Genesis Producing Company, LP v. Smith Big Oil Corporation, Todd D. Smith and James A. Whitson, Jr. , 454 S.W.3d 655 ( 2014 )

Reversed and Rendered and Opinion filed December 23, 2014.
In The
Fourteenth Court of Appeals
NO. 14-13-00743-CV
GENESIS PRODUCING COMPANY, L.P., Appellant
V.
SMITH BIG OIL CORPORATION, TODD M. SMITH AND JAMES A.
WHITSON, JR., Appellees
On Appeal from the 152nd District Court
Harris County, Texas
Trial Court Cause No. 2012-30652
OPINION
In this dispute over an assignment of an interest in an oil and gas lease,
Genesis Producing Company, L.P., appeals the trial court’s judgment granting
Smith Big Oil Corporation and Todd M. Smith’s summary judgment motion,
denying Genesis’s summary judgment motion, and striking Genesis’s amended
petitions. Concluding that Genesis nonsuited its claims before judgment was
rendered on the competing summary judgment motions, we reverse and render.
FACTUAL AND PROCEDURAL BACKGROUND
Genesis is in the business of oil and gas exploration and the purchase and
sale of oil, gas, and mineral leases in Texas and other states. J. Morgan Smith
(Morgan) owns a majority limited partnership interest in Genesis and his company,
J. Morgan Smith, Inc., is its general partner. Todd M. Smith (Todd) is Morgan’s
son and Smith Big Oil is Todd’s company. Unless otherwise indicated, we will
collectively refer to Smith Big Oil and Todd as “SBO.”
According to Genesis’s petition, Genesis’s business has declined over time
and its assets consist of a few remaining oil, gas, and mineral leases. As business
continued to worsen, Genesis owed substantial sums to creditors. Consequently,
Genesis entered into several transactions, including a purported assignment to
Smith Big Oil of its working interest in an oil and gas lease in Louisiana that is the
subject of this lawsuit. The lease contains one producing oil and gas well, which
Genesis asserts is Morgan’s principal source of personal income. Genesis claims
that the assignment was made “solely for the purpose of protecting the income and
revenues received on the Lease for the benefit of J. Morgan Smith and protecting
same from the claims of certain creditors” of Genesis.
Genesis alleges that the assignment of the lease is invalid because (1) no
consideration was paid for it, (2) the assignment was made through error, mistake,
or fraud, and (3) the assignment was improperly witnessed and notarized. Genesis
also alleges that it entered into this transaction unwittingly and on the advice of
one of its officers. Although Genesis demanded that SBO reassign the lease to
Genesis, SBO refused. Genesis also demanded that James A. Whitson, Jr., the
operator of the well, continue making payments of proceeds from the well to
Genesis. In response, SBO’s counsel instructed Whitson to continue making all
payments to Smith Big Oil.
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In 2012, Genesis sued Smith Big Oil, Todd, and Whitson, asserting causes
of action for conversion, breach of contract, and declaratory judgment in
connection with Genesis’s assignment of the lease to Smith Big Oil, and requesting
a temporary restraining order and temporary injunction. Shortly after the petition
was filed, the trial court signed an order reflecting that SBO agreed to a temporary
injunction requiring Whitson to pay certain revenues from the well into the registry
of the court during the pendency of the case. EOG Resources, Inc., one of
Genesis’s creditors, later intervened in the lawsuit, seeking to recover damages for
fraudulent transfer against SBO.
In January 2013, Genesis moved for summary judgment. SBO responded
and also moved for traditional and no-evidence summary judgment against
Genesis. The trial court heard the parties’ arguments on their cross-motions on
March 25, 2013. On April 11, Genesis filed a first amended petition adding
additional causes of action and a new defendant; SBO objected and moved to strike
the first amended petition. On April 16, Genesis filed a second amended petition,
as well as a motion to extend the pleading deadline. Genesis also moved to strike
EOG’s intervention, but the trial court denied the motion to strike on April 19 by
written order.
On April 22, at 3:44 p.m., the trial court sent the following email to counsel
for both parties:
On Friday the court denied Plaintiff’s Motion to Strike the
Intervention of EOG Resources, Inc.
Today, the court is denying [Genesis’s] Motion for Summary
Judgment and granting [SBO’s] Motion for Summary Judgment as to
Breach of Contract and Conversion of the Lease that is the subject of
this lawsuit. The court is denying [SBO’s] Motion for Summary
Judgment as to proceeds of the lease that are deposited into the
registry of the court.
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Counsel for SBO immediately requested a hearing seeking clarification as to
“whether any claims remain for trial” on April 24.
On the morning of April 23, the trial court held a telephonic hearing with the
parties which apparently was not recorded. At 12:32 p.m. that same day, Genesis
filed a notice of nonsuit of all of its causes of action. Later that afternoon, SBO
filed and served a proposed “Final Order on Plaintiff’s Claims.”
On April 24, the trial court signed the Final Order on Plaintiff’s Claims. In
the two-page order, the trial court expressly dismissed with prejudice Genesis’s
claims for breach of contract and conversion, as well as Genesis’s “fraud claim,
styled as a request for a declaratory judgment.” The trial court also specified that it
was dismissing with prejudice Genesis’s other requests for declaratory judgment
concerning failure of consideration, error or mistake, and improper witnessing and
notarization, and expressly confirmed that the court was dismissing all of
Genesis’s claims against Smith Big Oil, Todd, and Whitson. Finally, the trial court
denied Genesis leave to amend its original petition or file its first or second
amended petitions, and struck Genesis’s first and second amended petitions.
On July 19, 2013, the trial court signed a final judgment based on its
dismissal of Genesis’s claims and a subsequent settlement agreement between
EOG and SBO. In the final judgment, the trial court dismissed EOG’s claims
without prejudice, dissolved the temporary injunction, ordered the release of the
funds in the court’s registry to a trust account for the benefit of Smith Big Oil, and
ordered Whitson to pay a specified amount of all future oil and gas revenues from
the lease to the trust.1 Genesis filed a motion for new trial that was overruled by
operation of law, and this appeal followed.
1
Neither Whitson nor EOG are parties to this appeal.
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ANALYSIS
In five issues, Genesis complains that the trial court erred in granting
summary judgment in favor of Smith Big Oil and Todd on Genesis’s claims,
denying Genesis’s summary judgment motion, denying Genesis’s motion for leave
to extend the pleading deadline, and striking Genesis’s amended petitions. In its
second issue, Genesis contends that the trial court erred in rendering judgment after
Genesis nonsuited its claims. Because we conclude that this complaint is
dispositive, we need not address Genesis’s other issues.
A plaintiff may take a nonsuit at any time before it has introduced all of its
evidence other than rebuttal evidence. Tex. R. Civ. P. 162. The nonsuit renders the
merits of the plaintiff’s claims moot. Travelers Ins. Co. v. Joachim, 315 S.W.3d
860, 862 (Tex. 2010). The right to take a nonsuit is unqualified and absolute as
long as the defendant has not made a claim for affirmative relief. Villafani v. Trejo,
251 S.W.3d 466, 469 (Tex. 2008). But a decision on the merits, including a
summary judgment in the defendant’s favor, is not vitiated. See Hyundai Motor
Co. v. Alvarado, 892 S.W.2d 853, 855 (Tex. 1995) (per curiam) (“Once a judge
announces a decision that adjudicates a claim, that claim is no longer subject to the
plaintiff’s right to nonsuit.”).
Rendition of judgment is “the judicial act by which the court settles and
declares the decision of the law upon the matters at issue.” Comet Aluminum Co. v.
Dibrell, 450 S.W.2d 56, 58 (Tex. 1970). Generally, a judgment is rendered when
the decision is officially announced orally in open court, by written memorandum
filed with the clerk, or otherwise announced publicly. Garza v. Tex. Alcoholic
Beverage Comm’n, 89 S.W.3d 1, 6 (Tex. 2002); Dibrell, 450 S.W.2d at 59.
Rendition is distinguishable from the entry of judgment, which is a purely
ministerial act by which the judgment is made of record and preserved. Ex
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parte Gnesoulis, 525 S.W.2d 205, 209 (Tex. Civ. App.—Houston [14th Dist.] 1975,
orig. proceeding).
Although neither party has directed us to a case involving a trial judge’s
purported ruling communicated by email to the parties, courts have held that a trial
court’s letter may constitute a rendition of judgment if it is in sufficient detail to
state the court’s decision on all the matters at issue and is filed with the clerk. See,
e.g., Greene v. State, 324 S.W.3d 276, 282 (Tex. App.—Austin 2010, no pet.);
Mixon v. Moye, 860 S.W.2d 209, 210 (Tex. App.—Texarkana 1993, no writ); Ex
parte Gnesoulis, 525 S.W.2d at 209. Because the rendition of judgment is a present
act that decides the issues upon which the ruling is made, the words used by the
trial court must clearly indicate its intent to render judgment at that time, rather
than in the future. See S & A Restaurant Corp. v. Leal, 892 S.W.2d 855, 857–
58 (Tex. 1995) (per curiam); Greene, 324 S.W.3d at 283. A trial court’s letter to
the parties is not a rendition of judgment if it merely indicates the court’s intention
to render judgment in a certain way and sets out guidelines by which counsel are to
prepare a judgment. Mixon, 860 S.W.2d at 210; Ex parte Gnesoulis, 525 S.W.2d at
209.
Genesis argues that because it filed its April 23 nonsuit before the trial court
rendered judgment in its April 24 written order, the trial court’s April 22 email is
ineffective as a ruling on the merits of Genesis’s claims. In response, SBO argues
that the trial court’s email was intended to dismiss all of Genesis’s claims. In
support of its contention, SBO relies on Alvarado and Curry v. Bank of America
for the proposition that a party cannot nonsuit claims after they have been
adjudicated. See Alvarado, 892 S.W.2d at 855; Curry v. Bank of Am., N.A., 232
S.W.3d 345, 354 (Tex. App.—Dallas 2007, pet. denied) (citing Alvarado and
explaining that a party who has had his claims adjudicated unsuccessfully cannot
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later nonsuit his claims to avoid the judgment). But SBO’s argument assumes that
the trial court’s email effectively rendered judgment on Genesis’s claims. Neither
Alvarado nor Curry involved a dispute concerning whether the trial court
adjudicated the plaintiffs’ claims prior to nonsuit. See Alvarado, 892 S.W.2d at
855; Curry, 232 S.W.3d at 354.
At first glance, the trial judge’s email purports to deny Genesis’s summary
judgment motion and grant SBO’s motion for summary judgment at least as to
Genesis’s breach of contract and conversion claims. But, there is not any indication
in the record that the email was ever filed with the clerk or otherwise announced
publicly. In contrast, the trial court’s ruling denying Genesis’s motion to strike
EOG’s intervention—also mentioned in the email—was memorialized in a written
order that was signed and filed with the clerk. Additionally, counsel for SBO
immediately requested a telephonic hearing seeking “clarification” concerning the
email before the start of trial.2 The written “Final Order on Plaintiff’s Claims,”
signed after Genesis filed its nonsuit, is markedly different from the trial court’s
earlier email, including numerous additional rulings on matters not previously
mentioned in the email and expressly dismissing Genesis’s declaratory judgment
claims.
Based on the trial court’s failure to file the email or otherwise announce its
ruling publicly, as well as the differences between the email and the court’s
subsequent written ruling, we conclude that the email was not a rendition of
2
SBO represents that during the telephone conference, the trial court clarified that it was
dismissing all of Genesis’s claims, including its declaratory judgment claims, and instructed
SBO’s counsel to memorialize its rulings in a “Final Order on Plaintiff’s Claims” which the trial
court ultimately signed. However, there is no record of an oral pronouncement at the telephonic
hearing showing that the trial court rendered judgment at that time. See In re R.A.H., 130 S.W.3d
68, 69–70 (Tex. 2004) (per curiam) (holding that judgment was rendered when formal decree of
paternity was signed when no record or evidence of an oral pronouncement at earlier hearing
existed and the only written memorandum was an unsigned docket sheet).
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judgment. See Garza, 89 S.W.3d at 6; cf. Mixon, 860 S.W.2d at 210 (letter
consisting of one short paragraph that was not filed with the clerk and was
followed by a later, far more detailed order was not a rendition of judgment).
Because the trial court’s April 22 email to the parties was insufficient to effectuate
a rendition of judgment, Genesis’s April 23 nonsuit mooted all of its claims.
Consequently, the trial court erred when it subsequently rendered judgment
dismissing Genesis’s claims with prejudice. We therefore sustain Genesis’s issue
and reverse and render judgment that Genesis’s claims are dismissed without
prejudice.
CONCLUSION
We reverse the trial court’s final judgment, signed July 19, 2013, to the
extent that the judgment dismisses with prejudice Genesis’s claims for breach of
contract, conversion, and declaratory judgment. In light of Genesis’s nonsuit, we
render judgment that these claims asserted by Genesis are dismissed without
prejudice.
/s/ Ken Wise
Justice
Panel consists of Justices Boyce, Busby, and Wise.
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