Wade Oil & Gas, Inc. v. Telesis Operating Co., Inc., Vantage Energy, LLC and Vantage Fort Worth Energy, LLC , 417 S.W.3d 531 ( 2013 )

COURT OF APPEALS
EIGHTH DISTRICT OF TEXAS
EL PASO, TEXAS
§
WADE OIL & GAS, INC.
§ No. 08-12-00038-CV
Appellant,
§ Appeal from
v.
§ 236th District Court
TELESIS OPERATING COMPANY,
INC., VANTAGE ENERGY, LLC, § of Tarrant County, Texas
AND VANTAGE FORT WORTH
ENERGY, LLC, § (TC # 236-235985-09)
Appellees. §
OPINION
Wade Oil & Gas, Inc. appeals an order granting summary judgment in favor of Telesis
Operating Company, Inc. (Telesis), Vantage Energy, LLC, and Vantage Fort Worth Energy,
LLC (Vantage or the Vantage Appellees). For the reasons that follow, we affirm.
FACTUAL AND PROCEDURAL SUMMARY
This appeal involves two separate contracts which the opinion will refer to as: (1) the
BARA Override Assignment; and (2) the Telesis Exclusive Listing Agreement. Wade Oil & Gas
sued Telesis asserting that it breached the Exclusive Listing Agreement. It also sued Vantage
alleging that it breached the BARA Override Assignment and tortiously interfered with the
Exclusive Listing Agreement.
In 2004, BARA Corporation conveyed certain mineral properties to Telesis. The BARA
Override Assignment is a shorthand reference for a series of assignments, with an effective date
of May 1, 2004, from Telesis to Glenn Wade of a 2% override in oil and gas leases located in
several Texas counties. Glenn Wade is a registered professional engineer and the President of
Wade Oil & Gas, an oil and gas properties broker.1
In 2007, Telesis began negotiating with Black Mountain Energy, Inc. to sell certain oil
and gas properties. Wade contacted Telesis about the properties and the parties reached an
agreement for Wade to be the exclusive listing agent of the oil and gas properties for a three-
month period. The parties signed an exclusive listing letter agreement on November 13, 2007
(the Telesis Exclusive Listing Agreement).
Pursuant to the Exclusive Listing Agreement, Telesis gave Wade the exclusive right to
solicit and seek offers to purchase the mineral property over a three-month term beginning on
November 13, 2007 and ending on February 9, 2008. In the event of a sale of the working
interest portion of the property listed in Exhibit A of the Exclusive Listing Agreement, Telesis
agreed to pay Wade 1% of the purchase price and to assign to Wade 2% of 8/8ths overriding
royalty interest (ORRI), proportionately reduced based on the working interest sold by both the
operator and all non-operating working interest partners. In the event of a sale of the working
interest portion described in Exhibits B and C of the Exclusive Listing Agreement, Telesis
agreed to pay Wade a cash commission in the amount of 2% of the purchase price. The parties
exempted any purchase of the property by Black Mountain Energy from the foregoing provisions
and instead provided that Wade’s compensation would be 1% of the purchase price. The
Exclusive Listing Agreement also addressed the receipt by Telesis of any offers to purchase the
property within 180 days after the term. If Telesis received an offer to purchase the property
1
The opinion will refer to Wade Oil & Gas as Wade and to Glenn Wade as Mr. Wade.
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during that time period from a purchaser identified by Wade to Telesis during the term and a sale
was consummated, Telesis would be obligated to compensate Wade under the terms of the
Exclusive Listing Agreement. Sometime during the term and prior to February 9, 2008, Vantage
contacted Telesis about purchasing some of the oil and gas properties covered by the Telesis
Exclusive Listing Agreement. Vantage contacted Telesis directly and was not solicited by
Wade. Jim Murphy of Telesis told Wade of Vantage’s interest and advised that although Wade
would not be entitled to a commission under the Agreement, Telesis would pay Wade a 1% fee if
Vantage purchased the property and if Wade would assist with the due diligence for the
purchase.2 Vantage did not make an offer during the term of the Exclusive Listing Agreement,
but Telesis accepted an offer by Vantage during the 180 day period following expiration of the
term. Telesis paid Wade $87,730 at the closing (1% of the purchase price), but did not pay him
the 2% override. The wells and leases conveyed by Telesis to Vantage were burdened by the
BARA Override Agreement.
In February of 2009, Wade’s attorney sent a demand letter to Telesis asserting that it
owed Wade a 2% override with respect to the Vantage sale. Telesis informed Wade’s counsel
that it did not owe the override and Wade filed suit alleging breach of contract, specific
performance, and tortious interference with the contract. The suit also sought declaratory relief
with respect to Wade’s rights under the agreement. Wade later amended its suit to add claims
against Vantage. Wade alleged that Vantage breached both the Telesis Exclusive Listing
Agreement and the BARA Override Assignment and tortiously interfered with the Telesis
Exclusive Listing Agreement. Wade also sought declaratory relief with respect its rights under
the BARA Override Assignment.
2
Wade disputes having any oral agreements with Telesis.
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Telesis filed a traditional motion for summary judgment while Vantage moved for
summary judgment on both traditional and no evidence grounds. Wade sought partial summary
judgment with respect to its breach of contract and specific performance claims against Telesis.
The trial court denied Wade’s motion for summary judgment and granted summary judgment in
favor of both Telesis and Vantage.
TELESIS
In Issue One, Wade challenges the summary judgment granted in favor of Telesis with
respect to the breach of contract, specific performance, and declaratory judgment causes of
action.3 More specifically, it argues that: (1) the Telesis Exclusive Listing Agreement did not
require Wade to introduce Vantage to Telesis or be a procuring cause of the sale to Vantage for
Wade to be entitled to the 2% overriding royalty portion of the commission; (2) the statute of
frauds does not excuse the failure of Telesis to fulfill its obligation to pay the 2% overriding
royalty portion of the commission; and (3) Telesis failed to satisfy its summary judgment
burden.4
Standard of Review
The standard of review for traditional summary judgment under TEX.R.CIV.P. 166a(c) is
well established. Nixon v. Mr. Property Management Company, Inc., 690 S.W.2d 546, 548 (Tex.
1985). The moving party carries the burden of showing there is no genuine issue of material fact
and it is entitled to judgment as a matter of law. Diversicare General Partner, Inc. v. Rubio, 185
S.W.3d 842, 846 (Tex. 2005); Browning v. Prostok, 165 S.W.3d 336, 344 (Tex. 2005). Evidence
3
Telesis also obtained summary judgment with respect to Wade’s claim that Telesis tortiously interfered with the
Exclusive Listing Agreement. Wade concedes on appeal that Telesis could not interfere with an agreement to which
it is a party. Consequently, the opinion will not address that aspect of the summary judgment.
4
In this same issue, Wade also contends that Vantage failed to carry its summary judgment burden. We will
address this portion of Issue One with Issue Two which relates solely to Vantage.
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favorable to the non-movant will be taken as true in deciding whether there is a disputed issue of
material fact. Fort Worth Osteopathic Hospital, Inc. v. Reese, 148 S.W.3d 94, 99 (Tex. 2004);
Tranter v. Duemling, 129 S.W.3d 257, 260 (Tex.App.--El Paso 2004, no pet.). All reasonable
inferences, including any doubts, must be resolved in favor of the non-movant. Fort Worth
Osteopathic Hospital, 148 S.W.3d at 99. A defendant is entitled to summary judgment if the
evidence disproves as a matter of law at least one element of each of the plaintiff’s causes of
action or if it conclusively establishes all elements of an affirmative defense. D. Houston, Inc. v.
Love, 92 S.W.3d 450, 454 (Tex. 2002); Randall’s Food Markets, Inc. v. Johnson, 891 S.W.2d
640, 644 (Tex. 1995). Once the defendant establishes a right to summary judgment as a matter
of law, the burden shifts to the plaintiff to present evidence raising a genuine issue of material
fact. City of Houston v. Clear Creek Basin Authority, 589 S.W.2d 671, 678-79 (Tex. 1979);
Scown v. Neie, 225 S.W.3d 303, 307 (Tex.App.--El Paso 2006, pet. denied). We review the
grant or denial of a traditional motion for summary judgment de novo. Valence Operating
Company v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005); Texas Integrated Conveyor Systems, Inc.
v. Innovative Conveyor Concepts, Inc., 300 S.W.3d 348, 365 (Tex.App.--Dallas 2009, pet.
denied).
Breach of Contract, Specific Performance, and Declaratory Relief
Telesis moved for summary judgment on the ground that it did not breach the Exclusive
Listing Agreement because Wade did not identify Vantage as a potential purchaser during the
term, and therefore, Wade was not entitled to receive the overriding royalty interest (ORRI). The
relevant portions of the Telesis Exclusive Listing Agreement provided as follows:
This letter shall serve as our agreement that Wade Oil & Gas, Inc.
(‘Wade’), is granted the exclusive right to solicit and seek offers to purchase the
above referenced mineral property, but more particularly described in Exhibits
‘A’, ‘B’, ‘C’ and ‘D’ attached hereto and made a part hereof (the ‘Property’) from
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one or more qualified, financially responsible parties during the term of this
agreement from the date hereof until February 9th, 2008 (the ‘Term’). During
such Term you shall not list the Property with, or grant any right to seek and
solicit offers to purchase the Property to any other person or entity.
In the event of a sale of the working interest portion of the Property
described in Exhibit ‘A’, either whole or in part, the undersigned agrees at closing
to compensate Wade an amount equal to 1% of the purchase price in cash and by
assigning to Wade or its assigns 2% of 8/8ths overriding royalty interest,
proportionately reduced based on the working interest sold by both the operator
and all non-operating working interest partners. In the event of a sale of the
working interest portion of the Property described in Exhibits ‘B’ and ‘C’, either
whole or in part, the undersigned agrees at closing to compensate Wade a cash
commission in the amount of 2% of the purchase price. In the event of the sale of
the equipment portion of the Property described in Schedule ‘D’, the undersigned
agrees at closing to compensate Wade a separate and additional commission
based on the Lehman Scale for the portion of proceeds allocated to the equipment.
Notwithstanding the above, in the event that the purchaser is Black
Mountain Energy, Inc., or any of its principles, then Wade’s compensation will be
1% of the purchase price.
The effective date of the assignment shall be the effective date of the sale.
If any offers are received to purchase the Property by Telesis Operating Co., Inc.
within 180 days after the Term that were identified by Wade to Telesis Operating
Co., Inc. during the Term and a sale is consummated, then Telesis Operating Co.,
Inc. shall be obligated to compensate Wade as discussed in this paragraph.
[Emphasis added].
The Exclusive Listing Agreement does not define or explain the phrase “identified by Wade to
Telesis” as used in the emphasized portion of the Agreement and the parties offer diametrically
opposed interpretations of the Agreement.
In construing a contract, a court must ascertain the true intentions of the parties as
expressed in the writing itself. Italian Cowboy Partners, Ltd. v. Prudential Insurance Company
of America, 341 S.W.3d 323, 333 (Tex. 2011); J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223,
229 (Tex. 2003). In identifying the parties’ intent, “we must examine and consider the entire
writing in an effort to harmonize and give effect to all the provisions of the contract so that none
will be rendered meaningless.” Italian Cowboy, 341 S.W.3d at 333, quoting J.M. Davidson, 128
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S.W.3d at 229. We begin this analysis with the contract’s express language. Italian Cowboy,
341 S.W.3d at 333. If the written instrument is so worded that it can be given a certain or
definite legal meaning or interpretation, then it is not ambiguous and the court will construe the
contract as a matter of law. Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983). If, on the other
hand, the contract is subject to two or more reasonable interpretations after applying the pertinent
rules of construction, the contract is ambiguous, creating a fact issue on the parties’ intent. J.M.
Davidson, 128 S.W.3d at 229. In such a case, a court may consider the parties’ interpretation
and admit extraneous evidence to determine the true meaning of the instrument. Italian Cowboy,
341 S.W.3d at 333-34.
Wade argues that the Agreement gave it an exclusive right to receive offers and Telesis
could not negotiate directly with Vantage or receive an offer without the involvement of Wade.
Under this interpretation of the Agreement, Wade claims it would have been entitled to the
commission if the property sold during the term of the Agreement even if it played no role in the
sale and Vantage negotiated directly with Telesis. It reasons that the highlighted paragraph
related to offers received after the term should be given the same construction. In effect, Wade
contends that the Agreement gives it an exclusive right to sell the property rather than an
exclusive agency.
There is an important distinction between an “exclusive agency” and an “exclusive right
to sell.” Alba Tool and Supply Co., Inc. v. Industrial Contractors, 585 S.W.2d 662, 664 (Tex.
1979). If an owner gives the broker an exclusive right to sell, the owner is precluded from
selling the property independent from the broker. See Newman v. McClure, 459 S.W.2d 703,
705 (Tex.Civ.App.--Fort Worth 1970, no writ); Parks v. Underwood, 280 S.W.2d 320, 324
(Tex.Civ.App.--Dallas 1955, writ ref'd n.r.e.). In such a case, the principal must pay a
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commission to the agent regardless of the fact that the principal has arranged the sale of the
property. Alba, 585 S.W.2d at 664; see Newman, 459 S.W.2d at 705. In an exclusive agency,
the principal has a right to sell without the involvement of the agent and the principal would not
be required to pay a commission to the agent. Alba, 585 S.W.2d at 664.
The Exclusive Listing Agreement does not give Wade an exclusive right to receive offers
as it contends, but Wade does have an exclusive right to solicit or seek offers. The Agreement
precludes Telesis from listing the property with any other brokers or soliciting offers through any
other agents, but it does not give Wade an exclusive right to sell. See Alba, 585 S.W.2d at 664-
65. Consequently, Telesis reserved its right to sell the property independent of Wade and it was
not obligated to pay Wade a commission for any sale it negotiated directly with a purchaser.
With this understanding of the Agreement, we will examine the paragraph related to offers
received after the Agreement’s term.
Telesis interprets the Agreement as requiring Wade to introduce or bring a potential
buyer to the attention of Telesis during the term in order to earn its commission for an offer
received after the term. Wade counters that it is not required to take any action to identify or
introduce the potential buyer and it is sufficient if the identity of the buyer merely becomes
known to Wade and Telesis during the term.
The paragraph at issue is not a model of clarity. As written, it requires Wade to identify
the offer, not the potential buyer, during the term of the Agreement. It would be impossible for
Wade to perform under this interpretation of the Agreement because this paragraph applies only
to offers received during the 180-day period following the term of the Agreement and Wade
obviously could not identify an offer received after the term as an offer received during the term.
We will avoid construing the Agreement in a manner which makes performance impossible. See
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Temple-Eastex, Inc. v. Addison Bank, 672 S.W.2d 793, 798 (Tex. 1984)(holding that “a
construction rendering the contract possible of performance will be preferred to one that renders
its performance impossible or meaningless”); Republic National Bank of Dallas v. Northwest
National Bank of Fort Worth, 578 S.W.2d 109, 115 (Tex. 1978)(“If two constructions [of a
writing] are possible, a construction rendering the contract possible of performance will be
preferred to one which renders its performance impossible or meaningless.”). We will interpret
the Agreement as requiring Wade to take some affirmative action to identify the prospective
purchaser to Telesis during the Agreement’s term. Accordingly, we reject Wade’s assertion that
it was not required to take any action identifying Vantage to Telesis as a prospective purchaser
during the term.
The summary judgment evidence shows that Vantage did not contact Telesis through
Wade but instead contacted Telesis directly. Wade did not provide the name of Vantage to
Telesis as a potential buyer. In fact, Telesis made Wade aware of Vantage’s interest in the
properties. Vantage’s CEO, Roger Biemans, testified in his deposition that Vantage had been
looking at opportunities to acquire mineral interests or leases across the Fort Worth basin for a
year and a half and discovered that Telesis had properties through review of public information.
James Murphy, principal of Telesis, testified that Biemans told him in their initial conversation
that he and his team at Vantage had been buying properties in the North Texas area and they had
noticed Telesis’s oil and gas lease signs adjacent to the properties they were buying. Murphy
notified Mr. Wade about Vantage’s interest and advised him that Wade would not be entitled to a
commission under the Agreement but he would receive a 1% fee for performing some due
diligence and data management. According to Murphy, he and Mr. Wade had a handshake
agreement. Murphy also testified that Wade did not identify Vantage as a potential buyer. The
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summary judgment evidence submitted by Telesis showed that Vantage became interested in the
Telesis properties based on its own research and it contacted Telesis directly without any
involvement on the part of Wade. The evidence established that Wade did not take any action to
identify Vantage to Telesis.
Wade concedes that it did not introduce Vantage to Telesis, but it argues that a fact issue
exists with respect to whether it identified Vantage as a buyer. First, it relies on evidence that
Vantage had in its possession a copy of Wade’s exclusive offering related to the property.
During discovery, Vantage produced a copy of a document titled “Exclusive Oil and Gas
Property Offering” related to the properties at issue, but Vantage’s CEO did not know how it had
come into Vantage’s possession. He assumed that it had come from Wade Oil & Gas. Wade
does not explain how this evidence satisfies its obligation under the Agreement of identifying
Vantage as a prospective buyer to Telesis. Further, there is no summary judgment evidence
establishing that Vantage obtained the copy of the offering during the term of the Agreement.
Consequently, this evidence does not raise a genuine issue of material fact sufficient to preclude
summary judgment.
Wade also contends that a fact issue exists with respect to whether it identified Vantage
as a potential buyer because Mr. Wade attended meetings concerning the prospective sale and
Vantage negotiated a confidentiality agreement with Wade to be granted access to Wade’s
proprietary information. Both of these events occurred after Telesis notified Mr. Wade of
Vantage’s interest in the property. Consequently, this evidence does not create a fact issue with
respect to whether Wade identified Vantage as a potential buyer to Telesis during the term.
Telesis conclusively established that Wade was not entitled to the 2% override, and
therefore, it did not breach the Exclusive Listing Agreement. See Silva v. Reliant Energy Power
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Generation, Inc., No. 14-09-00809-CV, 2011 WL 782036, at *4 (Tex.App.--Houston [14th Dist.]
2011, no pet.)(rejecting argument that agent was entitled to commission because it was an
“exclusive” contract where contract did not give agent exclusive right to sell and agent failed to
identify the buyer to the principal as required by the contract). Because Telesis established its
right to summary judgment with respect to Wade’s causes of action for breach of contract,
specific performance, and declaratory relief, it is unnecessary to address whether the trial court
erred by granting summary judgment in favor of Telesis on its affirmative defense of statute of
frauds. We overrule Issue One.
VANTAGE
In Issue Two, Wade challenges the summary judgment granted in favor of Vantage on
Wade’s breach of contract, specific performance, and declaratory judgment claims related to the
Telesis Exclusive Listing Agreement, as well as the breach of contract and declaratory judgment
claims related to the BARA Override Assignment. Wade also alleges that the trial court erred by
granting summary judgment on its claim that Vantage interfered with the Exclusive Listing
Agreement.
No Evidence Motion for Summary Judgment
Vantage filed a no-evidence motion for summary judgment with respect to all of Wade’s
claims against it. On appeal, Wade does not address the no-evidence motion for summary
judgment although it does contend that fact issues exist which preclude summary judgment in
favor of Vantage on its tortious interference claim. We will construe Wade’s argument as
challenging the no-evidence summary judgment with respect to the tortious interference claim.
When a trial court grants summary judgment without specifying the exact basis for its ruling, the
appellant is obligated to challenge each ground of the summary judgment motion on appeal. See
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Cincinnati Life Insurance Company v. Cates, 927 S.W.2d 623, 625 (Tex. 1996). If the appellant
does not challenge one of the grounds for summary judgment, the judgment may be affirmed on
that ground alone. Humane Society of Dallas v. Dallas Morning News, L.P., 180 S.W.3d 921,
923 (Tex.App.--Dallas 2005, no pet.). Consequently, the trial court’s judgment must be affirmed
on the breach of contract, specific performance, and declaratory judgment claims even if
Vantage was not entitled to summary judgment on traditional grounds.
Breach of Contract, Specific Performance, and Declaratory Relief
Claims Related to the Telesis Exclusive Listing Agreement
Vantage moved for traditional summary judgment on Wade’s breach of contract, specific
performance, and declaratory judgment claims based on the Telesis Exclusive Listing
Agreement. Neither of the Vantage Appellees is a party to the Exclusive Listing Agreement.
Consequently, they could not breach the agreement and Wade cannot sue Vantage for specific
performance under the Agreement. Further, Wade cannot maintain a declaratory judgment
action against Vantage with respect to his rights under that Agreement. See TEX.CIV.PRAC.&
REM.CODE ANN. 37.006 (a)(West 2008)(“When declaratory relief is sought, all persons who
have or claim any interest that would be affected by the declaration must be made parties.”). The
trial court did not err by granting summary judgment on these claims. It is unnecessary to
address whether the court properly granted summary judgment on the affirmative defense of
statute of limitations.
Tortious Interference with the Telesis Exclusive Listing Agreement
Vantage sought summary judgment on the tortious interference claim under TEX.R.CIV.P.
166a(i). The Texas Rules of Civil Procedure permit a party to move for a no-evidence summary
judgment “without presenting summary judgment evidence,” but they require the moving party
to “state the elements as to which there is no evidence.” TEX.R.CIV.P. 166a(i); Aguilar v.
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Morales, 162 S.W.3d 825, 834 (Tex.App.--El Paso 2005, pet. denied). The burden then shifts to
the non-movant to produce summary judgment evidence raising a genuine issue of material fact
regarding each element challenged in the motion. Aguilar, 162 S.W.3d at 834.
A no-evidence motion for summary judgment is essentially a pretrial directed verdict,
and we apply the same legal sufficiency standard of review. King Ranch, Inc. v. Chapman, 118
S.W.3d 742, 750-51 (Tex. 2003). We view the evidence in the light most favorable to the non-
movant, and we must disregard all contrary evidence and inferences. Id. at 751. A genuine issue
of material fact is raised if the non-movant produces more than a scintilla of evidence regarding
the challenged element. Id. There is not a scintilla of evidence when the evidence is so weak as
to do no more than create a mere surmise or suspicion of material fact. Ianni v. Loram
Maintenance of Way, Inc., 16 S.W.3d 508, 513 (Tex.App.--El Paso 2000, pet. denied). Evidence
that fails to constitute more than a mere scintilla is, in legal effect, no evidence at all. Lozano v.
Lozano, 52 S.W.3d 141, 148 (Tex. 2001).
The elements of tortious interference with a contract are: (1) the existence of a contract
subject to interference; (2) the occurrence of an act of interference that was willful and
intentional; (3) the act was a proximate cause of the claimant’s damage; and (4) actual damage or
loss occurred. Prudential Insurance Company of America v. Financial Review Services, Inc., 29
S.W.3d 74, 77 (Tex. 2000). Vantage’s motion alleged there was no evidence that (1) Vantage
committed any act of interference that was willful and intentional with respect to the Exclusive
Listing Agreement, or that (2) any alleged act of interference proximately caused Wade’s
damage. The only act of interference identified by Wade is Roger Biemans’ statement made
during a meeting with Telesis that he did not want a broker involved. Biemans made this
statement after Telesis mentioned the existence of the exclusive listing agreement. He did not
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state that the involvement of a broker would “kill the deal” or words to that effect. Even
assuming that this lone statement is sufficient to raise a fact issue on the act of interference
element, there is no evidence that the statement proximately caused any breach on the part of
Telesis. We have already concluded that Telesis established its entitlement to summary
judgment on the breach of contract claim against it. Further, there is simply no evidence that
Biemans’ statement caused Telesis to not pay the 2% override. The trial court properly granted
summary judgment in Vantage’s favor on the tortious interference claim. Issue Two is
overruled. Having overruled both issues, we affirm the judgment of the trial court.
August 21, 2013
ANN CRAWFORD McCLURE, Chief Justice
Before McClure, C.J., Rivera, and Rodriguez, JJ.
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