broadway Bank did not intend
to make a fee simple conveyance to John or to consider what those parties would have intended
had they interpreted the Trust Amendment differently. See TEX. PROP. CODE § 5.030(a)(2), (3)
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(correction instrument that complies with section 5.029 is “prima facie evidence of the facts stated
in the” instrument and is “presumed to be true”); Broadway Nat’l Bank, 631 S.W.3d at 23–26.
Finally, Yates argues the life estate issue “is subsumed under the bona fide purchaser
defense” because “if the Trust Amendment and case law prove as a matter of law that John’s
interest was not ‘for life only’ and could be conveyed in fee simple, then Yates could not have had
notice of any ‘claim or interest’ in the property, as would be required to defeat its bona fide
purchaser status.” Again, we disagree. “A bona fide purchaser is one who acquires property in
good faith, for value, and without notice, constructive or actual, of any third party claim or
interest.” Noble Mortg. & Invs., LLC v. D&M Vision Invs., LLC, 340 S.W.3d 65, 75 (Tex. App.—
Houston [1st Dist.] 2011, no pet.). Whether a grantee has notice sufficient to preclude a bona fide
purchaser defense “concerns whether the purchaser has notice of any claimed interest in the
property, whether or not that claim ultimately proves valid.” Trinity Fin. Servs., LLC v. Mahanay,
No. 02-21-00027-CV, 2022 WL 247433, at *6 (Tex. App.—Fort Worth Jan. 27, 2022, no pet.)
(mem. op.) (citing Broadway Nat’l Bank, 631 S.W.3d at 26). Evidence of notice “does not hinge
on the validity of the claimed interest, but on knowledge of the claim regardless of its validity.”
Id. at *7. A purchaser can lose its ability to claim bona fide purchaser status if it “takes property
with knowledge of such facts as would excite the suspicions of a person of ordinary prudence[.]”
Hahn v. Love, 321 S.W.3d 517, 527 (Tex. App.—Houston [1st Dist.] 2009, pet. denied). Because
the validity of a claimed interest does not determine whether a purported bona fide purchaser had
notice of that interest, we need not reach the life estate issue to resolve appellants’ bona fide
purchaser defense. See id.; see also Trinity Fin. Servs., 2022 WL 247433, at *6–7.
For these reasons, we conclude the life estate issue falls outside the scope of the supreme
court’s remand. We therefore decline appellants’ invitation to consider that issue.
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Bona Fide Purchaser
Standard of Review
As noted above, the Texas Supreme Court instructed us “to consider the parties’ arguments
in light of the summary judgment ruling that neither Yates nor its assigns are bona fide purchasers.”
Broadway Nat’l Bank, 631 S.W.3d at 29–30. We review the probate court’s summary judgment
de novo. See, e.g., Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). To be
entitled to traditional summary judgment, the movant must show that there are no material issues
of fact and it is therefore entitled to judgment as a matter of law. TEX. R. CIV. P. 166a(c); JLB
Builders, L.L.C. v. Hernandez, 622 S.W.3d 860, 864 (Tex. 2021). If the movant meets that burden,
the respondent must bring forth evidence creating a genuine issue of material fact to preclude
summary judgment. TEX. R. CIV. P. 166a(c); Romo v. Tex. Dep’t of Transp., 48 S.W.3d 265, 269
(Tex. App.—San Antonio 2001, no pet.).
Applicable Law
The Texas Supreme Court held that the 2013 Amended Correction Deed is a valid
correction instrument. See Broadway Nat’l Bank, 631 S.W.3d at 27. We must therefore treat the
2013 Amended Correction Deed as if it replaced and was a substitute for the 2005 Mineral Deed
through which John initially obtained his interest in the subject minerals. See id.; see also TEX.
PROP. CODE § 5.030(b).
Nevertheless, even a valid, effective correction instrument “is subject to the property
interest of . . . a subsequent purchaser for valuable consideration without notice acquired on or
after the date the original instrument was acknowledged, sworn to, or proved and filed for record
as required by law and before the correction instrument has been acknowledged, sworn to, or
proved and filed for record as required by law.” Id. § 5.030(c). “Thus, even when a correction
instrument is properly executed and recorded, a bona fide purchaser’s property interest still
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controls if the purchaser acquired its interest prior to the correction instrument being recorded.”
Broadway Nat’l Bank, 631 S.W.3d at 27.
“Status as a bona fide purchaser is an affirmative defense,” and the person asserting that
defense must show that he acquired the subject property “in good faith, for value, and without
notice of any third-party claim or interest.” Madison v. Gordon, 39 S.W.3d 604, 606 (Tex. 2001)
(per curiam). The sole issue presented by this dispute is whether appellants acquired their interests
in the subject minerals without notice of the remaindermen’s claim to those minerals. Notice
sufficient to defeat a bona fide purchaser defense may be actual or constructive. See id. A person
has actual notice of a fact when he obtains “personal information or express knowledge” that is
actually communicated to him. See Nguyen v. Chapa, 305 S.W.3d 316, 323 (Tex. App.—Houston
[14th Dist.] 2009, pet. denied); see also Madison, 39 S.W.3d at 606. In contrast, “[c]onstructive
notice is notice the law imputes to a person not having personal information or knowledge.”
Madison, 39 S.W.3d at 606.
Application
All of the appellants acquired their interests in the subject minerals before the execution of
the 2013 Amended Correction Deed. Accordingly, even though the supreme court has held that
the 2013 Amended Correction Deed was effective, Broadway Bank was not entitled to a summary
judgment that the appellants were bound by that instrument unless it conclusively established the
appellants had actual or constructive notice of the relevant facts stated therein. See Broadway Nat’l
Bank, 631 S.W.3d at 27; see also TEX. R. CIV. P. 166a(c); Madison, 39 S.W.3d at 606.
In its amended cross-motion for summary judgment, Broadway Bank argued that none of
the appellants qualified for protection as bona fide purchasers because they “had actual and/or
constructive notice of the 2006 Correction Deed and that the interest they acquired was a life estate
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only.” Because the other appellants took their interests in the subject minerals from Yates, we will
begin by considering whether Yates had actual or constructive notice of the remaindermen’s claim.
A. Yates
Broadway Bank sought summary judgment on Yates’s bona fide purchaser defense, but
Yates did not file a competing motion for summary judgment on that issue. Because Yates was the
non-movant on this issue, we review the summary judgment evidence in the light most favorable
to Yates and indulge every reasonable inference and resolve all doubts in its favor. See, e.g.,
Scripps NP Operating, LLC v. Carter, 573 S.W.3d 781, 790 (Tex. 2019).
The summary judgment evidence shows that in November of 2006—approximately six
years before Yates acquired its interests in the subject minerals from John—Broadway Bank sent
Yates recorded copies of the 2006 Correction Mineral Deed. That instrument, which is
substantively identical to the 2013 Amended Correction Deed, recited that the 2005 Mineral Deed
had conveyed the interests to John in fee simple “[b]y oversight,” that the conveyance to John
should have been limited to a life estate, and that specific individuals owned remainder interests
in John’s share of the minerals. In response to Broadway Bank’s motion, Yates essentially
conceded that it received the 2006 Correction Mineral Deed before it acquired its interest in the
subject minerals in 2012. This evidence satisfied Broadway Bank’s threshold summary judgment
burden to establish that Yates acquired the subject minerals with actual notice of the
remaindermen’s claim. TEX. R. CIV. P. 166a(c); TEX. PROP. CODE § 5.030(c).
The burden thus shifted to Yates to present evidence raising a genuine issue of material
fact about whether it had actual notice of the remaindermen’s claim. TEX. R. CIV. P. 166a(c); Romo,
48 S.W.3d at 269. While Yates did not deny that Broadway Bank had sent it copies of the 2006
Correction Mineral Deed, it argued that it could not be charged with notice of the remaindermen’s
claim for several reasons. First, it argued that “actual notice is a question of fact, not of law.” While
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actual notice often presents a question of fact, that issue may present a question of law “when there
is no room for ordinary minds to differ as to the proper conclusion to be drawn from the evidence.”
Nguyen, 305 S.W.3d at 323. Yates did not present any evidence showing that under these
circumstances, there is room for reasonable minds to differ about whether it received actual notice
of the 2006 Correction Mineral Deed’s recitation of the remaindermen’s claimed interest in the
subject minerals. See id.; see also TEX. R. CIV. P. 166a(c).
Yates’s summary judgment response also argued that even if it received actual notice of
the 2006 Correction Mineral Deed, that notice would not defeat its bona fide purchaser defense
because the 2006 Correction Mineral Deed “was ineffective and unenforceable” and notified Yates
only “of an alleged mistake that had never been proved or properly corrected.” On remand, Yates
similarly argues that “a void correction deed provides notice of nothing.” As support for this
assertion, Yates cites Tanya L. McCabe Trust v. Ranger Energy LLC, which held that a recorded
correction instrument “could not be construed as notice to a subsequent buyer of the facts stated
therein” because that instrument was not executed in compliance with section 5.029. 531 S.W.3d
783, 798 (Tex. App.—Houston [1st Dist.] 2016, pet. denied); see also TEX. PROP. CODE
§ 5.030(a)(5) (recorded correction instrument executed in compliance with section 5.029
constitutes notice to subsequent purchasers).
Tanya L. McCabe Trust is distinguishable from these facts. Broadway Bank did not rely
solely on the recording of the 2006 Correction Mineral Deed to charge Yates with notice of the
facts stated in that instrument. See Tanya L. McCabe Tr., 531 S.W.3d at 791–92. Instead, it
presented evidence that it mailed copies of that instrument to Yates, and Yates conceded it received
those copies approximately six years before it acquired its interests in the subject minerals. We
decline Yates’s invitation to hold that an invalid correction instrument is wholly ineffective to
impart notice on a subsequent purchaser where, as here, that purchaser conceded that it received a
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copy of the instrument before it acquired the property at issue. Cf. Nguyen, 305 S.W.3d at 323(noting that an unrecorded conveyance is only wholly void “as to a subsequent purchaser who
purchases the property for valuable consideration and without notice”) (emphasis added).
Moreover, as explained above, the validity of the remaindermen’s claimed interest is irrelevant to
the question of whether Yates had notice of that claim. See Trinity Fin. Servs., 2022 WL 247433,
at *6–7. While we agree that the 2006 Correction Mineral Deed was ineffective, Yates did not
present any summary judgment evidence that raised a genuine issue of material fact about whether
its factual recitations were sufficient to “excite the suspicions of a person of ordinary prudence[.]” 4
See Hahn, 321 S.W.3d at 527.
Yates also argued below that the only “notice” that can defeat a bona fide purchaser defense
under these circumstances is described by section 5.030(a)(5), which provides that a correction
instrument that complies with section 5.029 constitutes “notice to a subsequent buyer of the facts
stated in the correction instrument.” TEX. PROP. CODE § 5.030(a)(5). Because the 2006 Correction
Mineral Deed did not comply with section 5.029 and the 2013 Amended Correction Deed was not
recorded until after Yates acquired its interest in the subject minerals, Yates argued that neither
instrument constituted “notice” as that term is used in section 5.030. See id.; see also id. § 5.030(c).
However, when the legislature enacted section 5.030 in 2011, it was well-established that a
purchaser who acquired property with either constructive or actual notice of a potential third-party
claim could not successfully assert a bona fide purchaser defense. See, e.g., Madison, 39 S.W.3d
4
EOG argues Yates’s receipt of the 2006 Correction Mineral Deed did not constitute actual notice of the
remaindermen’s potential claim because “any further inquiry by Yates would have revealed only that the 2005 Mineral
Deed was completely valid and not a mistake at all because the trust documents gave Broadway full authority to
convey fee simple to John.” However, the record shows that after EOG acquired its interests from Yates, it discovered
the existence of the 2006 Correction Mineral Deed and contacted Broadway Bank to inquire about the validity of that
instrument. EOG’s inquiry specifically questioned whether the instrument was consistent with the Trust Amendment.
Neither EOG nor Yates identified any evidence below showing that Yates could not have similarly questioned
Broadway Bank about the validity of the 2006 Correction Mineral Deed before it acquired the subject interests. See
Hahn, 321 S.W.3d at 527.
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at 606. We must presume the legislature was aware of this existing law when it enacted section
5.030. See, e.g., Traxler v. Entergy Gulf States, Inc., 376 S.W.3d 742, 748 (Tex. 2012). We
therefore do not read section 5.030 as extending bona fide purchaser protection to purchasers who
acquired the property after obtaining actual notice of a potentially adverse claim.
Yates also argued below that the recording of the 2006 Correction Mineral Deed was
insufficient to constitute constructive notice because it was outside of John’s—and therefore
Yates’s—chain of title. However, because Broadway Bank conclusively showed that Yates
received actual notice, we need not determine whether Yates also had constructive notice of that
instrument. See, e.g., Madison, 39 S.W.3d at 606 (notice that will defeat bona fide purchaser
defense “may be constructive or actual”) (emphasis added).
Finally, relying on Harrell v. Hickman, 215 S.W.2d 876 (Tex. 1948) and Moody v. Pitts,
708 S.W.2d 930 (Tex. App.—Corpus Christi–Edinburg 1986, no writ), Yates argues that the holder
of a life estate—here, Yates’s grantor, John—can sell the property in fee simple as long as he holds
the proceeds of the conveyance for the remaindermen. “Although a life tenant ordinarily cannot
convey an estate that is greater than one tied to her life, the instrument conveying the life estate
can confer greater powers upon the life tenant.” Steger v. Muenster Drilling Co., Inc., 134 S.W.3d
359, 373 (Tex. App.—Fort Worth 2003, pet. denied). Both Harrell and Moody involved
conveyance instruments that gave a life estate tenant unlimited power to dispose of the fee estate.
See Harrell, 215 S.W.2d at 878; Moody, 708 S.W.2d at 933, 936; but see Montgomery v. Browder,
930 S.W.2d 772, 777 (Tex. App.—Amarillo 1996, writ denied) (“[G]iving a life tenant extensive
powers of disposition does not convert the life estate into a fee simple title.”). The 2013 Amended
Correction Deed—which, again, the supreme court’s opinion requires us to treat as having replaced
the 2005 Mineral Deed through which John initially acquired the interest he later conveyed to
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Yates—did not grant any such authority to John. Furthermore, Yates did not present any evidence
that John held the proceeds of the sale to Yates for the remaindermen.
For these reasons, the probate court did not err by determining that Broadway Bank
conclusively showed that Yates received actual notice of the remaindermen’s claim and Yates did
not present evidence that raised a genuine issue of material fact on that issue. TEX. R. CIV. P.
166a(c). We therefore affirm the portion of the probate court’s summary judgment concluding that
Yates was not entitled to protection as a bona fide purchaser. Because the supreme court held that
the 2013 Amended Correction Deed was a valid correction instrument, our conclusion that Yates
was not a bona fide purchaser requires us to hold that Yates was bound by the 2013 Amended
Correction Deed and therefore acquired only a life estate interest from John. See TEX. PROP. CODE
§ 5.030(b), (c). Because it is undisputed that John died on February 10, 2014, Yates’s life estate
terminated on that date as a matter of law. TEX. R. CIV. P. 166a(c); Montgomery, 930 S.W.2d at
778.
B. Other Appellants
“It is axiomatic that a grantor cannot convey to a grantee a greater or better title than he
holds.” Law v. State, 811 S.W.2d 265, 267 (Tex. App.—Houston [1st Dist.] 1991, no pet.); see
also Cockrell v. Tex. Gulf Sulphur Co., 299 S.W.2d 672, 675 (Tex. 1956) (“We take it that no
authority need be cited for the proposition that a deed can pass no greater estate than that owned
by the grantor.”). Based on this general proposition, the probate court concluded that because Yates
was not a bona fide purchaser and was therefore bound by the 2013 Amended Correction Deed,
the other appellants were also bound by that instrument. On remand, Broadway Bank urges us to
apply this general rule to affirm the probate court’s summary judgment against the non-Yates
appellants and to hold that the subject minerals belong to the remaindermen as a matter of law.
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However, this general rule applies only if the grantee fails to “show[] himself to be a bona
fide purchaser[.]” See, e.g., Hartel v. Dishman, 145 S.W.2d 865, 609 (Tex. 1940); Decker v.
Decker, 192 S.W.3d 648, 658 (Tex. App.—Fort Worth 2006, no pet.) (“If a subsequent purchaser
cannot show himself to be a bona fide purchaser, then he acquires only the rights that his grantor
had.”). The bona fide purchaser doctrine “is founded in comparative equity” and is intended to
protect a grantee who “comes to the transaction innocent and is caught unawares.” Trinity Fin.
Servs., 2022 WL 247433, at *7. And, as explained above, the Property Code provides that a valid
correction instrument is subject to the property interest of a bona fide purchaser. TEX. PROP. CODE
§ 5.030(c). Accordingly, to determine whether the non-Yates appellants are bound by the 2013
Amended Correction Deed, we must consider whether the summary judgment record supports the
probate court’s conclusion that those parties were not bona fide purchasers. See id.; see also, e.g.,
Hartel, 145 S.W.2d at 609.
1. Jalapeno and Curry Glassell
Like Yates, Jalapeno and Curry Glassell filed a response to Broadway Bank’s motion for
summary judgment on their bona fide purchaser defense but did not affirmatively seek their own
summary judgment on that issue. We therefore review the summary judgment evidence in the light
most favorable to them and indulge every reasonable inference and resolve all doubts in their favor.
See Scripps, 573 S.W.3d at 790. As non-movants, Jalapeno and Curry Glassell did not have any
burden to produce summary judgment evidence unless Broadway Bank established it was entitled
to judgment as a matter of law. TEX. R. CIV. P. 166a(c); Lujan v. Navistar, Inc., 555 S.W.3d 79, 84
(Tex. 2018).
Broadway Bank did not argue or present any evidence showing that it mailed the 2006
Correction Mineral Deed to Jalapeno or Curry Glassell, as it did with Yates. Nor did it present any
evidence that Jalapeno or Curry Glassell received actual notice of the facts contained in the 2006
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Correction Mineral Deed through other means. Instead, it argued Jalapeno and Curry Glassell had
constructive notice of the 2006 Correction Mineral Deed because that instrument was filed of
record before they acquired their interests in the subject minerals.
“Under Texas law, a subsequent creditor or purchaser is only deemed on constructive
notice of recorded documents within its direct chain of title that either reveal the interests of
another, or that contain recitals that would put a prudent purchaser on inquiry notice of another’s
interest outside the chain of title.” Ovation Servs., LLC v. Richard, 624 S.W.3d 610, 621 (Tex.
App.—Tyler 2021, no pet.). “‘Chain of title’ has been defined to be [t]he successive conveyances,
commencing with the patent from the government, each being a perfect conveyance of the title
down to and including the conveyance to the present holder.” Noble Mortg., 340 S.W.3d at 80(internal quotation marks omitted). Here, it is undisputed that the 2006 Correction Mineral Deed
was executed after the 2005 Mineral Deed under which John—Jalapeno and Curry Glassell’s
grantor’s grantor—originally acquired the property. Accordingly, Jalapeno’s and Curry Glassell’s
chain of title would have included any instruments executed by John between his acquisition of
the property and his conveyance of it to another, but that chain would not include any instruments
executed by Broadway Bank after it conveyed the property to John. See id.Because Broadway Bank relied solely on the filing of the 2006 Correction Mineral Deed
to show constructive notice, it did not identify any evidence within Jalapeno’s or Curry Glassell’s
chain of title showing that those parties either actually were or should have been aware of the
remaindermen’s claims when they acquired their interests in the subject minerals. See Madison,
39 S.W.3d at 606 (defining actual and constructive notice). Broadway Bank therefore did not show
as a matter of law that Jalapeno or Curry Glassell had constructive notice of the remaindermen’s
claims. See Ovation Servs., 624 S.W.3d at 621. Because Broadway Bank did not conclusively
establish that Jalapeno or Curry Glassell had either actual or constructive notice of the
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remaindermen’s claims, the probate court erred by granting Broadway Bank a summary judgment
on those parties’ bona fide purchaser defenses. See id.; see also TEX. R. CIV. P. 166a(c).
Broadway Bank also argued below that Jalapeno and Curry Glassell may not claim an
interest greater than that owned by their grantor, Yates. Because Broadway Bank did not
conclusively establish that Jalapeno and Curry Glassell were not bona fide purchasers, we may not
affirm the probate court’s summary judgment against them on this basis. See, e.g., Hartel, 145
S.W.2d at 609.
Because Broadway Bank did not establish as a matter of law that Jalapeno and Curry
Glassell are not entitled to protection as bona fide purchasers, it also did not show as a matter of
law that they are bound by the 2013 Amended Correction Deed. TEX. PROP. CODE § 5.030(c). We
therefore reverse the probate court’s summary judgment against Jalapeno and Curry Glassell on
their bona fide purchaser defense, as well as the probate court’s conclusion that those parties are
bound by the 2013 Amended Correction Deed. We remand those issues to the probate court for
further proceedings. TEX. R. CIV. P. 166a(c); TEX. PROP. CODE § 5.030(c).
2. ACG3 and Glassell Non-Operated Interests
In addition to responding to Broadway Bank’s motion for summary judgment, ACG3 and
Glassell Non-Operated Interests affirmatively sought summary judgment on their bona fide
purchaser defense. Because those motions directly competed with Broadway Bank’s request for
summary judgment on the same issue, we must review all the evidence presented by Broadway
Bank, ACG3, and Glassell Non-Operated Interests and render the judgment the trial court should
have rendered. Valence, 164 S.W.3d at 661.
As was the case with Jalapeno and Curry Glassell, Broadway Bank’s motion for summary
judgment did not argue that ACG3 or Glassell Non-Operated Interests had actual notice of the
facts recited in the 2006 Correction Mineral Deed when they acquired their interests in the subject
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minerals. Accordingly, Broadway Bank did not show it was entitled to judgment as a matter of
law on that question. See TEX. R. CIV. P. 166a(c); Lujan, 555 S.W.3d at 84.
Broadway Bank argued that ACG3 and Glassell Non-Operated Interests had constructive
notice of the 2006 Correction Mineral Deed. However, it based that argument solely on its
assertions that: (1) the 2006 Correction Mineral Interest was filed of record; and (2) Yates’s actual
knowledge should be imputed to ACG3 and Glassell Non-Operated Interests. As with Jalapeno
and Curry Glassell, these arguments did not conclusively establish that ACG3 or Glassell Non-
Operated Interests had constructive notice of the remaindermen’s interest. See TEX. R. CIV. P.
166a(c); Ovation Servs., 624 S.W.3d at 621; Noble Mortg., 340 S.W.3d at 80. Because Broadway
Bank did not conclusively establish that ACG3 or Glassell Non-Operated Interests had either
actual or constructive notice of the remaindermen’s interests, the probate court erred by granting
summary judgment for Broadway Bank on those appellants’ bona fide purchaser defenses. TEX.
R. CIV. P. 166a(c); TEX. PROP. CODE § 5.030(c).
Our conclusion that Broadway Bank was not entitled to summary judgment against ACG3
and Glassell Non-Operated Interests does not necessarily mean the probate court should have
granted their competing motion. See, e.g., DCP Sand Hills Pipeline, LLC v. San Miguel Elec.
Coop., Inc., No. 04-19-00288-CV, 2020 WL 6748725, at *7 (Tex. App.—San Antonio Nov. 18,
2020, pet. denied) (mem. op.) (concluding neither side was entitled to summary judgment on
certain issues). ACG3 and Glassell Non-Operated Interests’ motion incorporated the arguments
and evidence in Yates’s and EOG’s summary judgment motions and responses, but it did not raise
any additional arguments or present any other evidence on behalf of ACG3 or Glassell Non-
Operated Interests. After reviewing the summary judgment record, we see no evidence that
conclusively established the bona fide purchaser defenses asserted by ACG3 or Glassell Non-
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Operated Interests. See TEX. R. CIV. P. 166a(c); JLB Builders, 622 S.W.3d at 864. The probate
court therefore did not err by denying their motion for summary judgment. TEX. R. CIV. P. 166a(c).
For these reasons, we reverse the probate court’s summary judgment against ACG3 and
Glassell Non-Operated Interests on their bona fide purchaser defense, as well as the probate court’s
conclusion that those parties are bound by the 2013 Amended Correction Deed. We remand those
issues to the probate court for further proceedings. TEX. R. CIV. P. 166a(c); TEX. PROP. CODE
§ 5.030(c).
3. EOG
Broadway Bank and EOG filed competing motions for summary judgment on EOG’s bona
fide purchaser defense. We must therefore review all the evidence presented by Broadway Bank
and EOG and render the judgment the trial court should have rendered. Valence, 164 S.W.3d at
661.
Broadway Bank’s motion for summary judgment argued that EOG was not a bona fide
purchaser because it had actual notice of the 2006 Correction Mineral Deed before it acquired its
interest in the subject minerals. As support for this assertion, Broadway Bank presented a
memorandum authored by one of EOG’s title attorneys that referred to the 2006 Correction
Mineral Deed. Broadway Bank argued that this memorandum was dated April 19, 2013, a date
that preceded EOG’s acquisition of the subject minerals. The summary judgment record shows,
however, that the memorandum was dated August 19, 2013. EOG presented summary judgment
evidence showing that it acquired its interest in the subject minerals after August 19, 2013.
Accordingly, the summary judgment evidence upon which Broadway Bank relied did not
conclusively establish that EOG had actual knowledge of the 2006 Correction Mineral Deed when
it acquired its interest in the subject minerals. TEX. R. CIV. P. 166a(c); City of Keller v. Wilson, 168
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S.W.3d 802, 816 (Tex. 2005) (“Evidence is conclusive only if reasonable people could not differ
in their conclusions, a matter that depends on the facts of each case.”).
On the question of whether EOG had constructive notice of the 2006 Correction Mineral
Deed, Broadway Bank’s motion again argued only that: (1) the 2006 Correction Mineral Interest
was filed of record; and (2) Yates’s actual knowledge should be imputed to EOG. As was the case
with the other non-Yates appellants, these arguments did not conclusively establish that EOG had
constructive notice of the remaindermen’s interest. See TEX. R. CIV. P. 166a(c); Ovation Servs.,
624 S.W.3d at 621; Noble Mortg., 340 S.W.3d at 80. Because Broadway Bank did not conclusively
show that EOG had either actual or constructive notice of the remaindermen’s interests, the probate
court erred by granting summary judgment for Broadway Bank on EOG’s bona fide purchaser
defense. TEX. R. CIV. P. 166a(c); TEX. PROP. CODE § 5.030(c).
Again, however, our conclusion that Broadway Bank did not show it was entitled to
summary judgment on EOG’s bona fide purchaser defenses does not necessarily mean EOG was
entitled to judgment as a matter of law on that point. While EOG presented an affidavit from its
land manager averring that EOG acquired its interests in the subject minerals without actual notice
of the 2006 Correction Mineral Deed, we do not believe the probate court was required to treat
that evidence as conclusive. TEX. R. CIV. P. 166a(c); City of Keller, 168 S.W.3d at 816. This is
because the issue of whether a party has received actual notice generally presents a question of
fact that may not be resolved on summary judgment. See, e.g., Hahn, 321 S.W.3d at 527. Although
a notice question may be resolved on summary judgment if reasonable minds could not differ on
the conclusion to be drawn from the evidence, see id., we do not believe a factfinder would be
required to credit the affidavit of EOG’s land manager on this point. See City of Keller, 168 S.W.3d
at 819 (“Jurors are the sole judges of the credibility of the witnesses and the weight to give their
testimony. They may choose to believe one witness and disbelieve another.”). Because EOG
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therefore did not establish that it was entitled to judgment on its bona fide purchaser defense as a
matter of law, the probate court did not err by denying EOG’s motion for summary judgment. TEX.
R. CIV. P. 166a(c).
For these reasons, we reverse the probate court’s summary judgment against EOG on its
bona fide purchaser defense, as well as the probate court’s conclusion that EOG is bound by the
2013 Amended Correction Deed. We remand those issues to the probate court for further
proceedings. TEX. R. CIV. P. 166a(c); TEX. PROP. CODE § 5.030(c).
Constitutionality of Section 5.029
Appellants argue that section 5.029, “as construed by the Texas Supreme Court, is
unconstitutional” because it deprives them of a property interest without notice, a hearing, or
compensation. Appellants contend the Texas Supreme Court’s analysis is inconsistent with Cedar
Point Nursery v. Hassid, 141 S. Ct. 2063 (2021), a recent opinion of the United States Supreme
Court.
As an intermediate court of appeals, we lack authority to review the constitutionality or
validity of the Texas Supreme Court’s conclusions. See Rice, 533 S.W.3d at 62; see also Ramos v.
Louisiana, 140 S. Ct. 1390, 1416 n.5 (2020) (Kavanaugh, J., concurring) (“[V]ertical stare decisis
is absolute, as it must be in a hierarchical system[.]”). Moreover, as with the life estate issue,
appellants raised this constitutional challenge—including the purported conflict with Cedar Point
Nursery—in their motion for rehearing in the supreme court, and the supreme court denied that
motion without instructing us to consider it on remand. Accordingly, we do not believe appellants’
constitutional challenge falls within the scope of the supreme court’s remand.
Even if we assume appellants’ constitutional challenge is limited to the statute itself—as
opposed to the supreme court’s interpretation of it—a constitutional challenge to a statute can be
waived if it is not timely asserted. See TEX. R. APP. P. 33.1; Dreyer v. Greene, 871 S.W.2d 697,
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698 (Tex. 1993); Tien Tao Ass’n, Inc. v. Kingsbridge Park Cmty. Ass’n, Inc., 953 S.W.2d 525, 532
(Tex. App.—Houston [1st Dist.] 1997, no pet.). Here, the record shows appellants did not raise
their constitutional challenge in the probate court. Instead, they challenged the constitutionality of
section 5.029 for the first time on rehearing in the Texas Supreme Court. While we recognize that
appellants could not know for certain how the supreme court would interpret section 5.029 until
after the court issued its opinion, the court’s interpretation of the statute is identical to the position
Broadway Bank has advocated throughout this case. Accordingly, to the extent that appellants
challenge the constitutionality of the statute itself, we conclude they waived that issue by failing
to raise it in the probate court. Cf. In re Doe 2, 19 S.W.3d 278, 284 (Tex. 2000) (statutes are
presumptively constitutional “and attacks on that presumption should generally be raised as an
affirmative defense to enforcement of the statute”).
CONCLUSION
We affirm the probate court’s judgment as to Yates. We reverse the probate court’s
judgment as to EOG, Jalapeno, ACG3, Glassell Non-Operated Interests, and Curry Glassell and
remand for further proceedings consistent with this opinion.
Beth Watkins, Justice
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