Samson Exploration, LLC v. T. W. Moak and Moak Mortgage and Investment Co. ( 2020 )

In The
Court of Appeals
Ninth District of Texas at Beaumont
__________________
NO. 09-18-00463-CV
__________________
SAMSON EXPLORATION, LLC, Appellant/Cross-Appellee
V.
T.W. MOAK AND MOAK MORTGAGE AND INVESTMENT CO.,
Appellees/Cross-Appellants
__________________________________________________________________
On Appeal from the 136th District Court
Jefferson County, Texas
Trial Cause No. D-195,106
__________________________________________________________________
MEMORANDUM OPINION
This is an oil and gas case involving a dispute over whether land associated
with mineral interests that were leased and included in a pooled unit remained in the
unit after the leases were terminated via foreclosure. The appellant/cross-appellee,
Samson Exploration, LLC (“Samson”) appeals the trial court’s final judgment
awarding equitable damages to the appellees/cross-appellants, T.W. Moak and Moak
Mortgage and Investment Co. (“Moak”). Samson asserts that the trial court
1
misapplied oil and gas law and ruled in favor of Moak, although Moak held neither
a leasehold interest nor a reversionary interest that warranted a share of production
in the pooled unit. Samson further argues that it did not have a duty to afford Moak,
an unleased co-tenant, the opportunity to ratify prior leases that were terminated via
foreclosure. Samson asks this Court to reverse the trial court’s judgment and render
a judgment that Moak take nothing against Samson.
According to Moak, the trial court correctly determined that it has an interest
in the pooled unit but misconstrued the nature of its interest as a royalty interest
rather than a working interest. Moak argues that because it has a working interest in
the Amelia Gas Unit (“the Unit”), the trial court erred in granting summary judgment
in favor of Samson, Bold Minerals II, LLC (“Bold Minerals”), and Etoco, L.P., 1 on
its claim for an accounting, and erred in assessing equitable damages based on a
calculation of accrued royalties. Moak asks this Court to reverse the trial court’s
summary judgment in favor of Samson and Bold on its accounting claim, reverse the
trial court’s final judgment that Moak take nothing as to Bold and reverse the trial
court’s award of equitable damages against Samson, and render a judgment for
damages in the amount of $171,658.39 against Samson and Bold. In the alternative,
1
We will collectively refer to Bold Minerals II, LLC and ETOCO, L.P. as
Bold.
2
Moak asks this Court to affirm the trial court’s award of equitable damages. Bold
filed a brief arguing that Moak does not own a working interest in the Unit and that
Moak has no evidence of damages caused by Bold. Bold asks this Court to affirm
that portion of the trial court’s judgment that Moak take nothing against Bold.
We affirm the trial court’s summary judgment in favor of Samson and Bold
on Moak’s accounting claim. We reverse the trial court’s final judgment awarding
equitable damages against Samson and render judgment that Moak take nothing as
to Samson. We affirm the trial court’s final judgment that Moak take nothing against
Bold.
PROCEDURAL BACKGROUND
Moak filed suit against Samson, Lucas Petroleum Group, Inc. (“Lucas”), and
Bold2, alleging to be record owners of undivided mineral and leasehold interests in
real property that entitled Moak “to participate in production of oil, gas, and other
minerals therefrom or from lands pooled therewith, or proceeds from the sale
thereof.” Moak alleged that Defendants purport to own undivided mineral interests
with Moak in the real property at issue, together with additional property pooled
therewith, and that Defendants operated a pooled unit that includes the real property
2
We will collectively refer to Samson Exploration, LLC, Lucas Petroleum
Group. Inc., ETOCO, T.L.P., and Bold Minerals II, LLC as Defendants.
3
in which Moak is a record owner, but have failed to account to Moak for production
attributable to its share of the undivided mineral interests. Moak asserted claims for
an accounting, conversion, unjust enrichment, negligence, and to quiet title.
The parties in the case agreed to the stipulations that are summarized below:
• In February 2012, Samson, Bold Minerals, and Lucas created the Unit
by executing and recording a Unit Designation that pooled and
combined certain leases and certain lands for the production, storage,
processing, and marketing of gas and all hydrocarbons and gaseous
substances.
• Bold Minerals assigned ETOCO an interest in the leases subject to the
Unit Designation.
• Moak is not a party to any Operating Agreements which govern oil and
gas operations within the Unit and which designate Samson as the
operator of the Unit.
• Samson drilled and completed two wells in the Unit.
• Moak filed suit against the Defendants alleging causes of action arising
out of Samson’s failure, as operator, to share with Moak any revenue,
royalties, and production from the Unit’s oil and gas production with
respect to six tracts of land, Property A, Property B, Property C,
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Property D, Property E, and Property F, which are collectively referred
to as the Subject Properties.
• At the time the Unit was created, Moak did not own any property
interest in the Subject Properties or within the boundaries of the Unit.
• In 2010, the property owner of Property A (“Porter”), leased all of her
fifty percent mineral interest in the property (the “Porter Interest”) to
Bold Minerals pursuant to a certain Oil, Gas, and Mineral Lease (the
“Porter Lease”) and at the time the lease was executed, the Porter
Interest was subject to a deed of trust that was never subordinated to the
Porter Lease which did not allow Porter to in any way commit or bind
the mortgagee. The Porter Lease and land were included in the Unit.
The Porter Interest was foreclosed on pursuant to the deed of trust,
thereby terminating the Porter Lease, and was eventually acquired by
Moak pursuant to a Substitute Trustee’s Deed in 2012.
• In 2010, the property owner of Property B (“Keys”), leased all of her
fifty percent mineral interest in the property (the “Keys Interest”) to
Bold Minerals pursuant to a certain Oil, Gas, and Mineral Lease (the
“Keys Lease”) and at the time the lease was executed, the Keys Interest
was subject to a deed of trust that was never subordinated to the Keys
5
Lease which did not allow Keys to in any way commit or bind the
mortgagee. The Keys Lease and land were included in the Unit. The
Keys Interest was foreclosed on pursuant to the deed of trust, thereby
terminating the Keys Lease, and was eventually acquired by Moak
pursuant to a Special Warranty Deed in 2012.
• In 2010, the property owner of Property C (“Jones”), leased all of her
fifty percent mineral interest in the property (the “Jones Interest”) to
Bold Minerals pursuant to a certain Oil, Gas, and Mineral Lease (the
“Jones Lease”) and at the time the lease was executed, the Jones Interest
was subject to a deed of trust that was never subordinated to the Jones
Lease which did not allow Jones to in any way commit or bind the
mortgagee. The Jones Lease and land were included in the Unit. The
Jones Interest was foreclosed on pursuant to the deed of trust, thereby
terminating the Jones Lease. The interest in Property C was acquired
by a third party and eventually leased to Moak pursuant to an Oil, Gas,
and Mineral Lease in 2013. The Unit Designation was never amended
to add the said Moak Lease to the Unit.
• In 2010, the property owner of Property D (“Anderson”), leased all of
her fifty percent mineral interest in the property (the “Anderson
6
Interest”) to Bold Minerals pursuant to a certain Oil, Gas, and Mineral
Lease (the “Anderson Lease”) and at the time the lease was executed,
the Anderson Interest was subject to a deed of trust that was never
subordinated to the Anderson Lease which did not allow Anderson to
in any way commit or bind the mortgagee. The Anderson Lease and
land were included in the Unit. The Anderson Interest was foreclosed
on pursuant to the deed of trust, thereby terminating the Anderson
Lease. The interest in Property D was acquired by a third party and
eventually leased to Moak pursuant to an Oil, Gas, and Mineral Lease
in 2012. The Unit Designation was never amended to add the Moak
Lease to the Unit.
• In 2010, the property owners of Property E (“Wilson”), leased all of
their fifty percent mineral interest in the property (the “Wilson
Interest”) to Samson pursuant to a certain Oil, Gas, and Mineral Lease
(the “Wilson Lease”) and at the time the lease was executed, the Wilson
Interest was subject to a deed of trust that was never subordinated to the
Wilson Lease which did not allow Wilson to in any way commit or bind
the mortgagee. The Wilson Lease and land were included in the Unit.
The Wilson Interest was foreclosed on pursuant to the deed of trust,
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thereby terminating the Wilson Lease. The interest in Property E was
acquired by a third party and eventually leased to Moak pursuant to an
Oil, Gas, and Mineral Lease in 2013. The Unit Designation was never
amended to add the Moak Lease to the Unit.
• Moak has never owned record title to Property F. Moak’s mineral claim
to ownership of Property F is by virtue of various legal claims,
including but not limited to the Strips and Gores Doctrine by way of
Moak’s ownership interest in adjacent Property A.
• Neither of the wells located in the Unit had a surface or bottom hole
location on or within 467 feet of any of the Subject Properties.
• There has been no revival or ratification of the Porter Lease, the Keys
Lease, the Jones Lease, the Anderson Lease, or the Wilson Lease.
• There has been no redemption by the Mortgagors of the Porter Interest,
the Keys Interest, the Jones Interest, the Anderson Interest, or the
Wilson Interest with respect to the relevant deeds of trust.
• There is no evidence by written lease or otherwise that Moak had a
contractual relationship with Defendants with respect to the Unit or
Moak’s interest in the Subject Properties.
8
• Moak was never a party to any Operating Agreement or Unit
Designation.
• Moak never entered into an oil and gas lease with any of Defendants
concerning his mineral interests in the Subject Properties.
• The inclusion of the leases and the land of the Subject Properties in the
Unit were terminated when the leases were terminated due to
foreclosure.
• Moak is not entitled to any royalty or other interests prior to obtaining
an ownership in the Subject Properties.
• Moak has not entered into any agreement with the mortgagees of the
Subject Properties.
• Moak does not claim any defect in the foreclosure of the Subject
Properties.
• Samson had a valid oil and gas lease covering fifty percent mineral
interest in the Subject Properties that was not covered by the leases at
issue.
Moak filed a traditional motion for partial summary judgment, in which it
contended that based on the Texas Supreme Court’s ruling in Wagner & Brown, Ltd.
v. Sheppard, 282 S.W.3d 419 (Tex. 2008), it is entitled to summary judgment
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because its participation in the pooled unit did not end with the termination of the
Subject Properties’ leases via the foreclosure of the mortgages of the original owners
and lessors. According to Moak, because the pooling provisions in the Subject
Properties’ leases pooled the land rather than the lease itself, the termination of the
predecessor leases did not terminate Moak’s participation in the pooled unit because
the land that is the subject of Moak’s mineral interest was still bound when the leases
terminated. Moak contends that the pooling agreement in the leases is independent
and outlives the leases because it is based on the actual land, and once the leases
terminated, the ownership of the minerals reverted to the mineral owners.
Defendants filed a traditional motion for summary judgment, in which they
asserted that at the time the Unit was created, Moak did not own any interest in the
Subject Properties, and the original landowners of the Subject Properties executed
leases with Samson that were wiped out by foreclosure of superior deeds of trust.
According to Defendants, Moak has no interest in the original leases because they
terminated prior to Moak obtaining the mineral interests in the Subject Properties.
Defendants argue that Sheppard is distinguishable from this case because (1) none
of the wells were drilled on or producing from any of the properties owned or leased
by Moak, and (2) the pooled leases and the reversionary interests in the Subject
Properties were wiped out by the foreclosure of the prior, superior deeds of trust.
10
According to Defendants, Moak is not an interest holder in any leases or land pooled
in the Unit, but is instead an unleased co-tenant of the mineral estates of the Subject
Properties. Further, Defendants argue that because the wells are not producing from
the Subject Properties, Moak has no interest in the production from the wells.
Defendants also argue that as an unleased mineral co-tenant, Moak has no right to
an accounting or to payments from the production of minerals in the Unit because
Moak’s unleased mineral interests are not pooled in the Unit.
After considering the parties’ joint factual stipulations, competing motions
for summary judgment, the evidence, and the applicable law, the trial court issued a
letter ruling. The trial court found that, when viewed in light of Sheppard, the parties’
factual stipulations and evidence unequivocally establish that the lands associated
with Moak’s mineral interests continued to be included in the pooling unit, despite
the foreclosure of the Subject Properties. The trial court determined that the Unit’s
formation document was a written agreement between Defendants and operated
independently from any chain of title of the foreclosed Subject Properties. The trial
court found that the termination of the mineral leases via foreclosure did not change
any of the lands committed to the Unit. The trial court denied both parties’ summary
judgment motions as to Moak’s causes of action for suit to quiet title, negligence,
conversion, and unjust enrichment. The trial court granted Defendants’ motion for
11
summary judgment as to Moak’s claim for an accounting, finding that although
Moak may be entitled to equitable relief on other grounds, the right to an accounting
exists by virtue of a contract, and Moak is not entitled to an accounting of royalty
payments because there is no contractual relationship between Moak and
Defendants. The trial court entered an order on Defendants’ and Moak’s competing
motions for summary judgment, granting Defendants’ motion as to Moak’s claim
for an accounting and denying Defendants’ and Moak’s motions as to the remainder
of the issues. The case proceeded to a bench trial.
THE TRIAL
The trial court heard testimony from T.W. Moak (‘T.W.”) who testified about
how he had acquired the leases on the five Subject Properties, and how Samson had
denied his requests to include his leases in the Unit; and how, even though the leases
provided the original lessors or owners a royalty interest, T.W. believed that he was
entitled to a working interest in the Subject Properties from the time he acquired
them. T.W. testified that he requested that Samson provide him with an accounting
of the proceeds that Samson had derived from his interests. According to T.W.,
Samson was contractually obligated to provide an accounting under the pooling
provision despite the leases being broken through foreclosure. T.W. explained that
he never requested that Samson allow him to ratify the leases.
12
John Selman, a shareholder of Bold, testified that he had an interest in the
Unit. Selman testified that Samson claimed that it had placed the royalties formerly
payable to the lessors of the foreclosed interests into no-pay status. Selman explained
that he could not verify Samson’s assertion that the accumulated royalties amounted
to $43,188.88. Selman testified that the original lessors of the Subject Properties
only had a royalty interest. Selman explained that Moak was seeking a working
interest, which is similar to a net profit basis, which none of the original leases had.
The trial court issued a letter ruling explaining that most of the relevant facts
are generally uncontested and that the task before the trial court was to resolve a
disputed question of law. The trial court reaffirmed its summary judgment ruling,
finding that the termination of the respective mineral leases via foreclosure did not
change any of the lands committed to the Unit. The trial court determined that the
question was whether Moak, as an unleased mineral co-tenant within the pool, had
an equitable claim for any production, proceeds, or royalties from the two wells
within the Unit. The trial court noted that in its summary judgment ruling it found
that Moak’s mineral interests were effectively unmarketable post-foreclosure
because of the Texas 40-acre spacing rule and the presence of the two producing
wells within the Unit. The trial court found that Moak was entitled to some equitable
13
relief and should have been afforded the opportunity to ratify the identical terms of
the prior mineral leases, pre-foreclosure.
At Defendants’ request, the trial court issued findings of fact and conclusions
of law. The trial court rendered judgment for Bold against Moak on all of Moak’s
claims and ordered that Moak recover nothing from Bold. The trial court rendered
judgment for Moak against Samson on its claims for conversion and unjust
enrichment, ordered Moak to recover equitable damages from Samson in the amount
of $43,188.88, and ordered that Moak take nothing against Samson on its claims for
suit to quiet title and negligence. Samson appealed the trial court’s final judgment.
Moak appealed the trial court’s final judgment and the trial court’s ruling on the
competing motions for summary judgment.
MOTION FOR SUMMARY JUDGMENT
We first address Moak’s cross-issue, in which Moak argues that the trial court
erred in granting summary judgment in favor of Samson and Bold on Moak’s claim
for an accounting, because the trial court incorrectly determined that Moak has only
a royalty interest in the Unit. According to Moak, as an unleased mineral co-tenant
with a working interest, it is entitled to an accounting. Moak asks this Court to
reverse the trial court’s summary judgment in favor of Defendants on its claim for
an accounting.
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We review summary judgment orders de novo. Provident Life & Accident Ins.
Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). The party moving for traditional
summary judgment must establish that (1) no genuine issue of material fact exists,
and (2) it is entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c); Randall’s
Food Mkts., Inc. v. Johnson, 891 S.W.2d 640, 644 (Tex. 1995). If the moving party
produces evidence entitling it to summary judgment, the burden shifts to the non-
movant to present evidence that raises a fact issue. Walker v. Harris, 924 S.W.2d
375, 377 (Tex. 1996). In determining whether there is a disputed material fact issue
precluding summary judgment, evidence favorable to the non-movant will be taken
as true. Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548-49 (Tex. 1985). We
review the summary judgment record “in the light most favorable to the nonmovant,
indulging every reasonable inference and resolving any doubts against the motion.”
City of Keller v. Wilson, 168 S.W.3d 802, 824 (Tex. 2005).
When both parties move for summary judgment on the same issue and the
trial court grants one motion and denies the other, the reviewing court considers the
summary judgment evidence presented by both parties and determines all the
questions presented. Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289
S.W.3d 844, 848 (Tex. 2009). If the reviewing court determines that the trial court
erred, the reviewing court renders the judgment the trial court should have rendered,
15
Id. We must affirm the summary judgment if any of the grounds asserted in the
motion are meritorious. Tex. Workers’ Comp. Comm’n v. Patient Advocates of Tex.,
136 S.W.3d 643, 648 (Tex. 2004).
We first examine whether Moak established that it is entitled to judgment as
a matter of law on its accounting claim. See Tex. R. Civ. P. 166a(c); Fielding, 289
S.W.3d at 848. In determining that Samson and Bold were entitled to summary
judgment as to Moak’s claim for an accounting, the trial court relied on the parties’
stipulation stating that “no contractual relationship, evidenced by written lease or
otherwise, ever existed between Moak and Defendants with respect to the Unit or
Moak’s interest in the Subject Properties.” The trial court found that although Moak
may be entitled to equitable relief on other grounds, the right to an accounting exists
by virtue of a contract, and because there is no contractual relationship between
Moak and Defendants, Moak is not entitled to an accounting of royalty payments.
Had Defendants produced minerals from the Subject Properties in which
Moak has a mineral interest, Defendants would have to account to Moak for its share
of minerals produced less the necessary and reasonable costs of producing and
marketing the minerals. See Superior Oil Co. v. Roberts, 398 S.W.2d 276, 277 (Tex.
1966); Hunt Oil Co. v. Moore, 656 S.W.2d 634, 642 (Tex. App.—Tyler 1983, writ
ref’d n.r.e.). However, the record shows that no minerals were produced from the
16
Subject Properties and that Moak had no contractual relationship with Defendants
or the other owners of mineral interests in the Unit which would give Moak the right
to minerals produced from the Unit. See Superior Oil Co., 398 S.W.2d at 277-78;
Hunt Oil Co., 656 S.W.2d at 642. The record also shows that Moak did not revive
or ratify the leases on the Subject Properties that had been terminated by foreclosure.
See Superior Oil Co., 398 S.W.2d at 277; Hunt Oil Co., 656 S.W.2d at 642. Because
Moak has no contractual relationship with Defendants, Moak failed to prove as a
matter of law that it was entitled to an accounting. See Tex. R. Civ. P. 166a(c);
Fielding, 289 S.W.3d at 848; Hunt Oil Co., 656 S.W.2d at 642. We conclude that
the trial court did not err in granting summary judgment in favor of Samson and Bold
on Moak’s claim for an accounting. We overrule Moak’s cross-issue and affirm the
trial court’s summary judgment.
FINAL JUDGMENT
In issue one, Samson argues that the trial court improperly interpreted the
Unit’s designation and retroactively awarded Moak royalties on a reversionary
interest that was never leased or pooled in the Unit. According to Samson, the Unit
only pooled leasehold mineral interests and not the reversionary interests of the prior
leaseholders. Samson contends that because the Unit designation does not contain
language that pools any reversionary mineral interests of the original lessors, the
17
reversionary interests that Moak acquired were never pooled into the Unit.
According to Samson, even if the Unit designation had attempted to pool the
reversionary interests, such an attempt would have been ineffective because the
mortgagees had not authorized their interests in the Subject Properties to be pooled.
Samson maintains that having land within the metes and bounds of a pooled unit
does not mean that the owner’s mineral interests are pooled in the Unit. Samson
argues that the trial court improperly concluded that the termination of the respective
mineral leases via foreclosure did not change any of the lands pooled in the Unit.
In issue two, Samson complains that the trial court incorrectly applied the law
by concluding that Moak was entitled to some equitable relief and that Moak should
have been afforded the opportunity to ratify the identical terms of the prior mineral
leases of the Subject Properties. Samson argues that it had no duty to identify, locate,
and afford shared-production opportunities to an unleased mineral co-tenant who
held zero interest in the pooled Unit, and Samson had no duty to provide Moak an
opportunity to ratify pre-foreclosure mineral leases because Moak was never a party
to any lease or contract with Samson, did not own any property that had an oil and
gas well on it, and never requested to ratify or adopt the pre-foreclosure leases.
Appellate courts review a trial court’s conclusions of law de novo as legal
questions. BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex.
18
2002). The reviewing court may review the trial court’s legal conclusions drawn
from the facts to determine whether the trial court correctly applied the law. Id. We
must uphold conclusions of law if any legal theory supported by the evidence
sustains the judgment. Wyde v. Francesconi, 566 S.W.3d 890, 894-95 (Tex. App.—
Dallas 2018, no pet.). Conclusions of law may not be reversed unless they are
erroneous as a matter of law. Id. at 895.
We consider whether the trial court erred by concluding as a matter of law
that the lands associated with Moak’s mineral interests continued to be included in
the Unit despite the foreclosures of the Subject Properties and that Moak should have
been afforded the opportunity to ratify the identical terms of the prior mineral leases
of the Subject Properties because Moak has an equitable claim to mineral royalty
payments. In forming its conclusions, the trial court relied on the Texas Supreme
Court’s ruling in Sheppard. See Sheppard, 282 S.W.3d at 424, 428-29. We conclude
that Sheppard is distinguishable. In Sheppard, Jane Sheppard was a party to the
original lease which authorized pooling of “all or any part of the leased premises or
interest therein[.]” See id. at 423. Because Jane’s possibility of reverter was an
interest in the leased premises, the language in Jane’s lease authorized her
reversionary interest in the mineral estate to be pooled in the Unit. See id. at 423-24.
Additionally, the wells were located on Jane’s property, Jane’s lease was not
19
terminated by the foreclosure of a deed of trust, and there was no evidence that Jane’s
property was subject to a mortgage. See id. at 421-22.
An oil and gas lease is a fee simple determinable estate in the realty. Jupiter
Oil Co. v. Snow, 819 S.W.2d 466, 468 (Tex. 1991). “A possibility of reverter is the
interest left in a grantor after the grant of a fee simple determinable.” Id. Upon the
termination of the lease, the grantor’s possibility of reverter in the mineral estate
becomes a present possessory interest and the mineral estate reverts to the grantors
of the lease, their heirs, or assigns. Id. The owner of a mineral estate can sell or
assign the possibility of reverter. Id. However, the lessee only acquires ownership of
all the minerals in place that the grantor owns and purports to lease. Nat. Gas
Pipeline Co. of Am. v. Pool, 124 S.W.3d 188, 192 (Tex. 2003).
The trial court concluded that the mortgagors did not have any power or
authority, contractual or otherwise, to pool or divest any interest in the Subject
Properties that would be binding upon the mortgagees or the purchasers at the
foreclosure sales. The record shows that the Subject Properties were subject to a
mortgage when the original mineral leases were executed and that the leases
terminated by virtue of the foreclosure sales. 3 Because the Subject Properties were
3
We note that Moak and Samson agree that section 66.001 of the Texas
Property Code, which became effective January 1, 2016, does not apply in this case.
See Tex. Prop. Code Ann. § 66.001(b) (providing that an oil and gas lease covering
20
encumbered by deed of trust liens, the legal and equitable estates in the properties
were severed, and the original lessors never acquired equitable title to the Subject
Properties because they defaulted on the notes. See XTO Entergy, Inc. v. EOG Res.,
Inc., 554 S.W.3d 127, 139 (Tex. App.—San Antonio 2018, pet. filed). Thus, even
though the original leases included all of the land described in the lease, together
with any reversionary rights of the lessor, the original lessors never acquired any
reversionary rights in the lands because the properties were foreclosed upon. If the
original lessors never acquired any reversionary rights in the lands due to
foreclosure, and the foreclosures terminated the leases, then it follows that post-
foreclosure, the Defendants no longer had the authority to pool all or any part of the
land or any interest covered by the leases. See XTO Energy Inc. v. Goodwin, 584
S.W.3d 481, 493-94 (Tex. App.—Tyler 2017, pet. denied).
Generally, oil and gas leases, and pooling clauses are matters of contract.
Samson Expl., LLC v. T.S. Reed Props., Inc., 521 S.W.3d 766, 774 (Tex. 2017) “A
lessee’s authority to pool requires the lessor’s consent, which is typically furnished
via a pooling provision in the mineral lease.” Id. A pooling agreement that fails to
comply with the terms of the lease is invalid and unenforceable absent the lessor’s
real property subject to a security instrument that has been foreclosed remains in
effect after the foreclosure sale if the lease has not terminated or expired on its own
terms).
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ratification. Id. The trial court found that post-foreclosure, neither party attempted
to ratify the terms of the prior mineral leases. The trial court further found that there
was no evidence that Moak entered into any type of agreement with the mortgagees
of the Subject Properties. The record shows that Moak had no contractual
relationship with Defendants or the other owners of mineral interests in the Unit
which would give Moak the right to minerals produced from the Unit but not
produced from the Subject Properties. See Superior Oil Co., 398 S.W.2d at 277-78;
Donnan v. Atlantic Richfield, 732 S.W.2d 715, 717 (Tex. App.—Corpus Christi
1987, writ denied); Hunt Oil Co., 656 S.W.2d at 642. Accordingly, we conclude that
Samson had no obligation to pay any royalties to Moak. See Sun Expl. and Prod.
Co. v. Pitzer, 822 S.W.2d 294, 295 (Tex. App.—Eastland 1991, writ denied).
“A claim for money had and received is an equitable action that may be
maintained to prevent unjust enrichment when the defendant obtains money, which
in equity and good conscience belongs to the plaintiff.” Spellmann v. Love, 534
S.W.3d 685, 693 (Tex. App.—Corpus Christi 2017, pet. denied). To prove
conversion, a plaintiff must show that (1) he owned or had legal possession of the
property or entitlement to possession; (2) the defendant unlawfully and without
authorization assumed and exercised dominion and control over the property to the
exclusion of, or inconsistent with, the plaintiff’s right as an owner; (3) the plaintiff
22
demanded return of the property; and (4) the defendant refused to return the property.
Goodwin, 584 S.W.3d at 496. Having concluded that Samson had no obligation to
pay Moak any royalties, we further conclude that Moak failed to prove its claims for
unjust enrichment and conversion. Accordingly, we hold that the trial court erred as
a matter of law by awarding Moak equitable damages based on Moak’s claims for
unjust enrichment and conversion. See generally Marchand, 83 S.W.3d at 794. We
sustain both of Samson’s issues and reverse the trial court’s final judgment awarding
Moak equitable damages against Samson in the amount of $43,188.88 and render
judgment that Moak take nothing as to Samson.
BOLD’S CROSS-POINT
In response to Moak’s cross-issue, Bold filed a brief arguing that the trial court
correctly concluded that Moak is not entitled to a working interest in the Unit, and
that Moak failed to prove that Bold received or converted any funds that were
attributable and payable to Moak. Having reversed the trial court’s final judgment
awarding equitable damages against Samson and rendered judgment that Moak take
nothing as to Samson, and having affirmed the trial court’s summary judgment in
favor of Samson and Bold on Moak’s accounting claim, we need not address Bold’s
cross-point. See Tex. R. App. P. 47.1. Accordingly, we affirm the trial court’s final
judgment that Moak take nothing as to Bold.
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AFFIRMED IN PART; REVERSED AND RENDERED IN PART.
______________________________
STEVE McKEITHEN
Chief Justice
Submitted on October 2, 2019
Opinion Delivered January 16, 2020
Before McKeithen, C.J., Kreger and Johnson, JJ.
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